<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 19, 1997.
REGISTRATION NO. 333-
================================================================================
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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SILICON VALLEY RESEARCH, INC.
(Exact name of Registrant as specified in its charter)
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CALIFORNIA 7372 94-2743735
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation Number)
or organization)
6360 SAN IGNACIO AVENUE
SAN JOSE, CALIFORNIA 95119-1231
(408) 361-0333
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
---------------------
ROBERT R. ANDERSON
CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF
THE BOARD OF DIRECTORS
SILICON VALLEY RESEARCH, INC.
6360 SAN IGNACIO AVENUE
SAN JOSE, CALIFORNIA 95119-1231
(408) 361-0333
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
---------------------
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 reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM
Title of Each Class of AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
Securities to be Registered REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
--------------------------- ---------------- ----------------- ------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, without par value 9,129,484 shares $1.0313 $9,415,237 $2,853
================ ================= =================== ================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee in
accordance with Rule 457(c) and based on the average of the high and
low prices of the Common Stock of Silicon Valley Research, Inc. as
reported on the Nasdaq National Market on September 16 , 1997.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PROSPECTUS
9,129,484 SHARES
SILICON VALLEY RESEARCH, INC.
COMMON STOCK
The 9,129,484 shares of Common Stock , without par value ("Common
Stock"), of Silicon Valley Research, Inc. ("SVR" or the "Company") offered by
this Prospectus (the "Shares") consist of 4,517,242 outstanding shares and
4,612,242 shares issuable pursuant to the exercise of currently exercisable
warrants ("the Warrants") that may be sold from time to time by or on behalf of
certain shareholders (the "Selling Shareholders") of the Company described in
this Prospectus under "Selling Shareholders." The Selling Shareholders of
4,517,242 shares and 4,517,242 shares issuable pursuant to the exercise of
warrants acquired the shares and warrants through a private placement of equity
securities by the Company in reliance on Regulation D and/or Section 4(2) of the
Securities Act of 1933, as amended (the "Securities Act"). The Unit Purchase
Agreement ("the Agreement") entered into in connection with the private
placement requires the Company to file a registration statement under the
Securities Act covering the shares issued in the private placement and the
shares issued or issuable upon exercise of the warrants and use its best efforts
to secure the effectiveness of such registration statement on or about October
14, 1997 and to cause the registration statement to remain effective until the
earlier of (a) the date ending three years after the effective date of such
registration statement, or (b) the date on which a holder is able to sell all of
such holder's registrable securities in any three-month period without
registration under the Securities Act pursuant to Rule 144. The Selling
Shareholder of 95,000 shares issuable pursuant to the exercise of a warrant
acquired the warrant through an employment agreement. The warrant agreement
allows the warrant holder to include the shares issuable upon exercise of the
warrant in any registration statement filed by the Company under the Securities
Act for purposes of effecting a public offering, subject to certain limitations.
The Company will not receive any of the proceeds from the sale of the Shares by
the Selling Shareholders. The Company will receive the proceeds from the cash
exercise of any Warrants.
The Company has been advised by the Selling Shareholders that they
intend to sell all of their respective Shares from time to time on the Nasdaq
National Market (the "National Market") on terms and at prices then obtainable
or in negotiated transactions. The Selling Shareholders and any broker-dealers,
agents or underwriters that participate with the Selling Shareholders in the
distribution of any of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act, and any commission received by them and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution."
Except as described in this Prospectus under "Plan of Distribution,"
the Company will pay all expenses incident to the offering and sale of the
Shares to the public. See "Plan of Distribution."
THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES
LAWS OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS. BROKERS OR
DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THE REGISTRATION OF
THE SHARES UNDER THE SECURITIES LAWS OF THE STATES IN WHICH SUCH TRANSACTIONS
OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS FROM SUCH REGISTRATION.
The Company's Common Stock is listed on the National Market. On
September 18, 1997, the last sale price of the Company's Common Stock as
reported on the National Market was $1.0625.
---------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR INFORMATION
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF
THE SHARES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September __, 1997
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the Commission's public reference room at 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, as well as at the Regional Offices of the
Commission located at Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, upon payment of the fees prescribed by the Commission. The Commission
maintains a Web site that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission. The Commission's Web site can be accessed at http://www.sec.gov. The
Company's Common Stock is traded on the National Market. Reports and other
information concerning the Company can also be inspected at the offices of the
Nasdaq Stock Market at 1735 K Street N.W., Washington D.C. 20006-1500.
The Company has also filed with the Commission a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the Registration
Statement, copies of which may be obtained from the Public Reference Section of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of
the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference: (1) Annual
Report on Form 10-K for the year ended March 31, 1997; (2) Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997; (3) Current Report on Form 8-K
filed on July 14, 1997; (4) Current Report on Form 8-K filed on September 18,
1997 and (5) the description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed on September 5, 1985.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of this offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of filing of such documents. Any
statement incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated by reference in this Prospectus (other than
any exhibits thereto). Requests for such documents should be directed to Silicon
Valley Research, Inc. at 6360 San Ignacio Avenue, San Jose, CA 95119-1231
(telephone number (408) 361-0333), Attn: Laurence G. Colegate, Jr.
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<PAGE> 4
THE COMPANY
The Company designs a broad line of integrated placement, routing and
floorplanning physical layout software products which enable electronics
manufacturers to achieve improved performance and smaller die size in their
integrated circuit ("IC") designs. The Company offers products which incorporate
its proprietary line probe technology to create a denser circuit design. The
products minimize die size, enabling a high performance design, and improve
manufacturability of the IC, resulting in higher production yield.
The Company was incorporated in California in 1979. The Company's
principal executive offices are located at 6360 San Ignacio Avenue, San Jose,
California 95119-1231, telephone number (408) 361-0333.
RISK FACTORS
The following risk factors should be considered in connection with the
other information included and incorporated by reference in this Prospectus
before purchasing the Common Stock offered hereby. Further, this Prospectus
contains forward-looking statements that involve risks and uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements as a result of risk factors set forth below and elsewhere in this
Prospectus.
Continuing Operating Losses. SVR has incurred operating losses in the
past five quarters and expects such losses to continue at least in the near term
as it expands its product development and marketing capabilities. Prior to that,
the Company generated minimal net income from operations during the six
preceding quarters. At June 30, 1997, SVR had an accumulated deficit of $31.3
million. The achievement of profitability is primarily dependent upon the
continued development and commercial acceptance of the Company's products, the
successful management of the business of SVR and management's ability to
strategically focus the Company. There can be no assurance as to whether or when
achievement of profitable operations will occur.
