<PAGE> 1
As filed with the Securities and Exchange Commission on June 4, 1996
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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RADIUS INC.
(Exact name of Registrant as specified in its charter)
CALIFORNIA 68-0101300
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
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215 MOFFETT PARK DRIVE
SUNNYVALE, CALIFORNIA 94089
(408) 541-6100
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
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CHERRIE L. FOSCO
VICE PRESIDENT AND CORPORATE CONTROLLER
RADIUS INC.
215 MOFFETT PARK DRIVE
SUNNYVALE, CALIFORNIA 94089
(408) 541-6100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies to:
EDWIN N. LOWE, ESQ.
JEFFREY R. VETTER, ESQ.
FENWICK & WEST LLP
TWO PALO ALTO SQUARE, SUITE 800
PALO ALTO, CALIFORNIA 94306
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME FOR A PERIOD OF 45 DAYS (OR SUCH LONGER PERIOD, AS MORE FULLY DESCRIBED
HEREIN, THAT MAY APPLY IF USE OF THIS REGISTRATION STATEMENT IS DEFERRED OR
SUSPENDED BY THE REGISTRANT) AFTER THE EFFECTIVE DATE OF THIS REGISTRATION
STATEMENT OR UNTIL THE EARLIER OF SALE OF ALL SHARES REGISTERED HEREUNDER.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] _______________
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ] _______________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) SHARE(1) PRICE(1) REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock 78,000 shs. $3.44 $268,320 $92.52
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act, based
on the last sales price of the Common Stock on the Nasdaq National Market
on May 28, 1996.
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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 SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2
SUBJECT TO COMPLETION DATED JUNE 4, 1996
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PROSPECTUS
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78,000 Shares
RADIUS, INC.
COMMON STOCK
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All of the shares of Common Stock offered hereby are being sold by the Selling
Shareholder named herein under "Selling Shareholder." Such shares are being
offered on a continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, during a period, which is anticipated to be 45 days in length
but which is subject to reduction or extension as described in "Plan of
Distribution," following the date on which the Registration Statement to which
this Prospectus relates becomes effective. No underwriting discounts,
commissions or expenses are payable or applicable in connection with the sale of
such shares. The Common Stock of Radius Inc. (the "Company") is quoted on the
Nasdaq National Market ("NNM") under the symbol "RDUS." The shares of Common
Stock offered hereby will be sold from time to time at then prevailing market
prices, at prices relating to prevailing market prices or at negotiated prices.
On May 31, 1996, the closing price of the Common Stock on the NNM was $3.44.
------------
SEE "RISK FACTORS" COMMENCING ON PAGE 3 FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION
WITH AN INVESTMENT IN THE COMMON STOCK 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.
<TABLE>
<CAPTION>
Proceeds to
Price to the Underwriting Proceeds to Selling
Public Discount Company(1) Shareholders(1)
------------ ------------ ----------- ---------------
<S> <C> <C> <C> <C>
Per Share...... see text above none none see text above
Total.......... see text above none none see text above
</TABLE>
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(1) The shares of Common Stock offered hereby will be sold from time to time
at the then prevailing market prices, at prices relating to prevailing
market prices or at negotiated prices. The Company will pay expenses of
registration estimated at $11,000.
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The date of this Prospectus is _____________, 1996.
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission located at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the Commission's regional offices at Seven World Trade Center, 13th Floor, New
York, New York, 10048; and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. Copies of such material can also be
obtained from the Public Reference Section of the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed
rates. The Company's Common Stock is quoted for trading on the Nasdaq National
Market and reports, proxy statements and other information concerning the
Company may be inspected at the offices of the National Association of
Securities Dealers, Inc., 9513 Key West Avenue, Rockville, Maryland 20850.
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 shares of Common Stock offered hereby. This Prospectus does
not contain all of the information set forth in the Registration Statement and
the exhibits and schedules thereto. For further information with respect to the
Company and the Common Stock offered hereby, reference is made to the
Registration Statement and the exhibits and schedules filed therewith.
Statements contained in this Prospectus as to the contents of any contract or
any other document referred to are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference. A copy of the Registration Statement may be
inspected, without charge, at the offices of the Commission in Washington, D.C.
and copies of all or any part of the Registration Statement may be obtained from
the Public Reference Section of the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, upon the payment of the fees
prescribed by the Commission.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom this Prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the information
that has been incorporated by reference in this Prospectus (not including
exhibits to the information that is incorporated by reference unless such
exhibits are specifically incorporated by reference into the information that
this Prospectus incorporates). Requests should be directed to Ms. Cherrie L.
Fosco, Controller, Radius Inc., 215 Moffett Park Drive, Sunnyvale, California
94089; telephone number (408) 541-6100.
No dealer, salesperson or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell or solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that the information
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herein is correct as of any time subsequent to the date hereof or that there has
been no change in the affairs of the Company since such date.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are incorporated herein by
reference:
(a) The Company's annual report on Form 10-K filed with the Commission for
the fiscal year ended September 30, 1995.
