Rule 424(b)(3)
Registration Statement No. 33-64875
PROSPECTUS
308,469 Shares
MICROCOM, INC.
Common Stock
The Prospectus relates to the resale of up to 308,469
shares (the "Shares") of Common Stock, $.01 par value per share,
of Microcom, Inc. (the "Company" or "Microcom") held by certain
shareholders of the Company (the "Selling Shareholders").
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. FOR A DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE
CONSIDERED IN CONNECTION WITH THE PURCHASE OF THESE SECURITIES,
SEE "RISK FACTORS" BEGINNING ON PAGE 5.
It is anticipated that some or all of the 266,429
Shares held by The Parthenon Group, Inc. ("Parthenon"), one of
the Selling Shareholders, may be distributed to certain of
Parthenon's current and former employees as soon as practicable
after the date of this Prospectus as compensation for employment
services rendered. The Selling Shareholders and their agents,
donees, distributees, pledgees and other successors in interest
may offer and sell the remainder of the Shares from time to time
in one or more transactions on The Nasdaq Stock Market, or
otherwise, at market prices then prevailing or in negotiated
transactions. The Shares may also be sold pursuant to option,
hedging or other transactions with broker-dealers. The Shares
may also be offered in one or more underwritten offerings. The
underwriters in an underwritten offering, if any, and the terms
and conditions of any such offering will be described in a
supplement to this Prospectus. See "Selling Shareholders" and
"Plan of Distribution."
The Company will not receive any of the proceeds from
the sale of the Shares by the Selling Shareholders. See "Use of
Proceeds".
The Common Stock of the Company is traded on the
National Market of The Nasdaq Stock Market (the "Nasdaq National
Market") under the symbol "MNPI". On February 5, 1996, the last
reported sale price of Common Stock on the Nasdaq National Market
was $25 3/8 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 6, 1996.
AVAILABLE INFORMATION
The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports,
proxy statements and other information with the Securities and
Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the
Commission pursuant to the informational requirements of the
Exchange Act 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 Commission's regional
offices located at Seven 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 materials also may be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The Common Stock of
the Company is traded on the Nasdaq National Market. Reports,
proxy statements and other information concerning the Company
also may be inspected at the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a
Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), with respect to the
Common Stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement
and the exhibits and schedules filed therewith. For further
information with respect to the Company and the Common Stock
offered hereby, reference is hereby made to such Registration
Statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of
any agreement or other document are not necessarily complete, and
in each instance reference is made to the copy of such agreement
or document filed as an exhibit to the Registration Statement,
each such statement being qualified in all respects by such
reference. The Registration Statement, including the exhibits
and schedules thereto, may be inspected without charge at the
principal office of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of all or any part thereof
may be obtained from such office upon payment of the prescribed
fees.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the
Commission (File No. 0-14805) are incorporated herein by
reference: (1) the Company's Annual Report on Form 10-K for the
fiscal year ended March 31, 1995; (2) the Company's interim
reports on Form 10-Q for the fiscal quarters ended June 30, 1995
and September 30, 1995; and (3) the Company's Registration
Statement on Form 8-A filed on April 28, 1987 registering the
Company's Common Stock under Section 12(g) of the Exchange Act.
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All documents filed by the Company with the Commission
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date hereof and prior to the termination of
the offering of the Common Stock registered hereby shall be
deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents.
Any statements contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part
of this Prospectus. The Company will provide without charge to
each person to whom this Prospectus is delivered, upon a written
request of such person, a copy of any or all of the foregoing
documents incorporated by reference into this Prospectus (other
than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into such documents).
Requests for such copies should be directed to the Chief
Financial Officer of the Company, 500 River Ridge Drive, Norwood,
Massachusetts 02062-5028, Telephone: (617) 551-1000.
THE COMPANY
The Company is a leading provider of remote network
access solutions. The Company's products enable users to access
and communicate with on-line computer networks, such as the
Internet, America Online, CompuServe and Prodigy, and corporate
networks from remote locations. Microcom provides its customers
with remote network access management and security capabilities,
and high quality, reliable products that are easy to install and
use.