Availability of Additional Financing. SVR is experiencing negative cash
flow from operations and it is expected that it will continue to experience
negative cash flow at least through fiscal 1998 and potentially thereafter. On
April 16, 1997, the Company completed a private placement of units comprised of
4,517,242 shares of Common Stock and warrants to purchase an additional
4,517,242 shares of Common Stock at $1.31 per share, with proceeds to the
Company of $3,930,000. The Company also has an additional revolving line of
credit from its bank providing for borrowings up to $2,000,000 with available
borrowings limited to certain percentages of eligible accounts receivable. The
Company believes its cash and cash generated from operations and available
borrowings will be sufficient to finance its operations at least through its
1998 fiscal year.
Nevertheless, the Company may require additional financing. Management
of SVR is exploring financing alternatives to supplement SVR's cash position.
Potential sources of additional financing for SVR include private equity
financings, mergers, strategic investments, strategic partnerships or various
forms of debt financings. If additional funds are raised by SVR through the
issuance of equity securities or securities convertible into or exercisable for
equity securities, the percentage ownership of the then current shareholders of
SVR will be reduced. SVR may issue a series of Preferred Stock with rights,
preferences or privileges senior to those of the SVR Common Stock. SVR has no
commitments or arrangements to obtain any additional funding and there can be no
assurance that the required financing of SVR will be available on acceptable
terms, if at all. The unavailability or timing of any financing, could prevent
or delay the continued development and marketing of the products of SVR and may
require curtailment of operations of SVR.
Receipt by SVR of a going concern opinion from its Independent
Accountants. The report of Price Waterhouse LLP on SVR's fiscal 1997
consolidated financial statements was amended on September 17, 1997 to add an
explanatory paragraph regarding SVR's ability to continue as a going concern.
There can be no assurance that SVR will not continue to incur significant
operating losses or that required additional financing will be available to meet
SVR's business plans in fiscal 1998 and beyond.
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<PAGE> 5
International Sales. International sales, primarily in Japan, Korea,
and Taiwan, accounted for approximately 52%, 43%, 25% and 28% of the Company's
total revenue in fiscal 1995, 1996, 1997 and in the three months ended June 30,
1997, respectively. Declining revenues from international sales were a result of
the reduction in capital expenditures by semiconductor manufacturers,
particularly in Asia, and increased competition in the electronic design
automation (EDA) software market. The Company expects that international sales
will continue to account for a significant portion of its revenue and plans to
continue to expand its international sales and distribution channels. This
revenue involves a number of inherent risks, including economic downturn in the
electronics industry in Asia, traditionally slower adoption of the Company's
products internationally, general strikes or other disruptions in working
conditions, generally longer receivables collection periods, unexpected changes
in or impositions of legislative or regulatory requirements, reduced protection
for intellectual property rights in some countries, potentially adverse taxes,
delays resulting from difficulty in obtaining export licenses for certain
technology and other trade barriers. There can be no assurance that such factors
will not have a material adverse effect on the Company's future international
sales and, consequently, on the Company's results of operations. Sales orders
received by foreign sales subsidiaries are primarily denominated in currencies
other than the U.S. dollar. In order to reduce the risk of loss between the time
the Company's products are purchased by subsidiaries and the time payment is
made, the subsidiaries enter into foreign exchange contracts when economically
feasible.
Dependence Upon Semiconductor and Electronics Industries; General
Economic and Market Conditions. The Company is dependent upon the semiconductor
and, more generally, the electronics industries. Each of these industries is
characterized by rapid technological change, short product life cycles,
fluctuations in manufacturing capacity and pricing and gross margin pressures.
Each of these industries is highly cyclical and has periodically experienced
significant downturns, often in connection with, or in anticipation of, declines
in general economic conditions during which the number of new IC design projects
often decreases. Purchases of new licenses from the Company are largely
dependent upon the commencement of new design projects, and factors negatively
affecting any of these industries could have a material adverse effect on the
Company's business, operating results or financial condition. The Company's
business, operating results and financial condition may in the future reflect
substantial fluctuations from period to period as a consequence of patterns and
general economic conditions in either the semiconductor or electronics industry.
Management Transition. The Company is experiencing a period of
management transition that has placed, and may continue to place, a significant
strain on its resources, including its personnel. Robert R. Anderson resumed the
role of Chief Executive Officer in December 1996 and has assembled a new senior
management team. The Company's ability to manage growth successfully will
require its new management personnel to work together effectively and will
require the Company to improve its operational, management and financial systems
and controls. If Company management is unable to manage this transition
effectively, the Company's business, competitive position, results of operations
and financial condition will be materially and adversely affected.
See "- Dependence on Key Personnel."
Dependence on Key Personnel. The Company's success depends to a
significant extent upon a number of key technical and management employees, in
particular, upon Robert R. Anderson, the Company's Chairman and Chief Executive
Officer. The Company does not currently have "key man" life insurance on Mr.
Anderson or any other members of its senior management. The loss of services of
Mr. Anderson or any of the Company's other key employees could have a material
adverse effect on the Company. See "- Management Transition." The Company's
success will depend in large part on its ability to attract and retain
highly-skilled technical, managerial, sales and marketing personnel. Competition
for such personnel is intense. There can be no assurance that the Company will
be successful in retaining its key technical and management personnel and in
attracting and retaining the personnel it requires to continue to grow.
New Products and Rapid Technological Change; Risk of Product Defects.
The EDA industry is characterized by extremely rapid technological change,
frequent new product introductions and enhancements, evolving industry standards
and rapidly changing customer requirements. The development of more complex ICs
embodying new technologies will require increasingly sophisticated design tools.
The Company's future results of operations will depend, in part, upon its
ability to enhance its current products and to develop and introduce new
products on a timely and cost-effective basis that will keep pace with
technological developments and evolving industry standards and methodologies, as
well as address the increasingly sophisticated needs of the Company's customers.
The Company has in the past and may in the future experience delays in new
product development and product enhancements. The
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Company has recently released significant upgrades to GARDS to provide a new
Power Router, to SonIC to provide a new placer and new routing capabilities, and
to SC to provide a rewritten Global Router and fast new placement. There can be
no assurance that these new products will gain market acceptance or that the
Company will be successful in developing and marketing product enhancements or
other new products that respond to technological change, evolving industry
standards and changing customer requirements, that the Company will not
experience difficulties that could delay or prevent the successful development,
introduction and marketing of these products or product enhancements, or that
its new products and product enhancements will adequately meet the requirements
of the marketplace and achieve any significant degree of market acceptance. In
addition, all of the Company's current products operate in, and planned future
products will operate in, the Unix operating system. In the event that another
operating system, such as Windows NT were to achieve broad acceptance in the EDA
industry, the Company would be required to port its products to such an
operating system, which would be costly and time consuming and could have a
material adverse effect on the Company's business, operating results or
financial condition. Failure of the Company, for technological or other reasons,
to develop and introduce new products and product enhancements in a timely and
cost-effective manner could have a material and adverse effect on the Company's
business, operating results and financial condition. In addition, the
introduction or even announcement of products by the Company or one or more of
its competitors embodying new technologies or changes in industry standards or
customer requirements could render the Company's existing products obsolete or
unmarketable. There can be no assurance that the introduction or announcement of
new product offerings by the Company or one or more of its competitors will not
cause customers to defer purchases of existing Company products. Such deferment
of purchases could have a material adverse effect on the Company's business,
operating results or financial condition.
