<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 17, 1996
REGISTRATION NO. 333-883
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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SIGMA DESIGNS, INC.
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
CALIFORNIA 7372 95-2848099
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
46501 LANDING PARKWAY
FREMONT, CALIFORNIA 94538
(510) 770-0100
(Address, including zip code and telephone number, including area code, of
Registrant's principal executive offices)
THINH Q. TRAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
SIGMA DESIGNS, INC.
46501 LANDING PARKWAY
FREMONT, CALIFORNIA 94538
(510) 770-0100
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
TOR R. BRAHAM, ESQ.
ADAM R. DOLINKO, ESQ.
IVAN J. BROCKMAN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(415) 493-9300
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration Statement.
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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, please 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 the only securities being delivered pursuant to this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(a),
MAY DETERMINE.
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<PAGE>
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
- --------------------------------------------------------------------------------
SUBJECT TO COMPLETION DATED , 1996
PROSPECTUS
1,550,243 SHARES
SIGMA DESIGNS, INC.
COMMON STOCK
This Prospectus may be used only in connection with the resale, from
time to time, of up to 1,550,243 shares (the "Shares") of Common Stock, no par
value per share (the "Common Stock"), of Sigma Designs, Inc. ("Sigma" or the
"Company"), for the account of the selling shareholders identified below (the
"Selling Shareholders"). All of the Shares covered hereby are to be sold by the
Selling Shareholders, who originally received the Shares pursuant to a private
placement. The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders. The expenses incurred in registering the
Shares, including legal and accounting fees, will be paid by the Company.
The Shares offered hereby may be offered and sold, from time to time, by
the Selling Shareholders in one or more transactions (which may involve block
transactions) on the Nasdaq National Market (or any exchange on which the Common
Stock may then be listed), in the over-the-counter market, in negotiated
transactions or otherwise. Sales will be effected at such prices and for such
consideration as may be obtainable from time to time. Commission expenses and
brokerage fees, if any, will be paid by the Selling Shareholders. See "Plan of
Distribution."
The Company's Common Stock is traded on the Nasdaq National Market under
the symbol "SIGM." On May 15, 1996, the last sale price for the Common Stock
as reported on the Nasdaq National Market was $12.25 per share.
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SEE "RISK FACTORS" ON PAGE 3 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS , 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, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). Such reports, proxy and information statements and other
information may be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: New York Regional Office, Seven World Trade Center, New York,
New York 10048, and Chicago Regional Office, 500 West Madison Street,
Chicago, Illinois 60661. Copies of such material can be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the prescribed fees. The Common
Stock of the Company is quoted on the Nasdaq National Market. Reports,
proxy and information statements and other information concerning the
Company may be inspected at the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on
Form S-3 (herein, together with all amendments and exhibits, referred to
as the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further
information with respect to the Company and the shares covered by this
prospectus, reference is made to the Registration Statement. Statements
contained herein concerning the provisions of any document are not
necessarily complete, and each such statement is qualified in its
entirety by reference to the copy of such document filed with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-K for the fiscal year ended January 31, 1996,
(ii) the Company's Proxy Statement relating to the Company's Annual
Meeting of Shareholders to be held on June 7, 1996, (iii) the Company's
Current Report on Form 8-K filed with the Commission on May 6, 1996, and
(iv) the description of the Company's Common Stock contained in its
Registration Statement on Form 8-A filed with the Commission on November
3, 1986, as amended on September 22, 1989.
All reports and other documents subsequently 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 this offering
shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such reports and documents. Any
statement incorporated herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also
is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus.
The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus
has been delivered, upon written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference
(other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents). Requests
for such documents should be submitted in writing to Q. Binh Trinh at the
Company's principal executive offices at 46501 Landing Parkway, Fremont,
California, 94538, or by telephone at (510) 770-0100.
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RISK FACTORS
The following discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results could differ materially
from those anticipated in such forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this prospectus.
HISTORY OF OPERATING LOSSES
The Company has incurred significant losses in the last four years and has
had substantial negative cash flow in the last five years. Since the
introduction of the Company's REALMagic MPEG product line in November 1993, the
Company has invested heavily in marketing and technological innovation for its
REALMagic products. As a result, the Company has continued to experience
significant losses. Fiscal 1994, 1995 and 1996 also included significant losses
associated with products other than those related to the REALMagic technology.
Since inception, the Company's total accumulated deficit is $33,923,000. There
can be no assurance that the Company will continue to sell its new REALMagic
products in substantial quantities or generate significant revenues from such
sales. Due in part to an increase in marketing expenses and technological
development associated with the REALMagic product line, the Company does not
expect to report significant net income, if any, in the first quarter of fiscal
1997. There can be no assurance that the Company will achieve profitable
operations in the future or that profitable operations, if achieved, will be
sustainable. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations."
MARKETING RISKS
The Company's ability to increase its sales, achieve profitability and
maintain REALMagic as a PC industry multimedia standard depends substantially
upon the Company's ability to achieve a sustained high level of sales to new OEM
customers. To date, the Company has commenced initial shipments of the latest
version of its REALMagic products, REALMagic Maxima, to certain OEM customers,
including NEC in Japan, Hyundai in Korea and Zenon Technology, PREMIO Express
and Zenith Data Systems in the U.S. The Company has not executed volume purchase
agreements with any of the Company's customers and these customers are not under
any obligation to purchase any minimum quantity of the Company's products.
Although the Company is continually engaged in marketing efforts directed to
sales of REALMagic products to additional U.S. and international OEMs, the
Company has not yet achieved design wins with a sufficient number of OEM
customers to ensure success of the REALMagic product line. Moreover, even if the
Company continues to achieve new design wins, there can be no assurance that PC
manufacturers will purchase the Company's products in substantial volumes. Sales
to any particular OEM customer are subject to significant variability from
quarter to quarter and to severe price pressures by competitors. Based on its
experience in the personal computer industry, the Company expects that its
actual sales to OEM customers will experience significant fluctuations and
estimates of future sales with respect to any particular customer or groups of
customers are inherently uncertain.
