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As filed with the Securities and Exchange Commission on July 24, 1998
Registration No. 333-58993
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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PRE-EFFECTIVE AMENDMENT No. 1
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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JETFAX, INC.
(Exact name of registrant as specified in its charter)
Delaware 3577 77-0182451
(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
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1378 Willow Road
Menlo Park, California 94025
(650) 324-0600
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
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MR. ALLEN K. JONES
Chief Financial Officer
JETFAX, INC.
1378 Willow Road
Menlo Park, California 94025
(650) 324-0600
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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Copy to:
PATRICK A. POHLEN, ESQ.
COOLEY GODWARD LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, California 94306-2155
(650) 843-5000
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Approximate date of commencement of proposed sale to public:
As soon as practicable after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities
Act of 1933, other than securities offered only in connection with dividend
or interest reinvestment plans, check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of
the earlier effective registration statement for the same offering. [ ]
If this Form is to be a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
registration statement of the earlier effective registration statement for
the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration
Statement shall become effective on such date as the Commission, acting
pursuant to said Section 8(a), may determine.
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Subject to completion, dated July 24, 1998
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement
becomes effective. This prospectus shall not constitute an offer to sell or
the solicitation of an offer to buy nor shall there be any sale of these
securities in any State in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the securities laws of
any such State.
PROSPECTUS 1,634,216 Shares
JETFAX, INC.
Common Stock
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This Prospectus relates to an aggregate of 1,634,216 shares (the
"Shares") of common stock, $.01 par value (the "Common Stock"), (i) 899,984
of which ("the Reorganization Shares") were issued by JetFax, Inc., a
Delaware corporation (the "Company"), on December 5, 1997 in connection with
the Company's merger with DocuMagics, Inc., a California corporation, (ii)
388,500 of which (the "Warrant Shares") are issuable by the Company pursuant
to the exercise of a warrant to purchase Common Stock (the "Warrant"), and
(iii) 345,732 of which were issued upon conversion of the Company's Series E
Preferred Stock and continue to be held by an affiliate of the Company. The
Shares are being offered for sale from time to time by the selling
securityholders named in this Prospectus (the "Selling Securityholders").
The Selling Securityholders, directly or through agents, broker-dealers
or underwriters, may sell the Common Stock offered hereby from time to time
on terms to be determined at the time of sale, in transactions on the Nasdaq
National Market or in privately negotiated transactions, or a combination of
such methods of sale, at prices related to such prevailing market prices or
at negotiated prices. Selling Securityholders may effect such transactions
by selling the Shares to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Securityholders or the purchasers of the Shares for whom
such broker-dealers may act as agent or to whom they sell as principal or
both (which compensation to a particular broker-dealer might be in excess of
customary commissions.) The Selling Securityholders and any agents, broker-
dealers or underwriters that participate in the distribution of the Common
Stock may be deemed to be "underwriters" within the meaning of the Securities
Act of 1933, as amended (the "Securities Act"), and any commission received
by them and any profit on the resale of the Common Stock purchased by them
may be deemed to be underwriting discounts or commissions under the Act. See
"Selling Securityholders" and "Plan of Distribution."
The Common Stock is traded on the Nasdaq National Market under the
symbol "JTFX." On July 22, 1998, the closing sale price for the Common Stock
was $4.19 per share.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING
ON PAGE 3.
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 underwriting commissions or discounts will be paid by the Company in
connection with this offering. Estimated expenses payable by the Company in
connection with this offering are $22,169.42. The aggregate proceeds to the
Selling Security holders from the sale of the Shares will be the purchase
price of the Shares sold less the aggregate agents' commissions and
underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. The exercise price of the Warrant is
$2.75 per share payable to the Company. The Company will receive all of the
proceeds from the exercise of the Warrant but will not receive any proceeds
from the sale of the Warrant Shares.
The Company has agreed to indemnify the Selling Securityholders and
certain other persons against certain liabilities, including certain
liabilities under the Securities Act.
July __, 1998.
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No person is authorized in connection with any offering made hereby to
give any information or to make any representation not contained or
incorporated by reference in this Prospectus, and any information or
representation not contained or incorporated herein must not be relied upon as
having been authorized by the Company. This Prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, by any person in any
jurisdiction in which it is unlawful for person to make such offer or
solicitation. Neither the delivery of this Prospectus at any time nor any
sale made hereunder shall, under any circumstances, imply that the information
herein is correct as of any date subsequent to the date hereof.
AVAILABLE INFORMATION
The Company is subject to the information reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "SEC"). Such reports, proxy
statements and other information may be inspected and copied 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. Copies of such material may be obtained 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 a
Web site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC at
the address http://www.sec.gov. The Company's Common Stock is listed on the
Nasdaq National Market, and such reports, proxy statements and other
information can also be inspected and copied at the offices of The Nasdaq
Stock Market, 1735 K Street, N.W., Washington DC 20006.
ADDITIONAL INFORMATION
The Company has filed with the SEC a registration statement on Form S-3
(herein referred to, together with all amendments and exhibits, as the
"Registration Statement") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the SEC. For further information, reference is hereby made to
the Registration Statement. Copies of the Registration Statement and the
exhibits and schedules are available as described above.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents of the Company filed with the SEC under the Exchange
Act are incorporated by reference in this Prospectus:
A. The Company's Annual Report on Form 10-K for the year ended January 3,
1998;
B. The Company's Quarterly Report on Form 10-Q for the quarterly period
ended April 4, 1998;
C. The Company's amended Quarterly Report on Form 10-Q/A for the
quarterly period ended April 4, 1998;
D. The Company's Current Report on Form 8-K/A filed on February 20,
1998; and
E. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, filed May 12, 1997.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering shall be deemed to be incorporated by
reference herein and to be a part hereof from the date of filing of such
documents. Any statement contained in this Prospectus or in a document
incorporated or deemed to be incorporated by reference herein shall be deemed
to be modified or superseded for purposes of this Prospectus to the extent
that a statement contained herein or in any subsequently-filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the documents that have been
incorporated by reference
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herein (not including exhibits to such documents unless such exhibits are
specifically incorporated by reference herein or into such documents). Such
request may be directed to JetFax, Inc., Attention: Chief Financial Officer,
1378 Willow Road, Menlo Park, California 94025, telephone (650) 324-0600.
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FORWARD LOOKING STATEMENTS
This Prospectus may contain forward-looking statements which involve
risks and uncertainties. When used in this Prospectus, the words
"anticipate," "believe," "estimate," and "expect" and similar expressions as
they relate to the Company or its management are intended to identify such
forward-looking statements. The Company's actual results, performance, or
achievements could differ materially from the results expressed in, or
implied by, these forward-looking statements as a result of certain factors
including those discussed in "Risk Factors."
THE COMPANY
The Company was incorporated in Delaware in August 1988 and since that
time has engaged in the development, manufacture and sale of its branded
multifunction products (''MFPs'') which consist of electronic office devices
that combine print, fax, copy and scan capabilities in a single unit. The
Company has also entered into agreements with manufacturers ("OEMs") of MFPs
for the customization and integration of the Company's embedded system
technology and desktop software in several OEM products.
RISK FACTORS
An investment in the shares being offered hereby involves a high degree
of risk. Prospective investors should carefully consider the following risk
factors, in addition to other information contained or incorporated by
reference in this Prospectus, in evaluating an investment in the shares of
Common Stock offered hereby.
History of Operating Losses; Accumulated Deficit
The Company has experienced annual net losses since inception. The
Company's historical losses and certain preferred stock dividends have
resulted in an accumulated deficit of approximately $29.0 million as of March
31, 1998. There can be no assurance that the Company will achieve
profitability on a quarterly or annual basis in the future.
