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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 30, 1998
REGISTRATION NO. 333-57037
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
______________________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
______________________
STORM TECHNOLOGY, INC.
(Exact name of Registrant as specified in its charter)
______________________
DELAWARE 7372 77-0239305
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification No.)
1395 CHARLESTON ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 691-6600
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
______________________
RICK MCCONNELL
CHIEF FINANCIAL OFFICER AND
VICE PRESIDENT, FINANCE AND ADMINISTRATION
STORM TECHNOLOGY, INC.
1395 CHARLESTON ROAD
MOUNTAIN VIEW, CALIFORNIA 94043
(650) 691-6600
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copy to:
THOMAS W. FURLONG, ESQ.
VICTORIA W-Y LEE, ESQ.
Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, CA 94301
(650) 328-6561
______________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time as described in the Prospectus 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, as amended (the "Securities Act") other than securities offered only in
connection with dividend or 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
under the Securities Act, please check the following box. [_]
______________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Aggregate Amount of
Registered Registered Per Share Offering Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, ($0.001 par value) 7,000,000 shares(1) $1.140625(2) $7,984,375 $2,355.39(3)
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL 7,000,000 shares $7,984,375 $2,355.39
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</TABLE>
(1) Represents 2,172,475 shares of Common Stock issuable upon conversion
of All outstanding shares of Series B Preferred Stock, assuming
conversion of the Series B Preferred Stock as of June 15, 1998, and up
to 4,827,525 additional shares issuable upon a Call for Proceeds, all
as described in the Prospectus. Pursuant to Rule 416 of the Securities
Act, this Registration Statement also covers such indeterminable
additional shares as may become issuable upon conversion of Series A
Preferred Stock as a result of any future stock splits, stock
dividends or similar transactions.
(2) Estimated solely for the purpose of computing the registration fee
pursuant to Rule 457(c) of the Securities Act and based on the average
of the high and low sales prices reported on the Nasdaq National
Market on June 24, 1998.
(3) $1,751.57 of registration fee previously paid.
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 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a), MAY
DETERMINE.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION DATED JUNE 30, 1998
2,172,475 SHARES (issuable upon conversion of Series B Preferred Stock)
4,827,525 SHARES (issuable upon Calls for Proceeds)
STORM TECHNOLOGY, INC.
COMMON STOCK
A portion of the 7,000,000 shares (the "Shares") of Common Stock of Storm
Technology, Inc., a Delaware corporation ("Storm" or the "Company") offered by
this Prospectus are issuable upon conversion of issued shares of Series B
Preferred Stock of the Company (the "Series B Shares"). The Series B Shares
were issued in connection with a privately placed equity financing to
institutional investors (the "Selling Stockholders") pursuant to a securities
purchase agreement and other related documents (collectively, the "Financing
Agreements"). The Series B Shares are convertible into shares of the Company's
Common Stock, calculated pursuant to a formula based on (i) the average closing
bid price of the Company's Common Stock on the three (3) days preceding
conversion of the Series B Shares (the "Conversion Date") (such average referred
to as the "Current Average Price") and (ii) the number of days after the closing
of the sale of the Series B Shares (the "Issuance Date") before this
Registration Statement is declared effective (such date referred to as the
"Effective Date"), all as set forth in the Company's Certificate of Designation
for the Series B Shares (the "Certificate of Designation"). The Certificate of
Designation also gives the Company the right to redeem some or all of the Series
B Shares at a per share price equal to the greater of (i) the number of shares
of Common Stock calculated as though the Series B Shares are converted on the
date of notice of redemption (the "Redemption Notice Date") multiplied by the
closing bid price as of the Redemption Notice Date, or (ii) one hundred twenty
percent (120%) of the purchase price of the Series B Shares being called for
redemption (or one hundred eighteen percent (118%) of such purchase price if
this Registration Statement is declared effective within sixty (60) days from
the Issuance Date), plus any and all accrued and unpaid dividends.
The Financing Agreements also provide that at any time during the eighteen
(18) months following the Effective Date (the "Commitment Period"), the Company
may notify the Selling Stockholders of its intention (a "Call for Proceeds") to
draw a specified dollar amount (the "Dollar Amount") during a thirty (30) day
period (the "Call Period") following the date such notice is received by the
Selling Stockholders (such date referred to as the "Call Date"). At any time
during the Call Period, and at the Selling Stockholder's sole discretion, the
Selling Stockholders shall provide one or more written notices to the Company
(each a "Call Acceptance") that it will meet all or a portion of the Call for
Proceeds against delivery of shares of the Company's Common Stock (the "Drip
Shares") up to a maximum of $12,000,000. If the Company does not receive Call
Acceptances from the Selling Stockholders equal to the total Dollar Amount
within the Call Period, a Call Acceptance shall be deemed received by the
Company as of the last trading day during the Call Period. The Dollar Amount
for any Call for Proceeds is limited to, among other things, (i) a minimum of
$50,000 and a maximum of $1,000,000 and (ii) eight percent (8%) of the product
obtained by multiplying the total number of shares traded on the Principal
Market for the twenty (20) trading days preceding the Call Date by the Current
Average Price preceding the Call Date. The number of Drip Shares to be sold at
each closing of a Call for Proceeds shall be equal to the quotient obtained by
dividing the Dollar Amount by eighty-five percent (85%) of the Current Average
Price preceding the date the Company receives the Call Acceptance. "Principal
Market" shall refer to the Nasdaq National Market, the Nasdaq
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Small-Cap Market, the American Stock Exchange or the New York Stock Exchange,
and any other applicable market in accordance with their requirements (other
than bulletin board markets or pink sheets). Any Shares which are not issued
upon conversion of the Series B Shares are available for issuance upon one or
more Calls for Proceeds and the resale of such remaining shares issuable upon
Calls for Proceeds (if any) are offered by this Prospectus.
The Company will use the proceeds from each Call for Proceeds, if any,
primarily for working capital. The Company will receive no proceeds from
conversions of the Series B Shares. The Company has agreed to register the
Shares under the Securities Act of 1933, as amended (the "Securities Act").
The Company is also obligated to use its best efforts to maintain its listing
under the Nasdaq National Market and list such Shares accordingly, and in
addition, take certain actions to comply with applicable state securities laws
and regulations. See "Plan of Distribution."
The Company will bear all out-of-pocket expenses incurred in connection
with the registration of the Shares, including, without limitation, all
registration and filing fees imposed by the Securities and Exchange Commission
(the "Commission"), the National Association of Securities Dealers, Inc. (the
"NASD") and blue sky laws, printing expenses, transfer agents' and registrars'
fees, and the reasonable fees and disbursements of the Company's outside counsel
and independent accountants, but excluding transfer or other taxes and other
costs and expenses incident to the issuances of the Shares.
