As filed with the Securities and Exchange Commission on November 20, 1996
Registration Statement No. 333-15731
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------
PRE-EFFECTIVE
AMENDMENT NO. 1
TO
FORM S-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-------------------------
GO-VIDEO, INC.
(Exact name of registrant as specified in its charter)
Delaware 86-0492122
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7835 East McClain Drive
Scottsdale, Arizona 85260
(602) 998-3400
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
---------------
Roger B. Hackett, Chief Executive Officer and President
Go-Video, Inc.
7835 East McClain Drive
Scottsdale, Arizona 85260
(602) 998-3400
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
---------------
Copy to:
Jon S. Cohen, Esq.
Samuel C. Cowley, Esq.
Snell & Wilmer L.L.P.
One Arizona Center
Phoenix, Arizona 85004-0001
(602) 382-6300
---------------
Approximate date of commencement of proposed sale to the public:
From time to time after this Registration Statement becomes effective.
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, check the following box. [X]
If the registrant elects to deliver its latest annual report to securityholders,
or a complete and legible facsimile thereof, pursuant to Item 11(a)(1) of this
form, 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. [ ]
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
filed as a part of this registration statement will be used as a combined
prospectus with Registration Statement no. 33-58720.
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 said Section 8(a),
may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 20, 1996
PROSPECTUS
6,808,861 SHARES OF COMMON STOCK
GO-VIDEO, INC.
The Securities offered by this Prospectus are 6,808,861 shares of Common
Stock, $.001 per value, of Go- Video, Inc. (the "Company" or "Go-Video").
2,146,951 shares of the Common Stock offered hereby are issuable upon the
exercise of Common Stock purchase warrants issued in connection with the sale to
the public of 1,145,000 Units in March 1990 (the "Publicly Issued Warrants").
486,444 shares of the Common Stock offered hereby are issuable upon the exercise
of Common Stock purchase warrants previously issued in various private
transactions (the "Private Warrants"). 95,466 shares of Common Stock may be sold
by selling shareholders (the "Selling Shareholders").
The balance of the Common Stock offered hereby includes (i) up to
3,000,000 shares issuable upon the conversion of 10% Convertible Subordinated
Notes (the "Notes"); (ii) 600,000 shares issuable upon the exercise of Common
Stock purchase warrants to be issued to holders of the Notes (the "Unit
Warrants"); (iii) 360,000 shares to be issued in connection with the interest to
be issued in the form of Common Stock ("Interest") to be delivered to holders of
the Notes; and (iv) 120,000 shares issuable upon the exercise of Common Stock
purchase warrants issued to the placement agent for the Notes.
Specific terms of the securities described above are set forth in
"Description of Securities." The Company will not receive any proceeds from the
sale of Common Stock by the Selling Shareholders.
The Common Stock is traded on the American Stock Exchange under the
symbol "VCR ." On November 18, 1996, the last reported sales price of the Common
Stock, as reported by the American Stock Exchange, was $1.31 per share.
ANY INVESTMENT IN THE SECURITIES OFFERED HEREIN INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SECURITIES 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.
PURSUANT TO RULE 429 OF THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), THIS
COMBINED PROSPECTUS ALSO RELATES TO REGISTRATION STATEMENT NO. 33-58720.
The date of this Prospectus is November 20, 1996
<PAGE>
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 and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and other
information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at its regional offices located at 7
World Trade Center, 13th Floor, New York, New York 10048 and at Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material may be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission maintains a web site (http://www.sec.gov) that contains reports,
proxy, and information statements and other information regarding registrants,
such as the Company, that file electronically with the Commission. The Company's
Common Stock is listed on the American Stock Exchange and similar information
can be inspected and copied at its offices at 86 Trinity Place, New York, New
York 10006.
The Company has filed with the Commission a registration statement (the
"Registration Statement") with respect to the shares of Common Stock offered
hereby. This Prospectus, which constitutes part of the Registration Statement,
does not contain all of the information contained in the Registration Statement
and the exhibits thereto. For further information with respect to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement, including the exhibits thereto. Statements contained herein
concerning the provisions of any documents filed as an exhibit to the
Registration Statement or otherwise filed with the Commission are not
necessarily complete and, in each instance, reference is made to the copy of
such document as so filed. Each such statement is qualified in its entirety by
such reference.
No person is authorized to give any information or make any
representation other than those contained or incorporated by reference in this
Prospectus and, if given or made, such information or representation must not be
relied upon as having been authorized. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof.
INFORMATION INCORPORATED BY REFERENCE
The following documents have been filed by the Company with the
Commission and are hereby incorporated by reference into this Prospectus: (1)
Annual Report on Form 10-K for the fiscal year ended March 31, 1996; (2)
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996; (3) Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996; and (4) the Proxy
Statement for the 1996 Annual Meeting of Shareholders. All other documents and
reports filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be made a part hereof from the date of the filing of such reports and
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 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.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or oral
request of such person, a copy of any or all documents incorporated herein by
reference (not including the exhibits to such documents, unless such exhibits
are specifically incorporated by reference in the document which this Prospectus
incorporates). Requests for such documents should be directed to Go- Video,
Inc., 7835 East McClain Drive, Scottsdale, Arizona 85260, Attention: Chief
Financial Officer. The Company's executive office telephone number is (602)
998-3400.
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INFORMATION ATTACHED WITH RESPECT TO THE COMPANY
This Prospectus is accompanied by a copy of the Company's most recent
Annual Report on Form 10-K and Quarterly Report on Form 10-Q.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including all documents incorporated by reference,
includes "forward-looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. All statements other than
statements of historical facts included in this Prospectus, including without
limitation, statements under "The Company" and "Risk Factors" regarding the
Company's financial position, business strategy and plans and objectives of
management of the Company for future operations, may be forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors that could
cause actual results to differ materially from the Company's expectations are
disclosed under "Risk Factors" and elsewhere in this Prospectus and information
incorporated by reference into this Prospectus. All subsequent written and oral
forward-looking statements attributable to the Company or persons acting on its
behalf are expressly qualified in their entirety by this section.
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the factors discussed below in
evaluating the Company and its business before purchasing any of the shares of
Common Stock offered hereby. This Prospectus contains forward-looking statements
which involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in the following risk
factors and elsewhere in this Prospectus and information incorporated by
reference into this Prospectus. See "Disclosure Regarding Forward-Looking
Statements."
Accumulated Deficit
Incorporated in 1984, the Company began generating revenues from sales of
its Dual-Deck VCR in 1990 after discontinuing prior operations. At June 30,
1996, the Company had an accumulated deficit of $14.2 million. There is no
assurance that the Company will achieve profitable operations in the future.
Dependence on Dual-Deck VCR Product
The Company expects that the majority of its operating revenues for at
least the next two fiscal years will be derived from sales of the Dual-Deck VCR.
In 1995, the Company introduced the GV40xx series, which is manufactured for the
Company under contract by Samsung Electronics Co. Ltd. ("Samsung"). The GV40xx
series features a redesigned chassis and other internal components which reduced
manufacturing costs over the preceding series. In 1996, the Company introduced
the GV60xx series, which is manufactured for the Company under contract by
Shintom Co. Ltd. and Talk Corporation ("Shintom"). The GV60xx series features a
stacked design and a further reduction of manufacturing costs over the GV40xx
series. Samsung reduced its selling prices to the Company on the GV40xx series
for purchases of new inventory after March 1996, although not to the levels
available to the Company from Shintom. The Company subsequently reduced its
selling price on certain models of the Dual-Deck VCR line to its customers and
anticipates reducing prices on other models in the future to increase sales. The
success of these models depends on a variety of factors, including general and
retail economic conditions, the effectiveness of the Company's sales and
marketing efforts, and the reliable supply of inventory from both manufacturers.
There is no assurance that these models or future models will enjoy market
acceptance at quantities and prices necessary to be commercially successful and
profitable to the Company.
