AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 9, 1999
REGISTRATION NO. 333-83713
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------------------
XATA CORPORATION
(Exact Name of registrant as specified in its charter)
MINNESOTA 7373 41-1641815
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification
incorporation) Number)
-------------------------------
151 EAST CLIFF ROAD, SUITE 10, BURNSVILLE, MINNESOTA 55337 (612) 894-3680
(Address, including zip code and telephone number,
including area code of registrant's principal executive offices)
-------------------------------
GARY C. THOMAS, CHIEF FINANCIAL OFFICER
XATA CORPORATION
151 EAST CLIFF ROAD, SUITE 10
BURNSVILLE, MINNESOTA 55337
TELEPHONE: (612) 894-3680 TELEFAX: (612) 894-2463
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
-------------------------------
COPIES TO:
JANNA R. SEVERANCE, ESQ.
MOSS & BARNETT, A PROFESSIONAL ASSOCIATION
4800 NORWEST CENTER, 90 SOUTH SEVENTH STREET
MINNEAPOLIS, MINNESOTA 55402-4129
TELEPHONE: (612) 347-0367
-------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time, commencing as soon as practicable 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 being
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. [ ]
THE REGISTRANT HEREBY AMENDS THE REGISTRATION STATEMENT ON SUCH 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>
466,670 SHARES
XATA
COMMON STOCK
This prospectus relates to up to 466,670 shares of the common stock,
par value $.01 per share, of XATA Corporation, a Minnesota corporation, which
may be sold from time to time by certain shareholders named in this prospectus.
The Company's common stock is traded in the Nasdaq SmallCap Market under the
symbol XATA. On August 31, 1999, the closing sale price for the common stock as
reported in the Nasdaq SmallCap Market was $3.625 per share.
The shares of common stock offered by this prospectus may be sold by
the selling shareholders from time to time in transactions in the open market or
in negotiated transactions, in each case at prices satisfactory to them.
THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS INVOLVE A HIGH
DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
No person has been authorized by us to give any information or to make
any representations about the offering of common stock made by this prospectus
other than the information and representations contained in this prospectus.
Accordingly, you should not rely on information outside of this prospectus. This
prospectus is not an offer to sell or buy any security other than the common
stock offered by this prospectus; it is not an offer to sell or buy securities
in any jurisdiction in which such offer is not qualified; and it is not an offer
to buy or sell securities to any person to whom such offer would be unlawful.
The information in this prospectus is current as of the date of this prospectus.
Your receipt of this prospectus does not mean that there has been no change in
the affairs of XATA since the date of this prospectus or that the documents
which are incorporated by reference in this prospectus are correct as of any
date after the date of such documents.
THE DATE OF THIS PROSPECTUS IS _____________, 1999.
The information in this prospectus is not complete and may be changed.
These securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective.
ii
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, and file reports, proxy statements and other
information with the Securities and Exchange Commission. These reports, proxy
statements and other information can be inspected and copies can be made at:
* the public reference facilities maintained by the Commission
at 450 Fifth Street, N.W., Washington, D.C. 20549
* the regional offices of the Commission located at 500 West
Madison Street, Chicago, Illinois 60601 and at 7 World Trade
Center, New York, New York 10048
* the offices of Nasdaq Operations, 1735 K Street, N.W.,
Washington, D.C.
These materials may also be accessed electronically by means of the
Securities and Exchange Commission's home page on the Internet
(http://www.sec.gov).
This prospectus is a part of a registration statement on Form S-3 that
the Company has filed with the Securities and Exchange Commission. You may
obtain copies of the registration statement from the Commission at the addresses
in the preceding paragraph. This prospectus does not contain all of the
information set forth in the registration statement and its exhibits. The
registration statement provides further information about us and the shares.
While the Company believes this prospectus provides the material information
regarding the contracts and documents described in it, the statements contained
in this prospectus about the contents of any contract or any other documents are
not necessarily complete and, in each such instance, you should inspect the copy
of such contract or document filed as an exhibit to the registration statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934 (File No. 0-27166) are
incorporated by reference in this prospectus, except as otherwise superseded or
modified herein:
Our Annual Report on Form 10-KSB for the fiscal year ended September
30, 1998.
Our Quarterly Reports on Form 10-QSB for the fiscal quarters ended
December 31, 1998, March 31, 1999, and June 30, 1999.
Our Current Report on Form 8-K, concerning a change in our certifying
accountant, effective August 13, 1999.
All documents subsequently filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering of the common stock, are also deemed to be incorporated by reference
into this prospectus.