(b) The Company's quarterly report on Form 10-Q filed with the Commission
for the quarter ended December 30, 1995.
(c) The Company's quarterly report on Form 10-Q filed with the Commission
for the quarter ended March 30, 1996.
(d) All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act following the date of this Prospectus
and prior to the termination of the offering contemplated hereby.
(e) The description of the Company's Common Stock contained in the
Company's registration statement on Form 8-A filed with the Commission
on July 13, 1990.
THE COMPANY
The principal executive offices of the Company are located at 215
Moffett Park Drive, Sunnyvale, California 94089 and its telephone number is
(408) 541-6100. In this Prospectus, the term "Radius" or "Company" refers to
Radius Inc., a California corporation, unless the context otherwise requires.
RISK FACTORS
Investors should consider carefully the following factors, in addition
to the other information contained in this Prospectus, before purchasing the
shares of Common Stock offered hereby.
NET CAPITAL DEFICIENCY; CREDITOR DEMANDS AND LITIGATION
As of March 30, 1996, the Company had total assets of approximately
$44.7 million and total current liabilities of approximately $97.1 million. The
Company is delinquent in its accounts payable as payments to certain vendors are
not being made in accordance with vendor terms. Several vendors have initiated
legal action to collect allegedly delinquent accounts and have threatened the
Company with initiation of insolvency or bankruptcy proceedings. In addition,
the Company's largest secured creditor, IBM Credit Corp. ("ICC") has informed
the Company that it is not in compliance with all of its contractual
obligations, including financial covenants, under its agreements with ICC. In
connection with its agreements with ICC, the Company granted to ICC a security
interest in most of its assets.
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The Company has established an unsecured creditors' committee in an
effort to work toward resolving the capital deficiency and creditor litigation
issues outside of formal insolvency or bankruptcy proceedings. The Company has
proposed a plan under which creditors' claims will be exchanged for equity in
the Company. The Company has filed with the Commission a preliminary proxy
statement to seek shareholder approval, if necessary, for the issuance of
convertible preferred stock of the Company in satisfaction of these claims. The
terms of this convertible preferred stock will be determined by negotiations
with the Company's creditors. The Company anticipates that the shares of this
convertible preferred stock will be convertible into a minimum of 40% of the
currently outstanding shares of the Company's Common Stock. Accordingly, the
Company's current shareholders will experience significant dilution depending
upon the number of shares of Common Stock into which these yet to be determined
shares of convertible preferred stock are convertible. There can be no
assurance that such convertible preferred stock will not be convertible into a
significantly higher percentage of the outstanding Common Stock.
The Company has incurred and expects to continue to incur significant
legal expense in responding to creditor demands, litigation, and the workout
process. There can be no assurance that the Company will be able to reach
accommodation with all of its creditors outside of bankruptcy, or that the
terms of any accommodation will not dilute shareholder value or adversely affect
the Company's results of operations. In the event that no accommodation is
reached with its creditors or in the event that not all of the Company's
creditors agree to such an accommodation, there can be no assurance that the
Company will not be placed into an involuntary bankruptcy by its creditors, or
that, if bankruptcy proceedings are initiated, they will not result in the
liquidation of the Company or will not otherwise materially and adversely
affect the Company's results of operations. Even if an accommodation with the
Company's creditors can be reached and if the Company is unable to obtain or
generate additional funds, it still may not be able to repay its other
obligations. Accordingly, the Company may have to reorganize or liquidate
under Chapter 11 or Chapter 7 of the United States Bankruptcy Code.
Absent reaching an agreement with most of its creditors including ICC,
the Company will require additional funding to repay its accounts payable and
other indebtedness, in addition to funding its operating and product
development activities. While the Company is investigating possible financing
alternatives, there can be no assurance that additional financing will be
available or, if available, that the terms of such financing will not adversely
affect the Company's results of operations or result in substantial shareholder
dilution.
CONTINUING OPERATING LOSSES
The Company experienced net operating losses in the fiscal quarters
ended March 30, 1996 and December 30, 1995, and in each of the fiscal years
ended September 30 1993, 1994 and 1995. The Company's ability to continue
operations will depend, initially, upon the Company's success in negotiating
accommodations with substantially all of its creditors and the Company's ability
to repay creditors with whom accommodations cannot be reached (assuming such
remaining creditors have not instituted bankruptcy or other insolvency
proceedings against the Company). In the future, if the Company is able to
continue its operations, the Company's ability to achieve and sustain
profitable operations will depend upon a number of other factors, including the
Company's ability to control costs; to develop innovative and cost-competitive
new products and to bring those products to market in a timely manner; the
continual commercial acceptance of Apple computers and the rate and mix of
Apple computers and related products sold; competitive factors such as new
product introductions,
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product enhancements and aggressive marketing and pricing practices; general
economic conditions; and other factors. The Company has faced and expects to
continue to face increased competition in graphic cards as a result of Apple's
transition of its product line to the PCI Bus. For these and other reasons,
there can be no assurance that the Company will be able to achieve profitability
in the near term, if at all.