Potential Fluctuations in Quarterly Results
The Company in the past has experienced, and in the future may
experience, significant fluctuations in quarterly operating results that have
been or may be caused by many factors including: the timing of introductions
of new products or product enhancements by the Company, its OEMs and their
competitors; initiation or termination of arrangements between the Company
and its existing and potential significant OEM customers or dealers and
distributors; the size and timing of and fluctuations in end user demand for
the Company's branded products and OEM products incorporating the Company's
technology; inventories of the Company's branded products or products
incorporating the Company's technology carried by the Company, its
distributors or dealers, its OEMs or the OEMs' distributors that exceed
current or projected end user demand; the phase-out or early termination of
the Company's branded products or OEM products incorporating the Company's
technology; the amount and timing of development agreements, one-time
software licensing transactions and recurring licensing fees; non-performance
by the Company, its suppliers or its OEM or other customers pursuant to their
plans and agreements; seasonal trends; competition and pricing; customer
order deferrals and cancellations in anticipation of new products or product
enhancements; industry and technology developments; changes in the Company's
operating expenses; software and hardware defects; product delays or product
quality problems; currency fluctuations; and general economic conditions. The
Company expects that its operating results will continue to fluctuate
significantly as a result of these and other factors. A substantial portion
of the Company's operating expenses is related to personnel, development of
new products, marketing programs and facilities. The level of spending for
such expenses cannot be adjusted quickly and is based, in significant part,
on the Company's expectations of future revenues and anticipated OEM
commitments. If such commitments do not result in revenues or operating
expenses are significantly higher, the Company's business, financial
condition and results of operations will be adversely affected, which could
have a material adverse effect on the price of the Company's Common Stock.
Furthermore, the Company has often recognized a substantial portion of
its revenues in the last month of a quarter, with such revenues frequently
concentrated in the last weeks or days of a quarter. The Company's branded
products are primarily sold through dealers, and such dealers often place
orders for products at or near the end of a quarter. As a result, because one
or more key orders that are scheduled to be booked and shipped at the end of
a quarter may be delayed until the beginning of the next quarter or
cancelled, revenues for future quarters are not predictable with any
significant degree of
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accuracy. For these and other reasons, the Company believes that period-to-
period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indicators of future performance.
It is likely that in future quarters, the Company's operating results, from
time to time, will be below the expectations of public market analysts and
investors, which could have a material adverse effect on the price of the
Company's Common Stock.
The accuracy of quarterly license revenues from OEMs reported by the
Company has been, and the Company believes will continue to be, dependent on
the timing and accuracy of product sales reports received from the Company's
OEMs. These reports are provided only on a quarterly basis (which may not
coincide with the Company's quarter) and are subject to delay and potential
revision by the Company's OEMs. Therefore, the Company is required to
estimate all of the recurring license revenues from OEMs for each quarter. As
a result, the Company will record an estimate of such revenues prior to
public announcement of the Company's quarterly results. In the event the
product sales reports received from the Company's OEMs are delayed or
subsequently revised, the Company may be required to restate its recognized
revenues or adjust revenues for subsequent periods, which could have a
material adverse effect on the Company's business, financial condition and
results of operations and the price of the Company's Common Stock.
Dependence on the MFP Market
The market for MFPs is relatively new and rapidly evolving. The
Company's future success is dependent to a significant degree upon broad
market acceptance of the type of MFPs on which the Company is focusing its
development efforts. This success will be dependent in part on the ability of
the Company and its OEM customers to develop MFPs that provide the
functionality, performance, speed and connectivity demanded by the market at
acceptable price points and to convince end users to broadly adopt MFPs for
office and home office use. There can be no assurance that the market for
MFPs will continue to develop, that the Company and its OEM customers will be
successful in developing MFPs that gain broad market acceptance, that the
Company will be able to offer in a timely manner its embedded system
technology, branded products or desktop software or that the Company's OEM
customers will choose the Company's technology for use in their MFPs. The
failure of any of these events to occur would have a material adverse effect
on the Company's business, financial condition and results of operations.
Risks Associated with Change in Focus of the Company's Business
The Company has historically focused primarily on the development,
manufacture and sale of its branded MFPs and currently derives a substantial
portion of its revenues from the sale of its branded MFPs. The Company
expects that its revenue growth will be dependent, in part, on increased
licensing of the Company's embedded system technology and desktop software
products. However, there can be no assurance that the Company will realize
growth in revenues from sales and licensing of its embedded system technology
or desktop software. If such growth in revenues does not occur and if
revenues from the sale of the Company's branded MFPs were not to continue at
past growth rates, due either to a change in the Company's deployment of
resources or otherwise, it could have a material adverse effect on the
Company's business, financial condition and results of operations.
Risks Associated with Increased Focus on PC Software Business
The Company expects that its business, financial condition and results
of operations will be more dependent on sales of its PC software for JetSuite
MFP desktop and PaperMaster personal document handling, which will be sold
both separately and bundled with the Company's branded products and embedded
system technology. The Company's on-going ability to develop its MFP desktop
software products business will depend upon several factors, including, but
not limited to, the commercial acceptance of the Company's MFP desktop
software products, upgrades and add-on software products, the ability of the
Company's personnel and distribution channels to sell and support MFP desktop
software products and the Company's ability to continue to integrate the
recent acquisition of DocuMagix, Inc. into the Company. Because the market
for MFP desktop software products is new and emerging, there can be no
assurance that a significant market, if any, will develop for sales of the
Company's MFP desktop software products, or for sales of upgrades and add-on
software products, and such a failure would likely have a material adverse
effect on the Company's MFP desktop software products business. There can be
no assurance that the Company's PC software products business will be
successful. Any failure by the Company to develop a successful PC software
products business would have a material adverse effect on the Company's
business, financial condition and results of operations.
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Dependence on Dealers and Distributors
The Company has derived a substantial portion of its revenues from sales
of its branded MFPs through dealers and distributors. The Company expects
that sales of these products through its dealers and distributors will
continue to account for a substantial portion of its revenues for the
foreseeable future. The Company currently maintains distribution
relationships with dealers associated with IKON Office Solutions (formerly
Alco Standard), a national group of office equipment dealers (''IKON''). The
Company has also derived substantial sales to A. Messerli AG (''Messerli''),
one of the Company's office equipment dealers located in Switzerland. Each of
the Company's dealers and distributors can cease marketing the Company's
products with limited notice and with little or no penalty. There can be no
assurance that the Company's dealers and distributors will continue to offer
the Company's products or that the Company will be able to recruit additional
or replacement dealers and distributors. The loss of one or more of the
Company's major dealers and distributors could have a material adverse effect
on the Company's business, financial condition and results of operations. The
Company's dealers and distributors also offer competitive products
manufactured by third parties. There can be no assurance that the Company's
dealers and distributors will give priority to the marketing of the Company's
products as compared to its competitors' products. Any reduction or delay in
sales of the Company's products by its dealers and distributors could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Dependence on OEMs
The Company has derived a significant portion of its revenues from
licensing of its embedded system technology and software and from development
services to OEMs. The Company currently has OEM relationships with Hewlett-
Packard Company (''Hewlett-Packard''), Oki Data Corporation (''Oki Data''),
and Samsung Electronics Corporation (''Samsung''). The Company anticipates
that a significant portion of its revenues will be derived from OEMs in the
future and that the Company's revenues will be increasingly dependent upon,
among other things, the ability and willingness of OEMs to timely develop and
promote MFPs that incorporate the Company's technology. The ability and
willingness of these OEMs to do so is based upon a number of factors, such as
the timely development by the Company and the OEMs of new products with
additional functionality, increased speed and enhanced performance at
acceptable prices to end users; development costs of the OEMs; licensing and
development fees of the Company; compatibility with emerging industry
standards; technological advances; intellectual property issues; general
industry competition; and overall economic conditions. Many of these factors
are beyond the control of the Company and its OEMs. Many OEMs, including some
of the Company's OEM customers, are concurrently developing and promoting
MFPs that do not incorporate the Company's technology. In such cases, the
OEMs may have profitability or other incentives to promote internal solutions
or competing products in lieu of products incorporating the Company's
technology. No assurance can be given as to the ability or willingness of the
Company's OEMs to continue developing, marketing and selling products
incorporating the Company's technology. The loss of any of the Company's
significant OEMs could have a material adverse effect on the Company's
business, financial condition and results of operations.
