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Filed Pursuant to Rule 424(b)(3)
Registration no. 333-82849
PROSPECTUS
290,000 SHARES OF COMMON STOCK
REGISTRY MAGIC INCORPORATED
Certain shareholders of Registry Magic Incorporated may use this
prospectus to sell up to 290,000 shares of our common stock from time to time.
The shares include 200,000 currently outstanding shares that were sold in
private placements and 90,000 shares issuable by us upon the exercise of
outstanding options. We expect that shareholders using this prospectus will
sell the stock
o in ordinary brokers' transactions;
o in transactions directly with market makers; or
o in privately negotiated sales or otherwise.
The selling security holders will determine when they will sell
shares, and in all cases they will sell shares at the current market price or
at negotiated prices at the time of the sale. We will pay the expenses incurred
to register the shares for resale, but the selling security holders will pay
any underwriting discounts, concessions, or brokerage commissions associated
with the sale of their shares. The selling security holders and any brokers and
dealers that they use may be considered to be "underwriters" within the meaning
of the securities laws, and any commissions received and any profits realized
by them on the sale of shares may be considered to be underwriting
compensation. See "Plan of Distribution."
We will not receive any of the proceeds of sales by the selling
security holders. Securities laws and SEC regulations may require the selling
security holders to deliver this prospectus to purchasers when they resell
their shares of common stock.
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "RMAG." On July 13, 1999, the last reported closing bid price for our
common stock on the Nasdaq SmallCap Market was $4.3125 per share.
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SEE "RISK FACTORS," BEGINNING ON PAGE 4, FOR A DISCUSSION OF CERTAIN
RISK FACTORS THAT YOU SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS AUGUST 2, 1999
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AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934. Accordingly, we file reports, proxy statements, and other
information with the SEC. The public may read and copy any materials that we
file with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the prescribed fees. The public may
obtain information on the operation of the Public Reference Room by calling the
SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy, and information statements and other materials that are filed
through the SEC's Electronic Data Gathering, Analysis, and Retrieval system.
This web site can be accessed at http://www.sec.gov.
THIS PROSPECTUS INCORPORATES CERTAIN INFORMATION BY REFERENCE
We hereby incorporate by reference in this prospectus (1) our Annual
Report on Form 10-K/SB for the year ended July 31, 1998; and (2) our Quarterly
Reports on Form 10- Q/SB for the quarters ended October 31, 1998, January 31
and April 30, 1999. All reports and other documents that we file pursuant to
Sections 13(a), 13(c), 14, or 15(d) of the Exchange Act after the date of this
prospectus shall be deemed to be incorporated by reference into and to be a
part of this prospectus from the date on which we file them. To the extent that
any statement in this prospectus or in any subsequently filed document that is
incorporated by reference modifies or supersedes any statement contained in a
previously filed document that is incorporated by reference, the more recent
statement will modify or supersede the earlier statement. Any modified or
superseded statement, to the extent that it is modified or superseded, is not
part of this prospectus.
The information contained in this prospectus relating to Registry
Magic Incorporated summarizes, is based upon, or refers to information and
financial statements contained in one or more of the documents incorporated by
reference in this prospectus. Accordingly, you should refer to those documents
to obtain all the information you should consider before purchasing our common
stock.
If you have received this prospectus in connection with a purchase of
our common stock from a selling stockholder, you may contact us to obtain free
copies of any or all of the documents referred to above that have been
incorporated by reference to this prospectus. We will provide exhibits to such
documents free of charge only if they are specifically incorporated by
reference into this prospectus.
You may contact us at: Registry Magic Incorporated
Attn: Bruce Carlsmith
One South Ocean Boulevard, Suite 206
Boca Raton, Florida 33432
(561) 367-0408
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STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
THE STATEMENTS CONTAINED IN OR INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS THAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN
THE MEANING OF APPLICABLE SECURITIES LAWS. FORWARD-LOOKING STATEMENTS INCLUDE
STATEMENTS REGARDING OUR "EXPECTATIONS," "ANTICIPATION," "INTENTIONS,"
"BELIEFS," OR "STRATEGIES" REGARDING THE FUTURE. FORWARD-LOOKING STATEMENTS
ALSO INCLUDE STATEMENTS REGARDING OUR REVENUE, MARGINS, EXPENSES, AND EARNINGS
ANALYSIS FOR FUTURE PERIODS; AND LIQUIDITY AND ANTICIPATED CASH NEEDS AND
AVAILABILITY. ALL FORWARD-LOOKING STATEMENTS INCLUDED IN OR INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS ARE BASED ON INFORMATION AVAILABLE TO US AS OF
THE DATE OF THIS PROSPECTUS, AND WE ASSUME NO OBLIGATION TO UPDATE ANY SUCH
FORWARD-LOOKING STATEMENTS. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THE
FORWARD-LOOKING STATEMENTS. AMONG THE FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY ARE THE FACTORS DISCUSSED UNDER THE HEADING "RISK
FACTORS."