The Company's Common Stock is quoted on The Nasdaq National Market under
the symbol "EASY." On June 26, 1998, the last sale price of the Company's
Common Stock as reported on The Nasdaq National Market was $01.1875.
________________________________
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
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 June __, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The reports, proxy statements and other information filed by the
Company with the Commission may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60611 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can also be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Such reports and other information may also be
inspected without charge at a Web site maintained by the Commission. The
address of the site is http:\\www.sec.gov. The Company's Common Stock is traded
on The Nasdaq National Market. Reports and other information concerning the
Company can also be inspected at the offices of the National Association of
Securities Dealers, Inc., Market Listing Section, 1735 K Street, N.W.,
Washington, D.C. 20006.
THE COMPANY
Storm creates personal scanners that enable consumers to input, organize,
store and use digital images easily with their personal computers. The Company's
vision is to empower consumers to use all forms of digital images to create more
personal, memorable and effective communications. Storm has been competing and
gaining market share based on a strategy of product innovation and price
performance leadership to develop and market personal scanners using the latest
technology with high quality at affordable consumer price points.
In 1995, the Company entered the personal scanner market by bundling its
EasyPhoto organizer software with a snapshot-sized photo scanner manufactured by
Primax Electronics, Ltd. ("Primax"). In 1996, Storm established its own
internal personal scanner hardware and software product development teams,
continued to build leadership in the personal photo scanner market and leveraged
OEMs to enter the page-sized sheetfed scanner market segment. During 1997,
Storm established itself as the market leader in the personal photo scanner
product segment, acquired the scanner business of Logitech, Inc. and its
affiliates (collectively, "Logitech") (the "Logitech Acquisition"), resulting in
a market leadership position in page-sized sheetfed personal scanners, and
leveraged OEMs to enter the flatbed personal scanner market segment. Based on
external research studies, Storm expects that scanner sales will grow to more
than 11 million units by 1999. With the Logitech Acquisition, the Company has
expanded distribution in Europe through Logitech's existing European
infrastructure, providing access to over 8,000 retail outlets in the region,
broadened its underlying product portfolio and digital imaging technology, and
effectively doubled its worldwide market share.
Storm's personal scanners and software are licensed for inclusion with
personal computers, digital cameras, scanners or color printers from leading
technology providers including Adobe, Hewlett-Packard, Kodak, Nikon and Sharp.
Storm's current scanner line, which includes EasyPhoto Reader, EasyPhoto
SmartPage Pro, EasyPhoto ImageWave, TotalScan and PageScan USB, is carried at
major computer retailers in the U.S., Canada and Europe. The principal executive
offices of Storm are located at 1395 Charleston Road, Mountain View, California
94043 and its telephone number at that location is (650) 691-6600.
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RISK FACTORS
The purchase of the Common Stock offered hereby involves a high degree of
risk. Purchasers should carefully consider the following risk factors, among
other information, in conjunction with the other information included and
incorporated by reference in this Prospectus before purchasing or otherwise
acquiring the Common Stock offered hereby. An investment in the Common Stock
offered hereby involves a high degree of risk and the Common Stock should not be
purchased by persons who cannot afford the loss of their entire investment.
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act and Section 21E of the Securities Exchange
Act. Actual results could differ materially from those projected in these
forward-looking statements as a result of a variety of factors, including those
set forth below and elsewhere in this Prospectus.
CONTINUING OPERATING LOSSES. The Company has incurred net losses in every
period since inception. There can be no assurance that it will attain
profitability, or, if profitability is attained, that the Company will sustain
profitability on a quarterly or an annual basis. As of December 31, 1997, the
Company had an accumulated deficit of $47.9 million. The Company's ability to
achieve profitability will be substantially dependent, in part, on its ability
to successfully complete and introduce new products, to successfully integrate
into its business the scanner products obtained in the Logitech Acquisition and
to retain management and other key personnel. There can be no assurance that
the Company will be able to successfully accomplish the foregoing.
FUTURE CAPITAL REQUIREMENTS AND AVAILABILITY OF ADDITIONAL FINANCING. In
December 1997, the Company completed a private placement sale of $3,000,000 of
Series A 8.5% Convertible Preferred Stock (the "Series A Shares") and warrants
to institutional investors and a separate private placement of over $2,000,000
of common shares and warrants at market price purchased entirely by management
of the Company (collectively, the "1997 Private Placement"). The proceeds of
the 1997 Private Placement were used primarily to fund the Logitech Acquisition.
In June 1998, the Company completed an additional private placement sale of
$2,000,000 of Series B Convertible Preferred Stock which included a commitment
from such investors to fund Calls for Proceeds from the Company up to an
additional $12,000,000 against delivery of shares of the Company's Common Stock
(collectively, the "1998 Drip Financing"). The proceeds of the 1998 Drip
Financing, together with any Calls for Proceeds thereunder, will be used for
working capital. However, the 1998 Drip Financing is subject to certain
conditions, including continued listing of the Company's Common Stock on the
Nasdaq National Market or the Nasdaq SmallCap Stock Market, which may not occur,
and therefore the Company may not be able to draw down funds from the 1998 Drip
Financing when necessary or at all.
The Company's management is exploring financing alternatives to supplement
Storm's cash position. Potential sources of additional financing for the
Company include private equity financings, mergers, strategic investments,
strategic partnerships, an increase in its available bank line of credit or
other forms of debt financings. If additional funds are raised through the
issuance of equity or debt, the percentage ownership of the then current
stockholders of the Company may be reduced and such securities may have
additional powers, rights, preferences or privileges, senior to existing shares.
Storm has no commitments or arrangements to obtain any additional funding,
except for the Drip Financing as described herein, and there can be no assurance
that the Company will be able to obtain such additional funding, if necessary,
on acceptable terms or at all. The unavailability or timing of any financing,
could prevent or delay the continued development and marketing of the products
of Storm and may require a reduction in the level of Storm's operations. The
failure to raise needed funds on sufficiently favorable terms could have a
material adverse effect on the Company's business, operating results and
financial condition. In addition, the Company is discussing the payment terms
of an accounts payable with Primax in excess of $13 million which is currently
overdue. Such terms may have an adverse effect on the Company's cash position.
ACQUISITION RISKS. In December 1997, the Company completed the acquisition
of Logitech's scanner product line to expand its presence in the consumer
scanner market. The Logitech Acquisition will expand Storm's presence in the
European market, a market which is relatively new to the Company. While the
Company
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believes that the scanner products acquired from Logitech offer an opportunity
for the Company to increase its market share and product offerings, there can be
no assurance that the Company will be successful in doing so. The Company's
business plan includes the possibility of acquiring other related companies and
technologies. There can be no assurances that such acquisitions will occur, or
that such acquired companies or technologies will contribute any revenue or
technological value for the Company.