The Company's ability to achieve sustained profitability also depends on a
substantial increase in sales of REALMagic products through domestic and
international distributors for resale through retail channels. In fiscal 1996,
Ingram Micro, Inc. was the only customer to which sales comprised over 10% of
consolidated revenue. Sales to such distributors are typically subject to
contractual rights of inventory rotation or price protection. Regardless of
particular contractual rights, however, the failure of Ingram Micro, Inc. or
other distributors to achieve sustained sell-through of REALMagic products could
result in product returns or collection problems, contributing to fluctuations
in the Company's results of operations. There can be no assurance that the
Company will be successful in maintaining a significant market for its REALMagic
products.
DEPENDENCE ON DEVELOPMENT OF SOFTWARE TITLES BY THIRD PARTIES
The Company depends on third-party software developers to create, produce
and market the software titles that will operate on the REALMagic format. No
software developer is contractually obligated to produce a REALMagic-compatible
title. There can be no assurance that third-party software developers will
continue to produce a substantial number of software titles, or that they will
produce enough software titles to develop and sustain a significant market in
REALMagic products. Moreover, there can be no assurance that any individual
software titles will be of high quality or that they will achieve market
acceptance. There can also be no assurance that current popular software titles
will be introduced in the REALMagic format. Because the Company has no control
over the content of the titles produced by software developers, the software
titles developed may represent only a limited number of software categories and
are likely to be of varying quality.
To date, over sixty interactive software titles are available in the
REALMagic format. The Company expects that at least 12 additional titles are
available through the first half of 1996, although there can be no assurance
that any such titles will not be delayed or cancelled. None of these titles are
currently carried by retailers on an unbundled basis and these titles must be
obtained through a Company catalog which is not widely circulated. The Company
has licensed the REALMagic API to over 1,200 software developers for development
of REALMagic-compatible programs. However, the number of software titles to be
developed by such software companies cannot be predicted. There can be no
assurance that any software developer who develops a REALMagic-compatible title
will actively promote the product or develop follow-on titles. Moreover, there
can be no assurance that any published title will have the quality or price
characteristics required to be commercially successful or that titles compatible
with the REALMagic format will be allotted retail shelf space. While the Company
is currently distributing titles itself by catalog, future sales of REALMagic
products will likely depend upon retailers carrying compatible software titles
on the shelf.
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<PAGE>
To further establish the Company's technology as a standard, the Company
announced in October 1995, its strategic direction of selling chipsets to
add-on card and computer manufacturers. The REALMagic Pro chipset became
available in January 1996. This chipset will enable other companies to
manufacture 100% OM-1 and REALMagic compatible MPEG playback cards capable of
playing the growing number of MPEG software titles on the market. In addition,
the Company announced the REALMagic Explorer chipset in November 1995, which
will allow OEM customers to build type II ZV-port compatible PCMCIA cards for
MPEG-1 video and audio playback, bringing MPEG technology to notebook computers
for the first time. Any delay or failure to bring any of the chipsets to market
could adversely affect the Company's market position by limiting the production
of REALMagic compatible playback cards capable of playing MPEG software titles.
Moreover, there can be no assurance that any of the Company's chipsets will be
broadly accepted by computer manufacturers.
TECHNOLOGICAL CHANGE
The market for multimedia PC products is characterized by rapidly changing
technology and user preferences, evolving formats for compression of video and
audio data and frequent new product introductions. Even though REALMagic
products and related software titles have gained initial market acceptance, the
Company's success will depend, among other things, upon the ability of the
Company, to achieve and maintain technological leadership and to remain
competitive in terms of price and product performance.
To maintain technological competitiveness, the Company must continue to
make technological advancements in the area of MPEG video and audio compression.
These advancements include compatibility with emerging standards and multiple
platforms, improvements to the REALMagic architecture, enhancements to the
REALMagic API and the achievement of these enhancements. There can be no
assurance that the Company will be able to make any such advancements to the
REALMagic technology or, if they are made, that the Company will be able to
achieve and maintain technological competitiveness. Any material failure of the
Company or OEMs and software developers to develop or incorporate any required
improvement could adversely affect the continued acceptance of the Company's
technology and the introduction and sale of future products based on the
Company's technology. There can be no assurance that products or technologies
developed by others will not render obsolete the Company's technology and the
products based on the Company's technology.
Further, to remain competitive, the Company must anticipate the needs of
the market and successfully develop and introduce innovative new products in a
timely fashion. No assurance can be given that the Company will be able to
successfully complete the design of its new products, have these products
manufactured at acceptable manufacturing yields or obtain significant purchase
orders for these products. The introduction of new products may adversely affect
sales of existing products, contributing to fluctuations in operating results
from quarter to quarter. The introduction of new products also requires the
Company to carefully manage its inventory to avoid inventory obsolescence. In
addition, new products typically have higher initial component costs than more
mature products, possibly resulting in downward pressures on the Company's gross
margins.
COMPETITION
The market for multimedia PC products is highly competitive. While the
Company does not believe that any product sold by a third party is directly
competitive with the REALMagic products at this time in terms of price and
performance, the possibility that other companies with more experience and
financial resources may develop a competitive product may inhibit continued
acceptance and future growth of the REALMagic technology. REALMagic is a
competitive product for the PC largely because of its affordable consumer price
point. Increased price competition could have an adverse effect on the REALMagic
product line. Increased competition may be generated from several major computer
product manufacturers who have developed products and technologies that could
compete directly with the REALMagic products on the PC platform. These include
S3, Cirrus Logic, Windbond and SGS Thompson. Also, several OEMs and
microprocessor companies possess proprietary video compression technology that
may compete with MPEG-based products. These include IBM, Intel, Mediamatics and
ESS Technology. Most of these companies have substantial experience and
expertise in audio, video and multimedia technology, in producing and selling
consumer products through retail distribution, and also have substantially
greater engineering, marketing and financial resources than the Company.
Competitors of the Company may form cooperative relationships, which could
present formidable competition to the Company. There can be no assurance that
the REALMagic technology will achieve commercial success or that they will
compete effectively against other interactive multimedia products, services and
technologies that currently exist, are under development or may be announced by
competitors.
