AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 15, 1999
REGISTRATION NO. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------------
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 jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------- ------------------ --------------------------- -------------------- ------------------
Proposed Maximum
Title of each class of securities Amount Proposed Maximum Aggregate Offering Amount of
to be registered to be Registered Offering Price Per Share(2) Price Registration Fee
- ----------------------------------- ------------------ --------------------------- -------------------- ------------------
<S> <C> <C> <C> <C>
Common stock, $.01 par value(1) 466,670 $1.50 $700,005.00 $194.60
- ----------------------------------- ------------------ --------------------------- -------------------- ------------------
TOTAL --
- ----------------------------------- ------------------ --------------------------- -------------------- ------------------
</TABLE>
(1) Consists of shares issuable upon conversion of issued and outstanding
Series A 8% Convertible Preferred Stock, including (pursuant to Rule 416
under the Securities Act of 1933) an indeterminate number of shares of
common stock issuable pursuant to the terms of the Preferred Stock to
prevent dilution from stock splits, stock dividends, or similar
transactions.
(2) Calculated pursuant to Rule 457(g) solely for the purpose of calculating
the registration fee. The price per share is $1.50, which is the
conversion price of the Preferred Stock.
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 June 30, 1999, the closing sale price for the common stock as reported
in the Nasdaq SmallCap Market was $ 3.09 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.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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, and at the regional offices of the Commission located at
500 West Madison Street, Chicago, Illinois 60601 and 7 World Trade Center, New
York, New York 10048. Copies can also be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. 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). Since our common stock is quoted on Nasdaq, our reports,
proxy statements and other information can also be inspected at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C.
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 and March 31, 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.
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
iii
<PAGE>
TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY ............................................................1
THE COMPANY ...................................................................3
RISK FACTORS ..................................................................3
USE OF PROCEEDS ...............................................................8
PRICE RANGE OF COMMON STOCK ...................................................8
SELLING SHAREHOLDERS ..........................................................8
PLAN OF DISTRIBUTION ..........................................................9
EXPERTS AND LEGAL MATTERS .....................................................9
MATERIAL CHANGES .............................................................10
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES ..........................................10
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION ..................................11
INDEMNIFICATION OF DIRECTORS AND OFFICERS ....................................11
EXHIBITS .....................................................................11
UNDERTAKINGS .................................................................12
SIGNATURES ...................................................................14
iv
<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 DATE AND RELATED NOTES, AND THE OTHER INFORMATION CONTAINED IN THE
FORM S-3 REGISTRATION STATEMENT BEFORE MAKING AN INVESTMENT DECISION. THE
REFERENCES TO "WE," "US," AND "OUR" MEAN XATA CORPORATION, EXCEPT WHERE IT IS
CLEAR BY THE CONTEXT THAT THE REFERENCE IS TO SOMEONE ELSE.
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
$700,005.00, and, at their option, they may convert their Preferred Stock into
common stock at a conversion rate of ten (10) 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 as a result of conversion............ 466,670 shares
Common Stock to be outstanding after conversion... 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
Transfer Agent and Registrar...................... Norwest Bank Minnesota, N.A.,
Minneapolis, Minnesota
1
<PAGE>
SUMMARY FINANCIAL INFORMATION
Year Ended
-------------------------------
Statement of Operations Data 1998 1997
---- ----
Net Sales.............................. $ 9,214,893 $10,404,477
Net Income(Loss)....................... (4,249,025) (2,421,079)
Net Income(Loss) per share(basic)...... (.97) (.55)
Net Income(Loss) per share(diluted).... (.97) (.55)
Balance Sheet Data
Working Capital........................ (991,000) 4,849,000
Total Assets........................... 6,985,969 10,509,978
Stockholders' Equity................... $ 2,967,528 $ 7,149,214
- ----------------------
(1) Does not include (i) 870,000 shares of common stock issuable under the
Company's 1991 Long-Term Incentive and Stock Option Plan (the "Incentive
Plan"); (ii) 81,812 shares of common stock issuable upon exercise of
outstanding warrants; and (iii) 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" (Class 6, 7 and 8) 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; and 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.
