Filed Pursuant to Rule 424(b)(4)
Registration No. 333-83981
PROSPECTUS
SILICON STORAGE TECHNOLOGY, INC.
816,867 shares of Common Stock
These shares of common stock are being offered by the selling stockholders,
identified in this prospectus. We issued the shares to the selling stockholders
in connection with the acquisition of the selling stockholders' shares of
capital stock of Linvex Technology, Corp. in June 1999. The selling stockholders
may sell these shares from time to time on the over-the-counter market in
regular brokerage transactions, in transactions directly with market makers or
in certain privately negotiated transactions. For additional information on the
methods of sale, you should refer to the section entitled "Plan of Distribution"
on page 13. We will not receive any portion of the proceeds from the sale of
these shares.
Each of the selling stockholders may be deemed to be an "Underwriter," as
such term is defined in the Securities Act of 1933.
The selling stockholders may sell their Silicon Storage Technology, Inc.
common stock in one or more transactions on the Nasdaq National Market at
prevailing market prices or at privately negotiated prices. These selling
stockholders may sell their shares directly or through agents, brokers, dealers
or underwriters. The selling stockholders will pay for underwriting discounts
and selling commissions related to the sale of shares. We will pay for all other
expenses related to such sales.
Our common stock is quoted on the Nasdaq National Market under the symbol
"SSTI."
On August 19, 1999, the last sale price of our common stock on the Nasdaq
National Market was $17.1875 per share.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state Securities
Commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
August 20, 1999.
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TABLE OF CONTENTS
Page Number
WHERE YOU CAN FIND MORE INFORMATION..................................... 2
DOCUMENTS INCORPORATED BY REFERENCE..................................... 3
SUMMARY................................................................. 4
THE COMPANY............................................................. 4
RISK FACTORS............................................................ 5
USE OF PROCEEDS......................................................... 11
SELLING STOCKHOLDERS.................................................... 11
PLAN OF DISTRIBUTION.................................................... 13
LEGAL MATTERS........................................................... 14
EXPERTS................................................................. 14
You should rely only on the information or representations provided in this
prospectus or incorporated by reference into this prospectus. We have not
authorized anyone to provide you with any different information or to make any
different representations in connection with any offering made by this
prospectus. This prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, in any state where the offer or sale is
prohibited. Neither the delivery of this prospectus, nor any sale made under
this prospectus shall, under any circumstances, imply that the information in
this prospectus is correct as of any date after the date of this prospectus.
We own or have rights to trademarks or trade names that we use in conjunction
with the operation of our business. We own the SuperFlash trademark in the
United States. This prospectus also includes trademarks owned by other parties.
WHERE YOU CAN FIND MORE INFORMATION
Our annual, quarterly and special reports, proxy statements and other
information are filed with the SEC as required by the Securities Exchange Act of
1934. You may inspect and copy these reports, proxy statements and other
information at the public reference facilities maintained by the SEC at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at
the SEC's regional offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. You may also obtain copies of these
materials by mail from the Public Reference Section of the SEC at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The
SEC also maintains an Internet web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC at the Internet web site address:
http://www.sec.gov. Our common stock is listed on the Nasdaq National Market,
and you may also inspect and copies these reports, proxy statements and other
information at the offices of The Nasdaq Stock Market, 1735 K Street, N.W.,
Washington DC 20006.
This prospectus provides you with a general description of the common stock
being registered. This prospectus is part of a registration statement that we
have filed with the SEC. To see more detail, you should read the exhibits and
schedules filed with our registration statement. You may obtain copies of the
registration statement and the exhibits and schedules to the registration
statement as described above.
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DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" other information that we
file or have filed with the SEC, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is an important part of this prospectus. Information
that we later file with the SEC will automatically update and replace the
information in this prospectus. We incorporate by reference the documents listed
below:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998;
2. Our Definitive Proxy Statement dated June 15, 1999 filed in connection
with our 1999 Annual Meeting of Stockholders;
3. Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999;
4. Our Quarterly Report on Form 10-Q for the quarter ended June 30, 1999;
5. Our Current Reports on Form 8-K, filed with the SEC on April 14, 1999,
May 14, 1999 and May 18, 1999;
6. The description of our common stock set forth in our Registration
Statement on Form 8-A, filed with the SEC on October 5, 1995; and
7. Any future filings which we make with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities and Exchange Act of 1934, until
the selling stockholders have sold all of the securities that we have
registered with the registration statement.