The Company was founded in 1980 as a developer of data
communications software, high performance modems and related
technologies. In the early 1990s, the Company responded to
changes in the data communications industry by undertaking a
series of strategic initiatives and restructurings designed to
reposition the Company to address the needs of the emerging
remote network access markets. These initiatives included the
development of products with remote network access functionality,
divestitures of non-core products, a restructuring of the
worldwide sales organization, the hiring of a new Chief Executive
Officer and the acquisition of Integrated Services Digital
Network (ISDN) product technologies. By implementing these
initiatives and by leveraging its technology and expertise, the
Company has developed a broad range of remote network access
products for central site network managers and remote users. The
Company believes that its recent results of operations reflect
the ongoing implementation of these initiatives.
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Microcom's products serve both central site network
managers and individual remote users. Products designed for the
central site include the High Density Management System (HDMS) --
a dial-up access management system; and LANexpress -- remote
local area network (LAN) access systems which include
expressWATCH, a comprehensive remote network access management
solution. Products designed for the individual remote user
include high performance V.34 (28.8 Kbps) PCMCIA, desktop and
other modems; Carbon Copy remote control/remote PC access
software; LANexpress remote client software, a remote node and
remote control LAN access product; and ISDN terminal adapters.
The Company's customers include (i) Internet and
on-line service network access providers, such as Sprint
Corporation, (ii) "Corporate 2000" companies such as American
Airlines, Inc., Blockbuster Entertainment Corporation, NYNEX
Corporation and State Farm Insurance Company, (iii) large
international corporations, (iv) governmental agencies and
universities and (v) individual remote users seeking to access
the Internet, on-line services and corporate networks. The
Company distributes its products through direct sales and
multiple indirect channels, including value added resellers
(VARs), distributors and original equipment manufacturers (OEMs)
in the United States and international markets.
Microcom's strategy is to continue to be a leading
provider of remote network access solutions and to capitalize on
the emerging trends in this market. The key components of the
Company's strategy are as follows:
Continue Focus on Remote Network Access Market by developing
new products and enhancements to existing products to meet
or exceed the evolving requirements of both the central site
network manager and the remote user.
Maintain Technology Leadership by investing in research and
development to enhance existing products, develop new
products, and respond to emerging technologies in a cost
effective and timely manner.
Leverage Existing Customer Base by aggressively marketing
new products and enhancements to existing customers and
utilizing this installed base as references for new
customers, particularly telecommunications companies.
Develop and Expand Strategic Relationships with
telecommunications companies, equipment providers, OEMs and
software vendors to enhance the Company's product
development activities and leverage shared technologies and
joint marketing efforts.
Expand Worldwide Distribution to develop further demand for
remote network access products both domestically and
internationally.
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MICROCOM, the Microcom logo, MICROCOM & DESIGN, MNP,
expressWATCH, LANexpress, Travelcard and TravelPorte are
registered trademarks of the Company and Advanced Parallel
Technology, APT, Carbon Copy, DeskPorte, DeskPorte FAST,
High Density Management System, HDMS, Intelligent Network
Controller, INC and Microcom Networking Protocol are trademarks
of the Company. This Prospectus and the documents incorporated
by reference herein also include trade names and trademarks of
companies other than Microcom.
The Company's principal executive offices are located
at 500 River Ridge Drive, Norwood, Massachusetts 02062-5028, and
its telephone number is (617) 551-1000.
RISK FACTORS
In addition to the other information contained in this
Prospectus and in the documents incorporated herein by reference
(see "Incorporation of Certain Documents by Reference" above),
the following factors should be considered carefully in
evaluating an investment in the Common Stock.
New Product Development and Rapid Technological Change
The market for Microcom's products is characterized by
rapidly changing technology, evolving industry standards and
frequent introductions of new products and enhancements.
