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As filed with the Securities and Exchange Commission on December 16, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
ACCESS BEYOND, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 52-1987873
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Mark Fields
Acting Chief Financial Officer
1300 Quince Orchard Blvd. 1300 Quince Orchard Blvd.
Gaithersburg, MD 20878 Gaithersburg, MD 20878
(301) 921-8600 (301) 921-8600
(Name, Address, Including Zip Code, and
(Address, including Zip Code, and Telephone Number, Including Area Code,
Telephone Number, Including of Agent for Service)
Area Code, of Registrant's Principal
Executive Offices)
Copy to:
Stephen I. Budow, Esq.
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, New York 10022
(212) 735-8600
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO
THE PUBLIC: As soon as practicable after this registration
statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Aggregate Offering Price Aggregate Offering Registration
to be Registered Registered (1)(2) per Share (3) Price (3) Fee
- --------------------------------- ------------------- -------------------------- --------------------- ---------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 4,397,276 $5.375 $23,635,359 $6,972.43
</TABLE>
(1) Represents the sum of (i) 106,972 shares of Common Stock (the number of
shares of Common Stock that have been issued upon conversion of 450 shares
of the Company's 6% Convertible Preferred Stock), plus (ii) two times the
number of shares of Common Stock that would be issued if the remaining
9,550 shares of the Company's 6% Convertible Preferred Stock were converted
into Common Stock on December 15, 1997.
(2) Pursuant to Rule 416, this Registration Statement also covers an
indeterminable number of additional shares of Common Stock issuable as a
result of any future anti-dilution adjustments in accordance with the
rights of the 6% Convertible Preferred Stock.
(3) Estimated solely for purposes of calculating the registration fee in
accordance with Rule 457(f)(2) under the Securities Act of 1933, as
amended, and constitutes the average bid and asked price of the Common
Stock as reported on the Nasdaq National Market on December 12, 1997.
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a) may determine.
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SUBJECT TO COMPLETION, DATED DECEMBER 16, 1997
PRELIMINARY PROSPECTUS
4,397,276 SHARES
ACCESS BEYOND, INC.
COMMON STOCK
(Par Value $.01 Per Share)
This Prospectus pertains to 4,397,276 shares (the "Shares") of common
stock, $.01 par value per share (the "Common Stock), of Access Beyond, Inc., a
Delaware corporation (the "Company"), that may be sold by the selling
stockholders named herein (the "Selling Stockholders").
On November 12, 1997, the Company executed a preferred stock investment
agreement (the "Preferred Stock Investment Agreement") with certain investors,
the Selling Stockholders herein, providing for the sale of an aggregate of up to
45,000 shares of its 6% cumulative convertible preferred stock (the "6%
Convertible Stock"), at a purchase price of $1,000 per share, for an aggregate
purchase price of up to $45.0 million. On November 12, 1997, 10,000 shares of
the 6% Convertible Stock were issued for an aggregate purchase price of
$10,000,000. The Registration Statement of which this Prospectus is a part was
filed in connection with certain registration rights granted to the Selling
Stockholders under the Preferred Stock Investment Agreement for the shares of
Common Stock issuable upon conversion of such 10,000 shares of 6% Convertible
Stock. On the date hereof, 106,972 shares of Common Stock have been issued upon
conversion of 450 shares of the 6% Convertible Stock. Pursuant to the
registration rights agreement with the Selling Stockholders, the Company has
agreed to register two times the number of shares of Common Stock issuable upon
conversion of shares of 6% Convertible Stock. The number of Shares offered by
this Prospectus is equal to the sum of (i) such 106,972 shares of Common Stock,
plus (ii) two times the number of shares of Common Stock that would be issued
if the remaining 9,550 shares of 6% Convertible Stock were converted into
Common Stock on December 15, 1997. The remaining up to 35,000 shares of 6%
Cumulative Stock are to be issued for an aggregate purchase price of up to
$35.0 million following the consummation of the contemplated merger between the
Company and Hayes Microcomputer Products, Inc. See "SPECIAL NOTE."
The Company will not receive any proceeds from the sale of the Shares
by the Selling Stockholders. The Shares may be sold from time to time directly
by the Selling Stockholders or by pledgees, donees, transferees or other
successors in interest. Alternatively, the Shares may be offered from time to
time by the Selling Stockholders to or through brokers or dealers who may act
solely as agent, or may acquire shares as principal. The distribution of the
Shares may be effected in one or more transactions that take place on the Nasdaq
National Market System ( "NASDAQ/NMS"), including block trades, ordinary
broker's transactions, privately negotiated transactions or through sales to one
or more broker/dealers for resale of such securities as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by these holders in
connection with such sales. In connection with such sales, the Selling
Stockholders and any participating brokers or dealers may be deemed
"underwriters" as such term is defined in the Act. See "PLAN OF DISTRIBUTION."
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING
ON PAGE 5 HEREOF.
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 SUCH STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Common Stock of the Company is quoted on NASDAQ/NMS under the
symbol "ACCB." On December 12, 1997, the reported closing bid price of the
Common Stock on NASDAQ/NMS was $5.375 per share.
THE DATE OF THIS PROSPECTUS IS DECEMBER , 1997.
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The Company will bear all expenses (other than underwriting discounts
and selling commissions, state and local transfer taxes, and fees and expenses
of counsel or other advisers to the Selling Stockholders) in connection with the
registration of the Shares being offered by the Selling Stockholders.
All dealers effecting transactions in the securities offered hereby may
be required to deliver a copy of this Prospectus.
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to buy any
security other than the securities offered hereby, nor does it constitute an
offer to sell or a solicitation of an offer to buy the securities by anyone in
any jurisdiction in which such offer or solicitation is not authorized, or in
which the person making such offer or solicitation is not qualified to do so, or
to any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any offer or sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of the Company since the date hereof.
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 Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copies may be obtained at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices
of the Commission at Suite 1400, Citicorp Center, 500 West Madison Street,
Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York, New York
10048. Copies of such information may also be obtained by mail from the Public
Reference Branch of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. The Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The Commission's web
site can be accessed at http://www.sec.gov. Any such reports, proxy statements
and other information filed or to be filed by the Company may 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 Common Stock
is traded on NASDAQ/NMS, and the Company's reports (and proxy and information
statements when filed) may be inspected at the offices of The Nasdaq Stock
Market, Inc., located at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on
Form S-3 and amendments thereto (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), of which this
Prospectus is a part. This Prospectus does not contain all of the information
set forth in the Registration Statement and the exhibits and schedules thereto.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document referred to herein are not necessarily complete. In each
instance, for a more complete description of the matter involved, reference is
made to such contract, agreement or other document filed as an exhibit to the
Registration Statement, and the Registration Statement shall be deemed qualified
in its entirety by such reference.
The Company intends to furnish to holders of Common Stock for each
fiscal year an annual report which contains consolidated financial statements
prepared in accordance with United States generally accepted accounting
principles and audited and reported on, with an opinion expressed by, an
independent public accounting firm, and such other reports as may be required by
law.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED.
THIS PROSPECTUS MAY CONTAIN ESTIMATES, PROJECTIONS AND OTHER
FORWARD-LOOKING STATEMENTS. THESE STATEMENTS ARE SUBJECT TO CERTAIN RISKS,
TRENDS AND OTHER UNCERTAINTIES, INCLUDING THOSE DISCUSSED IN THIS PROSPECTUS
THAT COULD CAUSE ACTUAL RESULTS TO VARY FROM THOSE PROJECTED. INVESTORS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS, WHICH ARE
BASED ONLY ON CURRENT JUDGMENTS AND CURRENT KNOWLEDGE.
