<PAGE>
As filed with the Securities and Exchange Commission on October 24, 1997
SEC Registration No. 333-29489
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
QUALMARK CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
COLORADO 84-1232688
------------------------ --------------------------
(State of Incorporation) (I.R.S. Employer I.D. No.)
1329 W. 121ST AVENUE, DENVER, COLORADO 80234, (303) 254-8800
------------------------------------------------------------------
(Address, including zip code, and telephone number, including area
code of Registrant's Principal Executive Offices)
W. Preston Wilson
QualMark Corporation
1329 W. 121st Avenue
Denver, Colorado 80234
(303) 254-8800
------------------------------------------------------------------
(Name, address, including zip code and telephone number
including area code of agent for service)
COPIES TO:
David J. Cook, Esq.
Peter J. Jensen, Esq.
Chrisman, Bynum & Johnson, P.C.
1900 Fifteenth Street
Boulder, CO 80302
(303) 546-1300
===============================================================================
Approximate date of commencement of proposed sale to the public:
From time to time after the effective date of this Registration Statement
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. /_/
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box. /X/
__________________________
<PAGE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
===============================================================================
<PAGE>
PROSPECTUS
404,182 SHARES
QUALMARK CORPORATION
COMMON STOCK
(NO PAR VALUE)
____________________
This Prospectus relates to up to 404,182 shares (the "Shares") of the
common stock, no par value (the "Common Stock") of QualMark Corporation
("QualMark" or the "Company"), which may be offered from time to time by the
Selling Shareholders named herein under "Selling Shareholders." The Shares
fall into two categories: (i) those which are now owned by the Selling
Shareholders as a result of purchases from the Company or received in
connection with mergers with the Company, in private transactions which were
exempt from registration under Section 4(2) or Regulation D of the Securities
Act of 1933; and (ii) those which may be purchased from the Company in the
future upon exercise of certain warrants held by the Selling Shareholders.
The Company will not receive any of the proceeds from the sale of the
Shares. The distribution of the Shares by the Selling Shareholders is not
subject to any underwriting agreement. The Shares offered by the Selling
Shareholders may be sold from time to time at designated prices that may be
changed, at market prices prevailing at the time of sale, at prices relating
to such prevailing market prices or at negotiated prices. In addition, the
Selling Shareholders may sell the Shares through customary brokerage
channels, either through broker-dealers acting as agents or principals. The
Selling Shareholders may effect such transactions by selling Shares to or
through broker-dealers, and such broker-dealers may receive compensation in
the form of underwriting discounts, concessions, commissions, or fees from
the Selling Shareholders and/or purchasers of the Shares for whom such
broker-dealers may act as agent, or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). Any broker-dealers that participate with the Selling
Shareholders in the distribution of Shares may be deemed to be underwriters
and any commissions received by them and any profit on the resale of Shares
positioned by them might be deemed to be underwriting discounts and
commissions within the meaning of the Securities Act of 1933, in connection
with such sales.
As of the close of trading on October 23, 1997, the closing sale price
of the Common Stock as quoted on the Nasdaq SmallCap Stock Market system was
$5.75 per share. Total expenses of the offering are estimated to be $13,700,
all of which will be paid by the Company.
SEE "RISK FACTORS" COMMENCING ON PAGE 3 FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
____________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ____________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (together with all amendments,
exhibits, schedules and supplements thereto, the "Registration Statement") on
Form S-3 under the Securities Act for registration of the shares of Common
Stock offered hereby. This Prospectus, which forms a part of the Registration
Statement, does not contain all of the information set forth in the Registration
Statement, certain parts of which have been omitted as permitted by the rules
and regulations of the Commission. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement. Statements contained in this Prospectus regarding the
contents of any contract or any other document to which reference is made are
qualified in all respects by the provisions of such exhibit, to which reference
is hereby made.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended, and in accordance therewith files periodic
reports, proxy statements and other information with the Commission. Such
periodic reports, proxy statements and other information, and a copy of the
Registration Statement can be copied and inspected at the public reference
facilities of the Commission at 450 Fifth Street, Washington, D.C. 20549, and
at the Commission's regional offices at 7 World Trade Center, Suite 1300, New
York, New York 10048, and Citicorp Center, 500 West Madison, Suite 1400,
Chicago, Illinois 60661. Copies of all or any portion of the Registration
Statement may be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
Company files certain of its materials with the Commission electronically.
