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As filed with the Securities and Exchange Commission on October 25, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
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PCTEL, INC.
(Exact name of Registrant as specified in its charter)
----------------
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<S> <C> <C>
Delaware 1331 California Circle 77-0364943
(State or other jurisdiction of Milpitas, California 95035 (I.R.S. Employer
incorporation or organization) (408) 965-2100 Identification Number)
</TABLE>
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
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PETER CHEN
Chief Executive Officer
1331 California Circle
Milpitas, California 95035
(408) 965-2100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
DOUGLAS H. COLLOM
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304-1050
(650) 493-9300
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Approximate Date of Commencement of Proposed Sale to the Public: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, 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 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
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<TABLE>
<CAPTION>
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class of to be Offering Price Aggregate Registration
Securities to be Registered Registered Per Share(1) Offering Price Fee
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<S> <C> <C> <C> <C>
Common Stock, $0.001 par value...... 124,438 shares $19.25 $2,395,431.50 $632.40
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</TABLE>
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(1) Estimated solely for the purpose of computing the amount of the
registration fee. The estimate is made pursuant to Rule 457(c) of the
Securities Act of 1933, as amended, based on the average of the high and
low prices as reported on the Nasdaq National Market on October 25, 2000.
----------------
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the SEC, acting pursuant to said
Section 8(a), may determine.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+Information contained herein is subject to completion or amendment. A +
+registration statement relating to these securities has been filed with the +
+Securities and Exchange Commission. These securities may not be sold nor may +
+offers to buy be accepted prior to the time the registration statement +
+becomes effective. This prospectus shall not constitute an offer to sell or +
+the solicitation of an offer to buy nor shall there be any sale of these +
+securities in any State in which such offer, solicitation or sale would be +
+unlawful prior to the registration or qualification under the securities laws +
+of any such State. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
PROSPECTUS (SUBJECT TO COMPLETION) DATED OCTOBER 25, 2000
PCTEL, Inc.
1331 California Circle
Milpitas, California 95305
Telephone Number: (408) 965-2100
[LOGO OF PCTEL]
124,438 Shares Of Common Stock
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These shares may be offered and sold from time to time by the stockholder of
PCTEL, Inc., or PCTEL, identified in this prospectus. See "Selling
Stockholder." In connection with PCTEL's conversion of the outstanding share
capital of Voyager Technologies, Inc., or Voyager Technologies, into shares of
PCTEL common stock pursuant to the merger of Voyager Technologies into a
wholly-owned subsidiary of PCTEL, PCTEL agreed to issue up to 316,743 shares of
PCTEL common stock, including 49,056 shares issuable upon the exercise of
options assumed by PCTEL. Of the 316,743 shares, 124,438 shares of PCTEL common
stock are being registered in this offering.
The selling stockholder will receive all of the net proceeds from the sale of
the shares. The stockholder will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the shares. PCTEL will not
receive any proceeds from the sale of the shares.
You should consider carefully the risk factors beginning on page 5 of this
prospectus before purchasing any of the common stock offered hereby.
-----------
PCTEL's common stock is quoted on the Nasdaq National Market under the symbol
"PCTI." On October 25, 2000, the last reported sale price of our common stock
was $19.00 per share.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
-----------
October 25, 2000
<PAGE>
TABLE OF CONTENTS
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<S> <C>
WHERE TO FIND ADDITIONAL INFORMATION ABOUT PCTEL............................ 3
INFORMATION INCORPORATED BY REFERENCE....................................... 4
FORWARD LOOKING INFORMATION................................................. 4
RISK FACTORS................................................................ 5
USE OF PROCEEDS............................................................. 14
SELLING STOCKHOLDER......................................................... 15
PLAN OF DISTRIBUTION........................................................ 15
LEGAL MATTERS............................................................... 16
</TABLE>
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholder is offering to sell, and
seeking offers to buy, shares of PCTEL common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of the shares.
2
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WHERE TO FIND ADDITIONAL INFORMATION ABOUT PCTEL
We will provide to you a copy of any and all of the information (excluding
exhibits, other than those filed with this prospectus) that we file with the
Securities and Exchange Commission, without charge, upon written or oral
request. You should make any request for documents as soon as possible to
ensure timely delivery of the documents.
Requests for documents relating to PCTEL should be directed to:
PCTEL, Inc.
1331 California Circle
Milpitas, California 95035
Telephone: (408) 965-2100
Attention: Imelda McNerney
Reports, proxy statements, and other information concerning PCTEL may also
be inspected at The National Association of Securities Dealers, 1735 K Street
N.W., Washington, D.C.
PCTEL has filed reports, proxy statements, and other information with the
Securities and Exchange Commission. Copies of its reports, proxy statements
and other information may be inspected and copied at the public reference
facilities maintained by the SEC:
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 500 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a website that contains reports, proxy statements and other
information regarding PCTEL. The address of the SEC website is
http://www.sec.gov.
3
<PAGE>
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below, and any future filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
until the selling stockholder sells all the shares. This prospectus is part of
a Registration Statement we filed with the SEC (Registration No. 333- ).