We will provide to you at no cost a copy of any and all of the information
incorporated by reference into the registration statement of which this
prospectus is a part. You may make a request for copies of this information in
writing or by telephone. Requests should be directed to:
Silicon Storage Technology, Inc.
Attention: Chief Financial Officer
1171 Sonora Court
Sunnyvale, CA 94086
(408) 735-9110
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SUMMARY
This prospectus contains forward-looking statements which involve risks and
uncertainties. Our actual results could differ materially from those anticipated
in these forward-looking statements as a result of certain factors, including
those set forth under "Risk Factors" and elsewhere in this prospectus.
The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors," appearing elsewhere in this prospectus or
incorporated by reference in this prospectus.
THE COMPANY
We were incorporated in California in 1989, and we design, manufacture, and
sell flash memory devices that address high volume applications such as personal
computers, disk drives, modems, pagers and cellular telephones. Flash memory
devices are semiconductor chips that store basic program code and are
electronically erasable and reprogrammable in the system. In-system
programmable, or ISP, devices are more cost effective for manufacturers to use
than earlier technologies because ISP devices allow manufacturers to make
changes to program codes while the device is inside the product, rather than
having to remove the device from the product in order to reprogram it. ISPs can
therefore simplify a manufacturer's inventory management and manufacturing
process by allowing the manufacturer to respond faster to product cycles and
changing market specifications.
Currently, we offer small sector, low and medium density devices that
target a broad range of existing and emerging applications in the personal
computer, personal computer peripheral, communications, consumer and industrial
markets. In addition, we design and market a variety of higher density memory
data storage products such as high density flash devices, 8 and 16 Megabit,
CompactFlash Cards, and flash microcontrollers, all of which incorporate and are
manufactured using our proprietary SuperFlash technology. These higher density
memory products address broader markets such as digital cameras, voice
recorders, memory cards, networking systems, digital cellular phones,
telecommunications, personal digital assistants and printer font storage. We are
also entering the 8-bit flash microcontroller industry segment with products to
address the emerging application of in-system programmable flash
microcontrollers. Our products are differentiated based upon certain attributes,
such as density, voltage, access speed, packaging and predicted endurance.
In addition to designing, manufacturing and selling flash memory devices,
we license our technology to wafer foundries and to manufacturers for
non-competing applications and receive license fees and royalty payments from
such arrangements.
In the course of normal day to day activities we are commonly referred to
by our initials SST. Throughout this document will be refer to Silicon Storage
Technology, Inc. as "SST".
Our executive offices are located at 1171 Sonora Court, Sunnyvale, CA
94086, and our telephone number is (408) 735-9110.
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RISK FACTORS
An investment in our shares involves a high degree of risk. We operate in a
dynamic and rapidly changing environment that involves numerous risks and
uncertainties. You should not make an investment in these shares if you cannot
afford to lose your entire investment. Before purchasing these shares, you
should carefully consider the following risk factors, as well as other
information contained in this prospectus or incorporated by reference into this
prospectus, in evaluating an investment in the shares of common stock offered by
this prospectus.
Risks Related to SST
Our operating results fluctuate significantly and it is difficult to predict our
future operating results.
Although we have had significant revenue growth in recent quarters, our
growth rates may not be sustainable and you should not use our past financial
performance to predict future operating margins or results. We have incurred net
losses for the past two fiscal years and the first six months of fiscal 1999.
Our recent operating results have shown both quarterly and annual fluctuations
and losses due to a variety of factors including:
o the availability, timely deliverability and cost of wafers from our
suppliers;
o competitive pricing pressures and related changes in average selling
prices;
o fluctuations in manufacturing yields;
o new product announcements and introductions for competing products by
us or our competitors;
o changes in demand for, or in the mix of, our products;
o the gain or loss of significant customers;
o market acceptance of products utilizing our SuperFlash technology;
o changes in the channels through which our products are distributed;
o exchange rate fluctuations;
o unanticipated research and development expenses associated with new
product introductions; and
o the timing of significant orders.
General economic conditions or a downturn in the market for consumer
products such as personal computers and cellular telephones that incorporate our
products can also adversely impact our operating results. All of these factors
are difficult to forecast and can materially affect our quarterly and annual
operating results.