The Logitech Acquisition and any future acquisitions or investments will be
accompanied by the risks commonly encountered in acquisitions of businesses.
Such risks include, among other things, difficulties in assimilation of acquired
operations, technologies and products, diversion of management's attention to
other business concerns, risks of entering markets in which the Company has no
or limited prior experience and potential loss of key employees of acquired
operations. No assurance can be given as to the ability of the Company to
successfully integrate the products or technologies of Logitech's scanner
product line or those from any future acquisitions, prevent disruption of the
Company's ongoing business, maximize the financial and strategic position of the
Company, maintain uniform standards, controls, procedures and policies and
preserve relationships with employees and customers as a result of any
integration of new management personnel. Further, there is no assurance that
the Company will compete effectively or will generate significant revenues in
newly entered markets through future acquisitions.
The Company may be required to incur significant initial costs in
integrating any acquired companies or technologies into the Company's then
existing product and service offerings which could result in using the Company's
financial and other resources which have been budgeted for other activities. In
addition, future acquisitions by the Company could result in potentially
dilutive issuances of equity securities, the incurrence of debt and contingent
liabilities or amortization expenses related to goodwill and other intangible
assets, any of which could materially adversely affect the Company's business,
operating results and financial condition and/or price of the Company's Common
Stock.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS AND SALES. Revenues derived
from international distributors and resellers accounted for less than 5% of
total revenues for the Company in fiscal year 1997. The Company believes that
its continued growth and profitability will require further expansion of its
international operations, in part through cooperation with Logitech as part of
the Logitech Acquisition. To successfully expand international sales, the
Company may find it necessary to establish additional foreign operations, hire
additional personnel and recruit additional international resellers. To the
extent that the Company is unable to do so in a timely manner, the Company's
growth in international sales, if any, may be limited, and the Company's
business, results of operations and financial condition could be materially
adversely affected. As the Company continues to expand its international
operations, significant costs may be incurred ahead of any anticipated
international revenues, which could have a material adverse effect on the
Company's business, results of operations and financial condition.
As the Company increases its foreign sales, it may be materially and
adversely affected by fluctuations in currency exchange rates, increases in duty
rates, exchange or price controls or other restrictions on foreign currencies.
The foregoing factors may become an increasingly significant risk as various
Asian countries experience internal economic instability and require increased
levels of foreign financial assistance. Additional risks inherent in doing
business on an international level include unexpected changes in regulatory
requirements, export restrictions, tariffs and other trade barriers,
difficulties in staffing and managing foreign operations, longer payment cycles,
problems in collecting accounts receivable, political instability, seasonal
reductions in business activity during the summer months in Europe and certain
other parts of the world and potentially adverse tax consequences, any of which
could adversely impact the success of the Company's international operations.
For example, if the value of the US dollar increases relative to foreign
currencies, the Company's results of operations could be materially adversely
affected because the Company's products may become more expensive to foreign
purchasers. However, if the US dollar increases in value, the Company may also
experience a decrease in costs from foreign manufacturers and suppliers. There
can be no assurance that one or more of such factors will not have a material
adverse effect on the Company's future international operations and,
consequently, on the
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Company's business, operating results and financial condition and there can be
no assurance that the Company will be able to successfully address each of these
challenges.
MANAGEMENT OF GROWTH. The Company has recently experienced and may
continue to experience growth in the number of employees, the scope of its
operating and financial systems and the geographic distribution of its
operations and customers due to an anticipated increase in annual sales. The
Company's ability to compete effectively and to manage future growth, if any,
will require the Company to continue to assimilate such new personnel and to
implement and improve its financial and management controls, reporting systems
and procedures on a timely basis and expand, train and manage its employee work
force. There can be no assurance that the Company will be able to manage its
growth effectively and therefore, the Company's business, operating results and
financial condition could be materially adversely affected.
SIGNIFICANT FLUCTUATIONS IN OPERATING RESULTS AND UNCERTAINTY OF REVENUES.
The Company has experienced and will continue to experience significant
fluctuations in revenues and operating results from quarter to quarter and from
year to year due to a combination of factors, many of which are outside of the
Company's direct control. These factors include development of consumer demand
for digital images on PCs in general and for the Company's products in
particular, the Company's success in developing, introducing and shipping new
products and product enhancements in a timely manner, the purchasing patterns
and potential product returns from the Company's retail distribution, the
potential for reduced revenue due to price protection granted to distributors
and resellers, the performance of the Company's contract manufacturers and
component suppliers, the ability of the Company to reduce costs of sales and
increase gross margins, the Company's ability to respond to new product
introductions and price reductions by its competitors, the timing, cancellation
or rescheduling of significant orders from OEMs, distributors or resellers, the
availability of key components and changes in the cost of materials for the
Company's products, the level of demand for PCs, the Company's ability to
attract, retain and motivate qualified personnel, the timing and amount of
research and development, the ability to integrate into the Company's business
the scanner products obtained in the Logitech Acquisition, the timing and amount
of marketing and selling and general and administrative expenditures, and
general economic conditions. In addition, the Company has experienced
seasonality in its operating results. The Company believes that the seasonality
of its revenues results primarily from the purchasing habits of consumers and
the timing of the Company's fiscal year end. The Company currently believes that
such seasonality will generally continue.
Revenues and operating results in any period depend on the volume, timing
and ability to fulfill customer orders, the receipt of which is difficult to
forecast. A significant portion of the Company's operating expenses is
relatively fixed in advance, based in large part on the Company's forecasts of
future sales. If sales are below expectations in any given period, the adverse
effect of a shortfall in sales on the Company's operating results may be
magnified by the Company's inability to adjust operating expenses in the short
term to compensate for such shortfall. Accordingly, any significant shortfall in
revenues relative to the Company's expectations would have an immediate material
adverse impact on the Company's operating results and financial condition. The
Company may also be required to reduce prices in response to competition or
increase spending to pursue new product or market opportunities. In the event of
significant price competition in the market for the Company's products, the
Company would be required to decrease costs at least proportionately in order to
maintain profit margins and would be at a significant disadvantage compared to
competitors with substantially greater resources, which could more readily
withstand an extended period of downward pricing pressure.