The documents we incorporate by reference are:
1. Our Annual Report on Form 10-K for the fiscal year ended December 31,
1999;
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 2000;
3. Our Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 2000;
4. The description of our common stock contained in the Registration
Statement on Form 8-A we filed with the SEC on August 23, 1999.
You may request a copy of these filings, including any exhibits to such
filings, at no cost, by writing or telephoning Imelda McNerney at the
following address: PCTEL, Inc., 1331 California Circle, Milpitas, California
95305; telephone number (408) 965-2100.
FORWARD LOOKING INFORMATION
This prospectus, including the information incorporated by reference
herein, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. These forward-
looking statements include, but are not limited to, statements about our
plans, objectives, expectations and intentions and other statements contained
in the prospectus that are not historical facts. When used in this prospectus,
the words "expects," "anticipates," "estimates" and similar expressions are
intended to identify forward-looking statements. Because these forward-looking
statements involve risks and uncertainties, there are important facts that
could cause actual results to differ materially from those expressed or
implied by these forward-looking statements, including statements under the
caption "Risk Factors." Our actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors
set forth below. In particular, please review the sections captioned
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in our annual report on Form 10-K for the fiscal year ended
December 31, 1999 and our quarterly reports on Form 10-Q for the fiscal
quarters ended March 31, 2000 and June 30, 2000, which reports are
incorporated herein by reference, and in the similarly captioned section of
any quarterly report on Form 10-Q that we may file with the SEC. In connection
with forward-looking statements which appear in these disclosures, prospective
purchasers of the shares offered hereby should carefully consider the factors
set forth in this prospectus under "Risk Factors."
4
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RISK FACTORS
Prospective investors are cautioned that the statements made in this
prospectus or in documents incorporated by reference herein that are not
descriptions of historical facts may be forward-looking statements that are
subject to risks and uncertainties. Actual results could differ materially
from those currently anticipated because of a number of factors, including
those identified herein under "Risk Factors" and elsewhere in this prospectus
or in documents incorporated by reference herein.
Risks Related to Our Business
Our sales are concentrated among a limited number of customers and the loss of
one or more of these customers could cause our revenues to decrease.
Our sales are concentrated among a limited number of customers. If we were
to lose one or more of these customers, or if one or more of these customers
were to delay or reduce purchases of our products, our sales revenues may
decrease. For the six months ended June 30, 2000, approximately 79% of our
revenues were generated by five of our customers with one customer
representing 31% of revenues. These customers may in the future decide not to
purchase our products at all, purchase fewer products than they did in the
past or alter their purchasing patterns, because:
. we do not have any long-term purchase arrangements or contracts with
these or any of our other customers,
. our product sales to date have been made primarily on a purchase order
basis, which permit our customers to cancel, change or delay product
purchase commitments with little or no notice and without penalty, and
. many of our customers also have pre-existing relationships with current
or potential competitors which may affect our customers' purchasing
decisions.
We expect that a small number of customers will continue to account for a
substantial portion of our revenues for at least the next 12 to 18 months and
that a significant portion of our sales will continue to be made on the basis
of purchase orders.
We have significant sales and operations concentrated in Asia. Continued
political and economic instability in Asia and difficulty in collecting
accounts receivable may make it difficult for us to maintain or increase
market demand for our products.
Our sales to customers located in Asia accounted for 99% of our total
revenues for the six months ended June 30, 2000. The predominance of our sales
are in Asia, mostly in Taiwan and China, because our customers are primarily
motherboard or modem manufacturers that are located there. In many cases, our
indirect original equipment manufacturer customers specify that our products
be included on the modem boards or motherboards, the main printed circuit
board containing the central processing unit of a computer system, that they
purchase from board manufacturers, and we sell our products directly to the
board manufacturers for resale to our indirect original equipment manufacturer
customers, both in the United States and internationally. Due to the industry
wide concentration of modem manufacturers in Asia, we believe that a high
percentage of our future sales will continue to be concentrated with Asian
customers. As a result, our future operating results could be uniquely
affected by a variety of factors outside of our control, including:
. political and economic instability,
. changes in tariffs, quotas, import restrictions and other trade barriers
which may make our products more expensive compared to our competitors'
products,
. delays in collecting accounts receivable, which we have experienced from
time to time, and
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<PAGE>
. fluctuations in the value of Asian currencies relative to the U.S.
dollar, which may make it more costly for us to do business in Asia
which may in turn make it difficult for us to maintain or increase our
revenues.
To successfully expand our sales in Asia and internationally, we must
strengthen foreign operations, hire additional personnel and recruit
additional international distributors and resellers. This will require
significant management attention and financial resources. To the extent that
we are unable to effect these additions in a timely manner, we may not be able
to maintain or increase market demand for our products in Asia and
internationally, and our operating results could be hurt.
Continuing decreases in the average selling prices of our products could
result in decreased revenues.
Product sales in the connectivity industry have been characterized by
continuing erosion of average selling prices. Price erosion experienced by any
company can cause revenues and gross margins to decline. The average selling
price of our products has decreased by approximately 57% from October 1995 to
June 30, 2000. We expect this trend to continue.