Software products as complex as those offered by the Company may
contain defects or failures when introduced or when new versions are released.
The Company has in the past discovered software defects in certain of its
products and may experience delays or lost revenue to correct such defects in
the future. Although the Company has not experienced material adverse effects
resulting from any such defects to date, there can be no assurance that, despite
testing by the Company, errors will not be found in new products or releases
after commencement of commercial shipments, resulting in loss of market share or
failure to achieve market acceptance. Any such occurrence could have a material
adverse effect upon the Company's business, operating results or financial
condition.
Competition. The EDA software market in which the Company competes is
intensely competitive and subject to rapid technological change. The Company
currently faces competition from EDA vendors, including Cadence Design Systems,
Inc. ("Cadence"), which currently holds the dominant share of the market for IC
physical design software, Avant! Corporation and Mentor Graphics. These EDA
vendors have significantly greater financial, technical and marketing resources,
greater name recognition and, in some cases, a larger installed customer base
than the Company. These companies also have established relationships with
current and potential customers of the Company and can devote substantial
resources aimed at preventing the Company from enhancing relationships with
existing customers or establishing relationships with potential customers. The
Company believes that competitive factors in the EDA software market include
product performance, price, support of industry standards, ease of use, delivery
schedule, product enhancements, and customer technical support and service. The
Company believes that, with respect to ease of use, the Company's products may
not be perceived as competing favorably.
Competition from EDA companies that choose to enter the IC physical
design market could present particularly formidable competition due to their
large installed customer base and their ability to offer a complete integrated
IC design solution which SVR does not offer. The Company expects additional
competition from other established and emerging companies. In addition, the EDA
industry has become increasingly concentrated in recent years as a result of
consolidations, acquisitions and strategic alliances. Accordingly, it is
possible that new competitors or alliances among competitors could emerge and
rapidly acquire significant market share. There can be no assurance that the
Company will be able to compete successfully against current and future
competitors or that competitive pressures faced by the Company will not have a
material adverse effect on its business, operating results and financial
condition.
Dependence on Single Product Line. Revenues from licenses of the SVR
GARDS family of products have historically represented a substantial majority of
the Company's license revenues. Although the Company has introduced its SonIC
family of products, the Company expects that revenues from the license of SVR
GARDS products will continue to account for at least a significant portion of
the Company's license revenues for the foreseeable future.
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The life cycles of the Company's products are difficult to predict due to the
effect of new product introductions or product enhancements by the Company or
its competitors, market acceptance of new and enhanced versions of the Company's
products and competition in the Company's marketplace. Declines in the demand
for the SVR GARDS family of products, whether as a result of competition,
technological change, price reductions or otherwise, could have a material
adverse effect on the Company's business, operating results and financial
condition.
Dependence on Certain Customers and Resellers. A small number of
customers account for a significant percentage of the Company's total revenue.
In fiscal 1995, HAL Computer Systems, Inc., a subsidiary of Fujitsu, Ltd.
("HAL"), accounted for 12% and Sony Corporation and Yamaha Corporation
("Yamaha") each accounted for 10% of the Company's total revenue; in fiscal
1996, HAL accounted for 16% and Motorola, Inc. and Yamaha each accounted for 11%
of the Company's total revenue. In fiscal 1997, HAL accounted for 14%, Lucent
Technologies, Inc. accounted for 19% and Motorola, Inc. accounted for 13% of the
Company's total revenue. There can be no assurance that sales to these entities,
individually or as a group, will reach or exceed historical levels in any future
period. Any substantial decrease in sales to one or more of these customers
could have a material adverse effect on the Company's business, operating
results or financial condition. The Company currently sells and markets its
products overseas, other than in Japan, through a limited number of
distributors. The Company has a limited history of performance by its
distributors. In addition, there can be no assurance that the distributors will
be able to successfully distribute and support the Company's products on a
timely basis or that such distributors will not reduce their efforts devoted to
selling the Company's products or terminate their relationship with the Company
as a result of competition with other suppliers' products. The loss of or
changes in the relationship with or performance by one or more of the Company's
international distributors could have a material adverse effect on the Company's
business.
Potential Fluctuations in Quarterly Operating Results. Numerous factors
may materially and unpredictably affect operating results of the Company,
including the uncertainties of the size and timing of software license fees,
timing of co-development projects with customers, timing of operating
expenditures, increased competition, new product announcements and releases by
the Company and its competitors, gain or loss of significant customers or
distributors, expense levels, renewal of maintenance contracts, pricing changes
by the Company or its competitors, personnel changes, foreign currency exchange
rates, and economic conditions generally and in the electronics industry
specifically. Any unfavorable change in these or other factors could have a
material adverse effect on the Company's operating results for a particular
quarter. Many of the Company's customers order on an as-needed basis and often
delay delivery of firm purchase orders until their project commencement dates
are determined, and, as a result, the Company operates with no significant
backlog. Quarterly revenue and operating results will therefore depend on the
volume and timing of orders received during the quarter, which are difficult to
forecast accurately. Historically, the Company has often recognized a
substantial portion of its license revenues in the last month of the quarter,
with these revenues frequently concentrated in the last two weeks of the
quarter. Operating results would be disproportionately affected by a reduction
in revenue because only a small portion of the Company's expenses vary with its
revenue. Operating results in any period should not be considered indicative of
the results to be expected for any future period, and there can be no assurance
that the Company's revenues will increase or that the Company will achieve
profitability.
Lengthy Sales Cycle. The licensing and sales of the Company's software
products generally involve a significant commitment of capital by prospective
customers, with the attendant delays frequently associated with large capital
expenditures and lengthy acceptance procedures. For these and other reasons, the
sales cycle associated with the licensing of the Company's products is typically
lengthy and subject to a number of significant risks over which the Company has
little or no control. Because the timing of customer orders is hard to predict,
the Company believes that its quarterly operating results are likely to vary
significantly in the future. Actual results of the Company could vary materially
as a result of a variety of factors, including, without limitation, the high
average selling price and long sales cycle for the Company's products, the
relatively small number of orders per quarter, dependence on sales to a limited
number of large customers, timing of receipt of orders, successful product
introduction and acceptance of the Company's products and increased competition.