The Dual-Deck VCR has been designed for home use as a full featured video
cassette player/recorder. Company- prepared literature and owner's manuals
caution consumers that the Dual-Deck VCR should not be used in a manner which
infringes on the rights of owners of copyrighted material. The Company cannot
predict the likelihood that distribution of the current or future Dual-Deck
models will be challenged for any reason, but the Company believes that
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<PAGE>
it would have meritorious defenses to any challenge. The Company believes that
the Dual-Deck VCR is the video equivalent or betterment of the dual-transport
audio tape deck, which has become an accepted industry standard. The Company is
not currently developing a digital formatted player or recorder and is unable to
predict the impact on the Company of developing digital technologies. In
addition, the Company is unable to predict the impact on the Company of any
changes to intellectual property rights resulting from legislation related to
the development of digital consumer video products.
The Company's business strategy includes the acquisition or development
of new consumer electronic products to increase revenues and to decrease the
Company's reliance on sales of the Dual-Deck VCR. Because of the potential cost
and opportunistic and highly variable nature of an acquisition and product
development strategy, there is no assurance that the Company will be successful
in pursuing additional diversification.
Distribution
The Company's current marketing strategy is to continue to sell its
products to retailers, catalogs, and direct mail syndicators with the support of
independent manufacturers' sales representatives that represent specific
geographic or industry territories throughout North America and who also
represent many other manufacturers of consumer electronic products. The Company
is marketing its products in overseas markets directly to distributors and
retailers. There can be no assurance that the Company's distribution and
marketing strategies will be successful or cost effective.
For the fiscal year ended March 31, 1996, Circuit City represented 14% of
the Company's revenues. No other account represented more than 10% of the
Company's revenues. The loss of Circuit City or another significant customer
could have an adverse affect on operating results.
Competition
The consumer electronics market is competitive and is characterized by
rapid technological change, general price erosion, and periodic shortages of
components. Most of the Company's actual and potential competitors have
substantially greater financial, manufacturing, technical, and marketing
resources than does the Company. Moreover, most of these companies have
established distribution channels that afford them a competitive advantage.
There is no assurance that the Company will be able to compete successfully in
its chosen markets.
Manufacturing and Licensing
The Company does not have manufacturing facilities and therefore will
continue to be dependent on Samsung and Shintom, or any other manufacturers with
which the Company might contract for the manufacture of its products. A change
in the ability or willingness of Samsung or Shintom to manufacture Dual-Deck
VCRs for the Company could have a materially adverse impact on the Company. The
Company also has license agreements with Samsung whereby the Company has
licensed to Samsung the non-exclusive right to use the Company's patented and
proprietary technology to manufacture and sell Dual-Deck VCRs for sale under its
own brand worldwide in competition with the Company. The Company believes that
if Samsung were to exercise its rights under the VHS/VHS License Agreement, the
Company's revenues and profitability could be affected in a materially adverse
manner.
Product Enhancements and New Products
Because of the rapid rate of technological change in the consumer
electronics industry, the Company's success will depend in large part on its
ability to introduce products on a timely basis that meet a market need at a
competitive price and with acceptable profit margins. There can be no assurance
that the Company will be successful in overcoming engineering obstacles and
other impediments and in introducing any new products on a profitable basis.
Patents, Trademarks, and Proprietary Rights
The Company has made significant investments in certain patents,
trademarks, and proprietary rights. The Company believes that patents,
trademarks, and proprietary rights once established are generally important in
the consumer electronics market, and the loss, denial, or infringement of such
patents, trademarks, and proprietary rights
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could have a materially adverse effect on the Company.
Need for Additional Funds
Management believes that the Company's current capital resources will be
sufficient to meet its cash requirements for the next twelve months. However,
management also believes that additional financing through debt or equity may be
required to materially expand the Company's current business or to support the
development and introduction of new products such as the LCD projection or
digital direct-view televisions. No final determination as to the forms and
amounts of such financing has yet been made and there is no assurance that such
financing, when required, would be available on terms favorable to the Company.
Shares Available for Future Sale and Possible Dilution
There are 11,426,478 shares of the Company's Common Stock outstanding as
of October 21, 1996. In addition, as of October 21, 1996, the Company had
outstanding warrants and options to purchase up to an aggregate of 5,028,328
shares of Common Stock at varying prices per share and Notes convertible into up
to 3,000,000 shares of Common Stock. Of the shares underlying the outstanding
warrants and options, 3,752,495 have been registered under the Securities Act.
The Company's Certificate of Incorporation authorizes issuance of a total
of 50,000,000 shares of Common Stock without further action by stockholders.
The existence of options, warrants, and convertible securities, as well
as any future issuance of Common Stock available under the Company's Certificate
of Incorporation, could reduce the prevailing market price of the Common Stock,
and could adversely affect the terms at which the Company may be able to obtain
additional equity financing. In addition, the ability of the Company to use
authorized but unissued shares of Common Stock without further stockholder
approval for financing or for other corporate purposes may cause further
dilution of the stockholders' and warrant holders' actual or potential equity
interest in the Company.
No Dividends
The Company has paid no dividends to its stockholders since its inception
and does not plan to pay dividends in the foreseeable future. The Company
intends to reinvest earnings, if any, in the development and expansion of its
business.
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THE COMPANY
Go-Video is a consumer electronics marketing, development, and
distribution company that designs, develops, and markets electronic video
products for home and business use. The Company retains an experienced and
motivated management team that oversees a broad marketing and distribution
network which includes many of the major consumer electronics retailers in North
America, such as: Circuit City, Sears, Montgomery Ward Electric Avenue, Nobody
Beats the Wiz, The Good Guys, Thorne America, Sharper Image, and Sun T.V.
In addition to its retail distribution, the Company has been successful
in marketing its products through alternative marketing venues such as credit
card inserts and catalogs. As a result of its presence throughout the consumer
electronics marketplace, Go-Video has established itself as an innovative
marketer and developer of high-end, high margin product lines and is positioned
to launch a variety of technologically advanced products over the next several
years.
Go-Video currently derives most of its revenue from the distribution of
video cassette player/recorders ("VCRs") with two decks built into one unit the
Dual-Deck(TM) VCR. Since its introduction six years ago, the Go-Video Dual- Deck
VCR has been established as a new category in consumer electronics, growing to a
$35 million per year business with over 350,000 decks sold to date. The Company
developed and patented the Dual-Deck system, which incorporates proprietary
circuitry and software to perform duplicating, dual recording, editing, and
video view switching functions not available from single deck VCRs. The Company
recently introduced a line of wireless home and business video security and
surveillance products and the Company is currently involved in the development
of digital television products and home theater systems for consumer and
commercial use.
Since current management took control in 1994, the Company has (i) added
a second Dual-Deck manufacturer to reduce manufacturing costs, reduce product
sourcing risks, and increase marketing and sales flexibility; (ii) built a
strong executive management team with a mix of industry and high-tech business
experience; (iii) discontinued slow-moving product lines and written off
obsolete inventory; and (iv) begun development of an international Dual-Deck VCR
to reach sizable overseas markets.
Go-Video was incorporated in Arizona in 1984, completed its initial
public offering in 1986, and reincorporated in Delaware in 1987. Sales of the
Dual-Deck VCR began in June 1990. In August 1996, the Company completed a
private placement of the Notes. The Company's executive office is located at
7835 E. McClain Drive, Scottsdale, Arizona, 85260, and its telephone number is
(602) 998-3400. The Company has regional sales offices in Pittsburgh and Dallas.
USE OF PROCEEDS
The net proceeds to the Company from the exercise of the warrants is
estimated to be approximately $19.2 million. However, the Company is unlikely to
receive proceeds in this amount because a substantial number of the warrants
have a high exercise price and expire in March 1997. In addition, there can be
no assurance that any of the warrants will be exercised. The Company anticipates
using any net proceeds for working capital and general and administrative
expenses.