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 which are offered.
FORWARD-LOOKING STATEMENTS. This prospectus and the information which is
incorporated by reference in this prospectus include "forward-looking
statements" within the meaning of the securities
3
<PAGE>
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 which 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 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.
Specific risk factors which you should consider include the following:
LIMITED HISTORY OF PROFITABLE OPERATIONS. From inception in 1985 through
the fiscal year ended September 30, 1994, the Company focused its efforts
primarily on product development and had only limited product marketing and
distribution, incurring a cumulative loss of $5,809,000. The Company 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. The Company 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.
Although, as of the date of this prospectus, the Company expects to return to
profitability in fiscal 1999, we cannot assure you that profitability will be
restored or sustained.
DEPENDENCE ON KEY CUSTOMERS. Historically, the Company has sold large
orders to individual fleets and thus has been 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 the
Company has experienced significant growth in its customer base as its sales
volume has increased, it is currently still dependent on continued purchases by
its present customers, who are continuing to equip and upgrade their fleets.
Loss of any significant current customers or an inability to further expand its
customer base would adversely affect the Company.
SALES CYCLE. The period required to complete a sale of the Company's
systems can be as long as 12 months, due in large part to the technical
complexity of the system and the system's cost, which usually requires an
advance budget decision by the customer. The continuing emergence of new
4
<PAGE>
technologies, as well as existing, similar purpose, technologies may complicate
and delay a buying decision. In addition, certain customers and prospects 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. The length of the sales cycle may result in quarter to quarter
fluctuations in the Company's purchase orders and shipments.
COMPETITION. Companies offer products with certain features competitive
with the Company's systems with greater financial and other resources than those
of 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. Such companies may
produce and offer products equivalent or comparable to those of the Company or
products which are more effectively marketed to or preferred by customers. In
addition, the Company believes that the nature and sources of competition in its
industry are rapidly evolving and, in the future, will be based upon the service
provider's ability to deliver integration of multiple information systems,
including links between 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 efforts represent
a trend toward integration of intracompany data with the larger external supply
chain involving the flow of goods to markets. The Company believes that these
changing markets will require it to adapt its existing products and to develop
new products which 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 compatible with products and
services provided by others in the industry, including others who may be
considered competitors of the Company in one or more lines of business. In
addition, the Company believes that these trends will require it to establish
strategic alliances with other companies, who may be competitors, to offer
customers an integrated solution.
PRODUCT AND MARKET CONCENTRATION. Although the Company's system has
potential applications in a number of industries, the Company, to date, has
targeted only the fleet trucking segment of the transportation industry. If this
market segment experiences a downturn which decreases the Company's sales, the
development of new applications and markets for the Company's system could take
several months or longer, and could require substantial funding. In addition,
the Company believes that its future success is dependent in part on developing
and marketing new software applications. There can be no assurance that any such
applications can be successfully developed or marketed.
CYCLICAL NATURE OF THE TRUCKING INDUSTRY. The fleet trucking segment of
the transportation industry is subject to fluctuations and business cycles.
Because mobile integrated information systems are a relatively new product, the
Company is unable to predict to what extent economic 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 the Company. Although the
Company had a backlog of approximately $1,572,000 as of June 30, 1999, which the
Company believes 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.
SALES AND MARKETING EFFORTS. Sales of the Company products are dependent
in part upon the salesperson's in-depth knowledge and understanding of the XATA
system, which requires experience and training over a period of several months.
The Company needs to attract, train, and retain qualified personnel necessary on
an intermittent but continuing basis. The Company may not be able to augment its
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 volume or profitability.
5
<PAGE>
DEPENDENCE ON PROPRIETARY TECHNOLOGY. The Company's success is heavily
dependent upon proprietary technology. The Company has been issued a design
patent by the United States Patent and Trademark Office which covers the design
of its computer display. The Company's software programs have not been patented.