Microcom's future success will depend in part on its ability to
enhance its existing products and to introduce new products on a
timely basis to meet and adapt to changing customer requirements,
evolving industry standards and emerging technologies. There can
be no assurance that Microcom will be successful in developing,
manufacturing and marketing new products or product enhancements
that respond to technological changes or evolving industry
standards, that the Company will not experience difficulties that
could delay or prevent the successful development, introduction
and marketing of these products or that its new products will
adequately meet the requirements of the marketplace and achieve
market acceptance. If the Company is unable, for technological
or other reasons, to develop new products or enhancements of
existing products in a timely manner in response to changing
market conditions or customer requirements, the Company's
business, results of operations and financial condition would be
materially and adversely affected. In addition, there can be no
assurance that services, products or technologies developed by
others will not render Microcom's products or technologies
uncompetitive or obsolete. The introduction of new or enhanced
products also requires the Company to manage the transition from
older products in order to minimize disruption in customer
ordering patterns, avoid excessive levels of older product
inventories and ensure that adequate supplies of new products can
be delivered to meet customer demand. There can be no assurance
that the Company will successfully manage the transition to new
products. The failure to manage any such transition successfully
could have a material adverse effect on the Company's business,
results of operations and financial condition.
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Highly Competitive Environment
The market for remote network access products is highly
competitive. In the central site remote network access market,
the Company competes with remote LAN access server vendors such
as Shiva Corporation, Digital Communications Associates, Inc.,
Novell, Inc. and 3Com Corporation and vendors of dial-up access
management systems such as U.S. Robotics Corporation, Primary
Access Corporation (which has been acquired by 3Com Corporation)
and Motorola, Inc. The Company also faces increasing competition
from operating system (OS) and network operating system (NOS)
vendors such as Microsoft Corporation, Novell, Inc. and
International Business Machines Corporation who are including
remote access capabilities in their products. In the remote site
personal computer (PC) communications software market, the
Company competes with a number of providers of remote control,
file transfer and remote LAN access software, including Symantec
Corporation, Stac Electronics, Inc. and Shiva Corporation. The
Company's remote site modems compete with those of U.S. Robotics
Corporation, Hayes Microcomputer Products, Inc. and its subsidiary
Practical Peripherals, Inc. Increased competition could result in
price reductions and loss of market share which would materially
and adversely affect Microcom's business, results of operations and
financial condition. The Company believes that its ability to
compete successfully depends on a number of factors, including
price, product features, product quality, performance and
reliability, name recognition, international certification,
experienced sales, marketing and service organizations,
development of new products and enhancements, evolving industry
standards and announcements by competitors. Many of Microcom's
current and potential competitors have significantly greater
financial, marketing, technical and other resources than
Microcom. As a result, they may be able to respond more quickly
to new or emerging technologies and changes in customer
requirements, or to devote greater resources to the development,
promotion and sale of their products than the Company. The
Company also expects competition to increase as a result of
industry consolidations. In addition, current and potential
competitors have established or may establish cooperative
relationships among themselves or with third parties to address
the remote network access needs of the Company's prospective
customers. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire
significant market share. There can be no assurance that
Microcom will be able to continue to compete successfully with
existing or new competitors or that competitive pressures faced
by the Company would not materially and adversely affect its
business, results of operations or financial condition.
Sales to Telecommunications Carriers
As part of its sales and marketing strategy, Microcom
is seeking to increase the sales of its central site remote
network access products to telecommunications carriers and
affiliated entities. These entities usually have long purchasing
cycles and extensive vendor qualification requirements.
