<PAGE>
PROSPECTUS
3,381,575 SHARES
ZITEL CORPORATION
-------------------
COMMON STOCK
-------------------
This Prospectus relates to a total of 3,381,575 shares of Common
Stock (the "Shares") (the "Common Stock") of Zitel Corporation (the
"Company") which are being offered and sold by certain stockholders of the
Company (the "Selling Securityholders"). Of such Shares, 3,231,575 are
issuable pursuant to the conversion of 3% Convertible Subordinated Debentures
due June 15, 1999 of the Company (the "Debentures") and 150,000 shares are
issuable upon exercise of Common Stock Purchase Warrants (the "Warrants").
The initial conversion price is $3.9262 per share. The conversion price is
subject to adjustment in the event that the average of the closing bid prices
for the Common Stock on the NASDAQ National market for the ten days preceding
July 30, 1998 multiplied by 90% is less than the specified conversion price.
The exercise price of the Warrants is equal to 130% of the conversion price,
as it may be so adjusted, initially $5.1041 per share. An aggregate of
$10,000,000 of Debentures and the Warrants were sold to six institutional
investors who are Selling Securityholders. In connection with the
acquisition and with the private placement of the Debentures the Company
agreed to register the resale of the Common Stock into which the Debentures
are convertible and for which the Warrants are exercisable.
The Shares may be offered by the Selling Securityholders or certain
pledgees, donees, transferees or other successors in interest from time to time
in long or short transactions on the Nasdaq National Market System, in privately
negotiated transactions, through the writing or exercise of options, or a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Securityholders
may effect such transactions by selling the Shares to or through broker-dealers,
and such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they sell
as principal or both (which compensation to a particular broker-dealer might be
in excess of customary commissions). Other methods by which the Shares may be
sold include, without limitation: (i) transactions which involve cross or block
trades or any other transaction permitted by the NASDAQ National Market System,
(ii) "at the market" to or through market makers or into an existing market for
the Common Stock, (iii) in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales effected through
agents, (iv) through transactions in options or swaps or other derivatives
(whether exchange-listed or otherwise), or (v) any combinations of any such
methods of sale. The Selling Securityholders may also sell Common Stock short
and deliver the shares of Common Stock registered hereby at any time to close
out such short positions, provided such short sales were effected pursuant to
this Prospectus. See "Selling Securityholders" and "Plan of Distribution."
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Securityholders hereof. See "Plan of Distribution."
The Selling Securityholders, directly or through agents, dealers or
underwriters, may sell the Shares offered hereby from time to time on terms to
be determined at the time of sale. The Company's Common Stock is traded on the
Nasdaq National Market System under the symbol ZITL.
-------------------
THE SHARES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 4.
-------------------
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.
No underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are $25,000. The aggregate proceeds to the
Selling Securityholders from the sale of the Shares will be the purchase price
of the Shares sold less the aggregate agents' commissions and underwriters'
discounts, if any, and other expenses of issuance and distribution not borne by
the Company. See "Plan of Distribution."
The Selling Securityholders and any broker-dealers, agents or
underwriters that participate with the Selling Securityholders in the
distribution of the Shares may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the "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 Act. The Company has agreed to indemnify the Selling
Securityholders and certain other persons against certain liabilities,
including liabilities under the Act.
The date of this Prospectus is July 29, 1998.