INCORPORATION OF DOCUMENTS BY REFERENCE
The documents listed below are incorporated by reference in this
Registration Statement, and all documents concurrently and subsequently filed by
the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, prior to the filing of a post-effective amendment which
indicates that all securities offered have been sold or which de-registers all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this Registration Statement and to be a part hereof from the date
of filing of such document.
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended July 31, 1997;
(2) Amendment No. 1 to the Company's Annual Report on Form 10-K/A
for the fiscal year ended July 31, 1997;
(3) The Company's Current Report on Form 8-K, as filed with the
Commission on November 17, 1997;
(4) The Company's Quarterly Report on Form 10-Q for the quarter
ended October 31, 1997, as filed with the Commission on
December 15, 1997.
(5) The Company's Registration Statement on Form S-4 (Registration
Statement No. 333-37993), declared effective by the Commission
on December 12, 1997; and
(6) The description of the Company's Common Stock contained in the
Company's Registration on Form 8-A, declared effective by the
Commission on November 18, 1996.
For purposes of this Registration Statement, any statement contained in
a document incorporated by or deemed to be incorporated by reference herein
shall be deemed to be modified or superseded 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 modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute part of this Registration Statement.
The Company shall furnish without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of such person, a copy of any or all of the documents
which are incorporated by reference herein (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
such documents). Written or telephone requests for such documents should be
directed to Mark Fields, Access Beyond, Inc., 1300 Quince Orchard Boulevard,
Gaithersburg, Maryland 20878, and the phone number is (301) 921-8600.
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SPECIAL NOTE
The Company has included the following special note to inform potential
investors of a transaction which, if consummated, will be material to the
operations of the Company.
On July 29, 1997, the Company and Hayes Microcomputer Products, Inc., a
Georgia corporation (with its subsidiaries, "Hayes") entered into an Agreement
and Plan of Reorganization (as subsequently amended, the "Merger Agreement")
pursuant to which H&A Merger Sub, Inc., a Georgia corporation ("Subsidiary") and
a wholly-owned subsidiary of the Company, will merge (the "Merger") with Hayes.
As a result of the Merger, Hayes will become a wholly-owned subsidiary of the
Company, and the shareholders of Hayes at the time the Merger becomes effective
(the "Effective Time") will own approximately 79% of the outstanding equity
securities of the Company, other than options and the Company's 6% Convertible
Stock and any shares of Common Stock issued or issuable upon conversion thereof
(such 6% Convertible Stock, together with such shares of Common Stock, the "6%
Securities"). After giving effect to the Merger and assuming that (x) all then
vested and exercisable options and warrants to purchase Hayes common stock are
exercised and (y) none of the then vested and exercisable options to purchase
Access Beyond's common stock are exercised, the Hayes shareholders will own
approximately 80.08% of the issued and outstanding equity securities of the
Company, excluding options and the 6% Securities. At the Effective Time, (a)
each outstanding share of Hayes (i) common stock, $.01 par value per share
("Hayes Common Stock"), will be converted into a right to receive such number of
shares of the Company's common stock, $.01 par value per share ("Common Stock")
as is equal to the Conversion Ratio (as provided below), (ii) Series A Preferred
Stock, no par value ("Hayes Series A Preferred Stock"), will be converted into
the right to receive such number of shares of the Company's Common Stock as is
equal to the Conversion Ratio multiplied by the number of shares of Hayes Common
Stock into which such shares of Hayes Series A Preferred Stock is then
convertible, and (iii) Series B Preferred Stock, no par value ("Hayes Series B
Preferred Stock"), will be converted into the right to receive such number of
shares of the Company's Series A Preferred Stock (the "Series A Preferred
Stock") as is equal to the Conversion Ratio multiplied by the number of shares
of Hayes Common Stock into which such shares of Hayes Series B Preferred Stock
is then convertible; (b) the Company will amend its certificate of incorporation
to (i) change its name to Hayes Corporation, (ii) increase the number of
authorized shares of capital stock and (iii) create the Series A Preferred
Stock; (c) the Board of Directors of the Company will be increased to seven
members, five of whom will be designated by the Hayes shareholders; and (d) the
obligations of Hayes under the Hayes option plan will be assumed by the Company.
There can be no assurance that the Merger will be consummated.
On December 15, 1997, the Company had 12,602,263 shares of Common Stock
and 9,550 shares of 6% Convertible Stock issued and outstanding. On December 15,
1997, Hayes had 4,991,750 shares of Hayes Common Stock, 4,900,000 shares of
Hayes Series A Preferred Stock and 263,113 shares of Hayes Series B Preferred
Stock issued and outstanding. At the Effective Time, the Conversion Ratio of
4.628924 (assuming no change in the number of such outstanding securities, other
than changes due to the issuance of shares of Common Stock upon conversion of 6%
Convertible Stock) will be applied to the outstanding Hayes securities,
resulting in the issue of (i) 23,106,433 shares of the Company's Common Stock
for the 4,991,750 shares of Hayes Common Stock, (ii) 22,681,729 shares of the
Company's Common Stock for the 4,900,000 shares of Hayes Series A Preferred
Stock, and (iii) 1,217,930 shares of the Company's Series A Preferred Stock for
the 263,113 shares of Hayes Series B Preferred Stock.
The Company filed a Registration Statement on Form S-4 (together with
any amendments thereto, the "S-4 Registration Statement") with the Commission
registering the issuance of such shares of the Company's Common Stock and Series
A Preferred Stock, which was declared effective on December 12, 1997. The S-4
Registration Statement contains a prospectus covering those shares and a proxy
statement in accordance with Schedule 14A of the Exchange Act setting forth,
among other things, the terms of the Merger, for a vote by the Company's
stockholders.
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RISK FACTORS
Investors should be aware that ownership of the Common Stock of the
Company involves certain risks, including those described below, which could
adversely affect the value of their holdings of Common Stock. The Company does
not make, nor has it authorized any other person to make, any representation
about the future market value of the Company's Common Stock. Unless otherwise
indicated, all references to the operations of the Company in this Prospectus
shall include the operations of the Remote Access Business (the developing and
marketing of products which enable local, remote or mobile users to access
network resources) of Penril DataComm Networks, Inc. ("Penril") prior to
November 18, 1996. Portions of this Prospectus contain certain "forward looking"
statements which involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward looking
statements. Factors that might cause such a difference include, but are not
limited to, market acceptance of the Company's products and services, other
factors discussed in the Registration Statement as well as factors discussed in
other filings made with the Securities and Exchange Commission. Although the
Company believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could prove inaccurate,
and therefore, there can be no assurance that the forward looking statements
included herein will prove to be accurate. In addition to the other information
contained in this Prospectus, the following factors should be considered
carefully in evaluating an investment in the Shares offered hereby.
ABSENCE OF PROFITABLE OPERATIONS; LIQUIDITY
The Company, and the Remote Access Business as conducted by Penril,
have not been profitable for the past three fiscal years. Penril posted a net
loss from continuing operations of $4.6 million for fiscal 1995, and $20.7
million for fiscal 1996 and the Company posted a net loss of $13.9 million for
fiscal 1997. Such losses have been due, in part, to decreased revenues caused by
a declining market for certain Penril products that began in fiscal 1995,
non-recurring restructuring costs in connection with operations that were
discontinued due to decline in market demand, costs related to the Penril/Bay
Merger, which occurred during fiscal 1996, costs associated with development of
the Remote Access Business and the spinning off of the Company from Penril
during the year ended July 31, 1997. In addition, during fiscal 1997, the
Company's revenues including, in particular, its revenues from the "Access
Beyond" product family, have been insufficient for the Company to be profitable.
