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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 9, 2000
REGISTRATION NO. 333-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ZOOM TELEPHONICS, INC.
(Exact Name of Registrant as Specified in Its Charter)
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CANADA NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
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207 SOUTH STREET
BOSTON, MA 02111
(617) 423-1072
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
-----------------------------------
FRANK B. MANNING
PRESIDENT AND CHIEF EXECUTIVE OFFICER
207 SOUTH STREET
BOSTON, MA 02111
(617) 423-1072
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
----------------------------------
COPIES TO:
LAWRENCE M. LEVY, ESQUIRE
BROWN, RUDNICK, FREED & GESMER
ONE FINANCIAL CENTER
BOSTON, MASSACHUSETTS 02111
TEL: (617) 856-8200
FAX: (617) 856-8201
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
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 Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If 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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CALCULATION OF REGISTRATION FEE
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AMOUNT PROPOSED PROPOSED
TITLE OF EACH CLASS OF TO BE MAXIMUM OFFERING MAXIMUM AGGREGATE AMOUNT OF REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE OFFERING PRICE FEE
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Common Stock, no par value 1,500,000 5.03(1) $7,545,000(1) $1,992
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(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) of the Securities Act of 1933 based upon the
average of the high and low prices of Zoom's common stock as reported
on the Nasdaq National Market on June 5, 2000.
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
==============================================================================
<PAGE>
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
A REGISTRATION STATEMENT RELATING TO THE COMMON STOCK OFFERED HEREBY HAS BEEN
FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION. THE COMMON
STOCK MAY NOT BE SOLD UNTIL THIS REGISTRATION STATEMENT IS DECLARED EFFECTIVE BY
THE SEC. THIS PROSPECTUS IS NOT AN OFFER TO SELL THE COMMON STOCK AND IT IS NOT
SEEKING AN OFFER TO BUY THE COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS
NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE ___, 2000
PROSPECTUS
ZOOM TELEPHONICS, INC.
1,500,000 Shares
Common Stock
We are offering up to 1,500,000 shares of our common stock under this
prospectus. The offering price of the shares will be determined pursuant to our
negotiations with the purchasers. This prospectus allows us to issue shares of
common stock within the next two years, which means:
- we may issue the shares of common stock offered under this
prospectus from time to time;
- we will provide a prospectus supplement each time we issue shares of
common stock under this prospectus; and
- each prospectus supplement will contain information about the terms
of the offering to which it relates, including the offering price,
and may also add, update or change information contained in this
prospectus.
You should carefully read this prospectus and any prospectus supplement before
you invest.
Our common stock is traded on the Nasdaq National Market under the symbol
"ZOOM". On June 5, 2000, the last reported sale price of our common stock on the
Nasdaq National Market was $5.0625 per share.
AN INVESTMENT IN THE COMMON STOCK OFFERED UNDER THIS PROSPECTUS INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
Neither the SEC nor any state securities commission has approved or disapproved
of these securities or determined if this prospectus is truthful or complete.
Any representation to the contrary is a criminal offense.
The date of this prospectus is June ___, 2000.
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PROSPECTUS SUMMARY
THIS SUMMARY BRIEFLY DESCRIBES OUR BUSINESS AND OUR PROPOSED SALE OF COMMON
STOCK UNDER THIS PROSPECTUS.
ABOUT ZOOM TELEPHONICS
We design, produce and market dial-up and broadband modems, wireless local area
network products, and other communications products that enable people to
connect their computers through the Internet, the dial-up telephone network and
local area networks.
Our objective is to build upon our position as a leading supplier of Internet
access devices and to take advantage of a number of current and emerging trends
in computer connectivity including Internet access, higher data rates, broadband
applications, and alternatives to traditional wired local area networks. We
intend to achieve our objective by:
- building upon and exploiting our Zoom and Hayes brands;
- continuing to develop dial-up, cable and DSL modems, wireless
networking, home phoneline networking and gateway products;
- expanding our current distribution channels of high-volume
retailers, value-added resellers, Internet Service Providers and
distributors to also include cable and telephone companies;
- expanding our international product line and distribution network;
- maintaining low costs through cost-effective product designs and
careful sourcing of components and outsourced manufacturing; and
- exploring strategic acquisitions.
Our current products and products under development are as follows:
DIAL-UP MODEMS. To date our revenues have come primarily from sales of our
dial-up modems. Our dial-up modems connect personal computers and other devices
to the local telephone line for transmission of data, fax, voice, and video. Our
dial-up modems enable personal computers and other devices to connect to other
computers and networks, including the Internet and local area networks, at top
data speeds of 56,000 bits per second. We also have a line of integrated
services digital network products, which can transmit and receive data
simultaneously at up to 128,000 bits per second.
In March and April of 1999, we acquired substantially all of the modem assets of
Hayes Microcomputer Products, Inc., a former leader in the modem industry. We
now sell and market dial-up modems under the Zoom and Hayes names, as well as
under various other private-label brands developed for some of our large
accounts.
While we continue to believe there are opportunities to expand our dial-up modem
business in the United States and worldwide, we are also developing new
broadband, home gateway, and networking products, all of which provide faster
connection speeds than dial-up modems.
WIRELESS LOCAL AREA NETWORK PRODUCTS. Wireless local area network products
enable the connection of a notebook or desktop computer to another computer or
an existing local area network using a wireless data communication standard. We
are currently shipping a variety of models of wireless products.
CABLE MODEMS. Cable modems provide a high-bandwidth connection to the Internet
through a cable-TV cable that connects to compatible equipment at or near the
cable service provider. We expect to begin shipping a line of cable modems
during the year 2000. Our first cable modems are expected to incorporate the
DOCSIS standard, the standard used in the United States and many other
countries. One of our models is expected to connect to a PC through its Ethernet
port, and one model is expected to connect to a PC's internal PCI bus. We are
also pursuing Cablelabs qualification for these modems. Obtaining Cablelabs
qualification is difficult and there is no guarantee that we will obtain
qualification.
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DSL MODEMS. DSL modems provide a high-bandwidth connection to the Internet
through a standard telephone line that connects to compatible DSL equipment in
or near the central telephone office. We expect to begin shipping a line of DSL
modems during the year 2000. Our first DSL modems, which are expected to be
offered as an external USB model and an internal PCI model, are expected to
incorporate the standards that are most popular with U.S. telephone companies
and Internet Service Providers, such as G.Lite and G.DMT. We expect to pursue
telephone company qualification for our DSL modems. We cannot guarantee that we
will obtain qualification.