The Commission maintains a World Wide Web site (www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically.
The Company intends to furnish its Shareholders with Annual Reports
containing audited financial statements for each fiscal year.
DOCUMENTS INCORPORATED BY REFERENCE
The Company will furnish without charge to each person, including any
beneficial owner to whom this Prospectus is delivered, upon the request of
such person, a copy of any or all of the documents referred to below, other
than exhibits to such documents. All requests for copies of such documents
should be directed in writing to Vernon W. Settle, Vice President, QualMark
Corporation, 1329 W. 121st Avenue, Denver, Colorado 80234.
The following documents filed by the Company with the Commission are
incorporated herein by reference:
1) Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996.
2) Proxy Statement for May 8, 1997 Annual Meeting of Shareholders.
3) Quarterly Report on Form 10-QSB for fiscal quarter ended
March 31, 1997.
4) Quarterly report on Form 10-QSB for fiscal quarter ended June
30, 1997.
5) Quarterly report on Form 10-QSB for fiscal quarter ended
September 30, 1997.
6) A description of the Common Stock contained in the Company's
Registration Statement No. 333-1454-D on Form SB-2 dated April 8,
1996.
All documents filed subsequent to the date of this Prospectus by the
Company with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the termination of the offering
of the Shares shall be deemed to be incorporated herein by reference from the
date of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein modifies or supersedes such statement. Any such statement so modified
or superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
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RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS THE FOLLOWING
RISK FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING THE COMPANY AND ITS
BUSINESS BEFORE PURCHASING THE SECURITIES OFFERED HEREBY.
ACCUMULATED DEFICIT; HISTORY OF OPERATING LOSSES; RISK OF INSUFFICIENT
CAPITAL AND LIQUIDITY. The Company was formed in July 1991 and had an
accumulated deficit of $2,469,000 as of December 31, 1996. The Company had
an operating loss of $1,381,000 for the year ended December 31, 1996, and an
operating loss of $122,794 for the nine months ended September 30, 1997. It
is anticipated that the Company's operations in the near term may result in
quarterly losses. Additionally, there can be no assurance that the Company
will be able to achieve and maintain profitable operations in the future.
There can be no assurance that the Company will be profitable in the future
or that funds provided by operations and presently available capital will be
sufficient to fund the Company's ongoing operations in the future. If the
Company has insufficient funds, there can be no assurance that additional
financing can be obtained on acceptable terms, if at all. The absence of such
financing would have a material adverse effect on the Company's business,
including a possible reduction or cessation of operations.
PATENT LITIGATION. The Company is a defendant in a patent infringement
litigation with a competitor, Screening Systems, Inc. ("SSI"). The suit
alleges that the Company's products infringe three United States patents owned
by Hughes Electronics Company ("Hughes") and licensed to SSI. The court
ordered that Hughes, the owner of the patents, be joined as an interested
party. When Hughes declined to join the action as a plaintiff, SSI joined
Hughes as a defendant. The Company has been aware of the patents in question
since the Company commenced its operations and designed its vibration system,
components of which are also patented, so as not to infringe the patents. The
Company's vibration system has been used continuously in its products since
1991. The Company has raised several defenses, including that one or more of
the patent claims are invalid or unenforceable. No assurance can be given
that the Company will be successful in its defense. With limited exception,
the parties have completed discovery. In March and April 1997 the Court held a
"MARKMAN hearing" to determine the scope and meaning of the relevant claims
and terms of the patents-in-suit. The Court has not set a trial date and the
Company understands that no trial date will be set until after the Court has
resolved the issues raised in the MARKMAN hearing and ruled on any subsequent
summary judgment motions. There can be no assurance that the Company will
reach a successful resolution of this matter. The suit may have a material
adverse effect on the business and financial condition of the Company in terms
of legal fees and costs for defending the claims, the possibility of a
significant award of damages, and the loss of management time needed to deal
with the suit.