We typically receive and fulfill a majority of our orders within the
quarter, with a substantial portion occurring during the last month of the
quarter. One reason for this is that our products are primarily sold to large
manufacturers that typically place orders at or near the end of a quarter. As a
result, we may not learn of revenue shortfalls until late in a quarter and may
not be able to predict future revenues with significant accuracy. Additionally,
our operating expenses consist of materials that must be ordered several months
in advance and salaries for personnel. These operating expenses are based in
part on our expectations for future revenues and are relatively fixed in the
short term. Any revenue shortfall below expectations could immediately and
seriously harm our business.
We offer a limited number of product lines that are highly concentrated in
applications for the personal computer industry and the semiconductor memory
market, and we are vulnerable to fluctuations in the purchase requirements of
these industries.
Our sales are concentrated in the nonvolatile memory sector of the
semiconductor memory market. During 1998, substantially all of our product
revenues were derived from sales of our standard flash memory product families.
A decline in market demand for our Page Write Flash and Sector Erase/Byte
Program Flash devices may adversely affect our operating results. In addition,
during 1998 the majority of our product revenues came from sales to customers in
the personal computer and computer peripherals industries. A decline in demand
in these industries could have a material adverse effect on our operating
results and financial condition.
While we are currently developing and introducing new products to the
market, we cannot assure you that these
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products will reach the market on time, will satisfactorily address customer
needs, will be sold in high volume, or will be sold at profitable margins.
We face intense competition from companies with significantly greater financial,
technical and marketing resources which could adversely affect our ability to
increase sales of our products.
We compete with major domestic and international semiconductor companies,
many of whom have substantially greater financial, technical, marketing,
distribution, and other resources than we do. Many of our competitors have
recently added significant capacity for the production of semiconductor memory
components. Our medium density products, which presently account for
substantially all of our revenues, compete principally against products offered
by Intel, Advanced Micro Devices, Inc., Atmel, STMicroelectronics, Sanyo,
Winbond Electronics Co. and Macronix, Inc. If we are successful in developing
our high density products, these products will compete principally with products
offered by Intel, Advanced Micro Devices, Fujitsu Limited, Sharp Electronics
Corporation, Samsung Semiconductor, Inc., SanDisk Corporation and Toshiba
Corporation, as well as any new entrants to the market.
In addition, we may in the future experience direct competition from our
foundry partners. We have licensed to our foundry partners the right to
fabricate products based on our technology and circuit design, and to sell such
products worldwide, subject to our receipt of royalty payments.
We may require additional capital in order to bring new products to market, and
the issuance of new equity securities will dilute your investment in our common
stock.
To implement our strategy of diversified product offerings, we need to
bring new products to market. Bringing new products to market and ramping up
production requires significant working capital. During 1998, we signed a credit
agreement with Foothill Capital Credit Corporation to provide up to $25 million
of additional capital to support potential on-going working capital
requirements. As of June 30, 1999, there were no borrowings under this facility.
However, future events could require us to start and/or to increase borrowing
under this credit facility, sell additional shares of our stock or seek
additional borrowings or outside capital infusions. We cannot assure you that
such financing events options will be available on terms acceptable to us, if at
all. In addition, if we issue shares of our common stock, our shareholders will
experience dilution with respect to their investment.
Our ability to compete successfully will depend, in part, on our ability to
protect our intellectual property rights, which we may not be able to protect.
We rely on a combination of patent, trade secrets, copyright and mask work
production laws and rights, nondisclosure agreements and other contractual
provisions and technical measures to protect our intellectual property rights.
Policing unauthorized use of our products, however, is difficult, especially in
foreign countries. Litigation may be necessary in the future to enforce our
intellectual property rights, to protect our trade secrets, to determine the
validity and scope of the proprietary rights of others, or to defend against
claims of infringement or invalidity. Litigation could result in substantial
costs and diversion of resources and could have a material adverse effect on our
business, operating results and financial condition regardless of the outcome of
the litigation. In particular, on July 31, 1998, we filed suit against Winbond
Electronics of Taiwan alleging breach of contract and breach of covenant of good
faith and fair dealing and are seeking an injunction prohibiting Winbond from
using any of our licensed technology. Winbond has responded by denying the
claims and asserting counter claims against us.
We own 20 United States patents concerning certain aspects of our products
and processes. Foreign patent applications have been filed in Canada, Europe,
Japan, and Taiwan, but we cannot assure you that any pending patent application
will be granted. Our operating results could be materially adversely affected by
the piracy of our intellectual property.