RELIANCE ON A SINGLE LINE OF PRODUCTS
The Company's business strategy has been to focus on REALMagic products by
investing heavily in the PC-based MPEG technology. In the fiscal year ended
January 31, 1996, sales of multimedia products accounted for primarily all of
net sales. A decline in the market demand for multimedia products would
adversely affect the Company's operating results. The Company's present reliance
on REALMagic products is exacerbated by the fact multimedia product sales are
concentrated in the personal computer industry. A decline in demand for PCs
could have a material adverse effect on the Company's operating results and
financial condition.
VARIABILITY OF OPERATING RESULTS
The Company's operating results have in the past and may continue to
fluctuate in the future due to a number of factors, including but not limited to
new product introductions by the Company and its competitors; market acceptance
of the Company's products by OEMs, software developers and end users; the
success of the Company's promotional programs; gains or losses of significant
customers; reductions in selling prices; inventory obsolescence; an interrupted
or inadequate supply of semiconductor chips; the Company's ability to protect
its intellectual property; and loss of key personnel. In addition, sales to OEM
customers are subject to significant variability from quarter to quarter,
depending on the OEMs' timing and release of products incorporating the
REALMagic technology, experience with sell-through of such products and
inventory levels.
The market for consumer electronics products is characterized by
significant seasonal swings in demand, which typically peak in the fourth
calendar quarter of each year. Because the Company expects to derive a
substantial portion of its revenues from the sales of REALMagic products in the
future, and the demand for such products will depend on the introduction of
compact disks containing software titles compatible with the Company's format,
the Company's revenues may also vary with the production of and demand for
popular software titles. Such demand may increase or decrease as a result of
a number of factors that cannot be predicted, such as consumer preferences and
product announcements by competitors. Announcements of directly competing
products will likely have a negative effect on operating results. Based on the
Company's experience, the Company believes that a substantial portion of its
shipments will occur in the third month of a quarter, with significant shipments
competed in the latter part of the third month. This shipment pattern may cause
the Company's operating results to be difficult to predict. The Company
currently places noncancelable orders to purchase semiconductor products from
its foundries on a long lead time basis. Consequently, if, as a result of
inaccurate forecasts or canceled purchase orders, anticipated sales and
shipments in any quarter do not occur when expected, inventory levels could be
disproportionately high, requiring significant working capital, negatively
impacting operating results.
MANUFACTURING RISKS
The REALMagic multimedia card is composed of four VLSI chips, each of which
is presently manufactured by an outside supplier or foundry. These suppliers are
Toshiba, C-Cube Microsystems, Analog Devices and Orbit Semiconductor, each of
which is a sole source supplier to the Company of their respective chip. The
Company does not have long-term contracts with such suppliers and conducts
business with its suppliers on a written purchase order basis. The Company's
reliance on independent suppliers involves several risks, including the absence
of adequate capacity, the unavailability of, or interruptions in access to,
certain process technologies and reduced control over delivery schedules,
manufacturing yields and costs. Although delays or interruptions have not
occurred to date, any delay or interruption in the supply of any of the
components required for the production of the REALMagic multimedia card that are
currently obtained from a single source could have a material adverse impact on
the sales of the REALMagic products by the Company and thus on the Company's
business.
The Company must provide its suppliers with sufficient lead time in order
to meet forecasted manufacturing objectives. Any failure to properly forecast
such quantities could materially adversely affect the Company's ability to
produce REALMagic products in sufficient quantities. No assurance can be given
that the Company's forecasts regarding new product demand will be accurate,
particularly since the Company sells REALMagic products on a purchase order
basis. The manufacturing of the REALMagic chipsets is a complex process, and the
Company may experience short-term difficulties in obtaining timely deliveries,
which could affect the Company's ability to meet customer demand for its
products. Any such delay in delivery products in the future could materially and
adversely affect the Company's operating results. In addition, should any of the
Company's major suppliers be unable or unwilling to continue to manufacture the
Company's key components in required volumes, the Company would have to identify
and qualify acceptable additional suppliers. This qualification process could
take up to three months or longer. No assurances can be given that any
additional sources of supply could be in a position to satisfy the Company's
requirements on a timely basis.
In the past, the Company has experienced production delays and other
difficulties and the Company could experience similar problems in the future. In
addition, there can be no assurance that a product defect will not escape
identification at the factory, possibly resulting in unanticipated costs,
cancellations or deferrals of purchaser orders or costly recall of products from
customer sites.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends in large part on the continued service
of its key technical, marketing, sales and management personnel. Given the
complexity of the REALMagic technology, the Company is dependent on its ability
to retain and motivate highly skilled engineers involved in the ongoing hardware
and software development of the REALMagic product, who will be required to
refine the existing hardware system and API and to introduce enhancements in
future applications. The multimedia PC industry is characterized by a high level
of employee mobility and aggressive recruiting of skilled personnel. There can
be no assurance that the Company's current employees will continue to work for
the Company or that the Company will be able to obtain the services of
additional personnel necessary for the Company's growth. The Company does not
have "key person" life insurance policies on any of its employees.
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LIMITED INTELLECTUAL PROPERTY PROTECTION
The Company's ability to compete may be affected by its ability to protect
its proprietary information. The Company currently holds four patents covering
the technology underlying the REALMagic products and the Company has filed
certain patent applications and is in the process of preparing others. There can
be no assurance that any additional patents for which the Company has applied
will be issued or that any issued patents will provide meaningful protection of
its product innovations. The Company, like other emerging multimedia companies,
relies primarily on trade secrets and technological know-how in the conduct of
its business. In addition, the Company is relying in part on copyright law to
protect its proprietary rights with respect to the REALMagic technology.
The electronics industry is characterized by frequent litigation regarding
patent and intellectual property rights. Any such litigation could result in
significant expense to the Company and divert the efforts of the Company's
technical and management personnel, whether or not the outcome of such
litigation is favorable to the Company. Moreover, in the event of an adverse
result in any such litigation, the Company could be required to expend
significant resources to develop noninfringing technology or to obtain licenses
to the technology which is the subject of the litigation. There can be no
assurance that the Company would be successful in such development or that any
such licenses would be available on acceptable terms, if at all. In addition,
patent disputes in the electronics industry have often been settled through
cross-licensing arrangements. Because the Company does not yet have a large
portfolio of issued patents, the Company may not be able to settle an alleged
patent infringement claim through a cross-licensing arrangement.