We are a Canadian holding company. Our operations are carried out by our
wholly-owned subsidiary, Zoom Telephonics, Inc., a Delaware corporation. Our
principal executive offices are located at 207 South Street, Boston, MA 02111.
THE OFFERING
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Common Stock offered under this prospectus ........ 1,500,000 shares
Common Stock outstanding after the offering ....... 9,244,547 shares
Nasdaq National Market Symbol ..................... ZOOM
Use of Proceeds ................................... For general corporate purposes, including acquisitions
or investments in complementary businesses, working
capital, research and development, sales and marketing, and
expansion of operations and infrastructure.
</TABLE>
The number of shares outstanding after the offering is based on 7,744,547 shares
our common stock that were outstanding as of June 5, 2000. The number of shares
outstanding after the offering does not include 1,695,566 shares issuable upon
exercise of outstanding stock options to purchase 1,695,566 shares of our common
stock, which were outstanding as of June 5, 2000.
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RISK FACTORS
THE COMMON STOCK WE ARE OFFERING UNDER THIS PROSPECTUS AND IN ANY PROSPECTUS
SUPPLEMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS
OR IN ANY PROSPECTUS SUPPLEMENT BEFORE DECIDING TO PURCHASE THE COMMON STOCK.
WE MAY CONTINUE TO INCUR SIGNIFICANT LOSSES.
We incurred net losses of approximately $1.4 million in fiscal 1999 and $941,415
in the first quarter of fiscal 2000. Although we have developed a strategic
business plan under which we expect to become profitable, we cannot predict when
we will become profitable, if at all.
We anticipate that our expenses will increase substantially in the foreseeable
future as we:
- develop our broadband access products, such as cable and DSL modems
and wireless local area network and Internet gateway products;
- increase our efforts to expand our sales channels to include cable
and telephone companies; and
- increase our employee headcount and level of marketing in
anticipation of our future growth.
Because we expect to continue to invest in our business ahead of future
revenues, we expect that we will continue to incur operating losses for the
foreseeable future. We cannot guarantee that our expenditures will significantly
increase our revenues, if at all. If we fail to significantly increase our
revenues as we implement our strategies, our losses will increase and our
business will be harmed.
CONTINUED FLUCTUATIONS IN OUR OPERATING RESULTS COULD CAUSE THE MARKET PRICE OF
OUR COMMON STOCK TO FALL.
Our operating results have fluctuated in the past and are likely to fluctuate in
the future. It is possible that our revenues and operating results will be below
the expectations of securities analysts and investors in future quarters. If we
fail to meet or surpass the expectations of securities analysts or investors,
the market price of our common stock will most likely fall. Factors that have
affected and may in the future affect our operating results include:
- the overall demand for dial-up, cable and DSL modems, wireless local
area network products, and other communication products;
- the timing of new product announcements and releases, such as our
cable and DSL modems, by us and our competitors;
- successful testing and qualification of our products, such as
Cablelabs qualification of cable modems and telephone company
qualification of DSL modems;
- variations in the number and mix of products we sell;
- the timing of customer orders and adjustments of delivery schedules
to accommodate our customers' programs;
- the availability of components, materials and labor necessary to
produce our products;
- the timing and level of expenditures in anticipation of future
sales;
- pricing and other competitive conditions; and
- seasonality.
TO STAY IN BUSINESS WE MAY REQUIRE FUTURE ADDITIONAL FUNDING WHICH WE MAY BE
UNABLE TO OBTAIN ON FAVORABLE TERMS, IF AT ALL.
Over time, we may require additional financing for our operations or potential
acquisitions. This additional financing may not be available to us on a timely
basis if at all, or, if available, on terms acceptable to us. Our business
strategy involves significant increases in our expenditures for a variety of
sales and marketing activities and product research and development. If we fail
to obtain acceptable additional financing when needed, we may
4
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be required to reduce our planned expenditures or forego acquisition
opportunities, which could reduce our revenues, increase our losses, and harm
our business. Moreover, additional equity financing could dilute the per share
value of our shares for existing stockholders, while additional debt financing
could restrict our ability to make capital expenditures or incur additional
indebtedness, all of which would impede our ability to succeed.
WE MAY HAVE DIFFICULTY MANAGING THE EXPANSION OF OUR OPERATIONS, AND ANY FAILURE
TO DO SO WILL HARM OUR BUSINESS.
We anticipate growth in the number of our employees and the scope of our
operations, as we attempt to grow our customer base and develop and seize market
opportunities in the broadband access industry. Our expansion could place a
significant strain on our senior management team and operational and financial
resources. To manage the anticipated growth of our operations and personnel, we
may need to improve or replace our existing operational and financial systems,
procedures and controls. We also will need to expand, train and manage our
growing employee base as well as expand and maintain close coordination among
our sales and marketing, research and development, finance, administrative and
operations personnel. We cannot guarantee that our current and future systems,
procedures and controls will be adequate to support our future operations, that
we will be able to hire, train, retain, motivate and manage the required
personnel or that we will be able to identify, manage, and benefit from existing
and potential strategic relationships and market opportunities. If we do not
effectively manage the planning and other process control issues presented by
such an expansion, our business will suffer. If we are unable to undertake new
business due to a shortage of staff or technology resources, our growth will be
impeded. Therefore, there may be times when our opportunities for revenue growth
may be limited by the capacity of our internal resources rather than by the
absence of market demand.
OUR CUSTOMER BASE IS CONCENTRATED AND THE LOSS OF ONE OR MORE OF OUR CUSTOMERS
COULD HARM OUR BUSINESS.
Relatively few customers have accounted for a substantial portion of our net
sales. In fiscal 1999, 27% of our net sales were attributable to two customers.
In the first quarter ended March 31, 2000, 24% of our net sales were
attributable to two customers. Because our customer base is concentrated, a loss
of a significant customer or a reduction or delay in orders or a default in
payment from any of our top customers could significantly reduce our sales.
OUR FAILURE TO MEET CHANGING CUSTOMER REQUIREMENTS AND EMERGING INDUSTRY
STANDARDS WOULD ADVERSELY IMPACT OUR ABILITY TO SELL OUR PRODUCTS.