There can be no assurance that the Company will achieve profitability, or that
the Company will be able to increase sales of its products to an amount which
will generate adequate cash for operational and capital needs.
Hayes has not been profitable for the past three fiscal years. On
November 15, 1994, Hayes filed a petition for relief under Chapter 11 of the
United States Bankruptcy Code due to its inability to pay its debts on a current
basis. Although Hayes consummated a court approved Reorganization Plan on April
16, 1996 and closed the bankruptcy on October 9, 1997, it has accumulated losses
of approximately $32.7 million since April 16, 1996.
The Company and Hayes have financed their loss from operations in the
past three years (or shorter period with respect to the Company) primarily
through private sales of equity securities, borrowings under credit facilities
and sale of assets, including assets from discontinued operations. On a pro
forma combined basis the Company and Hayes had a working capital deficit of
approximately $14.1 million at September 30, 1997.
At the Effective Time, only a limited amount of cash will be available
for working capital from credit facilities of the combined companies. The
Preferred Stock Investment Agreement provided the Company with $10.0 million of
cash on November 12, 1997. Both the Company and Hayes are relying on $35.0
million of anticipated cash from the closing of the second installment of the
Preferred Stock Investment Agreement immediately following the Effective Time to
provide working capital following the Merger. In the event that the closing of
such second installment is not consummated, cash provided by future operations
and available borrowings under the Company's and Hayes' credit facilities or
lines of credit could be insufficient to meet the Company's working capital
requirements. There can be no assurance that the closing of such second
installment will be consummated. Hayes is also pursuing the possibility of new
credit facilities, but there can be no assurance that these will be obtained.
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Due to Hayes' having not met certain covenants under its credit
facility with CIT requiring minimum levels of net worth and net income at
December 31, 1996, CIT revised the interest rate under the facility from prime
plus 1.625% to prime plus 2.125%.
LIMITED TRADING HISTORY OF THE COMMON STOCK
The Common Stock has a limited history as a publicly traded security.
The price for the Common Stock is determined in the market place and may be
influenced by many factors, including the operating performance of the Company,
the depth and liquidity of the market for the Common Stock, investor perception
of the Company and general economic and market conditions. There can be no
assurance that an orderly market for the Common Stock will be sustained, and the
prices at which the Common Stock is traded may fluctuate significantly.
LIMITED OPERATING HISTORY
The Company began operations on November 18, 1996 for the purpose of
receiving certain lines of business which were to be spun off from Penril. The
Company, as a separate entity, has a limited operating history. The Remote
Access Business, as conducted by Penril prior to the distribution of the Common
Stock to Penril shareholders in November 1996, had an operating history
consisting of the development and sale of local area network ("LAN") and host
access products (the "LAN and Host Access Products") and the development of a
new product family called "Access Beyond." See "-- Relationship with Penril."
DEPENDENCE ON KEY MANAGEMENT
If the Company is to be successful, its success will be due in large
part to the performance of Messrs. Dennis Hayes, Ronald Howard and P.K. Chan,
and, to a lesser extent, other key management personnel. Although the Company
will have employment agreements with Messrs. Hayes, Howard and Chan which
provide for their continued employment, no assurance can be given that the
Company will be able to retain their services or the services of any other key
management personnel. The loss of the services of one or more of the Company's
senior management following the Merger could have a material adverse effect upon
the Company's business, operating results and financial condition.
RISKS RELATING TO THE MERGER AND INTEGRATION OF THE BUSINESSES
There can be no assurance that the Merger will be consummated or, if
consummated, that the economies which the Company and Hayes expect to realize as
a result of the combination of the businesses will be achieved, or that the
personnel from the two companies will be successfully integrated.
In order for such integration to be successful, the general and
administrative operations, research and development operations and sales and
marketing operations of Hayes and the Company must be combined. There can be no
assurance that Hayes and the Company will be successful in integrating such
operations. There is no assurance that the Company will not encounter unforeseen
expenses, as well as difficulties and complications in integrating expanded
operations without disruption to overall operations. In addition, the
combination may adversely affect the Company's operating results because of many
factors, including the diversion of management time and resources and required
operating adjustments. There can be no assurance that the Company will
successfully integrate or achieve the anticipated benefits of its expanded
operations.
TECHNOLOGICAL CHANGES
The market for networking and modem products is subject to rapid
technological change, evolving industry standards and frequent new product
introductions and, therefore, requires a high level of expenditures for research
and development. The Company may be required to incur significant expenditures
to develop new integrated product offerings. There can be no assurance that
customer demand for products integrating network connectivity and remote access
technologies will grow at the rate expected by the Company, that the Company
will be successful in developing,
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manufacturing and marketing new products or product enhancements that respond to
these customer demands or to evolving industry standards and technological
change, that the Company will not experience difficulties that could delay or
prevent the successful development, introduction, manufacture and marketing of
these products (especially in light of the increasing design and manufacturing
complexities associated with the integration of technologies), or that its new
products and product enhancements will adequately meet the requirements of the
marketplace and achieve market acceptance. The Company's business, operating
results and financial condition may be materially and adversely affected if the
Company encounters delays in developing or introducing new products or product
enhancements or if such product enhancements do not gain market acceptance. In
order to maintain a competitive position, the Company must also continue to
enhance its existing products and there is no assurance that it will be able to
do so. The Company will be required to continue to make significant investment
in research and development to refine Hayes' products and its products and to
continue to develop additional products. A major portion of future revenues is
expected to come from new products and services. The Company cannot determine
the ultimate effect that new products will have on its revenues or earnings. The
rapid technological change and short life span of networking and modem products
subject the Company to the risk of inventory obsolescence, customer product
returns and unfavorable manufacturing costs as a result of disruption to
manufacturing schedules.
In 1997, the modem industry introduced modems that provide a throughput
capacity of 56kbs compared to the industry standard of 33.6kbs. The industry has
not established a standard for 56kbs modems and there are two competing 56kbs
technologies. Hayes introduced 56kbs products in early 1997 and sells products
using either K56 Flex or X2 technologies. Demand for 56kbs products has been
slow to develop and a substantial portion of Hayes revenues continue to be for
33.6kbs products. Hayes' modem buyers could be adversely impacted by
obsolescence changes, channel inventory returns and unfavorable manufacturing
variances if there was a sudden change in demand for 56kbs vs 33.6kbs products.
POSSIBLE LOSS OF TECHNOLOGY
The Company acquired technology and intellectual property rights
relating to certain open remote dial access cards used in its Hawk products
principally in consideration of the issuance of 503,704 shares of Common Stock.
Although the Company has registered the resale of such shares under the
Securities Act, if it fails to use its best efforts to maintain the
effectiveness of such registration statement then such technology and rights
could be lost which loss could have a material adverse effect on the Company.
COMPETITION
The networking industry is highly competitive and competition is
expected to intensify. There are numerous companies competing in various
segments of the network management and remote access markets. Competitors
include Ascend Communications, Shiva Corporation, Cisco Systems, Inc., 3 Com
Corporation ("3Com"), Microcom, Inc. ("Microcom") and Bay Networks, Inc., among
others. Many of the Company's competitors have greater name recognition, more
extensive engineering, manufacturing and marketing capabilities and greater
financial, technological and personnel resources than those available to the
Company. In addition, certain companies in the networking industry have expanded
their product lines or technologies in recent years as a result of acquisitions.
There can be no assurance that the Company will be able to compete successfully
in the future with existing or new competitors.