FLUCTUATIONS IN OPERATING RESULTS
The Company has experienced substantial fluctuations in operating
results. The Company's customers generally order on an as-needed basis, and
the Company has historically operated with relatively small backlogs.
Quarterly sales and operating results depend heavily on the volume and timing
of bookings received during the quarter, which are difficult to forecast. A
substantial portion of the Company's revenues are derived from sales made late
in each quarter, which increases the difficulty in forecasting sales
accurately. Recently, shortages of available cash have delayed the Company's
receipt of products from suppliers and increased shipping and other costs. The
Company recognizes sales upon shipment of product, and allowances are recorded
for estimated uncollectable amounts, returns, credits and similar costs,
including product warranties and price protection. Due to the inherent
uncertainty of such estimates, there can be no assurance that the Company's
forecasts regarding bookings, collections, rates of return, credits and related
matters will be accurate. A significant portion of the operating expenses of
the Company are relatively fixed in nature, and planned expenditures are based
primarily on sales forecasts which, as indicated above, are uncertain. Any
inability on the part of the Company to adjust spending quickly enough to
compensate for any failure to meet sales forecasts or to receive anticipated
collections, or any unexpected increase in product returns or other costs, could
also have an adverse impact on the Company's operating results.
DEPENDENCE ON AND COMPETITION WITH APPLE
Historically, substantially all of the Company's products have been
designed for and sold to users of Apple personal computers, and it is expected
that sales of products for such computers will continue to represent
substantially all of the sales of the Company for the foreseeable future. The
Company's operating results would be adversely affected if Apple should lose
market share, if Macintosh sales were to decline or if other developments were
to adversely affect Apple's business. Furthermore, any difficulty that may be
experienced by Apple in the development, manufacturing, marketing or sale of its
computers, or other disruptions to, or uncertainty in the market regarding,
Apple's business, resulting from these or other factors could result in reduced
demand for Apple computers, which in turn could materially and adversely affect
sales of the Company's products. Recently, Apple has announced large losses,
management changes, headcount reductions, and other significant events which has
led or could lead to uncertainty in the market regarding Apple's business and
products. In addition, news reports indicating that Apple may be or may have
been the target of merger, acquisition, or takeover negotiations, have led or
could lead to uncertainty in the market regarding Apple's business and products.
As software applications for the color publishing and multimedia
markets become more available on platforms other than Macintosh, it is likely
that these other platforms will continue to gain acceptance in these markets.
For example, recently introduced versions of the Windows operating environment
support high performance graphics and video applications similar to those
offered on the Macintosh. There is a risk that this trend will reduce the
support given to Macintosh products by third
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party developers and could substantially reduce demand for Macintosh products
and peripherals over the long term.
A number of the Company's products compete with products marketed by
Apple. As a competitor of the Company, Apple could in the future take steps to
hinder the Company's development of compatible products and slow sales of
the Company's products. The Company's business is based in part on supplying
products that meet the needs of high-end customers that are not fully met by
Apple's products. As Apple improves its products or bundles additional
hardware or software into its computers, it reduces the market for Radius
products that provide those capabilities. For example, the Company believes
that the on-board performance capabilities included in Macintosh Power PC
products have reduced and continue to reduce overall sales for the Company's
graphics cards. In the past, the Company has developed new products as Apple's
progress has rendered existing Company products obsolete. However, in light of
the Company's current financial condition there can be no assurance that the
Company will continue to develop new products on a timely basis or that any
such products will be successful. In order to develop products for the
Macintosh on a timely basis, the Company depends upon access to advance
information concerning new Macintosh products. A decision by Apple to cease
sharing advance product information with the Company would adversely affect the
Company's business.
New products anticipated from and introduced by Apple could cause
customers to defer or alter buying decisions due to uncertainty in the
marketplace, as well as presenting additional direct competition for the
Company. For example, the Company believes that Apple's transition during 1994
to Power PC products caused delays and uncertainties in the market place and
had the effect of reducing demand for the Company's products. In addition,
sales of the Company's products have been adversely affected by Apple's
revamping of its entire product line from Nubus-based to PCI Bus-based
computers. In the past, transitions in Apple's products have been accompanied
by shortages in those products and in key components for them, leading to a
slowdown in sales of those products and in the development and sale by the
Company of compatible products. In addition, it is possible that the
introduction of new Apple products with improved performance capabilities may
create uncertainties in the market concerning the need for the performance
enhancements provided by the Company's products and could reduce demand for such
products.