The market for PC communications products and high-speed broadband access
products is characterized by rapidly changing customer demands and short product
life cycles. Some of our product developments and enhancements have taken longer
than planned and have delayed the availability of our products, which adversely
affected our sales and profitability in the past. Any significant delays in the
future may adversely impact our ability to sell our products, and our results of
operations and financial condition may be adversely affected. Our future success
will depend in large part upon our ability to:
- identify and respond to emerging technological trends in the market;
- develop and maintain competitive products that meet changing
customer demands;
- enhance our products by adding innovative features that
differentiate our products from those of our competitors;
- bring products to market on a timely basis;
- introduce products that have competitive prices; and
- respond effectively to new technological changes or new product
announcements by others.
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OUR FUTURE SUCCESS DEPENDS IN PART ON OUR ABILITY TO ENHANCE OUR EXISTING
PRODUCTS AND TO DEVELOP NEW PRODUCTS.
We have developed and marketed a limited number of different product types. To
date our product introductions have focused on the development and enhancement
of our dial-up modems, wireless products and other communications products. We
believe that our future success will depend in large part on our ability to
enhance our existing products and to develop new products, such as cable and DSL
modems, which meet regulatory and customer requirements. The uncertainties
inherent with product development and introduction create a risk that we will be
unsuccessful in introducing new products or product enhancements on a timely
basis, if at all. Our failure to introduce new products or to enhance our
existing products on a timely basis has in the past and may in the future cause
our stock price to fluctuate. The enhancement and development of our products
are subject to risks associated with new product development of broadband access
products. These risks include:
- unanticipated delays;
- budget overruns;
- technical problems;
- regulatory approval from the Federal Communications Commission and
other regulatory authorities;
- successful testing and qualification of our products, such as
Cablelabs qualification of cable modems and telephone company
qualification of DSL modems; and
- other difficulties that could result in the abandonment or
substantial change in the commercialization of these enhancements or
new products.
OUR AVERAGE SELLING PRICES FOR OUR DIAL-UP MODEMS HAVE DECLINED, WHICH HAS HAD
AN ADVERSE AFFECT ON OUR OPERATING RESULTS.
The dial-up modem industry has been characterized by decline of average selling
prices. The decline in average selling prices is due to a number of factors,
including technological change and competition. As industry standards for cable
and DSL modems continue to evolve, it is likely that there will be an increased
retail distribution of cable and DSL modems, which could put further price
pressure on our dial-up modems and any cable or DSL modems that we introduce in
the future. Decreasing average selling prices could result in decreased revenue
even if the number of units sold increase. As a result of decreased average
selling prices, we have experienced and we may in the future experience
substantial period to period fluctuations in operating results.
OUR OPERATING RESULTS HAVE BEEN ADVERSELY AFFECTED BECAUSE OF PRICE PROTECTION
PROGRAMS.
In 1997, 1998 and, to a lesser extent, in 1999, our operating results were
adversely affected by reductions in average selling prices because we had to
give credits to some of our customers as a result of price protection. We offer
price protection to some of our customers with respect to products these
customers purchase from us. Specifically, when we reduce the price for a
product, the customer receives a credit for the difference between the
customer's original purchase price and our reduced price for the product, for
all unsold product at the time of the price reduction. In fiscal 1999, a slower
decline in our selling prices mitigated the impact of these price reductions.
WE MAY BE SUBJECT TO PRODUCT RETURNS RESULTING FROM DEFECTS IN OR OVERSTOCKING
OF OUR PRODUCTS. PRODUCT RETURNS COULD RESULT IN THE FAILURE TO ATTAIN MARKET
ACCEPTANCE OF OUR PRODUCTS, WHICH WOULD HARM OUR BUSINESS.
If our products contain undetected defects, errors or failures, we could face
- delays in the development of our products,
- numerous product returns, and
- other losses to us or to our customers or end users.
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Any of these occurrences could also result in the loss of or delay in market
acceptance of our products, either of which would harm our business and reduce
our sales. We are also exposed to the risk of product returns from our customers
as a result of contractual stock rotation privileges and our practice of
assisting some of our customers in balancing their inventories. Overstocking has
in the past led and may in the future lead to higher than normal returns.
WE MAY BE UNABLE TO PRODUCE SUFFICIENT QUANTITIES OF OUR PRODUCTS BECAUSE WE
DEPEND ON THIRD-PARTY MANUFACTURERS. IF THESE THIRD-PARTY MANUFACTURERS FAIL TO
PRODUCE QUALITY PRODUCTS AND IN A TIMELY MANNER, OUR ABILITY TO FULFILL OUR
CUSTOMER ORDERS WOULD BE ADVERSELY IMPACTED.
We use contract assemblers located in the United States, Mexico and China to
assemble our products to help assure low costs, rapid market entry and
reliability. Any manufacturing disruption could impair our ability to fulfill
orders. Our failure to fulfill orders would adversely affect our revenues.
Although we work with more than one third-party manufacturer, many of our
products are manufactured by only one manufacturer. Since third parties
manufacture our products and we expect this to continue in the future, our
success will depend, in part, on the ability of third parties to manufacture our
products cost effectively and in sufficient quantities to meet our customer
demand.
We are subject to the following risks because of our reliance on third party
manufacturers:
- reduced management and control of component purchases;
- reduced control over delivery schedules;
- reduced control over quality assurance;
- reduced control over manufacturing yields;
- lack of adequate capacity during periods of excess demand;
- limited warranties on products supplied to us;
- increases in prices;
- interruption of supplies from an assembler as a result of a fire,
natural calamity, strike or other significant event; and
- misappropriation of our intellectual property.
WE MAY BE UNABLE TO OBTAIN CERTAIN COMPONENTS FOR OUR MODEMS BECAUSE OF THE HIGH
DEMAND AND RELATIVELY LOW AVAILABILITY OF THESE COMPONENTS. IF WE FAIL TO OBTAIN
THESE COMPONENTS OUR BUSINESS WOULD BE HARMED BECAUSE WE WOULD BE UNABLE TO
MANUFACTURE CERTAIN PRODUCTS.
Certain components used in our modems, such as tuners, memory components, and
capacitors, are currently in high demand. There is currently a shortage of these
components. If we are unable to obtain these components in a timely manner or at
all, we would be unable to manufacture some of our modem products and our
business would be harmed.