Hayes' business products compete with the business products of 3Com,
AT&T Corp., Multi Tech Corp., Motorola, Inc. and others. 3Com is one of Hayes'
most significant competitors in the retail modem market. Other competitors of
Hayes in the retail modem market include Golden Video Corporation ("GVC"), Boca
Research, Inc. ("Boca"), Zoom Telephonics, Inc. ("Zoom"), Diamond Multimedia
Systems, Inc. ("Diamond") and others.
There are many other companies engaged in the research, development and
commercialization of products similar to the Hayes modem, network and broadband
products. Some of the Company's competitors and potential competitors possess
significantly greater capital, marketing, technical and other competitive
resources than Hayes or the Company following the Merger. As a result, they may
be able to adapt more quickly to new or emerging technologies
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and changes in customer requirements, to devote greater resources to the
promotion and sale of their products, or to devote greater resources to the
development of new products than can the Company.
Hayes' products are subject to significant price competition, and
management expects that it will face increasing pricing pressures from
competitors. Accordingly, there can be no assurance that following the Merger
the Company will be able to provide products that compare favorably with the
products of the Company's competitors or that competitive pressures will not
require the Company to reduce its prices. Any material reduction in the price of
the Company's products would negatively affect net margins as a percentage of
net revenues and would require the Company to increase sales to maintain or
increase net income.
IMPORTANT CONSIDERATIONS RELATED TO FORWARD-LOOKING STATEMENTS
This Prospectus contains or incorporates by reference certain forward
looking statements within the meaning of Section 27A of the Securities Act, and
Section 21E of the Securities Exchange Act of 1934, as amended (the"Exchange
Act"), which are intended to be covered by the safe harbors created thereby.
Investors are cautioned that all forward looking statements involve risks and
uncertainty including, without limitation, the ability of the Company to
implement its strategy and identify new market and product opportunities,
product development costs, future return rates of the Company's products, the
dependence of the Company on certain customers and manufacturers, as well as
general market conditions, competition and pricing. Although the Company
believes that the assumptions underlying the forward looking statements
contained herein are reasonable, any of the assumptions could be inaccurate, and
therefore, there can be no assurance that the forward looking statements
included in this Prospectus will prove to be accurate. In light of the
significant uncertainties inherent in the forward looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
OPTION PLANS - SHARES ELIGIBLE FOR FUTURE SALE AND DILUTION
In March 1997, the stockholders of the Company, at a special meeting,
approved and ratified two stock option plans of the Company - the Amended and
Restated 1996 Incentive Stock Option Plan (the "Incentive Plan") and the Amended
and Restated 1996 Non-employee Directors' Stock Option Plan (the "Directors'
Plan"). The Company is authorized to issue options to purchase up to an
aggregate of 2,000,000 shares of Common Stock under the Incentive Plan and
options to purchase an aggregate of 250,000 shares of Common Stock under the
Directors' Plan. As of November 20, 1997, the Company had outstanding options to
purchase an aggregate of 965,900 shares under the Incentive Plan and options to
purchase an aggregate of 120,000 shares under the Directors' Plan. As a result
of the Merger, all outstanding options granted under the Directors' Plan will
become fully vested and will terminate on the later of 90 days after the
Effective Time or seven months following the date of grant of each option.
Options granted under the Incentive Plan will not become fully vested as a
result of the Merger unless, as to each such option holder, his employment is
terminated without good cause within nine months following the Effective Time.
Holders of Common Stock could experience dilution in possible future earnings
per share in the event that a large number of options are exercised.
Furthermore, in October 1997, the Company registered the resale of the shares of
Common Stock issuable upon the exercise of options granted under the Incentive
Plan and the Directors' Plan, which registration allows such shares to be freely
tradeable in the public market immediately following exercise of such options,
subject to certain volume limitations for options exercised by directors and
executive officers of the Company.
In addition, at the Effective Time, each outstanding option to purchase
Hayes Common Stock (the "Hayes Options") granted under the Hayes Stock Option
Plan, adopted on June 4, 1996, as amended effective October 22, 1996 (the "Hayes
Option Plan"), and each warrant to purchase Hayes capital stock (collectively
the "Hayes Warrants") will be assumed by the Company in accordance with the
terms of such option or warrant, and converted into rights to purchase shares of
the Company's Securities. Hayes Options and Hayes Warrants for 5,971,312 shares
and 1,851,569 shares of Common Stock, respectively, will be assumed by the
Company. At the Effective Time, Hayes Options to purchase 1,363,912 shares of
Company Common Stock and Hayes Warrants to purchase 1,851,569 shares of Company
Common Stock will be exercisable. Holders of Common Stock could experience
dilution in possible future earnings per
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<PAGE> 11
share in the event that a large number of Hayes Options or Hayes Warrants of
options are exercised. The Company expects to register the resale of the shares
of Common Stock issuable upon the exercise of the Hayes Options and the Hayes
Warrants, which registration would allow such shares to be freely tradeable in
the public market immediately following exercise of such Hayes Options and Hayes
Warrants, subject to certain volume and other limitations for Hayes Options and
Hayes Warrants, by directors and executive officers of the Company following the
Merger.
OTHER ISSUANCES - SHARES ELIGIBLE FOR FUTURE SALE AND DILUTION
The Company may use shares of its Common Stock to acquire assets,
technology, license rights and/or other companies to develop and expand its
product lines. Future issuances of Common Stock in connection with such
acquisitions could, individually or in the aggregate, adversely affect the
market price of the Common Stock.
Pursuant to the Preferred Stock Investment Agreement, the Company's 6%
Convertible Stock is convertible into shares of Common Stock at a conversion
price equal to the lesser of $8 per share or 85% of the average closing bid
price of Common Stock on the NASDAQ/NMS (or other market) for the five
consecutive trading days prior to the date of the notice of conversion, subject
to adjustment in certain circumstances. Accordingly, conversion of the 6%
Convertible Stock will be below the market price of the Common Stock, will be
dilutive and could individually or in the aggregate, adversely affect the market
price of the Common Stock.
REGISTRATION AND LISTING OBLIGATIONS
The Registration Rights Agreement entered into in connection with the
Preferred Stock Investment Agreement requires the Company to promptly register
and cause to be listed the common shares underlying the 6% Convertible Stock and
underlying any warrants which are issued and to maintain such registration
statement and listing. If (i) the Company fails to effect such registration and
listing within the applicable time periods or (ii) an investor's ability to sell
registered shares is suspended for various reasons, including failure of the
Company to maintain the effectiveness of such registration statement or listing
for more than a specified number of days or (iii) the Company fails to comply
with a conversion notice and such event continues for more than a specified
number of days, then the Company is required to make payments to the investors
in an amount equal to 2% per month of the liquidation preference for each month
(or portion thereof) during which such failure continues and, under certain
circumstances, the Company may be required to (i) purchase the 6% Convertible
Stock for an amount equal to the liquidation preference divided by 85%, and
issue warrants and (ii) purchase shares of Common Stock issued upon conversion
of the 6% Convertible Stock and upon exercise of warrants for a purchase price
equal to the closing bid price as of the time of the issuance of such underlying
shares.
PRODUCT PROTECTION AND INTELLECTUAL PROPERTY
The Company, like many other companies in the network access industry,
anticipates that it will rely upon rights granted through licenses from third
parties for a substantial amount of proprietary information used to develop its
products; however, some companies may decide not to grant such licenses and may
seek to protect their proprietary rights in such technological information.
Accordingly, there can be no assurance that the Company will be able to continue
obtaining additional rights to utilize proprietary technological information
necessary to develop its products. Because of the existence of a large number of
patents in the networking field and the rapid rate of issuance of new patents,
it is not economically practical to determine in advance whether a product or
any of its components infringe patent rights of others. In the event of any
infringement, the Company believes that, based upon industry practice, necessary
licenses or rights under such patents may be obtained on terms that should not
have a material adverse effect on the Company's consolidated financial position
or results of operations. However, there can be no assurance in this regard.