Accordingly, sales efforts to such entities typically require
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significant investments of time and resources with no assurance
that such efforts will be successful. Sales by Microcom to
Sprint Corporation ("Sprint") accounted for 13% and 24% of net
sales in fiscal 1994 and 1995, respectively, and 9% in the first
nine months of fiscal 1996. Sprint is not obligated to make any
minimum level of future purchases from the Company or to provide
the Company with binding forecasts of product purchases for any
future period. While the Company expects that Sprint will
continue to be an important customer, the Company anticipates
that net sales to Sprint in fiscal 1996 will continue to be
significantly less than in fiscal 1995. The Company has recently
established a relationship with another major telecommunications
carrier which has accounted for 9% of the Company's net sales in
the first nine months of fiscal 1996. There can be no assurance,
however, that the Company will continue to make any significant
sales to such carrier or that sales to it and other
telecommunications carriers will fully offset any decline in
sales to Sprint. The failure to achieve and maintain significant
sales to telecommunications carriers or to fully offset any
decline in sales to Sprint would have a material adverse effect
on the Company's business, results of operations and financial
condition.
Fluctuations in Quarterly Results
Microcom's quarterly operating results have fluctuated
significantly in the past and may fluctuate significantly in the
future. Such fluctuations may result in volatility in the price
of the Company's Common Stock. Quarterly revenues and operating
results may fluctuate as a result of a variety of factors
including the timing of significant orders, the timing of product
enhancements and new product introductions by Microcom and its
competitors, the pricing of the Company's products, changes in
product mix, changes in customers' budgets, competitive
conditions, the proportion of international sales to total net
sales, the proportion of sales made pursuant to the Company's
various distribution channels and general economic conditions.
The Company has historically operated with limited backlog
because its products are shipped shortly after orders are
received. The Company has often recognized a substantial portion
of its net sales in the last month of the quarter. As a result,
net sales in any quarter are substantially dependent on orders
booked and shipped in the last month of a quarter. A small
variation in the timing of orders is likely to adversely and
disproportionately affect the Company's results of operations as
the Company's expense levels are based, in part, on its
expectations as to future net sales and only a small portion of
the Company's expenses vary with its net sales. Moreover,
Microcom's net sales may fluctuate based on the level of
inventories of the Company's products maintained by the Company's
resellers in any particular quarter. Accordingly, the Company
believes that period to period comparisons of results of
operations are not necessarily meaningful and should not be
relied upon as indicative of future performance. Although the
Company's net sales have increased and the Company has been
profitable in recent quarterly periods, there can be no assurance
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that the Company's net sales will increase in future quarters or
that the Company will remain profitable on a quarterly basis, if
at all. Due to the foregoing factors, it is possible that in
some future quarters the Company's results of operations will be
below the expectations of public market analysts and investors.
In such event, the price of the Company's Common Stock would be
materially and adversely affected.
Limited History of Profitable Operations
Although the Company's net income was $5,761,000, in
fiscal 1995 and $8,662,000 in the first nine months of fiscal
1996, the Company incurred net losses of $10,913,000 and
$10,694,000 for fiscal 1994 and 1993, respectively, which net
losses included restructuring and other costs of $7,875,000 and
$4,268,000 in those years, respectively. At December 31, 1995,
the Company had an accumulated deficit of $12,927,000. There can
be no assurance that the net sales and net income growth Microcom
has experienced in recent quarters can be sustained or that in
the future Microcom will be profitable and not incur additional
restructuring charges.
Dependence on Suppliers and Subcontractors
The Company is dependent on a small number of
subcontractors for the manufacture and assembly of all of its
remote network access products. In the event that any of these
subcontractors were to become unable or unwilling to manufacture
Microcom's products in required volumes, Microcom would have to
identify and qualify additional subcontractors. The
identification and qualification process could be lengthy and no
assurances can be given that any replacement subcontractors will
be available to the Company on a timely basis. The failure to
identify and qualify replacement subcontractors on a timely basis
would have a material and adverse effect on the Company's
business, results of operations and financial condition. In
addition, certain components used in the Company's products are
only available from a single supplier or a limited number of
suppliers. Components for the Company's products which are only
available from a single supplier include certain semiconductor
components used in the Company's modems sourced from Rockwell
International Corporation ("Rockwell") and the power supply
component obtained from TDK for the Company's PCMCIA modem. It
was recently reported that Rockwell would be required to allocate
among its customers, including Microcom, the supply of a certain
component incorporated into V.34 modems. This component is
included in the Company's HDMS, LANexpress and modem products.