WE MAY BE UNABLE TO PRODUCE SUFFICIENT QUANTITIES OF OUR PRODUCTS BECAUSE WE
OBTAIN CERTAIN KEY COMPONENTS FROM, AND DEPEND ON, CERTAIN SOLE OR LIMITED
SOURCE SUPPLIERS. IF WE ARE UNABLE TO OBTAIN COMPONENTS FROM OUR SOLE OR LIMITED
SOURCE SUPPLIERS, WE WOULD BE UNABLE TO SHIP OUR PRODUCTS IN A TIMELY MANNER AND
OUR RELATIONSHIPS WITH OUR CUSTOMERS WOULD BE HARMED.
We obtain certain key parts, components and equipment from sole or limited
sources of supply. For example, we obtain modem chipsets from Lucent
Technologies and Conexant Systems, Inc. In addition, Intersil is our only
wireless chipset supplier. In the past, we have experienced delays in receiving
shipments of modem chipsets from our sole source suppliers. We may experience
similar delays in the future. Any interruption in the operations of suppliers of
sole or limited source parts could affect our ability to meet our scheduled
product deliveries to our customers.
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Our business would be harmed if any of our sole-source suppliers:
- fail to produce chipset enhancements or new chipsets on a timely
basis;
- stop selling their products or components to us at commercially
reasonable prices; or
- refuse to sell their products or components to us at any price.
If we are unable to obtain a sufficient supply of components from our current
sources, we could experience difficulties in obtaining alternative sources or in
altering product designs to use alternative components. Resulting delays or
reductions in product shipments could damage relationships with our customers
and our customers could decide to purchase products from our competitors.
Inability to meet our customers' demand or a decision by one or more of our
customers to purchase products from our competitors could harm our operating
results.
SALES OF OUR PRODUCTS DEPEND ON THE WIDESPREAD ADOPTION OF BROADBAND ACCESS
PRODUCTS. IF THE DEMAND FOR BROADBAND ACCESS SERVICES DOES NOT DEVELOP, THEN OUR
RESULTS OF OPERATIONS AND FINANCIAL CONDITION COULD BE ADVERSELY AFFECTED.
Although we are continuing to enhance our existing dial-up modems, wireless
products and other communications products, our growth will be strongly affected
by our sale of cable and DSL modems. We have invested, and are continuing to
invest, substantial resources to develop cable and DSL modems and other
broadband access products. We would be unable to generate significant revenues
from sales of our broadband products and we will have expended significant
resources on products for which we are generating limited or no revenues, if:
- the market for broadband access products, such as cable and DSL
modems, does not develop further or develops slower than we expect;
- we do not market our broadband products effectively; or
- our broadband products do not obtain market acceptance.
Certain critical factors will likely affect our ability to develop a market and
obtain market acceptance for our broadband access products. These factors
include:
- inconsistent quality and reliability of service;
- lack of availability of cost-effective, high-speed service;
- inability to integrate business applications on the Internet;
- lack of interoperability among multiple vendors' network equipment;
- congestion in service providers' networks;
- inadequate security; and
- inability to meet growing demands for increasing bandwidth.
WE MAY BE UNABLE TO RECOUP OUR INVESTMENTS IN RESEARCH AND DEVELOPMENT OF NEW
PRODUCTS.
The technical innovations required for us to remain competitive in the broadband
access industry are complex, require long development cycles, and entail a
significant amount of research and development expenditures. We have invested
and will continue in the future to invest in research and development to develop
new products and to enhance our existing technologies and products. In fiscal
1997, 1998 and 1999 we incurred $4.2 million, $4.4 million and $6.4 million in
research and development costs. Growth in our research and development
activities is primarily related to our initiatives in the broadband, advanced
networking and gateway product areas. We will incur most our research and
development expenses before the technical feasibility or commercial viability of
our enhanced or new products can be ascertained. Revenues from our future or
enhanced products may be insufficient to recover our associated research and
development costs.
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WE MAY BE UNABLE TO MAINTAIN OR INCREASE OUR SALES THROUGH OUR EXISTING OR NEW
SALES CHANNELS.
We primarily sell our products through high-volume retailers, independent
distributors, and OEMs. Sales to each of these distribution channels are subject
to the following risks which, if they materialize, would have a material adverse
effect on our results of operations because our sales would be significantly
reduced.
RETAILERS:
Our sales to retailers have historically constituted the largest
percentage of our net sales. Due to competition for limited shelf space,
retailers have the ability to negotiate favorable terms of sale, including price
discounts and product return policies. We may be unable to maintain or increase
our sales to retailers on favorable terms, if at all.
INDEPENDENT DISTRIBUTORS:
Our independent distributors generally are not contractually committed
to future purchases of our products and may carry our competitors products. Many
of our distributors could discontinue carrying our products at any time.
OEMS:
OEMs may require special distribution arrangements and product pricing.
We may be unsuccessful in developing products for sales to OEMs or maintaining
or increasing sales to OEMs on favorable terms.
WE MAY BE UNABLE TO USE OUR EXISTING SALES CHANNELS OR FIND NEW SALES CHANNELS
FOR OUR NEW BROADBAND ACCESS PRODUCTS.
Although we believe that we will use our existing sales channels for sales of
our new broadband access products, we plan to expand our sales channels to
include cable and telephone companies. If we are unable to successfully develop,
manufacture and market our broadband access products to any of these sales
channels, then sales of our broadband access products could be materially and
adversely affected.
BECAUSE THE MARKET FOR HIGH-SPEED COMMUNICATIONS PRODUCTS AND SERVICES HAS MANY
COMPETING TECHNOLOGIES, THE DEMAND FOR OUR PRODUCTS AND SERVICES IS UNCERTAIN.
The market for high-speed communications products and services has a number of
competing technologies. Some of these competing technologies are:
- access solutions provided by telephone network service providers,
such as dial-up modems, integrated services digital networks and T1
services;
- broadband wireless technologies; and
- broadband cable and DSL technologies.
Although we currently sell or plan to sell products which have the technologies
described above, the market for high-speed communication products and services
is fragmented and still in its development stage. The introduction of new
products by competitors, market acceptance of products based on new or
alternative technologies, or the emergence of new industry standards could
render our products less competitive or obsolete. If any of these events occur,
we may be unable to sustain or grow our business. In addition, if any of one or
more of the alternative technologies gain market share at the expense of another
technology, demand for our products may be reduced, and we may be unable to
sustain or grow our business.