CHANGE IN BUSINESS PLAN
The Company has dramatically altered its business plan with the acquisition
of EMI and with the potential acquisition of Active Design, and the elimination
of all product lines other than the REALMagic line. The Company has begun to
devote its resources to the successful introduction of the REALMagic technology
and related multimedia products. As a result of the change in business strategy,
the Company expects to experience a period of significant alteration in number
and organization of employees. This change has placed, and will continue to
place, a substantial strain on the Company's management, operational, financial
and accounting resources. The Company must be evaluated in light of the costs,
delays and other difficulties frequently encountered in a recently established
and rapidly changing business enterprise.
ACQUISITION RISKS
On April 23, 1996, the Company entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") with Active Design Corporation,
a California Corporation ("Active Design"), and upon consummation of the
transactions contemplated thereby, Active Design became a wholly owned
subsidiary of Sigma.
Active Design is a development stage company engaged in the development,
design and marketing of VLSI circuits that provide high performance graphics and
three-dimensional functionality on PCs. Acquisitions in the technology industry
are frequently more difficult to successfully integrate into existing operations
than acquisitions in other industries. The integration of Active Design into the
Company's business will require the Company to compete in a new market segment
which the Company expects to be highly competitive. If larger companies that
possess significantly greater development resources and budgets than the Company
compete in this emerging market segment, the ability of the Company to achieve
market acceptance for its products could be materially and adversely affected.
Additionally, there can be no assurance that the products expected to be
introduced in this market segment will be successfully developed on time, or
free from errors, or that the Company will obtain significant purchase orders
for these products. If the Company does achieve a material market share, there
can be no assurance that the Company will be able to sustain or increase such
market share or that the Company will be able to maintain acceptable gross
margins for the products. Failure to achieve significant commercial revenues or
profitability could have a material adverse effect on the Company's business,
financial condition and results of operations.
INTERNATIONAL OPERATIONS
During the fiscal years ended January 31, 1996, 1995 and 1994, sales to
international customers accounted for approximately 63%, 36% and 33% of the
Company's net sales, respectively. The Company anticipates that sales to
international customers, including sales of REALMagic products, will continue to
account for a substantial percentage of net sales. In addition, some of the
foundries that manufacture the Company's products and components are located in
Asia. Overseas sales and purchases to date have been denominated in U.S.
dollars. Due to the concentration of international sales and the manufacturing
capacity in Asia, the Company is subject to the risks of conducting business
internationally. These risks include unexpected changes in regulatory
requirements and fluctuations in the U.S. dollar which could increase the sales
price in local currencies of the Company's products in international markets or
make it difficult for the Company to obtain price reductions from its foundries.
The Company does not currently engage in any hedging activities to mitigate
exchange rate risks. To the extent that the Company is successful in increasing
its sales to foreign customers, or to the extent that the Company increases its
transactions in foreign currencies, the Company's results of operations could be
adversely affected by exchange rate fluctuations.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has been and is expected to
continue to be subject to significant fluctuations. Factors such as
announcements of the introduction of new products by the Company or its
competitors and market conditions in the technology, entertainment and emerging
growth company sectors may have a significant impact on the market price of the
Company's Common Stock. Further, the stock market has experienced volatility
that has particularly affected the market prices of equity securities of many
high technology and development stage companies such as those in the electronics
industry. Such volatility has often been unrelated or disproportionate to the
operating performance of such companies. These fluctuations, as well as general
economic and market conditions, may adversely affect the price of the Common
Stock.
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THE COMPANY
The following section 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 under "Risk Factors" and elsewhere in
this Prospectus.
Sigma Designs, Inc. ("Sigma" or the "Company") designs, manufactures (using
subcontractors), and markets multimedia products for use with personal
computers. The emergence of multimedia technology in the personal computer
("PC") market has dramatically changed the way users interact with computers.
Multimedia integrates different elements, such as sound and video, to enhance
the computing experience and deliver a heightened sense of realism. Through its
REALMagic product line incorporating Moving Pictures Experts Group ("MPEG")
technology, Sigma Designs has become a leader in this emerging market.
Prior to MPEG's introduction, video on personal computers suffered from
serious drawbacks. Motion pictures appeared jerky and video was confined to
small window sizes. MPEG, a defined International Standards Organization (ISO)
standard for compression, eliminated those problems and revolutionized
multimedia on the PC platform. For the first time, MPEG users could play back
full-screen, full-motion video combined with stereo audio, even from a standard
CD-ROM. A single CD-ROM using the MPEG compression technique can store up to 74
minutes of full-motion video and audio.
Because of MPEG technology, producers can create (and users can enjoy) an
interactive, television-like experience on a desktop PC. The result was a
significant new visual impact thereby opening possibilities for a wide range of
entertainment, education, training and business presentation applications.
THE REALMAGIC MPEG STANDARD
Since its first shipment in November 1993, REALMagic technology has
received widespread support from PC industry leaders, software developers and
OEM and retail customers.
PARTNERSHIP WITH PC INDUSTRY LEADERS. Sigma has received endorsement for
its REALMagic technology from companies such as Microsoft, IBM, Hewlett Packard,
Oracle, Novell and Starlight Networks. On the operating system side, REALMagic
is being supported by Microsoft Windows 95 and IBM O/S 2. Additionally, both
Novell and Starlight Networks have products that are compatible with REALMagic
in a network environment.
WIDESPREAD SUPPORT FROM SOFTWARE DEVELOPERS. Support for Sigma's REALMagic
MPEG standard has grown rapidly in the software development community. Two years
ago, the Company listed fifty authorized REALMagic software developers; by the
end of fiscal 1996, Sigma's roster of developers rose to more than 1,200,
including Activision, Tsunami Media, Mindscape, Time Warner, and Interplay. This
widespread developer support has led to the introduction of more than 60
interactive software titles in the REALMagic format and many more currently
under development.