Revenues are difficult to forecast due to the foregoing factors, the
rapidly evolving consumer market for scanners, the variation in the Company's
sales cycle for its scanner products and the acquisition of the Logitech
scanners. Because the Company normally ships products within a short time after
it receives an order, it typically does not have any material backlog. As a
result, to achieve its quarterly revenue objectives, the Company is dependent
upon obtaining orders in any given quarter for shipment in that quarter.
COMPETITION. The markets for the Company's products and services are
intensely competitive, subject to rapid change and characterized by constant
demand for new products and product features, pressure to accelerate the release
of new products and product enhancements and to reduce prices. A number of
companies are potential competitors to Storm's products and services and
currently offer products or services that compete directly or
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indirectly with Storm. Several of these competitors or other potential
competitors have significantly greater financial, managerial, technical and
marketing resources than Storm. A variety of potential actions by any of Storm's
competitors, including a reduction of product prices, increased promotion,
announcement or accelerated introduction of new or enhanced products or
features, acquisitions of software applications or technologies from third
parties, product give-aways or product bundling could have a material adverse
effect on Storm's business, operating results and financial condition.
Storm's present or future competitors may be able to develop products
comparable or superior to those offered by Storm or may be able to adapt more
quickly than Storm to new technologies or evolving customer requirements. For
example, there can be no assurance that Storm will successfully complete the
integration of the scanner products obtained in the Logitech Acquisition into
Storm's current product offerings on a timely basis or that any of Storm's
current or future products will achieve market acceptance or be sold on a
profitable basis. Accordingly, there can be no assurance that Storm will be
able to continue to compete effectively in its markets, that competition will
not intensify or that future competition will not have a material adverse effect
on Storm's business, operating results and financial condition.
DEPENDENCE ON THIRD-PARTY LICENSES AND MANUFACTURERS. The Company is
dependent on licenses from third-party suppliers for certain of its products.
If any such third-party licenses were terminated or not renewed or if these
third parties fail to develop new products in a timely manner, the Company could
be required to develop an alternative approach to developing its products which
could require payment of substantial fees to third parties or additional
internal development costs and delays and such products may not be successful in
providing the same level of functionality. Additionally, the Company obtains
hardware components from third party manufacturers. There can be no assurance
that such manufacturers will be able to meet the Company's requirements for
quality manufactured products at competitive prices. Furthermore, obtaining
products from an alternative manufacturing source involves certain production
start-up risks and delays, such as those associated with the procurement of
materials and training of production personnel. Therefore, any inability to
obtain quality hardware components at competitive prices from current
manufacturers or to increase manufacturing capacity from such suppliers as
required could result in delays, increased costs or reduced functionality that
could have a material adverse affect on the Company's business, results of
operations and financial condition.
NEW PRODUCT INTRODUCTIONS. The Company's future sales will depend
substantially on its ability to continue to successfully design and market new
products and upgrades of current products for existing and new personal computer
platforms and operating environments and to integrate scanner products obtained
through the Logitech Acquisition. There can be no assurance that sales of such
new products and versions will meet the Company's expectations, due to various
factors. For example, the Company may introduce certain of such products later
to market than expected or later than competitors' introductions, or competitors
may introduce competitive products at lower prices.
From time to time the Company makes announcements to its customers with
respect to the time frames within which the Company expects to ship new
products. Such announcements are for the purpose of providing its customers
with a general idea of the expected availability of products for planning
purposes based only upon estimates and are not a prediction by the Company of
the exact availability of such products. In the past, certain of the Company's
products shipped later than the time frame within which the Company originally
anticipated that the products would be available. Due to the inherent
uncertainties of software and hardware development, it is likely that such
situations will occur from time to time in the future as well. Moreover, the
loss of key employees may increase the risk of delays in product availability
from time frames originally anticipated. Consequently, announcements regarding
the Company's expectations of when products may ship should not be considered a
prediction by the Company that the products will ship in any particular quarter
or otherwise be relied upon by investors as a basis for predicting the Company's
results for any future period. Delays in the shipment of such products and
product enhancements could have a material adverse impact on the Company.
Without the introduction of such new products and product enhancements, the
Company's products may become technologically obsolete, and as a result the
Company's business, operating results and financial condition could be
7
<PAGE>
materially adversely affected. There can be no assurance that the future
development and marketing efforts by the Company will be successful.
EVOLVING MARKET. Since February 1995, most of the Company's sales have
been made to distributors, computer superstores, consumer electronic
superstores, office supply superstores, specialty computer stores, on-line
companies, mass merchants and OEMs and, to a lesser extent, mail order
companies. Accordingly, the Company is dependent upon the continued viability
and financial stability of such entities in the distribution channel. The
Company's reseller customers offer products of several different companies,
including scanner products that are competitive with the Company's products.
Accordingly, these resellers may give higher priority to products of suppliers
other than the Company through increased shelf space or promotions, thus
reducing their efforts to sell the Company's products. In addition, as is
typical in the personal computer industry, the Company grants its distributors
and resellers price protection and certain rights of return with respect to
products purchased by them. The Company accrues for expected returns and
anticipated price reductions in amounts that the Company believes are
reasonable. However, there can be no assurance that these accruals will be
sufficient, especially in light of the rapid product obsolescence that often
occurs during product transitions. In order to respond to competitive pricing
actions, increase sales or expand the distribution of its products, the Company
may reduce the prices of its products, which could give rise to significant
price protection charges and which would have a material adverse effect on the
Company's business, financial condition and results of operations. In addition,
the difficulty in predicting future sales and the anticipated short product life
cycles of the Company's products due to frequent upgrades increase the risk that
new product introductions, price reductions by the Company or its competitors,
or other factors affecting the personal scanner market could result in
significant product returns. Any price protection charges or product returns in
excess of recorded allowances would have a material adverse effect on the
Company's business, operating results and financial condition.
DEPENDENCE ON KEY PERSONNEL AND CHANGES IN MANAGEMENT. The success of the
Company depends in large part upon the ability of the Company to recruit, retain
and motivate qualified employees. The competition for such personnel is
intense, and there can be no assurance that the Company will be successful in
retaining or recruiting such personnel. Specifically, the Company may
experience increased costs in order to attract and retain skilled employees.
The Company cannot offer any assurances that it can continue to recruit key
managerial and technical personnel. The Company's failure to attract additional
qualified employees or to retain the services of key personnel could materially
adversely affect the Company's business, operating results and financial
condition.
EXTREME VOLATILITY OF STOCK PRICE. Like the stock of other high
technology companies, the market price of the Company's Common Stock has been
and may continue to be extremely volatile. Since its initial public offering in
October 1996, the market price of the Company's Common Stock has ranged from a
high of $17.00 to a low of $1.125 per share. Factors such as quarterly
fluctuations in the Company's results of operations, the announcement of
technological innovations or the introduction of new products by the Company or
its competitors, and general conditions in the computer hardware and software
industries may have a significant impact on the market price of the Company's
Common Stock.