Hayes relies on a combination of patent, trade secret, copyright and
trademark laws, nondisclosure and other contractual provisions and technical
measures to protect its proprietary and intellectual property rights in its
products. Hayes receives from time to time, and may receive in the future,
communications from third parties asserting intellectual property rights
relating to its products and technologies. There can be no assurance that these
protections will be
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<PAGE> 12
adequate to protect Hayes' proprietary rights or that following the Merger, the
Company's competitors will not independently develop products that are
substantially equivalent or superior to the Company's products. There can be no
assurance that third parties will not assert infringement claims against the
Company following the Merger. The loss of proprietary technology or a successful
claim against the Company could have a material adverse effect on the Company's
financial condition or results of operations.
To the extent Hayes and the Company increase sales in international
markets, their exposure in countries with less protection of intellectual
property laws is increased.
CERTAIN ANTITAKEOVER EFFECTS
The Company's Certificate of Incorporation includes certain provisions
that are intended to prevent or delay the acquisition of the Company by means of
a tender offer, proxy contest or otherwise. Specifically, the Certificate of
Incorporation provides for a classified board of directors, classified into
three classes with terms of three years each. In addition, the Certificate of
Incorporation authorizes the Company Board to issue preferred stock without
further stockholder approval, which could have dividend, redemption,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of Common Stock. Finally, the
Company is subject to Section 203 of the Delaware General Corporation Law (the
"DGCL") which limits transactions between a publicly held company and
"interested stockholders" (generally those stockholders who, together with their
affiliates and associates, own 15% or more of a company's outstanding capital
stock). Any one of, or a combination of, the above anti-takeover provisions
could discourage a third party from attempting to acquire control of the
Company. The Incentive Plan and the Directors' Plan provide for acceleration of
stock options upon a change in control of the Company, which may have the effect
of making an acquisition of control of the Company more expensive. These plans
may also inhibit a change in control of the Company. In addition, certain
Company officers have severance compensation agreements with the Company that
provide for substantial cash payments and acceleration of other benefits in the
event of specified corporate changes related to the Company, including a change
in control of the Company.
DIVIDENDS
The Company does not anticipate paying dividends on its Common Stock in
the foreseeable future. The holders of 6% Convertible Stock are entitled to
receive cumulative dividends at the rate of six percent per annum on the
liquidation preference, payable annually on December 31 of each year, in cash,
Common Stock or by adding the amount thereof to the liquidation preference.
Holders of Series A Preferred Stock will be entitled to receive, as and when
declared by the Company Board, cumulative compounding dividends at the rate of
10% per annum of the original issue price per share of the Series A Preferred
Stock. No dividends may be paid on the Common Stock unless all accrued and
unpaid dividends on the Series A Preferred Stock and the 6% Convertible Stock
are paid.
Pursuant to a loan and security agreement dated October 2, 1997, the
Company may not declare or pay any dividends, except dividends payable solely in
shares of capital stock, or make any other payments on its capital stock,
without the consent of the lender. Hayes is subject to similar restrictions
under its credit facilities.
RELATIONSHIP WITH PENRIL
The Company has a limited operating history as an independent public
company. The operations of the Company historically have relied on Penril for
certain necessary administrative services. As of November 18, 1996, Penril and
the Company entered into several agreements for purposes of governing certain of
the ongoing relationships between the two companies following the Penril/Bay
Merger, including indemnification obligations. Pursuant to the Indemnification
Agreement entered into between Penril and the Company (the "Indemnification
Agreement") in connection with Penril's transfer (the "Transfer") to the Company
of substantially all of its assets and liabilities, other than those assets and
liabilities related to Penril's modem business (the "Modem Business"), the
Company agreed to indemnify Penril against all expenses and liabilities
resulting from (i) the operation of the Company from and after the Penril/Bay
Merger, (ii) Penril's operations prior to the Transfer other than those based
upon, arising out of or in
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<PAGE> 13
connection with (a) the Modem Business, (b) the Penril/Bay Merger and
transactions relating to the Penril/Bay Merger or (c) the tax consequences of
the Distribution, (iii) the termination of employment of employees (other than
those employees identified as remaining with Penril after the Transfer) by
Penril or (iv) information furnished by Penril or the Company relating to the
Company contained in the registration statement filed by Bay in connection with
the Penril/Bay Merger Proxy Statement/Prospectus. Although the Company is not
aware of any pending or threatened material liability for which the Company may
become obligated to make payments in connection with its obligation to indemnify
Penril, there can be no assurance that such indemnification obligations could
not arise or that such indemnification obligations would not be material to the
Company. These agreements were negotiated while the Company was owned by Penril
and, consequently, are not the result of arm's-length negotiations between
independent parties. Nevertheless, the Company believes that the agreements are
fair to the parties and contain terms which are generally comparable to those
which would result from arm's-length negotiations, although there can be no
assurance thereof.
INTERNATIONAL SALES
In fiscal 1996, international sales of Hayes' products accounted for
approximately 25% of net sales. These sales were primarily to customers in
Europe and the Asia Pacific region. The Company anticipates that, following the
Merger, international sales will continue to account for a significant portion
of the Company's net sales in the foreseeable future. As a result, the Company's
operating results will be subject to risks inherent in international sales,
including tariffs or other barriers, difficulties in staffing and managing
international operations, fluctuations in foreign currency exchange rates,
compliance with international regulations, approval and market requirements, and
volatility of international economic conditions. One or more of these factors
may have a material adverse effect on the Company's future international sales
and, consequently, on the Company's operating results.
Hayes sells its products outside the United States and procures modem
products from offshore vendors primarily in U.S. dollars and to a lesser extent,
British Sterling and Hong Kong dollars. Although Hayes has not experienced
material gains or losses from foreign currency fluctuations, if its
international business increases it could be subject to increased risk due to
such fluctuations. Hayes anticipates it will adopt hedging strategies if the
risks associates with foreign currency fluctuations materially increase.
A significant amount of Hayes' revenue is derived from its Asia region
business, particularly from China. Therefore, Hayes is subject to the risk of
political and economic instability experienced in this region. Hayes has begun
to expand its business in Latin America. Should Hayes' Latin America business
become material, Hayes would be subject to the political and economic
difficulties recently experienced in this region.
PRODUCT RETURNS, PRICE PROTECTION AND WARRANTY CLAIMS
Like other manufacturers of computer products, Hayes and the Company
are exposed to the risk of product returns from wholesale distributors,
resellers and retailers, either through contractual stock rotation privileges or
as a result of Hayes' and the Company's interest in assisting customers in
balancing inventories. Although Hayes and the Company attempt to monitor and
manage the volume of sales to wholesale distributors and retailers, large
shipments in anticipation of sales by wholesale distributors and retailers could
lead to substantial overstocking by their wholesale distributors and lead to
higher than normal returns. Moreover, the risk of product returns may increase
if demand for Hayes' or the Company's products declines. When Hayes and the
Company reduce their prices, Hayes and the Company credit their respective
wholesale distributors and retailers for the difference between the purchase
price of products remaining in their inventory and the reduced price for such
products on terms negotiated with Hayes and the Company, respectively, which
could have a material adverse effect on the operating results of Hayes and the
Company, respectively.
Hayes' standard two-year warranty permits customers to return any
product for repair or replacement if the product does not perform as warranted.