In addition, we believe that the widespread adoption of industry standards
in the soft modem industry is likely to further erode average selling prices,
particularly for analog modems. Adoption of industry standards is driven by
the market requirement to have interoperable modems. End users need this
interoperability to ensure modems from different manufacturers communicate
with each other without problems. Historically, users have deferred purchasing
modems until these industry standards are adopted. However, once these
standards are accepted, it lowers the barriers to entry and price erosion
results. Decreasing average selling prices in our products could result in
decreased revenues even if the number of units that we sell increases.
Therefore, we must continue to develop and introduce next generation products
with enhanced functionalities that can be sold at higher gross margins. Our
failure to do this could cause our revenues and gross margin to decline.
Our gross margins may vary based on the mix of sales of our products and
services, and these variations may hurt our net income.
We derive a significant portion of our sales from our software-based
connectivity products. We expect margins on newly introduced products
generally to be higher than our existing products. However, due in part to the
competitive pricing pressures that affect our products and in part to
increasing component and manufacturing costs, we expect margins from both
existing and future products to decrease over time. In addition, licensing
revenues from our products historically have provided higher margins than our
product sales. Changes in the mix of products sold and the percentage of our
sales in any quarter attributable to products as compared to licensing
revenues will cause our quarterly results to vary and could result in a
decrease in net income.
Our future success depends on our ability to develop and successfully
introduce new and enhanced products that meet the needs of our customers.
Our future success depends on our ability to anticipate our customers'
needs and develop products that address those needs. Introduction of new
products and product enhancements will require coordination of our efforts
with those of our suppliers to rapidly achieve volume production. If we fail
to coordinate these efforts, develop product enhancements or introduce new
products that meet the needs of our customers as scheduled, our revenues may
be reduced and our business may be harmed. We cannot assure you that product
introductions will meet the anticipated release schedules.
Our revenues may fluctuate each quarter due to both domestic and international
seasonal trends.
We have experienced and continue to experience seasonality in sales of our
connectivity products. These seasonal trends materially affect our quarter-to-
quarter operating results. Our revenues are typically higher in
6
<PAGE>
the third and fourth quarters due to the back-to-school and holiday seasons as
well as purchasers of PCs making purchase decisions based on their calendar
year-end budgeting requirements.
We are currently expanding our sales in international markets, particularly
in Asia, Europe and South America. To the extent that our revenues in Asia,
Europe or other parts of the world increase in future periods, we expect our
period-to- period revenues to reflect seasonal buying patterns in these
markets.
Any delays in our normally lengthy sales cycles could result in customers
canceling purchases of our products.
Sales cycles for our products with major customers are lengthy, often
lasting six months or longer. In addition, it can take an additional six
months or more before a customer commences volume production of equipment that
incorporates our products. Sales cycles with our major customers are lengthy
for a number of reasons:
. our original equipment manufacturer customers usually complete a lengthy
technical evaluation of our products, over which we have no control,
before placing a purchase order,
. the commercial integration of our products by an original equipment
manufacturer is typically limited during the initial release to evaluate
product performance, and
. the development and commercial introduction of products incorporating
new technologies frequently are delayed.
A significant portion of our operating expenses is relatively fixed and is
based in large part on our forecasts of volume and timing of orders. The
lengthy sales cycles make forecasting the volume and timing of product orders
difficult. In addition, the delays inherent in lengthy sales cycles raise
additional risks of customer decisions to cancel or change product phases. If
customer cancellations or product changes were to occur, this could result in
the loss of anticipated sales without sufficient time for us to reduce our
operating expenses.
We expect that our operating expenses will increase substantially in the
future and these increased expenses may diminish our ability to remain
profitable.
Although we have been profitable in recent years, we may not remain
profitable on a quarterly or annual basis in the future. We anticipate that
our expenses will increase substantially over at least the next three years as
we:
. further develop and introduce new applications and functionality for our
host signal processing technology,
. conduct research and development and explore emerging product
opportunities in digital technologies and wireless and cable
communications,
. expand our distribution channels, both domestically and in our
international markets, and
. pursue strategic relationships and acquisitions.
In order to maintain profitability we will be required to increase our
revenues to meet these additional expenses. Any failure to significantly
increase our revenues as we implement our product, service, distribution and
strategic relationship strategies would result in a decrease in our overall
profitability.
To date, we have principally relied upon our distributor sales organization
for product sales to smaller accounts. Our direct sales efforts have focused
principally on board manufacturers and smaller PC original equipment
manufacturers. To increase penetration of our target customer base, including
large, tier-one original equipment manufacturers, we must significantly
increase the size of our direct sales force and organize and
7
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deploy sales teams targeted at specific domestic tier-one original equipment
manufacturer accounts. If we are unable to expand our sales to additional
original equipment manufacturers, our revenues may not meet analysts'
expectations which could cause our stock price to drop.
We must accurately forecast our customer demand for our products. If there is
an unexpected fluctuation in demand for our products, we may incur excessive
operating costs or lose product revenues.