<PAGE>
No person is authorized in connection with any offering made hereby
to give any information or to make any representation not contained or
incorporated by reference in this Prospectus, and any information or
representation not contained or incorporated herein must not be relied upon
as having been authorized by the Company. This Prospectus does not constitute
an offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for such person to make such offer or
solicitation. Neither the delivery of this Prospectus at any time nor any
sale made hereunder shall, under any circumstances, imply that the
information herein is correct as of any date subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the informational reporting 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 can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
Commission's following Regional Offices: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511;
and New York Regional Office, 7 World Trade Center, Suite 1300, New York, New
York 10048. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Judiciary Plaza, Washington, D.C. 20549. 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
address of such Web site is http://www.sec.gov. The Company's Common Stock is
quoted on the Nasdaq National Market System, and such reports, proxy
statements and other information can also be inspected at the offices of The
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
Additional information regarding the Company and the Shares offered
hereby is contained in the Registration Statement on Form S-3 and the
exhibits thereto filed with the Commission under the Securities Act of 1933,
as amended (the "Securities Act"). This Prospectus does not contain all of
the information contained in such Registration Statement and the exhibits
thereto. Statements contained in this Prospectus regarding the contents of
any document or contract may be incomplete and, in each instance, reference
is made to the copy of such contract or document filed as an exhibit to the
Registration Statement. For further information pertaining to the Company and
the Shares, reference is made to the Registration Statement and the exhibits
thereto, which may be inspected without charge at, and copies thereof may be
obtained at prescribed rates from, the office of the Commission at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are by this reference incorporated in and made a
part of this Prospectus:
(1) The Annual Report on Form 10-K for the fiscal year ended September 30,
1997, including all matters incorporated by reference therein;
(2) The Current Report on Form 8-K dated June 30, 1997;
(3) The Proxy Statement filed on December 24, 1997, including all matters
incorporated by reference therein;
(4) The Quarterly Report on Form 10-Q for the quarterly period ended
December 31, 1997, including all matters incorporated by reference
therein; and
(5) The Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998, including all matters incorporated by reference therein.
(6) The Current Report on Form 8-K dated June 16, 1998.
(7) The Current Report on Form 8-K dated July 10, 1998.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of the offering shall be deemed to be incorporated by
reference herein and to be a part of this
2.
<PAGE>
Prospectus from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be 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
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
Copies of all documents which are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner to whom
this Prospectus is delivered, upon a written or oral request to Zitel
Corporation, Attention: Larry B. Schlenoff, 47211 Bayside Parkway, Fremont,
California 94538-6517; telephone number (510) 440-9600.
---------------------------------------
3.
<PAGE>
THE COMPANY
Zitel Corporation was incorporated in California in 1979. The Company's
executive offices are located at 47211 Bayside Parkway, Fremont, California
94538-6517, and its telephone number is (510) 440-9600.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Securityholders.
DIVIDEND POLICY
The Company has never paid cash dividends. The Company's Board of
Directors currently intends to retain any earnings for use in the Company's
business and does not anticipate paying any cash dividends in the foreseeable
future. The Company's 5% Convertible Subordinated Debentures, the Debentures
and the Company's bank credit agreement prohibit the payment of dividends.
RISK FACTORS
AN INVESTMENT IN THE COMPANY INVOLVES A HIGH DEGREE OF RISK. THE RISK
FACTORS SET FORTH IN THE COMPANY'S REPORTS UNDER THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, SHOULD BE CONSIDERED CAREFULLY BEFORE PURCHASING THE COMMON
STOCK OFFERED HEREBY.
4.
<PAGE>
THE COMPANY
BUSINESS
Zitel Corporation ("Zitel" or the "Company") develops, markets and
supports data management solutions in the form of software products for
performance monitoring, analysis and modeling of computer systems. The
Company provides solution services for the year 2000 century date conversion
opportunity through product and service offerings including MatriDigm
Corporation's MAP2000 factory conversion service. The Company has two
business units:
The software products business unit is the combination of the
Datametrics Systems Corporation and Palmer & Webb Systems companies, acquired
in 1997, with the Company's performance & modeling software products. The
combined subsidiaries operate under the Datametrics Systems name. The
business unit's product line is composed of a suite of systems with data
management, monitoring, analysis, modeling and control capabilities for
mainframe computers, open systems servers and distributed network systems.
The solution services business unit provides Year 2000 conversion
services, including project management, planning, analysis, code conversion,
and testing. Zitel's primary code conversion methodology is based on the
MatriDigm MAP2000 process for Cobol. In addition, as a solution provider,
Zitel utilizes other tools and processes to meet customer needs in different
environments. Zitel serves its Year 2000 customers both directly, with its
own consulting staff, and through a teaming program where Zitel may be the
subcontractor or partner to other solution providers worldwide.
In 1992, the Company entered into a joint development agreement with
International Business Machines Corporation ("IBM") and received substantial
royalties thereunder. The final royalty payment from IBM was recorded by the
Company in the quarter ended June 30, 1998.
DATA STORAGE PRODUCTS
The Company has engaged in the business of offering a family of rotating
memory systems utilizing the CASD technology for use with Unisys A and V
mainframe computers and with most UNIX, NT, Open VMS and NETWARE server
platforms. The Company has divested this business.