In the U.S. and Canada only, Hayes also offers its customers the option of an
additional three-year warranty upon completion of a registration card within 90
days of purchase. Some of the Practical Peripheral modems previously sold have a
lifetime warranty. Hayes to date has not encountered material warranty claims or
liabilities. Hayes has established and the Company following the Merger will
establish reserves for product returns,
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<PAGE> 14
price protection and warranty claims which management believes are adequate.
There can be no assurance that product returns, price protection and warranty
claims will not have a material adverse effect on future operating results of
the Company.
DEPENDENCE ON SUPPLIERS
Material and components for the Company's products are purchased from
outside suppliers. While most components are available from several suppliers, a
few are provided from sole-source vendors. The Company believes that in most
cases alternative sources of supply could be obtained within a reasonable time
period; however, an interruption in the supply of such components could have a
temporary adverse effect on the Company's operations. The major components of
Hayes' products include silicon chips, printed circuit boards, microprocessors,
chipsets and other integrated circuits. Most of the components used in Hayes'
modem products are available from multiple sources. However, certain components
used in Hayes' products are custom manufactured and currently obtained from
single sources. In addition, although readily interchangeable items are
available from several suppliers, many of the components that are incorporated
in Hayes' products, such as integrated circuits and discrete components, are in
limited supply and are allocated throughout the industry. Like others in the
computer industry, Hayes has, from time to time, experienced difficulty in
obtaining certain components. While Hayes has entered into supply arrangements
with certain suppliers, including Lucent Technologies, Inc. and Rockwell
International Corporation ("Rockwell") regarding a supply of chips and chipsets,
there can be no assurance following the Merger that these suppliers will
continue to meet the Company's requirements. There can be no assurance that
severe shortages of components will not occur in the future which could increase
the cost or delay the shipment of products and have a material adverse effect on
the Company's operating results.
SALES CHANNEL RISKS
The Company's distribution channel is composed of value-added
resellers, original equipment manufacturers and distributors in more than 40
countries. Sales to end-user customers account for less than 10% of the
Company's revenues. Many of the Company's value-added resellers and other
distributors carry products which are complimentary to those of the Company, and
may choose to give higher priority to products of other suppliers or competitors
of the Company.
Hayes sells its products primarily through national, regional and
international wholesale distributors, national corporate resellers, computer
superstores and mail order. Sales to wholesale distributors accounted for a
significant share of Hayes net sales in fiscal 1996. The personal computer
distribution industry has been characterized by rapid change, including
consolidations and financial difficulties of wholesale distributors and the
emergence of alternative distribution channels. Hayes is dependent upon the
continued viability and financial stability of its wholesale distributors. The
loss or ineffectiveness of any of Hayes' largest wholesale distributors or a
number of its smaller wholesale distributors could have a material adverse
effect on the Company's operating results following the Merger. In addition, an
increasing number of vendors are competing for access to wholesale distributors
which could adversely affect the Company's ability to maintain Hayes' existing
relationships with its wholesale distributors or could negatively impact sales
to such distributors.
Hayes is dependent on the continued viability and financial stability
of its national resellers. The loss or ineffectiveness of any of Hayes' largest
national resellers or a number of its smaller national resellers could have a
material adverse effect on the Company's operating results following the Merger.
Due to increased competition for limited shelf space, retailers are
increasingly in a better position to negotiate favorable terms of sale,
including price discounts and product return policies. There can be no assurance
that Hayes will be able to sustain or increase its sales to retailers, which
could have a material adverse effect on the Company's operating results
following the Merger.
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<PAGE> 15
The OEM modem market has grown to approximately 50% of the overall
modem market. Hayes has not participated substantially in the OEM modem market
for the last two years and Hayes can give no assurance that it will be able to
successfully penetrate this market.
CONDITIONS TO THE MERGER
The obligations of the Company and Hayes to effect the Merger are
subject to a number of conditions including the termination of the antidilution
warrant issued to Rinzai Limited ("ACMA") and the receipt by each party of all
consents, assignments, waivers, authorizations or other certificates of third
parties for the continuation in full force and effect of any and all material
contracts and leases. Hayes has not received a consent from its lender CIT
Group/Credit Finance, Inc. ("CIT") for the continuation in full force and effect
of Hayes' credit facility with CIT following the Merger. If CIT does not consent
to the continuation of its credit facility following the Merger, each of Hayes
and the Company may determine to not effect the Merger. If the Merger is
consummated without CIT's consent to continue its credit facility with the
Company, it will be necessary for the Company to pursue additional equity or
debt financing to meet its cash requirements. The Company and Hayes are in
discussions with CIT concerning its consent, and believe that CIT is predisposed
to grant its consent, although there can be no assurance that its consent will
be granted.
IMPLEMENTATION OF NEW INFORMATION SYSTEM
Hayes is currently involved in the replacement of its information
systems with software from Oracle Corporation which will be completed after the
Effective Time of the Merger. The implementation of a new information system
could cause disruption to work efficiency. There can be no assurance that the
project will be completed within the budgeted time schedule or costs. To the
extent that the project is not completed timely or within the budgeted costs,
the Company's business and financial condition could be adversely affected.
ELECTION OF DIRECTORS AND OTHER STOCKHOLDER MATTERS
As a result of the Shareholder's Agreement among each of the Hayes
Shareholders and Mr. Howard, certain shareholders, who will own substantially
more than 50% of the Common Stock, without regard to the conversion of the 6%
Convertible Stock, will control the election of a majority of the directors.
These shareholders consist of Mr. Howard, ACMA, Dennis C. Hayes and Chestnut
Capital Limited Partnership, a limited partnership controlled by Dennis C.
Hayes. Such agreement will remain effective for so long as certain shareholders
own at least ten (10%) percent of the outstanding shares of the Company. Such
persons will also be able to control the taking of action which requires
approval by stockholders, since they will own more than a majority of the
outstanding shares of the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares.
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<PAGE> 16
SELLING STOCKHOLDERS
The following table sets forth (i) the name of each Selling
Stockholder, (ii) the nature of any position, office or other material
relationship which each Selling Stockholder has had with the Company or any of
its affiliates within the last three years, (iii) the number of shares of Common
Stock owned by each Selling Stockholder prior to the offering, (iv) the number
of shares of Common Stock offered for each Selling Stockholder's account and (v)
the percentage owned by each Selling Stockholder after completion of the
offering.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF PERCENTAGE
OWNED PRIOR TO OFFERED FOR ACCOUNT OF SHARES OWNED OWNED AFTER
SELLING STOCKHOLDER (1) OFFERING (2) SELLING STOCKHOLDER (3) AFTER OFFERING OFFERING (4)
- ----------------------- -------------- ------------------------- -------------- -------------
<S> <C> <C> <C> <C>
Elliott Associates, L.P. 622,943 (5) 720,566 (6) 246,500 1.46%
Westgate International, L.P. 622,943 (5) 720,566 (6) 246,500 1.46%
Raphael, L.P. 44,925 89,850 0 0
GAM Arbitrage Investments, Inc. 22,462 44,924 0 0
AG Super Fund International Partners, L.P. 22,462 44,924 0 0
Leonardo, L.P. 341,877 683,754 0 0
Ramius Fund, Ltd. 67,387 134,774 0 0
Shepherd Investments International, Ltd. 250,506 (7) 479,846 (7) 0 0
Stark International 250,506 (7) 479,846 (7) 0 0
Westover Investments L.P. 234,507 469,014 0 0
Montrose Investments Ltd. 264,606 529,212 0 0
---------
4,397,276
=========
</TABLE>
(1) None of the Selling Stockholders has had any material relationship with
the Company or any of its predecessors or affiliates within the past
three years.