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RISK FACTORS
The securities offered hereby are speculative and involve a high
degree of risk. Only those persons who are able to lose their entire investment
should purchase these securities. Prospective investors, prior to making an
investment decision, should carefully read this Prospectus and consider, along
with other matters referred to herein, the following risk factors.
SPECIAL NOTE ABOUT FORWARD LOOKING STATEMENTS
We make statements in this prospectus and in the documents we
incorporate by reference that are considered "forward-looking statements"
within the meaning of the Securities Act and the Exchange Act. Sometimes these
statements contain words such as "may," "believe," "expect," "continue,"
"intend," or other similar words. These statements are not guarantees of our
future performance and are subject to risks, uncertainties, and other factors
that could cause our actual performance or achievements to be materially
different from those we project. The following factors, among others, could
cause materially different results from those anticipated or projected:
o heightened competition;
o failure to obtain new customers or retain existing customers;
o inability to carry out marketing and sales plans;
o inability to obtain capital for future growth;
o loss of key executives; and
o general economic and business conditions.
We do not have a policy of updating or revising forward-looking
statements and thus it should not be assumed that our silence over time means
that actual events are bearing out as estimated in such forward looking
statements.
Among the key risks that could cause actual results to differ
materially from expectations, estimates of costs, projected results or
anticipated results are as follows:
LIMITED OPERATING HISTORY; OPERATING LOSSES
We have received only limited revenues from our inception in October
1995 through April 30, 1999. Total revenues for the nine months ended April 30,
1999 were $1,694,409. We have only recently begun generating limited sales
revenue from our Virtual Operator product. Accordingly, we have only a limited
history upon which you can evaluate our
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prospects and future performance. Our prospects must be considered in light of
the risks, expenses and difficulties frequently involved in the operations and
expansion of a new business in an evolving industry which has not obtained
widespread commercial acceptance and which experiences rapid technological
obsolescence and intense competition.
From inception through April 30, 1999, we have incurred cumulative
losses of $6,840,222 and anticipate that our losses will continue during the
current fiscal year ending July 31, 1999. We expect to incur significant
expenditures in connection with the development and marketing of our speech
recognition applications which will likely result in losses until such time, if
ever, as we are able to obtain sufficient contracts for our speech recognition
products and services which will generate adequate sources of revenue to
support our operations. We cannot assure you that our current business strategy
will enable us to ever achieve profitable operations.
SIGNIFICANT CAPITAL REQUIREMENTS; POSSIBLE NEED FOR ADDITIONAL FINANCING
We will continue to have significant capital requirements due to the
substantial costs associated with product development and refinement,
recruitment of skilled personnel and the marketing of innovative speech
recognition products and related services primarily to large established
corporations and other organizations. Our cash requirements for the purpose of
developing our products have been substantial and, as a result, we have been
dependent upon capital resources provided by investors in order to finance our
operations.
At the current time our expenditures are exceeding our limited
revenues on a monthly basis. While we expect our revenues to increase during
the 1999 fiscal year, if we are wrong, or our revenues do not increase
substantially, we will continue to deplete our cash resources from our previous
public offering. In the event we do not develop and refine our products on a
timely basis, we do not complete contracts for the provision of products and
technology in sufficient number or in the event the proceeds of our initial
public offering are insufficient to fund the implementation of our business
plan and working capital requirements, we may require additional financing. We
have no current arrangements with respect to, or potential sources of,
additional financing and we do not anticipate that existing shareholders will
satisfy any portion of our future financing requirements. We cannot assure you
that any additional financing will be available to us when needed, on
commercially reasonable terms, or at all. If we are unable to obtain additional
financing when needed, this may have a material adverse effect on us, including
the curtailment of our product development, marketing and expansion activities.
DEVELOPMENT OF MARKETS REQUIRED FOR OUR SUCCESSFUL PERFORMANCE
We have only recently commenced major marketing activities, and we
cannot assure you that our marketing program will be successful or that our
applications software will be accepted by the market. Market acceptance for our
products will require substantial
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marketing efforts and the expenditure of significant funds. Our financial
performance will depend, in part, on acceptance of speech recognition
technology and the future development, growth and size of this market. Our
applications software products will compete with more conventional means of
information processing (e.g. data entry or access by keyboard or touch-tone
phone). The development of these markets also will depend upon the following:
o demand for new applications
o ability of our products and services to meet and adapt to
these needs
o continuing price and performance improvements in speech
recognition engine technology and hardware technology that
will reduce the cost and increase the performance of
products incorporating our applications
LACK OF MANAGEMENT
Since July 6, 1999 our operations have been managed by a Management
Committee formed by the Board of Directors. This committee consists of Bruce
Carlsmith, Dennis Wolf and Cornelia Eldridge. Although we have commenced a
search for a new Chief Executive Officer, there can be no assurance when one
will be selected and the effects on our operations during the period prior to
selection.