PROPRIETARY PROTECTION. The Company currently holds United States and
foreign patents covering certain features of its system and has applied for
certain additional patents. The Company also intends to seek patent
protection in the future for certain aspects of any new systems which may be
developed. However, no assurance can be given that the patents currently held
or that new patents, if issued, will be valid or will provide any significant
competitive advantage to the Company. Further, if it were determined that
another product infringed on the Company's patents, there can be no assurance
that the Company would be financially capable of enforcing its patents.
Although the Company is not aware of any infringement of patents or
intellectual property held by third parties, there can be no assurance that
the Company is not infringing on the intellectual property rights of others.
COMPETITION. The electronic product test/screening industry is highly
competitive. The Company's primary competitors in the market segment for
multi-axis vibration tables combined with thermal stress systems are
believed to be Screening Systems, Inc. and Hanse Environmental, Inc. The
Company is currently involved in patent litigation with Screening Systems,
Inc. See "Risk Factors - Patent Litigation". Competing products and
services also include traditional environmental stress screening equipment,
electro-dynamic vibration systems and thermal chambers, and laboratory
services. Many of the foregoing products and services provide design and
process screening at a price which may be lower than the cost of the
Company's products. The traditional equipment marketed by these
manufacturers is well-accepted in the market, since the equipment supports
traditional "pass-fail" specification test protocols that have been in use
for several decades. The Company's technology supports new accelerated test
protocols relating to improving product design and manufacturing processes
rather than the "pass-fail" test processes. As such, the Company is
attempting to create a new market segment and expects to allocate
considerable resources to convincing prospective customers to adopt
accelerated test protocols in addition to, or in replacement of, traditional
methods. There can be no
3
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assurance that the Company will be successful in this regard. Further, many
of the companies with which the Company competes have substantially greater
financial and other resources.
DEPENDENCE ON SIGNIFICANT CUSTOMERS. The Company derives revenue
primarily from system sales and secondarily from test center services. In
1996, system revenue accounted for 70% of net revenue, and test center
revenue accounted for 30% of net revenue, and for the nine months ended
September 30, 1997, system revenue accounted for 73% of net revenue, and test
center revenue accounted for 27% of net revenue. The Company's average
system order is in excess of $100,000 and the selling cycle is typically
between two and four months. As a result, the Company's quarterly revenues
can be materially dependent on a relatively limited number of individually
significant orders. In 1995, one customer, Allied Signal Corporation - 12%
accounted for more than 10% of the Company's net revenues. In 1996, one
customer, AT&T Corporation -16%, accounted for more than 10% of the Company's
net revenues. For the three and nine month periods ended June 30, 1997, no
customer accounted for more than 10% of revenue in the respective periods.
SEASONALITY; FLUCTUATION IN QUARTERLY REVENUES; CAPITAL SPENDING CYCLES.
Because the average system price is in excess of $100,000, most of the
Company's customers treat the purchase of the Company's systems as a capital
purchase. This historically has resulted in higher sales in the second and
fourth quarters of the calendar year, as customers delay purchasing capital
equipment until funds for the purchase have been built into a particular
customer's annual capital budget. A limited number of large orders may
continue to account for a significant portion of the Company's revenues and as
such, the Company's quarterly revenues and results of operations may continue
to be materially affected by the receipt or loss of any such orders and by the
timing of shipments and deliveries. Furthermore, overall capital spending
cycles will likely impact the Company's revenue growth. Accordingly, the
Company's future operating results are likely to be subject to significant
variability from quarter to quarter and could be adversely affected in any
particular quarter. Due to the foregoing factors, it is possible that the
Company's operating results may from time to time be below the expectations of
public market analysts and investors. In such event, the price of the
Company's securities could be adversely affected.
NEW TEST FACILITIES. The Company's plans call for opening additional
test facilities which will require the Company to add equipment and
personnel, enter into long-term leases and otherwise incur significant fixed
costs associated with operating these test centers. There can be no
assurance that demand for the Company's testing services will be adequate to
sustain the operations of new test facilities. Additionally, the opening of
new test facilities is dependent upon the Company's ability to find
highly-qualified engineering personnel.