If Rockwell is unable to supply sufficient quantities of this
component to the Company on a timely basis, it would cause a
delay in Microcom's product shipments and such delay would have a
material adverse effect on the Company's business, results of
operations and financial condition. The Company believes,
however, that it will be able to obtain from Rockwell sufficient
quantities of the component to satisfy its anticipated
requirements. The Company generally purchases single or limited
source components pursuant to purchase orders and has no
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guaranteed supply arrangements with its suppliers. Further, the
availability of many of these components is dependent in part on
the Company's ability to provide its suppliers with accurate
forecasts of its future requirements. A reduction or
interruption in supply of these components could result in delays
or reductions in product shipments which would materially and
adversely affect the Company's business, results of operations
and financial condition and could damage customer relationships.
The Company may also be subject to increases in component costs,
which could also have a material adverse effect on the Company's
business, results of operations or financial condition.
Dependence on Proprietary Technology
The Company's success and ability to compete is
dependent in part upon its ability to protect its proprietary
technology. The Company relies on a combination of patent,
copyright and trade secret laws and non-disclosure agreements to
protect its proprietary technology. The Company currently holds
fifteen United States patents, four of them involving ISDN
technology, and has three United States patent applications and
ten foreign patent applications pending in a number of
jurisdictions. There can be no assurance that patents will be
issued with respect to pending or future patent applications or
that the Company's patents will be upheld as valid or will
prevent the development of competitive products. The Company's
United States patents expire between 2004 and 2011. The Company
has not sought foreign patents for some of its technologies,
including technologies which have been patented in the United
States, which may adversely effect the Company's ability to
protect its technologies and products in foreign countries. The
Company generally enters into confidentiality or license
agreements with its employees, distributors, customers and
potential customers and limits access to and distribution of its
software, documentation and other proprietary information. There
can be no assurance that the steps taken by the Company to
protect its proprietary rights will be adequate to prevent
misappropriation of its technology or that the Company's
competitors will not independently develop technologies that are
substantially equivalent or superior to the Company's technology.
In addition, the laws of some foreign countries do not protect
the Company's proprietary rights to the same extent as do the
laws of the United States. The Company is also subject to the
risk of adverse claims and litigation alleging infringement of
the proprietary rights of others. From time to time the Company
has received claims of infringement of other parties' proprietary
rights. In addition, the Company periodically reviews recent
patents that have been issued to third parties. As a result of
such reviews, the Company has from time to time identified and
investigated the validity and scope of issued patents for
technologies similar to, or related to, the Company's
technologies. Although the Company believes that it does not
infringe the valid patents of others, there can be no assurance
that third parties will not assert infringement claims in the
future with respect to the Company's current or future products
or that any such claims will not require the Company to enter
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into license arrangements or result in protracted and costly
litigation, regardless of the merits of such claims. No
assurance can be given that any necessary licenses will be
available or that, if available, such licenses can be obtained on
commercially reasonable terms. The failure to obtain such
royalty or licensing agreements on a timely basis would have a
material adverse effect upon the Company's business, results of
operations and financial conditions.
Risks Associated with International Operations
The Company expects that sales outside North America,
which accounted for approximately 28% of net sales in fiscal 1995
and 47% in the first nine months of fiscal 1996, will continue to
represent a significant portion of its total net sales. In
addition, the Company uses subcontractors in China, Malaysia,
Singapore and Hong Kong to manufacture a substantial portion of
its products and obtains certain components from foreign
suppliers. Sales to customers outside the United States and
reliance on foreign manufacturers and suppliers involve a number
of risks, including unexpected changes in regulatory requirements
and tariffs, difficulties enforcing agreements and collecting
receivables, longer payment cycles, exchange rate fluctuations,
difficulties enforcing intellectual property rights, difficulties
obtaining export licenses, the imposition of withholding or other
taxes, embargoes or exchange controls or the adoption of other
restrictions on foreign trade.