Any statement in any document incorporated or deemed to be incorporated
by reference is modified or superseded to the extent that a statement in this
prospectus or in any other subsequently filed documents which are incorporated
by reference modifies or supersedes such statement.
iii
<PAGE>
The Company will furnish you, without charge, with a copy of any or all
of the documents referred to above (other than exhibits to such documents).
Requests for copies should be directed, orally or in writing, to:
Gary C. Thomas, Chief Financial Officer
XATA Corporation
151 E. Cliff Road, Suite 10
Burnsville, MN 55337
Telephone: (612) 894-3680
iv
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY............................................................1
THE COMPANY...................................................................3
RISK FACTORS..................................................................4
FORWARD-LOOKING STATEMENTS....................................................7
USE OF PROCEEDS...............................................................8
PRICE RANGE OF COMMON STOCK...................................................8
SELLING SHAREHOLDERS..........................................................8
PLAN OF DISTRIBUTION..........................................................9
INTERESTS OF NAMED EXPERTS AND COUNSEL........................................9
MATERIAL CHANGES..............................................................9
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION..........................9
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION..................................11
INDEMNIFICATION OF DIRECTORS AND OFFICERS....................................11
EXHIBITS.....................................................................11
UNDERTAKINGS.................................................................12
SIGNATURES...................................................................14
v
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY CONTAINS INFORMATION ABOUT XATA CORPORATION,
SOMETIMES REFERRED TO AS "XATA" OR THE "COMPANY." IT MAY NOT CONTAIN ALL THE
INFORMATION THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS,
THE DOCUMENTS WHICH ARE INCORPORATED BY REFERENCE IN THE PROSPECTUS, INCLUDING
THE FINANCIAL DATA AND RELATED NOTES, AND THE OTHER INFORMATION CONTAINED IN THE
FORM S-3 REGISTRATION STATEMENT BEFORE MAKING AN INVESTMENT DECISION.
THE COMPANY
XATA is a leading provider of supply chain software, systems, services
and solutions to the transportation, distribution and logistics segments of the
fleet trucking industry. XATA's products and services unify all participants in
a company's supply chain to optimize the collection, communication and
integration of information throughout the transportation network. XATA's systems
use onboard computers, fleet management software, route optimization software,
dispatch software, Internet software, satellite positioning and mobile
communication capabilities to improve fleet productivity and profitability.
XATA was incorporated in Minnesota in 1985 and became a publicly owned
company in 1989 through a merger with an existing publicly owned company. Our
principal offices are located at 151 East Cliff Road, Suite 10, Burnsville,
Minnesota 55337, and our telephone number is (612) 894-3680.
RISK FACTORS
An investment in XATA's common stock involves a high degree of risk and
is not appropriate for persons who cannot afford to lose their entire
investment. See "Risk Factors."
THE OFFERING
The shares of common stock which are offered by this prospectus are
shares which will be issued to the selling shareholders named in this prospectus
if they choose to convert their Series A 8% Convertible Preferred Stock. They
acquired the Preferred Stock in May 1999 for a total purchase price of $700,005,
and, at their option, they may convert their Preferred Stock into common stock
at a conversion rate of ten shares of common stock for each share of preferred
stock. If all shares of the Preferred Stock are converted, 466,670 shares of
common stock will be added to the Company's issued and outstanding common stock.
Certain information about the Company's common stock and this offering, is
summarized below:
Common Stock to be issued upon
conversion of Preferred Stock................466,670 shares
Common Stock to be outstanding after
conversion of Preferred Stock................4,884,803(1)
Use of proceeds..............................XATA will not receive any proceeds
from the conversion of the
Preferred Stock or the sale of the
common stock by the selling
shareholders
Nasdaq SmallCap Market symbol................XATA
1
<PAGE>
Transfer Agent and Registrar.................Norwest Bank Minnesota, N.A.,
Minneapolis, Minnesota
SUMMARY FINANCIAL INFORMATION
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
Nine Months Ended June 30 Year Ended September 30
------------------------------- -------------------------------
Statement of Operations Data: 1999 1998 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net Sales $ 2,929,051 $ 1,015,931 $ 9,214,893 $ 10,404,477
Net Income (Loss) 176,971 ($ 2,363,836) (4,249,025) (2,421,079)
Net Income (Loss) per share (basic) .04 (.53) (.97) (.55)
Net Income (Loss) per share (diluted) .04 (.53) (.97) (.55)
Balance Sheet Data:
Working Capital (694,472) 767,181 (991,505) 4,849,000
Total Assets 7,922,921 8,375,208 6,985,969 10,509,978
Stockholders' Equity 4,062,221 4,676,414 2,967,528 7,149,214
</TABLE>
- ----------------------
(1) Does not include (a) 870,000 shares of common stock issuable under the
Company's 1991 Long-Term Incentive and Stock Option Plan (the
"Incentive Plan"); (b) 81,812 shares of common stock issuable upon
exercise of outstanding warrants; and (c) 35,000 shares of common stock
issuable upon exercise of the warrants issued to an underwriter of a
1995 public offering by XATA.