The REALMagic DOS MPEG API has also become the industry standard for MPEG
software development, further evidence of widespread support from the software
development community. With its robust functionality, the REALMagic API is
currently the preferred technology available which allows the creation of fully
interactive MPEG software titles.
SUPPORT FROM OEMS. In the U.S., Zenith Data Systems, Zenon Technology, Inc.
and PREMIO Express, the direct marketing arm of Compu Trend Systems, Inc. have
purchased the REALMagic Maxima boards for installation inside their multimedia
PCs. Additionally many VARs have begun taking shipments of REALMagic boards for
systems targeted at vertical kiosk, business training and presentation
applications. In the Far East, where the popularity of Karaoke and videoCD has
made REALMagic a very well received product, the Company's OEM customers include
NEC in Japan and Hyundai in Korea.
ACCEPTANCE BY RETAIL CHANNEL. In addition to international distributors,
national U.S. distributors such as Ingram Micro, Inc. and Tech Data are carrying
REALMagic products, further evidence of the channel's acceptance and interest in
MPEG technology.
REALMAGIC BUSINESS STRATEGIES
Sigma's corporate objective is be the leading provider of MPEG multimedia
products that enable full-screen, full-motion, TV-like quality video on the
standard desktop and the notebook PC. To accomplish this goal, the Company
intends to promote the widespread acceptance of the REALMagic technology. The
key parts of this strategy includes:
ENCOURAGE CONTINUED DEVELOPMENT OF SOFTWARE UTILIZING THE REALMAGIC
TECHNOLOGY. The Company continues to encourage widespread software title
development by providing free technical support and licensing its
comprehensive API free of charge to all developers who wish to publish
REALMagic-compatible software titles. In addition, the Company has been
shipping REALMagic Producer, the industry's first low-cost MPEG authoring
system. It enables compression of MPEG video and audio in order to create
high-quality multimedia presentations and titles. The Company expects that
the availability of REALMagic Producer will lead to the development of more
REALMagic MPEG titles, and therefore increase the demand for REALMagic
playback card.
WIN MORE OEM PARTNERSHIPS AND FURTHER PENETRATE RETAIL CHANNEL. To
establish REALMagic as a true standard, the Company will continue to seek
design wins with major PC manufacturers worldwide in which the OEMs will
either factory-install the REALMagic card insider their multimedia PCs
(MPCs) or private-label the card now and distribute it through their own
channels of distribution and later when a single chipset solution becomes
available, these OEMs will install it on the CPUs of their MPCs. On the
retail side, the Company plans to expand its network of national
distributors and special VARs to distribute its high-end REALMagic playback
card and the REALMagic Producer, its low cost encoding card. In Europe and
Asia Pacific, the Company will continue to expand its relationship with
distributors as well as OEMs and VARs. In addition, the Company will seek
to sell to add-on card manufactures who will, in turn, market to owners of
486 and Pentium PCs.
INTRODUCE NEW GENERATIONS OF REALMAGIC, OFFER REALMAGIC PRODUCTS AT
COMPETITIVE PRICES AND CONTINUALLY REDUCE PRODUCT COSTS. A significant
aspect of the Company's product strategy is to include the sale of
REALMagic chipsets in its product line and continue developing newer
versions and generations of the REALMagic products including chipsets for
both desktop and notebook PCs. The general direction is to continue to
offer consumers with better-features and lower price products over time.
The intention is to stay at least one step ahead of competition.
-6-
<PAGE>
REALMAGIC PRODUCTS
The Company offers a complete family of REALMagic products including:
. REALMAGIC MAXIMA. An MPEG playback card designed to eliminate the
compatibility issue with graphics cards by using the Analog Overlay
Technology. The Maxima accelerates MPEG video to a guaranteed 30
frames per second playback rate with high quality CD sound at
resolutions of up to 1280 x 1024, which is in compliance with the MPC3
industry standard for MPEG video playback. The REALMagic drivers
guarantee compatibility with all the interactive MPEG titles available
today and all future titles which are OM-1 compatible.
. REALMAGIC PRO CHIPSET. In October 1995, the Company announced the
availability for sale of the REALMagic Pro Chipset. This chipset has
the following distinctive features:
+ Very high quality MPEG playback through 16 million color MPEG
video; horizontal and vertical bilinear interpolation; digital
brightness, contrast and saturation adjustment.
+ The use of Sigma's REAL Overlay chip enables the mixing of MPEG
video and PC graphics at resolutions up to 1600 x 1200 with an 85
Hz non-interlaced refresh rate.
+ 100% Windows 95 and MPC3 compliance.
+ 100% OM-1 and REALMagic compatibility.
+ Direct interface for NTSC/PAL decoder to support TV tuner
input.
The Company currently expects to commence volume shipment of this product
in the second quarter of fiscal 1997.
. REALMAGIC EXPLORER. In November 1995, the Company announced the
introduction of the REALMagic Explorer chipset. This chipset will put
MPEG-1 digital video playback in ZV port PCMCIA cards for the new
generation of notebook computers. The main features of this chipset
are:
+ MPEG-1 video playback with 16 million colors.
+ MPEG-1 audio layers I and II.
+ 100% REALMagic and OM-1 standard compatible.
+ MPC3 standard compliant.
+ Windows 95 Plug and Play.
The Company currently expects to start volume shipment of this product in
the second half of fiscal 1997.
. REALMAGIC PRODUCER. A 32-bit PCI low cost card with audio/video
capture and MPEG encoding capabilities. This product comes bundled
with a frame-accurate software VTR controller; real-time video
Previewer; Adobe and Caligari trueSpace software which are necessary
to make high-quality multimedia presentations and titles. REALMagic
Producer features include:
+ Fully compliant with MPEG-1 standard.
+ Compatible with any AVI-compatible video editing software.
+ Compatible with REALMagic decoding products.
+ Files are converted to fully compressed MPEG-1 at three times
actual time.
+ Accepts both S-VHS and Composite video inputs.