Reliance on Remote Network Access Market
Microcom currently devotes virtually all of its
research and development, manufacturing, marketing and sales
resources to service the remote network access market. The
Company's future financial performance will depend in large part
on continued growth in the remote network access market, which in
turn will depend in part on the growth in the number of
organizations utilizing remote network access products and the
number of applications developed for use with those products.
There can be no assurance that this market will continue to grow
or that the Company will be able to respond effectively to the
evolving requirements of this market. If this market fails to
grow or grows more slowly than the Company currently anticipates,
the Company's business, results of operations and financial
condition would be materially and adversely affected.
Reliance on Indirect Distribution Channels
Sales through indirect distribution channels accounted
for approximately 69% of the Company's net sales in fiscal 1995
and 69% in the first nine months of fiscal 1996. The Company's
agreements with VARs, distributors and OEMs are typically
non-exclusive and in many cases may be terminated by either party
without cause, and many of the Company's VARs, distributors and
OEMs carry competing product lines. Therefore, there can be no
assurance that any VAR, distributor or OEM will continue to
represent the Company's products and the loss of important VARs,
distributors or OEMs could adversely affect the Company's
business, results of operations and financial condition.
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Dependence on Personnel
Microcom believes that its future success will depend
in large part upon its ability to attract and retain highly
skilled engineering, managerial, sales, marketing and product
development personnel. Except with respect to the President and
Chief Executive Officer, the Company does not have employment
contracts with its key personnel and does not maintain any key
person life insurance policies. Competition for such personnel
is intense, especially in the areas of engineering and sales and
marketing. The loss of key management or technical personnel
could materially and adversely affect the Company's business,
results of operations and financial condition, and there can be
no assurance that Microcom will be able to attract and retain the
personnel required to engineer, manage, market or develop its
products and conduct its operations successfully.
Management of Growth
Microcom has recently experienced rapid growth which
has placed, and could continue to place, a significant strain on
the Company's management and operations. If Microcom's
management is unable to manage future growth effectively,
Microcom's business, results of operations and financial
condition could be materially and adversely affected.
Potential Volatility of Stock Price
The market price of the Company's Common Stock has
been, and could be, subject to wide fluctuations in response to,
among other things, quarterly fluctuations in operating results,
adverse circumstances affecting the introduction or market
acceptance of new products or enhancements offered by the
Company, announcements of new products or enhancements by
competitors, changes in earnings estimates by analysts, changes
in accounting principles, sales of Common Stock by existing
holders, loss of key personnel and market conditions in the
industry, shortages of key components as well as general economic
conditions. In addition, stock prices for many technology
companies, including the Company, have experienced significant
volatility for reasons unrelated to operating results. These
fluctuations may adversely affect the market price of the
Company's Common Stock.
Potential Adverse Effects of Anti-Takeover Provisions
The Company's Restated Articles of Organization and
By-laws contain provisions that may make it more difficult for a
third party to acquire, or discourage acquisition bids for, a
majority of the outstanding Common Stock of the Company. These
provisions include the classification of the Company's Board of
Directors and super-majority voting requirements to remove
directors and to amend the provisions relating to the
classification of the Board of Directors and the removal of
directors. In addition, the Company's Restated Articles of
Organization prohibit a holder of 10% or more of the Common Stock
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from engaging in certain transactions with the Company, including
a merger or sale of stock or assets, without the approval of the
holders of at least 80% of the Common Stock. These provisions
could delay or make more difficult a merger, tender offer or
proxy contest involving the Company, and may limit or reduce the
price that investors might be willing to pay in the future for
shares of the Company's Common Stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from
the sale of the Shares by the Selling Shareholders.
SELLING SHAREHOLDERS
Set forth below, with respect to each Selling
Shareholder, is the number of shares of Common Stock beneficially
owned, the number of Shares offered pursuant to this Prospectus
and the number of shares to be owned after completion of the
offering (assuming the sale of all the Shares offered hereunder).