(2) Assumes conversion of all of such Selling Stockholder's shares of 6%
Convertible Stock on December 15, 1997, at a conversion price of
$4.4519, which represents 85% of the average closing bid price of the
Common Stock on NASDAQ/NMS for the five (5) consecutive trading days
prior to, but excluding, December 15, 1997.
(3) Assumes, as to each Selling Stockholder, that it owns twice the number
of shares of Common Stock that would be obtained if all shares of 6%
Convertible Stock owned by it were converted on December 15, 1997.
(4) Based on 16,892,567 shares of Common Stock outstanding after the
offering, which includes twice the number of shares of Common Stock
that would be obtained if all shares of 6% Convertible Stock owned by
the Selling Stockholders were converted on December 15, 1997.
(5) Also includes (i) 32,320 shares of Common Stock issued upon conversion
of 135 shares of 6% Convertible Stock, and (ii) 246,500 shares of
Common Stock purchased in the public market.
(6) Also includes 32,320 shares of Common Stock issued upon conversion of
135 shares of 6% Convertible Stock. Does not include 246,500 shares of
Common Stock purchased in the public market.
(7) Also includes 21,166 shares of Common Stock issued upon conversion of
90 shares of 6% Convertible Stock.
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<PAGE> 17
PLAN OF DISTRIBUTION
The Shares may be sold from time to time by the Selling Stockholders or
their pledgees or donees. See "Selling Stockholders." Such sales may be made on
the NASDAQ/NMS or in negotiated transactions, at prices and on terms then
prevailing or at prices related to the then current market price or at
negotiated prices. The methods by which the Shares may be sold may include, but
not be limited to, the following: (a) block trades in which the broker or dealer
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account; (c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; (d) privately negotiated transactions; (e) short
sales; (f) short sales against the box; (g) puts and calls; and (h) a
combination of any such methods. In effecting sales, brokers or dealers engaged
by the Selling Stockholders may receive commissions or discounts from the
Selling Stockholders or from the purchasers in amounts to be negotiated
immediately prior to the sale. From time to time, Selling Stockholders may
pledge their shares pursuant to the margin provisions of their respective
customer agreements with their respective brokers. Upon a default by a Selling
Stockholder, the broker may offer and sell the pledged shares of Common Stock
from time to time.
The Company has agreed to maintain the effectiveness of the
registration of the Shares offered hereby until the earlier of the date upon
which all of the Shares offered hereby have been sold without restriction on
resale, or the date on which the Shares offered hereby, in the opinion of
counsel, may be immediately sold by the Selling Stockholders without
registration or restriction on resale. Any Shares which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under that Rule rather
than pursuant to this Prospectus. There can be no assurance that the Selling
Stockholders will sell any or all of the Shares offered hereby.
The Company is bearing all of the costs relating to the registration of
the Shares. Any commissions, discounts or other fees payable to a broker,
dealer, underwriter, agent or market maker in connection with the sale of any of
the Shares will be borne by the Selling Stockholders. The Company will not
receive any of the proceeds from this offering.
Pursuant to the registration rights granted to the Selling Stockholders
in connection with the sale of the Shares by the Company, the Company has agreed
to indemnify the Selling Stockholders, any person who controls a Selling
Stockholder, and any underwriters for the Selling Stockholders, against certain
liabilities and expenses arising out of or based upon the information set forth
in this Prospectus, and the Registration Statement of which this Prospectus is a
part, including liabilities under the Securities Act. The Selling Stockholders
and any brokers participating in such sales may be deemed to be underwriters
within the meaning of Section 2(11) of the Securities Act. Any commissions paid
or any discounts or concessions allowed to any broker, dealer, underwriter,
agent or market maker and, if any such broker, dealer, underwriter, agent or
market maker purchases any of the Shares as principal, any profits received on
the resale of such Shares, may be deemed to be underwriting commissions or
discounts under the Securities Act.
Because the Selling Stockholders may be deemed to be underwriters, the
Selling Stockholders will be subject to prospectus delivery requirements under
the Securities Act. Furthermore, in the event of a "distribution" of the Shares,
such Selling Stockholders, any selling broker or dealer and any "affiliated
purchasers" may be subject to Regulation M under the Exchange Act, which
prohibits, with certain exceptions, any such person from bidding for or
purchasing any security which is the subject of such distribution until his
participation in that distribution is completed. In addition, Regulation M
prohibits, with certain exceptions, any "stabilizing bid" or "stabilizing
purchase" for the purpose of pegging, fixing or stabilizing the price of Common
Stock in connection with this offering.
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LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon by
Morrison Cohen Singer & Weinstein, LLP, outside legal counsel to the Company.
EXPERTS
The consolidated financial statements of the Company and the related
consolidated financial statement schedule incorporated in this Prospectus by
reference from the Company's Amendment No. 1 to the Registration Statement on
Form S-4 (Registration Statement No. 333-37993) for the year ended July 31,
1997 and 1996 and for each of the three years in the period ended July 31, 1997
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The consolidated financial statements of Hayes and its subsidiaries as
of December 31, 1995 and 1996 and for the years ended September 30, 1994 and
1995, the three months ended December 31, 1995 and the year ended December 31,
1996 incorporated in this Prospectus by reference have been audited by Coopers
& Lybrand L.L.P., independent accountants, as stated in their report, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under the Delaware General Corporation Law, a corporation may indemnify
any director, officer, employee or agent against expense (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation to
procure a judgment in its favor -- a "derivative action") if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal proceeding, had no reasonable cause to believe that his or her conduct
was unlawful.
The Company's Certificate of Incorporation provides, among other
things, that the Company shall indemnify any person who is or was a director or
officer of the Company who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company), by reason of the fact that he (i) is or was a
director or officer of the Company, or (ii) is or was serving at the request of
the Company as director, officer, employee, agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
16
<PAGE> 19
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
AVAILABLE INFORMATION.............................................................................................2
INCORPORATION OF DOCUMENTS
BY REFERENCE..................................................................................................3
SPECIAL NOTE......................................................................................................4
RISK FACTORS......................................................................................................5
USE OF PROCEEDS..................................................................................................13
SELLING STOCKHOLDERS.............................................................................................14
PLAN OF DISTRIBUTION............................................................................................ 15
LEGAL MATTERS....................................................................................................16
EXPERTS..........................................................................................................16
INDEMNIFICATION OF DIRECTORS
AND OFFICERS..................................................................................................16
</TABLE>
ACCESS BEYOND, INC.
4,397,276 SHARES OF COMMON STOCK
PROSPECTUS
DECEMBER , 1997
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<CAPTION>
<S> <C>
S.E.C. Registration Fee................................... $ 6,972.43
NASDAQ/NMS Listing Fee.................................... $17,500.00
Legal Fees and Expenses................................... $20,000.00
Accountants' Fees and Expenses............................ $15,000.00
Printing and Engraving Fees............................... $ 3,000.00
Miscellaneous............................................. $ 2,527.57
----------
Total............................................ $65,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the Delaware General Corporation Law, a corporation may indemnify
any director, officer, employee or agent against expense (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with
specified actions, suits or proceedings, whether civil, criminal, administrative
or investigative (other than an action by or in the right of the corporation to
procure a judgment in its favor -- a "derivative action") if such person acted
in good faith and in a manner such person reasonably believed to be in or not
opposed to the best interests of the corporation, and, with respect to any
criminal proceeding, had no reasonable cause to believe that his or her conduct
was unlawful.