2
<PAGE>
THE COMPANY
XATA is a leading provider of supply chain software, systems, services
and solutions to the transportation, distribution and logistics segments of the
fleet trucking industry. The Company's products and services unify all
participants in a company's supply chain to optimize the collection,
communication and integration of information throughout the transportation
network. XATA's systems use onboard computers, fleet management software, route
optimization software, dispatch software, Internet software, satellite
positioning and mobile communication capabilities to improve fleet productivity
and profitability.
The transportation industry is characterized by increased demands for
greater efficiency, including faster transit times, lower costs and more
responsive service, as well as greater reliability and safety. Combined with
escalating fuel and labor costs, and extensive regulation by federal and state
authorities, these pressures necessitate the collection, analysis, communication
and optimal utilization of detailed operational information. To date, fleet
operators have largely lacked sufficient information to effectively monitor and
develop programs to improve many aspects of fleet operations, individually and
collectively. Supply chain systems and software can be a powerful tool to help
contain costs and increase operational efficiencies and profitability throughout
the transportation and logistics network. As a result, more transportation
managers are evaluating the impact of these technologies on their operations,
and both for-hire and private carriers are fast becoming broad-based freight
transportation providers that seek profit and increased efficiency outside of
traditional boundaries; and the newest segment of the trucking market, the
logistics provider, is growing as more and more fleets chose to outsource all or
part of their transportation and logistics functions.
The Company's suite of supply chain products and services are
specifically designed for key segments of the trucking and logistics
marketplace. Currently, we direct our sales and marketing efforts to trucking,
transportation and logistics companies operating "heavy duty" truck fleets of 25
or more vehicles, which account for over 61% of the 3.1 million trucks in this
industry segment. Our products include, among others, an Onboard Information and
Communication System, which uses various hardware and software components to
monitor and improve driver and vehicle performance and RouteView route
optimization software, which allows companies to develop cost-effective routes
for their delivery operations. The solutions provided by our portfolio of
products provide significant fleet savings and benefits through:
* increased fuel economy
* improved routing and scheduling
* reduced driver, clerical and compliance paperwork
* improved asset utilization and resource management
* reduced maintenance costs; improved driver productivity and
safety
* enhanced customer service
XATA was incorporated in Minnesota in 1985 and became a publicly owned
company in 1989 through a merger with an existing publicly owned company. Our
principal offices are located at 151 East Cliff Road, Suite 10, Burnsville,
Minnesota 55337, and our telephone number is (612) 894-3680.
3
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN THE COMMON STOCK YOU SHOULD CONSIDER THAT THE
VALUE OF THE SHARES IN THE SECONDARY MARKET IS SUBJECT TO VARIOUS RISKS,
INCLUDING THOSE DESCRIBED BELOW. THESE RISKS SHOULD BE EVALUATED TOGETHER WITH
ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE YOU DECIDE TO PURCHASE
ANY OF THE SHARES OFFERED. SPECIFIC RISK FACTORS YOU SHOULD CONSIDER INCLUDE THE
FOLLOWING:
WE DO NOT HAVE A LONG OR STABLE HISTORY OF PROFITABLE OPERATIONS. From
inception in 1985 through the fiscal year ended September 30, 1994, we focused
our efforts primarily on product development. During this time we had only
limited product marketing and distribution and incurred a cumulative loss of
$5,809,000. We had operating profits beginning in the fourth quarter of the
fiscal year ended September 30, 1994, and continuing throughout the fiscal year
ended September 30, 1996. We experienced a net loss of $2,421,079 for the fiscal
year ended September 30, 1997 and a net loss of $4,249,025 for fiscal year ended
September 30, 1998. These losses resulted in large part from the re-valuation
and expensing of certain software acquired in a 1996 business acquisition. The
report of our independent auditors for the fiscal year ended September 30, 1999
expressed uncertainty about the Company's ability to continue as a going
concern. Although, as of the date of this prospectus, we expect to return to
profitability in fiscal 1999, we cannot assure you that profitability will be
restored or sustained.
