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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 27, 1998.
REGISTRATION NO. 333-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------
SILICON VALLEY RESEARCH, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 7372 94-2743735
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Number) Identification No.)
</TABLE>
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)
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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)
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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
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==============================================================================================================
Title of Each Class of AMOUNT TO BE PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
Securities to be Registered REGISTERED OFFERING PRICE AGGREGATE OFFERING REGISTRATION FEE
PER SHARE (1) PRICE (1)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, without par value 7,623,948 shares $0.5625 $4,288,470.75 $1,265
==============================================================================================================
</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 February 23, 1998.
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.
================================================================================
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<PAGE> 2
PROSPECTUS
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7,623,948 SHARES
SILICON VALLEY RESEARCH, INC.
COMMON STOCK
The 7,623,948 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 3,811,974 outstanding shares and
3,811,974 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 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 on or before February 28, 1998 and use its best efforts
to secure the effectiveness of such registration statement on or before March
30, 1998 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 each 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 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
February 23, 1998, the last sale price of the Company's Common Stock as reported
on the National Market was $0.5625.
----------
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this Prospectus is ____, 1998.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements, and other information with
the 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 Reports on
Form 10-Q for the quarters ended June 30, 1997, September 30, 1997 and December
31, 1997; (3) Current Report on Form 8-K filed on July 14, 1997; (4) Current
Report on Form 8-K filed on September 19, 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 seven 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 December 31, 1997, SVR had an accumulated deficit of $35
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 1998. Since inception, the Company has
financed its operations primarily through sales of equity securities and to a
lesser extent, cash generated from operations. To date in fiscal 1998, the
Company has received net cash of $6,718,000 from the private placement of equity
securities. 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. Consolidated accounts
receivable were $549,000 as of December 31, 1997 and borrowings under the
revolving line of credit aggregated $285,000.
The Company believes its cash and cash generated from operations and
available borrowings may not be sufficient to finance its operations through
1998. 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 stockholders
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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Dependence on Single Product Line. Revenues from sales 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 sale of SVR GARDS
products will continue to account for at least a significant portion of the
Company's license revenues for the foreseeable future. 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.
New Products and Rapid Technological Change; Risk of Product Defects.
The Electronic Design Automation ("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 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.
Compliance with Nasdaq Listing Requirements; Disclosure Relating to
Low-Priced Stock. The Company's Common Stock is quoted on the Nasdaq National
Market (the "National Market"). However, in order to continue to be included in
the National Market, a company must meet certain maintenance criteria. Effective
February 23, 1998, the maintenance criteria requires 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).
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As of February 23, 1998, the closing bid price of a share of the
Company's Common Stock was $0.5625 and the Company's Common Stock had failed to
maintain a closing bid price greater than or equal to $1.00. Nasdaq has advised
that the Company will be provided, likely in the form of a letter, ninety
calendar days in which to regain compliance with the minimum bid price. If the
Company is unable to demonstrate compliance on or before the end of the period,
it must submit proposals for achieving compliance. 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. Effective February 1998, 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, a minimum bid price of $4.00 per share
and a public float of $5,000,000 for inclusion in the SmallCap Market, subject
to certain exceptions. 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 limit the ability of
purchasers in this offering to sell the Common Stock in the secondary market.
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 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.
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
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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.
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.
International Sales. International sales, primarily in Japan, Korea, and
Taiwan, accounted for approximately 52%, 43%, 25% and 31% of the Company's total
revenue in fiscal 1995, 1996, 1997 and in the nine months ended December 31,
1997, respectively. Declining revenues from international sales were a result of
the reduction in capital expenditures by semiconductor manufacturers,
particularly in Asia as a result of the current financial crisis in that region,
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.
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
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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 the Company 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 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.
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.
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 a former employee of
Gambit who is a current employee of the Company. Gambit sought injunctive
relief, compensation and punitive damages, restitution and attorneys' fees and
costs. The parties have reached
8
<PAGE> 9
an agreement in principle to resolve this litigation. Such agreement is awaiting
final documentation and does not call for the payment of any damages, monetary
or non-monetary, by the Company.
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 contract by the other party. In December 1997, the dispute was resolved when
the parties entered into a Settlement Agreement and Mutual Release.
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.