COMPLIANCE WITH NASDAQ LISTING REQUIREMENTS; DISCLOSURE RELATING TO LOW-
PRICED STOCKS. The Nasdaq Stock Market, Inc. ("Nasdaq") has recently adopted
new maintenance criteria which have eliminated the exception to the $1.00 per
share minimum bid price and require, among other things, $4,000,000 in net
tangible assets and $5,000,000 market value of the public float. Alternative
maintenance criteria include, among other requirements, a $50,000,000 market
capitalization or $50,000,000 in both total assets and revenue and a $5.00 per
share minimum bid price. At the present time, principally as the result of the
payment of cash and notes pursuant to the Logitech Acquisition, the Company does
not meet the National Market maintenance criteria and has received a notice of
delisting. The Company is appealing such proposed delisting and as of the date
of this Prospectus, the outcome of such proposed delisting is unknown. If the
Company is not able to raise sufficient equity or otherwise take action to meet
such requirements, the Company may be delisted from the National Market and the
quotation of the Company's Common Stock could be included on the Nasdaq SmallCap
Market (the "SmallCap Market") if the requirements for inclusion on the SmallCap
Market are met. As a result of quotation on the SmallCap Market, an investor
may find it more difficult to dispose of the Company's Common Stock.
8
<PAGE>
Currently, for inclusion on the SmallCap Market, a company must have
$4,000,000 in net tangible assets or $50,000,000 market capitalization or
$750,000 net income in two of the last three years, $5,000,000 market value of
the public float and a minimum bid price of $4.00 per share. Failure to meet
the SmallCap Market inclusion criteria, or the failure to meet the SmallCap
Market maintenance criteria if the initial SmallCap Market inclusion criteria
are met, may result in the delisting of the Company's Common Stock from Nasdaq.
Trading, if any, in the Company's Common Stock would thereafter be conducted in
the non-Nasdaq over-the-counter market. As a result of such delisting, an
investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Company's Common Stock. In addition,
if the Company's Common Stock were delisted from trading on Nasdaq trading in
the Company's Common Stock could be subject to certain rules promulgated under
the Exchange Act related to penny stocks. Such restrictions could severely
limit the market liquidity of the Common Stock and the ability of purchasers in
this offering to sell the Common Stock in the secondary market.
DEFECTS AND LIABILITY CLAIMS. Software and hardware products frequently
contain errors or defects, especially when first introduced or when new versions
or enhancements are released. Although the Company has not experienced any
material adverse effects resulting from any such defects or errors to date,
there can be no assurance that, despite testing by the Company and by current
and potential customers, defects and errors will not be found in current
versions, new versions or enhancements after commencement of commercial
shipments, resulting in the loss of revenues, delay in market acceptance or
unexpected reprogramming costs, which could have a material adverse effect upon
the Company's business, operating results and financial condition.
The Company's license agreements with its customers typically contain
provisions designed to limit the Company's exposure to potential product
liability claims. It is possible, however, that the limitation of liability
provisions contained in the Company's license agreements may not be effective as
a result of existing or future federal, state or local laws or ordinances or
unfavorable judicial decisions. A successful product liability claim brought
against the Company could have a material adverse effect upon the Company's
business, operating results and financial condition.
INTELLECTUAL PROPERTY RIGHTS. The Company relies on a combination of
patent, copyright, trademark and trade secret laws, non-disclosure agreements
and other intellectual property protection methods to protect its proprietary
technology. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may copy aspects of the Company's products or obtain and
use information that the Company regards as proprietary. In addition, the laws
of some foreign countries do not protect the Company's proprietary rights as
fully as do the laws of the United States. There can be no assurance that the
Company's means of protecting its proprietary rights in the United States or
abroad will be adequate or that competitors will not independently develop
similar technology.
Although there are no pending material lawsuits against the Company
regarding infringement of any existing patents or other intellectual property
rights or any material notices that the Company is infringing the intellectual
property rights of others, there can be no assurance that such infringement
claims will not be asserted by third parties in the future. The computer
industry has been subject to a substantial amount of intra-industry litigation
in recent years regarding, among other matters, the extent of patent, copyright
and intellectual property protection available for software products. As is
common in the industry, from time to time, the Company may receive notices from
third parties claiming infringement of intellectual property rights of such
parties. In the event the Company were to receive any such notices, the Company
would investigate such claim and respond as it deems appropriate. If any such
claims are asserted and determined to be valid, there can be no assurance that
the Company will be able to obtain licenses of the intellectual property rights
in question on reasonable terms. The Company's involvement in any patent dispute
or other intellectual property dispute or action to protect proprietary rights
may have a material adverse effect on the Company's business, operating results
and financial condition and may divert management's attention from the Company's
business. Adverse determinations in any litigation may subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from third parties and prevent the Company from manufacturing and selling its
products. Any of these situations can have a material adverse effect on the
Company's business, operating results and financial condition.
9
<PAGE>
POTENTIAL DILUTIVE EFFECTS. The number of shares of Common Stock which may
be issued upon conversion of the outstanding Series A Shares and Series B Shares
is dependent upon the trading price of the Company's Common Stock at the time of
conversion. As the trading price of the Common Stock decreases, the number of
shares of Common Stock issuable upon conversion of Series A Shares, Series B
Shares or a Call for Proceeds, if any, and the possibility of issuing additional
warrants on conversion of the Series A Shares, will increase. Also, in
connection with the Logitech Acquisition, the Company has issued and expects to
issue promissory notes which may, under certain circumstances, convert into
shares of the Company's Common Stock.
LEGAL PROCEEDINGS. The Company and certain of its officers and directors,
certain stockholders and the underwriters of Storm's initial public offering are
parties to a lawsuit filed in the Superior Court of Santa Clara Court by a
purported stockholder of Storm on behalf of a class of stockholders who
purchased Storm Common Stock during the period October 1, 1996 through December
17, 1996. The lawsuit alleges that the defendants made misrepresentations in
the prospectus, press releases and analyst reports regarding the Company's
business prospects. Two actions have been filed in the United States District
Court for the Northern District of California by the same plaintiffs in the
state court action and assert causes of action under federal law similar to
those alleged in the state court action. The state and federal court actions
are all in very early stages and it is impossible to ascertain the likelihood of
an unfavorable outcome or an estimate of the amount or range of any potential
loss in the case. There can be no assurance of the ultimate outcome of any of
these matters or that the Company's business, financial condition or operating
results will not be materially adversely affected as a result of such lawsuits.