WE ARE DEPENDENT ON KEY CUSTOMERS. We sell large orders to individual
fleets and may be dependent upon a few major customers each year whose volume of
purchases is significantly greater than that of other customers. During the
fiscal year ended September 30, 1998, two customers, together, accounted for
approximately 30% of net sales. Although we have experienced significant growth
in our customer base, we are still dependent on continued purchases by present
customers who continue to equip and upgrade their fleets. Loss of any
significant current customers or an inability to further expand our customer
base would adversely affect the Company.
OUR SALES CYCLE CAN BE LONG. The period required to complete a sale of
the Company's systems can be as long as 12 months. The length of the sales cycle
may result in quarter to quarter fluctuations in purchase orders and shipments.
Our systems are technically complex, which usually means that the customer has
to make an advance budget decision. The availability of new and other
technologies also complicates and delays buying decisions. In addition, some
customers and prospects have indicated that they may delay the acquisition of
technology during the fourth calendar quarter of 1999 and possibly the first
calendar quarter of 2000 due to Y2K monitoring requirements.
WE HAVE MANY LARGER COMPETITORS. Many of the companies who offer
competitive products have greater financial and other resources than the
Company. These competitors are based both in the United States and in Europe and
offer products ranging in sophistication and cost from basic onboard recorders
to advanced mobile satellite communication systems. Their products may offer
better or more functions than ours or may be more effectively marketed. In
addition, the nature and sources of competition in our industry are rapidly
evolving and increasingly depend on the ability to deliver integration of
multiple information systems. These systems must link trucking operations and
all other facets of the supply chain through a variety of sophisticated software
and communications technologies, including but not limited to the Internet.
These changes reflect a trend toward integration of intracompany data with the
larger external supply chain involving the flow of goods to markets. We will
have to adapt our existing products and develop new products that facilitate the
collection, integration, communication and optimal utilization of information
throughout the transportation network and the entire supply chain. This may
entail the development of new technologies and the adaptation of new and
existing products to be
4
<PAGE>
compatible with products and services provided by others in the industry. These
trends will require us to establish strategic alliances with other companies who
may be competitors.
WE HAVE A LIMITED NUMBER OF PRODUCTS AND THOSE PRODUCTS ARE
CONCENTRATED IN ONE INDUSTRY. Although our system has potential applications in
a number of industries, to date, we have targeted only the fleet trucking
segment of the transportation industry. If this market segment experiences a
downturn that decreases our sales, the development of new applications and
markets could take several months or longer, and could require substantial
funding. In addition, our future success is dependent in part on developing and
marketing new software applications. We cannot assure you that any new
applications can be successfully developed or marketed.
OUR TARGET MARKET IS HIGHLY CYCLICAL. The fleet trucking segment of the
transportation industry is subject to fluctuations and business cycles. We
cannot predict to what extent these business cycles may result in increases or
decreases in capital purchases by fleet managers. A significant downturn in the
prospects of the fleet trucking segment of the transportation industry could
have a material adverse effect on us. Although we had a backlog of approximately
$1,572,000 as of June 30, 1999, which we believe to be firm, the backlog could
decrease as a result of cancellations or reductions of orders in response to
adverse economic conditions in the industry or other factors.
THE EFFECTIVENESS OF OUR SELLING EFFORTS DEPENDS ON KNOWLEDGEABLE
STAFF. Sales of our products are dependent in part upon the salesperson's
in-depth knowledge and understanding of the XATA system. This knowledge is
attained only through experience and training over a period of several months.
We must attract, train, and retain qualified personnel on an intermittent but
continuing basis. We may not be able to sustain or augment our sales and
marketing efforts by adding personnel, or otherwise, and it is possible that
augmented sales and marketing efforts will not result in increased sales or
profitability.
WE ARE DEPENDENT ON PROPRIETARY TECHNOLOGY. Our success is heavily
dependent upon proprietary technology. We have been issued a design patent by
the United States Patent and Trademark Office that covers the design of its
computer display, but our software programs have not been patented. We rely
primarily on a combination of copyright, trademark and trade secret laws,
confidentiality procedures, and contractual provisions to protect our
proprietary rights. These measures afford only limited protection. Our means of
protecting our proprietary rights may prove inadequate, or our competitors may
independently develop similar technology, either of which could adversely affect
us. In addition, despite our efforts to protect our proprietary rights,
unauthorized parties may attempt to copy aspects of our systems or obtain and
use information that we regard as proprietary. Customer access to our source
code may increase the possibility of misappropriation or other misuse of our
software.