Risks Associated with Technological Change
The market for the Company's products and services is characterized by
rapidly changing technology, evolving industry standards and needs, and
frequent new product introductions. The Company currently derives all of its
revenues from the sale of its branded MFPs and related consumables, the
licensing of its technology and software, and the provision of related
development services. The Company anticipates that these sources of revenues
will continue to account for substantially all of its revenues for the
foreseeable future. The market expects the Company and its OEMs to develop
and release, in a regular and timely manner, new MFPs with better performance
and improved features at competitive price points. As the complexity of
product development increases and the expected time-to-market continues to
decrease, the risk and difficulty in meeting such schedules increase as well
as the costs to the Company and its OEMs. In addition, the Company, its OEMs
and their competitors, from time to time, may announce new products,
capabilities or technologies that may replace or shorten the life cycles of
the Company's branded products and software and the OEM products
incorporating the Company's technology. The Company's success will depend on,
among other things, market acceptance of the Company's branded products,
software and embedded system technology and the demand for MFPs by the
Company's OEM customers; the ability of the Company and its OEM customers to
respond to industry changes and market demands in a timely manner;
achievement of new design wins by the Company in the Company's development of
its branded products as well as the OEMs' development of associated new MFPs;
the ability of the Company and its OEM customers to reduce production costs;
and the regular and continued introduction of new and enhanced technology,
services and products by the Company and its OEMs on a timely and cost-
effective basis. There can be no assurance that the products and technology
of competitors of the Company or its OEMs will not render the Company's
branded products, technology, software or its OEMs' products noncompetitive
or obsolete. Any failure by the Company or its OEMs to anticipate or respond
adequately to the rapidly
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changing technology and evolving industry standards and needs, or any
significant delay in development or introduction of new and enhanced products
and services, could result in a loss of competitiveness or revenues, which
could have a material adverse effect on the Company's business, financial
condition and results of operations.
Reliance on Limited Product Line
The Company has been primarily engaged in the development, manufacture
and sale of MFPs and related technology and has derived a substantial portion
of its revenues from sales of its branded MFPs and consumables. Dependence on
a single product line makes the Company particularly vulnerable to the
successful introduction of competitive products. The Company currently
derives a substantial portion of its branded product revenues from sales of
the Series M900. Sales of the Series M900 began shipping commercially in the
third quarter of 1997. A reduction in demand for the Series M900, or the
Company's failure to timely introduce its next MFP, would have a material
adverse effect on the Company's business, financial condition and results of
operations.
Risks Associated with Product Development and Introduction; Product Delays
The Company's future success is dependent to a significant degree on its
ability to further develop its embedded system technology and software for
MFPs in the time frame required by its OEM and other customers and to develop
technology with the quality, speed and other specifications required by its
OEM and other customers. The Company in the past has experienced delays in
product development, and the Company may experience similar delays in the
future. Prior delays have resulted from numerous factors such as changing OEM
product specifications, delays in receiving necessary components,
difficulties in hiring and retaining necessary personnel, difficulties in
reallocating engineering resources and other resource limitation difficulties
with independent contractors, changing market or competitive product
requirements and unanticipated engineering complexity. The Company
experienced delays in one of its development projects in the past which
resulted in delays in receiving payment. In addition, the Company's software
and hardware have in the past, and may in the future, contain undetected
errors or failures that become evident upon product introduction or as
product production volumes increase. There can be no assurance that errors
will not be found; that the Company will not experience problems or delays in
meeting the delivery schedules for or in the acceptance of products by the
Company's OEMs or other customers; that there will not be problems or delays
in shipments of the Company's branded products or OEMs' products; or that the
Company's new products and technology will meet performance specifications
under all conditions or for all anticipated applications. Given the short
product life cycles in the MFP market, any delay or difficulty associated
with new product development, introductions or enhancements could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Highly Competitive Industry
The market for MFPs and related technology and software is highly
competitive and characterized by continuous pressure to enhance performance,
to introduce new features and to accelerate the release of new products. The
Company's branded products compete primarily with the dominant vendors in the
fax market, all of whom have substantially greater resources than the Company
and include, among others, Canon Inc., Panasonic, a division of Matsushita
Electrical Industrial Co., Ltd., Pitney Bowes Inc., Ricoh Co. Ltd., Sharp
Electronics Corporation and Xerox. The Company also competes on the basis of
vendor name and recognition, technology and software expertise, product
functionality, development time and price.
The Company's technology, development services and software primarily
compete with solutions developed internally by OEMs. Virtually all of the
Company's OEMs have significant investments in their existing solutions and
have the substantial resources necessary to enhance existing products and to
develop future products. These OEMs have or may develop competing
multifunction technologies and software which may be implemented into their
products, thereby replacing the Company's proposed or current technologies,
eliminating a need for the Company's services and products to these OEMs. The
Company also competes with technologies, software and development services
provided in the MFP market by other systems and software suppliers to OEMs.
With respect to MFP embedded system technologies, the Company competes with,
among others, Peerless Systems Corporation, Personal Computer Products, Inc.
and Xionics Document Technologies, Inc. With respect to desktop software, the
Company competes with, among others, Caere Corporation, Simplify Development
Corporation, Smith Micro Software, Inc., Visioneer Inc., Wordcraft
International and Xerox.
As the MFP market continues to develop, the Company expects that
competition and pricing pressures will increase from OEMs, existing
competitors and other companies that may enter the Company's existing or
future markets with similar
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or substitute products or technologies. Software solutions may also be
introduced by competitors that are less costly or provide better performance
or functionality. The Company anticipates increasing competition for its
MFPs, technologies and software under development. Most of the Company's
existing competitors, many of its potential competitors and all of the
Company's OEMs have substantially greater financial, technical, marketing and
sales resources than the Company. In the event that price competition
increases, competitive pressures could cause the Company to reduce the price
of its branded products, to reduce the amount of royalties received on new
licenses and to reduce the fees for its development services in order to
maintain existing business and generate additional product sales and license
and development revenues, which could reduce profit margins and result in
losses and a decrease in market share. No assurances can be given as to the
ability of the Company to compete favorably with the internal development
capabilities of its current and prospective OEM customers or with other
third-party vendors, and the inability to do so would have a material adverse
effect on the Company's business, financial condition and results of
operations.
Effect of Rapid Growth on Existing Resources; Potential Acquisitions
The Company has grown rapidly in recent years. A continuing period of
rapid growth could place a significant strain on the Company's management,
operations and other resources. The Company's ability to manage its growth
will require it to continue to invest in its operational, financial and
management information systems, procedures and controls, and to attract,
retain, motivate and effectively manage its employees. There can be no
assurance that the Company will be able to manage its growth effectively and
to successfully utilize the current management information system, and
failure to do so would have a material adverse effect on the Company's
business, financial condition and results of operations.