SOFTWARE PRODUCTS
The Company, on June 30, 1997, concluded the acquisition of three
companies primarily engaged in development and marketing of software
products: Datametrics Systems Corporation, headquartered in Fairfax,
Virginia; Palmer & Webb Systems, Limited, headquartered in the United
Kingdom; and Palmer & Webb Systems, B.V., headquartered in The Netherlands.
These entities combined with the Company's subsidiary, Performance &
Modeling, Inc., form a business unit operating as Datametrics Systems. The
Company's software products business unit offers a suite of products utilized
for data management, monitoring, analysis and control of mainframe computers,
open systems servers and distributed network systems. Corporate customers
with significant investments in management information systems utilize these
products to maximize efficiency of existing systems and plan system
enhancements. These products function with IBM VMS, Digital VMS, and Unisys
proprietary platforms as well as a wide variety of open systems platforms.
The flagship product of the business unit is ViewPoint-TM-, which is a
real-time data collector of approximately 2,000 different system attributes. It
operates on select computer mainframes and all major open systems platforms.
While the data is collected on the computer system, ViewPoint allows the user to
replay the real-time data on any Windows-based PC. Included in ViewPoint are
extensive comparative and auto-analysis capabilities and an auto-correlation
engine.
MATRIDIGM CORPORATION
At June 30, 1998 Zitel had invested approximately $7,400,000 and
guaranteed a bank loan of $1,000,000 to acquire an approximate 33% interest
in MatriDigm Corporation ("MatriDigm"), a private company formed to provide
COBOL maintenance and re-engineering services. The Company's percentage
ownership has changed and will continue to change as MatriDigm raises
additional capital and as options under MatriDigm's stock option plan vest
and are exercised.
5.
<PAGE>
The initial focus of MatriDigm has been development of technology to
automate the conversion of legacy software code which could not recognize or
utilize dates after the year 1999 (the "Year 2000 Problem") into code which is
able to recognize and utilize dates into the next century. MatriDigm has
devoted substantially all of its engineering resources to development of such
technology. In May 1997, MatriDigm announced the commercial availability of its
MAP2000 windowing process for programs written in ANSI COBOL 85. MatriDigm has
subsequently extended the capability of MAP2000 to cover COBOL ANSI 68 and 74,
with support for CICS and IMS/DC transactions and VSAM, IMS/DB and DB2 databases
and file systems. MatriDigm intends to continue to refine its current tool set
and to extend its tool set.
Substantially all software programs written assume that the first two
digits of any date are "19" and cannot recognize or utilize dates commencing
with the year 2000. Estimates of the cost and available market for conversion
of existing code to eliminate this problem are substantial and vary widely. The
alternatives solutions available to a company with a Year 2000 Problem include
migration to new programs, elimination of code with a Year 2000 Problem, use of
internal resources to convert existing code or procurement of conversion
services from outside providers such as the Company and MatriDigm. A large
number of companies, many of which have substantially greater resources than
MatriDigm, are offering conversion services or are developing systems to provide
such services, and competition is intense among the providers of such services.
The Company's solution services business unit provides Year 2000
conversion services, including project management, planning analysis, code
conversion and testing. The primary code conversion methodology of this
business unit is based on MatriDigm's MAP2000 process; the business unit will
also use other tools and processes to meet customer needs in different
environments. The Company has an exclusive right to create temporary
conversion centers utilizing the MAP2000 process at customer sites for
customers with security or other requirements which prohibit delivery of code
to offsite conversion facilities. The solution services business unit was
formed in the first quarter of the previous fiscal year. As of June 30, 1998
this business unit had not realized significant revenue.
MARKETING
The Company offers its products through system integrators, value-added
resellers and distributors, OEMs, and directly to end users. The Company's
direct sales and service staff consists of employees who operate from
California, Colorado, Florida, Massachusetts, Maryland, New Jersey, New York,
Texas, Virginia, and Europe.
The Company provides maintenance for its software products.
COMPETITION
The market for system management tools in which the Company's software
products business unit competes is intensely competitive. Many of the companies
with which the Company competes such as Computer Associates and BGS, Inc. have
substantially larger installed bases and greater financial resources than the
Company. The Company competes in this market by providing effective solutions
for its customers.