Number of Shares Number of Shares
Total Number of Shares to be To be Owned After
Name of Shares Owned Offered or Sold the Offering (1)
______ _______________ _________________ _________________
The Parthenon Group, Inc. 311,429 266,429(2) 45,000
Walter Y.C. Chang & Sylvia 21,256 21,256(3) 0
S.W. Chang
Sinn Tai Chinn & Sylvia S.W. 2,682 2,682(3) 0
Chang
David Y. Chin & Pauline C. 4,930 4,930(3) 0
Chin
Robert G. Segel 308 308(3) 0
Joanne S. Chertok 304 154(3) 150
Walter C.J. Pang & Carol L. 2,533 2,033(3) 500
Pang
Jimin Ling & Hanna S.H. Ling 1,479 1,479(3) 0
Clarence S. Chinn & Agatha Y. 1,788 1,788(3) 0
Chinn
Franklin K.S. Leong & Darlene 1,448 1,448(3) 0
D. Leong
Kwock Y. Leong 1,448 1,448(3) 0
Gerald W.S. Ching & Gladys 616 616(3) 0
K.S. Ching
James J.L. Fitzgerald & Ida M. 616 616(3) 0
Fitzgerald
Leor Zolman & Lisa Zolman 771 771(3) 0
William M.H. Dung & Daisy P. 1,685 1,685(3) 0
Dung
Steven G. Finn 826 826(3) 0
_________________________
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(1) Assumes that the respective Selling Shareholders will
each sell all of the Shares registered hereunder. Each
Selling Shareholder may sell all or any part of his, her
or its Shares pursuant to this Prospectus.
(2) Such Shares were acquired by Parthenon, a management and
consulting company of which John C. Rutherford, a
director of the Company, is a managing director and fifty
percent shareholder, as compensation for various
consulting services rendered to the Company.
(3) Such Shares were issued by the Company to such Selling
Stockholders in exchange for their shares of preferred
stock of Extension Technology Corp., a Delaware
corporation ("Extension"), on January 5, 1995 in
connection with the merger of Extension with and into a
wholly-owned subsidiary of the Company.
PLAN OF DISTRIBUTION
Parthenon has advised the Company that it intends to
distribute some or all of the 266,429 of its Shares covered by
this Prospectus to certain of its current and former employees
(approximately 62 persons total) as compensation for employment
services rendered as soon as practicable after the date of this
Prospectus. The remaining Shares, and any of the Shares which
may not be distributed by Parthenon as described in the preceding
sentence, will be distributed as described below.
The Selling Shareholders and their agents, donees,
distributees, pledgees and other successors in interest may, from
time to time, offer for sale and sell or distribute the Shares to
be offered by them hereby (a) in transactions executed on the
Nasdaq National Market, or any securities exchange on which the
shares may be traded, through registered broker-dealers (who may
act as principals, pledgees or agents) pursuant to unsolicited
orders or offers to buy, (b) in negotiated transactions, or (c)
through other means. The Shares may be sold from time to time in
one or more transactions at market prices prevailing at the time
of sale or a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated
prices. Such prices will be determined by the Selling
Shareholders or by agreement between the Selling Shareholders and
their underwriters, dealers, brokers or agents. The Shares may
also be offered in one or more underwritten offerings. The
underwriters in an underwritten offering, if any, and the terms
and conditions of any such offering will be described in a
supplement to this Prospectus.
In connection with distribution of the Shares, the
Selling Shareholders may enter into hedging or other option
transactions with broker-dealers in connection with which, among
other things, such broker-dealers may engage in short sales of
the Shares pursuant to this Prospectus in the course of hedging
the positions they may assume with one or more of the Selling
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Shareholders. The Selling Shareholders may also sell Shares
short pursuant to this Prospectus and deliver the Shares to close
out such short positions. The Selling Shareholders may also
enter into option or other transactions with broker-dealers which
may result in the delivery of Shares to such broker-dealers who
may sell such Shares pursuant to this Prospectus. The Selling
Shareholders may also pledge the Shares to a broker-dealer and
upon default the broker-dealer may effect the sales of the
pledged Shares pursuant to this Prospectus.
