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As filed with the Securities and Exchange Commission on January 26, 1998
Registration No. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GLOBAL VILLAGE COMMUNICATION, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 94-3095680
(STATE OF INCORPORATION) (I.R.S. EMPLOYER
IDENTIFICATION NUMBER)
1144 EAST ARQUES AVENUE
SUNNYVALE, CA 94086
(408) 523-1000
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
NEIL SELVIN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GLOBAL VILLAGE COMMUNICATION, INC.
1144 EAST ARQUES AVENUE
SUNNYVALE, CA 94086
(408) 523-1000
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
Copy to:
ALAN K. AUSTIN
MARK L. REINSTRA
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
(415) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement become effective.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
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TITLE OF AMOUNT TO BE PROPOSED PROPOSED AMOUNT OF,
EACH CLASS OF REGISTERED MAXIMUM MAXIMUM REGISTRATION
SECURITIES TO OFFERING AGGREGATE FEE
BE REGISTERED PRICE OFFERING
PER SHARE(1) PRICE(1)
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<S> <C> <C> <C> <C>
Common Stock, 0.001 par value 142,392 shares $1.75 $249,186.00 $73.51
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</TABLE>
(1) Estimated solely for purposes of calculation of the registration fee based
on the average of the high and low prices of the Registrant's Common Stock
on the Nasdaq National Market on January 22, 1998.
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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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 the registration or qualification under the securities laws of any such
State.
PROSPECTUS
142,392 SHARES
GLOBAL VILLAGE COMMUNICATION, INC.
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COMMON STOCK
($0.001 PAR VALUE)
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This Prospectus relates to 142,392 shares (the "Shares") of Common
Stock, $0.001 par value (the "Common Stock"), of Global Village Communication,
Inc., a Delaware corporation (the "Company"). The Shares may be offered by
certain shareholders of the Company (the "Selling Shareholder") from time to
time in transactions on the Nasdaq National Market System, in privately
negotiated transactions or otherwise at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to such market
prices or at negotiated prices. The Shares were issued in connection with a
stock puchase transaction exempt from the registration requirements of the
Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section
4(2) thereof (the "Private Offering"). See "Selling Shareholder" and "Plan of
Distribution."
The Company will receive no part of the proceeds of sales made
hereunder. All expenses of registration incurred in connection with this
offering are being borne by the Company, but all selling and other expenses
incurred by the Selling Shareholder will be borne by such Selling Shareholder.
The Company and the Selling Shareholder have each agreed to indemnify the other
against certain liabilities, including certain liabilities under the Securities
Act.
The Common Stock is traded on the Nasdaq National Market under the
symbol "GVIL." On January 22, 1998, the closing price of the Common Stock on the
Nasdaq National Market was $1.8125.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
The Selling Shareholder and any broker executing selling orders on
behalf of the Selling Shareholder may be deemed to be an underwriter within the
meaning of the Securities Act. Commissions received by any such broker may be
deemed to be underwriting commissions under the Securities Act.
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THESE SHARES 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.
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The date of this Prospectus is January 26, 1998.
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NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY SELLING SHAREHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THE
SHARES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH PERSON
TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational 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 "Commission"). Such reports, proxy
statements and other information can be inspected and copied at the Public
Reference Room of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the Commission's regional offices at Seven World Trade Center, 13th
Floor, New York, New York, 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661; and copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
The Company has filed with the Commission a Registration Statement
(which term shall include all amendments, exhibits and schedules thereto) on
Form S-3 under the Securities Act, with respect to the Shares offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and to which reference is hereby
made. Statements made in this Prospectus as to the contents of any document
referred to are not necessarily complete. With respect to each such document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. The
Registration Statement may be inspected at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W. Washington,
D.C. 20549, at prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
There are hereby incorporated by reference in this Prospectus the
following documents and information heretofore filed with the Commission:
(1) the Company's Quarterly Report on Form 10-Q for the fiscal quarters
ended June 30, 1997 and September 30, 1997;
(2) the Company's Annual Report on Form 10-K for the fiscal year ended
March 31, 1997; and
(3) the description of the Company's Common Stock offered hereby
contained in the Company's Registration Statement on Form 8-A dated
January 24, 1994.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act, after the date of this Prospectus and prior to
the filing of a post-effective amendment which indicates that all securities
offered have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference in this Prospectus and
to be part hereof from the date of filing such documents. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for all purposes to the extent that a statement contained
in this Prospectus or in any other subsequently filed documents which also is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement contained herein shall be deemed to be modified or
superseded for all purposes to the extent that a statement contained in a
subsequently filed document which is deemed to be incorporated by reference
herein modifies or supersedes such statement.