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 64.6% 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, 20,609,669 shares, including 3,811,974 shares of the 7,623,948
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 3,811,974 shares of Common Stock issuable upon exercise of the
Warrants and offered hereby, are eligible for sale. An additional 4,773,105
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. 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 cause a large number of shares to be 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> 10
MATERIAL CHANGES
Changes in Beneficial Ownership of the Company's Common Stock. There
were material changes to the security ownership of certain beneficial owners of
the Company's Common Stock as a result of the December 30, 1997 private
placement of equity securities. As of December 30, 1997, Austin Marxe
beneficially owned 7,569,788 shares of the Company's Common Stock, raising his
percentage ownership from 23.8% to 31.8%. As of December 30, 1997, J.F. Shea
Co., Inc. beneficially owned 5,122,367 shares of the Company's Common Stock,
raising its percentage ownership from 19.0% to 22.6%. As of December 30, 1997,
Robert R. Anderson beneficially owned 1,846,550 shares of the Company's Common
Stock, raising his percentage ownership from 7.9% to 8.6%. As of December 30,
1997, Bay Area Micro-Cap Fund, L.P. beneficially owned 1,906,156 shares of the
Company's Common Stock with a percentage ownership of 8.9%.
Change in Accounting Principles. In February 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
No. 128, "Earnings per Share" (SFAS 128), which the Company adopted for the
quarter ended December 31, 1997. Under SFAS 128, the Company presents two EPS
amounts. Basic EPS is calculated based on income or loss to common shareholders
and the weighted-average number of shares outstanding during the reported
period. Diluted EPS includes additional dilution from common stock equivalents,
such as stock issuable pursuant to the exercise of stock options and warrants.
The Company's earnings per share data included in the summary of financial data
presented below has been restated for the adoption of SFAS 128.
The following data has been derived from the Company's consolidated financial
statements.
<TABLE>
<CAPTION>
Years Ended March 31,
(in thousands except per share data) 1993 1994 1995 1996 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Revenue $ 11,022 $ 7,537 $ 8,251 $ 10,947 $ 5,504
Operating income (loss) 1,411 (3,636) 420 530 (10,105)
Net income (loss) 1,003 (3,892) 211 569 (9,885)
Net income (loss) per share (basic) 0.21 (0.66) 0.03 0.06 (0.86)
Net income (loss) per share 0.21 (0.66) 0.03 0.05 (0.86)
(diluted)
Weighted-average Common Shares 4,836 5,887 7,588 9,169 11,521
(basic)
Weighted-average Common Shares and
equivalents (diluted) 4,892 5,887 8,257 10,386 11,521
BALANCE SHEET DATA
Working capital (deficit) $ 2,070 $ (298) $ 4 $ 11,848 $ 481
Total assets 6,582 3,246 5,222 17,092 8,477
Long term obligations, less current 373 36 794 38 254
portion
Shareholders' equity 2,358 105 982 13,728 5,058
</TABLE>
10
<PAGE> 11
MANAGEMENT
As of January 1, 1998, the names of the directors and executive officers
of the Company and their respective ages are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE COMPANY
- ---- --- -------------------------
<S> <C> <C>
Robert R. Anderson (3)............... 60 Chairman of the Board and Chief
Executive Officer
Laurence G. Colegate, Jr............. 55 Chief Financial Officer and
Senior Vice President of Finance
and Administration
Minoru Takagi........................ 52 Vice President and President of
SVR-KK
Dr. Donald Hanson.................... 47 Chief Technical Officer
Robert Wong.......................... 45 Vice President of Operations
Kenneth Barnett...................... 61 Vice President of Sales
Roy L. Rogers (1)(2)................. 63 Director
Dr. Thomas Sherby (1)................ 63 Director
</TABLE>
- ----------
(1) Member of Audit Committee
(2) Member of Compensation Committee
(3) Member of Nominating Committee
Robert R. Anderson became Chairman of SVR in January 1994 and resumed
the position of Chief Executive Officer in December 1996. Prior to that, Mr.
Anderson was Chief Executive Officer from April 1994 until July 1995 and was
Chief Financial Officer from September 1994 to November 1995. Mr. Anderson
co-founded KLA Instruments Corporation "KLA," a supplier of equipment for
semiconductor companies, in 1975. He served as Vice-Chairman of the Board of KLA
from November 1991 to March 1994 and served as Chairman of the Board of KLA from
May 1985 to November 1991. Prior to that, Mr. Anderson served as Chief Operating
Officer and Chief Financial Officer of KLA for nine years. Mr. Anderson
currently serves as a director of Applied Science & Technology Inc., a supplier
of systems components for the semiconductor industry.
Laurence G. Colegate, Jr. joined SVR as Senior Vice President, Finance
and Administration and Chief Financial Officer in February 1997. Mr. Colegate
has over thirty years experience in corporate financing, financial control, tax,
treasury, information systems and risk management. Prior to joining SVR, he was
Vice President and Chief Financial Officer of CBR Cement Corporation, a producer
and distributor of cement and construction materials, from 1989 to 1995.
Minoru Takagi is Vice President of SVR and President and General Manager
of SVR-KK in Japan. He has been an employee of the Company since the mid 1980s.
He began his career in the electronics industry in 1968 and has worked for
Burroughs Computer, Fairchild and Megatest Corp., a manufacturer of automatic
test systems for the integrated circuit industry, in Japan.