The Company may become involved in various other legal actions arising in
the normal course of business. Due to the inherent uncertainties of litigation,
the outcome of any of these actions could be unfavorable, and the Company may
choose to make payments, or enter into other arrangements, to settle such
actions or may be required to pay damages or other expenses. Such an outcome in
certain of these matters could have a material adverse effect on the Company's
financial condition or results of operations. Such actions can require the
expenditure of substantial management time and financial resources and can
adversely affect the financial performance of the companies involved. There can
be no assurance that the Company will not be a party to other such litigation in
the future.
YEAR 2000. While the Company does not anticipate any material "Year 2000"
issues from its own information systems or products, the Company could be
adversely impacted by Year 2000 issues faced by its vendors, customers and
financial service providers. The Year 2000 issue arises because most computer
systems and programs were designed to handle only a two-digit year, not a four-
digit year, thus the year 2000 could be interpreted as the year 1900 resulting
in the incorrect processing of data. The Company does not believe such issues,
if any, will have a material adverse effect on the Company's operations or
capital resources. However, there can be no assurance that the Company will not
be adversely affected by unanticipated Year 2000 issues.
USE OF PROCEEDS
The Company will receive the proceeds of a Call for Proceeds, if any, and
expects to use such proceeds, if any, primarily for working capital. The
Company will not receive any proceeds from conversions of the Series B Shares.
The Company will not receive any proceeds from the resale of the shares of
Common Stock by the Purchasers issuable upon conversion of the Series B Shares
or those issuable upon Calls for Proceeds and all proceeds will go to the
Selling Stockholders to be used for their own purposes.
10
<PAGE>
SELLING STOCKHOLDERS
The Selling Stockholders will hold shares of Common Stock which are
issuable upon conversion of the Series B Shares and Calls for Proceeds, if any.
The table below lists the Selling Stockholders, the number of shares of Common
Stock which each will own, assuming a conversion date of June 29, 1998, the
number of shares of Common Stock subject to sale pursuant to this Registration
Statement and the number of shares of Common Stock each would own assuming sale
of all shares of Common Stock registered by this Registration Statement.(3)
<TABLE>
<CAPTION>
Shares Owned After
Shares Owned Shares To Offering Such
Selling Stockholder(1) Before Offering(3)(4) Be Offered(3)(4) Shares(2)
- ---------------------- --------------------- ---------------- -----------------
<S> <C> <C> <C>
Libertyview Plus Fund 2,800,000 2,800,000 0
Libertyview Fund, LLC 699,999 699,999 0
CPR (USA) Inc. 3,500,001 3,500,001 0
Total 7,000,000 7,000,000 0
</TABLE>
_____________
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Storm Common Stock shown as beneficially owned by
them, subject to community property laws, where applicable.
(2) Assumes the sale of all shares offered hereby.
(3) The number of shares set forth in the table represents an estimate of the
number of shares of Common Stock to be offered by the Selling Stockholder
and assumes no Call for Proceeds have been made as described in this
Prospectus. Additional shares will be issuable upon a Call for Proceeds,
if any, as described in the Prospectus. Pursuant to the Financing
Agreements, the Company has agreed to register 7,000,000 shares of Common
Stock. The actual number of shares of Common Stock issuable upon
conversion of Series B Shares and a Call for Proceeds is indeterminate, is
subject to adjustment and could be materially less or more than such
estimated number depending on factors which cannot be predicted by the
Company at this time, including among other factors, the future market
price of the Common Stock. The actual number of shares of Common Stock
offered hereby, and included in the Registration Statement of which this
Prospectus is a part, includes such additional number of shares of Common
Stock as may be issued or issuable upon conversion of the Series B Shares
and a Call for Proceeds, if any, by reason of the floating rate conversion
price mechanism or other adjustment mechanisms described therein, or by
reason of any stock split, stock dividend or similar transaction involving
the Common Stock, in order to prevent dilution, in accordance with Rule 416
under the Securities Act. Pursuant to the terms of the Series B Shares, if
the Series B Shares had been actually converted on June 29, 1998, the
conversion price would have been $.9225 (the price, assuming that the
Registration Statement of which this Prospectus is a part is declared
effective by August 3, 1998, is 82% of the average of the closing bid
prices of the Common Stock for the three consecutive trading days
immediately preceding June 29, 1998) at which price the Series B Shares
would have been converted into approximately 2,172,475 shares of Common
Stock, allocated among Libertyview Plus Fund, Libertyview Fund, LLC and CPR
(USA) Inc. for 868,990, 217,247 and 1,086,238 shares of Common Stock,
respectively. Pursuant to the Certificate of Designation of the Series B
Shares, the number of shares of Common Stock issuable upon conversion of
the Series B Shares and the shares of Common Stock issued upon a Call for
Proceeds, together with the number of shares of Common Stock owned by such
holder and its affiliates (but not including shares of Common Stock
underlying unconverted shares of Series B Shares) may not, without
appropriate stockholder approval, exceed 19.99% of the outstanding Common
Stock on the Issuance Date as determined in accordance with Section 13(a)
of the Exchange Act.
(4) Assuming the conversion of the Series B Shares as described in note 3
above, 4,827,525 shares of Common Stock would be available for issuance
upon Calls for Proceeds. In accordance with the terms of the Securities
Purchase Agreement, if a Call Acceptance was received on June 29, 1998, and
without regard to the maximum $1,000,000 Dollar Amount applicable to a
single Call for Proceeds, all 4,827,525 shares of Common Stock would be
issuable upon a Call for Proceeds with a Dollar Amount of $4,616,320.80
(based on 85% of the average of the closing bid prices of the Common Stock
for the three consecutive trading days immediately preceding June 29, 1998
which average is $.95625). Such shares of Common Stock would be allocated
prorata among the Selling Stockholders based on the amount of their
original investment in the Series B Shares and accordingly, 40%, 10% and
50% of the 4,827,525 shares of Common Stock would be allocated among
Libertyview Plus Fund, Libertyview Fund, LLC and CPR (USA) Inc.,
respectively, in the amounts of 1,931,010, 482,752 and 2,413,763 shares of
Common Stock, respectively.
PLAN OF DISTRIBUTION
The Shares being offered by the Selling Stockholders or their respective
pledgees, donees, transferees or other successors in interest, will be sold in
one or more transactions (which may involve block transactions) on the Nasdaq
National Market or on such other market on which the Common Stock may from time
to time be trading, in privately-negotiated transactions, through the writing of
options on the Shares, short sales or any combination thereof. The sale price
to the public may be the market price prevailing at the time of sale, a price
related to such prevailing market price or such other price as the Selling
Stockholders determine from time to time.