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The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus is delivered, upon written or oral request of
any such person, a copy of any and all of the information that has been or may
be incorporated by reference in this Prospectus, other than exhibits to such
documents. Requests for such copies should be directed to the Company at 1144
East Arques Avenue, Sunnyvale, CA 94086. The Company's telephone number at that
location is (408) 523-1000.
THE COMPANY
The Company is a leader in the design, development and marketing of
easy-to-use integrated communications products for personal computers with
Windows, Macintosh, OS/2 and DOS operating systems. The Company's products
enable mobile, home office and networked computer users in small- to
medium-sized organizations to access the Internet and other information
services, connect to a remote organization's internal network, send and receive
faxes and e-mail from their computers and communicate efficiently with
colleagues, customers and suppliers.
The Company was incorporated in California in 1989. The Company
reincorporated in Delaware in March 1994 in connection with the initial public
offering of its Common Stock. The Company's principal executive offices are
located at 1144 East Arques Avenue, Sunnyvale, California 94086 and its
telephone number at that address is (408) 523-1000. The Common Stock of the
Company is traded on the Nasdaq National Market under the symbol GVIL.
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RISK FACTORS
This Prospectus contains forward-looking statements that involve risks
and uncertainties. The Company's actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Prospectus. In addition to the other information in this Prospectus, the
following risk factors should be considered carefully in evaluating the Company
and its business before purchasing the Common Stock offered by this Prospectus.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS
The Company has in the past experienced and in the future may experience
significant fluctuations in annual and quarterly operating results that may be
caused by many factors including, among others, the introduction or enhancement
of products by Apple Computers, Inc. ("Apple"), IBM-compatible personal computer
(PC) manufacturers, the Company or its competitors; customer acceptable of, and
transition to, 56 Kbps products, including the Company's 56 Kbps product line;
the sales rates of Apple Macintosh personal computers and PCs; the size and
timing of individual orders; market price reductions; product returns; market
acceptance of new products and technology; risks related to delays in product
development; introductions of new technologies or standards; seasonality of
revenues; customer order deferrals, accelerations, and payments of accounts
receivable in anticipation of new products; changes in the Company's operating
expenses; performance of the Company's distributors and suppliers; mix of
products sold; quality control of the Company's products; and general economic
conditions. As a result, the Company believes that period-to-period comparisons
of its results of operations are not necessarily meaningful and should not be
relied upon as an indication of future performance.
Because the Company generally ships products within a short period after
receipt of an order, the Company does not usually have a material backlog of
unfilled orders, and revenues in any quarter are substantially dependent on
orders booked in that quarter. The Company's expense levels are based in part on
its expectations as to future revenues. Therefore, the Company may be unable to
adjust spending in a timely manner to compensate for any unexpected revenue
shortfall. Accordingly, any significant shortfall of demand in relation to the
Company's expectations or any material delay of customer orders would have an
almost immediate adverse effect on the Company's results of operations.
Fluctuations in operating results may also result in volatility in the price of
the Company's Common Stock.
PRODUCT DEVELOPMENT AND TECHNOLOGICAL CHANGE
The industry in which the Company competes generally is subject to short
product life cycles. In this regard, the Company traditionally has experienced a
reduction in the average selling prices of its products as the time from product
introduction elapses. The Company routinely institutes significant price
reductions and/or rebates with respect to substantially its products and expects
that competitive pressures will continue to necessitate price reductions. This
is illustrated by the decline in the suggested retail price of the Company's
TelePort Platinum product from $171 to $139 during the 1997 fiscal year. In
particular, the Company expects the trend of reduced average selling prices for
its individual use products to continue during fiscal 1998. There can be no
assurance that the trend of reduced average selling prices will not accelerate
during fiscal 1998.