We must forecast and place purchase orders for specialized semiconductor
chips, such as the application specific integrated circuit, coder/decoder and
discrete access array, or data access arrangement, components of our modem
products, several months before we receive purchase orders from our own
customers. This forecasting and order lead time requirement limits our ability
to react to unexpected fluctuations in demand for our products. These
fluctuations can be unexpected and may cause us to have excess inventory, or a
shortage, of a particular product. In the event that our forecasts are
inaccurate, we may need to write down excess inventory. For example, we were
required to write down inventory in the second quarter of 1996 in connection
with a product transition within our 14.4 Kbps product family. Similarly, if
we fail to purchase sufficient supplies on a timely basis, we may incur
additional rush charges or we may lose product revenues if we are not able to
meet a purchase order. These failures could also adversely affect our customer
relations. Significant write-downs of excess inventory or declines in
inventory value in the future could cause our net income and gross margin to
decrease.
We rely heavily on our intellectual property rights which offer only limited
protection against potential infringers. Unauthorized use of our technology
may result in development of products that compete with our products which
could cause our market share and our revenues to be reduced.
Our success is heavily dependent upon our proprietary technology. We rely
primarily on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality procedures and contractual provisions to protect our
proprietary rights. These means of protecting our proprietary rights may not
be adequate. We hold a total of 40 patents, a number of which cover technology
that is considered essential for International Telecommunications Union
standard communications solutions, and also have 29 additional patent
applications pending or filed. These patents may never be issued. These
patents, both issued and pending, may not provide sufficiently broad
protection against third party infringement lawsuits or they may not prove
enforceable in actions against alleged infringers.
Despite precautions that we take, it may be possible for unauthorized third
parties to copy aspects of our current or future products or to obtain and use
information that we regard as proprietary. We may provide our licensees with
access to our proprietary information underlying our licensed applications.
Additionally, our competitors may independently develop similar or superior
technology. Finally, policing unauthorized use of software is difficult, and
some foreign laws, including those of various countries in Asia, do not
protect our proprietary rights to the same extent as United States laws.
Litigation may be necessary in the future to enforce our intellectual property
rights, to protect our trade secrets or to determine the validity and scope of
the proprietary rights of others. Litigation could result in substantial costs
and diversion of resources.
We have received, and may receive in the future, communications from third
parties asserting that our products infringe on their intellectual property
rights, that our patents are unenforceable or that we have inappropriately
licensed our intellectual property to third parties. These claims could affect
our relationships with existing customers and may prevent potential future
customers from purchasing our products or licensing our technology. Because we
depend upon a limited number of products, any claims of this kind, whether
they are with or without merit, could be time consuming, result in costly
litigation, cause product shipment delays or require us to enter into royalty
or licensing agreements. In the event that we do not prevail in litigation, we
could be prevented from selling our products or be required to enter into
royalty or licensing agreements on terms which may not be acceptable to us. We
could also be prevented from selling our products or be required to pay
substantial monetary damages. Should we cross license our intellectual
property in order to obtain
8
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licenses, we may no longer be able to offer a unique product. Other than the
ESS Technology lawsuit described elsewhere in the financial footnotes, no
material lawsuits relating to intellectual property are currently filed
against us.
New patent applications may be currently pending or filed in the future by
third parties covering technology that we use currently or may use in the
future. Pending U.S. patent applications are confidential until patents are
issued, and thus it is impossible to ascertain all possible patent
infringement claims against us. We believe that several of our competitors,
including Lucent, Motorola and Texas Instruments, may have a strategy of
protecting their market share by filing intellectual property claims against
their competitors and may assert claims against us in the future. The legal
and other expenses and diversion of resources associated with any such
litigation could result in a decrease in our revenues and profitability.
In addition, some of our customer agreements include an indemnity clause
that obligates us to defend and pay all damages and costs finally awarded by a
court should third parties assert patent and/or copyright claims against our
customers. As a result, we may be held responsible for infringement claims
asserted against our customers. If our financial reserves for potential future
license fees are less than any actual fees that we are required to pay, our
net income would be reduced.
If our financial reserves for potential future license fees are less than any
actual fees that we are required to pay, our net income would be reduced.
We have established and recorded on a monthly basis a reserve for payment
of future license fees based upon our estimate as to the likely amount of the
licensing fees that we may be required to pay in the event that licenses are
obtained. We believe that it is typical for participants in the modem industry
to obtain licenses in exchange for grants of cross licenses rather than for
payment of fees and we have based our estimates on our understanding of the
license fee practices of other segments of our industry. Our reserves may not
be adequate because of factors outside of our control and because these
license fee practices in the modem industry may not be applicable to our
experience.
Competition in the connectivity market is intense, and if we are unable to
compete effectively, the demand for, or the prices of, our products may be
reduced.
The connectivity device market is intensely competitive. We may not be able
to compete successfully against current or potential competitors. Our current
competitors include Conexant, ESS Technology, Lucent Technologies, Motorola
and SmartLink. We expect competition to increase in the future as current
competitors enhance their product offerings, new suppliers enter the
connectivity device market, new communication technologies are introduced and
additional networks are deployed.
We may in the future also face competition from other suppliers of products
based on host signal processing technology or on new or emerging communication
technologies, which may render our existing or future products obsolete or
otherwise unmarketable. We believe that these competitors may include Alcatel,
Analog Devices, Aware, Broadcom, Efficient Networks, ITeX, Terayon
Communications, Texas Instruments and Virata.