COMPETITION
The markets for the Company's products are highly competitive, and the
Company expects competition to intensify. Many of the Company's current and
prospective competitors have significantly greater financial, technical,
manufacturing and marketing resources than the Company. The Company believes
that its ability to compete will depend on a number of factors, including the
amount of financial resources available to the Company, whether the Company can
reach an accommodation with its creditors, success and timing of new product
developments by the Company and its competitors, product performance, price and
quality, breadth of distribution and customer support. There can be no
assurance that the Company will be able to compete successfully with respect to
these factors. In addition, the introduction of lower priced competitive
products could result in price reductions that would adversely affect the
Company's results of operations.
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DEPENDENCE ON SUPPLIERS
The Company outsources the manufacturing and assembly of its products
to third party suppliers. Although the Company uses a number of
manufacturer/assemblers, each of its products is manufactured and assembled by a
single supplier. The failure of a supplier to ship the quantities of a product
ordered by the Company could cause a material disruption in the Company's sales
of that product. In the past, the Company has at times experienced substantial
delays in its ability to fill customer orders for displays and other products,
due to the inability of certain suppliers to meet their volume and schedule
requirements and, more recently, due to the Company's shortages in available
cash. Such shortages have caused some suppliers to put the Company on a cash
or prepay basis and/or to require the Company provide security for their risk
in procuring components or reserving manufacturing time, and there is a risk
that suppliers will discontinue their relationship with the Company. In the
past, the Company has been vulnerable to delays in shipments from suppliers
because the Company has sought to manage its use of working capital by, among
other things, limiting the backlog of inventory it purchases. More recently,
this vulnerability has been exacerbated by the Company's shortages in cash
reserves. Delays in shipments from suppliers can cause fluctuations in the
Company's short term results and contribute to order cancellations. The
Company currently has arranged payment terms for certain of its major suppliers
such that certain of the Company's major customers pay these suppliers directly
for products ordered and shipped.
The Company is also dependent on sole or limited source suppliers for
certain key components used in its products, including certain digital to
analog converters, digital video chips, color-calibrated monitors and other
products. Certain other semiconductor components and molded plastic parts are
also purchased from sole or limited source suppliers. The Company purchases
these sole or limited source components primarily pursuant to purchase orders
placed from time to time in the ordinary course of business and has no
guaranteed supply arrangements with sole or limited source suppliers. Although
the Company expects that these suppliers will continue to meet its requirements
for the components, there can be no assurance that they will do so. Certain
suppliers, due to the Company's shortages in available cash, have put the
Company on a cash or prepay basis and/or to require the Company provide security
for their risk in procuring components or reserving manufacturing time, and
there is a risk that suppliers will discontinue their relationship with the
Company. The introduction of new products presents additional difficulties in
obtaining timely shipments from suppliers. Additional time may be needed to
identify and qualify suppliers of new products. Also, the Company has
experienced delays in achieving volume production of new products due to the
time required for suppliers to build their manufacturing capacity. An extended
interruption in the supply of any of the components for the Company's products,
regardless of the cause, could have an adverse impact on the Company's results
of operations. The Company's products also incorporate components, such as
VRAMs, DRAMs and ASICs that are available from multiple sources but have been
subject to substantial fluctuations in availability and price. Since a
substantial portion of the total material cost of the Company's products is
represented by these components, significant fluctuations in their price and
availability could affect its results of operations.
TECHNOLOGICAL CHANGE; CONTINUING NEED TO DEVELOP NEW PRODUCTS
The personal computer industry in general, color publishing and video
applications within the industry, are characterized by rapidly changing
technology, often resulting in short product life cycles and rapid price
declines. The Company believes that its success will be highly dependent on
its ability to develop innovative and cost-competitive new products and to
bring them to the marketplace in a
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timely manner. Should the Company fail to introduce new products on a timely
basis, the Company's operating results could be adversely affected.
Technological innovation is particularly important for the Company, since its
business is based on its ability to provide functionality and features not
included in Apple's products. As Apple introduces new products with increased
functionality and features, the Company's business will be adversely affected
unless it develops new products that provide advantages over Apple's latest
offerings. Continued reduction in the available cash resources of the Company
could result in the interruption or cancellation of research and product
development efforts.
The Company anticipates that the video editing industry will follow the
pattern of the professional publishing industry in which desktop publishing
products, including those produced by Radius, replaced more expensive,
proprietary products, and the Company also anticipates that this evolution will
lead to a significant increase in the purchase and use of video editing
products. There is a risk that this evolution will not occur in the video
editing industry as expected by the Company, or that it will occur at a slower
pace than anticipated.
The introduction of new products is inherently subject to risks of
delay. Should the Company fail to introduce new products on a timely basis,
the operating results of the Company could be adversely affected. The
introduction of new products and the phasing out of older products will require
the Company to carefully manage its inventory to avoid inventory obsolescence
and may require increases in inventory reserves. The long lead times -- as
much as three to five months -- associated with the procurement of certain
components (principally displays and ASICs) exposes the Company to greater risk
in forecasting the demand for new products. There can be no assurance that the
Company forecasts regarding new product demand and its estimates of appropriate
inventory levels will be accurate. Moreover, no assurance can be given that
the Company will be able to cause all of its new products to be manufactured at
acceptable manufacturing yields or that the Company will obtain market
acceptance for these products.