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WE FACE SIGNIFICANT COMPETITION, WHICH COULD RESULT IN DECREASED DEMAND FOR OUR
PRODUCTS OR SERVICES.
We may be unable to compete successfully. A number of companies have developed,
or are expected to develop, products that compete or will compete with our
products. Furthermore, many of our current and potential competitors have
significantly greater resources than we do. Intense competition, rapid
technological change and evolving industry standards could decrease demand for
our products or make our products obsolete. Our competitors by product group
include the following:
- DIAL-UP MODEM COMPETITORS: 3Com, Action Tec, Best Data, Creative
Labs, Elsa, GVC, S3 and Viking.
- CABLE MODEM COMPETITORS: 3Com, Com21, Motorola and Terayon.
- DSL MODEM COMPETITORS: 3Com and Efficient Networks.
- WIRELESS LOCAL AREA NETWORK COMPETITORS: 3Com, Cisco Systems,
Lucent, and Proxim.
The principal competitive factors in our industry include the following:
- product performance, features and reliability;
- price;
- product availability and lead times;
- size and stability of operations;
- breadth of product line;
- sales and distribution capability;
- technical support and service;
- relationships with providers of broadband access services; and
- compliance with industry standards.
OUR BUSINESS IS DEPENDENT ON THE INTERNET AND THE DEVELOPMENT OF THE INTERNET
INFRASTRUCTURE.
Our success will depend in large part on increased use of the Internet to
increase the need for high-speed communications products. Critical issues
concerning the commercial use of the Internet remain largely unresolved and are
likely to affect the development of the market for our products. These issues
include security, reliability, cost, ease of access and quality of service. Our
success also will depend on the growth of the use of the Internet by businesses,
particularly for applications that utilize multimedia content and that require
high bandwidth. The recent growth in the use of the Internet has caused frequent
periods of performance degradation. This has required the upgrade of routers,
telecommunications links and other components forming the infrastructure of the
Internet by Internet service providers and other organizations with links to the
Internet. Any perceived degradation in the performance of the Internet as a
whole could undermine the benefits of our products. Potentially increased
performance provided by our products and the products of others ultimately is
limited by and reliant upon the speed and reliability of the Internet backbone
itself. Consequently, the emergence and growth of the market for our products
will depend on improvements being made to the entire Internet infrastructure to
alleviate overloading.
CHANGES IN CURRENT OR FUTURE LAWS OR GOVERNMENTAL REGULATIONS THAT NEGATIVELY
IMPACT OUR PRODUCTS AND TECHNOLOGIES COULD HARM OUR BUSINESS.
The jurisdiction of the Federal Communications Commission, or the FCC, extends
to the entire communications industry including our customers and their products
and services that incorporate our products. Our products are also required to
meet the regulatory requirements of Industry Canada and other countries
throughout the world where our products are sold. Obtaining government
regulatory approvals is time consuming and very costly. In the past, we have
encountered delays in the introduction of our cable modems as a result of
government certifications. We may face further delays if we are unable to comply
with governmental regulations. Delays caused by the time it takes to comply with
regulatory requirements may result in order cancellations or postponements of
product purchases by our customers, which would harm our business.
10
<PAGE>
OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO A NUMBER OF RISKS INHERENT IN
INTERNATIONAL ACTIVITIES.
Our international sales accounted for approximately 29% of our revenues in
fiscal 1999 and 30% in the first three months of fiscal 2000. The recent
increase in the percentage of revenues received from international sales is
primarily attributable to our Hayes European operation, which we acquired in
March 1999. Currently, our operations are significantly dependent on our
international operations and may be materially and adversely affected by many
factors including:
- international regulatory and communications requirements and policy
changes;
- favoritism towards local suppliers;
- difficulties in inventory management, accounts receivable collection
and the management of distributors or representatives;
- difficulties in staffing and managing foreign operations;
- political and economic changes and disruptions;
- governmental currency controls;
- shipping costs;
- currency exchange rate fluctuations; and
- tariff regulations.
We anticipate that our international sales will continue to account for a
significant percentage of our revenues. If foreign markets for our current and
future products develop more slowly than currently anticipated or if foreign
countries decide not to construct the infrastructure necessary to operate
broadband access products, our future results of operations may be harmed.
FLUCTUATIONS IN THE FOREIGN CURRENCY EXCHANGE RATES IN RELATION TO THE U.S.
DOLLAR COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR OPERATING RESULTS.
Changes in currency exchange rates that increase the relative value of the U.S.
dollar may make it more difficult for us to compete with foreign manufacturers
on price or otherwise have a material adverse effect on our sales and operating
results. A significant increase in our foreign denominated sales would increase
our risk associated with foreign currency fluctuations.
OUR FUTURE SUCCESS WILL DEPEND ON THE CONTINUED SERVICES OF OUR EXECUTIVE
OFFICERS AND KEY RESEARCH AND DEVELOPMENT PERSONNEL WITH EXPERTISE IN HARDWARE
AND SOFTWARE DEVELOPMENT.
The loss of any of our executive officers or key research and development
personnel, the inability to attract or retain qualified personnel in the
future or delays in hiring required personnel could harm our business.
Because of the recent explosion of the "high-tech" industry, competition for
personnel, particularly hardware and software engineers and other technical
personnel, is extremely intense. We may be unable to attract and retain all
personnel necessary for the development of our business. In addition, the
loss of Frank B. Manning, our president and chief executive officer, or Peter
Kramer, a senior vice president, some other member of the management team, a
key engineer or other key individual contributors, could harm our relations
with our customers, our ability to respond to technological change, and our
business.
OUR BUSINESS MAY BE HARMED BY ACQUISITIONS WE MAY COMPLETE IN THE FUTURE.
We may pursue acquisitions of related businesses, technologies, product lines or
products. Our identification of suitable acquisition candidates involves risk
inherent is assessing the values, strengths, weaknesses, risks and profitability
of acquisition candidates, including the effects of the possible acquisition on
our business, diversion of our management's attention, and risk associated with
unanticipated problems or latent liabilities. If we are successful in pursuing
future acquisitions, we expect to expend significant funds, incur additional
debt or issue additional securities, which may harm our revenues and business
and be dilutive to our stockholders. If we spend
11
<PAGE>
significant funds or incur additional debt, our ability to obtain financing for
working capital or other purposes could decline and we may be more vulnerable to
economic downturns and competitive pressures. We cannot guarantee that we will
be able to finance additional acquisitions or that we will realize any
anticipated benefits from acquisitions that we complete. Should we successfully
acquire another business, the process of integrating acquired operations into
our existing operations may result in unforeseen operating difficulties and may
require significant financial resources that would otherwise be available for
the ongoing development or expansion of our existing business. Acquisitions
could also result in goodwill or other intangible assets which could create
substantial ongoing amortization charges against our earnings over the useful
lives of the assets acquired. We have no current plans, agreements or
commitments with respect to any acquisitions.