As a result of our February 2000 acquisition of Voyager Technologies, we
anticipate that we will enter the markets for wireless Internet connectivity
and wireless home networking. These markets are intensely competitive. We
believe that our future competitors in these markets may include Aironet,
Breezecom, Conexant, Lucent, Intersil, Motorola, Proxim and Symbol
Technologies.
We believe that the principal competitive factors required by users and
customers in the connectivity product market include compatibility with
industry standards, price, functionality, ease of use and customer service and
support. Although we believe that our products currently compete favorably
with respect to these factors, we may not be able to maintain our competitive
position against current and potential competitors.
9
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In order for us to maintain our profitability and continue to introduce and
develop new products for emerging markets, we must attract and retain our
executive officers and qualified technical, sales, support and other
administrative personnel.
Our past performance has been and our future performance is substantially
dependent on the performance of our current executive officers and certain key
engineering, sales, marketing, financial, technical and customer support
personnel. If we lose the services of one or more of our executives or key
employees, a replacement could be difficult to recruit and we may not be able
to grow our business.
We maintain "key person" life insurance policies on Peter Chen, our
Chairman and Chief Executive Officer, William Wen-Liang Hsu, our Vice
President, Business Development, and Han Yeh, our Vice President, Technology,
in the face amount of $1 million for each individual. However, these insurance
policies may not adequately compensate us for the loss of services of any of
these individuals.
We intend to hire a significant number of additional engineering, sales,
support, marketing and finance personnel in the future. Competition for
personnel, especially engineers and marketing and sales personnel in Silicon
Valley, is intense. We are particularly dependent on our ability to identify,
attract, motivate and retain qualified engineers with the requisite education,
background and industry experience. As of June 30, 2000, we employed a total
of 72 people in our engineering department, over half of whom have advanced
degrees. In the past we have experienced difficulty in recruiting qualified
engineering personnel, especially developers, on a timely basis. If we are not
able to hire at the levels that we plan, our ability to continue to develop
products and technologies responsive to our markets will be impaired.
Our acquisition of Voyager Technologies and any future acquisitions may be
difficult to integrate, disrupt our business, dilute stockholder value or
divert management attention.
We acquired Voyager Technologies, Inc. on February 24, 2000. We are in the
process of integrating Voyager Technologies into our business. We may
encounter problems associated with the integration of Voyager Technologies
including:
. difficulties in assimilation of acquired personnel, operations,
technologies or products,
. unanticipated costs associated with the acquisition,
. diversion of management's attention from other business concerns,
. adverse effects on our existing business relationships with our and
Voyager Technologies' customers, and
. inability to retain employees of Voyager Technologies.
As part of our business strategy, we may in the future seek to acquire or
invest in additional businesses, products or technologies that we believe
could complement or expand our business, augment our market coverage, enhance
our technical capabilities or that may otherwise offer growth opportunities.
These future acquisitions could pose the same risks to our business posed by
the acquisition described above. In addition, we could use substantial
portions of our available cash to pay for future acquisitions. We could also
issue additional securities as consideration for these acquisitions, which
could cause our stockholders to suffer significant dilution.
We have experienced significant growth in our business in recent periods and
failure to manage our growth could strain our management, financial and
administrative resources.
Our ability to successfully sell our products and implement our business
plan in rapidly evolving markets requires an effective management planning
process. Future expansion efforts could be expensive and put a strain on our
management by significantly increasing the scope of their responsibilities and
resources by
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increasing the number of people using them. We have increased, and plan to
continue to increase, the scope of our operations at a rapid rate. Our
headcount has grown and will continue to grow substantially. Our headcount
increased from 95 at December 31, 1998 to 180 at June 30, 2000. In addition,
we expect to continue to hire a significant number of new employees. To
effectively manage our growth, we must maintain and enhance our financial and
human resources systems and controls, integrate new personnel and manage
expanded operations.
We rely on independent companies to manufacture, assemble and test our
products. If these companies do not meet their commitments to us, our ability
to sell products to our customers would be impaired.
We do not have our own manufacturing, assembly or testing operations.
Instead, we rely on independent companies to manufacture, assemble and test
the semiconductor chips, which are integral components of our products. Most
of these companies are located outside of the United States. There are many
risks associated with our relationships with these independent companies,
including reduced control over:
. delivery schedules,
. quality assurance,
. manufacturing costs,
. capacity during periods of excess demand, and
. access to process technologies.
In addition, the location of these independent parties outside of the
United States creates additional risks resulting from the foreign regulatory,
political and economic environments in which each of these companies exists.
Further, some of these companies are located near earthquake fault lines.
While we have not experienced any material problems to date, failures or
delays by our manufacturers to provide the semiconductor chips that we require
for our products, or any material change in the financial arrangements we have
with these companies, could have an adverse impact on our ability to meet our
customer product requirements.
