As filed with the Securities and Exchange Commission on April __, 2000.
REGISTRATION NO. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
LABTEC INC.
(Exact name of registrant as specified in its charter)
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<CAPTION>
MASSACHUSETTS 3577 04-3116697
<S> <C> <C>
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1499 S.E. TECH CENTER PLACE, SUITE 350
VANCOUVER, WASHINGTON 98683
360-896-2000
</TABLE>
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
ROBERT G. WICK, PRESIDENT AND CHIEF EXECUTIVE OFFICER
LABTEC INC.
1499 S.E. TECH CENTER PLACE, SUITE 350
VANCOUVER, WA 98683
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of communications to:
MARK S. HIRSCH, ESQ.
PARKER CHAPIN LLP
THE CHRYSLER BUILDING
405 LEXINGTON AVENUE
NEW YORK, NEW YORK 10174
(212) 704-6105
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 are being offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_| __________________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.|_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
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<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Proposed Proposed
Amount Maximum Maximum
Title Of Shares To Be Aggregate Price Aggregate Amount Of
To Be Registered Registered Per Share(1) Offering Price Registration Fee
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par
value $.01 per share........ 262,237 $7.375 $1,933,998 $510.58
====================================================================================================================
</TABLE>
<PAGE>
(1) Represents the shares of Common Stock being registered for resale by
the selling stockholder. Estimated solely for the purpose of
calculating the registration fee under Rule 457(c) under the Securities
Act of 1933, based on the average of the bid and asked price on the OTC
Bulletin Board on April 3, 2000.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE>
PROSPECTUS (SUBJECT TO COMPLETION, DATED APRIL 10, 2000)
262,237 SHARES OF COMMON STOCK
LABTEC INC.
1499 S.E. TECH CENTER PLACE, SUITE 350
VANCOUVER, WA 98683
The selling stockholder named in this prospectus is offering to sell an
aggregate of 262,237 shares of common stock. Labtec will not receive any of the
proceeds from the offering.
The common stock is quoted on the OTC Bulletin Board under the symbol LABT.
--------------------------
CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
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.
--------------------------
Prospectus dated , 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
<PAGE>
TABLE OF CONTENTS
PAGE
----
PROSPECTUS SUMMARY..........................................................3
RISK FACTORS................................................................4
SELLING STOCKHOLDER AND PLAN OF DISTRIBUTION...............................10
DESCRIPTION OF CAPITAL STOCK...............................................12
SHARES ELIGIBLE FOR FUTURE SALE............................................13
LEGAL MATTERS..............................................................13
EXPERTS....................................................................13
ABOUT THIS PROSPECTUS......................................................13
WHERE YOU CAN FIND MORE INFORMATION........................................14
<PAGE>
PROSPECTUS SUMMARY
This is only a summary and does not contain all of the information that
you should consider before investing in our common stock. You should read the
entire prospectus carefully, including the "Risk Factors" section. In general,
the terms "we" or "Company" refer to Labtec Inc.
THE COMPANY
We are a leading developer and marketer of high technology accessories
for personal computers and workstations. We offer a broad array of products,
including computer speakers, subwoofers, voice access microphones, headphones
and accessories, three-dimensional, or 3D, input controllers, 3D gamepads and
storage devices for secure computer systems and networks. Our strategy is to
offer a growing assortment of products based on our own technology through
various distributors. We currently sell to many of the largest retailers,
distributors and computer equipment manufacturers in the world.
THE OFFERING
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<CAPTION>
<S> <C>
Common Stock Offered by the Selling Stockholder................ 262,237 shares of common stock
Common Stock Outstanding after the Offering.................... 4,024,072 shares
Trading Symbol................................................. LABT
Risk Factors................................................... You should note that an investment in the
securities offered in this prospectus involves
a high degree of risk. See "Risk Factors."
</TABLE>
3
<PAGE>
RISK FACTORS
An investment in the common stock offered in this prospectus involves a
high degree of risk. Prospective investors should consider the specific risk
factors set forth below as well as the other information contained in this
prospectus.
OUR FUTURE PROFITABILITY IS UNCERTAIN BECAUSE WE HAVE A LIMITED OPERATING
- -------------------------------------------------------------------------
HISTORY.
- --------
Because we began manufacturing 3D graphic devices and computer storage
equipment in 1999, we only have a limited operating history on which you can
base your evaluation of our business. We may not continue to grow or achieve
profitability. We face a number of risks encountered by early stage companies in
the electronics industry, including:
o the uncertainty of market acceptance of commercial services utilizing
our products;
o our substantial dependence on products with only limited market
acceptance to date;
o our need to introduce reliable products that meet the needs of our
customers for computer graphics software and hardware and data
storage;
o our need to expand our marketing, sales, consulting and support
organizations, as well as our distribution channels;
o our ability to anticipate and respond to market competition;
o our need to manage expanding operations; and
o our dependence upon key personnel.
We may not be able to successfully address these risks.