WE HAVE HAD AND MAY IN THE FUTURE HAVE DIFFICULTY PROTECTING OUR INTELLECTUAL
PROPERTY.
Our ability to compete is heavily affected by our ability to protect our
intellectual property. We rely primarily on trade secret laws, confidentiality
procedures, patents, copyrights, trademarks and licensing arrangements to
protect our intellectual property. The steps we take to protect our technology
may be inadequate. Existing trade secret, trademark and copyright laws offer
only limited protection. Our patents could be invalidated or circumvented. The
laws of some foreign countries in which our products are or may be developed,
manufactured or sold may not protect our products or intellectual property
rights to the same extent as do the laws of the United States. This may make the
possibility of piracy of our technology and products more likely. We cannot
assure that the steps that we have taken to protect our intellectual property
will be adequate to prevent misappropriation of our technology.
WE COULD INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS.
Particular aspects of our technology could be found to infringe on the
intellectual property rights or patents of others. Other companies may hold or
obtain patents on inventions or may otherwise claim proprietary rights to
technology necessary to our business. We cannot predict the extent to which we
may be required to seek licenses. We cannot assure that the terms of any
licenses we may be required to seek will be reasonable.
OUR EXECUTIVE OFFICERS AND DIRECTORS MAY CONTROL CERTAIN MATTERS TO BE VOTED ON
BY THE STOCKHOLDERS. THESE OFFICERS AND DIRECTORS MAY VOTE IN A MANNER THAT IS
NOT IN YOUR BEST INTERESTS.
Our executive officers and directors beneficially own, in the aggregate,
approximately 19.1% of our outstanding common stock. As a result, in
practicality, these stockholders control certain matters to be voted on by the
stockholders. These matters include the election of directors, amendments to our
charter and approval of significant corporate transactions. These executive
officers and directors may vote as stockholders in a manner that is not in your
best interests.
THE VOLATILITY OF OUR STOCK PRICE COULD ADVERSELY AFFECT YOUR INVESTMENT IN OUR
COMMON STOCK.
The market price of our common stock has been and may continue to be highly
volatile. We believe that a variety of factors have caused and could in the
future cause the stock price of our common stock to fluctuate, including:
- announcements of developments related to our business, including
announcements of certification by the FCC or other regulatory
authorities of our or our competitors products;
- quarterly fluctuations in our actual or anticipated operating
results and order levels;
- general conditions in the worldwide economy;
- announcements of technological innovations;
- new products or product enhancements by us or our competitors;
- developments in patents or other intellectual property rights and
litigation; and
- developments in our relationships with our customers and suppliers.
12
<PAGE>
In addition, in recent years the stock market in general and the markets for
shares of small capitalization and "high-tech" companies in particular, have
experienced extreme price fluctuations which have often been unrelated to the
operating performance of affected companies. Any fluctuations in the future
could adversely affect the market price of our common stock and the market price
of our common stock may decline.
BECAUSE WE ARE A CANADIAN CORPORATION, WE ARE SUBJECT TO LAWS THAT MAY HAVE THE
EFFECT OF DELAYING OR PREVENTING A CHANGE IN CONTROL OF OUR COMPANY.
An investment in our common stock that results in a change of control may be
subject to the review and approval of the Canadian governmental authorities. If
the Canadian governmental authorities have to approve and review an investment
that may result in a change of control, the investment will be delayed and
possibly prevented.
Generally, under the Canada Business Corporations Act, at least one-third of our
directors and any committees of the board of directors must be Canadian
residents. If our sales in Canada exceed five percent of our net sales, then
one-half of our directors and any committees of the board of directors must be
Canadian residents.
INVESTORS IN OUR COMMON STOCK MAY BE SUBJECT TO IMMEDIATE AND SUBSTANTIAL
DILUTION.
Based on our net tangible book value as of March 31, 2000, and assuming an
offering price of $12.00 per share, purchasers of our common stock offered under
this prospectus will experience immediate and substantial dilution of $6.35 per
share.
13
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549,
Chicago, Illinois and New York, New York. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public on the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933, as amended, with respect to the common stock offered in
connection with this prospectus. This prospectus does not contain all of the
information set forth in the registration statement. We have omitted certain
parts of the registration statement in accordance with the rules and regulations
of the SEC. For further information with respect to us and the common stock, you
should refer to the registration statement. Statements contained in this
prospectus as to the contents of any contract or other document are not
necessarily complete and, in each instance, you should refer to the copy of such
contract or document filed as an exhibit to or incorporated by reference in the
registration statement. Each statement as to the contents of such contract or
document is qualified in all respects by such reference. You may obtain copies
of the registration statement from the SEC's principal office in Washington,
D.C. upon payment of the fees prescribed by the SEC, or you may examine the
registration statement without charge at the offices of the SEC or the SEC's
Website described above.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and information that we later file with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934.
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1999;
2. Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2000;
3. Proxy Statement used for our annual meeting of stockholders to be
held on June 16, 2000; and
4. The description of our common stock contained in the registration
statement on Form 10 dated June 29, 1990 (File No. 0-18672) filed
with the Commission pursuant to Section 12 of the Exchange Act,
including any amendment or report filed for the purposes of
updating such description.
You may request a copy of these filings at no cost, by writing or telephoning
our investor relations department at the following address:
Zoom Telephonics, Inc.
207 South Street
Boston, MA 02111
(617) 423-1072
You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide you with different information.
We are not making an offer of these securities in any state where the offer is
not permitted. You should not assume that the information in this prospectus is
accurate as of any date other than the date on the front of the document.