We design, market and sell application specific integrated circuits and
outsource the manufacturing and assembly of the integrated circuits to third
party fabricators. The majority of our products and related components are
manufactured by five principal companies: Taiwan Semiconductor Manufacturing
Corporation, ST Microelectronics, Kawasaki/LSI, Silicon Labs and Delta
Integration. We expect to continue to rely upon these third parties for these
services. Currently, the data access arrangement chips used in our soft modem
products are provided by a sole source, Silicon Labs, on a purchase order
basis, and we have only a limited guaranteed supply arrangement under a
contract with our supplier. Although we believe that we would be able to
qualify an alternative manufacturing source for data access arrangement chips
within a relatively short period of time, this transition, if necessary, could
result in loss of purchase orders or customer relationships, which could
result in decreased revenues.
Undetected software errors or failures found in new products may result in
loss of customers or delay in market acceptance of our products.
Our products may contain undetected software errors or failures when first
introduced or as new versions are released. To date, we have not been made
aware of any significant software errors or failures in our products. However,
despite testing by us and by current and potential customers, errors may be
found in new products after commencement of commercial shipments, resulting in
loss of customers or delay in market acceptance.
Risks Related to Our Industry
If the market for applications using our host signal processing technology
does not grow as we anticipate, or if our products are not accepted in this
market, our revenues may stagnate or decrease.
Our success depends on the growth of the market for applications using our
host signal processing technology. Market demand for host signal processing
technology depends primarily upon the cost and
11
<PAGE>
performance benefits relative to other competing solutions. This market has
only recently begun to develop and may not develop at the growth rates that
have been suggested by industry estimates. Although we have shipped a
significant number of soft modems since we began commercial sales of these
products in October 1995, the current level of demand for soft modems may not
be sustained or may not grow. If customers do not accept soft modems or the
market for soft modems does not grow, our revenues will decrease.
Further, we are in the process of developing next generation products and
applications which improve and extend upon our host signal processing
technology, such as a G.Lite modem solution and a remote access solution. If
these products are not accepted in our markets when they are introduced, our
revenues and profitability will be negatively affected.
Our industry is characterized by rapidly changing technologies. If we do not
adapt to these technologies, our products will become obsolete.
The connectivity product market is characterized by rapidly changing
technologies, limited product life cycles and frequent new product
introductions. To remain competitive in this market, we have been required to
introduce many products over a limited period of time. For example, we
introduced a 14.4 Kbps product in 1995, a 28.8 Kbps product in 1996, a 33.6
Kbps product in late 1996, a non-International Telecommunications Union
standard 56 Kbps modem in the second half of 1997 and a v.90 International
Telecommunications Union standard 56 Kbps modem in early 1998. The market for
high speed data transmission is also characterized by several competing
technologies that offer alternative broadband solutions which allow for higher
modem speeds and faster internet access. These competing broadband
technologies include digital subscriber line, wireless and cable. However,
substantially all of our current product revenue is derived from sales of
analog modems, which use a more conventional technology. We must continue to
develop and introduce technologically advanced products that support one or
more of these competing broadband technologies. If we are not successful in
our response, our products will become obsolete and we will not be able to
compete effectively.
Changes in laws or regulations, in particular, future FCC regulations
affecting the broadband market, internet service providers, or the
communications industry could negatively affect our ability to develop new
technologies or sell new products and therefore, reduce our profitability.
The jurisdiction of the Federal Communications Commission, or FCC, extends
to the entire communications industry, including our customers and their
products and services that incorporate our products. Future FCC regulations
affecting the broadband access services industry, our customers or our
products may harm our business. For example, future FCC regulatory policies
that affect the availability of data and internet services may impede our
customers' penetration into their markets or affect the prices that they are
able to charge. In addition, international regulatory bodies are beginning to
adopt standards for the communications industry. Although our business has not
been hurt by any regulations to date, in the future, delays caused by our
compliance with regulatory requirements may result in order cancellations or
postponements of product purchases by our customers, which would reduce our
profitability.
Risks Related to our Common Stock
Substantial future sales of our common stock in the public market may depress
our stock price.
Our current stockholders hold a substantial number of shares, which they
will be able to sell in the public market in the near future. Sales of a
substantial number of shares of our common stock could cause our stock price
to fall.
12
<PAGE>
Provisions in our charter documents may inhibit a change of control or a
change of management which may cause the market price for our common stock to
fall and may inhibit a takeover or change in our control that a stockholder
may consider favorable.
Provisions in our charter documents could discourage potential acquisition
proposals and could delay or prevent a change in control transaction that our
stockholders may favor. These provisions could have the effect of discouraging
others from making tender offers for our shares, and as a result, these
provisions may prevent the market price of our common stock from reflecting
the effects of actual or rumored takeover attempts and may prevent
stockholders from reselling their shares at or above the price at which they
purchased their shares. These provisions may also prevent changes in our
management that our stockholders may favor. Our charter documents do not
permit stockholders to act by written consent, do not permit stockholders to
call a stockholders meeting and provide for a classified board of directors,
which means stockholders can only elect, or remove, a limited number of our
directors in any given year.
Our board of directors has the authority to issue up to 5,000,000 shares of
preferred stock in one or more series. The board of directors can fix the
price, rights, preferences, privileges and restrictions of this preferred
stock without any further vote or action by our stockholders. The rights of
the holders of our common stock will be affected by, and may be adversely
affected by, the rights of the holders of any preferred stock that may be
issued in the future. Further, the issuance of shares of preferred stock may
delay or prevent a change in control transaction without further action by our
stockholders. As a result, the market price of our common stock may drop. The
board of directors has not elected to issue additional shares of preferred
stock since the initial public offering on October 19, 1999.