Possible Volatility of Stock Price. The market price of the Company's
Common Stock has been volatile. Future announcements concerning the Company or
its competitors, quarterly variations in operating results, announcements of
technological innovations, the introduction of new products or changes in
product pricing policies by the Company or its competitors, proprietary rights
or other litigation, changes in earnings estimates by analysts or other factors
could cause the market price of the Common Stock to fluctuate substantially. In
addition, the stock market has
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from time to time experienced significant price and volume fluctuations that
have particularly affected the market prices for the common stocks of technology
companies and that have often been unrelated to the operating performance of
particular companies. These broad market fluctuations may also adversely affect
the market price of the Company's Common Stock. In the past, following periods
of volatility in the market price of a company's securities, securities class
action litigation has occurred against the issuing company. There can be no
assurance that such litigation will not occur in the future with respect to the
Company. Such litigation could result in substantial costs and divert management
attention and resources, which could have a material adverse effect on the
Company's business, financial condition and results of operations. Any adverse
determination in such litigation could also subject the Company to significant
liabilities.
Compliance with Nasdaq Listing Requirements; Disclosure Relating to
Low-Priced Stocks. The Company's Common Stock is quoted on the National Market.
However, in order to continue to be included in the National Market, a company
must meet certain maintenance criteria, including two market makers, a minimum
bid price of $1.00 per share, $4,000,000 in net tangible assets (total assets
less total liabilities and goodwill) and $5,000,000 market value of the public
float (excluding shares held directly or indirectly by any officer or director
of the Company and by any person holding beneficially more than 10% of the
Company's outstanding shares). Although the Company currently meets the National
Market maintenance criteria, if the Company's stock price declines below $1.00,
the Company would not meet the minimum bid price requirement. Failure to meet
these maintenance criteria may result in the delisting of the Company's Common
Stock from the National Market and the quotation of the Company's Common Stock
on the Nasdaq SmallCap Market (the "SmallCap Market") if the requirements for
inclusion on the SmallCap Market are met. As a result of quotation on the
SmallCap Market, an investor may find it more difficult to dispose of the
Company's Common Stock.
Currently, a company must have $4,000,000 in net tangible assets or
$50,000,000 market capitalization or $750,000 net income in two of the last
three years, $5,000,000 market value of the public float and a minimum bid price
of $4.00 per share for inclusion in the SmallCap Market. Failure to meet the
SmallCap Market inclusion criteria, or the failure to meet the SmallCap Market
maintenance criteria if the initial SmallCap Market inclusion criteria are met,
may result in the delisting of the Company's Common Stock from Nasdaq. Trading,
if any, in the Company's Common Stock would thereafter be conducted in the
non-Nasdaq over-the-counter market. As a result of such delisting, an investor
may find it more difficult to dispose of, or to obtain accurate quotations as to
the market value of, the Company's Common Stock.
In addition, if the Company's Common Stock were delisted from trading
on Nasdaq and the trading price of the Common Stock was less than $5.00 per
share, trading in the Common Stock would also be subject to certain rules
promulgated under the Exchange Act, which require additional disclosure by
broker-dealers in connection with any trades involving a stock defined as a
penny stock (generally, any non-Nasdaq equity security that has a market price
of less than $5.00 per share, subject to certain exceptions). Such rules require
the delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith, and impose
various sales practice requirements on broker-dealers who sell penny stock to
persons other than established customers and accredited investors (generally
institutions). For these types of transactions, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transactions prior to sale. The additional
burden imposed upon broker-dealers by such requirements may discourage
broker-dealers from effecting transactions in the Common Stock, which could
severely limit the market liquidity of the Common Stock and the ability of
purchasers in this offering to sell the Common Stock in the secondary market.
Certain Price Protection and Registration Obligations. Effective
February 24, 1997 the Company and Mentor Graphics Corporation ("Mentor") settled
a legal action brought against the Company in 1994. Pursuant to the settlement
agreement (the "Settlement Agreement"), the Company undertook certain
obligations, the time for completing which expired on various dates ending
August 13, 1997. Mentor has threatened to assert a claim against the Company
based on an alleged failure to comply with the Settlement Agreement. Mentor has
advised the Company that it contends that the Settlement Agreement obligates the
Company to issue an additional 90,697 shares of Common Stock to Mentor. Mentor
has also advised the Company that it contends that the Settlement Agreement
obligates the Company to provide up to an additional 80 hours of source code
consulting support and training. In its responses to Mentor, the Company has
denied that it has any such obligations. If Mentor asserts these claims, the
Company will vigorously defend against them. Shareholders of the Company will
incur immediate dilution if additional shares of Common Stock are issued to
Mentor. Mentor has the right to require the Company to register any such
additional shares under the Securities Act. Sales by Mentor
7
<PAGE> 9
of any such additional shares of Common Stock in the public market could
adversely affect the market price for the Company's Common Stock. In addition,
there can be no assurance that the Company will not have to provide the
requested consulting services to Mentor at the Company's expense.
The Company was obligated under the Agreement to file a registration
statement covering the Shares on or before August 14, 1997 and to use its best
efforts to secure the effectiveness of such registration statement on or about
October 14, 1997. The Company did not file the registration statement by the
required date and advised the Selling Shareholders, other than Anthony
Wainwright, on August 1, 1997. If the registration statement does not become
effective by October 14, 1997, there can be no assurance that the Selling
Shareholders, other than Mr. Wainwright, will not file a legal action seeking
damages as a result of the Company's failure to file or secure the effectiveness
of a registration statement by the dates required by the Agreement.
The Company was obligated under the Settlement Agreement to file a
registration statement covering the 627,451 shares of Common Stock issued
initially to Mentor under the terms of the Settlement Agreement on or before
March 25, 1997. The Company did not file the registration statement by the
required date and advised Mentor on March 24, 1997. The Company filed the
registration statement on May 7, 1997. Mentor has advised the Company by letter
that it reserves its rights under the Settlement Agreement. There can be no
assurance that Mentor will not file a legal action seeking damages, if any, as a
result of the Company's failure to file a registration statement by the date
required under the Settlement Agreement.