UNCERTAINTY OF PRODUCT AND TECHNOLOGY DEVELOPMENT
Our initial product, the Virtual Operator, is a speech driven
auto-attendant. In addition, we have developed prototypes for two additional
telephone-based speech recognition products including a voice driven speed
dialing product and a conversational personal assistant that performs
voice-mail, facsimile, and e-mail retrieval, as well as the functions of the
Virtual Operator and the speed dialing product. To date, however, we have not
developed foreign language versions for our Virtual Operator product (other
than Spanish and Japanese) or our two prototypes. Additionally, we also intend
to continue to develop and refine additional products including Virtual Dialer,
Virtual Personal Assistant and Virtual Employee Teleservices, which is
currently in the relatively early stages of development. In order to finalize
development of these products, we will be required to spend considerable time,
effort and resources. Our success will depend, in part, upon the ability of our
proposed products to meet targeted performance, cost objectives, and their
timely introduction into the marketplace.
In addition, early versions of software products often contain errors
or defects. We cannot assure you that, despite extensive testing by us and
potential customers, errors or defects will not be found in our applications
software products prior to or after commencement of their commercial
deployment. This may result in redevelopment costs and loss of, or delay in,
market acceptance of our products. Additionally, we cannot assure you that our
products will satisfactorily perform the functions for which they are designed
or, that they will meet applicable price or performance objectives.
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RAPID TECHNOLOGICAL CHANGE
The speech recognition products market is expected to involve rapid
technological change resulting in dynamic customer demands, frequent new
product and service introductions and short product lifecycles. The markets for
our products may change rapidly as a result of the following:
o innovations in core speech recognition engine technology
o computer hardware
o software and communications technologies
Our success will depend, in part, upon our ability to make timely and
cost-effective enhancements and additions to our existing applications software
products and developing new products that meet changing customer demands. We
cannot assure you that we will have the resources necessary to achieve this
objective and that our products will not be rendered obsolete.
COMPETITION
The speech recognition applications market is growing and is expected
to be characterized by intense competition. Our products will compete with, or
affect the sales of, many well-established companies including IBM, AT&T,
Digital Equipment, Lucent, Nortel and Unisys. Most of these companies have
substantially greater financial, technical, personnel and other resources than
we have and have established reputations for success in the development,
licensing and sale of their products and technology, especially the larger
organizations. Several of these competitors have the financial resources
necessary to enable them to withstand substantial price competition or
downturns in their markets. In addition, certain companies may be expected to
develop technologies or products that may be functionally similar to some or
all of those being developed by us. With respect to the Virtual Operator
product, our competitors will likely include Voice Control Systems, Locus,
Phonetics, Parlance and Vocalis. With respect to the Virtual Dialer product,
our competitors will likely include IntelliVoice, Brite and Periphonics. In the
Virtual Personal Assistant product, we expect that our initial competitors will
be Wildfire, General Magic and Webley. Additionally, manufacturers of
voice-mail and telephone switches may also attempt to develop their own
conversational speech recognition applications. There can be no assurance that
we will be able to compete successfully, that our competitors or future
competitors will not develop technologies or products that render our products
and technology obsolete or less marketable, or that we will be able to
successfully enhance its proposed products or technology or adapt them
satisfactorily.
Industry standards with respect to the markets for the technology and
products being developed by us are continually evolving. This often results in
product obsolescence or short product life cycles. Accordingly, our ability to
compete successfully will depend on a number of factors including our ability
to:
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o complete development and introduce into the marketplace our
proposed products and technology
o continually enhance and improve our products and technology
in a timely manner
o adapt our proposed products in order to be compatible with
specific products manufactured by others
o successfully develop and market new products and technology
We cannot assure you that we will be able to compete successfully, that our
competitors or future competitors will not develop technologies or products
that make our products and technology obsolete or less marketable, or that we
will be able to successfully improve our proposed products or technology or
adapt them satisfactorily.
DIFFICULTIES IN MAINTAINING PROPRIETARY RIGHTS
Our success depends upon our proprietary applications software
technology which may be difficult to protect. We currently rely on a
combination of contractual rights, trade secrets, know-how, trademarks,
non-disclosure agreements and technical knowledge to establish and protect our
proprietary rights. We cannot assure you, however, that the measures we have
taken to protect our proprietary rights will be adequate to prevent
misappropriation of the technology or independent development by others of
products with features based upon, or otherwise similar to, those of our
products. Additionally, although we believe that we have independently
developed our technology and our technology does not infringe on the
proprietary rights or trade secrets of others, we cannot assure you that our
technology does not and will not so infringe or that third parties will not
assert infringement claims, trade secret violations, competitive torts or other
proprietary rights violations against us in the future. In the case of
infringement, we could, under certain circumstances, be required to modify our
products or obtain licenses, which could require cash or other consideration.