The Company may, from time to time, pursue the acquisition of other
companies, assets or product lines that complement or expand its existing
business. Acquisitions involve a number of risks that could adversely affect
the Company's operating results, including the diversion of management's
attention, the assimilation of the operations and personnel of the acquired
companies, the amortization of acquired intangible assets and the potential
loss of key employees. JetFax has no present commitments nor is it engaged in
any discussions or negotiations with respect to possible acquisitions. No
assurance can be given that any acquisition by the Company will not
materially and adversely affect the Company or that any such acquisition will
enhance the Company's business.
Dependence on Outside Suppliers; Dependence on Sole Source Suppliers
The Company relies on various suppliers of components for its products.
Many of these components are standard and generally available from multiple
sources. However, there can be no assurance that alternative sources of such
components will be available at acceptable prices or in a timely manner. The
Company generally buys components under purchase orders and does not have
long-term agreements with its suppliers. Although alternate suppliers may be
readily available for some of these components, for other components it could
take an undetermined amount of time to qualify a replacement supplier and
order and receive replacement components. The Company does not always
maintain sufficient inventory to allow it to fill customer orders without
interruption during the time that would be required to obtain an adequate
supply of single sourced components. Although the Company believes it could
develop other sources for single source components, no alternative source
currently exists and the process could take several months or longer.
Therefore, any interruption in the supply of such components could have a
material adverse effect on the Company's business, financial condition and
results of operations.
Many of the components used in the Company's products are purchased from
suppliers located outside the United States. Foreign manufacturing facilities
are subject to risk of changes in governmental policies, imposition of
tariffs and import restrictions and other factors beyond the Company's
control. There can be no assurance that United States or foreign trading
policies will not restrict the availability of components or increase their
cost. Any significant increase in component prices or decrease in component
availability could have a material adverse effect on the Company's business,
financial condition and results of operations.
Certain components used in the Company's products are available only
from one source. The Company is dependent on Oki America, Inc. (''Oki
America''), as the supplier of major components, including the printer
engine, of the Series M900. Oki America is also a competitor of the Company.
The Company is also dependent on American Microsystems, Inc. (''AMI'') to
provide unique application specific integrated circuits (''ASICs'')
incorporating the Company's imaging and logic circuitry, Motorola, Inc.
(''Motorola'') to provide microprocessors, Pixel Magic, Inc., a subsidiary of
Oak Technology, Inc. (''Pixel''), to provide a specialized imaging processor
and Rockwell Semiconductor Systems (''Rockwell'') to provide modem chips. If
Oki America, AMI, Motorola, Pixel or Rockwell were to limit or reduce the
sale of such components to the Company, or if such suppliers were to
experience financial difficulties or other problems which prevented them from
supplying the Company with
8
<PAGE> 10
the necessary components, it could have a material adverse effect on the
Company's business, financial condition and results of operations. These sole
source providers are subject to quality and performance issues, materials
shortages, excess demand, reduction in capacity and/or other factors that may
disrupt the flow of goods to the Company or its customers and thereby
adversely affect the Company's business and customer relationships. Any
shortage or interruption in the supply of any of the components used in the
Company's products, or the inability of the Company to procure these
components from alternate sources on acceptable terms, could have a material
adverse effect on the Company's business, financial condition and results of
operations.
Dependence on Intellectual Property Rights; Risk of Infringement
The Company's success is heavily dependent upon its proprietary
technology. To protect its proprietary rights, the Company relies on a
combination of copyright, trade secret and trademark laws and nondisclosure
and other contractual restrictions. The Company has no patents or patent
applications pending. As part of its confidentiality procedures, the Company
generally enters into nondisclosure agreements with its employees,
consultants, OEMs and strategic partners and limits access to and
distribution of its designs, software and other proprietary information.
Despite these efforts, the Company may be unable to effectively protect its
proprietary rights and, in any event, enforcement of the Company's
proprietary rights may be expensive. The Company's source code also is
protected as a trade secret. However, the Company from time to time licenses
portions of its source code and designs to OEMs and also places such source
code and designs in escrow to be released to OEMs in certain circumstances,
which subjects the Company to the risk of unauthorized use or
misappropriation despite the contractual terms restricting disclosure. In
addition, it may be possible for unauthorized third parties to copy the
Company's products or to reverse engineer or obtain and use the Company's
proprietary information. Further, the laws of some foreign countries do not
protect the Company's proprietary rights to the same extent as do the laws of
the United States. There can be no assurance that the Company's means of
protecting its proprietary rights will be adequate or that the Company's
competitors will not independently develop similar technology.
As the number of patents, copyrights, trademarks and other intellectual
property rights in the Company's industry increases, products based on the
Company's technology increasingly may become the subject of infringement
claims. The Company has in the past received communications from third
parties asserting that the Company's trademarks or products infringe the
proprietary rights of third parties or seeking indemnification against such
infringement. The Company is generally required to agree to indemnify its
OEMs from third party claims asserting such infringement. There can be no
assurance that third parties will not assert infringement claims against the
Company or its OEMs in the future. Any such claims, regardless of merit,
could be time consuming, result in costly litigation, cause product shipment
delays or require the Company to enter into royalty or licensing agreements.
Such royalty or licensing agreements, if required, may not be available on
terms acceptable to the Company, or at all, which could have a material
adverse effect on the Company's business, financial condition and results of
operations. In addition, the Company may initiate claims or litigation
against third parties for infringement of the Company's proprietary rights or
to establish the validity of the Company's proprietary rights. Litigation to
determine the validity of any claims, whether or not such litigation is
determined in favor of the Company, could result in significant expense to
the Company and divert the efforts of the Company's technical and management
personnel from daily operations. In addition, the Company may lack sufficient
resources to initiate a meritorious claim. In the event of an adverse ruling
in any litigation regarding intellectual property, the Company may be
required to pay substantial damages, discontinue the use and sale of
infringing products, expend significant resources to develop non-infringing
technology or obtain licenses to infringing or substituted technology. The
failure of the Company to develop, or license on acceptable terms, a
substitute technology could have a material adverse affect on the Company's
business, financial condition and results of operations.
Dependence on Key Personnel
The Company is largely dependent upon the skills and efforts of its
senior management, particularly Edward R. Prince, III (''Rudy Prince''), its
President and Chief Executive Officer, and Lon Radin, its Vice President of
Engineering, and other officers and key employees, some of whom only recently
have joined the Company. The Company maintains key person life insurance
policies on Rudy Prince and Lon Radin. None of the Company's officers or key
employees, other than Michael Crandell, Vice President of Software, are
covered by an employment agreement with the Company. The Company believes
that its future success will depend in large part upon its ability to attract
and retain highly skilled engineering, managerial, sales, marketing and
operations personnel, many of whom are in great demand. Competition for such
personnel, especially engineering, has recently increased significantly. The
loss of key personnel or the inability to hire or retain
9
<PAGE> 11
qualified personnel could have a material adverse effect on the Company's
business, financial condition and results of operations.
International Activities
Revenues from sales to the Company's customers outside the United States
account for a substantial portion of the Company's total revenues. The
Company expects that revenues from customers located outside the United
States may increase in both absolute dollars and as a percentage of total
revenues in the future. The international market for the Company's branded
products and products incorporating the Company's technology and software is
highly competitive, and the Company expects to face substantial competition
in this market from established and emerging companies and technologies
developed internally by its OEM customers. Risks inherent in the Company's
international business activities also include currency fluctuations and
restrictions, the burdens of complying with a wide variety of foreign laws
and regulations, including Postal, Telephone and Telegraph (''PTT'')
regulations, longer accounts receivable cycles, the imposition of government
controls, risks of localizing and internationalizing products to local
requirements in foreign countries, trade restrictions, tariffs and other
trade barriers, restrictions on the repatriation of earnings and potentially
adverse tax consequences, any of which could have a material adverse effect
on the Company's business, financial condition and results of operations.