Our stock price may be volatile based on a number of factors, some of which
are not in our control.
The trading price of our common stock has been highly volatile. Our stock
price could be subject to wide fluctuations in response to a variety of
factors, many of which are out of our control, including:
. actual or anticipated variations in quarterly operating results,
. announcements of technological innovations,
. new products or services offered by us or our competitors,
. changes in financial estimates by securities analysts,
. conditions or trends in our industry,
. our announcement of significant acquisitions, strategic partnerships,
joint ventures or capital commitments,
. additions or departures of key personnel, and
. sales of common stock by us or our stockholders.
In addition, the Nasdaq National Market, where many publicly held
telecommunications companies, including our company, are traded, often
experiences extreme price and volume fluctuations. These fluctuations often
have been unrelated or disproportionate to the operating performance of these
companies. The trading prices of many technology companies continue to trade
at multiples of earnings or revenues which are substantially above historic
levels. These trading prices and multiples may not be sustainable. These broad
market and industry factors may seriously harm the market price of our common
stock, regardless of our actual operating performance. In the past, following
periods of volatility in the market price of an individual company's
securities, securities class action litigation often has been instituted
against that company. This type of litigation, if instituted, could result in
substantial costs and a diversion of management's attention and resources.
13
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
stockholder. The selling stockholder will receive all net proceeds from the
sale of our common stock under this prospectus.
14
<PAGE>
SELLING STOCKHOLDER
The following table sets forth information with respect to the number of
shares of common stock owned by the selling stockholder named below and as
adjusted to give effect to the sale of the shares offered hereby. The
information in the table below is current as of the date of this prospectus.
The shares are being registered to permit public secondary trading of the
shares, and the selling stockholder may offer the shares for resale from time
to time.
The selling stockholder acquired the shares being offered in connection
with our acquisition of Voyager Technologies. In the acquisition, the shares
of common stock were issued pursuant to an exemption from the registration
requirements of the Securities Act. In connection with the acquisition, we
agreed to register the shares of our common stock received by the former
shareholders of Voyager Technologies pursuant to the registration statement of
which this prospectus is a part. The selling stockholder does not own and will
not own after the offering more than 1% of our outstanding common stock.
Shares of common stock subject to options that are currently exercisable or
exercisable within 60 days of September 30, 2000 are treated as outstanding
and beneficially owned by the selling stockholder and are listed under the
"Shares Underlying Options" column below.
The shares offered by this prospectus may be offered from time to time by
the selling stockholder named below:
<TABLE>
<CAPTION>
Number of Shares Number of Shares
Beneficially Owned Beneficially Owned
Prior to Offering After Offering
------------------ --------------------
Shares Number
of Shares of Shares of Shares
Common Underlying Shares Common Underlying
Stock Options Offered Stock Options
------- ---------- ------- --------- ----------
Selling Stockholder
-------------------
<S> <C> <C> <C> <C> <C>
Raymond R. Shook................ 124,438 -- 124,438 -- --
</TABLE>
PLAN OF DISTRIBUTION
PCTEL will not receive any proceeds from the sale of the shares. The shares
may be sold or distributed from time to time by the selling stockholder or by
pledgees, donees, transferees of, or other successors in interest directly to
one or more purchasers (including pledgees) or through brokers, dealers or
underwriters who may act solely as agents or may acquire shares 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, all of
which may be changed. The distribution of the shares may be effected in one or
more transactions that may take place through the Nasdaq National Market,
including block trades or ordinary broker's transactions, or through privately
negotiated transactions, or through a combination of any such methods of sale,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the
selling stockholder in connection with such sales.
The aggregate proceeds to the selling stockholder from the sale of the
shares will be the purchase price of the common stock sold less the aggregate
agents' commissions, if any, and other expenses of issuance and distribution
not borne by us. The selling stockholder and any dealers or agents that
participate in the distribution of the shares may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any
profit on the sale of the shares by them and any commissions received by any
such dealers or agents might be deemed to be underwriting discounts and
commissions under the Securities Act of 1933.
15
<PAGE>
To the extent required, the specific shares of common stock to be sold, the
name of the selling stockholder, the purchase price, the public offering
price, the names of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offering will be set forth
in an accompanying prospectus supplement.
We have agreed to bear certain expenses of registration of the common stock
under federal and state securities laws and of any offering and sale hereunder
not including certain expenses, such as commissions of dealers or agents and
fees attributable to the sale of the shares. We have agreed to indemnify the
selling stockholder against certain liabilities, including certain potential
liabilities under the Securities Act of 1933. The selling stockholder has also
agreed to indemnify us against certain liabilities, including certain
potential liabilities under the Securities Act of 1933.
Any securities covered by this prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act of 1933 may be sold under that Rule
rather than pursuant to this prospectus.
There can be no assurance that the selling stockholder will sell any or all
of the shares of common stock offered under this prospectus.
LEGAL MATTERS
The validity of the common stock offered will hereby has been passed upon
for us by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.