OUR PRODUCTS MAY QUICKLY BECOME OBSOLETE. Our systems utilize
proprietary software and an onboard touch-screen computer. Although we believe
our proprietary software is more important in the capture and communication of
operating data than the hardware in which the software is encased, continued
improvements in hardware may render our technology, including its software,
obsolete. The field of PC-based software and hardware is constantly undergoing
rapid technological changes and we may not be able to react and adapt to changes
in this field. Moreover, development by our competitors could make our system
and services less competitive or obsolete. We believe that advancements in
hardware and communications technology provide opportunities for us to form
alliances with companies offering products complementary to our system and
services, but we cannot assure you that we can form alliances with such
companies or that any such alliance will be successful. Our success depends, in
large part, on our ability to anticipate changes in technology, industry
standards and develop and introduce new features and enhancements to our system
on a timely basis. If we are unable to do so for
5
<PAGE>
technological or other reasons or if new features or enhancements do not achieve
market acceptance, our business could be materially and adversely affected. We
may encounter technical or other difficulties that could in the future delay the
introduction of new systems or system features or enhancements.
OUR CURRENT MANAGEMENT OWNS ENOUGH STOCK TO EXERT SIGNIFICANT CONTROL
OVER THE COMPANY. As of August 31, 1999, the officers and directors of the
Company beneficially own approximately 32.3% of the Company's outstanding shares
of common stock. Because of such ownership, management is able to significantly
influence the affairs of the Company, including the election of the Board of
Directors. There is no cumulative voting for the election of directors of the
Company.
WE ARE DEPENDENT ON KEY PERSONNEL. Our future success depends to a
significant extent on the efforts of key management, technical, and sales
personnel, particularly William P. Flies, Chief Technical Officer. We are the
beneficiary of a key-person life insurance policy on William P. Flies in the
amount of $1,000,000. The loss of Mr. Flies would adversely affect the Company's
ability to provide leading edge technology to the transportation industry. In
addition, we currently do not have a permanent Chief Executive Officer and need
to recruit a person for this position. We cannot assure you that the Company
will be able to attract and retain a qualified CEO or any other personnel
necessary for the business.
WE MAY NEED ADDITIONAL CAPITAL. Although cash flow from operations and
bank financing has been sufficient to fund operations during the past several
years, we intend to create new marketing programs, hire additional personnel and
increase sales. In addition, we may consider acquisition of complementary or
additional businesses or products. We completed two such acquisitions within the
last two years. Although, as of the date of this prospectus, we believe that
cash flow from operations and our bank financing will be sufficient to meet
capital requirements for the foreseeable future, our cash needs may vary
significantly from predictions. For example, if we do not generate anticipated
cash flow, or if we grow at a rate faster than we anticipate, our predictions
regarding cash needs may prove inaccurate and we may require additional
financing. Our inability to obtain needed financing could have a material
adverse effect on operating results. We cannot assure you that we will be able
to secure any additional financing when needed or at all or that financing, if
obtained, will be on terms favorable or acceptable to us. Moreover, future
financing may result in dilution to holders of the common stock.
WE MAY ISSUE ADDITIONAL STOCK WITHOUT YOUR CONSENT. The Company has
authorized 8,333,333 shares of common stock, of which 4,418,133 shares are
issued and outstanding as of June 30, 1999. The Board of Directors has
authority, without action or vote of the shareholders, to issue all or part of
the authorized but unissued shares. Additional shares may be issued in
connection with future financings, acquisitions, employee plans, or otherwise.
Any such issuance will dilute the percentage ownership interest of existing
shareholders, and may dilute the book value of the common stock. In addition,
the Company is authorized to issue up to 333,333 shares of preferred stock, no
designated par value, of which 46,667 shares have been issued as Series A 8%
Convertible Preferred Stock and are outstanding. The Board of Directors can
issue preferred stock in one or more series and fix the terms of such stock
without approval by shareholders. Preferred stock may include the right to vote
as a series on particular matters, preferences as to dividends and liquidation,
conversion and redemption rights and sinking fund provisions. The issuance of
preferred stock could affect the rights of the holders of common stock adversely
and reduce the value of the common stock. In addition, specific rights granted
to holders of preferred stock could be used to restrict the Company's ability to
merge with or sell its assets to a third party.
OUR DIRECTORS' LIABILITY IS LIMITED UNDER MINNESOTA LAW. Our Articles
of Incorporation, as amended and restated, state that our directors are not
liable for monetary damages for breach of fiduciary
6
<PAGE>
duty, except for a breach of the duty of loyalty, for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, for dividend payments or stock repurchases illegal under Minnesota law or
for any transaction in which the director derived an improper personal benefit.