Substantially all of the Company's international sales are currently
denominated in U.S. dollars and, therefore, increases in the value of the
U.S. dollar relative to foreign currencies could make the Company's products
less competitive in foreign markets. Because of the Company's international
activities, it faces certain currency exposure and translation risks. For
example, late in 1997 the Company established a subsidiary in Germany which
will increase the Company's exposure to foreign exchange risk, and the
Company purchases certain key components pursuant to purchase contracts
denominated in foreign currency. In connection therewith, the Company has Yen
cash deposits designated as a hedge against the firm purchases under supply
contract.
Dependence on Single Manufacturing Facility; Risks Related to Potential
Disruption
The Company's manufacturing operations are located in its facility in
Northern California. In addition, a number of the suppliers of components for
the Company's products and providers of outsourced assembly, upon which the
Company relies, are located in Northern California. Since the Company does
not currently operate multiple facilities in different geographic areas, or
have alternative sources for many of its components or outsourced assembly, a
disruption of the Company's manufacturing operations, or the operations of
its suppliers, resulting from sustained process abnormalities, human error,
government intervention or natural disasters such as earthquakes, fires or
floods could cause the Company to cease or limit its manufacturing operations
and consequently have a material adverse effect on the Company's business,
financial condition and results of operations.
Readiness for Year 2000
The Company has and will continue to make certain investments in its
software systems and applications to ensure the Company's information systems
are Year 2000 compliant. The financial impact to the Company of the Company's
Year 2000 compliance effort has not been and is not anticipated to be
material to its financial position or results of operations in any given
year. The Company believes that its current products are Year 2000 compliant.
The approach of Year 2000 presents significant issues for many computer
systems, since much of the software in use today may not accurately process
data beyond 1999. The Company has recently implemented new information
systems and accordingly does not anticipate any internal Year 2000 issues
from its own information systems, databases or programs. However, the Company
could be adversely impacted by Year 2000 issues faced by major distributors,
suppliers, customers, vendors and financial service organizations with which
the Company interacts. The Company is currently taking steps to address the
impact, if any, of the Year 2000 issue on the operations of the Company.
There can be no assurances that the Company will be able to detect all
potential failures of the Company's and/or third parties' computer systems. A
significant failure of the Company's or a third party's computer system could
have a material adverse effect on the Company's business, financial condition
and results of operations.
Shares Eligible for Future Sale; Registration Rights
Sales of substantial amounts of Common Stock in the public market could
have an adverse effect on the trading price of the Common Stock. Based on
shares outstanding as of May 11, 1998, the Company has outstanding
approximately 11,753,405 shares of Common Stock. Of such shares outstanding,
approximately 7,404,768 shares are freely tradable
10
<PAGE> 12
without restriction or further registration under the Securities Act, unless
held by "affiliates" of the Company as that term is defined in Rule 144 under
the Securities Act. After the registration of the 1,634,316 shares offered
hereby, the remaining approximately 2,714,441 shares of Common Stock
outstanding are "restricted securities" as that term is defined in Rule 144,
and may be sold under Rule 144 subject to the holding period, volume
limitations and other restrictions under Rule 144.
The Company has entered into an agreement with the Selling
Securityholders pursuant to which the 899,984 common shares, 388,500 common
shares issuable pursuant to the Warrant, and 345,732 common shares issued
upon the conversion of the Series E Preferred Stock and offered hereby are
registered for resale under the Securities Act.
11
<PAGE> 13
USE OF PROCEEDS
The Company will receive all of the proceeds from the exercise of the
Warrant but will not receive any proceeds from the sale of the Shares by the
Selling Securityholders. The Company anticipates that the net proceeds
received by the Company from the exercise of the Warrant will be used for
general corporate purposes.
DIVIDEND POLICY
The Company has never declared or paid cash dividends on its Common
Stock and intends to retain all available funds for use in the operation and
expansion of its business. The Company therefore does not anticipate that
any cash dividends will be declared or paid in the foreseeable future. In
addition, the Company's credit facility prohibits the payment of cash
dividends without the consent of the lender.
12
<PAGE> 14
SELLING SECURITYHOLDERS
The following table sets forth certain information regarding the number
of shares of Common Stock owned beneficially by the Selling Securityholders
as of June 30, 1998 and the number of shares which may be offered pursuant to
this Prospectus. This information is based upon information provided by the
Selling Securityholders. The Selling Securityholders may sell all, some or
none of their Common Stock being offered.
<TABLE>
<CAPTION>
Shares
Beneficially Number of Number of
Owned Prior to Shares Shares Owned After
Offering(1) being Potential Offering
----------------- ------------------
Name Number Percent(2) Offered Number Percent(2)
- ---------------------------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Bahous, Michelle L. and
F. Joseph.................. 22 * 22 -- 0
BancBoston Ventures, Inc.... 252,360 2.15% 252,360 -- 0
Bronina, Lyudmila........... 4 * 4 -- 0
Chen-Chi Charitable Remainder
Unitrust DTD 7/28/93....... 3,468 * 3,468 -- 0
Crowell, Gayle.............. 45 * 45 -- 0
DeVere, Laura............... 114 * 114 -- 0
First to Market............. 45 * 45 -- 0
Forman, Ed.................. 13 * 13 -- 0
Gallagher, Paul and
Karen Jenkins.............. 285 * 285 -- 0
Hahn, Sam................... 3,657 * 3,657 -- 0
LeGault, Kenn............... 167 * 167 -- 0
Leung, Ka-Lai (Steve)....... 8,229 * 8,229 -- 0
Mariani, Glacomo............ 22 * 22 -- 0
Nijor, Robin S.............. 137 * 137 -- 0
Noling, Rick................ 45 * 45 -- 0
Open Market, Inc............ 20,891 * 20,891 -- 0
Audrey Virginia Proulx Trust
dated 12/30/94,Virginia L.
Boyd Trustee............... 1,545 * 1,545 -- 0
Ian Forrest Seth Proulx Trust
dated 12/30/94,Virginia L.
Boyd, Trustee.............. 1,545 * 1,545 -- 0
Proulx Living Trust dated
8/30/92, Thomas Proulx,
Trustee.................... 11,395 * 11,395 -- 0
Proulx, Tom................. 5,400 * 5,400 -- 0
Sam Borofsky Assoc. ........ 68 * 68 -- 0
Schlein, Ted................ 9 * 9 -- 0
U.S. Ventures S.A. ........ 17,287 * 17,287 -- 0
Segal, Andy................. 45 * 45 -- 0
Siebel Charitable Remainder
Trust dated 7/27/93........ 6,358 * 6,358 -- 0
Sill, Igor.................. 769 * 769 -- 0
Silicon Valley Bancshares... 2,120 * 2,120 -- 0
Skaff, George W. ........... 1,199 * 1,199 -- 0
Shklar, Eugene & Faymel..... 11 * 11 -- 0
Sullivan, Patrick........... 3,468 * 3,468 -- 0
Tokuda, Lance............... 68 * 68 -- 0
Aeneas Venture Corporation.. 18,627 * 18,627 -- 0
Allstate Insurance Company.. 44,704 * 44,704 -- 0
Allstate Life Insurance
Company.................... 14,901 * 14,901 -- 0
The Agents' Pension Plan of
Allstate Insurance Company 7,451 * 7,451 -- 0
Allstate Retirement Plan.... 7,451 * 7,451 -- 0
13
<PAGE> 15
Ameritech Pension Trust by
State Street Bank and
Trust Company as Trustee... 5,588 * 5,588 -- 0
The Army and Air Force
Exchange Services 401(h)
Plan....................... 373 * 373 -- 0
Retirement Annuity Plan for
Employees of the Army and
Air Force Exchange Service
Trust...................... 3,725 * 3,725 -- 0
Jaime Zobel de Ayala........ 447 * 447 -- 0
Mellon Bank, N.A. as Trustee
for the Bell Atlantic
Master Trust............... 46,660 * 46,660 -- 0
The John and Frances Bowes
1997 Family Trust.......... 869 * 869 -- 0
Merrill Lynch-SF IRA Rollover
A/C #270-89D38 FBO John G.