We cannot assure you that we will be able to do either in a timely manner or
upon acceptable terms and conditions, and this failure could have a material
negative effect on us. In addition, we cannot assure you that we will have the
resources to defend or prosecute a patent infringement or other proprietary
rights infringement action. We have filed for federal trademark protection with
the United States Patent and Trademark Office (the "PTO") and have received
registration for the marks REGISTRY MAGIC(R), VIRTUAL OPERATOR(R), and VIRTUAL
EMPLOYEE(R).
There are four patent applications currently pending with the PTO on
various aspects of our applications software including for our barge-in and key
word spotting attributes. We have five additional provisional patent
disclosures filed with the PTO which relate to the Virtual Personal Assistant
and the Virtual Dialer products. There can be no assurance that any of these
patents will be granted, or if granted, will provide us with significant
protection against competitors. Certain of our competitors have obtained patent
protection, and we believe that certain of our competitors are seeking patent
protection on various aspects of their speech recognition technology. There can
be no assurances that
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our technology will not be subject to challenges that such technology infringes
on the proprietary rights or trade secrets of others.
DEPENDENCE ON OTHER COMPANIES FOR ASSEMBLY AND COMPONENT PARTS
We do not manufacture component parts for our products and,
accordingly, will be dependent on others for the supply and assembly of various
of our products. Our products are designed to be used with personal computers
(PCs), specifically Intel Pentium and Celeron processors. While we currently
purchase our modems, which are required for our software applications, for
remote maintenance from a variety of manufacturers and our telephone interface
cards, which are also required for our software applications, from Dialogic
Corporation, located in Parsippany, New Jersey, there are a number of other
manufacturers who can supply similar products to us, and we are not dependent
upon a single supplier for any equipment or component parts. However, the loss
of Dialogic as a source for telephone interface cards could have a negative
impact on us, since we may not be able to offer all of the features of a
particular application if a card manufactured by another entity is used.
Additionally, we generally do not have long-term contracts with suppliers for
the purchase and delivery of component parts or contractors for the assembly of
our products. However, any interruption of supply in the assembly services we
use or in the supply of key components, for any reason, could result in
significant delivery delays, which would have a material negative effect on our
marketing efforts, customer relations, revenues and profitability.
LACK OF SALES AND MARKETING CAPABILITIES; DEPENDENCE UPON INDEPENDENT
DISTRIBUTORS, CORPORATE PARTNERS AND STRATEGIC ALLIANCES
We are currently in the process of establishing a distribution network
for North America consisting of independent distributors and dealers as well as
a direct sales force. Our ultimate strategy is to establish alliances with
corporate partners so that we will be able to license our proprietary software
products and generate revenue on a recurring basis. We cannot assure you that
our distribution network can be successfully established or will result in
substantial sales of our products. Furthermore, we cannot assure you that our
strategic partners will provide us with the support anticipated by us, or that
any of the strategic alliances will be successful in marketing speech
technology applications without further delays or within budget. Failure of
these joint ventures to be successful would have a material negative effect on
our business and prospects.
IMPACT OF THE YEAR 2000 ON COMPUTER SYSTEMS
IMPACT OF THE YEAR 2000 ON COMPUTER SYSTEMS ON OUR PRODUCTS
Computers, software and other equipment utilizing microprocessors that
use only two digits to identify a year in a data field may be unable to process
accurately certain date-based information at or after the year 2000. We
recognize the need to insure that its
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operations will not be adversely affected by Year 2000 software failures.
Software failures due to processing errors potentially arising from
calculations using the Year 2000 date are a recognized risk, and we are
addressing this issue on several different fronts. We are in contact with our
suppliers to assess their compliance. Should third parties not convert their
systems in a timely manner and in a way that is compatible with our system
there may be a material adverse effect on us. We believe that our actions with
suppliers will minimize these risks.
Finally, we have established an internal workforce to coordinate
solutions for the Year 2000 issue with a goal of having all our products Year
2000 compliant by the end of 1999. After evaluation of the responses from
suppliers, which we anticipate to complete in the fourth quarter of fiscal
1999, we will prepare a contingency plan to mitigate Year 2000 issues, if
necessary.
Through April 30, 1999, we have not incurred material expenses
relating to Year 2000 compliance efforts and believe that the expenses
associated with completing our year 2000 compliance plans will not have a
material adverse impact on our operations. Internal and external expenses
specifically associated with modifying internal-use software for the Year 2000
will be expensed as incurred. Our current estimates of the amount of time and
expenses necessary to implement and test our computer systems are based on the
facts and circumstances existing at this time. Nevertheless, achieving Year
2000 compliance is dependent on many factors, some of which are not completely
within our control. Should either our internal system or the internal systems
of one or more significant vendors or suppliers fail to achieve Year 2000
compliance, our business and our results of operations could be adversely
affected.