OUR BUSINESS WILL NOT GROW WITHOUT INCREASED USE OF 3D GRAPHICS.
- ----------------------------------------------------------------
Our future success will continue to depend on sales of our computer
graphics software and hardware products designed to be used with 3D graphic
interfaces. Our ability to increase product sales depends in part on the
continued development of products that incorporate 3D graphic interfaces. There
can be no assurance that the market for 3D graphic interfaces will continue to
grow or that we will be able to respond effectively to the evolving requirements
of such market.
THE MARKET FOR OUR PRODUCTS AND SERVICES IS HIGHLY COMPETITIVE.
- ---------------------------------------------------------------
The market for our products and services is becoming increasingly
competitive. The widespread adoption of new industry standards, rapidly changing
technology and short product life cycles may make it easier for new and existing
competitors to introduce products that compete with our computer graphics
software and hardware products. We expect that we will compete primarily on the
basis of time to market, functionality, price, quality, breadth of product and
service offerings, industry position and experience. We may not be able to
compete effectively on these or other bases and, as a result, our revenues and
income may decline, which would harm our business. Some of our competitors have
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<PAGE>
significantly greater financial, marketing and other resources, generate greater
revenues and have greater name recognition and international experience than we
do.
WE MAY NOT ACHIEVE OR SUSTAIN OUR REVENUE OR PROFIT GOALS.
- ----------------------------------------------------------
Because we expect to continue to incur significant product development,
sales and marketing, and administrative expenses, we will need to generate
significant revenue to become and remain profitable on a quarterly or annual
basis. We may not achieve or sustain our revenue or profit goals and our ability
to do so depends on a number of factors outside of our control, including the
extent to which:
o there is market acceptance of commercial products that use our
computer graphics software and hardware;
o our competitors announce and develop competing products or
significantly lower their prices; and
o we are able to upgrade our software to respond to new technologies.
OUR REVENUES TO DATE HAVE BEEN DERIVED FROM A RELATIVELY SMALL NUMBER OF
- ----------------------------------------------------------------------------
CUSTOMERS AND THE FAILURE TO RETAIN THESE CUSTOMERS OR ADD NEW CUSTOMERS MAY
- ----------------------------------------------------------------------------
HARM OUR BUSINESS.
- ------------------
To date our revenues have been derived from a relatively small number
of customers. We had two customers that represented 17% and 15% of net sales,
respectively, for the year ended March 31, 1997; 21% and 13% of net sales,
respectively, for the year ended March 31, 1998; and 15% and 11% of net sales,
respectively, for the year ended March 31, 1999. We expect that these customers
will continue to represent a significant percentage of our revenue for the
foreseeable future. There can be no assurance that we will be able to retain
these customers or, in the event of a reduction or loss of business from these
customers, that we would be able to replace lost orders with other sales. The
occurrence of any such events could have a material adverse effect on our
operating results. Our future success depends on our ability to increase
revenues from sales of our computer graphics software and hardware products. Any
failure by us to capture a significant share of customers could materially harm
our business.
IF WE HIRE A RESELLER WHO FAILS TO MARKET OUR PRODUCTS AND SERVICES EFFECTIVELY
- ----------------------------------------------------------------------------
OR WHO PROVIDES POOR CUSTOMER SERVICE, OUR REPUTATION WILL SUFFER AND WE COULD
- ----------------------------------------------------------------------------
LOSE CUSTOMERS.
- ---------------
While we currently market and sell a significant portion of our
products directly to users, we expect that we will sell an increasing amount of
our product through third-party distributors, such as original equipment
manufacturers, or OEMs, and value added resellers, or VARs. Such OEMs and VARs
are not under our control and may stop selling and marketing our products
without notice. In addition, if we hire a reseller who fails to market our
products and services effectively, we could lose market share. Also, if a
reseller provides poor customer service, we could lose brand equity. Therefore,
we must maintain and hire additional resellers throughout the world that are
capable of providing high-quality sales and service efforts. If we lose a
reseller in a key market, or if a current or future reseller fails to adequately
provide customer support, our reputation could suffer and sales of our products
and services and our customer base may be substantially diminished.
OUR PRODUCTS MAY NOT SUCCESSFULLY PENETRATE THE CONSUMER MARKETPLACE.
- ---------------------------------------------------------------------
Sales to retail customers require significant marketing and sales
expenditures and post-sale product support costs. Penetration of the consumer
market depends in large part on building relationships with distributors and
retailers. An increasing number of vendors compete for access to these
distributors
5
<PAGE>
and retailers, which generally offer products of several different companies,
including products competitive with our products. We anticipate spending
substantial capital to increase penetration of these distribution channels. In
the future, we intend to reach the consumer marketplace through three
strategies: (1) retail sales, (2) OEM sales, and (3) technology licensing and
component sales to producers of hardware platforms, such as console game systems
and personal computers. There can be no assurance that we will be successful in
implementing any of these marketing strategies in the consumer marketplace or in
launching any new products into these markets, or that any negotiations with
leading manufacturers, OEMs or distributors in this marketplace will be
successfully completed on terms favorable to us.