11
<PAGE>
The Selling Stockholders or their respective pledgees, donees, transferees
or other successors in interest, may also sell the Shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Brokers acting as agents for the Selling
Stockholders will receive usual and customary commissions for brokerage
transactions, and market makers and block purchasers purchasing the Shares will
do so for their own account and at their own risk. It is possible that a
Selling Stockholder will attempt to sell shares of Common Stock in block
transactions to market makers or other purchasers at a price per share which may
be below the then market price. There can be no assurance that all or any of
the Shares offered hereby will be issued to, or sold by, the Selling
Stockholders. The Selling Stockholders and any brokers, dealers or agents, upon
effecting the sale of any of the Shares offered hereby, may be deemed
"underwriters" as that term is defined under the Securities Act or the Exchange
Act, or the rules and regulations thereunder.
The Selling Stockholders and any other persons participating in the sale or
distribution of the Shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, which provisions may
limit the timing of purchases and sales of any of the Shares by the Selling
Stockholders or any other such person. The foregoing may affect the
marketability of the Shares.
The Company has agreed to indemnify in certain circumstances the Selling
Stockholders against certain liabilities, including liabilities under the
Securities Act. The Selling Stockholders have agreed to indemnify in certain
circumstances the Company against certain liabilities, including liabilities
under the Securities Act.
The Company has agreed to use its best efforts to keep the Registration
Statement, of which this Prospectus constitutes a part, effective until the
earlier of (i) the date on which the Selling Shareholders can sell all the
Shares pursuant to Rule 144 of the Security Act (without regard to volume
limitations), or (ii) when all of the Shares have been resold pursuant to Rule
144 or an effective registration statement.
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich, LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K of Storm Technology, Inc. for the
year ended December 31, 1997 have been so incorporated in reliance on the report
of Price Waterhouse LLP, independent accountants, given on the authority of such
firm as experts in auditing and accounting.
12
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by Storm (File No.
0-21449) pursuant to the Exchange Act are incorporated herein by reference:
1. Annual Report on Form 10-K for the fiscal year ended December 31, 1997
(the "Storm 1997 Form 10-K"), filed with the Commission on March 31,
1998;
2. Definitive Proxy Statement with respect to Storm's Annual Meeting of
Stockholders on May 8, 1998 filed with the Commission on April 10,
1998;
3. Quarterly Report on Form 10-Q for the quarter ended March 31, 1998,
filed with the Commission on May 15, 1998, as amended by Form 10-Q/A
filed with the Commission on June 10, 1998;
4. Report on Form 8-K filed with the Commission on June 16, 1998;
5. The description of Storm Common Stock contained in its Registration
Statement filed with the Commission on June 26, 1996 (Registration
number 333-06911) under the Exchange Act, as amended.
All documents and reports subsequently filed by the Company pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Registration Statement and prior to the effective date of this Registration
Statement shall be deemed to be incorporated by reference herein and to be a
part hereof from the date of filing of such documents or reports. Any statement
contained in a document incorporated by reference or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes of
this Registration Statement to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Registration Statement. The Company
will provide without charge to each person to whom this Registration Statement
is delivered, upon written or oral request, a copy of any or all of the
foregoing documents incorporated by reference in this Registration Statement
(other than any exhibits thereto). Requests for such documents should be
directed to Storm Technology, Inc. at 1395 Charleston Road, Mountain View,
California 94043 (telephone number (650) 691-6600), Attn.: Investor Relations
Department.
13
<PAGE>
<TABLE>
<S> <C>
____________________________________________ ____________________________________________
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO
MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED OR INCORPORATED BY REFERENCE IN
THIS PROSPECTUS IN CONNECTION WITH THE
OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATION 4,000,000 Shares
MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, ANY STORM TECHNOLOGY, INC.
SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES, OR AN OFFER
TO SELL, OR A SOLICITATION OF AN OFFER TO
BUY, IN ANY JURISDICTION IN WHICH IT IS COMMON STOCK
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF
THE COMPANY SINCE THE DATE HEREOF OR THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
_______________________
TABLE OF CONTENTS PROSPECTUS
PAGE _______________________
Available Information................... 3
The Company............................. 3
Risk Factors............................ 4
Use of Proceeds......................... 10
Selling Stockholders.................... 11
Plan of Distribution.................... 11
Legal Matters........................... 12
Experts................................. 12
June __, 1998
____________________________________________
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the Securities and Exchange Commission registration fees and Nasdaq
filing fee.
<TABLE>
<CAPTION>
To be Paid
By The
Registrant
----------
<S> <C>
SEC Registration Fee.................................. $2,355.39
Nasdaq filing fee..................................... 17,500
Accounting fees and expenses.......................... 15,000
Legal fees and expenses............................... 15,000
Miscellaneous expenses................................ $ 141.61
---------
Total............................................. $ 50,000*
=========
</TABLE>
*Fees subject to increase in the event of any Call for Proceeds.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As permitted by Section 145 of the Delaware General Corporation Law (the
"DGCL"), the Registrant's Certificate of Incorporation provides that each person
who is or was or who had agreed to become a director or officer of the
Registrant or who had agreed at the request of the Registrant's Board of
Directors or an officer of the Registrant to serve as an employee or agent of
the Registrant or as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified by the Registrant to the full extent permitted by the DGCL or any
other applicable laws. Such Certificate of Incorporation also provides that no
amendment or repeal of such Certificate shall apply to or have any effect on the
right to indemnification permitted or authorized thereunder for or with respect
to claims asserted before or after such amendment or repeal arising from acts or
omissions occurring in whole or in part before the effective date of such
amendment or repeal.
The Registrant's Bylaws provide that the Registrant shall indemnify to the
full extent authorized by law any person made or threatened to be made a party
to an action or a proceeding, whether criminal, civil, administrative or
investigative, by reason of the fact that he, his testator or intestate was or
is a director, officer or employee of the Registrant or any predecessor of the
Registrant or serves or served any other enterprise as a director, officer or
employee at the request of the Registrant or an predecessor of the Registrant.
The Registrant's Bylaws also provide that the Registrant may enter into one or
more agreements with any person which provides for indemnification greater or
different than that provided in such Certificate of Incorporation.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers.
The Registrant intends to purchase and maintain insurance on behalf of any
person who is a director or officer against any loss arising from any claim
asserted against him and incurred by him in any such capacity, subject to
certain exclusions.
See also the undertakings set out in response to Item 17 herein.
II-1
<PAGE>
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
2.2* Agreement for Purchase and Sale of Assets dated as of December 18,
1997.