DISTRIBUTION
The Company's primary means of distribution is through a limited number
of third-party distributors and master resellers. As a result, the Company's
business and financial results are highly dependent on the amount of the
Company's products that is ordered by these distributors and resellers. Such
orders are in turn dependent upon the continued viability and financial
condition of these distributors and resellers as well as on their ability to
resell such products and maintain appropriate inventory levels. This risk may
also affect the Company's supply of products under arrangements wherein certain
of the Company's major suppliers rely on certain of the Company's major
customers for payment. Due in part to the historical volatility of the
personal computer industry, certain of the Company's resellers have from time
to time experienced declining profit margins, cash flow shortages and other
financial difficulties. The future growth and success of the Company will
continue to depend in large part upon its reseller channels. If its resellers
were to experience financial difficulties, the Company's results of operations
could be adversely affected.
INTERNATIONAL SALES
During the second fiscal quarter, the Company's international sales
were primarily made through distributors and the Company's subsidiary in
Japan. Effective April 1, 1996, the Company has appointed an exclusive
distributor for Japan. The Company expects that international sales will
represent a significant portion of its net sales and that it will be subject to
the normal risks of
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international sales such as currency fluctuations, longer payment cycles,
export controls and other governmental regulations and, in some countries, a
lesser degree of intellectual property protection as compared to that provided
under the laws of the United States. In addition, demand for the Company's
products in Japan could be affected by the transition of its Japanese sales and
marketing efforts from Radius' subsidiary to a distributor. Additionally,
fluctuations in exchange rates could affect demand for the Company's products.
If for any reason exchange or price controls or other restrictions on foreign
currencies are imposed, the Company's business and operating results could be
materially adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's success depends to a significant degree upon the continued
contributions of its key management, marketing, product development and
operational personnel and the Company's ability to retain and continue to
attract highly skilled personnel. Competition for employees in the computer
industry is intense, and there can be no assurance that the Company will be able
to attract and retain qualified employees. The Company has recently made a
number of management changes, including the departure of its Chief Financial
Officer and three other Vice Presidents, and has had substantial layoffs and
other employee departures. As the company's financial difficulties continue, it
has become increasingly difficult for it to hire new employees and retain key
management and current employees. Moreover, the terms of any arrangement with
creditors may require changes in Board composition or management. The Company
does not carry any key person life insurance with respect to any of its
personnel.
DEPENDENCE ON PROPRIETARY RIGHTS
The Company relies on a combination of patent, copyright, trademark and
trade secret protection, nondisclosure agreements and licensing arrangements to
establish and protect its proprietary rights. The Company has a number of
patents and patent applications and intends to file additional patent
applications as it considers appropriate. There can be no assurance that
patents will issue from any of these pending applications or, if patents do
issue, that any claims allowed will be sufficiently broad to protect the
Company's technology. In addition, there can be no assurance that any patents
that may be issued to the Company will not be challenged, invalidated or
circumvented, or that any rights granted thereunder would provide proprietary
protection to the Company. The Company has a number of trademarks and
trademark applications. There can be no assurance that litigation with respect
to trademarks will not result from the Company's use of registered or common
law marks, or that, if litigation against the Company were successful, any
resulting loss of the right to use a trademark would not reduce sales of the
Company's products in addition to the possibility of a significant damages
award. Although, the Company intends to defend its proprietary rights,
policing unauthorized use of proprietary technology or products is difficult,
and there can be assurance that the Company's efforts will be successful. The
laws of certain foreign countries may not protect the proprietary rights of the
Company to the same extent as do the laws of the United States.
The Company has received, and may receive in the future, communications
asserting that its products infringe the proprietary rights of third parties,
and the Company is engaged and has been engaged in litigation alleging that the
Company's products infringe others' patent rights. As a result of such claims
or litigation, it may become necessary or desirable in the future for the
Company to obtain licenses relating to one or more of its products or relating
to current or future technologies, and there can be no assurance that it would
be able to do so on commercially reasonable terms.
9
<PAGE> 11
VOLATILITY OF STOCK PRICES; DILUTION
The price of the Company's Common Stock has fluctuated widely in the
past. Management believes that such fluctuations may have been caused by
announcements of new products, quarterly fluctuations in the results of
operations and other factors, including changes in conditions of the personal
computer industry in general and of Apple Computer in particular, and changes in
the Company's results of operations and financial condition. Stock markets, and
stocks of technology companies in particular, have experienced extreme price
volatility in recent years. This volatility has had a substantial effect on the
market prices of securities issued by the Company and other high technology
companies, often for reasons unrelated to the operating performance of the
specific companies. Due to the factors referred to herein, the dynamic nature of
the Company's industry, general economic conditions and other factors, the
Company's future operating results and stock prices may be subject to
significant volatility in the future. Such stock price volatility for the Common
Stock has in the past provoked securities litigation, and future volatility
could provoke litigation in the future that could divert substantial management
resources and have an adverse effect on the Company's results of operations.