YEAR 2000 IMPACT ON INTERNAL BUSINESS OPERATIONS
We use a significant number of computer software programs and
operating systems in our internal operations, including applications used in
financial business systems and various administration functions. To the extent
that these software applications contain source code that is unable to
appropriately interpret the upcoming calendar year "2000," some level of
modification or even replacement of such source code or applications will be
necessary. We are in the process of identifying the software applications that
are not Year "2000" compliant. Given the information known at this time about
our systems, coupled with our ongoing efforts to upgrade or replace business
critical systems as necessary, it is currently not anticipated that these "Year
2000" costs will have a material adverse impact on our business, financial
condition and results of operations. However, we are still analyzing our
software applications and, to the extent they are not fully "Year 2000"
compliant, there can be no assurance that the costs necessary to update
software or potential interruptions would not have a material adverse effect on
our business, financial condition and results of operations.
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RISKS ASSOCIATED WITH MANAGEMENT OF GROWTH
Under our business plan the anticipated growth in our customer base
and continued development of our speech recognition products and related
services also involve potential risks. This growth and continued development
could place a major strain on our management, employees and operations. In the
event of this expansion, we would have to continue to implement and improve our
operating systems, and to expand, train and manage our employee base. If we are
unable to implement and improve these operating systems and manage our employee
base effectively, our operations could be negatively affected.
RISK OF INTERNATIONAL SALES
Our business is expected to be conducted in the European Union, as
well as in the United States, and may be affected by changes in demand
resulting from fluctuations in currency exchange rates, as well as by
governmental controls and other risks associated with international sales. Our
international business may be subject to longer payment cycles, difficulties in
accounts receivable collection, delays in shipments, increases in duties and
taxes, price controls, adverse changes in foreign regulations and the burdens
of complying with a wide variety of foreign laws. We will generally deal in
local currencies in foreign markets. If the U.S. dollar strengthens in relation
to these international currencies, our revenues from international sales and
the gains and losses on the settlement of receivables from international
operations may be negatively affected. We cannot assure you that exchange rate
fluctuations and other risks associated with international operations will not
have a material negative effect on our business and prospects.
VARIABILITY OF QUARTERLY RESULTS
Our quarterly operating results may fluctuate as a result of a variety
of factors, including:
o the length of the sales cycle;
o the timing of orders from and shipments to customers;
o delays in product development and customer acceptance of
custom applications;
o product development expenses;
o the success of new product introductions or announcements by
us or our competitors;
o levels of market acceptance for new and existing products;
and
o the hiring and training of additional staff as well as
general economic conditions.
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Because a significant portion of our overhead is fixed in the
short-term, our results of operations may be negatively affected if revenues
fall below our expectations. If our management's estimate of product sales and
product mix turn out to be substantially inaccurate, we may not have the
necessary inventory available to deliver systems in a timely manner. This could
have a material negative effect on our results of operations during quarterly
periods.
CONTROL BY MANAGEMENT
Our executive officers and directors will own or have the right to
acquire within the next 60 days up to approximately 36% of the outstanding
shares of Common Stock. Accordingly, our management will have the ability to
elect our entire Board of Directors and control the outcome of all matters
submitted to a vote of our shareholders.
POSSIBLE DELISTING OF SECURITIES FROM NASDAQ
Our Common Stock is listed on The Nasdaq SmallCap Market. In order to
continue to be listed on Nasdaq, however, we must maintain at least $2,000,000
in net tangible assets (total assets less total liabilities and goodwill) or
$500,000 in net income in the latest fiscal year or in two of the last three
years or $35,000,000 in market capitalization, a public float of at least
500,000 shares, a $1,000,000 market value of public float, a minimum bid price
of $1.00 per share, at least two market makers, at least 300 shareholders and
at least two outside directors. The failure to meet these maintenance criteria
in the future may result in the delisting of our securities from Nasdaq, and
our Common Stock would thereafter be traded in the non-Nasdaq over-the-counter
market. As a result of such delisting, an investor could find it more difficult
to dispose of or to obtain accurate quotations as to the market value of our
Common Stock.
AUTHORIZATION OF PREFERRED STOCK; POSSIBLE ANTI-TAKEOVER EFFECTS
The Board of Directors is authorized to issue shares of preferred
stock and to determine the dividend, liquidation, conversion, redemption, and
other rights, preferences, and limitations of such shares without any further
vote or action of the shareholders. Accordingly, our Board of Directors has the
power, without shareholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting, or other rights which could negatively affect
the voting power or other rights of the holders of the Common Stock. In the
event of issuance, the preferred stock could be utilized, under certain
circumstances, as a method of discouraging and delaying or preventing a change
in control. We have no present plan to issue any shares of our preferred stock,
although we cannot assure you that we will not do so in the future.