Bowes...................... 186 * 186 -- 0
Carleton College............ 3,725 * 3,725 -- 0
Crossroads DPT Limited
Partnership................ 9,313 * 9,313 -- 0
Dayton Hudson Corporation
Retirement Fund............ 7,451 * 7,451 -- 0
Alexandra McMicking Ellsworth 261 * 261 -- 0
Trustees of General Electric
Pension Trust.............. 37,254 * 37,254 -- 0
Bankers Trust Company as
Trustee for General Motors
Hourly Rate Employees
Pension Trust.............. 18,627 * 18,627 -- 0
Bankers Trust Company as
Trustee for General Motors
Salaried Employees Pension
Trust...................... 18,627 * 18,627 -- 0
Rhoda H. Goldman............ 1,863 * 1,863 -- 0
Bankers Trust as Trustee for
the GTE Service Corporation
Plan for Employees'Pensions 18,627 * 18,627 -- 0
Ian C.M. Hall............... 261 * 261 -- 0
Joseph C.M. Hall............ 447 * 447 -- 0
Roderick C.M. Hall.......... 447 * 447 -- 0
Horsley Bridge Fund I, L.P. 37,254 * 37,254 -- 0
HKP Ventures................ 5,588 * 5,588 -- 0
Illinois Municipal Retirement
Fund....................... 1,863 * 1,863 -- 0
Brinson Trust Company as
Trustee of the Institutional
Venture Capital Fund II.... 447 * 447 -- 0
Kroger Co. Master Retirement
Trust...................... 18,627 * 18,627 -- 0
Leeway & Co. ............... 16,857 * 16,857 -- 0
Consuelo Hall McHugh........ 447 * 447 -- 0
Bennett B. McMicking........ 261 * 261 -- 0
Brent L. McMicking.......... 447 * 447 -- 0
Henry Cameron McMicking..... 447 * 447 -- 0
New York Life Insurance
Company.................... 37,254 * 37,254 -- 0
Paul Capital Partners, L.P. 37,254 * 37,254 -- 0
Phoenix Home Life Mutual
Insurance Co. ............. 11,176 * 11,176 -- 0
Phoenix Employee Pension
Plan Trust................. 1,863 * 1,863 -- 0
The Northern Trust Company
as Custodian for Policemen''
Annuity & Benefit Fund-City
of Chicago................. 3,725 * 3,725 -- 0
Renselaer Polytechnic
Institute.................. 5,588 * 5,588 -- 0
Trust for the Benefit of John
N. Rosekrans, Jr. ......... 1,739 * 1,739 -- 0
Boston Safe Deposit & Trust
Company as Trustee for SBC
Master Pension Trust....... 13,039 * 13,039 -- 0
Boston Safe Deposit & Trust
Company as Trustee for SBC
Master Pension Trust
(Brinson) ................. 14,901 * 14,901 -- 0
Merrill Lynch-SF IRA Rollover
A/C #270-88E80 FBO Edward
Scal....................... 186 * 186 -- 0
Charles M. Schulz........... 3,725 * 3,725 -- 0
Board of Trustees of the
Leland Stanford Junior
University................. 7,451 * 7,451 -- 0
Merrill Lynch-SF IRA Rollover
A/C #270-89D63 FBO
Douglas E. Tinker.......... 186 * 186 -- 0
14
<PAGE> 16
Citibank, N.A. as Trustee for
the United Technologies
Corporation Master Trust
as Directed by Manufacturers
Investment Corp. .......... 14,901 * 14,901 -- 0
Boston Safe Deposit & Trust
Company as Trustee for
the US WEST Pension Trust.. 37,254 * 37,254 -- 0
US Venture Pte. Ltd. ....... 5,588 * 5,588 -- 0
Brinson Trust Company as
Trustee of the Venture
Partnership Acquisition Fund 7,004 * 7,004 -- 0
Maria Victoria Zobel........ 261 * 261 -- 0
O-S Ventures, a California
General Partnership........ 1,645 * 1,645 -- 0
Jacques A. Robinson......... 164 * 164 -- 0
Steven J. Simmons........... 329 * 329 -- 0
Arthur Stabenow............. 164 * 164 -- 0
William N. Starling......... 82 * 82 -- 0
Joan Strauss................ 82 * 82 -- 0
Gary H. Story............... 247 * 247 -- 0
Phillip R. Trapp............ 82 * 82 -- 0
W. M. vanCleemput........... 164 * 164 -- 0
Jeffrey D. West............. 330 * 330 -- 0
Lincoln Trust Company,
Custodian #60806368 FBO
Riley R. Willcox........... 82 * 82 -- 0
BHMS Partners III........... 58 * 58 -- 0
Vernon R. Anderson & Lysbeth
W. Anderson, Trustee
The Anderson Family Trust
dtd July 13, 1983 as
Amended.................... 329 * 329 -- 0
Thomas R. Baruch............ 82 * 82 -- 0
Robert M. Berger............ 164 * 164 -- 0
Brody Family Trust dated
August 15, 1986............ 82 * 82 -- 0
Steven Campbell............. 82 * 82 -- 0
Dieter Enzmann.............. 41 * 41 -- 0
Susan Enzmann............... 41 * 41 -- 0
Gary D. Foss................ 164 * 164 -- 0
Douglas J. Glader........... 115 * 115 -- 0
Michael M. Goodman.......... 82 * 82 -- 0
Paul Hug and Livia Hug,
as joint tenants........... 82 * 82 -- 0
Scott G. McNealy............ 329 * 329 -- 0
Steven C. Mendell and
Barbara B. Mendell, Co-
Trustees, U.T.D.
September 13, 1996......... 164 * 164 -- 0
Richard M. Moley............ 330 * 330 -- 0
Morse Family Trust.......... 82 * 82 -- 0
J. Marty O'Donohue.......... 82 * 82 -- 0
Masahiro Omori.............. 82 * 82 -- 0
Watts, Lesa M. ............. 25 * 25 -- 0
Wong, Henry................. 6 * 6 -- 0
Ailicec International
Enterprises Limited....... 734,232 6.05% 734,232(3) -- 0
</TABLE>
[FN]
* less than 1%
(1) Unless otherwise indicated below, the persons named in the table have
sole voting and investment power with respect to all shares owned by them,
subject to community property laws where applicable.
(2) Applicable percentage of ownership at June 30, 1998 is based upon
11,753,405 shares of Common Stock outstanding. The Percentage of common
stock beneficially owned by Ailicec International Enterprises Limited prior
to the offering is based on the total number of shares outstanding plus the
388,500 shares issuable upon exercise of the Warrant. 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.
(3) Includes 388,500 Shares issuable upon exercise of the Warrant and
345,732 shares of Common Stock issued upon the conversion of Series E
Preferred Stock. The Managing Director of Ailicec International Enterprises
Limited is a director of the Company.