DILUTION
The net tangible book value of the Company as of June 30, 1996, was
$4,525,781 or $0.40 per share of Common Stock. Net tangible book value per share
represents the amount of the Company's total tangible assets less total
liabilities, divided by the number of shares of Common Stock outstanding. Net
tangible book value dilution per share represents the difference between the
amount per share paid by investors upon exercise of the Publicly Issued Warrants
and the Private and Unit Warrants, in exchange for Common Stock and the net
tangible book value per share after the exercise of such warrants. After giving
effect to the exercise of the Publicly Issued Warrants and the Private and Unit
Warrants and the assumed net proceeds to the Company of $19,161,720, the net
tangible book value of the Company
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as of June 30, 1996, would have been $23,687,501, or approximately $1.61 per
share. This represents an immediate increase of net tangible book value of $1.21
per share for existing shareholders, an immediate dilution of $6.49 per share
for holders of the Publicly Issued Warrants, and an immediate increase of
tangible book value of $0.14 per share for the holders of the Private and Unit
Warrants who exercise their warrants, as illustrated in the following table:
<TABLE>
<CAPTION>
Publicly Issued Warrants Private and Unit Warrants
------------------------ -------------------------
<S> <C> <C>
Assumed exercise price per share $8.10 $1.47
Net tangible book value per share at $0.40 $0.40
June 30, 1996
Pro forma net tangible book value per $1.61 $1.61
share after exercise of all Publicly
Traded Warrants and Other Warrants
(Dilution of) increase in net tangible ($6.49) $0.14
book value per share to warrant
holders who exercise their warrants
</TABLE>
SELLING SHAREHOLDERS
The following table provides information with respect to Common Stock
owned by the Selling Shareholders as of October 21, 1996, and as adjusted to
reflect the sale of the securities offered hereby, by the Selling Shareholders.
Except as otherwise indicated, to the knowledge of the Company, the Selling
Shareholders have sole voting and investment power with respect to their
securities, except to the extent that authority is shared by spouses under
applicable law or as otherwise noted below.
<TABLE>
<CAPTION>
Common Stock Common Stock
Beneficially Common Stock Beneficially
Owned Prior to to be Sold Owned After
the Offering(1) in the Offering the Offering(2)
Name of ------------------ --------------- -------------------
Selling Shareholder Number Percent Number Number Percent
- ------------------- ------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
R. Terren Dunlap(3) 607,518(4) 5.0% 35,466 572,052(4) 4.8%
Private Investors Equity Group 44,250 * 44,250 0 *
Paladin Holdings, L.L.P. 15,750 * 15,750 0 *
</TABLE>
* Less than one percent.
(1) Includes all Common Stock beneficially owned by Selling Shareholder as
a percentage of the Common Stock outstanding on October 21, 1996.
(2) Assumes that the Selling Shareholders dispose of all of the Shares of
Common Stock covered by this Prospectus and owned by the Selling
Shareholders and does not acquire any additional Common Stock. Assumes
no other exercise of options, warrants or conversion rights or
issuances of additional securities.
(3) Mr. Dunlap was a co-founder of the Company and served as Chairman and
Chief Executive Officer from April 1988 to March 1994. Prior to that
time, he served as President and a director. Mr. Dunlap retired as a
director on August 29, 1996.
(4) Includes options and warrants to acquire 538,312 Shares of Common
Stock.
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PLAN OF DISTRIBUTION
The Securities offered by this Prospectus are 6,808,861 shares of
Common Stock.
2,146,951 shares of the Common Stock offered hereby are issuable upon
the exercise of the Publicly Issued Warrants. 486,444 shares of the Common Stock
offered hereby are issuable upon the exercise of the Private Warrants. 95,466
shares of Common Stock may be sold by the Selling Shareholders.
The balance of the Common Stock offered hereby includes (i) up to
3,000,000 shares issuable upon the conversion of the Notes; (ii) 600,000 shares
issuable upon the exercise of the Unit Warrants; (iii) 360,000 shares to be
issued to holders of the Notes as Interest; and (iv) 120,000 shares issuable
upon the exercise of Common Stock purchase warrants issued to the placement
agent for the Notes.
This Prospectus may be used from time to time by the Company for the
issuance of Common Stock to the warrant holders and Note holders for
transactions in which such holders are or may be deemed to be underwriters
within the meaning of the Securities Act. Additionally, the shares of Common
Stock offered herein by the Selling Shareholders may be sold by the Selling
Shareholders from time to time in either underwritten public offerings, in
transactions pursuant to Rule 144 under the Securities Act, in privately
negotiated transactions, through the facilities of the American Stock Exchange,
or otherwise, at market prices prevailing at the time of such sale, at prices
relating to such prevailing market prices, or at negotiated prices. The Company
will not receive any of the proceeds from the sale of shares of Common Stock
offered herein by the Selling Shareholders. The Selling Shareholders may elect
to sell all, a portion or none of the Common Stock offered by them hereunder.
It is anticipated that the broker dealers participating in the sales of
Common Stock will receive the usual and customary selling commissions.
DESCRIPTION OF SECURITIES
Common Stock
The Company's authorized capital stock consists of 50,000,000 shares of
Common Stock, $0.001 par value per share, of which 11,426,478 shares were
outstanding as of October 21, 1996. Each share of Common Stock is entitled to
share pro rata in dividends and distributions, if any, when and if declared by
the Board of Directors, from funds legally available therefor. The Company has
not paid any cash dividends on its Common Stock and does not anticipate paying
cash dividends in the foreseeable future. No holder of any shares of Common
Stock has any pre-emptive right with respect to any securities of the Company to
be issued. The issued and outstanding Common Stock is fully paid and
nonassessable. Stockholders as such are not personally liable for debts of the
Company. Holders of Common Stock will share ratably in the net assets of the
Company in the event of liquidation, unless there are then preferred shares
which may have preferences on liquidation. There are no redemption, sinking
fund, or conversion rights applicable to the Common Stock.
Holders of Common Stock are entitled to one vote for each share of
record on each matter submitted to a vote of stockholders. Subject to the rights
of holders of any class or series of shares having a preference over the Common
Stock as to dividends or upon liquidation, holders of Common Stock are entitled
to such dividends as may be declared by the Company's Board of Directors out of
funds lawfully available therefor, and are entitled upon liquidation to receive
pro rata the assets available for distribution to shareholders. Holders of the
Common Stock have no preemptive, subscription or conversion rights. The Common
Stock is not subject to assessment and have no redemption provisions.
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The Notes
On July 15, 1996, the Company privately offered the Notes in the amount
of $250,000 each. The Notes have the following characteristics:
Conversion Privilege. Each of the Notes is convertible into 200,000
shares of the Company's Common Stock at $1.25 per share. The Notes may be
converted into shares of Common Stock at the holder's election at any time after
issuance or at the Company's election after the third anniversary of the
issuance of the Notes.
Conversion Terms. Holders of the Notes may convert at any time provided
that the holder notifies the Company with written notice via U.S. Mail, courier,
or confirmed facsimile transmission of the intention to convert. The Company may
call for mandatory conversion at any time after the third anniversary of the
issuance of the Notes by providing written notice of its intention to call for
conversion to the holders ten (10) business days prior to the Conversion Date.
Conversion Price. Upon conversion of the Notes, the Conversion Price
shall be the lesser of the Stated Conversion Price of $1.25 per share or the
Adjusted Conversion Price. The Adjusted Conversion Price shall be calculated as
the greater of (i) seventy percent (70%) of the closing price for the Common
Stock as reported on the American Stock Exchange on the trading day preceding
receipt by the Company of Notice from the Holder of the intention to exercise
its conversion privilege; (ii) the average closing price of the Common Stock for
the ten (10) trading days immediately preceding receipt by the Company of Notice
from the holder of the intention to exercise its conversion privilege; or (iii)
$0.50 per share. The minimum and maximum number of shares of Common Stock per
Note that would be issued upon conversion would be 200,000 and 500,000,
respectively. The Notes must be converted in full.
Interest. The holders of each Note are entitled to receive annual
interest in the form of Common Stock of the Company equal to 10 percent (10%) of
the principal amount of the Note. Interest shall be due and payable on each
annual anniversary of the issuance of the Notes. The number of shares of Common
Stock to be issued for payment of accrued interest shall be based upon the
average closing price of the Common Stock for the twenty trading days
immediately preceding such anniversary date. In the event that fractional shares
would be issuable, the Company shall pay the fractional amount with cash.
Interest shall accrue on a quarterly basis. Note holders who convert their Notes
prior to the annual anniversary date shall be entitled to receive accrued but
unpaid interest at the time they convert.