MARKETING AND SALES
Sigma Designs currently distributes its products through sales to national
and regional distributors, VARs and OEMs in the U.S. and throughout the world.
The Company's U.S. distributors include Ingram Micro, Inc. and Tech Data, and
its OEMs include Zenith Data Systems, Zenon Technology and PREMIO Express. The
Company's international OEMs include NEC in Japan and Hyundai in Korea and its
international distributors are strategically located in many countries around
the world. However, there can be no assurance that the Company will achieve
significant sales so as to realize profitability in the near term, if at
all.
The Company generally acquires and maintains products for distribution
through retail channels based on forecasts rather than firm purchase orders.
Additionally, the Company generally only acquires products for sales to its OEM
customers after receiving purchase orders from such customers, which purchase
orders are typically cancelable without substantial penalty from such OEM
customers. The Company currently places noncancelable orders to purchase
semiconductor products from its suppliers on a twelve to sixteen-week lead time
basis. Consequently, if, as a result of inaccurate forecasts or canceled
purchase orders, anticipated sales and shipments in any quarter do not occur
when expected, expenses and inventory levels could be disproportionately high,
requiring significant working capital resulting in severe pressure on the
Company's financial condition.
RESEARCH AND DEVELOPMENT
As of January 31, 1996, the Company had a staff of 28 research and
development personnel, which conducts all the Company's product development. The
Company is focusing its development efforts primarily on MPEG multimedia
products, including new and improved version of REALMagic MPEG chipsets, new
software titles and cost reduction processes.
To maintain its competitiveness, the Company must continue to make
technological advancements in the areas of MPEG video and audio compression and
decompression. These advancements include compatibility with emerging standards
and multiple platforms, improvements to the REALMagic architecture and
enhancements to REALMagic API. There can be no assurance that the Company will
be able to make any of such advancement to the REALMagic MPEG technology or, if
they are made, that the Company will be able to market such advancements to
achieve profitability and maintain its technological leadership.
During fiscal 1996, fiscal 1995 and fiscal 1994, the Company's research
and development expenses were approximate $3.8 million, $4.3 million and $12.0
million (including $8.1 million of acquired research and development relating to
the acquisition of EMI) respectively. The Company plans to continue to devote
substantial resources to the research and development of the future generation
of MPEG and other multi-media.
COMPETITION
The market for MPEG multimedia products is highly competitive. While the
Company does not believe that any products sold by a third party is in direct
competition with the REALMagic encoding and decoding card in terms of price and
performance, the possibility that other companies with more marketing and
financial resources may develop a competitive product may inhibit the wide
acceptance of REALMagic technology. The Company believes that many computer
product manufacturers are developing MPEG products that will compete directly
with REALMagic products in the near future.
The Company believes that the principal competitive factors in the market
for MPEG multimedia hardware products include time to market for new product
introductions, product performance, compatibility to industry standards, price
and marketing and distribution resources. The Company believes that it competes
most favorably with respect to time to market, product performance and price of
REALMagic products. Moreover, the Company believes that the acceptance of
REALMagic API as an industry standard for software development could provide a
significant competitive advantage for the Company. However, there can be no
assurance that the Company's lead time in product introduction will be
sustained.
Sales to distributors and sometimes even to OEMs are typically subject to
contractual rights of inventory rotation and price protection. Regardless of
particular contractual rights, the failure of one or more distributors or OEMs
to achieve sustained sell-through of REALMagic products could result in product
returns or collection problems, contributing to significant fluctuations in the
Company's operating results.
LICENSES, PATENTS AND TRADEMARKS
The Company is seeking patent protection for the basic low-cost
architecture of the REALMagic producers, as well as certain software and
hardware features in current and future versions of REALMagic. The Company
currently has eight pending patent applications for its REALMagic technology.
Four patents have been issued to the Company and there can be no assurance that
more patents will be issued, or, even if issued, will provide adequate
protection for the Company's competitive position. The Company also attempts to
protect its trade secrets and other proprietary information through agreements
with customers, suppliers and employees and other security measures. Although
the Company intends to protect its rights vigorously, there can be no assurance
that these measures will be successful.
MANUFACTURING
To reduce overhead expenses, capital and staffing requirements, the Company
currently uses third party contract manufacturers to fulfill its manufacturing
needs. All of the chips used by the Company to make its encoding and decoding
products are manufactured by outside suppliers and foundries. Each of these
suppliers is a sole source of supply to the Company of the respective chips
produced by such supplier.
The Company's reliance on independent suppliers involves several risks,
including the absence of adequate capacity, reduced control over delivery
schedules, manufacturing yields and costs. Any delay or interruption on the
supply of any of the components required for the production of REALMagic
products could have a material adverse impact on the sales of the Company's
products and thus on the Company's operating results.
BACKLOG
Because the Company's customers typically expect quick deliveries, the
Company seeks to ship products within a few weeks of receipt of a purchase
order. The customer may reschedule delivery of products or cancel the purchase
order entirely without significant penalty. Historically, the Company's backlog
has not been reflective of future sales. The Company also expects that in the
near term, its backlog will continue to be not indicative of future sales.
EMPLOYEES
As of January 31, 1996, the Company had 60 full-time employees, including
28 in research and development, 13 in marketing, sales and support, 9 in
operations and 10 in finance and administration. The Company's future success
will depend, in part, on its ability to continue to attract, retain and motivate
highly qualified technical, marketing, engineering and management personnel, who
are in great demand. The Company's employees are not represented by any
collective bargaining unit, and the Company has never experienced a work
stoppage. The Company believes that its employee relations are
satisfactory.