If we successfully penetrate the retail market, we believe that our
gross margins would decrease due to the anticipated reduced sales prices for our
products. This is due to the fact that we believe that we must competitively
price our products in order to penetrate this market and that we anticipate an
increased cost of revenues in the retail market. We further anticipate that our
results from retail sales will be significantly affected by seasonality due
primarily to the increased demand for 3D game and entertainment products during
the year-end holiday buying season. Retail distributors typically expect that
they will be permitted to return inventory to us for credit against other
purchases. In addition, we anticipate that retail distributors will require
price protection clauses in agreements with us under which we will be obligated
to grant credits if we reduce selling prices on products previously purchased by
the distributor. Also, if we generate significant retail sales relative to OEM
sales, there is a greater risk of increased product returns and warranty claims.
We have established reserves for product returns and warranty claims based on
previous experience and future expectations. If we are successful in penetrating
the retail market, there can be no assurance that these reserves will be
adequate or that product returns and warranty claims and price protection
adjustments will not have a material adverse effect on our future operating
results.
WE MAY FAIL TO SUPPORT OUR ANTICIPATED GROWTH IN OPERATIONS.
- ------------------------------------------------------------
To continue to be successful, we must develop new products and improve
existing products while managing anticipated growth by implementing effective
planning and operating processes. To manage anticipated growth, we must:
o continue to implement and improve our operational, financial and
management information systems;
o hire, train and retain additional qualified personnel; and
o continue to expand customer service and technical support.
If we fail to manage our growth effectively, our business could suffer
materially.
OUR COMPUTER GRAPHICS SOFTWARE AND HARDWARE PRODUCTS MAY CONTAIN DEFECTS OR
- ----------------------------------------------------------------------------
ERRORS AND SHIPMENTS OF OUR PRODUCTS MAY BE DELAYED.
- ----------------------------------------------------
The computer graphics software and hardware products we develop are
complex and must meet the stringent technical requirements of our customers. We
must continue to develop our products quickly to keep pace with the rapidly
changing electronics market. Computer graphics software and hardware products as
complex as ours may contain undetected errors or defects, especially when first
introduced or when new versions are released. Our products may not be free from
errors or defects after commercial shipments have begun, which could result in
lost revenues, diverted development resources and increased service and warranty
costs, any of which could harm our business.
6
<PAGE>
OUR QUARTERLY OPERATING RESULTS MAY BE SUBJECT TO SIGNIFICANT FLUCTUATIONS AND
- ----------------------------------------------------------------------------
OUR STOCK PRICE MAY BE VOLATILE.
- --------------------------------
Our quarterly revenues and operating results are difficult to predict
and may fluctuate significantly from quarter to quarter. At our current level of
operations, most of our expenses are relatively fixed. As a result, any
shortfall in revenues relative to our expectations could cause a significant
decline in our quarterly operating results. If we do not meet the expectations
of investors and analysts in a given quarter, our common stock price could
decline. Fluctuations in our common stock price may be exaggerated if the
trading volume of our common stock is low. In addition, due to the
technology-intensive nature of our business, the market price of our common
stock may fall, or rise, in response to:
o announcements of technological or competitive developments;
o acquisitions or strategic alliances by us or our competitors;
o the gain or loss of a significant customer or order; and
o conditions in the electronics industry and economic conditions
generally.
Due to these factors, quarterly revenues, expenses and results of operations
could vary significantly in the future. You should take these factors into
account when evaluating past periods and, because of the potential variability
due to these factors, you should not rely upon results of past periods as an
indication of our future performance. In addition, the long-term viability of
our business could be negatively impacted if there were a downward trend in
these factors.
WE MAY NOT BE ABLE TO DEFEND OUR PATENTS FROM INFRINGEMENT BY COMPETITORS.
- --------------------------------------------------------------------------
Our success is heavily dependent upon our proprietary computer graphics
software and hardware technology. We rely on a combination of patent, trade
secret, copyright and trademark law, software license agreements, non-disclosure
agreements and technical measures to protect our rights pertaining to our
products. Such protection may not stop competitors from developing products with
features similar to our products. Our success will depend in part on our ability
to obtain and defend United States and foreign patent protection for our
products and preserve our trade secrets. The laws of certain countries do not
protect our products and intellectual property rights to the same extent as do
the laws of the United States. Our issued patents, or any future patents, may
not provide the Company with significant protection against competitive
products. If patents issued to or licensed by us are infringed upon by others,
or if unauthorized parties attempt to copy aspects of our products or to obtain
and use information we regard as proprietary, it could harm our business.
WE RELY ON OUR SUPPLIERS AND ANY INTERRUPTION IN THE SUPPLY OF PARTS AND
- ----------------------------------------------------------------------------
COMPONENTS FOR OUR PRODUCTS COULD CAUSE A DECLINE IN SALES.