If we are accused of infringing the intellectual property rights of other
parties we may become subject to time-consuming and costly litigation.
Third parties may assert that our products infringe their proprietary
rights, or may assert claims for indemnification resulting from infringement
claims against us. Any such claims may cause us to delay or cancel
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shipment of our products which could materially adversely affect our business,
financial condition and results of operations. In addition, irrespective of the
validity or the successful assertion of such claims, we could incur significant
costs in defending against such claims.
Over the past three years we were sued by both Atmel Corporation and Intel
Corporation regarding patent infringement issues. Significant management time
and financial resources have been devoted to defending these lawsuits. We
settled with Intel in May 1999 and the Atmel litigation is ongoing.
In addition to the Atmel and Intel actions, we receive from time to time
letters or communications from other companies stating that these other
companies have patent rights which involve our products. Since the design of all
of our products is based on our SuperFlash technology, any legal finding that
our use of our SuperFlash technology infringes the patent of another company
could have a material adverse effect on our entire product line and operating
results. Furthermore, if such a finding was made, there can be no assurance that
we could license the other company's technology on commercially reasonable terms
or that we could successfully operate without such technology. Moreover, if we
are found to infringe, we could be required to pay damages to the owner of the
protected technology and could be prohibited from making, using, selling, or
importing into the United States any products that infringe the protected
technology. In addition, the management attention consumed by and legal cost
associated with any litigation could have a material adverse effect on our
operating results.
We depend on foreign foundries to supply our raw materials and to package and
test our products. If our relationships with these foundries are impaired our
ability to produce and market our products and our operating margins will be
seriously harmed.
We only have limited internal capability to manufacture our products and we
rely on third parties to perform substantially all of our manufacturing. In
addition, we only have very limited internal capacity to test all of our
products. We currently buy all of our wafers, an integral component of our
products, from a limited number of suppliers. During 1998, substantially all of
our wafers and sorted die were supplied by two foundries, Sanyo Electric Co.,
Ltd. in Japan and Taiwan Semiconductor Manufacturing Company in Taiwan. If these
suppliers fail to satisfy our requirements on a timely basis and at competitive
prices we could suffer manufacturing delays, a possible loss of revenues or
higher than anticipated cost of revenues, which would affect operating results
adversely.
As recently as June 30, 1999 we were unable to meet all of the demand for
our products, and have in the past failed to meet scheduled shipment dates, due
to our inability to obtain a sufficient supply of wafers and sorted die from our
foundries. Our current contract foundries, together with any additional foundry
at which capacity might be obtained, may not be willing or able to satisfy all
of our purchase and/or delivery requirements on a timely basis at favorable
prices. In addition, we have encountered delays at our subcontractors in the
process of qualifying new products and in the process of ramping new product
production. New product qualification and production ramp-up times at any
additional foundry, assuming an additional foundry could be found at all, could
take longer than anticipated. We are also subject to the risks of service
disruptions, raw material shortages and price increases by the foundries. Such
disruptions, shortages and price increases could have a material adverse effect
on our operating results.
Our cost of revenues may increase if we are required to purchase manufacturing
capacity in the future.
In order to obtain additional manufacturing capacity, we may be required to
make deposits, equipment purchases, loans, joint ventures, equity investments or
technology licenses in or with wafer fabrication companies. Such transactions
could involve a commitment of substantial amounts of our capital and technology
licenses in return for production capacity. We may be required to seek
additional debt or equity financing if we need substantial capital in order to
secure this capacity. However, we may not be able to obtain such financing at
all or on acceptable terms acceptable to us and this may have a material adverse
impact on our operating results.
We depend on manufacturers' representatives and distributors to generate a
majority of our revenues.
We rely on manufacturers' representatives and distributors to sell our
products and these entities can discontinue selling our products at any time.
Two of our manufacturers' representatives are responsible for substantially all
of our sales in Taiwan, which accounted for 28% of our product revenues during
1998. One manufacturers' representative
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accounted for substantially all of our sales in Hong Kong/China during 1998,
which accounted for 23% of our total 1998 product revenues. The loss of any of
these manufacturers' representatives, or any other significant manufacturers'
representative or distributor could have a material adverse effect on our
operating results by impairing our ability to sell our products.
Our business may suffer due to risks associated with international sales.
During 1996, 1997, and 1998, our export product and licensing revenues
accounted for approximately 86%, 87%, and 93% of our net revenues, respectively.