DEPENDENCE ON KEY PERSONNEL. The Company's operations are materially
dependent upon the services of W. Preston Wilson, President and Chief
Executive Officer of the Company, and the loss of the services of Mr. Wilson
would materially and adversely affect the Company's business. The Company
has an employment agreement with Mr. Wilson, which prohibits Mr. Wilson from
competing with the Company for a period of two years following his voluntary
or involuntary termination from the Company. The Company has purchased key
man life insurance on Mr. Wilson in the amount of $1,000,000. There can be
no assurance that the Company will retain the members of its current
management or that it will successfully attract and retain qualified
management and sales personnel in the future.
PRODUCT LIABILITY RISKS. The Company's systems consist of high
performance thermal chambers and vibration apparatus, which if misused could
cause injury. To minimize the risk of injury, the Company has designed its
systems with several redundant safety features. The Company is not aware of
any injury caused by its systems, and the Company has not experienced any
claims for product liability to date. There can be no assurance, however,
that such claims will not be made in the future. The Company maintains
product liability insurance in the aggregate amount of $2,000,000 per year
and has additional insurance in the amount of $1,000,000 for liability in
excess of its initial $2,000,000 of coverage. A successful claim against the
Company in excess of such coverage could have a material adverse effect on
the Company. Further, such insurance is expensive and may not be available
in the future on acceptable terms, if at all.
NEED FOR CONTINUED PRODUCT DEVELOPMENT. Because of the nature of the
Company's products and services, there is the need to work to improve
existing products and to develop new products. As a result, the Company is
dependent upon the acquisition and retention of key technical personnel, who
may be difficult to recruit and who may command high salaries. The Company
currently has a development program in process to make significant additions
to the system's control software. There is no assurance that this or any
other development program will be successful.
4
<PAGE>
LIMITED DATA ON RELIABILITY OF PRODUCTS. To date the Company's systems
have, for the most part, performed adequately without significant maintenance
requirements. However, because the number of systems that have been
installed for over three years is relatively limited, data on long term
maintenance requirements and performance of the Company's products is
limited. If future maintenance requirements are significantly greater than
those experienced to date, customers may be reluctant to place future orders
and the Company s finances could be adversely affected.
DEPENDENCE ON SUPPLIERS. The Company's manufacturing activities to date
have been limited to assembling components provided by outside vendors.
Interruptions in supply of such components could have a material adverse effect
on the Company's ability to supply its products to customers until a new source
is available and, as a result, could have a material adverse effect on the
Company's business, financial condition and results of operations. Because the
components of the Company's products are manufactured by outside vendors, the
Company's ability to control the quality of its products is somewhat limited.
Although the Company has attempted to contract only with reliable suppliers,
there is no assurance that it will continue to be successful in this regard.
AUTHORIZATION OF PREFERRED STOCK. The Company's Articles of Incorporation
authorize the issuance of up to 2,000,000 shares of Preferred Stock with such
rights and preferences as may be determined from time to time by the Board of
Directors ("Preferred Stock"). Accordingly, under the Articles of Incorporation
the Board of Directors may, without shareholder approval, issue Preferred Stock
with dividend, liquidation, conversion, voting, redemption or other rights which
could adversely affect the voting power or other rights of the holders of Common
Stock. The issuance of any shares of Preferred Stock having rights superior to
those of the Common Stock, may result in a decrease of the value or market price
of the Common Stock and could be used by the Board of Directors as a device to
prevent a change in control of the Company. Holders of Preferred Stock may have
the right to receive dividends, certain preferences in liquidation and
conversion rights. The Company has no plans to issue shares of Preferred Stock.
LIMITATIONS ON DIRECTOR LIABILITY. The Company's Articles of Incorporation
provide, as permitted by governing Colorado law, that a director of the Company
shall not be personally liable to the Company or its shareholders for monetary
damages for breach of fiduciary duty as a director, with certain exceptions.
These provisions may discourage shareholders from bringing suit against a
director for breach of fiduciary duty and may reduce the likelihood of
derivative litigation brought by shareholders on behalf of the Company against
a director. In addition, the Company's Bylaws provide for mandatory
indemnification of directors and officers to the fullest extent permitted by
Colorado law.