In addition, our bylaws provide that we shall indemnify our officers and
directors to the fullest extent permitted by Minnesota law for all expenses
incurred in the settlement of any actions against them in connection with their
service as officers or directors of the Company.
ANTI-TAKEOVER PROVISIONS. Minnesota law provides Minnesota corporations
with anti-takeover protections. These protective provisions could delay or
prevent a change in control of the Company by requiring shareholder approval of
significant acquisitions of voting stock of the Company. These provisions
operate even when many shareholders may think a takeover would be in their best
interests.
YEAR 2000 ISSUE. We have investigated the impact of the Year 2000 issue
on both our own internal information systems and the products we develop. During
fiscal 1996, we purchased from a world-wide supplier and developer of
information systems an enterprise-wide information system with written assurance
from the developer that the system will correctly function across the year 2000,
as verified by previous system tests. During fiscal 1997, we reviewed all the
products it developed, markets and sells for compliance to year 2000 operations.
One product was not in compliance and was modified during fiscal 1998 at a
nominal cost. We cannot be sure that the Year 2000 issue will be properly
addressed by customers, vendors, service utilities, government and other
external entities. Contacts have been made with these parties to determine their
Year 2000 readiness. The efforts of third parties are not within our control and
their failure to properly and completely address the Year 2000 issue could
result in business disruption, loss of revenue and increased operating costs.
FORWARD-LOOKING STATEMENTS
This prospectus and the information incorporated by reference in this
prospectus include "forward-looking statements" within the meaning of the
securities laws. Statements about us and our expected financial position,
business and financing plans are forward-looking statements. Forward-looking
statements can be identified by, among other things, the use of forward-looking
terminology such as "believes," "expects," "may," "will," "should," "seeks,"
"pro forma," "anticipates," "intends," or other variations or comparable
terminology, or by discussions of strategy or intentions. Although we believe
that the expectations reflected in our forward-looking statements are
reasonable, we cannot assure you that our expectations will prove to be correct.
Forward-looking statements are necessarily dependent upon assumptions, estimates
and data that may be incorrect or imprecise and involve known and unknown risks,
uncertainties and other factors. Accordingly, you should not consider our
forward-looking statements as predictions of future events or circumstances. A
number of factors could cause our actual results, performance, achievements or
industry results to be materially different from any future results, performance
or achievements expressed or implied by our forward-looking statements. These
factors include, but are not limited to: the competitive environment in the
trucking and logistics industries; changes in economic conditions in general and
in our business; changes in prevailing interest rates and the availability of
and terms of financing to fund our business; our ability to attract and retain
qualified personnel; changes in our acquisition and capital expenditure plans;
and other factors discussed in this prospectus including, without limitation,
those set out below and those in our filings with the Securities and Exchange
Commission. Given these uncertainties, you should not rely on our
forward-looking statements in making an investment decision. We disclaim any
obligation to update you on any factors that may affect the likelihood of
realization of our expectations and we do not intend to announce publicly the
results of any revisions to any of our forward-looking statements to reflect
future events or
7
<PAGE>
developments. All written and oral forward-looking statements attributable to
us, including statements before and after the date of this prospectus, are
expressly qualified by these cautionary statements.
USE OF PROCEEDS
We will not receive any proceeds from the conversion of the Preferred
Stock or the sale of common stock by the selling shareholders.
PRICE RANGE OF COMMON STOCK
As of June 1, 1999, our common stock is traded under the symbol "XATA"
on the Nasdaq SmallCap Market. Prior to June 1, 1999, our common stock was
traded on the Nasdaq National Market, also under the symbol "XATA". The
following table shows the high and low prices as reported by the Nasdaq during
the last fiscal year and the first three quarters of our fiscal year ending
September 30, 1999.
- --------------------------------------------------------------------------------
FISCAL YEAR 1998 1998 1999 1999
- --------------------------------------------------------------------------------
SALE PRICE LOW HIGH LOW HIGH
- --------------------------------------------------------------------------------
FIRST QUARTER 3.375 7.250 1.2500 2.6250
- --------------------------------------------------------------------------------
SECOND QUARTER 3.375 6.000 1.0625 2.3750
- --------------------------------------------------------------------------------
THIRD QUARTER 2.000 5.750 0.9063 4.7500
- --------------------------------------------------------------------------------
FOURTH QUARTER 2.000 3.250 NA NA
- --------------------------------------------------------------------------------
XATA has never declared or paid a dividend on its common stock and the
Board of Directors presently intends to retain all earnings, if any, for use in
the business for the foreseeable future. Any future determination as to
declaration and payment of dividends will be made at the discretion of the Board
of Directors, subject to covenants in any loan documents restricting the payment
of dividends.