Our international business activities are subject to a number of risks, each of
which could impose unexpected costs on us that would have an adverse effect on
our operating results. These risks include:
o difficulties in complying with regulatory requirements and standards;
o tariffs and other trade barriers;
o costs and risks of localizing products for foreign countries;
o reliance on third parties to distribute our products;
o longer accounts receivable payment cycles;
o potentially adverse tax consequences;
o limits on repatriation of earnings; and
o burdens of complying with a wide variety of foreign laws.
Several Asian countries where we do business, such as Japan, Taiwan and Korea,
have recently experienced severe currency fluctuation and economic deflation. We
derived 82% of our product revenue from Asia during 1998 and 85% during the
first six months of fiscal 1999. Any kind of economic instability in this region
can negatively impact our total revenues and can also negatively impact our
ability to collect payments from these customers. During these periods, the lack
of capital in the financial sectors of these countries made it difficult for our
customers to open letters of credit or other financial instruments that are
guaranteed by foreign banks. Additionally, our major wafer suppliers and
assembly and packaging subcontractors are all located in Asia. Major disruptions
in their businesses due to these economic problems can have an adverse impact on
their business, which in turn may negatively impact their ability to adequately
supply us. Finally, the economic situation may exacerbate the current decline in
average selling prices for our products if our competitors reduce product prices
to generate needed cash. Continued economic and political instability during
1999 and beyond in this region will have a material adverse effect on our
operating results due to the large concentration of our production and sales
activities in this region.
We must successfully introduce new products or our business will be adversely
affected.
The markets for our products are characterized by rapidly changing
technology, product obsolescence, and the frequent introduction of new products.
Our ability to succeed depends on our ability to develop new products with which
we have limited or no experience. We cannot assure you that we will be able to
identify new product opportunities, or that we will be able to both develop and
market new products successfully or in a timely fashion.
We may be adversely affected if our computer systems fail or if those of our
distributors, suppliers, customers, or other third party providers fail because
of year 2000 compliance problems.
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. They could fail or create
erroneous results unless corrected so that they can process data related to the
year 2000. We rely on our internal systems (such as general ledger, accounts
payable and payroll modules), customer services, infrastructure, embedded
computer chips, networks and telecommunications equipment and end products for
our operations. We also rely on external systems of business enterprises such as
customers, suppliers, creditors, financial organizations, and of governments,
both domestically and globally, directly for accurate exchange of data and
indirectly. Should any of these internal or external systems fail as a result of
a year 2000 problem, we could experience problems with significant negative
financial consequences.
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Currently, we believe that the costs associated with the year 2000 issue,
and the consequences of incomplete or untimely resolution of the year 2000
issue, will not have a material adverse affect on our results of operations or
financial position in any given year. However, despite our efforts to address
the year 2000 impact on our internal systems, we are not sure that we have fully
identified all year 2000 issues, nor that we can resolve all issues that arise
without any disruption of our business and without incurring significant
expense. In addition, even if our internal systems are not materially affected
by the year 2000 issue, we could be negatively and significantly affected
through disruptions in the operation of other enterprises with which we
interact, such as our vendors, customers, financial institutions, governments or
other third party service providers.
Risks Related to Our Industry
Our success is dependent on the growth and strength of the flash memory market.
All of our products, as well as all new products currently under design,
are stand-alone flash memory devices or devices embedded with flash memory. A
technology other than SuperFlash may be adopted as an industry standard. Our
competitors are generally in a better financial and marketing position than we
are from which to influence industry acceptance of a particular flash
technology. In particular, a primary source of competition may come from
alternative technologies such as companies that offer ferroelectric random
access memory devices if such technology is commercialized for higher density
applications. To the extent our competitors are able to promote a technology
other than SuperFlash as an industry standard, our business will be seriously
harmed.
The average selling prices for our products are extremely volatile and for the
past two years has continued to significantly decline which has resulted in
losses.
The semiconductor memory industry is very competitive and has in recent
years experienced severe product price erosion, rapid technological change and
product obsolescence. Historically, the selling prices for semiconductor memory
products fluctuate significantly with changes in the supply and demand for these
products. During 1998, industry overcapacity resulted in greater than normal
price declines in our markets, which unfavorably impacted our revenues, gross
margins, and profitability. We expect this price erosion may continue for some
time. Growth in worldwide supply outpaced growth in demand during 1998. To
respond to these pressures, we are attempting to accelerate our cost reduction
efforts. We are also developing new products to expand and diversify our
application and geographic base. However, we cannot assure you that these cost
reduction and new product development activities will be implemented quickly
enough to offset the impact of further declines in average selling prices on
gross margins and operating results.