Legal Proceedings. As with other companies in the Company's industry,
the Company is subject to the risk of adverse claims and litigation on a variety
of matters, including infringement of intellectual property, intentional and/or
negligent misrepresentation of material facts and breach of fiduciary duties. On
January 10, 1997, Gambit Automated Design, Inc. ("Gambit"), a competitor of the
Company, filed a complaint alleging misappropriation of trade secrets, breach of
contract, inducing breach of contract, breach of fiduciary duty, unfair
competition and unjust enrichment against the Company and Anton Krouglyanskiy, a
former employee of Gambit and a current employee of the Company. Gambit seeks
injunctive relief, compensation and punitive damages, restitution and attorneys'
fees and costs. The parties have agreed to mediation of this matter and are
currently engaged in discovery. A date for the mediation has not been set. The
Company believes the lawsuit is without merit and intends to defend itself
vigorously.
In June 1996, the Company entered into an agreement whereby the Company
was granted the exclusive marketing rights to Lucent Technologies' CLOVER line
of deep submicron verification products worldwide, with the exception of Japan
and Taiwan. Pursuant to the four year agreement, the Company made prepaid
royalty payments of $1,750,000. The agreement also provided for future prepaid
royalty payments of: $1,250,000 in fiscal 1998 and $1,000,000 in fiscal 1999. In
July and August 1997, both parties sent notices of termination, alleging breach
of the agreement by the other party. The agreement provides that any dispute,
controversy or claim arising out of the agreement shall be resolved through good
faith consultation for a specified period. That period has passed. The agreement
provides that if the dispute is not resolved by consultation, it shall be
referred to and finally resolved by arbitration. Request for arbitration has
been made and arbitrators currently are in the process of being appointed.
Lucent's request for arbitration includes a "Prayer for Relief" for $750,000 of
royalty prepayments, consequential, special and incidental damages in an
unspecified sum and punitive damages in an unspecified sum. The dispute is in
its early stages and the ultimate outcome cannot presently be determined.
Accordingly, no provision for any liability that may result upon adjudication
has been made in the Company's financial statements. The Company believes that
the Request for Arbitration is without merit and intends to vigorously dispute
the claim.
Any litigation may result in substantial cost and expenses to the
Company and significant diversion of efforts by the Company's technical and
management personnel. In addition, an adverse ruling in any litigation could
have a material adverse effect on the Company's business, operating results or
financial condition.
Proprietary Rights. The Company relies on contract, trade secret and
copyright law to protect its technology. The Company generally enters into
confidentiality or license agreements with its employees, distributors and
customers, and limits access to and distribution of its software, documentation
and other proprietary information. Despite these precautions, it may be possible
for a third party to copy or otherwise obtain and use the Company's products or
technology without authorization, or to develop similar technology
independently. In addition, effective copyright and trade secret protection may
be unavailable or limited in certain foreign countries.
8
<PAGE> 10
There has been substantial industry litigation regarding patents and
other intellectual property rights involving technology companies. In the
future, litigation may be necessary to protect and enforce the Company's
intellectual property rights, to defend the Company against claimed infringement
of the rights of others and to determine the scope and validity of the
proprietary rights of others. Any such litigation could be costly and could
divert management's attention, which could have a material adverse effect on the
Company's business, results of operations or financial condition regardless of
the outcome of the litigation. In addition, third parties making claims against
the Company with respect to intellectual property infringement may be able to
obtain injunctive or other equitable relief that could effectively block the
Company's ability to sell its products in the United States and abroad, and
could result in an award of substantial damages. In the event of a claim of
infringement, the Company and its customers may be required to obtain one or
more licenses from third parties. There can be no assurance that the Company or
its customers could obtain necessary licenses from third parties at a reasonable
cost or at all.
Concentration of Stock Ownership. The present directors, executive
officers and 5% shareholders of the Company and their affiliates beneficially
own approximately 52.1% of the outstanding Common Stock. As a result, these
shareholders may be able to exercise significant influence over all matters
requiring shareholder approval, including the election of directors and approval
of significant corporate transactions. Such concentration of ownership may have
the effect of delaying or preventing a change in control of the Company.
Effect of Certain Charter Projections; Blank Check Preferred Stock. The
Company's Board of Directors has the authority to issue up to 1,000,000 shares
of Preferred Stock and to determine the price, rights, preferences, privileges
and restrictions, including voting rights, without any further vote or action by
the Company's shareholders. The rights of the holders of the Common Stock will
be subject to, and may be adversely affected by, the rights of the holders of
any Preferred Stock that may be issued in the future. The issuance of Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company.
Shares Eligible for Future Sale. Sales of a substantial number of
shares of Common Stock in the public market following this offering could
adversely affect the market price for the Company's Common Stock. On the date of
this Prospectus, 16,776,884 shares, including 4,517,242 shares of the 9,129,484
Shares offered hereby, are eligible for sale, subject in some cases to the
volume and other restrictions of Rule 144 under the Securities Act. An
additional 4,612,242 shares of Common Stock issuable upon exercise of the
Warrants and offered hereby, are eligible for sale. An additional 218,344 shares
of Common Stock issuable upon exercise of outstanding warrants, other than the
Warrants, are eligible for sale, subject in some cases to the volume and other
restrictions under Rule 144. In addition, Mentor Graphics is claiming the
Company is required to issue to Mentor and register 90,697 additional shares
pursuant to the terms of the Settlement Agreement. See "- Certain Price
Protection and Registration Obligations." Further, holders of approximately
240,000 shares of Common Stock issuable upon exercise of outstanding warrants,
other than the Warrants, are entitled to certain registration rights with
respect to such shares. If such holders, by exercising their registration
rights, cause a large number of shares to be registered and sold in the public
market, such sales could have a material adverse effect on the market price for
the Company's Common Stock.
9
<PAGE> 11
MATERIAL CHANGES
Receipt by SVR of a Going Concern Opinion From its Independent
Accountants. The report of Price Waterhouse LLP on SVR's fiscal 1997
consolidated financial statements was amended on September 17, 1997 to add an
explanatory paragraph regarding SVR's ability to continue as a going concern and
to disclose the cancellation of a significant contract subsequent to March 31,
1997. There can be no assurance that SVR will not continue to incur significant
operating losses or that required additional financing will be available to meet
SVR's business plans in fiscal 1998 and beyond. See "Risk Factors-Receipt by SVR
of a going concern opinion from its Independent Accountants".
Option Repricing. In July 1997, as a result of the continued decline in
the price of the Company's Common Stock, the Compensation Committee of the
Company's Board of Directors reviewed the options held by the Company's
executive officers and employees and the fact that a substantial number of stock
options granted pursuant to the Company's 1988 Stock Option Plan (the "1988
Plan"), including those repriced in November 1996, had exercise prices well
above the recent historical trading prices of the Common Stock. The Committee
determined it to be in the best interests of the Company and its shareholders to
restore the incentives for employees and executive officers to remain as
employees of the Company and to exert their maximum efforts on behalf of the
Company by granting replacement stock options under the 1988 Plan at the
optionee's election, with exercise prices equal to current market value.