Liquidation Preference. In the event of a liquidation or capital
restructuring of the Company under the Bankruptcy Code, holders of the Notes
shall be subordinated to all other claims, with the exception that holders of
the Notes shall enjoy liquidation preference over Common stockholders.
The Unit Warrants
The Company also privately offered on July 15, 1996 Unit Warrants to
holders of the Notes. Each Unit Warrant is eligible to purchase 100,000 shares
of Common Stock per Note at $1.25 per share, as described below:
Time and Condition of Issue. The Unit Warrants will be issued to
holders of the Notes on the Warrant Issuance Date which is the earlier of (i)
three (3) months after this registration statement has been declared effective
or (ii) six months after the issuance of the Notes. Holders who have converted
the Notes into Common Stock prior to the Warrant Issuance Date shall not be
entitled to receive Unit Warrants.
Exercise Price, Expiration, Redemption. The Unit Warrants when issued
shall entitle the holder to purchase an aggregate of 100,000 shares of the
Company's Common Stock at an exercise price of $1.25 per share or such lower
price as the Board of Directors may in its sole discretion determine. The Unit
Warrants will expire three (3) years following the Warrant Issuance Date. The
Unit Warrants will be redeemable by the Company at any time when the closing
price of the Company's Common Stock is equal to at least $3.00 for twenty (20)
consecutive trading days, after which the Company must notify holders of Unit
Warrants of such redemption within ten (10) business days. If not exercised by
the holder within fifteen
9
<PAGE>
(15) business days after notice of redemption is given, the Unit Warrants may be
redeemed by the Company. The redemption price of each Warrant will be $0.05.
Options, Other Warrants, and Other Rights to Purchase Common Stock Currently
Outstanding
At October 21, 1996, there were outstanding 3,153,395 warrants (not
including any warrants related to the Notes) to purchase shares of Common Stock
at prices per share between $1.25 and $8.25 and 1,874,933 options to purchase
shares of Common Stock at prices per share between $0.50 and $4.75. Of the
outstanding warrants, 2,146,951 were listed on the American Stock Exchange and
may be redeemed by the Company at any time, upon thirty days notice, at a price
of $0.50 per warrant. Such warrants expire in March 1997 and have an exercise
price of $8.25 per share. With regard to such warrants, the Company may, at the
sole discretion of the Board of Directors, reduce the exercise price, increase
the number of shares that may be purchased upon exercise of the warrants, or
extend the expiration date of the warrants if it deems such actions to be in the
best interests of the Company. The remaining warrants and options contain
various terms including anti-dilution provisions to avoid dilution of the equity
interest represented by the underlying shares of Common Stock upon the
occurrence of certain events including share dividends or splits, mergers, or
acquisitions. Certain holders of the warrants and options have been granted
certain rights to have the shares issuable upon exercise thereof registered by
the Company under the Securities Act.
Transfer Agent
American Securities Transfer, Inc., Denver, Colorado, is the registrar
and transfer agent for the Common Stock.
LEGAL OPINIONS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Snell & Wilmer L.L.P., One Arizona Center, Phoenix, Arizona
85004-0001.
EXPERTS
The consolidated financial statements of Go-Video, Inc. incorporated in
this Prospectus by reference from the Company's Annual Report on Form 10-K for
the year ended March 31, 1996, have been audited by Deloitte & Touche LLP,
independent auditors, as included therein and incorporated herein by reference.
Such financial statements are stated in their report, which is incorporated by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
10
<PAGE>
================================================================================
No dealer, sales representative, or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company, the Selling Shareholders, or any other
person. 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 an offer to buy, to
any person in any jurisdiction where such an offer or solicitation would be
unlawful. Neither the delivery of this Prospectus nor any sale made hereunder
and thereunder 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
Page
----
Available Information ..................................................... 2
Information Incorporated
by Reference ............................................................ 2
Information Attached with Respect
to the Company .......................................................... 3
Disclosure Regarding Forward-
Looking Statements ...................................................... 3
Risk Factors .............................................................. 3
The Company ............................................................... 6
Use of Proceeds ........................................................... 6
Dilution .................................................................. 6
Selling Shareholders ...................................................... 7
Plan of Distribution ...................................................... 8
Description of Securities ................................................. 8
Legal Opinions ............................................................ 10
Experts ................................................................... 10
6,808,861 Shares of Common Stock
GO-VIDEO, INC.
----------
PROSPECTUS
----------
November 20, 1996
================================================================================
<PAGE>
PART II
Information Not Required in Prospectus.
Item 14. Other Expenses of Issuance and Distribution.
The following are the estimated expenses in connection with the
issuance and distribution of the securities being registered, all of which
expenses will be paid by the Company:
Securities and Exchange Commission
Registration Fee........................................ $ 1,787.21
American Stock Exchange Listing Fee....................... 17,500
Legal Fees and Expenses................................... 15,000
Accounting Fees and Expenses.............................. 2,500
----------
Total............................................ $36,787.21
==========
Item 15. Indemnification of Directors and Officers.
Article X of Go-Video, Inc.'s (the "Company") Bylaws provides a right
of indemnification generally applicable to any person who is, or is threatened
to be made, a party to any judicial or governmental proceeding by reason of
serving as a director, officer, employee, or agent of the Company or by reason
of serving in any of the foregoing capacities with another entity at the request
of the Company. The indemnification applies to expenses (including attorneys'
fees), judgments, fines, and amounts paid in settlement incurred by the person
in connection with the proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interest of the Company
and, in a criminal proceeding, if he also had not reasonable cause to believe
his conduct was unlawful. Indemnification is available in a derivative action
brought on behalf of the Company in which the person is adjudged liable to the
Company if and only to the extent that the court in which the action is brought
specifically finds that, despite the adjudication of liability but in view of
all circumstances of the case, the person is fairly and reasonably entitled to
indemnification. Notwithstanding the foregoing, such person is entitled to
indemnification against expenses incurred if he is successful on the merits or
otherwise in any such proceeding, whether direct or derivative, or in defense of
any claim, issue, or matter therein.
The determination to grant indemnification under Article X is to be
made either (i) by a majority of a quorum of disinterested directors, or (ii) if
such a quorum is unobtainable or a majority of such a quorum so directs, by
independent legal counsel in a written opinion, or (iii) by the Stockholders.
Expenses incurred in defending a proceeding are to be paid by the Company in
advance but such expenses must be repaid if it is ultimately determined that the
recipient has not satisfied the requirements for indemnification set forth
above.
The indemnification provided for in Article X is not exclusive of any
other rights to which the recipient may be entitled. Article X further provides
that the Company has the power to purchase liability insurance covering any
person whose status makes him eligible for indemnification, regardless of
whether the Company would have the power to indemnify such person against such
liability under Article X. The right to indemnification granted by Article X
continues to be available after a person ceases to occupy a status which would
make him eligible for indemnification and inures to the benefit of his heirs,
executors, and administrators.
1
<PAGE>
Section 145 of the Delaware General Corporation Law, as amended, grants
to corporations incorporated in Delaware, such as the Company, a right to
indemnify persons that is substantially coextensive with the right to
indemnification granted by Article X of the Company's Bylaws.