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LIMITATION OF LIABILITY OF OUR DIRECTORS AND OFFICERS
Our Articles of Incorporation include provisions to eliminate, to the
full extent permitted by the Florida Business Corporation Act (the "Florida
Act") the personal liability of our directors for monetary damages arising from
a breach of their fiduciary duties as directors. The Articles of Incorporation
also include provisions that we shall, to the maximum extent permitted under
the laws of the State of Florida, indemnify, and upon request shall advance
expenses to any director or officer, to the extent that such indemnification
and advancement of expense is permitted under law.
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SUMMARY
THE FOLLOWING SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT MAY
BE IMPORTANT TO PURCHASERS OF OUR COMMON STOCK. PROSPECTIVE PURCHASERS OF
COMMON STOCK SHOULD CAREFULLY REVIEW THE DETAILED INFORMATION AND FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN OR INCORPORATED
BY REFERENCE INTO THIS PROSPECTUS. UNLESS OTHERWISE INDICATED, ALL INFORMATION
IN THIS PROSPECTUS ASSUMES NO EXERCISE OF ANY CURRENTLY OUTSTANDING OR
AUTHORIZED STOCK OPTIONS OR WARRANTS.
BUSINESS
General
Registry Magic(R) Incorporated commercializes speech recognition
technologies through the design, development and marketing of proprietary
intellectual property, products and services. Our products and technology
available, or under development, allow a user to speak into a telephone or to a
computer in a natural and conversational manner. In turn, these products
listen, understand and respond by performing employee tasks, retrieving
information or processing transactions.
Our technologies, products and services, among other attributes, are
designed to (i) substantially eliminate the need for telephone touch-tone
menus, (ii) allow for the automation of telephone systems internationally where
touch-tone technology may not be prevalent, and (iii) reduce a company's
operational expenses by performing repetitive employee tasks or improving
employee productivity.
Our business strategy is to focus long-term on three distinct business
areas. These business areas include (i) the marketing of products that reside
at a customers location to produce revenue from the sale and support of the
products, (ii) the marketing of technology to original equipment manufacturers
to produce recurring royalty revenue from license fees, and (iii) the provision
of a variety of services, that use our technologies and products, to produce
revenue on a transaction or recurring basis based on usage. These business
areas are referred to as (i) product sales, (ii) technology licensing, and
(iii) teleservices respectively.
The primary product we are marketing today is the Virtual Operator(R),
a speech driven auto-attendant and call routing turnkey product that performs
the repetitive tasks of a human operator without placing callers on hold or
requiring inefficient touch-tone menus. The product has received a number of
industry awards including: "Product of the Year 1997 and 1998" from industry
publications including Computer Telephony Magazine, CTI Magazine and
Teleconnect Magazine, "Best of Show" awards in 1998 and 1999 at industry trade
shows including CT Expo CTI Expo, and is included in the Smithsonian's
permanent
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collection of Information, Technology and Society. Installations span multiple
industries in both small and Fortune 500 companies alike.
In the product sales business area, we have recently entered into
national distribution or "teaming" agreements with Entex Information Services,
Homisco/Voicenet, Inter-Tel, Lucent Technologies, Tadiran Telecommunications,
Teleco as well as a number of regional dealers. We have also established
Business Partner relationships with other industry players including CompuCom,
Dialogic, NEC, Northern Telecom and Siemens. Certain of these distributors and
dealers have ordered or installed their "in-house" units, have sold units to
end user customers, and are working with the Company to educate and assist
their sales organizations to develop plans to promote the product to their
customers.
In the technology licensing business area, we announced that we are
licensing an application programming interface (API) for the Virtual Operator
and are in active discussion with telecommunication original equipment
manufacturers (OEMs) to provide technology to "speech enable" their next
generation of voicemail systems. In addition to recurring royalty revenue, it
is our objective to receive attribution for our Virtual Operator brand within
the products of these OEMs.
In the teleservices business area, we launched a service bureau
offering referred to as Virtual Employee(R) Teleservices. To support this
business, we have entered into a subcontracting agreement which allows the
service bureau to process over one thousand calls simultaneously. We have begun
to provide Virtual Employee(R) teleservices to Office Depot for catalog
ordering and have begun to receive revenue on a transaction basis. Teleservices
represents a minimal amount of our current revenues.
While we are generating limited sales revenue and limited recurring
royalty revenues, and anticipate continued increased revenues during the 1999
fiscal year, our expenses will continue to exceed revenues for at least the
remainder of the current fiscal year ending July 31, 1999. Product sales,
technology licensing or teleservices may not generate sufficient revenues to
enable us to operate profitably during our 1999 fiscal year or thereafter.
We are subject to all of the risks inherent in the establishment of a
new business enterprise in an emerging technology area. To address these risks,
we must, among other things, continue to enhance our technologies and products,
increase the number of key customer installations, enter into successful
distribution arrangements, expand into the international market, respond to
competitive developments, and attract, retain and motivate qualified executive
and other personnel. Failure to achieve one or more of these goals could have
material adverse effect upon our business, operating results and financial
condition.