Accordingly, the Committee approved an offer to all employees of the Company,
including executive officers, to exchange outstanding options with exercise
prices above the then current trading price for options with an exercise price
equal to the current trading price, with vesting continuing in accordance with
the vesting schedule of the forfeited option. Optionees who participated in the
exchange received a lower exercise price on their exchanged options. Options for
1,562,939 shares with exercise prices ranging from $3.4376 to $1.00 were
exchanged for options for an equal number of shares at an exercise price of
$0.8750, the fair market value of the Company's Common Stock on July 17, 1997,
the date of the Committee's approval of the repricing and the acceptance of the
repricing by the employees.
Legal Proceedings. In June 1996, the Company entered into an agreement
whereby the Company was granted the exclusive marketing rights to Lucent
Technologies' CLOVER line of deep submicron verification products worldwide with
the exception of Japan and Taiwan. Pursuant to the four year agreement, the
Company made prepaid royalty payments of $1,750,000. The agreement also provided
for future prepaid royalty payments of: $1,250,000 in fiscal 1998 and $1,000,000
in fiscal 1999. In July and August 1997, both parties sent notices of
termination, alleging breach of the agreement by the other party. The agreement
provides that any dispute, controversy or claim arising out of the agreement
shall be resolved through good faith consultation for a specified period. That
period has passed. The agreement provides that if the dispute is not resolved by
consultation, it shall be referred to and finally resolved by arbitration.
Request for arbitration has been made and arbitrators are in the process of
being appointed. Lucent's request for arbitration includes a "Prayer for Relief"
for $750,000 of royalty prepayments, consequential, special and incidental
damages in an unspecified sum and punitive damages in an unspecified sum. The
dispute is in its early stages and the ultimate outcome cannot presently be
determined. Accordingly, no provision for any liability that may result upon
adjudication has been made in the Company's financial statements. The Company
believes that the Request for Arbitration is without merit and intends to
vigorously dispute the claim. See "Risk Factors-Legal Proceedings."
Increase in the Number of Authorized Shares of the Company's Common
Stock. At the Company's Annual Meeting of Shareholders on September 4, 1997, the
Board of Directors' proposal to amend the Company's Amended and Restated
Articles of Incorporation to increase the authorized number of shares of Common
Stock to forty million (40,000,000) from twenty five million (25,000,000) was
approved by the shareholders. The Company has filed an amendment to its Articles
of Incorporation with the Secretary of State of the State of California to
effect such increase.
10
<PAGE> 12
SELLING SHAREHOLDERS
The following table lists the Selling Shareholders, the number of
shares of the Company's Common Stock which each owned as of July 31, 1997, the
number of Shares expected to be sold by each, and the number and the percentage
of the shares of the Company's Common Stock which each will own after the
offering pursuant to the Registration Statement, assuming the sale of all the
Shares expected to be sold.
The Selling Shareholders, except Anthony Wainwright, acquired 4,517,242
shares of Common Stock and 4,517,242 shares issuable pursuant to the exercise of
warrants pursuant to a Unit Purchase Agreement ("the Agreement") between the
Company and such Selling Shareholders in a private placement by the Company in
reliance on Regulation D and/or Section 4(2) of the Securities Act. The $1.31
exercise price for the warrants is payable in cash, cancellation of
indebtedness, in shares of the Company's Common Stock, through a "same day sale"
commitment or "margin" commitment from the warrant holder and a broker who is a
member of the National Association of Securities Dealers, Inc. (the "NASD") or
by a "net exercise." The warrants are exercisable for a term of three years and
are redeemable, at the Company's discretion, commencing 18 months after April
16, 1997 at $.01 per share of Common Stock subject to the warrants, subject to
certain limitations. The Company agreed to file a registration statement under
the Securities Act on or before August 14, 1997 with respect to the shares
issued or issuable pursuant to the Agreement and to use its best efforts to
secure the effectiveness of the registration statement on or about October 14,
1997 and to cause the registration statement to remain effective until the
earlier of (a) the date ending three years after the effective date of the
registration statement, or (b) the date on which the holder of registrable
securities is able to sell all of such holder's registrable securities in any
single three month period without registration under the Securities Act pursuant
to Rule 144. Anthony Wainwright, acquired 95,000 shares issuable pursuant to the
exercise of a warrant pursuant to an employment agreement. Mr. Wainwright's
warrant is exercisable at $1.25 per share and expires on April 21, 1999. The
exercise price is payable in cash, cancellation of indebtedness, in shares of
the Company's Common Stock, through a "same day sale" commitment or "margin"
commitment from the warrant holder and a broker who is a member of the NASD or
by a "net exercise". As part of the warrant agreement, this Selling Shareholder
received the right to include the shares issuable pursuant to the exercise of
the warrant in any registration statement of the Company, subject to certain
limitations. The warrant agreement requires the Company to prepare and file with
the Commission a registration statement with respect to such shares and use its
best efforts to cause such registration statement to become effective and keep
such registration statement effective for up to 180 days.
<TABLE>
<CAPTION>
Shares Percentage of
Shares Owned Shares To Owned After Company's
Selling Shareholder Before Offering Be Offered Offering Common Stock
- ------------------- --------------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Robert R. Anderson 1,371,550(3) 574,712 (1) 796,838 4.7
Compass Technology Partners, L.P. 545,470(4) 344,828 (1) 200,642 1.2
Compass Management Partners, L.P. 27,086 22,988 (1) 4,098 *
Clarion Capital Corporation 311,853 229,886 (1) 81,967 *
Laurence G. Colegate, Jr. (5) 115,942 114,942 (1) 1,000 *
Bay Partners SBIC, L.P. 574,746(6) 344,828 (1) 229,918 1.4
Special Situations Private 1,149,426(7) 1,149,426 (1) 0 *
Equity Fund, L.P.
Special Situations Fund III, L.P. 2,482,638(7) 1,724,138 (1) 758,500 4.5
Special Situations Cayman Fund, L.P. 768,212(7) 574,712 (1) 193,500 1.2
Senvest International LLC 349,886 229,886 (1) 120,000 *
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
Shares Percentage of
Shares Owned Shares To Owned After Company's
Selling Shareholder Before Offering Be Offered Offering Common Stock
- ------------------- --------------- ---------- -------- ------------
<S> <C> <C> <C> <C>
Roy L. Rogers, Trustee 1,186,311(8) 344,828 (1) 841,483 5.0
Rogers Family Trust
J. F. Shea Co., Inc. 3,429,851(9) 2,298,850 (1) 1,131,001 6.7
William R. Timken 145,692 114,942 (1) 30,750 *
Donn Tognazzini 70,228 45,978 (1) 24,250 *
Bay Area Micro-Cap Fund, L.P. 814,156 689,656 (1) 124,500 *
Isabella Partners 239,887(10) 114,942 (1) 124,945 *
Warren Wong (11) 117,942 114,942 (1) 3,000 *
Anthony Wainwright(12) 151,417 95,000 (2) 56,417 *
</TABLE>
* Less than 1%
(1) Exactly half of these Shares are issuable upon exercise of Warrants.