The Company's Common Stock is listed on the NASDAQ national market
pursuant to an agreement containing certain financial requirements with which
the Company is currently not in compliance. NASDAQ has granted the Company a
limited conditional waiver with respect to these requirements which will expire
on June 30, 1996 at which time the Company must be in compliance with all of the
requirements for listing on the NASDAQ national market. There is no assurance
that the Company will fulfill the conditions in the times prescribed by NASDAQ,
or that NASDAQ will deem that the Company has not fulfilled such conditions.
In its attempt to restructure its debt, the Company has proposed
exchanging equity in the Company in full or partial satisfaction of creditor
claims. Although the Company has no agreements or understandings with respect to
the issuance of additional equity securities to creditors, the issuance of any
additional equity in the Company could exert downward pressure or otherwise
affect the volatility of the price of the Company's Common Stock.
10
<PAGE> 12
SELLING SHAREHOLDERS
The following table sets forth certain information known to the Company
with respect to the beneficial ownership of the Company's Common Stock as of May
28, 1996 by the Selling Shareholder named below (without regard to shares sold
by such person pursuant to this Prospectus). The Selling Shareholder acquired
the shares of Common Stock offered hereby in connection with the private
placement transaction occurring in June 1995 (the "Private Placement"). The
Selling Shareholder has not had any position, office or other material
relationship with the Company within the past three years. The following table
assumes the Selling Shareholder sells all of the shares held by it in this
offering. The Company is unable to determine the exact number of shares that
will actually be sold.
Assignees of the Selling Shareholder, if any, who acquire shares of
Common Stock of the Company from the Selling Shareholder and satisfy certain
conditions are entitled to the same registration rights as the Selling
Shareholder. If any such assignee wishes to sell shares hereunder, this
Prospectus will be amended or supplemented to name such assignee as a Selling
Shareholder.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Prior to Offering Owned After Offering
----------------------- --------------------
Shares Being
Name Number Percent Offered Number Percent
- -------- ------- -------- ------------ ------- -------
<S> <C> <C> <C> <C> <C>
Wajilei Foundation 78,000 * 78,000 -- --
</TABLE>
- ---------------
* Less than 1%.
11
<PAGE> 13
PLAN OF DISTRIBUTION
In connection with the Private Placement, the Selling Shareholder
entered into a Registration Rights Agreement (the "Agreement") with the
Company. The Registration Statement of which this Prospectus forms a part has
been filed pursuant to the Agreement. To the Company's knowledge, the Selling
Shareholder has not entered into any agreement, arrangement or understanding
with any particular broker or market maker with respect to the shares offered
hereby, nor does the Company know the identity of the brokers or market makers
which will participate in the offering.
The shares of Common Stock covered hereby may be offered and sold from
time to time by the Selling Shareholder. The Selling Shareholder will act
independently of the Company in making decisions with respect to timing, manner
and size of each sale. Such sales may be made over the NNM or otherwise, at
prices and on terms then prevailing or at prices related to the then market
price, or in negotiated transactions. The shares may be sold by one or more of
the following: (a) a block trade in which the broker-dealer engaged by the
Selling Shareholder will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by the broker-dealer as principal and resale by such broker or
dealer for its account pursuant to this Prospectus; and (c) ordinary brokerage
transactions and transactions in which the broker solicits purchasers. The
Company has been advised by the Selling Shareholder that it was not, as of the
date hereof, entered into any arrangement with a broker-dealer for the sale of
shares through a block trade, special offering, or secondary distribution of a
purchase by a broker-dealer. In effecting sales, broker-dealers engaged by the
Selling Shareholder may arrange for other broker-dealers to participate.
Broker-dealers will receive commissions or discounts from the Selling
Shareholder in amounts to be negotiated immediately prior to the sale.
In offering the shares, the Selling Shareholder and any broker-dealers
who execute sales for the Selling Shareholder may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any profits realized by the Selling Shareholder and the compensation
of such broker-dealer may be deemed to be underwriting discounts and
commissions.
The Selling Shareholder has advised the Company that, during such time
as they may be engaged in a distribution of the shares of Common Stock included
herein, they will comply with Rules 10b-6 and 10b-7 under the Exchange Act and,
in connection therewith, the Selling Shareholder has agreed not to engage in
any stabilization activity in connection with any securities of the Company, to
furnish copies of this Prospectus to each broker-dealer through which the
shares of Common Stock included herein may be offered, and not to bid for or
purchase any securities of the Company or attempt to induce any person to
purchase any securities of the Company except as permitted under the Exchange
Act. The Selling Shareholder has also agreed to inform the Company and
broker-dealers through whom sales may be made hereunder when the distribution
of the shares is completed.