Specifically, during 1997 and 1998 the semiconductor industry and flash
memory marketplace experienced an overcapacity situation which resulted in
higher than normal price declines for our products. This significant price
erosion unfavorably impacted our revenues, gross margins and profitability
during those years. However, in early 1999 industry capacity has become
constrained such that some vendors which supply raw materials for our products
are now placing their customers, ourselves included, on allocation. This means
that while we have customer orders, we may not be able to obtain the materials
that we need to fill those orders timely, which may unfavorably impact our
revenues, gross margins and profitability.
Risks Related to this Offering
We expect the price of our common stock to be highly volatile and you may lose
all or part of your investment.
Our common stock is quoted for trading on the Nasdaq National Market. The
market price for our common stock may continue to be highly volatile for a
number of reasons including:
o fluctuations in our quarterly or yearly operating results;
o our status as a technology company;
o the rapid pace of technological change;
o the uncertainty of our business transactions;
o the contents of news, security analyst reports or other information
forums;
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o changes in earnings estimates by analysts;
o market conditions in the industry;
o announcements by competitors;
o the status our litigation;
o regulatory actions;
o general economic conditions; and
o broad market trends unrelated to performance.
In addition, stock prices for many technology companies fluctuate widely
for reasons which may be unrelated to operating results. These fluctuations, as
well as general economic, market and political conditions such as recessions or
military conflicts, may materially and adversely affect the market price of our
common stock.
We have implemented some anti-takeover provisions that may prevent or delay an
acquisition of SST that might be beneficial to our shareholders.
Provisions of our amended and restated articles of incorporation and
bylaws, as well as provisions of California law, could make it more difficult
for a third party to acquire us, even if doing so would be beneficial to our
shareholders. These provisions include:
o the ability of our board of directors to issue without shareholder
approval "blank check" preferred stock to increase the number of
outstanding shares and thwart a takeover attempt;
o limitations on who may call special meetings of shareholders;
o prohibiting stockholder action by written consent, thereby requiring
all shareholder actions to be taken at a meeting of our stockholders;
and
o establishing advance notice requirements for nominations for election
to the board of directors or for proposing matters that can be acted
upon by stockholders at stockholder meetings.
In May 1999, our board of directors adopted a Share Purchase Rights Plan,
commonly referred to as a "poison pill." In addition, the terms of our stock
option plan may discourage, delay or prevent a change in control of SST.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as "anticipates",
"believes," "continue,", "could," "estimates," "expects," "intends," "may,"
"plans," "potential," "predicts," "should," or "will" or the negative of such
terms or other comparable terminology. These statements are only predictions and
involve known and unknown risks, uncertainties and other factors, including the
risks outlined under "Risk Factors," that may cause our or our industry's actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels or activity, performance or
achievements expressed or implied by such forward-looking statements.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of such statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform such statements to actual results, unless required
by law.
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USE OF PROCEEDS
The proceeds from the sale of the common stock offered pursuant to this
prospectus are solely for the account of the selling stockholders. Accordingly,
we will not receive any proceeds from the sale of the shares by the selling
stockholders.
SELLING STOCKHOLDERS
All of the common shares registered for sale pursuant to this prospectus
will be owned immediately after registration by the selling stockholders. All of
the shares offered by the selling stockholders were acquired in connection with
our acquisition of the selling stockholders shares of capital stock of Linvex
Technology, Corp. The shares represent approximately three percent of our
outstanding capitalization as of the date of this prospectus. None of the
selling stockholders has a material relationship with us, except that some
selling stockholders are non-officer employees of SST.
The following table sets forth information known to us with respect to
beneficial ownership of our common stock as of June 30, 1999 by each selling
stockholder. The following table assumes that the selling stockholders sell all
of the shares. We are unable to determine the exact number of shares that
actually will be sold.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes sole or shared voting or
investment power with respect to shares shown as beneficially owned. Percentage
ownership is based on 24,278,562 shares of common stock outstanding as of June
30, 1999.