(2) These Shares are issuable upon exercise of a Warrant.
(3) Includes 470,956 shares held in trust of which Mr. Anderson is trustee,
including 400,956 shares held by the Robert R. and Sally E. Anderson
Trust, 12,500 shares held by the Robert R. Anderson Trust, 12,500 shares
held by the Sharon Davidson Trust, 35,000 shares held by the Timothy R.
Anderson Trust and 10,000 shares held by the Steven Davidson Trust. Also
includes 17,550 shares of which Mr. Anderson disclaims beneficial
ownership, including 2,550 shares owned by Sharon Davidson and 15,000
shares owned by Steven Davidson, two of Mr. Anderson's children. Also
includes 462,356 shares subject to warrants exercisable within 60 days of
July 31, 1997 and 33,332 shares subject to options exercisable within 60
days of July 31, 1997. Mr. Anderson is Chairman of the Board and Chief
Executive Officer of the Company and beneficially owns 7.9% of the
Company's outstanding shares as of July 31, 1997.
(4) Includes 180,747 shares of Common Stock subject to warrants, exercisable
within 60 days of July 31, 1997.
(5) Laurence G. Colegate, Jr. is the Company's Senior Vice President of
Finance and Administration and Chief Financial Officer.
(6) Includes 197,414 shares of Common Stock subject to warrants, exercisable
within 60 days of July 31, 1997.
(7) Austin Marxe is a General Partner of Special Situations Private Equity
Fund, L.P., Special Situations Fund III, L.P. and Special Situations
Cayman Fund, L.P. He beneficially owns 23.8% of the Company's outstanding
shares as of July 31, 1997.
(8) Includes 283,333 shares held by R&W Ventures, and 645,440 shares and
222,414 shares subject to warrants exercisable within 60 days of September
5, 1997, held by the Rogers Family Trust. Also includes 15,000 shares held
by the Roy L. Rogers IRA and 20,124 shares subject to options exercisable
within 60 days of July 31,1997. Mr. Rogers is a member of the Company's
Board of Directors who beneficially owns 7% of the Company's outstanding
shares as of July 31, 1997.
(9) Includes 1,708,168 shares held by J.F. Shea Co., Inc. (of which Mr. Edmund
H. Shea, Jr. is Vice President) and 472,258 shares held by E&M RP Trust
(of which Mr. Shea is a Trustee). Also includes 1,249,425 shares subject
to warrants held by J.F. Shea Co., Inc. exercisable within sixty days of
July 31, 1997. J.F. Shea Co., Inc. beneficially owns 19% of the Company's
outstanding shares as of July 31, 1997.
12
<PAGE> 14
(10) Includes 82,471 shares of Common Stock subject to warrants, exercisable
within 60 days of July 31, 1997.
(11) Warren Wong is the Company's Vice President of Business Development.
(12) Anthony Wainwright was President and Chief Executive Officer of the
Company until April 15, 1995.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that they, or
their respective pledgees, donees, transferees or successors in interest, intend
to sell all of the Shares from time to time on the National Market at prices and
at terms prevailing at the time of sale or at prices related to the then current
market price or in negotiated transactions. The Shares may be sold by one or
more of the following methods: (a) an over-the-counter distribution in
accordance with the rules of the National Market and at prices prevailing at the
time of sale; (b) ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and (c) in privately negotiated transactions. There
is no assurance that the Selling Shareholders will sell any or all of the
Shares.
In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from the Selling Shareholder in
amounts to be negotiated prior to the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales.
With respect to shares offered by the Selling Shareholders, except
Anthony Wainwright, the Company will pay all expenses incurred in connection
with any registration qualification and compliance requested pursuant to the
Agreement (excluding underwriters' or brokers' discount and commissions),
including without limitation all filing registration and qualification,
printers' and accounting fees and the reasonable fees and disbursements of one
counsel for the Selling Shareholders and counsel for the Company.
With respect to Anthony Wainwright, all expenses incurred in connection
with a piggyback registration pursuant to the warrant agreement (excluding
underwriters' and brokers' discounts and commissions), including, without
limitation all federal and "blue sky" or other state securities registration and
qualification fees, printers' and accounting fees, fees and disbursements of
counsel for the Company will be borne by the Company.
The Company has agreed to indemnify in certain circumstances the
Selling Shareholders and various related persons against certain liabilities,
including liabilities under the Securities Act. The Selling Shareholders have
agreed to indemnify in certain circumstances the Company and various related
persons against certain liabilities, including liabilities under the Securities
Act.
Pursuant to the Agreement, the Company agreed to use its best efforts
to cause the Registration Statement, of which this Prospectus constitutes a
part, to remain effective until the earlier of (a) the date ending three years
after the effective date of the Registration Statement, or (b) the date on which
a Selling Shareholder, other than Mr. Wainwright, is able to sell all of such
holder's registrable securities in any three-month period without registration
under the Securities Act pursuant to Rule 144. As part of his warrant agreement,
Mr. Wainwright has the right to include the shares issuable upon exercise of his
warrant in any registration statement filed by the Company, subject to certain
limitations.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Shareholders. The Company could receive up to $6,036,337 upon the
cash exercise of all the Warrants, of which there can be no assurance. The
exercise price for the Warrants is payable in cash, cancellation of
indebtedness, in shares of the Company's Common Stock, through a "same day sale"
commitment or "margin" commitment from the warrant holder and a broker who is a
member of the NASD or by a "net exercise". See "Selling Shareholders". The
Company intends to use any proceeds received from the exercise of Warrants for
general corporate purposes, including working capital.
13
<PAGE> 15
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich, A Professional Corporation, Palo Alto, California.
EXPERTS
The consolidated financial statements as of March 31, 1997 and 1996 and
for each of the two years in the period ended March 31, 1997 incorporated by
reference in this Prospectus by reference to the Current Report on Form 8-K
dated September 18, 1997 have been so incorporated in reliance on the report of
Price Waterhouse LLP, independent accountants, given on the authority of said
firm as experts in auditing and accounting. The consolidated financial
statements and schedule of the Company for the year ended March 31, 1995
incorporated by reference into and made a part of this Prospectus and
Registration Statement of the Company, have been audited by Coopers & Lybrand
L.L.P., independent accountants, as set forth in their reports incorporated by
reference herein. See "Incorporation of Certain Documents by Reference."