- -----------------------------------------------------------
We rely on outside suppliers for substantially all of our parts,
components and manufacturing supplies. The microprocessor currently used in the
manufacture of one of our hardware products is obtained from one supplier. The
disruption or termination of the supply of microprocessors from this source
could cause delays in the delivery of such products, which may harm our
business.
Our suppliers may experience difficulty in supplying us products or
services sufficient to meet our needs or they may terminate or fail to renew
contracts for supplying us these products or services
7
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on terms we find acceptable. Any significant interruption in the supply of any
of these products or services could cause a decline in sales of our computer
graphics software or hardware products unless and until we are able to find or
develop comparable products and services. We depend on third parties to deliver
and support certain software and hardware products on a timely and
cost-effective basis and to respond to emerging industry standards and other
technological changes.
WE DEPEND ON OUTSIDE VENDORS AND ANY DELAYS IN DELIVERY OR QUALITY PROBLEMS MAY
- ----------------------------------------------------------------------------
REDUCE OUR ABILITY TO FILL CUSTOMER ORDERS.
- -------------------------------------------
We have and will continue to rely on outside vendors to manufacture
hardware for our products. Any delays incurred or quality problems caused by any
of the contract manufacturers may adversely affect our ability to fill customer
orders. Our reliance on outside manufacturers, particularly those overseas, may
limit our ability to obtain an adequate supply of required products and reduce
our control over the price, timeliness of delivery, reliability and quality of
finished products. If we cannot obtain timely delivery of products that meet our
quality standards we may have to seek alternative vendors or manufacture our own
hardware. Such events could delay our ability to ship products, which could
damage our relationships with our customers.
WE DEPEND ON RECRUITING AND RETAINING KEY MANAGEMENT AND TECHNICAL PERSONNEL.
- -----------------------------------------------------------------------------
Because of the technical nature of our products and the dynamic market
in which we compete, our continued performance depends on attracting and
retaining highly skilled engineering, managerial, consulting, marketing and
sales personnel. In particular, our future success depends in part on the
continued services of each of our current executive officers and key employees.
In order to increase our revenues significantly, we need to hire a substantial
number of employees in the near future. Competition for qualified personnel in
the electronics industry is intense. We believe that there are only a limited
number of persons with the requisite skills to serve in many key positions and
it is difficult to hire and retain these persons. Competitors and others have
attempted to recruit our employees in the past and may do so in the future.
WE MAY NEED ADDITIONAL FINANCING AND WE MAY NOT BE ABLE TO ATTAIN IT, WHICH
- ----------------------------------------------------------------------------
COULD PREVENT US FROM CARRYING OUT OUR BUSINESS STRATEGY.
- ---------------------------------------------------------
Our need for additional financing in the future will depend on how
quickly we can develop products, whether our products are widely accepted in the
market, the amount of promotion and advertising costs needed to successfully
launch new products and whether we need financing for possible acquisitions.
Changes in technology or a growth of sales beyond our current manufacturing
capabilities may also require further investment. We may have to seek additional
funding by selling debt publicly or privately, which may be difficult to
complete on terms favorable to us, or at all. If additional funds are raised by
issuing stock, the percentage ownership of our then-current stockholders may be
reduced and the holders of new stock may have rights, preferences or privileges
senior to those of the holders of our common stock. If additional funds are
raised through a bank credit facility or the issuance of debt, the holder of
this indebtedness may have rights senior to the rights of the holders of our
common stock and the terms of this indebtedness could impose restrictions on our
business operations. If we cannot raise adequate funds on acceptable terms, we
may not be able to continue to fund our operations.
OUR CURRENT MANAGEMENT HAS CONTINUING CONTROL OF THE COMPANY.
- -------------------------------------------------------------
Marc J. Leder is our Co-Chairman, Senior Vice President, Finance, Chief
Financial Officer, Treasurer, and Director and Rodger R. Krouse is our
Co-Chairman, Clerk and Director. Mr. Leder is also the Vice President and
Secretary and Mr. Krouse is the President and Treasurer of Sun Multimedia
Advisors, Inc., which in turn is the general partner of Sun Multimedia Partners,
L.P., our largest
8
<PAGE>
stockholder. Sun Multimedia Partners, L.P. owns approximately 48% of our issued
and outstanding shares of common stock. As a result, Messrs. Leder and Krouse
could exercise a significant influence over the control of the Company and on
the outcome of matters submitted to our stockholders for approval. Their
influence might not be consistent with the interests of other stockholders. In
addition, they may be able to elect a majority of our directors, deter or cause
a change in control of the Company and otherwise generally control our affairs.
INTERNATIONAL EXPANSION IS AN IMPORTANT PART OF OUR STRATEGY AND THIS EXPANSION
- ----------------------------------------------------------------------------
CARRIES SPECIFIC RISKS.