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Method of Filing
- ------ ------- ----------------
<S> <C> <C>
3.1 Certificate of Incorporation Incorporated by reference to Exhibit 3-A of
S-1 No. 33-17277
3.2 Bylaws of the Company Incorporated by reference to Exhibit 4-B to S-2
No. 33-38445
4.1 Specimen Certificate representing Incorporated by reference to Exhibit 4-A to S-1
No. 33-17277
4.2 Specimen Warrant Certificate Incorporated by reference to Exhibit 4-B to S-1
No. 33-17277
4.3 Form of Warrant Agreement Incorporated by reference to Exhibit 4-C to S-1
No. 33-17277
4.4 Form of Mandatory Convertible Previously filed with Registration Statement
Subordinated Note No. 333-15731
4.5 Form of Unit Warrant Previously filed with Registration Statement
No. 333-15731
5 Opinion of Snell & Wilmer L.L.P. Filed herewith
10.2 Assignment of U.S. Patent Rights to Incorporated by reference to Exhibit 10-B(1)
Go-Video, Inc., by R. Terren Dunlap to S-1 No. 33-17277
and Richard A. Lang, dated October
11, 1985
10.3 Assignment of Japanese Patent Rights Incorporated by reference to Exhibit 10-B(2)
to Go-Video, Inc., by R. Terren Dunlap to S-1 No. 33-17277
and Richard A. Lang, dated August 5,
1987
10.4 Assignment of U.S. Patent Rights to Incorporated by reference to Exhibit 10-B(3)
Go-Video, Inc., by R. Terren Dunlap, to Annual Report on Form 10K for the fiscal
John Berkheimer, and Dwayne Woodmas, year ended July 31, 1988 (the "1988 10K")
dated August 4, 1988
10.5 Assignment of U.S. Patent Rights to Incorporated by reference to Exhibit 10-B(4)
Go-Video, Inc., by R. Terren Dunlap, to Company's 1988 10K
John Berkheimer, and Richard Otto,
dated September 9, 1988
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C> <C>
10.6 ** Form of 1987 Nonstatutory Stock Incorporated by reference to Exhibit 4-A to
Option Plan, as amended S-8 No. 33-18428
10.7 ** Form of 1989 Nonstatutory Stock Incorporated by reference to Exhibit 10-C(2)
Option Plan, as amended to S-2 No. 33-33033
10.8 ** Form of 1991 Directors' Nonstatutory Incorporated by reference to Exhibit 28.1 to
Stock Option Plan, as amended S-8 No. 33-49924 and Exhibit A to the
Company's 1995 Proxy Statement
10.9 ** Form of 1991 Employee Stock Option Incorporated by reference to Exhibit 28.1 to
Plan S-8 No. 33-49926
10.10 Financing Agreement between Go- Incorporated by reference to Exhibit 4-D to
Video, Inc. and Congress Financial Annual Report Form 10K for fiscal year
Corporation, dated October 12, 1992 ended July 31, 1992
10.11 Settlement Agreement, Manufacturing Incorporated by reference to Exhibit 10-E
Agreement, License and Technical (10) to S-1 No. 33-18433
Assistance Agreement and Mutual
Release between Go-Video, Inc., and
Samsung Electronics Co. Ltd., dated
February 28, 1989
10.13 Amendment Number One to Accounts Incorporated by reference to Exhibit 10.13
Financing Agreement between Go- to Annual Report Form 10K for fiscal year
Video, Inc. and Congress Financial ended July 31, 1993 (the "1993 10K")
Corporation, dated May 14, 1993
10.14 *** Manufacturing Agreement between Incorporated by reference to Exhibit 10.14
Go-Video, Inc. and Samsung to 1993 10K.
Corporation, dated September 14, 1993
10.15 ** Separation Agreement between R. Incorporated by reference to Exhibit 10.5
Terren Dunlap and Go-Video, Inc., to 1993 10K
dated August 2, 1993
10.16 ** Separation Agreement between Roger Incorporated by reference to Exhibit 10.16
B. Hackett and Go-Video, Inc., dated to 1993 10K
August 2, 1993
10.17 *** License Agreement between Go-Video, Incorporated by reference to Exhibit 10.17
Inc. and Goldstar U.S.A., Inc., dated to Annual Report Form 10K for fiscal year
July 11, 1994 ended July 31, 1994 (the "1994 10K")
10.18 ** First Amendment to the Separation Incorporated by reference to Exhibit 10.18
Agreement between Go-Video, Inc. to 1994 10K
and R. Terren Dunlap, dated August
10, 1994
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C> <C>
10.19 Second Combined Amendment to Incorporated by reference to Exhibit 10.19
Financing Agreements between 1994 10K
Go-Video, Inc. and Congress
Financial Corporation, dated
August 16, 1994
10.20 Office Lease Agreement between Go- Incorporated by reference to Exhibit 10.22
Video, Inc. and 78 McClain, L.L.C., to Quarterly Report Form 10Q for the
for premises at 7835 East McClain quarter ended January 31, 1995
Drive, Scottsdale, AZ, dated
November 15, 1994
10.23 Purchase Agreement between Incorporated by reference to Exhibit 10.23
Go-Video, Inc. and Dublin Companies to the Transition Report 1995 10K
10.24 ** Form of 1993 Employee Stock Option Incorporated by reference to Exhibit 10.24
Plan to the Transition Report 1995 10K
10.25 Amendment to Financing Agreement Incorporated by reference to Exhibit 10.25
between Go-Video, Inc. and Congress to Quarterly Report Form 10Q for the
Financial Corporation, dated August quarter ended September 30, 1995
11, 1995
10.26 *** Manufacturing Agreement between Incorporated by reference to Exhibit 10.26
Go-Video, Inc. and Shintom Co. Ltd. to Quarterly Report Form 10Q for the
and Talk Corporation, dated January quarter ended December 31, 1995
9, 1996
10.27 *** First Amendment to Manufacturing Incorporated reference to Exhibit 10.27 to
Agreement between Go-Video, Inc. to Annual Report Form 10K for fiscal
and Samsung Corporation dated year ended March 31, 1996
April 1, 1996
10.28 Amendment to Financing Agreement Incorporated by reference to Exhibit 10.28
between Go-Video, Inc. and Congress to Annual Report Form 10K to fiscal year
Financial dated June 4, 1996 ended March 31, 1996
13.1 Form 10-K for the Company's fiscal Previously filed with Registration Statement
year ended March 31, 1996 No. 333-15731
13.2 Form 10-Q for the Company fiscal Previously filed with Registration Statement
quarter ended June 30, 1996 No. 333-15731
13.3 Form 10-Q for the Company fiscal Filed herewith
quarter ended September 30, 1996.
23.1 Consent of Deloitte & Touche LLP. Previously filed with Registration Statement
No. 333-15731
23.2 Consent of Snell & Wilmer L.L.P. Filed herewith in Exhibit 5
(included in Exhibit 5)
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
24 Power of Attorney (included on
signature page of Registration Statement)
27 Financial Data Schedule Previously filed with Registration Statement
No. 333-15731
</TABLE>
** Management contract or compensatory plan.
*** Confidential treatment requested.
Item 17. Undertakings.
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; (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; and (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;
(2) That, for the purpose of determining any liability under the 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.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's Annual
Report pursuant to Section 13(a) or Section 15(d) of the Securities Exchange of
1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act") that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X are not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the 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 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
II-5
<PAGE>
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 Act and will be governed by the final
adjudication of such issue.
II-6
<PAGE>
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-2 and has duly caused this
pre-effective amendment to the Registration Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the City of Scottsdale, State
of Arizona, on November 20, 1996.
GO-VIDEO, INC.
By /S/ ROGER B. HACKETT
--------------------------
Roger B. Hackett
Chairman, Chief Executive Officer,
President, and Chief Operating Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<S> <C> <C>
/S/ ROGER B. HACKETT Chairman of the Board of November 20, 1996
- ---------------------------------- Directors, Chief Executive Officer,
Roger B. Hackett President, and Chief Operating Officer
(principal executive officer)
/S/ DOUGLAS P. KLEIN Vice President, Chief Financial Officer, November 20, 1996
- ----------------------------------- Secretary and Treasurer
Douglas P. Klein (principal financial and
accounting officer)
* Director November 20, 1996
- -----------------------------
Thomas F. Hartley, Jr.
* Director November 20, 1996
- ---------------------------------
Thomas E. Linnen
* Director November 20, 1996
- -----------------------------------
Ralph F. Palaia
* Director November 20, 1996
- ----------------------------
William T. Walker, Jr.
*By: /s/ Douglas P. Klein November 20, 1996
------------------------
Douglas P. Klein
(Attorney-in-Fact)
</TABLE>
II-7
Exhibit 5
---------
November 20, 1996
Go-Video, Inc.
7835 East McClain Drive
Scottsdale, Arizona 85260
Ladies and Gentlemen:
We have acted as counsel to Go-Video, Inc., a Delaware
corporation (the "Company") in connection with the registration by the Company
of 4,585,466 shares of common stock, $.001 par value (the "Common Stock"), as
contemplated in the Registration Statement on Form S-2 filed with the Securities
and Exchange Commission on November 7, 1996 (the "Registration Statement")
pursuant to the Securities Act of 1933, as amended.