Rule 10b-6 under the Exchange Act prohibits participants in a
distribution from bidding for or purchasing for an account in which the
participant has a beneficial interest, any of the securities that are the
subject of the distribution. Rule 10b-7 under the Exchange Act governs
12
<PAGE> 14
bids and purchases made to stabilize the price of a security in connection with
a distribution of the security.
The Agreement provides that the Registration Statement of which this
Prospectus forms a part will remain effective for at least 45 consecutive days.
Notwithstanding the foregoing, upon the occurrence of certain events the Company
may suspend use of this Prospectus. However, the Company may not exercise its
right to suspend use of this Prospectus for the first 30 days after the
Registration Statement of which this Prospectus forms a part has been declared
effective; and the period during which the Company is required to maintain the
effectiveness of such Registration Statement will be extended by 1.5 days for
each day during which use of this Prospectus is suspended.
This offering will terminate on the earlier of (a) the period described
in the previous paragraph during which the Company is required to maintain the
effectiveness of the Registration Statement of which this Prospectus is a part;
or (b) the date on which all shares offered hereby have been sold by the
Selling Shareholder. There can be no assurance that the Selling Shareholder
will sell any or all of the shares of Common Stock offered hereby.
Upon the occurrence of any of the following events, this Prospectus
will be amended to include additional disclosure before offers and sales of the
securities in question are made: (a) to the extent the securities are sold at a
fixed price or at a price other than the prevailing market price, such price
would be set forth in the Prospectus, (b) if the securities are sold in block
transactions and the purchaser acting in the capacity of an underwriter wishes
to resell, such arrangements would be described in the Prospectus, (c) if the
Selling Shareholder sells to a broker-dealer acting in the capacity as an
underwriter, such broker-dealer will be identified in the Prospectus and (d) if
the compensation paid to broker-dealers is other than usual and customary
discounts, concessions or commissions, disclosure of the terms of the
transaction would be included in the Prospectus.
LEGAL MATTERS
The validity of the issuance of the shares of Common Stock offered
hereby will be passed upon for the Company by Fenwick & West LLP, Two Palo Alto
Square, Suite 800, Palo Alto, California 94306.
EXPERTS
The consolidated financial statements and schedule of Radius Inc.
appearing in Radius Inc.'s Annual Report (Form 10-K) for the year ended
September 30, 1995 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon, (which contains an explanatory paragraph
with respect to the uncertainty of the Company's ability to continue as a going
concern), including therein and incorporated herein by reference. Such
consolidated financial statements and schedule are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
13
<PAGE> 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RADIUS INC.
78,000 Shares of
Common Stock
----------------
PROSPECTUS
----------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses to be paid by the Registrant in connection with
this offering are as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee $ 92.52
Accounting fees and expenses 5,000.00
Legal fees and expenses 5,000.00
Miscellaneous 904.24
----------
Total $11,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The provisions of Section 317 of the California Corporations Code,
Article V of the Registrant's Articles of Incorporation and Article VI of the
Registrant's Bylaws provide for indemnification to the fullest extent permitted
by law for expenses, judgments, fines, settlements and other amounts actually
and reasonably incurred in connection with any proceeding arising by reason of
the fact that any person is or was a director, officer or employee of the
Registrant. This indemnification may be sufficiently broad to permit
indemnification of the Registrant's officers and directors for liabilities
arising under the Securities Act. In addition, Article IV of the Registrant's
Articles of Incorporation provides that the liability of the Registrant's
directors shall be eliminated to the fullest extent permissible under the
California Law.
The Registrant has entered into Indemnity Agreements with each of its
current directors to give such directors additional contractual assurances
regarding the scope of the indemnification and liability limitations set forth
in the Registrant's Articles of Incorporation and Bylaws.
The Registrant currently carries a director and officer liability
insurance policy with a per claim and annual aggregate coverage limit of
$10 million.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference
herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- -------------
<S> <C> <C>
4.01 -- Specimen Certificate for shares of Common Stock of the
Registrant.(1)
4.02 -- Form of Registration Rights Agreement between the Registrant and
certain shareholders.(2)
</TABLE>
II-1
<PAGE> 17
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title
- ------- -------------
<S> <C> <C>
4.03 -- The Registrant's Sixth Amended and Restated Articles
of Incorporation.(3)
4.04 -- Certificate of Amendment of Registrant's Sixth Amended and
Restated Articles of Incorporation.(4)
4.05 -- The Registrant's Bylaws.(5)
5.01 -- Opinion of Fenwick & West regarding the legality of the
securities being issued.
23.01 -- Consent of Ernst & Young LLP, Independent Auditors.
23.02 -- Consent of Fenwick & West (included in Exhibit 5.01).
24.01 -- Power of Attorney (see page II-4).
</TABLE>
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-35769) filed with the Commission on July 6, 1990.
(2) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 (File No. 33-62049) filed with the Commission on August 23, 1995.
(3) Incorporated by reference to the Registrant's Report on Form 10-K for the
fiscal year ended September 30, 1990.
(4) Incorporated by reference to the Registrant's Report on Form 10-K for the
fiscal year ended September 30, 1994.