- -----------------------
International sales of products accounted for approximately 26%, 26%
and 23% of our total revenues in the years ended March 31, 1997, 1998 and 1999,
respectively. We expect international sales to continue to account for a
significant portion of our revenues, although the percentage of our total
revenues derived from international sales may vary. Risks inherent in our
international business activities include business risks, economic and political
risks, and legal risks.
FLUCTUATIONS IN THE VALUE OF FOREIGN CURRENCIES COULD HARM OUR PROFITABILITY.
- -----------------------------------------------------------------------------
In connection with our international operations, we will incur expenses
in a number of currencies. Fluctuations in the value of the United States dollar
and foreign currencies may make our products more expensive than local product
offerings. This could make our product offerings less competitive than local
product offerings, which could harm our business. We do not currently engage in
currency hedging activities to limit the risks of exchange rate fluctuations.
Therefore, fluctuations in the value of foreign currencies could have a negative
impact on the profitability of our global operations, which could harm our
business.
9
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SELLING STOCKHOLDER AND PLAN OF DISTRIBUTION
The selling stockholder may offer its shares of our common stock at
various times in one or more of the following transactions:
o on any United States securities exchange on which our common stock may
be listed at the time of such sale;
o in the over-the-counter market;
o in transactions other than on such exchanges or in the
over-the-counter market;
o in connection with short sales; and
o in a combination of any of the above transactions.
The selling stockholder may offer its shares of common stock at
prevailing market prices at the time of sale, at prices related to such
prevailing market prices, at negotiated prices or at fixed prices.
The selling stockholder may use broker-dealers to sell its shares of
common stock. If this happens, broker-dealers will either receive discounts or
commissions from the selling stockholder, or they will receive commissions from
purchasers of shares of common stock for whom they acted as agents. Such brokers
may act as dealers by purchasing any and all of the shares covered by this
prospectus either as agents for others or as principals for their own accounts
and reselling such securities pursuant to this prospectus.
The selling stockholder and any broker-dealers or other persons acting
on behalf of the selling stockholder that participates in the distribution of
the shares may be deemed to be underwriters. As such, any commissions or profits
they receive on the resale of the shares may be deemed to be underwriting
discounts and commissions under the Securities Act of 1933.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and the selling
stockholder with respect to the offer or sale of the shares pursuant to this
prospectus. To the extent required under the Securities Act, we will file a
supplemental prospectus to disclose (1) the name of any broker-dealers, (2) the
number of shares involved, (3) the price at which such shares are to be sold,
(4) the commissions paid or discounts or concessions allowed to the
broker-dealers, where applicable, (5) that the broker-dealers did not conduct
any investigation to verify the information set out in this prospectus, as
supplemented, and (6) other facts material to the transaction.
The selling stockholder is selling all of the shares covered by this
prospectus for its own account. Accordingly, we will not receive any proceeds
from the resale of these shares.
Pursuant to a letter agreement entered into with the selling
stockholder, we have agreed to indemnify and hold harmless the selling
stockholder against liabilities, including liabilities under the Securities Act
of 1933, which may be based upon, among other things, any untrue statement or
omission of a material fact made in this prospectus or the registration
statement of which this prospectus is a part. The selling stockholder has agreed
to indemnify us and our directors and officers, as well as any person that
controls us, against some liabilities, including liabilities under the
Securities Act of 1933, which may be based upon any untrue statement or omission
from this prospectus, or the registration statement of which this prospectus is
a part, if the statement or omission is based upon written information provided
to us by the selling stockholder that we relied upon in connection with this
prospectus.
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On December 1, 1999, the Selling Stockholder entered into a letter
agreement with us to convert $1,500,000 principal amount of a $6,000,000 senior
subordinated note issued on October 1, 1997 and due October 1, 2005, into shares
of common stock of Labtec Inc. The conversion was effected at a conversion price
equal to 75% of the average of the closing prices of Labtec Inc. common stock on
the 20 business days prior to December 1, 1999, as adjusted for the Company's
one-for-two reverse stock split effective December 1, 1999, resulting in the
issuance of an aggregate of 262,237 shares.
The following table includes information regarding the selling
stockholder. Beneficial ownership of the common stock by the selling stockholder
after the offering will depend on the number of shares of common stock sold by
the selling stockholder.
<TABLE>
<CAPTION>
SHARES OF COMMON STOCK
OWNED AFTER OFFERING
---------------------------------
NUMBER OF MAXIMUM
NAME AND ADDRESS OF SHARES PRIOR AMOUNT TO
SELLING STOCKHOLDER TO OFFERING BE SOLD NUMBER PERCENT
------------------- ----------- ------- ------ -------
<S> <C> <C> <C> <C>
The KB Mezzanine Fund II, L.P....................... 354,621 262,237 92,384 8.8%
c/o Equinox Investment Partners
19 Old Kings Highway South
Darien, CT 06820
</TABLE>
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DESCRIPTION OF CAPITAL STOCK
The following is a summary description of our capital stock and certain
provisions of our certificate of incorporation and bylaws.