15
<PAGE> 16
EMPLOYEES
We currently have 36 full-time employees. Three persons are in
management and provide services in the areas of marketing and business
development, administration and research and development; 17 are employed in
research and development; 14 are engaged in sales and marketing and two are in
administration. No employees are covered by a collective bargaining agreement
or are represented by a labor union. We consider our employee relations to be
good. We have also entered into independent contractor arrangements with three
individuals on an as-needed basis to develop programming or provide sales and
marketing assistance for us.
RECENT DEVELOPMENT
On July 6, 1999, Walt Nawrocki and Registry Magic manually agreed that
Mr. Nawrocki will no longer serve as our Chief Executive Officer and Director.
In addition, we formed a Management Committee, headed by Board member Bruce
Carlsmith, to manage our day-to-day operations as we search for a new Chief
Executive Officer. See "Risk Factors - Lack of Management".
USE OF PROCEEDS
The sale of the shares of common stock offered pursuant to this
prospectus are solely for the account of the selling security holder.
Accordingly, we will not receive any proceeds from the sale of such shares of
Common Stock by the selling security holders.
SELLING SECURITY HOLDERS
The following table sets forth the name of the selling security
holder, the number of shares of common stock beneficially owned by selling
security holders as of the date hereof, and the number of shares being offered
by the selling security holders. The shares of common stock being offered
hereby are being registered to permit public secondary trading, and the selling
security holders may offer all or part of such shares for resale from time to
time. However, selling security holders are under no obligation to sell all or
any portion of such shares immediately under this prospectus. All information
with respect to share ownership has been derived from the records of our
transfer agent with respect to shares of our common stock held of record by
such selling security holders. During the past three years the selling security
holders have not been an officer, director or affiliate of us nor has any
selling security holder had any material relationship with us during such
period, except 1-800 Reach Me LLC entered into a Dealer Agreement dated
December 10, 1997 with us pursuant to which we granted 1-800 Reach Me LLC the
non-exclusive right to market and distribute our Virtual Operator systems.
16
<PAGE> 17
Because the selling security holders may sell all or a portion of
their shares of common stock, no estimate can be given as to the number of
shares of common stock that will be held by the selling security holders upon
termination of any offering made hereby; accordingly, the following table
assumes the sale of all shares of common stock by the selling security holders
immediately following the date of this prospectus.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
No. of Shares
No. of Shares of No. of Shares of Common Stock Owner-
Common Stock of Common Beneficially ship
Name of Selling Beneficially Stock Owned After After
Security Holder Owned (1) Offered Offering (2) Offering (2)
- ----------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C>
1-800-REACH ME LLC 200,000 200,000 0 *
Roger Goldwyn 91,000(3) 90,000 1,000 *
</TABLE>
- ---------------------
* represents less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with
respect to securities and includes any securities which the person has
the right to acquire within 60 days of May 24, 1999 through the
conversion or exercise of any security or other right.
(2) Assumes the sale of all the shares of common stock offered hereby.
There are 5,873,000 shares of common stock outstanding as of the date
of this prospectus.
(3) Includes immediately exercisable options to acquire an aggregate of
90,000 shares of common stock exercisable at $.50.
PLAN OF DISTRIBUTION
The common stock offered by this prospectus is being offered on behalf
of the selling security holders. Such common stock may be sold or distributed
from time to time by the selling security holders, or by donees or transferees
or, or other successors in interest to the selling security holders, directly
to one or more purchasers or through brokers, dealers or underwriters who may
act solely as agents or may acquire such common stock as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices, which may be changed.
The sale of the common stock offered hereby may be effected in one or more of
the following methods: (i) ordinary brokers' transactions; (ii) transactions
involving cross or block trades or otherwise on the Nasdaq SmallCap Market
(TM); (iii) purchases by brokers, dealers or underwriters as principal and
resale by such purchasers for their own accounts pursuant to this prospectus;
(iv) "at the market" to or through market markers or into an existing market
for the common stock; (v) in other ways not involving market markers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (vi) through transactions in options, swaps or other
derivatives (whether exchange-listed or otherwise); (vii) in privately
negotiated transactions (viii) to cover short sales; or (ix) any combination of
the foregoing.
From time to time, the selling security holders may pledge,
hypothecate or grant a security interest in some or all of the shares of common
stock owned by them, and the pledgees, secured parties or persons to whom such
shares have been hypothecated shall,
17
<PAGE> 18
upon foreclosure in the event of default, be deemed to be selling security
holders hereunder. The number of selling security holders' shares of common
stock beneficially owned by the selling security holder who so transfers,
pledges, donates or assigns such shares will decrease as and when they take
such actions. The plan of distribution for the selling security holder's shares
of common stock sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be selling security
holders hereunder. In addition, the selling security holders may, from time to
time, sell short the common stock, and in such instances, this prospectus may
be delivered in connection with such short sales and the shares of common stock
offered hereby may be used to cover such short sales.