We have examined the Certificate of Incorporation and the
Bylaws of the Company and the proceedings of the Board of Directors of the
Company relating to the authorization and issuance of the Common Stock and have
relied upon the certificate of the Company attached hereto as Exhibit A. In
addition, we have made such further examination as we have deemed necessary or
advisable for the purposes of rendering the opinion set forth herein.
Based upon the foregoing, it is our opinion that:
1. The 95,466 shares of Common Stock which may be sold by
certain selling shareholders of the Company as contemplated in the Registration
Statement, will be validly issued, fully paid, and non-assessable when the
shares are issued in accordance with the respective purchase agreements
therefor.
2. The 3,000,000 shares of Common Stock which are subject to
the Registration Statement and issuable pursuant to the exercise of 10%
Convertible Subordinated Notes (the "Notes") will be validly issued, fully paid,
and non-assessable, when (i) the exercise price therefor has been paid and (ii)
the stock certificates representing the 3,000,000 shares of Common Stock have
been executed and delivered, all in accordance with the terms of the Notes as
contemplated in the Registration Statement.
<PAGE>
Go-Video, Inc.
November 20, 1996
Page 2
3. The 600,000 shares of Common Stock which are subject to the
Registration Statement and issuable pursuant to the exercise of Common Stock
purchase warrants to be issued to holders of the Notes (the "Unit Warrants")
will be validly issued, fully paid, and non-assessable when (i) the Unit
Warrants are issued, (ii) the exercise price therefor has been paid, and (iii)
the stock certificates representing the 600,000 shares of Common Stock have been
executed and delivered, all in accordance with the terms of the Notes and Unit
Warrants as contemplated in the Registration Statement.
4. The 360,000 shares of Common Stock which are to be issued
as interest to holders of the Notes will be validly issued, fully paid, and
non-assessable when the stock certificates representing the 360,000 shares have
been executed and delivered in accordance with the terms of the Notes as
contemplated by the Registration Statement.
5. The remaining shares of Common Stock which are subject to
the Registration Statement and issuable pursuant to various purchase warrants
will be validly issued, fully paid, and non-assessable when (i) the exercise
price therefor has been paid and (ii) the stock certificates representing the
shares of Common Stock have been executed and delivered, all in accordance with
the terms of such warrants as contemplated in the Registration Statement.
Consent is hereby given to the use of this opinion as an
Exhibit to the Registration Statement and to the use of our name wherever it
appears in the Registration Statement and the related prospectus.
Very truly yours,
/s/ Snell & Wilmer L.L.P.
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission File No. 2-331855
Go-Video, Inc.
--------------
(Exact name of registrant as specified in its charter)
Delaware 86-0492122
-------- ----------
(State of Incorporation) (IRS E.I.N.)
7835 East McClain Drive, Scottsdale, Arizona 85260
- -------------------------------------------- -----
(Address of principal executive offices) (Zip code)
(602) 998-3400
--------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
----- -----
11,331,012 shares of Common Stock were outstanding as of November 11, 1996
<PAGE>
GO-VIDEO, INC.
INDEX
Page No.
--------
Part I. FINANCIAL INFORMATION
Consolidated Balance Sheets --
At September 30, 1996 and March 31, 1996 3
Consolidated Statements of Operations --
Three and Six months ended September 30, 1996
and 1995 4
Consolidated Statements of Cash Flows --
Six months ended September 30, 1996 and 1995 5-6
Notes to Consolidated Financial Statements -- 7-8
Management's Discussion and Analysis of Results
of Operations and Financial Condition 9-12
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13
Signatures S-1
2
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
ASSETS September 30, 1996 March 31, 1996
------------------ --------------
(unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 393,157 313,916
Receivables - less allowance for doubtful accounts of
$130,000 and $130,000, respectively 5,738,876 4,147,143
Inventories 6,942,206 5,127,102
Prepaid expenses and other assets 165,652 42,021
----------- -----------
Total current assets 13,239,891 9,630,182
----------- -----------
EQUIPMENT AND IMPROVEMENTS:
Furniture, fixtures & equipment 517,906 507,990
Leasehold improvements 208,888 173,157
Office equipment 513,542 483,861
Tooling 1,277,560 1,107,970
----------- -----------
Total 2,517,896 2,272,978
Less accumulated depreciation and amortization 1,344,785 1,100,386
----------- -----------
Equipment and improvements - net 1,173,111 1,172,592
----------- -----------
DUAL-DECK VCR PATENTS, net of amortization of $43,474
and $40,041, respectively 73,277 76,711
GOODWILL, net of amortization of $21,408, and $17,046,
respectively 144,894 153,417
OTHER ASSETS, net of amortization $522,988 and
$471,321, respectively 139,396 165,084
----------- -----------
TOTAL $14,770,569 $11,197,986
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,264,610 $ 2,512,594
Accrued expenses 707,310 375,972
Other current liabilities 674,822 731,824
Warranty reserve - current 197,000 186,000
Line of credit 4,163,185 2,430,330
----------- -----------
Total current liabilities 8,006,927 6,236,720
----------- -----------
WARRANTY RESERVE - Long-term 5,000 5,000
----------- -----------
DEFERRED RENT 23,328 15,520
----------- -----------
LONG TERM OBLIGATIONS 14,562 262,885
----------- -----------
MANDATORY CONVERTIBLE SUBORDINATED DEBT 1,270,000 0
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock $.001 par value - authorized, 50,000,000 shares;
issued and outstanding, 11,331,012 and
11,331,012 shares, respectively 11,391 11,331
Additional capital 19,134,736 19,054,796
Unamortized consulting services (22,502) (35,002)
Accumulated deficit (13,872,873) (14,353,264)
----------- -----------
Total stockholders' equity 5,250,752 4,677,861
----------- -----------
TOTAL $14,770,569 $11,197,986
=========== ===========
</TABLE>
3
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For The Three For The Six
Months Ended September 30, Months Ended September 30,
-------------------------- --------------------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
SALES $ 9,393,147 $ 9,170,337 $ 17,581,162 $ 16,109,705
COST OF SALES 7,254,281 6,985,475 13,572,737 12,930,861
------------ ------------ ------------ ------------
Gross profit 2,138,866 2,184,862 4,008,425 3,178,844
------------ ------------ ------------ ------------
OTHER OPERATING COSTS:
Sales and marketing 846,885 1,229,914 1,554,353 1,964,356
Research and development 233,065 162,682 458,144 314,434
General and administrative 593,720 642,216 1,203,892 1,334,837
------------ ------------ ------------ ------------
Total other operating costs 1,673,670 2,034,812 3,216,389 3,613,627
------------ ------------ ------------ ------------
Operating income (loss) 465,196 150,050 792,036 (434,783)
------------ ------------ ------------ ------------
OTHER (EXPENSE) REVENUES:
Interest income 9,702 1,356 11,855 1,769
Interest expense (182,586) (128,910) (324,637) (233,192)
Other income 480 6,600 1,138 7,751
------------ ------------ ------------ ------------
Total other expense (172,404) (120,954) (311,644) (223,672)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 292,792 $ 29,096 $ 480,392 $ (658,455)
============ ============ ============ ============
NET INCOME (LOSS) PER
COMMON SHARE $ 0.03 $ 0.00 $ 0.04 $ (0.06)
============ ============ ============ ============
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 11,331,012 11,301,012 11,331,012 11,289,149
============ ============ ============ ============
</TABLE>
4
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
<TABLE>
<CAPTION>
For the Six
Months Ended September 30,
--------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 480,392 $ (658,455)
Adjustments to reconcile net income
to net cash used in operating activities:
Depreciation and amortization 320,491 290,785
Provision for doubtful accounts 3,000 (3,005)
Change in operating assets and liabilities-net of effect of acquisition:
Receivables (1,594,733) (1,540,500)
Inventories (1,815,104) (3,064,865)
Prepaid expenses and other assets (123,631) (12,648)
Other assets (980) 6,743
Accounts payable (247,983) 2,318,370
Accrued expenses 331,338 117,520
Other current liabilities (57,002) 137,844
Warranty reserve 11,000 17,000
Other liabilities (40,514) (1,245)
----------- -----------
Net cash used in operating activities (2,733,726) (2,392,456)
----------- -----------
INVESTING ACTIVITIES:
Equipment and improvement expenditures (244,888) (270,584)
Cash acquired from acquisition 0 39,951
----------- -----------
Net cash used in investing activities (244,888) (230,633)
----------- -----------
FINANCING ACTIVITIES:
Proceeds from issuance of common stock 0 20,250
Net (repayments) borrowings under line of credit 1,732,855 2,863,958
Payment of financing costs (25,000) (15,000)
Proceed from issuance of mandatory convertible debt 1,350,000 0
Payment of debt assumed in acquisition 0 (257,314)
----------- -----------
Net cash provided by financing activities 3,057,855 2,611,894
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 79,241 (11,195)
CASH AND CASH EQUIVALENTS, beginning of period 313,916 166,819
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 393,157 $ 155,624
=========== ===========
SUPPLEMENTAL INFORMATION TO CASH FLOW
STATEMENT:
Interest paid $ 324,637 $ 233,192
=========== ===========
</TABLE>
5
<PAGE>
(Continued)
GO-VIDEO, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(unaudited)
For the Six
Months Ended September 30,
--------------------------
1996 1995
---- ----
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
In connection with the acquisition, liabilities were assumed as follows:
Liabilities assumed $ 0 $361,120
-------- --------
Fair value of assets acquired, including $39,951
in cash $ 0 $190,657
-------- --------
Excess of cost over fair value of assets acquired $ 0 $170,463
======== ========
6
<PAGE>
GO-VIDEO, INC. AND SUBSIDIARY
NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------
GENERAL
- -------
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all adjustments (consisting of normal reoccurring accruals)
necessary to present fairly the financial position of the Company and the
results of its operations and changes in its financial position for the periods
reported. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the entire year.