Dr. Donald Hanson joined SVR in May 1997 as Chief Technical Officer. He
has over twenty years experience in micro computer design and has had
responsibility for integrating computer-aided design systems for HAL Computer
Systems, a subsidiary of Fujitsu Corporation, where he was employed for six
years prior to joining SVR. He received a B.S. in Engineering from Harvey Mudd
College and a M.S. and a Ph.D. in Electrical Engineering from Stanford
University.
11
<PAGE> 12
Robert Wong joined SVR in December 1997 as Vice President of Operations.
From May 1992 through November 1997, Mr. Wong was the Senior Manager of HAL
Computer Systems and was responsible for corporate CAD, packaging technology and
processor module development. Prior to that, Mr. Wong was the Executive Vice
President of Shared Resources, Inc., where he was responsible for CAD software
development, software quality assurance and customer services. He has over
twenty years experience in the EDA industry ranging from IC design to system
design. He received a B.S. in Electrical Engineering and Computer Science from
the University of California, Berkeley, and a M.S. in Computer Science from
Santa Clara University.
Kenneth Barnett joined SVR in November 1997 as the Vice President of
Sales with over twenty five years experience in the semiconductor industry. For
twelve years, Mr. Barnett was the President of Silicon Valley Associates, a
semiconductor test equipment company which he founded in 1985. Prior to that,
Mr. Barnett was Vice President of Sales and Marketing for KLA-Tencor Corporation
for a six year period and Vice President of Sales and Marketing for Micronix
Corporation. Mr. Barnett holds a degree in Electrical Engineering from the
Illinois Institute of Technology.
Roy L. Rogers has been a director of SVR since January 1994. He is
President of Rogers Investment Corporation. For the past ten years, Mr. Rogers
has served as a General Partner of two venture capital limited partnerships, R &
W Ventures I and R & W Ventures II. Previously, for a fifteen year period, he
held management positions in research, institutional sales and corporate finance
at Hambrecht & Quist LLC, an investment banking firm.
Dr. Thomas Sherby has been a director of SVR since September 1994. He
recently retired from his position as Chief Executive Officer and Chairman of
the Board of Directors of Knights Technology, Inc., a supplier of prepackaged
software, which he held since April 1989. He has over twenty years of management
experience in the electronics and computer industries with Fairchild
Semiconductor, Dataproducts Corp., a manufacturer of peripheral data processing
equipment, and AT&T Global Information Solutions (formerly NCR Corporation), a
manufacturer of computers and peripherals.
12
<PAGE> 13
SELLING SHAREHOLDERS
The following table lists the Selling Shareholders, the number of shares
of the Company's Common Stock which each owned as of December 30, 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 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 acquired 3,811,974 shares of Common Stock and
3,811,974 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 $0.53 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 five years. The Company agreed to file a
registration statement under the Securities Act on or before February 28, 1998
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 before March 30, 1998 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.
<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 1,846,550(2) 420,000(1) 1,426,550 6.7
Bay Area Micro-Cap Fund, L.P. 1,906,156(3) 1,000,000(1) 906,156 4.3
Bay Partners SBIC, L.P. 842,746(4) 268,000(1) 574,746 2.8
Compass Technology Partners, L.P. 778,242(5) 270,272(1) 507,970 2.4
Compass Management Partners, L.P. 54,114(6) 27,028(1) 27,086 *
Compass Chicago Partners, L.P. 135,136(7) 135,136(1) 0 *
Clarion Capital Corporation 581,853(8) 270,000(1) 311,853 1.5
Carlton G. Costigan 153,150(9) 60,000(1) 93,150 *
William H. Costigan 55,500(10) 30,000(1) 25,500 *
Isabella Partners 323,887(11) 84,000(1) 239,887 1.2
J. F. Shea Co., Inc., 5,122,367(12) 1,678,000(1) 3,444,367 15.8
Special Situations Private 2,500,778(14) 1,351,352(1) 1,149,426 5.4
Equity Fund, L.P. (13)
Special Situations Fund III, L.P.(13) 3,846,258(15) 1,258,620(1) 2,587,638 12.1
Special Situations Cayman 1,222,752(16) 419,540(1) 803,212 3.8
Fund, L.P. (13)
Rogers Family Trust 1,455,353(17) 268,000(1) 1,187,353 5.7
Roy L. Rogers, Trustee
William R. Timken 229,692(18) 84,000(1) 145,692 *
</TABLE>
- ----------
* Less than 1%
13
<PAGE> 14
(1) Exactly half of these Shares are issuable upon exercise of Warrants.
(2) 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 K. 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 672,356
shares subject to warrants exercisable within 60 days of December 30, 1997
and 88,332 shares subject to options exercisable within 60 days of December
30, 1997. Mr. Anderson is Chairman of the Board and Chief Executive Officer
of the Company and beneficially owned 8.6% of the Company's outstanding
shares as of December 30, 1997.