14
<PAGE>
WARNINGS REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements contained in this prospectus under "Summary" and "Risk
Factors," and in the documents incorporated by reference, are forward-looking
made pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. In essence, forward-looking statements are predictions of
future events. Although we would not make forward-looking statements unless we
believe we have a reasonable basis for doing so, we cannot guarantee their
accuracy and actual results may differ materially from those we anticipated due
to a number of uncertainties, many of which we are not aware. We urge you to
consider the risks and uncertainties discussed under "Risk Factors" and in the
other documents filed with the SEC that we have referred you to in evaluating
our forward-looking statements.
You should understand also that we have no plans to update our forward-looking
statements. Our forward-looking statements are accurate only as of the date of
this prospectus, or in the case of forward-looking statements in documents
incorporated by reference, as of the date of those documents.
We identify forward-looking statements with the words "plans," "expects,"
"anticipates," "estimates," "will," "should" and similar expressions. Examples
of our forward-looking statements may include statements related to:
- our plans, objectives, expectations and intentions;
- our anticipated growth;
- the timing of, availability, cost of development and functionality
of products under development or recently introduced;
- our anticipated introduction of advanced cable and DSL modems and
other broadband access solutions;
- our potential as a significant player in the cable and DSL markets;
and
- our ability to expand our dial-up modem market share.
DILUTION
At March 31, 2000, we had a net tangible book value of $34,316,641 or
approximately $4.43 per share of common stock. Net tangible book value per share
represents the amount of our tangible assets less our total liabilities, divided
by the number of outstanding shares of our common stock. Net tangible book value
dilution per share represents the difference between the amount per share paid
by purchasers of shares of common stock in the offering pursuant to this
prospectus and the pro forma net tangible book value per share of common stock
immediately after completion of the offering. After giving effect to the sale of
1,500,000 shares of common stock in this offering at an assumed offering price
of $12.00 per share and the application of the estimated net proceeds therefrom
(after deducting estimated offering expenses), but without taking into account
any other changes in our pro forma net tangible book value after March 31, 2000,
our pro forma net tangible book value as of March 31, 2000 would have been
$52,232,149, or $5.65 per share. This represents an immediate increase in net
tangible book value of $1.22 per share to existing stockholders and an immediate
dilution in net tangible book value of $6.35 per share to purchasers of common
stock in the offering, as illustrated in the table below.
<TABLE>
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<S> <C> <C>
Assumed public offering price per share $12.00
Net tangible book value per share before
the offering $4.43
Increase per share attributable to new investors 1.22
Pro forma net tangible book value per share after the offering 5.65
Dilution per share to new investors $6.35
--------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
USE OF PROCEEDS
We do not know the number of shares of common stock that we will ultimately sell
under this prospectus, nor do we know the prices at which such shares of common
stock will be sold. We cannot guarantee that we will receive any proceeds in
connection with this offering.
We have not designated specific uses for the net proceeds, if any, from the sale
our common stock under this prospectus. Unless otherwise specified in the
applicable prospectus supplement, we expect to use the net proceeds of this
offering, if any, for general corporate purposes, including working capital,
increased spending on sales and marketing, research and development, and
expansion of our operational and administrative infrastructure. We may also use
a portion of the net proceeds of this offering, if any, to acquire or invest in
complementary businesses. We have no current plans, agreements or commitments
with respect to any acquisitions or investments.
We will retain broad discretion in the allocation of the net proceeds, if any,
of this offering. The amounts we actually spend may vary significantly and will
depend on a number of factors, including our future revenue and cash generated
by operations and the other factors described in "Risk Factors."
PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to institutional investors or other purchasers;
- to or through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
- the identity of any underwriters, dealers, agents or investors who
purchase the common stock, as required;
- the material terms of the distribution, including the number of
shares sold and the consideration paid;
- the amount of any compensation, discounts or commissions to be
received by underwriters, dealers or agents;
- the terms of any indemnification provisions, including
indemnification from liabilities under the federal securities laws;
- the intention of an underwriter, dealer or agent to engage in
passive market making transactions as permitted by Rule 103 of
Regulation M; and
- the nature of any transaction by an underwriter, dealer or agent
during the offering that is intended to stabilize or maintain the
market price of the common stock.
16
<PAGE>
Any shares of common stock sold pursuant to this prospectus will be listed on
the Nasdaq National Market, subject to official notice of issuance. In order to
comply with the securities laws of certain states, if applicable, the common
stock will be sold in such jurisdictions only through registered or licensed
brokers or dealers.
LEGAL MATTERS
For the purpose of this offering, Thomas Rondeau, our Canadian counsel, will
provide us with an opinion as to the validity of the common stock that may be
offered with this prospectus.
EXPERTS
The financial statements and related financial statement schedule of Zoom
Telephonics, Inc. as of December 31, 1999 and 1998, and for each of the years in
the three-year period ended December 31, 1999, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
17
<PAGE>
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT WE FILED WITH THE SEC. YOU
SHOULD RELY ONLY ON THE INFORMATION OR REPRESENTATIONS PROVIDED IN THIS
PROSPECTUS. WE HAVE AUTHORIZED NO ONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
WE ARE NOT MAKING AN OFFER IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF
ANY DATE OTHER THAN THE DATE OF THIS PROSPECTUS.
ZOOM TELEPHONICS, INC.
1,500,000 Shares
Common Stock
PROSPECTUS
June ___, 2000
TABLE OF CONTENTS PAGE
<TABLE>
<S> <C>
PROSPECTUS SUMMARY..................................... 2
RISK FACTORS........................................... 4
WHERE YOU CAN FIND MORE INFORMATION.................... 14
WARNINGS REGARDING FORWARD-LOOKING STATEMENTS.......... 15
DILUTION............................................... 15
USE OF PROCEEDS........................................ 16
PLAN OF DISTRIBUTION................................... 16
LEGAL MATTERS.......................................... 17
EXPERTS................................................ 17
</TABLE>
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities
registered hereby. All amounts are estimated except for the SEC and Nasdaq
filing fee. Costs of issuance and distribution will be borne by the Registrant
as follows:
<TABLE>
<S> <C>
SEC Registration Fee.................................. $ 1,992
Nasdaq Filing Fee..................................... 17,500*
Accounting Fees and Expenses.......................... 5,000*
Legal Fees and Expenses............................... 50,000*
Miscellaneous......................................... 10,000*
Total........................................ $84,492*
</TABLE>
*Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 124 of the Canada Business Corporations Act permits indemnification
of directors, officers, employees and agents of corporations under certain
conditions and subject to certain limitations.