RISKS ASSOCIATED WITH FORWARD-LOOKING STATEMENTS. This Registration
Statement contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act of 1934 and the Company intends that such forward-looking statements be
subject to the safe harbors for such statements under such sections. The
forward-looking statements herein are based on current expectations that
involve a number of risks and uncertainties. Such forward-looking statements
are based on numerous assumptions, including, but not limited to, the
assumption that the SSI litigation will be resolved in a manner that does not
adversely impact the ability of the Company to manufacture its products, that
as the Company's revenue base expands quarterly results of operations will
become more consistent, that the Company will be able to continue to find and
retain qualified personnel for its manufacturing and existing and anticipated
test center operations, and that demand for the Company's products and
services will continue to grow.
The foregoing assumptions are based on judgments with respect to, among other
things, future economic, competitive and market conditions, and future business
decisions, all of which are difficult or impossible to predict accurately and
many of which are beyond the Company's control. Accordingly, although the
Company believes that the assumptions underlying the forward-looking statements
are reasonable, any such assumption could prove to be inaccurate and therefore
there can be no assurance that the results contemplated in forward-looking
statements will be realized. The forward-looking statements are subject to
risks and uncertainties that could cause actual results to differ materially
from those set forth in or implied by the forward-looking statements, including,
but not limited to, the risk of an unfavorable outcome in the SSI litigation,
variability in order flow and operating results, the ability of the Company to
find and retain qualified personnel to staff its manufacturing and marketing
operations and existing and anticipated test centers, and the risk that the
demand for the Company's systems will not continue to grow.
5
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NO DIVIDENDS. The Company has not paid any dividends on its Common
Stock and does not intent to pay dividends in the foreseeable future.
THINLY TRADED STOCK AND VOLATILITY OF STOCK PRICE. The Company's Common
Stock is thinly traded and is subject to significant price volatility.
Between the Company's April 1996 initial public offering and December 31,
1996, the Company's Common Stock closing prices ranged from a high of $5.88
to a low of $2.88.
NASDAQ LISTING; "PENNY STOCK" RULES. Although the Common Stock is
listed on the Nasdaq SmallCap Market, there can be no assurance that such
listing will be maintained. If the Company's Common Stock is delisted for
failure to meet the Nasdaq listing maintenance requirements, the Common Stock
would be subject to the rules promulgated under the Securities Exchange Act
of 1934 relating to "penny stocks" which apply to non-Nasdaq companies whose
stock trades at less than $5 per share or whose tangible net worth is less
than $2,000,000. These rules require brokers who sell securities subject to
such rules to persons other than established customers and "accredited
investors" to complete certain documentation, make suitability inquiries of
investors and provide investors with certain information concerning the risks
of trading in the security. These rules may restrict the ability of brokers
to sell the Company's Common Stock and may affect the ability of purchasers
in this offering to sell such Common Stock in the secondary market.
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of
the Shares. All net proceeds of sale will go to the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
Common Stock owned by each Selling Shareholder as of August 11, 1997, and as
adjusted to give effect to the sale of such securities. The Shares are being
registered to permit public secondary trading of such securities, and the
Selling Shareholders may offer such securities for resale from time to time.
See "Plan of Distribution".
The Shares of Common Stock being offered by the Selling Shareholders
fall into two categories: (i) 150,000 Shares acquired from the Company in
various private transactions in reliance on Section 4(2) of the Securities
Act and Regulation D promulgated thereunder as the basis for an exemption
from registration; and (ii) 254,182 Shares that may be purchased by the
Selling Shareholders upon exercise of warrants ("Warrants") held by such
persons to purchase Common Stock. In connection with such private
transactions, the Company agreed to register all such shares of Common Stock
and the shares of Common Stock issuable upon exercise of the Warrants.