</FN>
15
<PAGE> 17
DESCRIPTION OF WARRANT
On December 31, 1994, the Company issued the Warrant to purchase 388,500
shares of Series E Preferred Stock to Ailicec International Enterprises
Limited. The Warrant may be exercised at an exercise price of $2.75 per
share. Upon conversion of the Company's Series E Preferred Stock into Common
Stock, the Warrant became exercisable for an equivalent number of shares of
Common Stock. The Warrant contains provisions for the adjustment of the
exercise price or the aggregate number of shares issuable upon exercise of
the Warrant under certain circumstances, including stock dividends, stock
splits, combinations, mergers, consolidations, recapitalizations,
reclassifications, and sales below the exercise price. The Warrant will
expire on October 4, 1999.
PLAN OF DISTRIBUTION
One hundred eighteen Selling Securityholders received an aggregate of
899,984 Reorganization Shares from the Company in connection with the
Agreement and Plan of Reorganization, dated as of November 11, 1997 (the
"Reorganization Agreement") among the Company, JF Acquisition Sub, Inc.,
DocuMagix, Inc. and the former shareholders of DocuMagix, Inc. The Company
agreed to register all of the Reorganization Shares pursuant to the
Reorganization Agreement. The Company will not receive any of the proceeds
from sales of the Reorganization Shares. The Reorganization Shares are
"restricted securities" for purposes of the Act.
Ailicec International Enterprises Limited, a Hong Kong Corporation
("Ailicec") received and continues to hold 345,732 shares of Common Stock
pursuant to the conversion of Series E Preferred Stock issued by the Company
to Ailicec. The Managing Director of Ailicec is a director of the Company.
The trading of these shares, prior to the effectiveness of this registration
statement, is subject to the volume restrictions of Rule 144, as the holder is
an affiliate of the Company within the meaning of such rule. The Company
agreed to register, under certain circumstances, all of the shares issued upon
conversion of the Series E Preferred Stock (the "Conversion Shares"). The
Company will not receive any of the proceeds from resale of the Conversion
Shares.
Ailicec also received the Warrant to purchase 388,500 shares of Series E
Preferred Stock, which converted into a warrant to purchase an equivalent
number of shares of common stock, pursuant to that certain Warrant to Purchase
Stock, dated as of December 31, 1994 issued by the Company to Ailicec
International Enterprises Limited, a Hong Kong Corporation ("Ailicec"). The
Warrant may be exercised at an exercise price of $2.75 per share. The Company
agreed to register all of the Warrant Shares. The Company will not receive
any of the proceeds from resale of the Warrant Shares. The Warrant Shares are
"restricted securities" for purposes of the Securities Act.
The shares of Common Stock may be offered by the Selling Securityholders
from time to time to purchasers directly by the Selling Securityholders
acting as principal for their own accounts in one or more transactions at a
fixed price, which may be changed, or at varying prices determined at the
time of sale or at negotiated prices. Alternatively, the Selling
Securityholders may from time to time offer the Common Stock through
underwriters, dealers or agents who may receive compensation in the form of
underwriting discounts, commissions or concessions from the Selling
Securityholders and/or the purchasers of shares for whom they may act as
agent. In addition, the shares of Common Stock may be pledged from time to
time by the Selling Securityholders to a lender to secure one or more loans,
and defaults under that loan or loans may result in the pledgee acquiring
title to some or all of the shares and selling them either directly or
through underwriters, dealers or agents. Sales may be made on the Nasdaq
National Market or in private transactions. In addition, any securities
covered by this Prospectus which qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this Prospectus.
The Selling Securityholders and any underwriters, dealers, agents or
pledgees that participate in the distribution of the Common Stock offered
hereby may be deemed to be underwriters within the meaning of the Act and any
discounts, commissions or concessions received by them and any provided
pursuant to the sale of shares by them might be deemed to be underwriting
discounts and commissions under the Act. In order to comply with the
securities laws of certain states, if applicable, the Common Stock will be
sold in such jurisdictions only through registered or licensed brokers or
dealers. In addition, in certain states the Common Stock may not be sold
unless it has been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied with.
The Company entered into agreements with the Selling Securityholders to
register their shares under applicable federal and state securities laws.
The Company will pay substantially all of the expenses incident to the
offering and sale to the public of the Common Stock offered hereby, other
than commissions, concessions and discounts of underwriters, dealers or
agents, if any. Such expenses (excluding such commissions and discounts, if
any) are estimated to be approximately $22,169.42. Such agreements provide
16
<PAGE> 18
for cross-indemnification of the Selling Securityholders and the Company to
the extent permitted by law, for losses, claims, damages, and liabilities
arising, under certain circumstances, out of any registration of the Shares.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the shares may not simultaneously
engage in market making activities with respect to the Common Stock for a
period of one business day prior to the commencement of such distribution. In
addition and without limiting the foregoing, the Selling Shareholders will be
subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, without limitation, Regulation M. These
provisions may limit the timing of purchases and sales of shares of Common
Stock by the Selling Shareholder.
A supplement to this Prospectus will be filed, if required, pursuant
to Rule 424 under the Securities Act disclosing (a) the name of the
participating broker-dealer(s); (b) the number of Shares involved; (c) the
price at which such shares were sold; (d) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable; and (e)
other facts material to the transaction, including the name and other
information regarding the Selling Shareholder.
The Company will maintain the effectiveness of the Registration
Statement until the earlier of (i) such time as all of the Shares have been
disposed of in accordance with the intended methods of disposition set
forth in the Registration Statement, (ii) the date the Common Shares are
eligible for sale in their entirety within a three month period under Rule
144 of the SEC (assuming compliance by the Selling Securityholders with the
provisions thereof) or (iii) December 5, 1999. In the event that any Shares
remain unsold at the end of such period, the Company may file a post-
effective amendment to the Registration Statement for the purpose of
deregistering the Shares.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
the Company by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The financial statements of the Company and its consolidated
subsidiaries, except DocuMagix, Inc. (for certain prior periods audited by
other auditors described below) and the related financial statement schedule,
as of December 31, 1997 and 1996 and for the year ended December 31, 1997,
the nine-month period ended December 31, 1996 and the year ended March 31,
1996, incorporated by reference in this prospectus have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their reports which
are incorporated herein by reference.
The financial statements relating to DocuMagix Inc., incorporated in
this Prospectus by reference to the Annual Report on Form 10-K as of June 30,
1996, for the two years then ended have been incorporated in reliance on the
report of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements of DocuMagix, Inc. as of June 30, 1997 and for
the year then ended (consolidated with those of the Company) have been
audited by Deloitte & Touche LLP as stated in their report incorporated
herein by reference. Such financial statements of the Company and its
consolidated subsidiaries have been incorporated herein by reference in
reliance upon the respective reports of such firms given upon their authority
as experts in accounting and auditing. Both of the foregoing firms are
independent auditors.
18
<PAGE> 20
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST
NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING
STOCKHOLDER OR BY ANY OTHER PERSON. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION TO BUY ANY OF THE SHARES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION WOULD BE UNLAWFUL OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information .............................................. 2
Additional Information ............................................. 2
Documents Incorporated by Reference ................................. 2
Forward Looking Statements ......................................... 3
The Company ........................................................ 3
Risk Factors ....................................................... 3
Use of Proceeds .................................................... 11
Dividend Policy .................................................... 11
Selling Securityholders ............................................ 12
Description of Warrant ............................................. 15
Plan of Distribution ............................................... 15
Legal Matters ...................................................... 16
Experts ............................................................ 16
</TABLE>
19
<PAGE> 21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
<TABLE>
<CAPTION>
Item 14. Other Expenses of Issuance and Distribution
<S> <C>
Securities and Exchange Commission registration fee... $ 2,169.42
Legal fees and expenses............................... $ 10,000.00
Accountants' fees..................................... $ 8,000.00
Miscellaneous......................................... $ 2,000.00
Total............................................. $ 22,169.42
</TABLE>
The foregoing items, except for the Securities and Exchange Commission
registration fee, are estimated.