COMMON STOCK
We are authorized to issue up to 25,000,000 shares of common stock.
Before this offering, there were issued and outstanding 4,024,072 shares of
common stock. The number of issued and outstanding shares of common stock will
not change as a result of this offering.
PREFERRED STOCK
We are authorized to issue up to 1,000,000 shares of preferred stock.
Our board of directors may issue preferred stock in one or more series and may
determine the terms of preferred stock at the time of issuance, without further
action by our stockholders. Such terms may include voting rights, including the
right to vote as a series on particular matters, preferences as to dividends and
liquidation, conversion and redemption rights.
No shares of preferred stock are outstanding and we have no present
plans to issue preferred stock. The issuance of any preferred stock could
adversely affect the rights of the holders of common stock and, therefore,
reduce the value of the common stock. The ability of the board of directors to
issue preferred stock could discourage, delay or prevent a takeover of us.
VOTING RIGHTS
Holders of common stock have one vote for each share held on all
matters submitted to a vote of stockholders. A majority of the outstanding
shares of common stock constitutes a quorum required for a meeting of, or action
by, stockholders. The shares of common stock do not have cumulative voting
rights in the election of directors. As a result, the holders of more than 50%
of the common stock have the power to elect all the directors, to the exclusion
of the remaining stockholders.
DIVIDEND AND OTHER RIGHTS
Our articles of organization provide that our board of directors may
declare dividends on the common stock, subject to the rights of any series of
preferred stock. Our credit agreement with the Chase Manhattan Bank, however,
prohibits us from making dividend distributions with respect to any shares of
our capital stock. Holders of common stock have no preemptive rights and have no
rights to convert their common stock into any other securities.
TRANSFER AGENT
The Transfer Agent and Registrar for our common stock is American Stock
Transfer & Trust Company, New York, New York.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Immediately following this offering 4,024,072 shares of common stock
will be outstanding. All of these shares, other than shares owned by
"affiliates," as that term is defined in Rule 144 under the Securities Act of
1933, will be tradeable without restriction. We believe that 1,984,011 of our
shares are presently owned by "affiliates." Future sales of substantial amounts
of shares of common stock in the public market, or the perception that such
sales could occur, could adversely affect the price of the shares of common
stock in the trading market for such shares.
Our shares currently trade on the OTC Bulletin Board. Following this
offering, we cannot predict the effect, if any, that sales of common stock or
the availability of such shares for sale will have on the market price.
LEGAL MATTERS
The validity of the shares of common stock being offered in this
prospectus will be passed upon for us by Parker Chapin LLP, New York, New York.
EXPERTS
Our financial statements incorporated in this prospectus by reference
to the Annual Report on our Form 10-K of Labtec Inc. for the year ended March
31, 1999, and the historical financial statements included on pages F-1 through
F-13 of our Current Report on Form 8-K/A dated August 20, 1999 and filed on
November 2, 1999, have been audited by PricewaterhouseCoopers LLP, independent
accountants, as set forth in their reports included in the Form 10-K and Form
8-K/A. Such financial statements are so incorporated by reference in this
prospectus in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
ABOUT THIS PROSPECTUS
This prospectus does not contain all of the information included in the
registration statement of which this prospectus is a part. We have omitted parts
of the registration statement as permitted by the rules and regulations of the
SEC. For further information, we refer you to the registration statement on Form
S-3, including its exhibits. Statements contained in this prospectus about the
provisions or contents of any agreement or other document are not necessarily
complete. If SEC rules and regulations require that any agreement or document be
filed as an exhibit to the registration statement, you should refer to that
agreement or document for a complete description of these matters. You should
not assume that the information in this prospectus or any prospectus supplement
is accurate as of any date other than the date on the front of each document.
You should read this prospectus together with the additional
information described below under the heading "Where You Can Find More
Information."
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy materials that we have
filed with the SEC, including the registration statement, at the following SEC
public reference rooms:
<TABLE>
<CAPTION>
<S> <C> <C>
450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661
</TABLE>
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"LABT," and our SEC filings can also be read at the following Nasdaq address:
Nasdaq Operations
1735 K Street, N.W.
Washington, D.C. 20006
Our SEC filings are also available to the public on the SEC's Web site at
www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this information. We incorporate
by reference the documents listed below:
o Annual Report on Form 10-K for the fiscal year ended March 31, 1999,
as amended on Amendment No. 1 on Form 10-K/A filed July 29, 1999;
o Quarterly Reports on Form 10-Q for the fiscal quarters ended June 30,
1999, September 30, 1999 and December 31, 1999;
o the Current Reports on Form 8-K dated August 20, 1999 (date of
earliest event reported), November 1, 1999 (date of earliest event
reported), December 1, 1999 (date of earliest event reported) and
February 15, 2000 (date of earliest event reported) and our Current
Report on Form 8-K/A dated August 20, 1999, filed on November 2, 1999;
and
o the description of our common stock contained in our Registration
Statement on Form 8-A filed on November 29, 1995 under the Securities
Exchange Act of 1934, including any amendment or report filed for the
purpose of updating such description.