The market for Year 2000 conversion services through outside
providers is intensely competitive, with services being provided by a
substantial number of national, regional and local firms, many of which have
existing relationships and contractual arrangements with customers. Many of
these competitors have substantially greater financial, technical and
marketing resources than the Company and MatriDigm. The ability of the
Company and MatriDigm to compete in this market will depend on the ability of
MatriDigm to successfully market its automated solution.
PATENTS
Management believes that technical expertise, responsiveness to user
requirements and implementation of technological advances, rather than patents,
are mandatory factors in the markets in which the Company competes. The Company
does not own any patents which are material to its continuing businesses.
EMPLOYEES
At June 30, 1998, the Company employed 161 persons on a full-time
basis, 43 in research and development, 10 in manufacturing, 68 in sales
and marketing, and 40 in general management and administration.
6.
<PAGE>
The Company believes that its further success will depend, in part,
on its ability to attract and retain qualified employees, who are in great
demand. None of the Company's employees are represented by a labor union and
the Company believes that its employee relations are good.
PROPERTIES
The Company leases its headquarter manufacturing and office facility in
Fremont, California. Under a non-cancelable operating lease, which expires in
March 2003, with an average annual rent of $990,000. The Company is presently
seeking a subtenant for or termination of this lease and intends to relocate to
a smaller and less expensive facility or consolidate into existing facilities.
The software business unit is primarily located in Fairfax, Virginia and
Leatherhead, U.K. under a lease in Fairfax which expires in October, 2004 with a
rent of approximately $440,000 per annum and a lease in Leatherhead which
expires in April, 2010, with a rent of approximately $190,000 per annum.
7.
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the names of the Selling Securityholders,
the number of shares of Common Stock owned by each Selling Securityholder prior
to this offering, the number of shares of Common Stock being offered for the
account of each Selling Securityholder and the number of shares of Common Stock
to be owned by each Selling Securityholder after completion of this offering.
This information is based upon information provided by the Selling
Securityholders. Because the Selling Securityholders may offer all, some or
none of their Common Stock, no definitive estimate as to the number of Shares
thereof that will be held by the Selling Securityholders after such offering can
be provided.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO BEING OWNED AFTER
SELLING SECURITYHOLDER OFFERING (1) OFFERED OFFERING (3)
---------------------- -------- ------- ------------
<S> <C> <C> <C>
Halifax Fund, L.P. 845,395 (2) 845,395 (2) 0
Palladin Overseas Fund 507,236 (2) 507,236 (2) 0
Limited
Palladin Partners I, L.P. 507,236 (2) 507,236 (2) 0
The Gleneagles Fund 507,236 (2) 507,236 (2) 0
Company
Palladin Securities, LLC 507,236 (2) 507,236 (2) 0
Colonial Penn Life 507,236 (2) 507,236 (2) 0
Insurance Company
</TABLE>
(1) None of the Selling Securityholders has, or within the past three
years has had, any position, office, or other material relationship
with the Company or any of its predecessors and affiliates.
(2) Assumes that all of the shares registered were allocated pro rata among
the Selling Securityholders. Assuming no adjustments were made to the
current conversion price, 2,696,960 shares of Common Stock would be
issuable upon exercise of the Warrants and conversion of the principal
of (but not the accrued 3% interest on) the Debentures. Pursuant to
the terms of the Debentures and the Warrants, the Debentures are
convertible and the Warrants are exercisable by any holder only to the
extent that the number of shares of Common Stock thereby issuable,
together with the number of shares of Common Stock owned by such holder
and its affiliates (but not including shares of Common Stock underlying
unconverted Debentures or unexercised Warrants) would not exceed 4.9% of
the then outstanding Common Stock as determined in accordance with
Section 13(d) of the Exchange Act. Accordingly the number of shares of
Common Stock set forth in the table for the Selling Securityholders
exceeds the number of shares of Common Stock that the Selling
Securityholders could own beneficially at any given time through its
ownership of the Debentures and Warrants. In that regard, beneficial
ownership of the Selling Securityholders set forth in the table is not
determined in accordance with Rule 13d-3 under the Exchange Act.
(3) Assumes the sale of all Shares offered hereby. The Company has
agreed to pay all reasonable fees and expenses incident to the
filing of this offering. See "Plan of Distribution."
(4) The shares set forth in the table are managed directly or indirectly
by The Palladin Group, L.P. ("Palladin") or an affiliate of Palladin.