The Company relies primarily on a combination of copyright, trademark and trade
secret laws, confidentiality procedures, and contractual provisions to protect
its proprietary rights; however, these measures afford only limited protection
and there can be no assurance that competitors will not seek to use similar
computer displays or "touch screens." Despite the Company's efforts to protect
its proprietary rights, unauthorized parties may attempt to copy aspects of the
Company's systems or obtain and use information that the Company regards as
proprietary. Customer access to the Company's source code may increase the
possibility of misappropriation or other misuse of the Company's software. The
Company's means of protecting its proprietary rights may prove inadequate, or
the Company's competitors may independently develop similar technology, either
of which could adversely affect the Company.
RISK OF TECHNOLOGICAL OBSOLESCENCE. The Company's systems utilize
proprietary software and an onboard touch-screen computer. Although the Company
believes its 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 the Company's technology,
including its software, obsolete. The field of PC-based software and hardware is
constantly undergoing rapid technological changes and the Company 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 the
Company can form alliances with such companies or that any such alliance will be
successful. Our success is dependent, in large part, upon our ability to
anticipate changes in technology and industry standards and to develop and
introduce new features and enhancements to our system on a timely basis. If the
Company is unable to do so for 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.
MANAGEMENT CONTROL. The officers and directors of the Company beneficially
own approximately 33% 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.
DEPENDENCE ON KEY PERSONNEL. The Company believes its future success
depends to a significant extent on the efforts of key management, technical, and
sales personnel, including William P. Flies, Chief Technical Officer. The
Company maintains and is the beneficiary of keyperson life insurance policies on
William P. Flies in the amount of $1,000,000. The loss of Mr. Flies could have a
material adverse effect on the Company's business. The Company currently does
not have a permanent Chief Executive Officer and needs 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. Except
for William P. Flies, who has an agreement to refrain from employment with any
competitor of the Company for one year after leaving employment with the
Company, the Company's employees are not restricted as to future employment.
However, all employees are restricted as to use of information which is
confidential and proprietary to the Company.
6
<PAGE>
RELIANCE ON MANUFACTURERS AND DISTRIBUTORS. We acquire most of the
components of our systems from suppliers who manufacture these components
pursuant to Company specifications. The Company currently has no supply
agreements with any of these manufacturers. Although we currently purchase more
than ten percent of the components for our systems from a single supplier, and
while the loss of any supplier could cause a short-term disruption in the
availability of components, we believe that alternative sources could be
obtained for such components without materially affecting system costs or timely
delivery.
POSSIBLE NEED FOR ADDITIONAL CAPITAL OR FINANCING. Although cash flow from
operations and bank financing has been sufficient to fund operations during the
past several years, as part of its continuing growth strategy, the Company
intends to create new marketing programs, hire additional personnel and increase
sales. In addition, the Company will consider, if appropriate, the acquisition
of complementary or additional businesses or products. The Company completed two
such acquisitions within the last two years. Although, as of the date of this
prospectus, the Company believes that cash flow from operations and its bank
financing will be sufficient to meet its capital requirements for the
foreseeable future, it is possible that the Company's cash needs may vary
significantly from its predictions, due to failure to generate anticipated cash
flow, growth at a rate faster than anticipated, or other reasons. Our
predictions regarding cash needs may prove to be inaccurate and the Company may
require additional financing. We cannot assure you that the Company will be able
to secure any required additional financing when needed or at all, or that such
financing, if obtained, will be on terms favorable or acceptable to the Company.
Our inability to obtain needed financing could have a material adverse effect on
operating results and any future financings may result in dilution to holders of
the common stock. In addition, the Company's future growth and operating results
will depend on management's continuing ability to implement its growth strategy,
as to which no assurance can be given.
ISSUANCE OF ADDITIONAL SHARES. 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 voting rights (including 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.
LIMITATIONS ON DIRECTORS' LIABILITY UNDER MINNESOTA LAW. Pursuant to the
Company's Articles of Incorporation, as amended and restated, as authorized
under applicable Minnesota law, directors of the Company are not liable for
monetary damages for breach of fiduciary 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, and for any transaction in which the
director derived an improper personal benefit. In addition, the Company's bylaws
provide that the Company shall indemnify its officers and directors to the
fullest
7
<PAGE>
extent permitted by Minnesota law for all expenses incurred in the settlement of
any actions against such persons in connection with their service as officers or
directors of the Company.