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<PAGE>
- --------------------------------------------------------------------------------
LABTEC INC.
262,237
Shares
Common Stock
PROSPECTUS
, 2000
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following expenses incurring in connection with the sale of the
securities being registered will be borne by the Company. Other than the
registration fee, the amounts stated below are estimates.
Securities and Exchange $510.58
Commission registration fee
Legal fees and expenses (1) $19,570.00
Accounting fees and expenses (1) $1,500.00
Transfer agent fees (1) $0
Printing and engraving expenses (1) $0
Miscellaneous (1) $0
-----------------
Total $21,580.58
=================
- ---------------
(1) Estimated.
The Selling Stockholder will bear the expense of its own legal counsel and
miscellaneous fees and expenses, if any.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 67 of chapter 156B of the Massachusetts Business Corporation
Law grants the Registrant the power to indemnify any director, officer, employee
or agent to whatever extent permitted by the Registrant's Articles of
Organization, By-Laws or a vote adopted by the holders of a majority of the
shares entitled to vote thereon, unless the proposed indemnitee has been
adjudicated in any proceeding not to have acted in good faith in the reasonable
belief that his or her actions were in the best interests of the corporation or,
to the extent that the matter for which indemnification is sought relates to
service with respect to an employee benefit plan, in the best interests of the
participants or beneficiaries of such employee benefit plan. Such
indemnification may include payment by the Registrant of expenses incurred in
defending a civil or criminal action or proceeding in advance of the final
disposition of such action or proceeding, upon receipt of an undertaking by the
person indemnified to repay such payment if he or she shall be adjudicated to be
not entitled to indemnification under the statute.
Article VI of the Registrant's By-Laws provides that the Registrant
shall, to the extent legally permissible, indemnify each person who may serve or
who has served at any time as a director or officer of the corporation or of any
of its subsidiaries, or who at the request of the corporation may serve or at
any time has served as a director, officer or trustee of, or in a similar
capacity with, another organization or an employee benefit plan, against all
expenses and liabilities (including counsel fees, judgments, fines, excise
taxes, penalties and amounts payable in settlements) reasonably incurred by or
imposed upon such person in connection with any threatened, pending or completed
action, suit or other
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<PAGE>
proceeding, whether civil, criminal, administrative or investigative, in which
he or she may become involved by reason of his or her serving or having served
in such capacity (other than a proceeding voluntarily initiated by such person
unless he or she is successful on the merits, the proceeding was authorized by
the corporation or the proceeding seeks a declaratory judgment regarding his or
her own conduct). Such indemnification shall include payment by the Registrant
of expenses incurred in defending a civil or criminal action or proceeding in
advance of the final disposition of such action or proceeding, upon receipt of
an undertaking by the person indemnified to repay such payment if he or she
shall be adjudicated to be not entitled to indemnification under Article VI,
which undertaking may be accepted without regard to the financial ability of
such person to make repayment.
The indemnification provided for in Article VI is a contract right
inuring to the benefit of the directors, officers and others entitled to
indemnification. In addition, the indemnification is expressly not exclusive of
any other rights to which such director, officer or other person may be entitled
by contract or otherwise under law, and inures to the benefit of the heirs,
executors and administrators of such a person.
The Registrant also has in place agreements with certain officers and
directors which affirm the Registrant's obligation to indemnify them to the
fullest extent permitted by law and contain various procedural and other
provisions which expand the protection afforded by the Registrant's By-Laws.
Section 13(b)(1 1/2) of chapter 156B of the Massachusetts Business
Corporation Law provides that a corporation may, in its articles of
organization, eliminate a director's personal liability to the corporation and
its stockholders for monetary damages for breaches of fiduciary duty, except in
circumstances involving (i) a breach of the director's duty of loyalty to the
corporation or its stockholders, (ii) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
unauthorized distributions and loans to insiders and (iv) transactions from
which the director derived an improper personal benefit. Section VI.C.5. of the
Registrant's Restated Articles of Organization provides that no director shall
be personally liable to the corporation or its stockholders for monetary damages
for any breach of fiduciary duty as a director, except to the extent that such
exculpation is not permitted under the Massachusetts Business Corporation Law as
in effect when such liability is determined.
ITEM 16. EXHIBITS.
Exhibit
Number Description
------ -----------
5.1 Opinion of Parker Chapin LLP as to the legality of the
securities registered hereunder. Filed herewith.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants. Filed herewith.
23.2 Consent of Parker Chapin LLP (contained in Opinion of Parker
Chapin LLP, filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (set forth on the signature page to this
Registration Statement).
II-3
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change in
the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume
and price represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information in
the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 14
above, 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
II-4
<PAGE>
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.
II-5
<PAGE>
SIGNATURES
Pursuant to 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 has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vancouver, State of Washington on February 29,
2000.
LABTEC INC.