-7-
<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Shares
hereunder by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock as of May 17, 1996 by
each Selling Shareholder. Except as indicated in the footnotes to this
table, the persons named in the table have sole voting and investment
power with respect to all shares of Common Stock shown as beneficially
owned by them, subject to community property laws where applicable.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED
OFFERING (1)(2) NUMBER AFTER OFFERING(1)(2)
-------------------- OF SHARES ---------------------
NAME AND ADDRESS NUMBER PERCENT BEING OFFERED NUMBER PERCENT
- ---------------- ------- ------- ------------- ------ -------
<S> <C> <C> <C> <C> <C>
BKP Partners(3)(4)........................ 682,303 7.8% 682,303 0 0
One Sansome Street, #3900
San Francisco, CA 94104
Everest Capital International Ltd.(5)(6).. 231,983 2.6% 231,983 0 0
Corner House
20 Parliament Street
Hamilton HM12
British Virgin Islands
Everest Capital Fund L.P.(5)(7)........... 109,168 1.2% 109,168 0 0
Corner House
20 Parliament Street
Hamilton HM12
British Virgin Islands
Hsu Hui Liang (8)......................... 113,716 1.3% 113,716 0 0
Rm 501-2, Alliance Building
130-136, Connaught Road C
Hong Kong
Chao Ping Wang (9)........................ 113,716 1.3% 113,716 0 0
82, 4FL, Liu Chou Avenue
Taipei, Taiwan, R.O.C
Direct International, Ltd (10)............ 113,716 1.3% 113,716 0 0
7F-B1, Ruentex Banking Tower
76, Tun Hwa South Road, Section 2
Taipei, Taiwan, R.O.C.
Chao Hsuan Mei Tseng (11).................. 45,487 * 45,487 0 0
2B, No. 203-2, Section 4
Hsin Yih Road
Taipei, Taiwan, R.O.C.
Sandra Ma (12)............................ 29,565 * 29,565 0 0
6/F, 311 Tun-Hwa South Road
Section 1
Taipei, Taiwan, R.O.C.
F&B Limited Liability Company (13)........ 27,292 * 27,292 0 0
7F-B1, Ruentex Banking Tower
76, Tun Hua South Road, Section 2
Taipei, Taiwan, R.O.C.
Nitai Electronics Ind. Co., Ltd.(14)...... 22,743 * 22,743 0 0
No. 152, Section 4
Hsin Yih Road
Taipei, Taiwan, R.O.C.
</TABLE>
-8-
<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OWNED
OFFERING (1)(2) NUMBER AFTER OFFERING(1)(2)
-------------------- OF SHARES ---------------------
NAME AND ADDRESS NUMBER PERCENT BEING OFFERED NUMBER PERCENT
- ---------------- ------- ------- ------------- ------ -------
<S> <C> <C> <C> <C> <C>
Hsieh Hsu Jui-Mei (15).................... 22,743 * 22,743 0 0
3F, No. 143, Section 2
Min Sheng E. Road
Taipei, Taiwan, R.O.C.
Peter Liu (16)............................ 13,457 * 13,457 0 0
50 California Street, Suite 2920
San Francisco, CA 94111
Austin Jieh (17).......................... 11,775 * 11,775 0 0
2917 San Juan Blvd.
Belmont, CA 94002
Robert Chou (18).......................... 5,047 * 5,047 0 0
50 California Street, #2920
San Francisco, CA 94111
Capitol Bay Securities (19)............... 4,167 * 4,167 0 0
2200-B Douglas Blvd., Suite 100
Roseville, CA 95661
WI Harper, Inc. (20)...................... 3,365 * 3,365 0 0
50 California Street, Suite 2920
San Francisco, CA 94111
</TABLE>
- ---------------
* Represents less than 1%
(1) The number and percentage of shares beneficially owned is determined under
rules of the Securities and Exchange Commission, and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under
such rules, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within sixty (60) days
of May 17, 1996 through the exercise of any Convertible Securities or other
rights.
(2) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws where applicable and the information
contained in the footnotes to this table.
(3) To the knowledge of the Company, Mr. Robert Pryt has voting and investment
power with respect to such shares.
(4) Includes shares underlying a warrant immediately exercisable for
170,576 shares of Common Stock.
(5) To the knowledge of the Company, Mr. Jeffrey Terman has voting and
investment power with respect to such shares.
(6) Includes shares underlying a warrant immediately exercisable for
57,996 shares of Common Stock.
(7) Includes shares underlying a warrant immediately exercisable for
27,292 shares of Common Stock.
(8) Includes shares underlying a warrant immediately exercisable for
28,429 shares of Common Stock.
(9) Includes shares underlying a warrant immediately exercisable for
28,429 shares of Common Stock.
(10) Includes shares underlying a warrant immediately exercisable for
28,429 shares of Common Stock.
(11) Includes shares underlying a warrant immediately exercisable for
11,372 shares of Common Stock.
(12) Includes shares underlying a warrant immediately exercisable for
7,391 shares of Common Stock.
(13) Includes shares underlying a warrant immediately exercisable for
6,823 shares of Common Stock.
(14) Includes shares underlying a warrant immediately exercisable for
5,686 shares of Common Stock.
(15) Includes shares underlying a warrant immediately exercisable for
5,686 shares of Common Stock.
(16) Represents shares underlying a warrant immediately exercisable for
Common Stock.
(17) Represents shares underlying a warrant immediately exercisable for
Common Stock.
(18) Represents shares underlying a warrant immediately exercisable for
Common Stock.
(19) Represents shares underlying a warrant immediately exercisable for
Common Stock.
(20) Represents shares underlying a warrant immediately exercisable for
Common Stock.
-9-
<PAGE>
PLAN OF DISTRIBUTION
On December 15, 1995, the Company entered into Subscription
Agreements with the Selling Shareholders (the "Subscription Agreements"),
pursuant to which the Selling Shareholders purchased certain subordinated
convertible promissory notes (the "Notes") in an aggregate amount of
$6,500,000. The Notes were subsequently converted by the Selling
Shareholders into shares of the Company's Common Stock, and concurrent
with the conversion, the Selling Shareholders received warrants to
purchase additional Common Stock at an exercise price in excess of the
conversion price of the Notes. This Registration Statement has been filed
by the Company pursuant to the exercise of certain registration rights
granted under the Subscription Agreements.
The Shares may be sold from time to time by the Selling Shareholders
or by pledgees, donees, transferees or other successors in interest.