Inventories at September 30, 1996 consisted of $492,164 of raw materials and
service parts and $6,450,042 of finished goods.
Goodwill of approximately $170,000 resulting from the acquisition of the
Company's Security Products Division is being amortized on the straight line
basis over ten years.
The Company is engaged in one business segment, the design, development,
marketing and licensing of electronic video communication products. The
Company's current primary focus is the design, marketing, sale, and distribution
of several models of its Dual-Deck(TM) videocassette recorder. Sales to Circuit
City Stores totaled 10% or more of net sales for the six months ended September
30, 1996. Sales to Circuit City Stores were $3,374,380 for the six month period
ended September 30, 1996. Accounts receivable from Circuit City Stores was
$1,378,865 at September 30, 1996.
The Company sold $1.5 million of convertible subordinated notes in a private
placement with institutional holders in August 1996. The placement included six
Units, each consisting of one 10% Convertible Subordinated Note in the principle
amount of $250,000 with warrants to purchase 100,000 shares of common stock at
$1.25 per share. The notes must be converted to common stock within three years.
The warrants have an aggregate fair value of $230,000. In connection with the
private placement, the Company also issued warrants and commons stock to the
placement agent with a fair value of $46,000 and $75,000 respectively.
Certain reclassifications have been made to the prior financial statements to
conform to the current classifications.
Deferred income taxes reflect the net tax effects of (a) temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes, and (b) operating loss
and tax credit carryforwards. The tax effects of significant items comprising
the Company's net deferred tax asset as of September 30, 1996 are as follows:
7
<PAGE>
Deferred Tax Assets:
Current-reserves not currently
deductible $ 473,000
Noncurrent:
Differences between book & tax
basis of property $ 399,000
Operating loss carryforwards 7,722,000
Contribution carryforwards 8,000
Tax credit carryforwards 189,000
Other intangibles 95,000
-----------
Net Deferred Tax Asset 8,886,000
Valuation Allowance (8,886,000)
-----------
Net Deferred Asset $ -0-
============
The information presented within the financial statements should be read in
conjunction with the Company's audited Financial Statements for the fiscal year
ended March 31, 1996, the eight month transition period ended March 31, 1995,
and the fiscal year ended July 31, 1994 and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" from the 1996 Annual
Report on Form 10-K.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Results of Operations
Three months ended September 30, 1996 compared with the three months ended
- --------------------------------------------------------------------------------
September 30, 1995:
- -------------------
Net sales increased 2.4% to $9.4 million during the three months ended September
30, 1996 from $9.2 million during the three months ended September 30, 1995. The
increase in net sales was primarily due to a 33% increase in net units sold for
the three months ended September 30, 1996 compared to the three months ended
September 30, 1995, offset in part by a 23% decrease in average revenue per unit
for the two periods. The increase in net unit sales was primarily due to the
Company having two full model lines for sale, the GV40xx and the GV60xx series
during the three months ended September 30, 1996. The decrease in average
revenue per unit was primarily due to an overall decrease in the per unit
selling price of the GV6010 and the GV40xx series models compared to the GV30xx
series models and the GV4060 model which were sold during the three months ended
September 30, 1995, and the Company's product sales mix which included a higher
percentage of its less expensive price leader models during the three months
ended September 30, 1996 as compared with the three months ended September 30,
1995. Net sales of the Company's Security Products Division, which was acquired
on April 1, 1995, were less than 5% of total net sales for the three months
ending September 30, 1996.
Gross profit was $2.1 million and $2.2 million for the three months ended
September 30, 1996 and 1995, respectively, representing a 2.1% decrease in gross
profit dollars. Gross profit as a percentage of net sales decreased to 22.8% for
the three month period ended September 30, 1996 compared to 23.8% for the three
month period ended September 30, 1995. The decrease in gross profit as a
percentage of sales is primarily due to the Company's product sales mix which
included a higher percentage of its less expensive price leader models during
the three months ended September 30, 1996 as compared with the three months
ended September 30, 1995.
Sales and marketing expense decreased 31.1% to $0.8 million for the three months
ended September 30, 1996 from $1.2 million for the three months ended September
30, 1995. As a percentage of sales, sales and marketing expenses decreased from
13.4% in the three months ended September 30, 1995, to 9.0% in the three months
ended September 30, 1996. The decrease in sales and marketing expenses as a
percentage of sales is primarily due to lower commission expense resulting from
reduced commission rates, and reduced spending on marketing and promotional
items during the three months ended September 30, 1996.
Research and development expenses increased 43.3% to $0.2 million for the three
months ended September 30, 1996. The increase in research and development
expenses is due primarily to expenses incurred in connection with the Company's
development of prototype-digital LCD projection and direct view televisions.
General and administrative expenses decreased 7.6% to $0.6 million for the three
months ended September 30, 1996. As a percentage of net sales, general and
administrative expense decreased from 7.0% for the three months ended September
30, 1995 to 6.3% for the three months ended September 30, 1996. The decrease in
general and administrative expense is primarily due to compensation expense
recorded by the Company during the three months ended September 30, 1995
relating to a Separation Agreement and reduced consulting fees.
As a result of the above, the Company recorded an operating profit of $465,196
for the three months ended September 30, 1996 compared with an operating profit
of $150,050 for the three months ended September 30, 1995. The Company recorded
net other expense of $172,404 for the three months ended
9
<PAGE>
September 30, 1996 compared with net other expense of $120,954 for the same
period of the prior year. The increase in net other expense was primarily due to
increased interest expense caused by an increase in the average daily loans
outstanding while the average effective interest rate remained consistent during
the three month period ending September 30, 1996 as compared to the three month
period ending September 30, 1995.
Net income for the three months ended September 30, 1996 was $292,792 compared
with net income of $29,096 for the three months ended September 30, 1995. The
Company did not recognize income tax expense for either quarter due to its net
operating loss carryforwards.
Six months ended September 30, 1996 compared with the six months ended September
- --------------------------------------------------------------------------------
30, 1995:
- ---------
Net sales increased 9.1% to $17.6 million during the six months ended September
30, 1996 from $16.1 million during the six months ended September 30, 1995. The
increase in net sales was primarily due to a 41.0% increase in net units sold
for the six months ended September 30, 1996 compared to the six months ended
September 30, 1995, offset in part by a 22.6% decrease in average revenue per
unit for the two periods. The increase in net unit sales was due to the
introduction of the Company's GV60xx series(VHS/VHS Dual-Deck VCR) during the
six months ended September 30, 1996. The decrease in average revenue per unit
was primarily due to an overall decrease in the per unit selling price of the
GV6010 and GV40xx series models compared to the GV30xx series models and the
GV4060 model which were sold during the six months ended September 30, 1995, and
the Company's product sales mix which included a higher percentage of its less
expensive price leader models during the six months ended September 30, 1996 as
compared with the six months ended September 30, 1995. Net sales of the
Company's Security Products Division, which was acquired on April 1, 1995, were
less than 5% of total net sales for the six months ending September 30, 1996.
