Prospectus Summary
This summary highlights information contained elsewhere in this prospectus. You should read this entire prospectus carefully, especially regarding the risks of investing in our common stock discussed under "Risk Factors," before making an investment decision.
Netpliance, Inc.
We are pioneering a new model for delivering a simplified and more relevant Internet experience through consumer Internet appliances. In November 1999 we launched our i-opener service, an all-in-one Internet experience integrating an Internet appliance, access, and consumer portal. Our approach avoids the technological complexities generally associated with using personal computers, or PCs, and traditional Web browsers to access the Internet. We believe our solution provides a simple, seamless and relevant experience that appeals to both new and existing Internet users.
Our i-opener service consists of the following three integrated elements:
.i-opener Internet Appliance--our i-opener Internet appliance arrives preconfigured to a new user and ready to access the Internet. A user simply plugs the i-opener Internet appliance into an electric outlet, connects a phone line and is ready to enjoy the Internet. The sleek profile and attractive design of the i-opener Internet appliance allows it to be placed in high traffic areas such as the living room or kitchen, enabling our i-opener service to become a primary source of current news and information.
.i-opener Access--our i-opener Internet appliance comes prepackaged with Internet access delivered over a nationwide dial-up network. Future plans include broadband delivery over DSL and cable. Our network architecture enables us to cache and download content to Internet appliances connected to our service, providing users instant access to this content. Additionally, our network allows us to manage the user's i-opener experience remotely by updating content and delivering upgrades and new applications to our users automatically, without user intervention.
. i-opener Consumer Portal--our portal provides an entrance point to the Internet for our users and links them directly to consumer content and e- commerce sites tailored to their likely interests and needs based on age and geographic location. In the future we intend to tailor content to personal preferences. Our portal provides users access to our instant channels, e-mail, our Web Guide and Web Mall.
Our objective is to establish our i-opener service as the leader in the new market of delivering simplified Internet services and network hosted applications through Internet appliances. We intend to consistently upgrade and customize the functionality of our i-opener portal and add new features to ensure user satisfaction. Our infrastructure, operating system and network are designed to support additional devices such as cellular and wireless telephones and other handheld communication devices. We also believe our installed base of devices, and our ability to remotely upgrade and deliver software to our user base through our network, will allow us to host new and emerging web-based applications and services.
In December 1999 we entered into an agreement with GO.com, an affiliate of The Walt Disney Company. GO.com has agreed to serve as our exclusive provider of content for our children, family, sports, news and entertainment related categories for the cached instant channels on our i-opener portal. Also in December 1999, we entered into a non-binding agreement with US West regarding joint sales, marketing and distribution of our i-opener service through dial-up and DSL Internet access. Affiliates of each of US West and GO.com are investing in our Series D preferred stock.
Netpliance was incorporated in Texas in January 1999 and will be reincorporated in Delaware upon the closing of this offering. Our principal executive offices are located at 7600A North Capital of Texas Highway, Austin, Texas 78731 and our telephone number is (512) 493-8300. The address of our Web site is www.netpliance.com. Information contained on our Web site should not be considered a part of this prospectus.
The Offering
Common stock offered.............................. shares Common stock to be outstanding after the offering. shares Use of proceeds................................... We plan to use the proceeds from this offering for working capital, general corporate purposes and other operating expenses, including sales and marketing, subsidies for the purchase price of our i-opener Internet appliance and further development of our services. See "Use of Proceeds." Nasdaq National Market symbol..................... NPLI The number of shares of common stock to be outstanding after the offering is based on:
.6,302,357 shares of common stock outstanding as of December 22, 1999;
. 8,419,810 shares of common stock issuable upon conversion of our preferred stock outstanding as of December 22, 1999;
. 1,430,000 shares of common stock issuable upon conversion of the Series D preferred stock to be issued pursuant to an irrevocable commitment made in December 1999; plus . 155,678 shares of common stock that we expect to issue upon the exercise of warrants that will expire upon the closing of this offering.
The above number excludes:
. 1,211,250 shares of common stock issuable upon exercise of outstanding options under our stock option plan as of December 22, 1999 at a weighted average exercise price of $2.98 per share;
. 288,750 shares reserved for future issuance under our stock option plan as of December 22, 1999;
. 323,044 shares of common stock issuable upon exercise of an outstanding option granted outside our stock option plan; and . 200,000 shares of common stock issuable upon the exercise of an outstanding common stock purchase warrant that does not expire upon the closing of this offering.
See "Capitalization."
Generally, unless otherwise indicated, all information in this prospectus:
. assumes a for stock split;
. gives effect to the conversion of all preferred stock to common stock and the exercise of 155,678 warrants to purchase common stock;
. gives effect to our reincorporation into Delaware upon the closing of this offering; and . assumes no exercise of the underwriters' over-allotment option.
We have applied to register the trademarks Netpliance(TM) and i-opener(TM). Every other trademark, trade name or service mark appearing in this prospectus belongs to its owner.
Summary Historical and Pro Forma Financial Information (In thousands, except per share data) The following table summarizes our historical financial information. This table does not present all of our financial information. You should read this information together with our financial statements and the notes to those statements beginning on page F-1 of this prospectus, and the information under "Selected Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
From January 12, 1999 (inception) through September 30, 1999
Statement of Operations Data: Net revenues.............................................. $ -- Operating expenses........................................ 9,405 Loss from operations...................................... (9,405) Other income, net....................................... 55 Net loss.................................................. $ (9,350) Weighted average common shares outstanding................ 4,821,152 Loss per common share--basic and diluted.................. $ (1.94)
As of September 30, 1999
Pro Pro Forma
Actual Forma As Adjusted
Balance Sheet Data: Cash and cash equivalents........................... $12,172 $54,263 Working capital..................................... 10,521 52,612 Total assets........................................ 17,088 59,179 Non-current portion of capital lease obligations.... 893 893 Total stockholders' equity.......................... 13,375 55,466 The table above summarizes our balance sheet data:
. on an actual basis as of September 30, 1999;
. on a pro forma basis to reflect the issuance and conversion into common stock of 116,666 shares of Series B preferred stock, 66,668 shares of Series C preferred stock and 1,430,000 shares of Series D preferred stock, the issuance and exercise of 155,678 warrants to purchase common stock and the issuance and sale of 130,000 shares of common stock after September 30, 1999; and
. on a pro forma as adjusted basis to reflect the pro forma
transactions described above and the sale of shares of
common stock offered by this prospectus at an initial offering price
of $ per share after deducting estimated underwriting
discounts and commissions and estimated offering expenses.