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<TABLE>
<CAPTION>
Shares Beneficially Owned Prior Shares Offered Shares Beneficially Owned
To The Offering By This After The Offering
Prospectus -------------------------
------------------------------- ----------------
Name of Selling Stockholder Shares Percent Shares Percent
- --------------------------------------------- --------------- ------------- ---------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Paul S. Lui.................................. 192,427 * 175,934 16,493 *
Brian B. Tighe (1) .......................... 164,672 * 139,153 13,717 *
Elliot Wang.................................. 78,249 * 70,424 7,825 *
LTC Enterprise, Inc. ........................ 64,570 * 58,113 6,457 *
Morris Ades.................................. 59,990 * 53,991 5,999 *
Bernard Aronson (2).......................... 32,787 * 25,931 2,162 *
Murray Koppelman............................. 26,083 * 23,475 2,608 *
Patrick Tsim (3)............................. 40,872 * 23,475 4,087 *
Jerry I. Kiachian............................ 25,182 * 22,664 2,518 *
Hung-Lan Peng................................ 22,361 * 22,361 0 *
S.C. Tsui.................................... 18,431 * 16,587 1,844 *
Sang S. Wang................................. 14,971 * 13,474 1,497 *
Patrick Tsim and Teresa S. Tsim 40,872 * 13,310 4,087 *
Revocable Trust, UT 11/12/95 (4).............
Chu Tjok Moy................................. 13,410 * 12,069 1,341 *
Bell S.C. Liu................................ 13,303 * 11,972 1,331 *
Jack Lai..................................... 13,041 * 11,737 1,304 *
Chi Wah Lee.................................. 12,591 * 11,332 1,259 *
Brian B. Tighe & Louise L. Tighe Family Trust 164,672 * 11,180 13,717 *
(5)..........................................
Yueh-Yu Lay (6).............................. 16,787 * 11,180 560 *
Asnat & Ben Gall............................. 32,787 * 7,042 782 *
Jong W. Lee.................................. 7,824 * 7,042 782 *
James Cohan.................................. 12,824 * 7,042 5,782 *
Huan Chung You............................... 6,708 * 6,708 0 *
Russell Knapp................................ 7,430 * 6,687 743 *
Yun-Sheng Hwang.............................. 6,991 * 6,292 699 *
J.D. and M.L. Adkins Living Trust Dated 6,520 * 5,868 652 *
01/08/80.....................................
Charles Sheng-Yen Liao (7)................... 16,787 * 5,047 560 *
The Joshua L. Peleg 1996 Trust .............. 5,216 * 4,694 522 *
Deborah L. Brooks............................ 5,216 * 4,694 522 *
Rachel B. Brooks............................. 5,216 * 4,694 522 *
Ying Go...................................... 3,689 * 3,320 369 *
Muneyoshi Samejima........................... 2,817 * 2,535 282 *
Brian R. Tighe............................... 2,767 * 2,490 277 *
Rita Taylor.................................. 2,608 * 2,347 261 *
Multi-Product Research, Inc. ................ 2,213 * 1,992 221 *
John Luke.................................... 1,844 * 1,660 184 *
Lo Shan Lee.................................. 1,549 * 1,394 155 *
Robert T. Borawski........................... 1,383 * 1,245 138 *
Ing-Hong Chen................................ 764 * 688 76 *
Best Trend Limited........................... 737 * 663 74 *
Jeanne Sai Yin Lee........................... 737 * 663 74 *
Chong Bo Nam................................. 737 * 663 74 *
Louise Tighe (8) ............................ 164,672 * 622 13,717 *
David Fong................................... 590 * 531 59 *
Shone Lee.................................... 590 * 531 59 *
Daniel Ma.................................... 535 * 481 54 *
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Chuck K. Chang............................... 230 * 207 23 *
Jiun-Cheng Hsu............................... 368 * 331 37 *
Carter Horney................................ 184 * 166 18 *
Steve Yu..................................... 484 * 166 318 *
</TABLE>
- --------------------
*Represents less than one percent.
(1) Includes 11,180 shares held by the Brian B. Tighe and Louise L. Tighe
Family Trust and 691 shares held by Louise Tighe.
(2) Includes 5,216 shares held by The Joshua L. Peleg 1996 Trust of which Mr.
Aronson is the trustee.
(3) Includes 14,789 shares held by the Patrick Tsim and Teresa S. Tsim
Revocable Trust, UT 11/12/95.
(4) Includes 26,083 shares held by Patrick Tsim.
(5) Includes 152,801 shares held by Brian B. Tighe and 691 shares held by
Louise Tighe.