(5) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 (File No. 33-47525) filed with the Commission on April 29, 1992.
ITEM 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement: (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933 (the
"Securities Act"); (ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information in the Registration Statement;
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (i) and (ii) do not apply if the information required
to be included in a post-effective amendment is contained in periodic reports
filed with or furnished to the Securities and Exchange Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934 (the "Exchange Act") that are incorporated by reference in the
Registration Statement.
II-2
<PAGE> 18
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed 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.
(4) 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 that is incorporated by
reference in this 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.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all for the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on the 28th day of
May, 1996.
RADIUS INC.
By: /s/CHARLES W. BERGER
-----------------------------------
Charles W. Berger
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Charles W. Berger and Cherrie L. Fosco, and each
of them, his attorneys-in-fact and agents, each with the power of substitution,
for him or her and in his or her name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to sign any registration
statement for the same offering covered by this Registration Statement that is
to be effective upon filing pursuant to Rule 462(b) promulgated under the
Securities Act of 19933, and all post-effective amendments thereto, and to file
the same, with all exhibits thereto and all documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agent, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or his, her or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ---------------------------- ------------
<S> <C> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/CHARLES W. BERGER President, Chief Executive May 28, 1996
- ----------------------- Officer and Chairman of the
Charles W. Berger Board of Directors
PRINCIPAL FINANCIAL OFFICER:
/s/CHARLES W. BERGER Acting Chief Financial Officer May 28, 1996
- -----------------------
Charles W. Berger
</TABLE>
II-4
<PAGE> 20
PRINCIPAL ACCOUNTING OFFICER:
/s/ CHERRIE L. FOSCO Vice President and May 28, 1996
- ---------------------------- Corporate Controller
Cherrie L. Fosco
ADDITIONAL DIRECTORS:
/s/ MICHAEL D. BOICH Director May 28, 1996
- ----------------------------
Michael D. Boich
/s/ REGIS McKENNA Director May 28, 1996
- ----------------------------
Regis McKenna
/s/ DAVID B. PRATT Director May 28, 1996
- ----------------------------
David B. Pratt
II-5
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Title Page
- ------- ------------- ----
<S> <C> <C> <C>
4.01 -- Specimen Certificate for shares of Common Stock of the
Registrant.(1)
4.02 -- Form of Registration Rights Agreement between the Registrant
and certain shareholders.(2)
4.03 -- The Registrant's Sixth Amended and Restated Articles
of Incorporation.(3)
4.04 -- Certificate of Amendment of Registrant's Sixth Amended and
Restated Articles of Incorporation.(4)
4.05 -- The Registrant's Bylaws.(5)
5.01 -- Opinion of Fenwick & West regarding the legality of the
securities being issued.
23.01 -- Consent of Ernst & Young LLP, Independent Auditors.
23.02 -- Consent of Fenwick & West (included in Exhibit 5.01).
24.01 -- Power of Attorney (see page II-4).
</TABLE>
- ---------------
(1) Incorporated by reference to the Registrant's Registration Statement on
Form S-1 (File No. 33-35769) filed with the Commission on July 6, 1990.
(2) Incorporated by reference to the Registrant's Registration Statement on
Form S-3 (File No. 33-62049) filed with the Commission on August 23, 1995.
(3) Incorporated by reference to the Registrant's Report on Form 10-K for the
fiscal year ended September 30, 1990.
(4) Incorporated by reference to the Registrant's Report on Form 10-K for the
fiscal year ended September 30, 1994.
(5) Incorporated by reference to the Registrant's Registration Statement on
Form S-8 (File No. 33-47525) filed with the Commission on April 29, 1992.
<PAGE> 1
[FENWICK & WEST LLP LETTERHEAD]
June 4, 1996
Radius Inc.
215 Moffett Park Drive
Sunnyvale, CA 94089
Gentlemen/Ladies:
At your request, we have examined the Registration Statement on Form
S-3 (the "Registration Statement") to be filed by you with the Securities and
Exchange Commission on or about June 4, 1996 in connection with the registration
under the Securities Act of 1933, as amended, of an aggregate of 78,000 shares
of your Common Stock, no par value (the "Stock"), all of which are presently
issued and outstanding and will be sold by a selling shareholder (the "Selling
Shareholder").
As your counsel, we have examined the proceedings relating to the
issuance of the Stock to the Selling Shareholder. It is our opinion that the
Stock is legally issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us, if any, in the
Registration Statement and any amendments thereto.
Very truly yours,
FENWICK & WEST LLP
<PAGE> 1
EXHIBIT 23.01
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Radius Inc. for the
registration of 78,000 shares of its common stock and to the incorporation by
reference therein of our report dated December 8, 1995 (except Note 11 as to
which the date is December 27, 1995) with respect to the consolidated financial
statements and schedule of Radius Inc. included in its Annual Report (Form 10-K)
for the year ended September 30, 1995 filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Palo Alto, California
May 29, 1996