Item 15. Indemnification of Directors and Officers
As permitted by the Delaware General Corporation Law, the Company has
included in its Certificate of Incorporation a provision to eliminate the
personal liability of its directors for monetary damages for breach or
alleged breach of their fiduciary duties as directors, subject to certain
exceptions. In addition, the Bylaws of the Company provide that the Company
is required to indemnify its officers and directors under certain
circumstances, including those circumstances in which indemnification would
otherwise be discretionary, and the Company is required to advance expenses
to its officers and directors as incurred in connection with proceedings
against them for which they may be indemnified. The Company has entered into
indemnification agreements with its officers and directors containing
provisions that are in some respects broader than the specific
indemnification provisions contained in the Delaware General Corporation Law.
The indemnification agreements may require the Company, among other things,
to indemnify such officers and directors against certain liabilities that may
arise by reason of their status or service as directors or officers (other
than liabilities arising from willful misconduct of a culpable nature), to
advance expenses incurred as a result of any proceeding against them as to
which they could be indemnified and to obtain directors' and officers'
insurance if available on reasonable terms. At present, the Company is not
aware of any pending or threatened litigation or proceeding involving a
director, officer, employee or agent of the Company in which indemnification
would be required or permitted. The Company believes that its charter
provisions and indemnification agreements are necessary to attract and retain
qualified persons as directors and officers.
II-1
<PAGE> 22
Item 16. Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------------------------------------------------------
<S> <C>
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Independent Auditors
23.2 Consent of Independent Accountants
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1* Power of Attorney.
* As previously filed.
</TABLE>
Item 17. Undertakings
(a) The undersigned Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement; and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement;
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is on Form S-3, Form S-8 or Form F-3,
and the information required to be included in a post-effective amendment by
those paragraphs is contained in periodic reports filed with or furnished to
the Commission by the Registrant pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act 1934 that are incorporated by reference in the
registration statement.
2. That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered herein,
and the offering of such securities at that time shall be deemed to be the
bona fide offering thereof.
3. To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the registrant's annual report pursuant to Section 13(a) or 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange 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 Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 23
SIGNATURES
Pursuant to 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 Form S-3 and has duly caused this
Registration Statement to be filed on its behalf by the undersigned,
thereunto duly authorized in the City of Menlo Park, State of California,
this 10th day of July, 1998.
JETFAX, INC.
By: /s/ Allen K. Jones
-------------------
Allen K. Jones, Chief Financial Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ RUDY PRINCE* President, Chief Executive July 24, 1998
- ---------------------------- Officer and Chairman of the Board
(Rudy Prince) (Principal Executive Officer)
/s/ ALLEN K. JONES Chief Financial Officer July 24, 1998
- ---------------------------- (Principal Financial
(Allen K. Jones, as and Accounting Officer)
Attorney-in-Fact)
/s/ THOMAS B. AKIN* Director July 24, 1998
- ----------------------------
(Thomas B. Akin)
/s/ DOUGLAS Y. BECH* Director July 24, 1998
- ----------------------------
(Douglas Y. Beach)
/s/ STEVEN J. CARNEVALE Director July 24, 1998
- ----------------------------
(Steven J. Carnevale)
/s/ CHUNG CHIU Director July 24, 1998
- ----------------------------
(Chung Chiu)
/s/ EDWARD R. PRINCE,JR.* Director July 24, 1998
- ----------------------------
(Edward R. Prince, Jr.)
/s/ LON B. RADIN* Director July 24, 1998
- ----------------------------
(Lon B. Radin)
/s/ ALBERT E. SISTO* Director July 24, 1998
- ----------------------------
(Albert E. Sisto)
</TABLE>
[FN]
By: /s/ Allen K. Jones
-----------------------
(Allen K. Jones, as
Attorney-in-Fact)
</FN>
II-3
<PAGE> 24
INDEX TO EXHIBITS
-----------------
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------------------------------------------------------
<S> <C>
5.1 Opinion of Cooley Godward LLP
23.1 Consent of Independent Auditors
23.2 Consent of Independent Accountants
23.3 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24.1* Power of Attorney.
* As previously filed.
</TABLE>
II-4
<PAGE> 25
EXHIBIT 5.1
[COOLEY GODWARD LLP LETTERHEAD]
July 24, 1998
JetFax, Inc.
1378 Willow Road
Menlo Park, California 94025
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by Jet Fax, Inc. (the "Company") of a Registration Statement
on Form S-3 (the "Registration Statement") with the Securities and Exchange
Commission covering the offering for resale of 1,634,216 shares of the Common
Stock, par value $0.01 per share, of the Company (the "Common Stock"), 899,984
of which are held by certain of the Selling Security holders and were issued
pursuant to the Agreement and Plan of Reorganization, dated as of November 11,
1997 among the Company, JF Acquisition Sub, Inc., DocuMagix, Inc. and the
former shareholders of DocuMagix, Inc. (the "Reorganization Shares"). In
addition, the Registration Statement covers 388,500 shares of Common Stock
issued to Ailicec International Enterprises Limited ("Ailicec") pursuant to
its conversion of the Company's Series E Preferred Stock, and 344,732 shares
of Common Stock (the "Warrant Shares") issuable upon exercise of a warrant
held by Ailicec (the "Warrant").
In connection with this opinion, we have examined the Registration Statement,
the Company's Certificate of Incorporation and Bylaws, as amended, the
Warrant, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as
originals, the conformity to originals of all documents submitted to us as
copies thereof, and the due execution and delivery of all documents where due
execution and delivery are a prerequisite to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that (i) the Reorganization Shares have been validly issued, and are fully
paid and nonassessable, and (ii) the Conversion Shares have been validly
issued, and are fully paid and nonassessable, and (iii) the Warrant Shares,
when acquired upon exercise of the Warrant in accordance with its terms, will
be validly issued, fully paid, and nonassessable.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the reference to our firm under the caption "Legal Matters"
in the Prospectus included in the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Patrick A. Pohlen
Patrick A. Pohlen
II-5
<PAGE> 26
EXHIBIT 23.1
Consent of Independent Auditors
-------------------------------
JetFax, Inc.:
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-58993 of JetFax, Inc. on Form S-3 of (1) our
reports dated January 30, 1998 (February 23, 1998 as to the last sentence of
Note 6) and March 31, 1998 (relating to the financial statement schedule),
appearing in the Annual Report on Form 10-K of JetFax, Inc. for the year ended
December 31, 1997 and (2) our report dated December 12, 1997 (relating to the
financial statements of DocuMagix, Inc. for the year ended June 30, 1997),
appearing in Amendment Number 1 to the Current Report on Form 8-K/A of JetFax,
Inc. dated December 5, 1997 (filed February 23, 1998).
We also consent to the reference to us under the heading "Experts" in this
Amendment No. 1 to Registration Statement No. 333-58993.
DELOITTE & TOUCHE LLP
San Jose, California
July 23, 1998
II-6
<PAGE> 27
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report
dated October 25, 1996, relating to the financial statements of DocuMagix,
Inc., appearing on page 35 of JetFax Inc.'s Annual Report on Form 10-K for
the year ended January 3, 1998. We also consent to the reference to us under
the heading "Experts" in such Prospectus.
PRICEWATERHOUSECOOPERS LLP
San Jose, California
July 23, 1998
II-7
<PAGE> 28