The selling security holders may enter into hedging transactions with
broker-dealers and the broker-dealers may engage in short sales of the common
stock in the course of hedging the positions they assume with such selling
security holders, including, without limitation, in connection with
distributions of the common stock by such broker-dealers. The selling security
holders may also enter into option or other transactions with broker-dealers
that involve the delivery of the shares of common stock to the broker-dealers,
who may then resell or otherwise transfer such shares. A selling security
holder may also loan or pledge the shares of common stock to a broker-dealer
and the broker-dealer may sell such shares so loaned or upon a default may sell
or otherwise transfer the pledged shares of common stock.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares of common stock as agents may receive compensation
in the form of commissions, discounts or concessions from the selling security
holders and/or purchasers of the common stock for whom such broker-dealers may
act as agent, or to whom they may sell as principal, or both (which
compensation as to a particular broker-dealer may be less than or in excess of
customary commissions). The selling security holders and any broker-dealers who
act in connection with the sale of the shares of common stock hereunder may be
deemed to be "underwriters" within the meaning of the Securities Act, and any
commission they receive and proceeds of any sale of the shares of common stock
may be deemed to be underwriting discounts and commissions under the Securities
Act. Neither we nor any selling security holder can presently estimate the
amount of such compensation. We know of no existing arrangements between the
selling security holders, any other stockholder, broker, dealer, underwriter or
agent relating to the sale or distribution of the shares of common stock
included in this prospectus.
We will pay substantially all of the expenses incident to the
registration, offering and sale of the shares of common stock included in this
prospectus to the public, other than commission or discounts of underwriters,
broker-dealers or agents. We have also agreed to indemnify certain of the
selling security holders and certain related persons against liabilities,
including liabilities under the Securities Act.
18
<PAGE> 19
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons, we have been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable.
We have advised the selling security holders that during such time as
they may be engaged in a distribution of the shares of common stock included
herein they are required to comply with Regulation M promulgated under the
Exchange Act. With certain exceptions, Regulation M precludes any selling
security holder, any affiliated purchasers, and any broker-dealers or other
person who participates in such distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase any security which is
the subject of the distribution until the entire distribution is complete.
Regulation M also prohibits any bids or purchases made in order to stabilize
the price of a security in connection with the distribution of that security.
All of the foregoing may affect the marketability of the shares of common
stock.
LEGAL MATTERS
Certain legal matters in connection with the securities being offered
hereby have been passed upon for us by Atlas, Pearlman, Trop & Borkson, P.A.,
Fort Lauderdale, Florida. Certain members of the firm of Atlas, Pearlman, Trop
& Borkson, P.A. own 21,000 shares of Common Stock.
EXPERTS
The financial statements as of and for the years ended July 31, 1998
and 1997 incorporated by reference in this prospectus have been audited by BDO
Seidman, LLP, independent certified public accountants, to the extent and for
the periods set forth in their report incorporated herein by reference, and are
incorporated herein in reliance upon such report given upon the authority of
said firm as experts in auditing and accounting.
19
<PAGE> 20
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations not contained in this Prospectus in
connection with this offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by us or any
Underwriter. This Prospectus does not constitute an offer to sell or a
solicitation of any offer to buy any of the securities offered hereby in any
circumstance in which such offer or solicitation would be unlawful. Neither the
delivery of this Prospectus nor any sale made hereunder shall under any
circumstances create an implication that information herein is correct at any
time subsequent to the date of this Prospectus.
--------------
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION.......................2
INFORMATION INCORPORATED
BY REFERENCE...........................2
RISK FACTORS................................4
BUSINESS ...................................14
USE OF PROCEEDS.............................16
SELLING SECURITY HOLDERS....................16
PLAN OF DISTRIBUTION........................17
LEGAL MATTERS...............................19
EXPERTS.....................................19
290,000 shares
of Common Stock
REGISTRY MAGIC
INCORPORATED
-----------
PROSPECTUS
-----------
August 2, 1999
<PAGE> 21
ATLAS, PEARLMAN, TROP & BORKSON, P.A.
200 East Las Olas Boulevard, Suite 1900
Fort Lauderdale, Florida 33301
August 2, 1999
Securities and Exchange Commission
Office of Small Business
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Attention: Filing Desk
RE: REGISTRY MAGIC INCORPORATED (THE "COMPANY") RULE 424(b)(3)
PROSPECTUS FILE NO. 333-82849
Dear Sir/Madam:
Enclosed for electronic filing on behalf of the Company is the Rule
424(b)(3) Prospectus.
Should you have any questions or comments regarding the enclosed,
please call the undersigned collect at (954) 763-1200.
Very truly yours,
/s/ Matthew W. Miller
--------------------------------------
Matthew W. Miller
MWM/dcb
Enclosure
cc: Registry Magic Incorporated