(3) Includes 971,328 shares and 844,828 shares subject to warrants exercisable
within 60 days of December 30, 1997 held by Bay Area Micro-Cap Fund, L.P.
(of which Gregory F. Wilbur is a General Partner). Also includes 90,000
shares held directly by Gregory F. Wilbur. Bay Area Micro-Cap Fund, L.P.
beneficially owned 8.9% of the Company's outstanding shares as of December
30, 1997.
(4) Includes 331,414 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(5) Includes 315,883 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(6) Includes 25,008 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(7) Includes 67,568 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(8) Includes 249,943 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(9) Includes 30,000 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(10) Includes 15,000 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(11) Includes 124,471 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(12) Includes 2,547,168 shares held by J.F. Shea Co., Inc. (of which Mr. Edmund
H. Shea, Jr. is Vice President), 472,258 shares held by E&M RP Trust (of
which Mr. Shea is a Trustee), 7,258 shares held directly by John H. Shea
and 7,258 shares held directly by Peter O. Shea. John H. Shea and Peter O.
Shea are both executive officers of J.F. Shea Co., Inc. Also includes
1,249,425 shares subject to warrants held by J.F. Shea Co., Inc.
exercisable within 60 days of December 30, 1997. J.F. Shea Co., Inc.
beneficially owned 22.6% of the Company's outstanding shares as of December
30, 1997.
(13) 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 owned 31.8 % of the Company's outstanding shares
as of December 30, 1997.
(14) Includes 1,250,389 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(15) Includes 1,491,379 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(16) Includes 497,126 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
(17) Includes 283,333 shares held by R&W Ventures II and 645,440 shares and
356,414 shares subject to warrants exercisable within 60 days of December
30, 1997 held by the Rogers Family Trust. Also includes 15,000 shares held
by the Roy L. Rogers IRA and 21,166 shares subject to options exercisable
within 60 days of December 30, 1997. Mr. Rogers is a member of the
Company's Board of Directors and beneficially owned 6.9% of the Company's
outstanding shares as of December 30, 1997.
(18) Includes 99,471 shares of Common Stock subject to warrants exercisable
within 60 days of December 30, 1997.
14
<PAGE> 15
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, 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.
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 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.
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 $2,020,346 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.
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware &
Freidenrich, LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements 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 17, 1997 have been so incorporated in reliance on the report
(which contains an explanatory paragraph relating to the Company's ability to
continue as a going concern as described in Note 1 to the consolidated financial
statements) 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."
15
<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............... 3
Incorporation of Certain
Documents by Reference............ 3
The Company......................... 4
Risk Factors........................ 4
Material Changes................... 10
Management......................... 11
Selling Shareholders............... 13
Plan of Distribution................ 15
Use of Proceeds.................... 15
Legal Matters....................... 15
Experts............................ 15
</TABLE>
7,623,948 SHARES
SILICON VALLEY
RESEARCH, INC.
COMMON STOCK
----------
PROSPECTUS
----------
-----
================================================================================
<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............. $1,265
Nasdaq National Market additional listing fee................... 17,500
Accounting fees and expenses.................................... 4,000
Printing expenses............................................... 0
Transfer agent and registrar fees and expenses.................. 0
Blue Sky fees and expenses (including legal fees)............... 0
Legal fees and expenses......................................... 4,000
Miscellaneous expenses.......................................... 2,000
----------
Total.................................................... $28,765
==========
</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 25th day of
February, 1998.
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 February 25, 1998 by the
following persons in the capacities indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
Chairman of the Board and Chief Executive
/s/Robert R. Anderson Officer (Principal Executive Officer)
- ----------------------------------------------
Robert R. Anderson
/s/Laurence G. Colegate, Jr. Chief Financial Officer and Senior Vice
- ---------------------------------------------- President of Finance and Administration
Laurence G. Colegate, Jr. (Principal Financial and Accounting Officer)
/s/Roy L. Rogers Director
- ----------------------------------------------
Roy L. Rogers
/s/Thomas Sherby Director
- ----------------------------------------------
Thomas Sherby
</TABLE>
II-4
<PAGE> 21
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Sequentially Numbered
No. Description of Exhibit Page
- ------ ---------------------- ---------------------
<S> <C> <C>
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, LLP
23.1 Consent of Price Waterhouse LLP.
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Gray Cary Ware & Freidenrich, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
February 27, 1998
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 3,811,974 shares (the "Outstanding Shares") of Common
Stock, without par value, of the Company (the "Common Stock") held by certain
selling security holders and 3,811,974 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, LLP
GRAY CARY WARE & FREIDENRICH, LLP
<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 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
February 24, 1998
<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 statement 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
February 27, 1998