ANTITAKEOVER PROVISIONS. The Company is subject to certain antitakeover
provisions contained in the Minnesota Business Corporation Act which could delay
or prevent a change in control of the Company by requiring shareholder approval
of certain acquisitions of voting stock of the Company.
YEAR 2000 ISSUE: The Company has investigated the impact of the Year 2000
issue on both its own internal information systems and the products it develops,
markets and sells. During fiscal 1996, the Company 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, the Company 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. The Company can not 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 the Company's 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.
USE OF PROCEEDS
The Company 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
The Company's Common Stock is traded under the symbol "XATA" on the Nasdaq
SmallCap Market. The following table shows the high and low prices as reported
by the Nasdaq during the last seven (7) quarters.
- ------------------------------------------------------------------------------
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
8
<PAGE>
shares of common stock each person will own after the offering, assuming they
sell all of the shares offered.
<TABLE>
<CAPTION>
a================================= =============================== ====================================
BENEFICIAL OWNERSHIP PRIOR TO BENEFICIAL OWNERSHIP AFTER OFFERING
NAME OFFERING
- ---------------------------------- ------------------------------- ------------------------------------
Shares Percentage Shares Percentage
- ---------------------------------- ------------------------------- ------------------------------------
<S> <C> <C> <C> <C>
XATA Investment Partners, LLP(1) 400,003 8.189 0 0
- ---------------------------------- ------------------------------- ------------------------------------
Deborah K. Carlson 33,334 0.682 0 0
- ---------------------------------- ------------------------------- ------------------------------------
Jeffrey A. Carlson 33,333 0.682 0 0
- ---------------------------------- ------------------------------- ------------------------------------
a================================= =============================== ====================================
</TABLE>
(1) One of the members of XATA Investment Partners LLP is a Director of the
Company.
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.
9
<PAGE>
MATERIAL CHANGES
In May 1999 the Company sold 46,667 shares of its Series A 8% Convertible
Preferred Stock for $700,005.00. The proceeds from this sale were used to reduce
the Company's working capital deficit. There have been no other material changes
in the financial condition of the Company since its Report on Form 10-QSB dated
March 31, 1999.
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 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........................ 6,000
Accounting fees and expenses................... 2,000
Blue Sky fees and expenses..................... 0
Printing and engraving expenses................ 0
Miscellaneous.................................. 1,800
-------
Total...................................... $10,000
=======
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.
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:
(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.
12
<PAGE>
(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 July 9, 1999.
XATA CORPORATION
By: /s/ Edward T. Michalek
----------------------
Edward T. Michalek, President and Chief
Executive Officer (Principal executive
officer)
14
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Gary C. Thomas, his true and lawful
attorney-in-fact and agent with full power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming that said attorney-in-fact and agent or
his substitute, may lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Edward T. Michalek Chief Executive Officer and President July 9, 1999
- ---------------------- (Principal executive officer) --------------
Edward T. Michalek
/s/ Gary C. Thomas Chief Financial Officer and Treasurer July 9, 1999
- ------------------ (Principal accounting and financial --------------
Gary C. Thomas officer)
/s/ William P. Flies Director, Chief Technical Officer and July 9, 1999
- -------------------- Secretary --------------
William P. Flies
/s/ Carl M. Fredericks Director July 9, 1999
- ---------------------- --------------
Carl M. Fredericks
/s/ Stephen A. Lawrence Chairman of the Board of Directors July 9, 1999
- ----------------------- --------------
Stephen A. Lawrence
/s/ Roger W. Kleppe Director July 9, 1999
- ------------------- --------------
Roger W. Kleppe
/s/ Dennis R. Johnson Director July 9, 1999
- --------------------- --------------
Dennis R. Johnson
*Executed by the undersigned as attorney-in-
fact for the named signatory
------------------------
Gary C. Thomas
15
Exhibit 5.1
WRITER'S DIRECT DIAL NUMBER
(612) 347-0367
WRITER'S E-MAIL ADDRESS
[email protected]
July 14, 1999
Board of Directors
XATA Corporation
151 East Cliff Road
Suite 10
Burnsville, MN 55337
Gentlemen:
We have acted as counsel to XATA Corporation, a Minnesota corporation (the
"Company"), in connection with the filing by the Company of a Registration
Statement on Form S-3, covering the registration of 466,670 shares of common
stock, par value $.01 per share (the "Common Shares") that may be issued upon
conversion of the Company's Series A 8% Convertible Preferred Stock (the
"Preferred Shares"). We have been asked to issue an opinion as to whether the
Common Shares registered will, when issued, be legally issued, fully paid and
non-assessable.