SELLING SHAREHOLDERS
The following table sets forth the name of each person who is offering
shares of common stock by this prospectus, the number of shares of common stock
owned by each person now, and the number of shares of common stock each person
will own after the offering, assuming they sell all of the shares offered.
- --------------------------------------------------------------------------------
BENEFICIAL OWNERSHIP PRIOR BENEFICIAL OWNERSHIP
NAME TO OFFERING AFTER OFFERING
- --------------------------------------------------------------------------------
Shares Percentage Shares Percentage
- --------------------------------------------------------------------------------
XATA Investment Partners, 400,003 8.189 0 0
LLP(1)
- --------------------------------------------------------------------------------
Deborah K. Carlson 33,334 0.682 0 0
- --------------------------------------------------------------------------------
Jeffrey A. Carlson 33,333 0.682 0 0
- --------------------------------------------------------------------------------
(1) One of the members of XATA Investment Partners LLP is a Director of the
Company.
8
<PAGE>
PLAN OF DISTRIBUTION
The selling shareholders have advised us that there are presently no
underwriting arrangements with respect to the sale of the shares; however, such
arrangements may exist in the future. The selling shareholders, or their
pledges, donees, transfers or other successors in interest, may choose to sell
all or a portion of their common stock from time to time as market conditions
permit in the over-the-counter market, or otherwise, at prices and terms then
prevailing or at prices related to the then-current market price, or at
negotiated prices.
The shares may also be sold by one or more of the following methods,
without limitation: (a) block trades in which a broker or dealer so engaged 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 a broker or
dealer as principal and resale by such broker and dealer for its account
pursuant to this prospectus; (c) ordinary brokerage transactions (which may
include long or short sales) and transactions in which the broker solicits
purchases; (d) "at the market" to or through market makers and into an existing
market for the shares; (e) in other ways not involving market makers or
established trading markets, including direct sales to purchasers or sales
effected through agents; (f) through transactions in options, swaps or other
derivatives (including transactions with broker-dealers or institutions of the
shares, which shares may be resold thereafter pursuant to this prospectus); or
(g) any combination of the foregoing, or by any other legally available means.
In effecting sales, brokers or dealers engaged by the selling shareholders may
arrange for other brokers or dealers to participate. Such brokers or dealers may
receive commissions or discounts from selling shareholders in amounts to be
negotiated. Such brokers and dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933 in connection with such sales.
EXPERTS AND LEGAL MATTERS
The financial statements of XATA Corporation as of September 30, 1998,
and 1997, and for each of the two years in the period ended September 30, 1998,
incorporated by reference in this prospectus and in the registration statement
of which this prospectus is a part have been audited by McGladrey & Pullen,
L.L.P. independent certified public accountants upon the authority of such firm
as experts in accounting and auditing.
The validity of the shares of common stock offered by this prospectus
has been passed upon for the Company by Moss & Barnett, A Professional
Association, Minneapolis, Minnesota.
MATERIAL CHANGES
There have been no material changes in the financial condition of the
Company since its Report on Form 10-QSB dated June 30, 1999. The Company changed
its certifying accountant, effective August 13, 1999, as reported on Form 8-K.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITY ACT LIABILITIES
XATA's amended and restated Articles of Incorporation, as amended and
restated, limit personal liability for breach of the fiduciary duty of its
directors, to the fullest extent provided by the Minnesota Business Corporation
Act. Articles eliminate the personal liability of directors for damages
occasioned
9
<PAGE>
by breach of fiduciary duty, except for liability based on the director's duty
of loyalty to XATA, liability for acts or omissions not made in good faith,
liability for acts or omissions involving intentional misconduct, liability
based on payments of improper dividends, liability based on violations of state
securities laws, and liability occurring prior to the date such provision was
added. Any amendment to or repeal of these provisions will not be applied
retroactively to adversely affect any right or protection of a director with
respect to any acts or omissions occurring prior to the amendment or repeal.
In addition, the Minnesota Business Corporation Act and XATA's Bylaws
provide that officers and directors of XATA have the right to indemnification
from the Company for liability arising out of certain actions to the fullest
extent permissible by law. This indemnification may be available for liabilities
arising in connection with this offering. However, in the opinion of the
Securities and Exchange Commission, indemnification for liabilities arising
under the Securities Act of 1933 is against public policy as expressed in the
Act and is therefore unenforceable.