2.3* Joint Sales and Marketing Agreement dated as of December 18, 1997.
2.4* Manufacturing Services Agreement dated as of December 18, 1997.
3.1* Certificate of Designation for Series A 8.5% Convertible Preferred
Stock filed December 18, 1997.
3.2** Certificate of Designation for Series B Convertible Preferred Stock
filed June 3, 1998.
4.1* Series A 8.5% Convertible Stock Subscription Agreement dated as of
December 18, 1997 by and between Storm and CPR (USA) Inc.
4.2* Series A 8.5% Convertible Stock Subscription Agreement dated as of
December 18, 1997 by and between Storm and Libertyview Plus Fund.
4.3* Series A 8.5% Convertible Stock Subscription Agreement dated as of
December 18, 1997 by and between Storm and Libertyview Fund, LLC.
4.4* Stock Purchase Warrant to Purchase Shares of Common Stock issued to CPR
(USA) Inc.
4.5* Stock Purchase Warrant to Purchase Shares of Common Stock issued to
Libertyview Plus Fund.
4.6* Stock Purchase Warrant to Purchase Shares of Common Stock issued to
Libertyview Fund, LLC.
4.7* Registration Rights Agreement dated as of December 18, 1997 by and
between Storm and CPR (USA) Inc.
4.8* Registration Rights Agreement dated as of December 18, 1997 by and
between Storm and Libertyview Plus Fund.
4.9* Registration Rights Agreement dated as of December 18, 1997 by and
between Storm and Libertyview Fund, LLC
4.10** Securities Purchase Agreement dated as of June 3, 1998 by and among the
Selling Stockholders.
4.11** Registration Rights Agreement dated as of June 3, 1998 by and among the
Selling Stockholders.
4.12** Escrow Agreement dated as of June 3, 1998 by and among the Selling
Stockholders.
5.1**** Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of Price Waterhouse LLP, independent accountants.
23.2**** Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
(included in Exhibit 5.1).
24.1**** Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
II-2
<PAGE>
27.1*** Financial Data Schedule
________________
*Filed as an exhibit to the Company's Report on Form 8-K filed on January 2,
1998 and incorporated herein by reference.
**Filed as an exhibit to the Company's Report on Form 8-K filed on June 16, 1998
and incorporated herein by reference.
***Filed as an exhibit to the Company's Report on Form 10-Q filed on May 15,
1998, as amended by Form 10-Q/A filed with the Commission on June 10, 1998.
****Filed previously.
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;
(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 a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
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) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-4
<PAGE>
(e) The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this 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 Mountain View, State of California on the 30th day of June, 1998.
Storm Technology, Inc.
By: /s/ RICK McCONNELL
------------------------
Rick McConnell, Chief Financial Officer
and Vice President, Finance and
Administration
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT, THIS REGISTRATION STATEMENT
HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATES
INDICATED:
<TABLE>
<CAPTION>
SIGNATURE Title Date
<S> <C> <C>
/s/ L. WILLIAM KRAUSE President and Chief Executive Officer June 30, 1998
- ----------------------------------------------------- (Principal Executive Officer)
L. William Krause
/s/ ADRIAAN LIGTENBERG Chairman June 30, 1998
- -----------------------------------------------------
Adriaan Ligtenberg
/s/ RICK MCCONNELL Chief Financial Officer and Vice June 30, 1998
- ----------------------------------------------------- President, Finance and Administration
Rick McConnell (Principal Financial and Accounting
Officer)
/s/ WILLIAM H. LANE III Director June 30, 1998
- -----------------------------------------------------
William H. Lane III
/s/ JAMES M. KOSHLAND Director June 30, 1998
- -----------------------------------------------------
James M. Koshland
</TABLE>
II-7
<PAGE>
INDEX TO EXHIBITS
2.2* Agreement for Purchase and Sale of Assets dated as of December 18,
1997.
2.3* Joint Sales and Marketing Agreement dated as of December 18, 1997.
2.4* Manufacturing Services Agreement dated as of December 18, 1997.
3.1* Certificate of Designation for Series A 8.5% Convertible Preferred
Stock filed December 18, 1997.
3.2** Certificate of Designation for Series B Convertible Preferred Stock
filed June 3, 1998.
4.1* Series A 8.5% Convertible Stock Subscription Agreement dated as of
December 18, 1997 by and between Storm and CPR (USA) Inc.
4.2* Series A 8.5% Convertible Stock Subscription Agreement dated as of
December 18, 1997 by and between Storm and Libertyview Plus Fund.
4.3* Series A 8.5% Convertible Stock Subscription Agreement dated as of
December 18, 1997 by and between Storm and Libertyview Fund, LLC.
4.4* Stock Purchase Warrant to Purchase Shares of Common Stock issued to CPR
(USA) Inc.
4.5* Stock Purchase Warrant to Purchase Shares of Common Stock issued to
Libertyview Plus Fund.
4.6* Stock Purchase Warrant to Purchase Shares of Common Stock issued to
Libertyview Fund, LLC.
4.7* Registration Rights Agreement dated as of December 18, 1997 by and
between Storm and CPR (USA) Inc.
4.8* Registration Rights Agreement dated as of December 18, 1997 by and
between Storm and Libertyview Plus Fund.
4.9* Registration Rights Agreement dated as of December 18, 1997 by and
between Storm and Libertyview Fund, LLC
4.10** Securities Purchase Agreement dated as of June 3, 1998 by and among the
Selling Stockholders.
4.11** Registration Rights Agreement dated as of June 3, 1998 by and among the
Selling Stockholders.
4.12** Escrow Agreement dated as of June 3, 1998 by and among the Selling
Stockholders.
5.1**** Opinion of Gray Cary Ware & Freidenrich, A Professional Corporation.
23.1 Consent of Price Waterhouse LLP, independent accountants.
23.2**** Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1).
24.1**** Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
27.l*** Financial Data Schedule.
<PAGE>
________________
*Filed as an exhibit to the Company's Report on Form 8-K filed on January 2,
1998 and incorporated herein by reference.
**Filed as an exhibit to the Company's Report on Form 8-K filed on June 16, 1998
and incorporated herein by reference.
***Filed as an exhibit to the Company's Report on Form 10-Q filed on May 15,
1998, as amended by Form 10-Q/A filed with the Commission on June 10, 1998.
****Filed previously.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Amendment No. 1 to Registration Statement on Form S-
3 of our report dated January 26, 1998 appearing in Storm Technology, Inc.'s
Annual Report on Form 10-K for the year ended December 31, 1997. We also
consent to the reference to us under the heading "Experts" in such Prospectus.
PRICE WATERHOUSE LLP
San Jose, California
June 25, 1998