Such sales may be made in any one or more transactions (which may involve
block transactions) on the Nasdaq National Market, or any exchange on
which the Common Stock may then be listed, in the over-the-counter market
or otherwise in negotiated transactions or a combination of such methods
of sale, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices or at negotiated prices. The
Selling Shareholders may effect such transactions by selling shares to or
through broker-dealers, and such broker-dealers may sell the Shares as
agent or may purchase such Shares as principal and resell them for their
own account pursuant to this Prospectus. Such broker-dealers may receive
compensation in the form of underwriting discounts, concessions or
commissions from the Selling Shareholders and/or purchasers the Shares,
for whom they may act as agent (which compensation may be in excess of
customary commissions). In connection with such sales, the Selling
Shareholders and any participating brokers or dealers may be deemed to be
"underwriters" as defined in the Securities Act. The Subscription
Agreements provide that the Company will indemnify the Selling
Shareholders against certain liabilities, including liabilities under the
Securities Act.
LEGAL MATTERS
Certain legal matters relating to validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Wilson
Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The consolidated financial statements and the related financial
statement schedule of Sigma Designs, Inc. and the financial statements of
Active Design Corporation, all of which are incorporated in this
prospectus by reference from the Company's Annual Report on Form 10-K for
the fiscal year ended January 31, 1996 have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in
reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
-10-
<PAGE>
================================================================================
TABLE OF CONTENTS
Page
----
Available Information............................ 2
Incorporation of Certain Documents by Reference.. 2
Risk Factors..................................... 3
The Company...................................... 6
Use of Proceeds.................................. 8
Selling Shareholders............................. 8
Plan of Distribution............................. 10
Legal Matters.................................... 10
Experts.......................................... 10
---------------
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information and representations must not
be relied upon as having been authorized by the Company or the Selling
Shareholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the Shares by anyone in any jurisdiction in
which such offer or solicitation is not authorized, or in which the person
making the offer or solicitation is not qualified to do so, or to any person to
whom it is unlawful to make such offer or solicitation. Under no circumstances
shall the delivery of this Prospectus or any sale made pursuant to this
Prospectus, create any implication that the information contained in this
Prospectus is correct as of any time subsequent to the date of this Prospectus.
---------------
================================================================================
================================================================================
1,550,243 Shares
SIGMA DESIGNS, INC.
Common Stock
______________________
PROSPECTUS
_____________________
-------- --, 1996
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable in connection with the
sale of Common Stock being registered. All amounts are estimates except
the Securities and Exchange Commission registration fee and the Nasdaq
National Market Listing Fee.
<TABLE>
<S> <C>
Securities and Exchange Commission
Registration Fee.................... $ 4,344
Nasdaq National Market Listing Fee.... 17,500
Legal Fees and Expenses............... 30,000
Accounting Fees and Expenses.......... 30,000
Blue Sky Fees and Expenses............ 2,500
Transfer Agent and Registrar Fees..... 5,000
Miscellaneous......................... 5,656
-------
Total.......................... $95,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California Corporations Code authorizes a court
to award or a corporation's Board of Directors to grant, indemnity to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for labilities (including
reimbursement for expenses incurred) arising under the Securities Act.
Article IV of the Registrant's Articles of Incorporation and Article VI
of the Registrant's Bylaws provide for indemnification of its directors,
officers, employees and other agents to the maximum extent permitted by
the California Corporations Code. In addition, the Registrant has
entered into Indemnification Agreements with its officers and directors.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions, the
Registrant has been informed that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) EXHIBITS
4.1* Form of Subscription Agreement, by and between Sigma and
the Selling Shareholders.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel for the Registrant.
23.1 Independent Auditors' Consent of Deloitte & Touche LLP.
23.2* Consent of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel for the Registrant
(included in Exhibit 5.1).
24.1* Power of Attorney.
---------------
*Previously provided.
Schedules not listed above have been omitted because they are not
applicable or are not required or the information required to be set
forth therein is included in the consolidation financial statements or
notes thereto.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
Insofar as indemnification by the Registrant for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered hereunder, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, or post-effective amendment to this Registration Statement 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
Securities Act, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of
the Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, the information
omitted from the form of Prospectus filed as part of this Registration
Statement in reliance upon 430A and contained in a form of Prospectus
filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under
the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Fremont, State of California, on the 17th day of May 1996.
SIGMA DESIGNS, INC.
By: /s/ Thinh Q. Tran
------------------------------
Thinh Q. Tran
Chairman of the Board,
President and Chief Executive
Officer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATE INDICATED:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Thinh Q. Tran Chairman of the Board, President and Chief
- ---------------------- Executive Officer (Principal Executive Officer) May 17, 1996
Thinh Q. Tran
Co-Chairman of the Board and Chief Technical
- ---------------------- Officer
Julien Nguyen
/s/ Q. Binh Trinh Vice President, Finance, Chief Financial Officer,
- ---------------------- Secretary and Director (Chief Financial and
Q. Binh Trinh Accounting Officer) May 17, 1996
/s/ William J. Almon Director May 17, 1996
- ----------------------
William J. Almon
/s/ William Wang Director May 17, 1996
- ----------------------
William Wang
*By: /s/ Q. Binh Trinh
- ----------------------
Attorney-in-Fact
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
EXHIBIT NUMBER
--------------
4.1* Form of Subscription Agreement, by and between Sigma and
the Selling Shareholders.
5.1* Opinion of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel for the Registrant.
23.1 Independent Auditors' Consent of Deloitte & Touche LLP.
23.2* Consent of Wilson Sonsini Goodrich & Rosati,
Professional Corporation, counsel for the Registrant
(included in Exhibit 5.1).
24.1* Power of Attorney.
----------
*Previously provided.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 3 to
Registration Statement No. 333-883 of Sigma Designs, Inc. on Form S-3 of our
report dated March 1, 1996 (April 22, 1996 as to Note 14) on the consolidated
financial statements and the related financial statement schedule of Sigma
Designs, Inc. and our report dated April 22, 1996 on the financial statements
of Active Design Corporation, appearing in the Annual Report on Form 10-K of
Sigma Designs, Inc. for the fiscal year ended January 31, 1996 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
San Jose, California
May 16, 1996