The By-Laws of the Registrant provide for the indemnification of directors
and officers of the Registrant pursuant to Section 124 of the Canada Business
Corporation Act. The By-Laws provide for the indemnification of a director or
officer, a former director or officer, or a person who acts or acted at the
Registrant's request as a director or officer of a corporation in which the
Registrant is or was a shareholder or creditor, and his heirs and legal
representatives, against any and all costs, charges and expenses, including an
amount paid to settle an action or satisfy a judgment, reasonably incurred by
such person in respect of any civil, criminal or administrative proceeding to
which such person was made a party by reason of being or having been a director
or officer of the Registrant or such other corporation if such person acted
honestly and in good faith with a view to the best interests of the Registrant,
or, in the case of a criminal or administrative action or proceeding that is
enforced by monetary penalty, such person had reasonable grounds in believing
that the conduct was lawful. The By-Laws provide that the Registrant shall also
indemnify any such person in such other circumstances as the Canada Business
Corporations Act permits or requires. The By-Laws limit the right of any person
entitled to indemnification to claim indemnity apart from the provisions of the
By-Laws to the extent permitted by the Canada Business Corporations Act or such
other law.
The Registrant has purchased a general liability insurance policy that
covers certain liabilities of directors and officers of the Registrant arising
out of claims based upon acts or omissions in their capacities as directors or
officers.
The Registrant has entered into indemnification agreements with its
directors and certain of its officers pursuant to which the Registrant is
contractually obligated to indemnify such persons to the fullest extent
permitted by applicable law.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER REFERENCE
------ ---------
<S> <C> <C>
2.1 Asset Purchase Agreement Between Zoom Telephonics, Inc. and Hayes Microcomputer Products,
Inc. dated March 8, 1999. B
2.2 Asset Purchase Agreement Between Zoom Telephonics, Inc. and Hayes Microcomputer Products, B
Inc. dated March 28, 1999.
3.1 Articles of Continuance. A
3.2 By-Law No. 1 of Zoom Telephonics, Inc. A
3.3 By-Law No. 2 of Zoom Telephonics, Inc. A
4.1 Specimen Certificate for Shares of the Registrant's Common Stock. C
4.2 Description of Capital Stock (contained in By-Law No. 1 of the Registrant filed as Exhibit A
3.2)
5 Legal Opinion of Thomas, Rondeau regarding legality of Common Stock A
23.1 Consent of Thomas, Rondeau (contained in Exhibit 5 hereof) A
23.2 Consent of KPMG LLP A
24 Power of Attorney (contained on pages II-5 hereof). A
</TABLE>
-----------------------
* Where incorporated from another filing, the number assigned to each
Exhibit in this Registration Statement is the same as the number assigned
to the Exhibit in each filing referenced above.
A. Filed herewith.
B. Incorporated by reference to the Registrant's Quarterly Report on
Form 10-Q for the fiscal quarter ended March 31, 1999.
C. Incorporated by reference to the Registrant's Registration Statement on
Form S-3, filed with the Commission on February 16, 1996 (Registration
No. 33-97928).
II-2
<PAGE>
ITEM 17. UNDERTAKINGS
(a) 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 to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
(g) Not applicable.
(h) 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 foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the SEC 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 of 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.
(i) The undersigned Registrant undertakes that:
(1) For purpose of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of the registration statement in reliance upon Rule 430A and contained in
the form of prospectus filed by the Registrant pursuant to Rule 424(b) (1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
act of 1933, each post-effective amendment that contains a form of
prospectus 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.
(j) Not applicable.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant certifies
that it has reasonable grounds to believe that it meets all 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
Boston, Commonwealth of Massachusetts, on June 8, 2000.
ZOOM TELEPHONICS, INC.
By: /s/ Frank B. Manning
---------------------------------
FRANK B. MANNING
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Frank B. Manning and Peter R. Kramer, and
each of them (with full power to each of them to act alone), his or her true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any or all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto and other documents in connection therewith, and, in connection
with any registration of additional securities pursuant to Rule 462(b) under the
Securities Act, to sign any abbreviated registration statement and any and all
amendments thereto, and to file the same, with all exhibits thereto and other
documents in connection therewith, in each case, with the SEC, granting unto
said attorneys-in-fact and agents, 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 or she
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, or their 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>
/s/ Frank B. Manning Principal Executive Officer and June 8, 2000
--------------------------------------------
Frank B. Manning Director
/s/ Robert A. Crist Principal Financial Officer June 8, 2000
--------------------------------------------
Robert A. Crist
/s/ Peter R. Kramer Director June 8, 2000
--------------------------------------------
Peter R. Kramer
/s/ Bernard Furman Director June 8, 2000
--------------------------------------------
Bernard Furman
/s/ Lamont Gordon Director June 8, 2000
---------------------------------------------
Lamont Gordon
/s/ J. Ronald Woods Director June 8, 2000
--------------------------------------------
J. Ronald Woods
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER REFERENCE
------ ---------
<S> <C>
2.1 Asset Purchase Agreement Between Zoom Telephonics, Inc. and Hayes Microcomputer Products,
Inc. dated March 8, 1999. B
2.2 Asset Purchase Agreement Between Zoom Telephonics, Inc. and Hayes Microcomputer Products, B
Inc. dated March 28, 1999.
3.1 Articles of Continuance. A
3.2 By-Law No. 1 of Zoom Telephonics, Inc. A
3.3 By-Law No. 2 of Zoom Telephonics, Inc. A
4.1 Specimen Certificate for Shares of the Registrant's Common Stock. C
4.2 Description of Capital Stock (contained in By-Law No. 1 of the Registrant filed as Exhibit A
3.2)
5 Legal Opinion of Thomas, Rondeau regarding legality of Common Stock A
23.1 Consent of Thomas, Rondeau (contained in Exhibit 5 hereof) A
23.2 Consent of KPMG LLP A
24 Power of Attorney (contained on pages II-5 hereof). A
</TABLE>
-------------------------
* Where incorporated from another filing, the number assigned to each
Exhibit in this Registration Statement is the same as the number assigned
to the Exhibit in each filing referenced above.
A. Filed herewith.
B. Incorporated by reference to the Registrant's Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 1999.
C. Incorporated by reference to the Registrant's Registration Statement on
Form S-3, filed with the Commission on February 16, 1996 (Registration
No. 33-97928).
E-1