Except as set forth below, none of such Selling Shareholders has had a
material relationship with the Company within the past three years other than
as a result of ownership of the securities of the Company. The Shares may be
offered from time to time by the Selling Shareholders named below or their
nominees, and this Prospectus may be required to be delivered by persons who
may be deemed to be underwriters in connection with the offer or sale of such
securities. See "Plan of Distribution". In accordance with the rules of the
Commission, the columns "Common Stock Owned After Offering" show the amount
of securities owned by Selling Shareholders after the offering. The numbers
in such columns assume all Shares registered and offered by this Prospectus,
shown in the column "Common Stock Offered" are sold by the Selling
Shareholders. However, the Selling Shareholders are not required to sell any
of the Shares offered, and the Selling Shareholders may sell as many or as
few Shares as they choose. See "Plan of Distribution".
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<TABLE>
COMMON STOCK COMMON STOCK
OWNED PRIOR TO OFFERING(1) OWNED AFTER OFFERING
NAME OF -------------------------- COMMON STOCK --------------------------
SELLING SHAREHOLDERS AMOUNT PERCENT(2) OFFERED(1) AMOUNT(3) PERCENT(2)(4)
- -------------------- ---------- ---------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C>
Wolf Capital Partners Co., LLP 63,595 1.9% 5,001 58,594 1.6%
Roser Partnership II, Ltd. 332,636 9.5% 47,756 284,880 7.6%
George S. Slocum 15,417 -- 501 14,916 --
Gary C. Klein 18,760 -- 3,780 14,980 --
Theresa M. Jordan 2,501 -- 2,501 0 --
Edmar T. Fink 951 -- 951 0 --
Clare Fink 3,300 -- 3,300 0 --
Summit Capital Appreciation Fund, LP 10,001 -- 10,001 0 --
Craig C. Avery 2,501 -- 2,501 0 --
Jeffrey Howe 2,501 -- 2,501 0 --
Thomas J. Smith and
Ginny A. Smith JTWROS 2,501 -- 2,501 0 --
Craig Forsman 5,001 -- 5,001 0 --
Charles Stromgren and
Linda Stromgren JTWROS 5,001 -- 5,001 0 --
Gregg K. Hobbs(5) 658,935 19.1% 72,000 586,935 16.2%
CVM Equity Fund IV, Ltd. 244,747 7.2% 51,020 193,727 5.3%
Boulder Ventures, L.P.(6) 29,696 -- 29,696 0 --
E. Jeffrey Peierls 52,346 1.5% 10,000 42,346 1.2%
Brian Eliot Peierls 41,000 1.2% 10,000 31,000 --
Ethel Peierls Estate 50,546 1.5% 8,000 42,546 1.2%
G. James Spinner 44,277 -- 44,277 0 --
Robert H. Paymar 44,277 -- 44,277 0 --
Thomas P. Niemiec 7,050 -- 7,050 0 --
Neal E. Doty 33,042 -- 33,042 0 --
</TABLE>
7
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<TABLE>
COMMON STOCK COMMON STOCK
OWNED PRIOR TO OFFERING(1) OWNED AFTER OFFERING
NAME OF -------------------------- COMMON STOCK --------------------------
SELLING SHAREHOLDERS AMOUNT PERCENT(2) OFFERED(1) AMOUNT(3) PERCENT(2)(4)
- -------------------- ---------- ---------- ------------ --------- -------------
<S> <C> <C> <C> <C> <C>
Joseph P. Sullivan 3,524 -- 3,524 0 --
All Selling Shareholders as a Group 1,674,106 45.8% 404,182 1,269,924 34.7%
</TABLE>
- -------------------
(1) Includes the following Shares which may be purchased by Selling
Shareholders upon exercise of Warrants: Wolf Capital Partners Co.,
LLP - 5,001; Roser Partnership II, Ltd. - 10,001; George S. Slocum - 501;
Gary C. Klein - 251; Theresa M. Jordan - 2,501; Edmar T. Fink - 951; Clare
Fink - 3,300; Summit Capital Appreciation Fund, LP - 10,001; Craig C.
Avery - 2,501; Jeffrey Howe - 2,501; Thomas J. Smith and Ginny A. Smith -
2,501; Craig Forsman - 5,001; Charles Stromgren and Linda Stromgren -
5,001; Gregg K. Hobbs - 72,000; G. James Spinner - 44,277; Robert H.