The market for personal computer communications products is
characterized by continual change and improvement in hardware and software
technology resulting in short product life cycles. The Company's success will
depend on its ability to enhance its current products, develop new products on a
timely and cost-effective basis that meet changing customer needs and respond to
emerging industry standards and other technological changes. In particular, the
Company must adapt its products to the evolving technological standards of the
various computer platforms and new technical standards resulting from increases
in data transmission speed and wireless communication, as well as new form
factors such as PCMCIA. Any failure by the Company to anticipate or respond
adequately to changes in technology and customer preferences, or any significant
delay in product development or introduction, would have a material adverse
effect on the Company's results of operations. Due in part to the factors
described above, the Company is subject to the risk that its inventories may
rapidly become obsolete or that the Company may carry quantities of certain
products that exceed current or projected demand. While the Company writes down
inventory that it considers to be excessive or obsolete, the Company has in the
past
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recorded inventory write-downs in excess of available reserves. There can
be no assurance that the Company's recorded allowances for such write-downs will
be adequate in the future, and material write-downs could have a material
adverse effect on the Company's results of operations. In addition, products as
complex as those offered by the Company may contain undetected errors or defects
when first introduced or as new versions are released. There can be no assurance
that despite testing by the Company and by current and potential customers,
errors will not be found in new products after commencement or commercial
shipments resulting in a delay in market acceptance or a recall of such
products.
DEPENDENCE ON APPLE MACINTOSH FAMILY OF COMPUTERS; ADVERSE AFFECT OF REDUCED
APPLE SALES
A substantial majority of the Company's sales to date have been derived
from products designed for use with the Apple Macintosh family of personal
computers, including the Macintosh desktop series of computers and the PowerBook
series of portable computers. Therefore, the Company is substantially dependent
on the sale of Apple Macintosh computers and the development and sale of new
Apple computers. Due to continued weakness in demand for Apple products,
expected continuing pricing pressures and new product introductions by the
Company's competitors, the Company expects that revenues from its products for
the Apple Macintosh family could remain flat or decrease in future periods,
which would have a material adverse effect on the Company's business and results
of operations unless the Company can generate sufficient revenues from its PC
and other products to compensate for any shortfall in revenues from its Apple
products. The market for personal computers is extremely competitive and rapidly
changing. There can be assurance that personal computers competing with the
Apple Macintosh family of computers will not displace the Macintosh products or
reduce their growth as such personal computers are enhanced in their
functionality, evolve to support technologically superior applications or
otherwise become economically more attractive.
Apple, in the past, has experienced difficulty in making the transition
associated with the development, manufacturing, marketing and sale of certain
new computers. In this regard, the Company anticipates that there will be
ongoing transitions within the Apple product line. These transitions will
subject the Company to the risks that (i) potential customers will defer
purchases of current products as a result of, among other things, speculation or
premature announcements about new products, discontinuance of product lines or
corporate restructuring; (ii) the products will not be successfully received in
the marketplace; and (iii) Apple will be unable to adequately meet demand for
the new products. The inability of Apple to successfully develop, manufacture,
market, sell or make the transition to new products, including, among other
things, new PowerBook products and new desktop computers, would have a material
adverse effect on the Company's results of operations. In addition, sales of the
Company's products in the past have been adversely affected by the announcement
by Apple of new products with the potential to replace existing products.
DEPENDENCE ON RELATIONSHIP WITH APPLE
The Company relies on its working relationship with Apple, which has
included and includes collaborative product development, sharing of information,
product sales to Apple and licensing of Apple technology. Apple is not
contractually obligated to continue such collaborative development or
information sharing activities and could discontinue such activities at any
time. In addition, Apple is not contractually obligated to renew its licenses
with the Company or purchase the Company's products. Apple is collaborating with
other vendors of communications products that compete with the Company's
products, and Apple may elect not to renew its licenses with the Company in the
future. The Company, has in the past, experienced interruptions in the sale of
its products to Apple, and there is no guarantee that these sales will continue.
The Company's strategy of developing products compatible with the Macintosh
family of products is substantially dependent on the Company's ability to gain
pre-release access to, and to develop expertise in, current and future Macintosh
product developments by Apple. There can be no assurance that Apple will
continue to cooperate with the Company, and the inability of the Company to
maintain and further develop its relationship with Apple would have a material
adverse effect on the Company's results of operations. There can be no assurance
that Apple will not initiate product repair/recall programs in the future for
its Macintosh computers, which if it did, would have an adverse impact on
revenues of the Company.