Section 302A.671 of the Minnesota Business Corporation Act (the
"Minnesota Act") applies with certain exceptions, to any acquisition of voting
stock of XATA, including the receipt of a proxy, from a person other than XATA,
and other than in connection with certain mergers and exchanges to which XATA is
a party, that results in the beneficial ownership by the acquiring party of 20%
or more of the Company's voting stock then outstanding. Under Section 302A.671
any such acquisition must be approved by a majority vote of XATA's shareholders.
In general, in the absence of such approval, shares exceeding the threshold are
denied voting rights and may be redeemed by XATA at their then fair market value
within 30 days after the acquiring person fails to give a timely information
statement to the Company or after the date that shareholders vote not to grant
voting rights to the acquiring person's shares.
Section 302A.673 of the Minnesota Act generally prohibits any business
combination by a Minnesota company with any shareholder that purchases 10% or
more of the company's voting shares (an "interested shareholder") within four
years following the interested shareholder's share acquisition date, unless the
business combination is approved by a committee of all of the disinterested
members of the Board of Directors of the company before the share acquisition.
These statutory provisions could delay or prevent a change in control
of XATA.
10
<PAGE>
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimate expenses in connection with the issuance and distribution
of the Common Stock registered hereby, other than underwriting discounts and
fees, are set forth in the following table:
SEC registration fee................................. $ 200
Legal fees and expenses.............................. 10,000
Accounting fees and expenses......................... 9,800
Blue Sky fees and expenses........................... 0
Printing and engraving expenses...................... 0
Miscellaneous........................................ 30,000
-------
Total....................................... $50,000
=======
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Unless prohibited in a corporation's articles or bylaws, Minnesota
Statutes ss 302A.521 requires indemnification of officers, directors, employees
and agents, under certain circumstances, against judgments, penalties, fees,
settlements and reasonable expenses (including attorneys' fees and
disbursements) incurred by such person in connection with a threatened or
pending proceeding with respect to the acts or omissions of such person in his
or her official capacity. The general effect of Minnesota Statutes ss 302A.521
is to reimburse (or pay on behalf of) directors and officers of the Registrant
any personal liability that may be imposed for certain acts performed in their
capacity as directors and officers of the Registrant, except where such persons
have not acted in good faith. The Bylaws of the Registrant provide for such
indemnification to the maximum extent permitted by Minnesota Statutes.
EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ------------------------------------------------------------------
*3.1 Restated Articles of Incorporation, as amended
*3.2 Bylaws
*4.1 Form of Certificate representing common stock
**4.2 Certificate of Designation of Series A 8% Convertible
Preferred Stock
11
<PAGE>
***5.1 Opinion and Consent of Counsel to XATA
***23.1 Consent of McGladrey & Pullen, LLP, independent certified
public accountants
***23.2 Consent of Counsel to XATA (filed as part of Exhibit 5.1)
- --------------------
* Incorporated by reference to exhibit filed as a part of Form S-2
Registration Statement, Commission File No. 33-98932.
** Incorporated by reference to Report on Form 8-K dated May 13, 1999.
*** Filed with initial filing of this registration statement on Form S-3
(Commission file 333-82905) on July 15, 1999.
UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act") may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions or otherwise, the small business issuer has been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer 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 Act and will be governed by the final adjudication of such
issue.
If the Company relies upon Rule 430A under the Act, the Company
undertakes that, for determining any liability under the Act, it will:
(1) Treat the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed under Rule 424(b)(1) or (4) or 497(h)
under the Act as part of this registration statement as of the time the
Commission declared it effective.
(2) Treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities offered in the
registration statement, and that offering of the securities at that time as the
initial bona fide offering of those securities.
Insofar as the Company is registering securities under Rule 415 of the
Securities Act, the Company will:
12
<PAGE>
(1) file, during any period in which it offers or sells
securities, a post-effective amendment to this registration
statement to include any additional or changed material
information on the plan of distribution.
(2) for determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of
the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
13
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly authorized this
amendment to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Minneapolis, State of
Minnesota, on September 9, 1999.
XATA CORPORATION
By: */s/ Gary C. Thomas
---------------------------------------------
Edward T. Michalek, President and Chief Executive
Officer (Principal executive officer)
14
<PAGE>
SIGNATURE TITLE DATE
--------- ----- ----
Chief Executive Officer and President
(Principal executive officer)
Chief Financial Officer and Treasurer
(Principal accounting and financial
officer)
Director, Chief Technical Officer and
Secretary
Director
Chairman of the Board of Directors
Director
Director
*Executed by the undersigned as attorney-in-
fact for the named signatory
/s/ Gary C. Thomas
- --------------------------------------------
Gary C. Thomas