Gross profit was $4.0 million and $3.2 million for the six months ended
September 30, 1996 and 1995, respectively, representing a 26.1% increase in
gross profit dollars. Gross profit as a percentage of net sales increased to
22.8% for the six month period ended September 30, 1996 from 19.7% for the six
month period ended September 30, 1995. The increase in gross profit as a
percentage of sales is primarily due to higher sales margins realized on the
GV60xx and GV40xx series over the close-out of the GV30xx series in the six
months ended September 30, 1995.
Sales and marketing expense decreased 20.9% to $1.6 million for the six months
ended September 30, 1996 from $1.9 million for the six months ended September
30, 1995. As a percentage of sales, sales and marketing expenses decreased from
12.2% in the six months ended September 30, 1995, to 8.8% in the six months
ended September 30, 1996. The decrease in sales and marketing expenses as a
percentage of sales is primarily due to lower commission expense resulting from
reduced commission rates and reduced spending on marketing and promotional items
during the six months ended September 30, 1996.
Research and development expenses increased 45.7% to $0.5 million for the six
months ended September 30, 1996 from $0.3 million for the six months ended
September 30, 1995. The increase in research and development expenses is due
primarily to expenses incurred in connection with the Company's development of
prototype digital LCD-projection and direct view televisions.
General and administrative expenses decreased 9.9% to $1.2 million for the six
months ended September 30, 1996 from $1.3 million for the six months ended
September 30, 1995. As a percentage of net sales, general and administrative
expense decreased from 8.3% for the six months ended September 30, 1995 to 6.8%
for the six months ended September 30, 1996. The decrease in general and
administrative expense is primarily due to compensation expense recorded by the
Company during the six months ended September 30, 1995 relating to a Separation
Agreement.
10
<PAGE>
As a result of the above, the Company recorded an operating profit of $792,036
for the six months ended September 30, 1996 compared with an operating loss of
$434,783 for the six months ended September 30, 1995. The Company recorded net
other expense of $311,644 for the six months ended September 30, 1996 compared
with net other expense of $223,672 for the same period of the prior year. The
increase in net other expense was primarily due to increased interest expense
caused by an increase in the average daily loans outstanding while the average
effective interest rate remained consistent during the six month period ending
September 30, 1996 as compared to the six month period ending September 30,
1995.
Net income for the six months ended September 30, 1996 was $480,392 compared
with a net loss of $658,455 for the six months ended September 30, 1995. The
Company did not recognize income tax expense for the six months ended September
30, 1996 due to its net operating loss carryforwards. For the six months ended
September 30, 1995, the Company did not recognize an income tax benefit due to
recording a valuation allowance to offset the potential tax benefit of the loss.
Seasonality
- -----------
As the growth of the current distribution network has slowed, seasonal factors
are now more evident in the Company's operating results. Accordingly, the
Company expects to continue to experience peaks consistent with previous years
in its sales from September through December, which covers the holiday season.*
The Company's performance during and following this period will be affected by
retail sales of its customers.
Future Results
- --------------
This Report on Form 10-Q contains "Forward Looking Statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended. The Company's future
operating results may be affected by a number of factors, including the general
economic conditions in the markets in which the Company operates, the Company's
ability to design, distribute and sell its products profitably, competition in
general and competitive pricing in particular.
Capital Resources and Liquidity
- -------------------------------
Net cash used in operating activities was $2.7 million for the six months ended
September 30, 1996 compared to cash used in operations of $2.4 million for the
six months ended September 30, 1995. The more significant factors comprising the
net cash used were a $1.8 million increase in inventory and a $1.5 million
increase in receivables. The increase in the inventory balance from March 31,
1996 to September 30, 1996 was primarily due to increased inventory in transit
ordered for the holiday selling season. The Company had less inventory
in-transit at March 31, 1996. The increase in the receivable balance from March
31, 1996 to September 30, 1996 is primarily due to the timing of shipments
during the six months ended September 30, 1996 which were weighted heavily near
the end of the six month period, as the Company's average collection experience
has generally remained consistent.
The Company had net working capital of $5.2 million and $3.4 million at
September 30, 1996 and March 31, 1996, respectively. At September 30, 1996, the
Company's current ratio (the ratio of current assets to current liabilities) was
1.7 to 1.
The Company's sales seasonality requires incremental working capital for
investment primarily in inventories and receivables. The primary source of funds
over the six months ended September 30, 1996 has been borrowings under the
Company's line of credit. The Company has a line of credit that was
- --------
*Contains "Forward Looking Statements".
11
<PAGE>
entered into in October 1992 and was amended in May 1993, November 1993, August
1994, August 1995, and June 1996. The maximum line of credit, as amended, is
$14.0 million limited by specific inventory and receivable balances used as a
borrowing base, and provides for cash loans, letters of credit and acceptances.
The agreement, as amended, has a term of five years, with an origination fee of
1%, an annual facility fee of 0.5%, a non-use fee of 0.25%, and a prepayment (if
applicable) fee of 1%. Loans are priced at prime plus 2.5%. The lender is
collateralized by all assets of the Company. The unused and available line of
credit at September 30, 1996 was $1,843,660. The Company has capitalized $0.5
million of closing costs related to the origination and amendment of the
financing agreement. These costs are being amortized over the term of the
agreement. Management believes its current financial resources to be adequate to
support operations over the next twelve months.*
The Company sold $1.5 million of convertible subordinated notes in a private
placement with institutional holders in August 1996. The notes must be converted
to common stock within three years.
The Company expects to incur increased expenses for research and development and
marketing expenses related to the LCD projection television project, the Loewe
Opta television project, and other product lines currently being considered.*
The Company leases a 33,000 square foot executive office and warehouse facility
in north Scottsdale, Arizona, which is fully utilized, in good condition, and
adequate for the Company's needs. The lease began in January 1996 and has a term
of seven years, with one three year extension at the option of the Company.
Inflation
- ---------
Inflation has had no material effect on the Company's operations or financial
condition.
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on August 29, 1996. There
were present at the Annual Meeting, either in person or by proxy, 10,486,275
shares, which constituted a quorum. At the meeting, shareholders approved the
election of a director, and did not approve an amendment to provide for
preferred stock:
Item 1: Election of the following directors:
For Withheld Against
--- -------- -------
Roger B. Hackett 9,962,828 466,449 56,998
Item 2: Approval of amendment to the Certificate of Incorporation to
authorize 1,000,000 shares of Preferred Stock.
For Withheld Against Not Voted
--- -------- ------- ---------
2,474,793 142,974 953,354 6,915,154
- --------
*Contains "Forward Looking Statements".
12
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a. The following exhibit is filed as part of this Report:
<TABLE>
<CAPTION>
Exhibit No. Exhibit Method of Filing
- ----------- ------- ----------------
<S> <C> <C>
4.3 Form of Warrant Certificate Incorporated by reference to Exhibit 4.3
to the Company's S-2 filed November 7,
1996
4.4 Form of Mandatory Convertible Incorporated by reference to Exhibit 4.3
Subordinated Note to the Company's S-2 filed November 7, 1996
27 Financial Data Schedule
</TABLE>
b. Reports on Form 8-K
NONE
13
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
GO-VIDEO, INC. (Registrant)
Date: November 11, 1996 By /S/ ROGER B. HACKETT
-------------------------------------
Roger B. Hackett
Chairman of the Board,
Chief Executive Officer,
President and Chief Operating Officer
Date: November 11, 1996 By /S/ DOUGLAS P. KLEIN
-------------------------------------
Douglas P. Klein
Vice President, Chief Financial Officer,
Secretary and Treasurer
(principal financial and
accounting officer)
S-1