The distribution of the Shares by the Selling
Shareholders is not subject to any underwriting agreement. Any
underwriters, dealers, brokers or agents participating in the
distribution of the Shares may receive compensation in the form
of underwriting discounts, concessions, commissions or fees from
the Selling Shareholders and/or purchasers of Shares, for whom
they may act. Such discounts, concessions, commissions or fees
will not exceed those customary for the type of transactions
involved. In addition, the Selling Shareholders and any such
underwriters, dealers, brokers or agents that participate in the
distribution of Shares may be deemed to be underwriters under the
Securities Act, and any profits on the sale of Shares by them and
any discounts, commissions or concessions received by any of
such persons may be deemed to be underwriting discounts and
commissions under the Securities Act. Those who act as
underwriter, broker, dealer or agent in connection with the sale
of the Shares will be selected by the Selling Shareholders and
may have other business relationships with the Company and its
subsidiaries or affiliates in the ordinary course of business.
The aggregate proceeds to the Selling Shareholders from
the sale of the Shares offered by the Selling Shareholders hereby
will be the purchase price of such Shares less any broker's
commissions.
In order to comply with the securities laws of certain
states, if applicable, the Shares will be sold in such
jurisdiction only through registered or licensed brokers or
dealers. In addition, in certain states the Shares may not be
sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration of
qualification requirement is available and is complied with.
The Selling Shareholders and any broker-dealer, agent or
underwriter that participates with the Selling Shareholders in
the distribution of the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any
commissions received by such broker-dealers, agents or
underwriters and any profit on the resale of the Shares purchased
by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
Under applicable rules and regulations under the Exchange
Act, any person engaged in the distribution of the Shares offered
hereby may not simultaneously engage in market making activities
with respect to the Shares for a period of two business days
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prior to the commencement of such distribution. In addition, and
without limiting the foregoing, the Selling Shareholders will be
subject to applicable provisions of the Exchange Act and the
rules and regulations thereunder, including, without limitation,
Rules 10b-2, 10b-5, 10b-6 and 10b-7, which provisions may limit
the timing of sales of the Shares by the Selling Shareholders.
There is no assurance that the Selling Shareholders will
sell any or all of the Shares described herein and may transfer,
devise or gift such securities by other means not described
herein. The Company is permitted to suspend the use of this
Prospectus in connection with sales of the Shares by holders
during certain periods of time under certain circumstances
relating to pending corporate developments and public filings
with the Commission and similar events. Expenses of preparing
and filing the registration statement all post-effective
amendments will be borne by the Company.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Common Stock offered hereby is being
passed upon for the Company by Choate, Hall & Stewart, Boston,
Massachusetts. William C. Rogers, a partner of Choate, Hall &
Stewart, is the Clerk of the Company.
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No dealer, salesman or
any other person has been
authorized to give any
information or to make any
representations not contained
in this Prospectus, and, if
given or made, such
information or representations
must not be relied upon as
having been authorized by the
Company or any of the
Underwriters. 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 or solicitation would be
unlawful. Neither the
delivery of this Prospectus
nor any sale hereunder shall,
under any circumstances,
create any implication that
the information contained
herein is correct as of any
time subsequent to the date
hereof.
TABLE OF CONTENTS
Page
Available Information . . . 2
Incorporation of Certain
Documents by Reference . 2
The Company . . . . . . . . 3
Risk Factors . . . . . . . 5
Use of Proceeds . . . . . . 12
Selling Shareholders . . . 12
Plan of Distribution . . . 13
Interests of Named Experts
and Counsel . . . . . . . 15
____________________
308,469 SHARES
MICROCOM, INC.
COMMON STOCK
_____________________
PROSPECTUS
FEBRUARY 6, 1996
______________________