(6) Includes 5,607 shares held by Charles Sheng-Yen Liao, Ms. Lay's spouse.
(7) Includes 11,180 shares held by Yueh-Yu Lay, Mr. Liao's spouse.
(8) Includes 11,180 shares held by the Brian B. Tighe and Louise L. Tighe
Family Trust and 152,801 shares held by Brian B. Tighe.
We are registering the shares for resale by the selling stockholders in
accordance with registration rights granted to the selling stockholders. We will
pay the registration and filing fees, printing expenses, listing fees, blue sky
fees, if any, and fees and disbursements of our counsel and the selling security
holders' counsel in connection with this offering, but the selling stockholders
will pay any underwriting discounts, selling commissions and similar expenses
relating to the sale of the shares. In addition, we have agreed to indemnify the
selling stockholders against certain liabilities, including liabilities under
the Securities Act, in connection with this offering. The selling stockholders
have agreed to indemnify us and our directors and officers, as well as any
person that controls us, against certain liabilities, including liabilities
under the Securities Act. Insofar as indemnification for liabilities under the
Securities Act may be permitted to our directors or officers, or persons that
control us, we have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
PLAN OF DISTRIBUTION
The selling stockholders, or, subject to applicable law, their pledgees,
donees, distributees, transferees or other successors in interest, may sell
shares from time to time in public transactions, on or off the Nasdaq National
Market, or private transactions, at prevailing market prices or at privately
negotiated prices, including but not limited to, one or any combination of the
following types of transactions:
o ordinary brokers' transactions;
o transactions involving cross or block trades or otherwise on the
Nasdaq National Market;
o purchases by brokers, dealers or underwriters as principal and resale
by these purchasers for their own accounts pursuant to this
prospectus;
o "at the market," to or through market makers, or into an existing
market for our common stock;
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents;
o through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise);
o in privately negotiated transactions; or
o to cover short sales.
In effecting sales, brokers or dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate in the resales. The
selling stockholders may enter into hedging transactions with broker-dealers,
and in connection with those transactions, broker-dealers may engage in short
sales of the shares. The selling stockholders also may sell shares short and
deliver the shares to close out such short positions. The selling stockholders
also may enter into option or other transactions with broker-dealers that
require the delivery to the
13
<PAGE>
broker-dealer of the shares, which the broker-dealer may resell pursuant to this
prospectus. The selling stockholders also may pledge the shares to a broker or
dealer. Upon a default, the broker or dealer may effect sales of the pledged
shares pursuant to this prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling stockholders in amounts to be
negotiated in connection with the sale. The selling stockholders and any
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commission, discount or concession these "underwriters" receive may be deemed to
be underwriting compensation.
To the extent required, the following information will be set forth in a
supplement to this prospectus:
o information as to whether underwriters who the selling stockholders
may select, or any other broker-dealer, is acting as principal or
agent for the selling stockholders;
o the compensation to be received by underwriters that the selling
stockholders may select or by any broker-dealer acting as principal or
agent for the selling stockholders; and
o the compensation to be paid to other broker-dealers, in the event the
compensation of such other broker-dealers is in excess of usual and
customary commissions.
Any dealer or broker participating in any distribution of the shares may be
required to deliver a copy of this prospectus, including a prospectus
supplement, if any, to any person who purchases any of the shares from or
through this dealer or broker.
We have advised the selling stockholders that they are required to comply
with Regulation M promulgated under the Securities Exchange Act during such time
as they may be engaged in a distribution of the shares. With certain exceptions,
Regulation M precludes any selling stockholder, any affiliated purchasers and
any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase any security that is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchases made
in order to stabilize the price of a security in connection with the
distribution of that security. All of the foregoing may affect the marketability
of the common stock.
We will not receive any of the proceeds from the selling stockholders' sale
of our common stock.
This registration statement will remain effective until the earlier of (a)
the date when all of the shares registered by this registration statement have
been distributed to the public, or (b) the date the shares of common stock are
eligible for sale in their entirety under Rule 144(k). In the event that any
shares remain unsold at the end of such period. We may file a post-effective
amendment to the registration statement for the purpose of deregistering the
shares registered by this prospectus.
LEGAL MATTERS
For the purpose of this offering, Cooley Godward LLP, Palo Alto, California
is giving an opinion of the validity of the common stock offered by this
prospectus.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended December 31, 1998, have been so incorporated in reliance on
the reports of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
14