16
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, payable by us in
connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee and Nasdaq National Market listing
fee.
<TABLE>
<CAPTION>
Amount to be Paid
-----------------
<S> <C>
SEC registration fee..................................... $ 632
Printing expenses........................................ $10,000
Legal fees and expenses.................................. $10,000
Accounting fees and expenses............................. $10,000
Miscellaneous expenses................................... $ 1,368
-------
Total.................................................. $32,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents and in agreements between the corporation
and its directors and officers provisions expanding the scope of
indemnification beyond that specifically provided by the current law.
Article IX of our Amended and Restated Certificate of Incorporation
provides for the indemnification of directors to the fullest extent permitted
under Delaware law.
Article VI of our Bylaws provides for the indemnification of officers,
directors and third parties acting on behalf of the corporation to the fullest
extent permitted under the General Corporation Law of Delaware.
We have entered into indemnification agreements with our directors and
executive officers, in addition to the indemnification provided for in our
Bylaws, and we intend to enter into indemnification agreements with any new
directors and executive officers in the future.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers, or persons controlling us
pursuant to the foregoing provisions, we have been informed that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
The Registration Rights Agreement dated February 24, 2000, entered into by
us in connection with our acquisition of all of the outstanding shares of
Voyager Technologies common stock, provides that we will indemnify the selling
stockholders against certain liabilities, including liabilities under the
Securities Act.
At present, there is no pending litigation or proceeding involving any of
our directors, officers, employees, or other agents in which indemnification
is being sought, nor are we aware of any threatened litigation that may result
in a claim for indemnification by any of our directors, officers, employees or
other agents.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EhibitxNo. Description
----------- -----------
<S> <C>
*4.11 Registration Rights Agreement dated February 24, 2000 (pursuant to which PCTEL,
Inc. granted certain registration rights to former shareholders of Voyager
Technologies)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included in
Exhibit 5.1)
24.1 Power of Attorney (reference is made to the signature page of this Registration
Statement)
</TABLE>
--------
* Incorporated by reference to the exhibit bearing the same number filed with
the Registrant's Registration statement on Form S-1 (Registration Statement
333-32570), which the Securities and Exchange Commission declared effective
on April 10, 2000.
ITEM 17. UNDERTAKINGS
The 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:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(b) 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;
(c) 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) and (b) above do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Company pursuant to Section 13 or Section 15(d) of the Exchange Act
that are incorporated by reference in the Registration Statement.
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
4. That, for the purpose of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) 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.
5. To deliver or cause to be delivered with the prospectus, to each
person to whom the prospectus is sent or given, the latest annual report to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Exchange Act; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are not set forth
in the prospectus, to deliver, or cause to be delivered to each person to
whom the prospectus is sent or given, the latest quarterly report that is
specifically incorporated by reference in the prospectus to provide such
interim financial information.
II-2
<PAGE>
6. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the SEC
such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Milpitas, State of
California, on the 25th day of October, 2000.
PCTEL, Inc.
By: /s/ Peter Chen
_____________________________________
Peter Chen
Chief Executive Officer and
Chairman
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each such person whose signature
appears below constitutes and appoints, jointly and severally, Andrew D. Wahl
and Peter Chen their attorneys-in-fact, each with the power of substitution,
for him in any and all capacities, to sign any amendments to this Registration
Statement on Form S-3 (including post-effective amendments), to sign any
registration statement for the same offering covered by this Registration
Statement that is to be effective upon filing pursuant to Rule 462(b)
promulgated under the Securities Act of 1933, and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, thereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutions, may do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Peter Chen Chief Executive Officer and October 25, 2000
______________________________________ Chairman of the Board of
Peter Chen Directors (Principal Executive
Officer)
</TABLE>
<TABLE>
<S> <C> <C>
/s/ William F. Roach President, Chief Operating October 25, 2000
______________________________________ Officer and Director
William F. Roach
/s/ Andrew D. Wahl Vice President, Finance and October 25, 2000
______________________________________ Chief Financial Officer
Andrew D. Wahl (Principal Financial and
Accounting Officer)
/s/ Richard C. Alberding Director October 25, 2000
______________________________________
Richard C. Alberding
/s/ Martin H. Singer Director October 25, 2000
______________________________________
Martin H. Singer
/s/ Wen C. Ko Director October 25, 2000
______________________________________
Wen C. Ko
/s/ Giacomo Marini Director October 25, 2000
______________________________________
Giacomo Marini
/s/ Mike Min-Chi Chen Director October 25, 2000
______________________________________
Mike Min-Chu Chen
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
*4.11 Registration Rights Agreement dated February 24, 2000 (pursuant to which PCTEL,
Inc. granted certain registration rights to former shareholders of Voyager
Technologies)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
23.1 Consent of Arthur Andersen LLP, Independent Public Accountants
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation (included
in Exhibit 5.1)
24.1 Power of Attorney (reference is made to the signature page of this Registration
Statement)
</TABLE>
--------
* Incorporated by reference to the exhibit bearing the same number filed
with the Registrant's Registration statement on Form S-1 (Registration
Statement 333-32570), which the Securities and Exchange Commission
declared effective on April 10, 2000.