Paymar - 44,277; Thomas P. Niemiec - 7,050; Neal E. Doty - 33,042; Joseph
P. Sullivan - 3,524.
(2) No percent of class is shown for holders of less than 1%. Percentage
computations are based on 3,379,984 shares of Common Stock outstanding as
of August 11, 1997.
(3) Assumes sale of all Common Stock offered hereby. See "Plan of
Distribution".
(4) Assumes issuance of 254,182 shares of Common Stock registered hereby,
issuable upon exercise of shares of Common Stock underlying the Warrants,
and is therefore based on 3,634,166 shares of Common Stock outstanding.
No percent of class is shown for holders of less than 1%.
(5) Dr. Hobbs was a director of the Company from 1991 to 1996. Dr. Hobbs was
President of the Company from 1991 to 1993, and Chief Technical Officer
from 1993 to 1995.
(6) Kyle Lefkoff, a general partner of Boulder Ventures, L.P., was a director
of the Company from 1994 to 1996.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Shareholders is not subject
to any underwriting agreement. The Shares offered by the Selling Shareholders
may be sold from time to time at designated prices that may be changed, at
market prices prevailing at the time of sale, at prices relating to such
prevailing market prices or at negotiated prices. The Selling Shareholders are
not required to sell any of the Shares offered, and the Selling Shareholders may
sell as many or as few Shares as they choose. In addition, the Selling
Shareholders may sell the Shares through customary brokerage channels, either
through broker-dealers acting as agents or principals. The Selling Shareholders
may effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of underwriting
discounts, concessions, commissions, or fees from the Selling Shareholders
and/or purchasers of the Shares for whom such broker-dealers may act as agent,
or to whom they sell as principal, or both (which compensation to a particular
broker-dealer might be in excess of customary commissions). Certain Selling
Shareholders, and any broker-dealers that participate with the Selling
Shareholders in the distribution of Shares may be deemed to be underwriters
and any commissions received by them and any profit on the resale of Shares
positioned by them might be deemed to be underwriting discounts and
commissions within the meaning of the Securities Act of 1933, in connection
with such sales. The Company has entered into a Selling Agreement with holders
of all of the Shares offered hereby, which contains the Company's agreement to
indemnify the Selling Shareholders for losses or damages, including losses or
damages under the Securities Act, to which the Selling Shareholders may become
subject arising out of or based upon untrue statements of fact contained in
the registration statement of which this Prospectus is a part.
INDEMNIFICATION
The Colorado Business Corporation Act (the "Colorado Act") permits the
Company to indemnify an officer or director who was or is a party or is
threatened to be made a party to any proceeding because of his or her position,
if: (i) the officer or director acted in good faith; (ii) the person reasonably
believed, in the case of conduct in an official capacity with the Company, that
his or her conduct was in the best interests of the Company, or in all other
cases, that his or her conduct was at least not opposed to the Company's best
interests; and, (iii) in the case of a criminal
8
<PAGE>
proceeding, the person had no reasonable cause to believe his or her conduct
was unlawful. If the officer or director is successful on the merits in such
a proceeding, the Colorado Act requires the Company to indemnify the officer
or director against all expenses, including attorneys' fees incurred in
connection with any such proceeding. The Colorado Act authorizes the Company
to advance expenses incurred in defending any such proceeding under certain
circumstances. Article XII of the Company's Articles of Incorporation
provide that the Company shall indemnify its officers and directors to the
fullest extent permitted by the Colorado Act.
The Colorado Act permits the Company to limit the personal liability of
its directors for monetary damages for breaches of fiduciary duty as a
director, except for breaches that involve the director's duty of loyalty,
acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of law, acts involving unlawful dividends or stock
redemptions or transactions from which the director derived an improper
personal benefit. Article XIII of the Company's Articles of Incorporation
includes such a provision which limits the personal monetary liability of its
directors.
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act of 1933 (the "Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company 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.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-KSB for the fiscal year ended December
31, 1996 have been so incorporated in reliance on the report of Price
Waterhouse LLP, independent accountants, given upon the authority of said
firm as experts in auditing and accountng.