By: /s/ Robert G. Wick
---------------------------
Robert G. Wick
President and Chief Executive
Officer
POWER OF ATTORNEY
The undersigned directors and officers of Labtec Inc. hereby constitute
and appoint Robert G. Wick, Marc J. Leder and Rodger R. Krouse and each of them,
with full power to act without the other and with full power of substitution and
resubstitution, our true and lawful attorneys-in-fact with full power to execute
in our name and behalf in the capacities indicated below any and all amendments
(including post-effective amendments and amendments thereto) to this
Registration Statement (or any other registration statement for the same
offering that is to be effective upon filing pursuant to Rule 462(b) under the
Securities Act of 1933, as amended) and to file the same, with all exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission and hereby ratify and confirm each and every act and thing
that such attorneys-in-fact, or any of them, or their substitutes, shall
lawfully do or cause to be done by virtue thereof.
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<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/s/ Robert G. Wick President and February 11, 2000
- -------------------------------------- Chief Executive Officer
Robert G. Wick
Co-Chairman, Senior Vice President, February 21, 2000
/s/ Marc J. Leder Finance, Chief Financial Officer,
- -------------------------------------- Treasurer and Director
Marc J. Leder
/s/ Rodger R. Krouse February 21, 2000
- --------------------------------------
Rodger R. Krouse Co-Chairman, Clerk and Director
/s/ George R. Rea February 10, 2000
- --------------------------------------
George R. Rea Director
/s/ Patrick J. Sullivan February 11, 2000
- --------------------------------------------
Patrick J. Sullivan Director
/s/ Bradley A. Krouse February 22, 2000
- --------------------------------------------
Bradley A. Krouse Director
/s/ Joseph Pretlow February 22, 2000
- --------------------------------------
Joseph Pretlow Director
/s/ Clarence Terry February 11, 2000
- --------------------------------------
Clarence Terry Director
</TABLE>
II-6
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
5.1 Opinion of Parker Chapin LLP as to the legality of the
securities registered hereunder. Filed herewith.
23.1 Consent of PricewaterhouseCoopers LLP, independent
accountants. Filed herewith.
23.2 Consent of Parker Chapin LLP (contained in Opinion of
Parker Chapin LLP, filed as Exhibit 5.1 hereto).
24.1 Power of Attorney (set forth on the signature page to
this Registration Statement).
The Chrysler Building
405 Lexington Avenue, New York, NY 10174
(212) 704-6000 Fax (212) 704-6288
April 7, 2000
Labtec Inc.
1499 S.E. Tech Center Place
Suite 350
Vancouver, Washington 98683
Dear Sir or Madam:
We have acted as counsel to Labtec Inc., a Massachusetts corporation
(the "Company"), in connection with its filing of a registration statement on
Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, relating to an offering
of an aggregate of 262,237 shares of common stock, par value $.01 per share (the
"Shares").
Capitalized terms used herein and not otherwise defined shall have the
respective meanings set forth in the Registration Statement.
In our capacity as counsel to the Company, we have examined originals
or copies, satisfactory to us, of the Company's (i) Restated Articles of
Organization, as amended, (ii) Amended and Restated By-laws and (iii)
resolutions of the Company's board of directors. We have also examined a certain
letter agreement, dated December 1, 1999, between the Company and The KB
Mezzanine Fund II, L.P. concerning the issuance of the Shares. We further have
reviewed such other matters of law and examined and relied upon all such
corporate records, agreements, certificates and other documents as we have
deemed relevant and necessary as a basis for the opinion hereinafter expressed.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity
with the original documents of all documents submitted to us as copies or
facsimiles. As to any facts material to such opinion, we have, to the extent
that relevant facts were not independently established by us, relied on
certificates of public officials and certificates of officers or other
representatives of the Company.
Based upon and subject to the foregoing, we are of the opinion that the
Shares have been legally issued, fully paid and non-assessable.
<PAGE>
Labtec Inc.
April 7, 2000
Page 2
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the reference made to us under the caption
"Legal Matters" in the prospectus constituting part of the Registration
Statement.
Very truly yours,
/s/ Parker Chapin LLP
PARKER CHAPIN LLP
PRICEWATERHOUSECOOPERS
- --------------------------------------------------------------------------------
PricewaterhouseCoopers LLP
1300 SW Fifth Avenue
Suite 3100
Portland OR 97201-5638
Telephone (503) 478-6000
Facsimile (503) 478-6099
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our reports dated May 21, 1999 relating to the
financial statements and financial statement schedules of Labtec, Inc., which
appear in Labtec, Inc.'s Annual Report on Form 10-K for the year ended March 31,
1999. We also consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated October 8, 1999 related to the
financial statements of Connector Resources Unlimited, Inc., which appears in
the Current Report on Form 8-K/A of Labtec, Inc. dated August 20, 1999 and filed
on November 2, 1999. We also consent to the reference to us under the heading
"Experts" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
April 7, 2000