Palladin may be deemed to be the beneficial owner of these shares
pursuant to Section 13(d) of the Exchange Act. Palladin disclaims any
beneficial interest in these securities. None of the Selling
Securityholders set forth in the table has any beneficial interest in
the shares held by any other Selling Securityholder in such table.
8.
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be offered by the Selling Securityholders or by certain
pledgees, donees, transferees or other successors in interest from time to time
in long or short transactions on the Nasdaq National Market System, in privately
negotiated transactions, through the writing or exercise of options, or a
combination of such methods of sale, at fixed prices that may be changed, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Securityholders
may effect such transactions by selling the Shares directly or by or through
agents or broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they sell as
principal or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). Other methods by which the Shares may be sold
include, without limitation: (i) transactions which involve cross or block
trades or any other transaction permitted by the NASDAQ National Market System,
(ii) "at the market" to or through market makers or into an existing market for
the Common Stock, (iii) in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales effected through
agents, (iv) through transactions in options or swaps or other derivatives
(whether exchange-listed or otherwise), or (v) any combinations of any such
methods of sale. The Selling Securityholders may also sell Common Stock short
and deliver the shares of Common Stock registered hereby at any time to close
out such short positions, provided such short sales were effected pursuant to
this Prospectus.
The Selling Securityholders and any underwriters, dealers or agents that
participate in the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, and any discounts, commissions or
concessions received by them and any provided pursuant to the sale of the Shares
by them might be deemed to be underwriting discounts and commissions under the
Securities Act. In order to comply with the securities laws of certain states,
if applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless such Shares have been registered or qualified for
sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with. The Company has
advised the Selling Securityholders that the anti-manipulation rules under the
Exchange Act may apply to sales of Shares in the market and to the activities of
the Selling Securityholders and their affiliates.
The Company entered into agreements with the Selling Securityholders to
register their Shares under applicable federal and state securities laws. The
Company will pay substantially all of the expenses incident to the offering and
sale of the Shares to the public, other than commissions, concessions and
discounts of underwriters, dealers or agents. Such expenses (excluding such
commissions and discounts) are estimated to be $25,000. Such agreements
provide for cross-indemnification of the Selling Securityholders and the Company
to the extent permitted by law, for losses, claims, damages, liabilities and
expenses arising, under certain circumstances, out of registration of the
Shares.
9.
<PAGE>
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for
the Company by Cooley Godward LLP, San Francisco, California.
EXPERTS
The consolidated financial statements and related financial schedule of
Zitel Corporation at September 30, 1997 and 1996 and for each of the three years
in period ended September 30, 1997, incorporated by reference in the Company's
Annual Report on Form 10-K for the year ended September 30, 1997, have been
audited by PricewaterhouseCoopers L.L.P., independent accountants, as set forth
in their reports thereon included or incorporated by reference therein, and are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
The financial statements of Datametrics Systems Corporation appearing in
Zitel Corporation's Current Report (Form 8-K) dated June 30, 1997 have been
audited by Ernst & Young LLP, independent accountants, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements are incorporated by reference herein upon the authority of
such firm as experts in accounting and auditing.
The financial statements of Palmer & Webb Systems B.V. appearing in
Zitel Corporation's Current Report on Form 8-K dated June 30, 1997 have been
audited by Van Doesburg & Partners, independent accountants, as set forth in
their report thereon included therein and incorporated herein by reference.
Such financial statements are incorporated herein by reference in reliance
upon such report given upon the authority of such firm as experts in accounting
and auditing.
The financial statements of Palmer & Webb Systems Limited appearing in
Zitel Corporation's Current Report on Form 8-K dated June 30, 1997 have been
audited by M P Saunders & Company, Chartered Accountant and Registered Auditor,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated by reference herein upon
the authority of such firm as experts in accounting and auditing.
10.
<PAGE>
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
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PAGE
Available Information......................................................2
Incorporation of Certain Documents by Reference............................2
The Company................................................................4
Use of Proceeds............................................................4
Dividend Policy............................................................4
Risk Factors...............................................................4
The Company................................................................5
Selling Securityholders....................................................8
Plan of Distribution.......................................................9
Legal Matters.............................................................10
Experts...................................................................10
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3,381,575 SHARES
ZITEL CORPORATION
COMMON STOCK
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PROSPECTUS
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JULY 29, 1998
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