14
<PAGE> 16
================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS IN CONNECTION WITH THE OFFERING DESCRIBED HEREIN,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR BY ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES,
OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, IN ANY JURISDICTION
IN WHICH IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY
OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information ................................................... 2
Incorporation of Certain
Documents by Reference ................................................ 2
The Company ............................................................. 3
Risk Factors ............................................................ 3
Material Changes ........................................................ 10
Selling Shareholders .................................................... 11
Plan of Distribution .................................................... 13
Use of Proceeds ......................................................... 13
Legal Matters ........................................................... 14
Experts ................................................................. 14
</TABLE>
================================================================================
9,129,484 SHARES
SILICON VALLEY
RESEARCH, INC.
COMMON STOCK
PROSPECTUS
September __, 1997
================================================================================
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses payable by the
Company in connection with the sale and distribution of the securities being
registered, other than underwriting discounts and commissions. All of the
amounts shown are estimates, except the Securities and Exchange Commission
registration fee and the Nasdaq National Market filing fee.
<TABLE>
<CAPTION>
To Be Paid
By The
Registrant
----------
<S> <C>
Securities and Exchange Commission registration fee........................... 2,853
Nasdaq National Market additional listing fee................................. 17,500
Accounting fees and expenses.................................................. 5,000
Printing expenses............................................................. 0
Transfer agent and registrar fees and expenses................................ 0
Blue Sky fees and expenses (including legal fees)............................. 0
Legal fees and expenses....................................................... 5,000
Miscellaneous expenses........................................................ 4,000
---------
Total................................................................ 34,353
=========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 204(10) of the California General Corporation Law ("California
Law") permits indemnification of officers, directors, and other corporate agents
under certain circumstances and subject to certain limitations. The Company's
Articles of Incorporation and Bylaws provide that the Company shall indemnify
its directors, officers, or agents to the full extent permitted by California
Law. The right to indemnification conferred to such parties is a contract right.
These indemnification provisions may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
(including reimbursement of expenses incurred) arising under the Securities Act
of 1933, as amended (the "Securities Act").
In addition, with the approval of its Board of Directors, the Company
has entered into separate indemnification agreements with its directors and
officers which require the Company to, among other things, indemnify them
against certain liabilities which may arise by reason of their status or
service.
The Company has obtained liability insurance for the benefit of its
directors and officers.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or other agent of the Company in which
indemnification is being sought.
II-1
<PAGE> 18
ITEM 16. EXHIBITS
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit
- -------- ----------------------
<S> <C>
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional Corporation.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation (included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained in Part II of the Registration
Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20% change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement; provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 19
C. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
D. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Jose, State of California, on the 19th day of
September, 1997.
SILICON VALLEY RESEARCH, INC.
By: /s/Robert R. Anderson
---------------------------------------
Robert R. Anderson
Chairman and Chief Executive Officer
POWER OF ATTORNEY
Each of the officers and directors of Silicon Valley Research, Inc.
whose signature appears below hereby constitutes and appoints Robert R. Anderson
and Laurence G. Colegate, Jr., and each of them, their true and lawful attorneys
and agents, with full power of substitution, each with power to act alone, to
sign and execute on behalf of the undersigned any amendment or amendments to the
Registration Statement on Form S-3 and to perform any acts necessary in order to
file such amendments, and each of the undersigned does hereby ratify and confirm
all that said attorneys and agents, or their or his substitutes, shall do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on September 19, 1997 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Chairman of the Board and Chief Executive Officer
/s/Robert R. Anderson (Principal Executive Officer)
---------------------------------------
Robert R. Anderson
Chief Financial Officer and Senior Vice President of
/s/Laurence G. Colegate, Jr. Finance and Administration (Principal Financial and
--------------------------------------- Accounting Officer)
Laurence G. Colegate, Jr.
Director
/s/Benjamin Huberman
---------------------------------------
Benjamin Huberman
Director
/s/Roy L. Rogers
---------------------------------------
Roy L. Rogers
Director
/s/Thomas Sherby
---------------------------------------
Thomas Sherby
</TABLE>
II-4
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
No. Description of Exhibit Sequentially Numbered Page
- ------- ---------------------- --------------------------
<S> <C> <C>
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional
Corporation.
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
September 19, 1997
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: SILICON VALLEY RESEARCH, INC. REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
As legal counsel to Silicon Valley Research, Inc., a California
corporation (the "Company"), we are rendering this opinion in connection with
the preparation and filing of a registration statement on Form S-3 (the
"Registration Statement") relating to the registration under the Securities Act
of 1933, as amended of 4,517,242 shares (the "Outstanding Shares") of Common
Stock, without par value, of the Company (the "Common Stock") held by certain
selling security holders and 4,612,242 shares (the "Warrant Shares") of Common
Stock issuable by the Company upon the exercise of warrants (the "Warrants")
issued to the selling security holders as set forth in the Registration
Statement to which this opinion is being filed as Exhibit 5.1.
We have examined such instruments, documents and records which we
deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to the originals of all documents submitted to us as copies.`
Based on such examination, we are of the opinion that the Outstanding
Shares are duly authorized, validly issued, fully paid and nonassessable and the
Warrant Shares are duly authorized and, if and when issued upon exercise of the
Warrants in accordance with the respective warrant agreements, will be validly
issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
above-referenced Registration Statement and to the use of our name wherever it
appears in said Registration Statement, including the Prospectus constituting a
part thereof, as originally filed or as subsequently amended.
This opinion is to be used only in connection with the sale of the
Shares while the Registration Statement is in effect.
Respectfully submitted,
/s/Gray Cary Ware & Freidenrich
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
3
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
May 27, 1997, except for the second paragraph of Note 1 and the third paragraph
of Note 6 which are as of September 17, 1997, which appears on page 2 of Exhibit
99.1 of Silicon Valley Research, Inc.'s Current Report on Form 8-K dated
September 18, 1997. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
/s/Price Waterhouse LLP
PRICE WATERHOUSE LLP
San Jose, California
September 18, 1997
4
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus constituting part
of this Registration Statement on Form S-3 of our report dated May 23, 1995 on
our audit of the consolidated financial statements and financial statement
schedule of Silicon Valley Research Inc. for the year ended March 31, 1995
appearing on page 3 of Exhibit 99.1 of Silicon Valley Research, Inc.'s Report on
Form 8-K dated September 17, 1997. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
/s/Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
San Jose, California
September 17, 1997