LEGAL OPINION
The legality of the Common Stock offered will be passed upon for the
Company by Chrisman, Bynum & Johnson, P.C., 1900 Fifteenth Street, Boulder,
CO 80302.
9
<PAGE>
______________________________
No person has been authorized to give any information or make any
representations other than those contained in this Prospectus in connection
with the sale or offering of any Shares of Common Stock covered by this
Prospectus, and if given or made, such other information or representations
must not be relied upon as having been authorized by QualMark Corporation or
the Selling Shareholders. This Prospectus does not constitute an offer of
any securities other than those to which it relates or an offer to sell, or a
solicitation of an offer to buy, in any jurisdiction to any person to whom it
is not lawful to make such offer or solicitation in such jurisdiction. Under
no circumstances should the delivery of this Prospectus or the sale or
offering of any Shares of Common Stock covered by this Prospectus create any
implication that there has been no change in the business or operations of
QualMark Corporation since the date of this Prospectus.
______________________________
TABLE OF CONTENTS
PAGE
----
Available Information..................................... 2
Documents Incorporated by Reference....................... 2
Risk Factors.............................................. 3
Use of Proceeds........................................... 6
Selling Shareholders ..................................... 6
Plan of Distribution ..................................... 8
Indemnification .......................................... 8
Experts................................................... 9
Legal Opinion ............................................ 9
404,182 Shares
QUALMARK CORPORATION
Common Stock (No Par Value)
PROSPECTUS
______________________________
[LOGO]
______________________________
____________, 1997
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------- ----------------------
1.1* Form of Selling Agreement.
4.1 Form of Certificate for Shares of Common Stock.(1)
4.6 Form of Warrant issued to holders of 10% secured promissory notes.(1)
5.1* Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Price Waterhouse LLP.
23.2* Consent of Chrisman, Bynum & Johnson, P.C. (contained in the opinion
filed as Exhibit 5.1).
24.1* Power of attorney (included in signature page of original filing).
- -------------------
* Previously filed.
(1) Incorporated by reference from the Company's Registration Statement No.
333-1454-D on Form SB-2 dated April 8, 1996.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 1 to Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Denver, State of Colorado, on the 23rd day of October, 1997.
QUALMARK CORPORATION
By: /s/ W. Preston Wilson
--------------------------------
W. Preston Wilson, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to Registration Statement on Form S-3 has been
signed below by the following persons in the capacities and on the dates
indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ W. Preston Wilson
- --------------------- President, Chief Executive October 23, 1997
W. Preston Wilson Officer and Director
(Principal Executive Officer)
/s/ Vernon W. Settle
- --------------------- Vice President of Finance and October 23, 1997
Vernon W. Settle Administration (Principal
Financial and Accounting Officer)
*
- --------------------- Chairman of the Board
H. Robert Gill and Director October 23, 1997
*
- --------------------- Director October 23, 1997
Charles A. French
II-2
<PAGE>
*
- --------------------- Director October 23, 1997
Philip A. Gordon
- --------------------- Director _________, 1997
William B. Phillips
*By: /s/ W. Preston Wilson
-------------------------
W. Preston Wilson, Attorney-in-Fact
II-3
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT PAGE
- ------- ---------------------- ----
1.1* Form of Selling Agreement.
4.1 Form of Certificate for Shares of Common Stock.(1)
4.6 Form of Warrant issued to holders of 10% secured promissory
notes.(1)
5.1* Opinion of Chrisman, Bynum & Johnson, P.C.
23.1 Consent of Price Waterhouse LLP.
23.2* Consent of Chrisman, Bynum & Johnson, P.C. (contained in the
opinion filed as Exhibit 5.1).
24.1* Power of attorney (included in signature page of original filing).
- -------------------
* Previously filed.
(1) Incorporated by reference from the Company's Registration Statement No.
333-1454-D on Form SB-2 dated April 8, 1996.
II-6
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated February 21, 1997, which appears on page 14 of the 1996 Annual Report
to Shareholders of QualMark Corporation, which is incorporated in QualMark
Corporation's Annual Report on Form 10-KSB for the year ended December 31,
1996. We also consent to the reference to us under the heading "Experts"
in such Prospectus.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Denver, Colorado
October 22, 1997