The Company's Certificate of Incorporation provides, among other
things, that the Company shall indemnify any person who is or was a director or
officer of the Company who is or was a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the Company), by reason of the fact that he (i) is or was a
director or officer of the Company, or (ii) is or was serving at the request of
the Company as director, officer, employee, agent of another corporation,
partnership, joint venture, trust, or other enterprise, against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him in connection with such action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful. The termination of any action, suit or proceeding by
judgment, order, settlement, conviction or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did not
act in good faith and in a manner which he reasonably believed to be in or not
opposed to the best interests of the Company or, with respect to any criminal
action or proceeding, had reasonable cause to believe that his conduct was
unlawful.
ITEM 16. EXHIBITS.
Exhibit No. Description
4.1 Preferred Stock Investment Agreement dated as of November 12,
1997 between the Company and the Selling Stockholders (filed
as Exhibit 4.1 to the Company's Form 8-K, as filed with the
Commission on November 17, 1997, including the Certificate of
Designations and Form of Warrant, which are attached as
exhibits).
II-1
<PAGE> 21
Exhibit
No. Description
4.2 Registration Rights Agreement dated as of November 12, 1997
between the Company and the Selling Stockholders (filed as Exhibit
4.2 to the Company's Form 8-K, as filed with the Commission on
November 17, 1997).
5.1 Opinion of Morrison Cohen Singer & Weinstein, LLP regarding
legality.
23.1 Consent of Morrison Cohen Singer & Weinstein, LLP (contained in
Exhibit 5.1 hereto).
23.2 Consent of Deloitte & Touche, LLP independent public accountants.
23.3 Consent of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (included on the signature page to this
Registration Statement).
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) to file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10
(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the Registration
Statement. Notwithstanding the foregoing, any increase or
decrease in the 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 and 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 percent 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
Registration Statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic report filed with or furnished to the Commission by the
registrant pursuant to Section 13 or 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 of 1933, each such post-effective amendment shall
be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
II-2
<PAGE> 22
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the Registration Statement to include any
financial statements required by Rule 3-19 of this chapter at the
start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided, that the
registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph
(a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of
those financial statements. Notwithstanding the foregoing, with
respect to registration statements on Form F-3, a post-effective
amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Act or Rule 3-19 of
this chapter if such financial statements and information are
contained in periodic reports filed with or furnished to the
Commission 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 Form F-3.
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing of
the registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Act of 1934 (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE> 23
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 Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Gaithersburg, State of Maryland, on December 16, 1997.
ACCESS BEYOND, INC.
By: /s/ Ronald A. Howard
-----------------------------------
Ronald A. Howard
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Ronald A. Howard and Mark Fields, or
either of them, each with the power of substitution, his or her
attorney-in-fact, to sign any amendments to this Registration Statement and to
file the same, with exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying and
confirming all that each of said attorney-in-fact, or his or her substitute, may
do or choose to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ronald A. Howard President and Chief Executive Officer December 16, 1997
- -------------------------------- (Principal Executive Officer) and
Ronald A. Howard Chairman of the Board
/s/ Mark Fields Controller and Acting Chief Financial December 16, 1997
- -------------------------------- Officer (Principal Financial and
Mark Fields Accounting Officer)
/s/ Barbara Perrier Dreyer Director December 16, 1997
- --------------------------------
Barbara Perrier Dreyer
/s/ John Howard Director December 16, 1997
- --------------------------------
John Howard
/s/ Arthur Samberg Director December 16, 1997
- --------------------------------
Arthur Samberg
/s/ Paul Schaller Director December 16, 1997
- --------------------------------
Paul Schaller
</TABLE>
<PAGE> 24
EXHIBIT INDEX
Exhibit
No. Description
4.1 Preferred Stock Investment Agreement dated as of November 12,
1997 between the Company and the Selling Stockholders (filed
as Exhibit 4.1 to the Company's Form 8-K, as filed with the
Commission on November 17, 1997, including the Certificate of
Designations and Form of Warrant, which are attached as
exhibits).
4.2 Registration Rights Agreement dated as of November 12, 1997
between the Company and the Selling Stockholders (filed as Exhibit
4.2 to the Company's Form 8-K, as filed with the Commission on
November 17, 1997).
5.1 Opinion of Morrison Cohen Singer & Weinstein, LLP regarding
legality.
23.1 Consent of Morrison Cohen Singer & Weinstein, LLP (contained in
Exhibit 5.1 hereto).
23.2 Consent of Deloitte & Touche, LLP independent public accountants.
23.3 Consent of Coopers & Lybrand L.L.P.
24.1 Power of Attorney (included on the signature page to this
Registration Statement).
<PAGE> 1
Exhibit 5.1
Morrison Cohen Singer & Weinstein, LLP
750 Lexington Avenue
New York, NY 10022
(212) 735-8600
December 16, 1997
Access Beyond, Inc.
1300 Quince Orchard Boulevard
Gaithersburg, MD 20878
Re: Access Beyond, Inc. Registration Statement on Form S-3
Gentlemen:
As counsel to Access Beyond, Inc., a Delaware corporation (the
"Company"), we have been requested to render our opinion in connection with the
sale of up to 4,446,290 shares (the "Shares") of the Company's common stock,
$.01 par value ("Common Stock") by certain stockholders of the Company pursuant
to a registration statement on Form S-3 (the "Registration Statement") being
filed by the Company with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Act of 1933, as amended (the
"Securities Act").
In connection with the foregoing, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the Certificate of
Incorporation of the Company, as amended, the By-laws of the Company, as
amended, and such other documents as we have deemed necessary or appropriate as
a basis for the opinions set forth below. In such examination, we have assumed
the genuineness of all signatures, the authenticity of all documents submitted
to us as originals, and the conformity to executed documents of all executed
copies submitted to us as conformed or photostatic copies. As to any facts
material to such opinions which we did not independently establish or verify, we
have relied upon statements or representations of officers and other
representatives of the Company, public officials or others.
<PAGE> 2
Access Beyond, Inc.
December 16, 1997
Page 2
On the basis of the foregoing and such other investigations as we have
deemed necessary in connection with this opinion, we are of the opinion that (i)
the Shares have been duly authorized by the Board of Directors of the Company
and (ii) assuming that the Registration Statement becomes and remains effective
and that applicable state securities laws are complied with, the Shares will,
when issued and sold in the manner contemplated in the Registration Statement,
be legally issued, fully paid and nonassessable shares of Common Stock.
We hereby consent to the inclusion of this opinion as Exhibit 5.1 to
the Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the Registration Statement. In giving this consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Securities Act, or the rules and regulations of
the Securities and Exchange Commission thereunder.
Very truly yours,
/s/ Morrison Cohen Singer & Weinstein, LLP
Morrison Cohen Singer & Weinstein, LLP
<PAGE> 1
Exhibit 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Access Beyond, Inc. on Form S-3 of our report dated August 29, 1997 (November
12, 1997 as to Note 11), appearing in Amendment No.1 to the Registration
Statement on Form S-4 (Registration Statement No. 333-37993) of Access Beyond,
Inc. for the year ended July 31, 1997 and to the reference to us under the
heading "Experts" in the Prospectus, which is part of this Registration
Statement.
/s/ Deloitte & Touche LLP
Washington, D.C.
December 16, 1997
<PAGE> 1
Exhibit 23.3
CONSENT OF INDEPENDENT ACCOUNTANT
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report appearing in Amendment No. 1 to the
registration statement on Form S-4 (File No. 333-37993) dated April 30, 1997,
except for Note 18 as to which the date is November 12, 1997 on our audits of
the consolidated financial statements of Hayes Microcomputer Products, Inc. We
also consent to the reference to our firm under the caption "Experts."
COOPERS & LYBRAND L.L.P.
Atlanta, Georgia
December 17, 1997