As counsel to the Company, we have examined the Articles of Incorporation
and Bylaws, as amended to date, and other corporate records of the Company, as
well as the Certificate of Designation (as amended) establishing the rights and
preferences of the Preferred Shares. In addition, we have relied, to the extent
we deem such reliance proper, upon certain factual representations of officers
and directors of the Company.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us. We have assumed that the corporate records of the Company furnished to us
constitute all of the existing corporate records of the Company and include all
corporate proceedings taken by it in connection with the Preferred Shares.
Based solely upon and subject to the foregoing, we are of the opinion that
the Common Shares are duly authorized, and when issued upon conversion of the
Preferred Shares, the Common Shares will be validly issued, fully paid and
non-assessable.
<PAGE>
XATA Board of Directors
July 14, 1999
Page 2
We consent to the filing of this opinion as an Exhibit to the aforesaid
Registration Statement and to the reference to our firm under the caption
"Experts and Legal Matters" in the Prospectus.
Very truly yours,
MOSS & BARNETT, a Professional
Association
/s/ Janna R. Severance
Janna R. Severance
JRS/les
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report, dated December 8, 1998 (January 8, 1999, as
to Note 8), relating to the balance sheets of XATA Corporation as of September
30, 1998 and 1997, and the related statements of operations, shareholder's
equity, and cash flows for each of the two years in the period ended September
30, 1998, which report appears in the Company's Annual Report on Form 10-KSB for
the year ended September 30, 1998 and to the reference to our Firm under the
caption "Experts" in the Prospectus.
McGladrey & Pullen, LLP
Minneapolis, Minnesota
July 9, 1999
Exhibit 23.2
WRITER'S DIRECT DIAL NUMBER
(612) 347-0367
WRITER'S E-MAIL ADDRESS
[email protected]
July 14, 1999
Board of Directors
XATA Corporation
151 East Cliff Road
Suite 10
Burnsville, MN 55337
Gentlemen:
We have acted as counsel to XATA Corporation, a Minnesota corporation (the
"Company"), in connection with the filing by the Company of a Registration
Statement on Form S-3, covering the registration of 466,670 shares of common
stock, par value $.01 per share (the "Common Shares") that may be issued upon
conversion of the Company's Series A 8% Convertible Preferred Stock (the
"Preferred Shares"). We have been asked to issue an opinion as to whether the
Common Shares registered will, when issued, be legally issued, fully paid and
non-assessable.
As counsel to the Company, we have examined the Articles of Incorporation
and Bylaws, as amended to date, and other corporate records of the Company, as
well as the Certificate of Designation (as amended) establishing the rights and
preferences of the Preferred Shares. In addition, we have relied, to the extent
we deem such reliance proper, upon certain factual representations of officers
and directors of the Company.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us. We have assumed that the corporate records of the Company furnished to us
constitute all of the existing corporate records of the Company and include all
corporate proceedings taken by it in connection with the Preferred Shares.
Based solely upon and subject to the foregoing, we are of the opinion that
the Common Shares are duly authorized, and when issued upon conversion of the
Preferred Shares, the Common Shares will be validly issued, fully paid and
non-assessable.
<PAGE>
XATA Board of Directors
July 14, 1999
Page 2
We consent to the filing of this opinion as an Exhibit to the aforesaid
Registration Statement and to the reference to our firm under the caption
"Experts and Legal Matters" in the Prospectus.
Very truly yours,
MOSS & BARNETT, a Professional
Association
/s/ Janna R. Severance
Janna R. Severance
JRS/les