In May 1996, Apple announced a repair program for its Powerbook 5300 and
190 laptop computers which was effectively a recall of defective Apple Macintosh
computers. As a result of the repair program, the Company experienced
significantly reduced sales of its products. Sales of such products have not
returned to the levels achieved prior to Apple's
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announcement and the Company does not believe that it will achieve such sales
levels in the foreseeable future. The Company therefore expects that revenues
and/or gross margins from its products for the Apple Macintosh family could
decrease in future periods, which would have a material adverse effect on the
Company's business and results of operations unless the Company can generate
sufficient revenues and/or gross margins from other products to compensate for
any shortfall in revenues from its Apple platform products. Any price reduction
or decrease in sales volume could have a material adverse effect on the
Company's results of operations.
RELIANCE ON SINGLE PRODUCT LINE; NEW PRODUCT ACCEPTANCE
To date, a substantial majority of the Company's revenue has been
attributable to sales of its TelePort and PowerPort product lines for the Apple
Macintosh family of computers, and the Company expects that sales of these
products will account for a majority of its revenue for the foreseeable future.
The Company's future financial performance will depend in part on the successful
development, introduction and customer acceptance of new and enhanced versions
of its TelePort and PC Card products (including PowerPort), the Company's
ability to successfully reduce or control various operating expenses as well as
the Company's ability to generate increased sales of products for Windows-based
computers or other products. Though the Company continually seeks to further
enhance its product offerings and to develop new products, there can be no
assurance that these development efforts will result in enhanced or new products
being introduced on a timely basis, or that any such product enhancements or new
products will achieve market acceptance. In addition, the announcement by the
Company of new products with the potential to replace current products may cause
customers to defer purchasing the Company's current products which could have a
material adverse effect on the Company's results of operations. There can be no
assurance that the Company will be successful in developing new products or
enhancing its current products on a timely basis, or that such new products or
product enhancements will achieve market acceptance.
MARKET ANTICIPATION OF NEW PRODUCTS, NEW TECHNOLOGIES OR STANDARDS, OR LOWER
PRICES
Since the environment in which the Company operates is characterized by
rapid new product and technology introductions and generally falling prices for
existing products, the Company's customers may from time to time postpone
purchases in anticipation of such new product introductions or lower prices. If
such anticipated changes are viewed as significant by the market, such as the
introduction of faster modem technologies, then this may have the effect of
temporarily slowing overall market demand and negatively impacting the Company's
operating results. For example, the recent industry announcements of modems
based on 56Kbps technology may have caused such an effect in the first nine
months of fiscal 1998. Moreover, the existence of two competitive
implementations of the new 56Kbps technology, X2 and K56Flex, may have the
effect of confusing and slowing the market. The existence of two competing
protocols may result in customers delaying purchases until a single standard
emerges. Consequently, delays in the market acceptance of new 56Kbps technology
based modems could have a material adverse effect on the Company's business,
financial condition and results of operations.
COMPETITION
The market for the Company's products is intensely competitive and is
characterized by rapidly changing technology, evolving industry communication
standards and frequent new product introductions. A number of competitors,
including U.S. Robotics, Diamond Multimedia, Hayes, Shiva, Zoom, and 3Com, among
others, offer products that compete with one or more of the Company's products.
Other companies in the personal computer industry, such as modem vendors, remote
access server vendors, communication software vendors, microprocessor and chip
set suppliers, networking equipment suppliers, fax machine manufacturers,
personal computer manufacturers and telecommunications companies, could seek to
expand their product offerings by designing and selling products using
competitive technology that could render obsolete or have a material adverse
effect on sales of the Company's products.
Apple currently offers products that compete directly or indirectly with
the Company's products and can be expected to introduce additional competitive
products in the future. Apple currently bundles modems and communications
software with certain of its computers, and the Company anticipates that Apple
will continue to bundle such products in the future. In addition, Apple may
further enhance communications functionality within its desktop or portable
computers. Any such
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additional bundling or enhancement by Apple would have a material adverse effect
on the Company's financial condition and results of operations.
Many of the Company's competitors have substantially greater financial,
technical, sales, marketing and other resources, as well as greater name
recognition and a larger customer base, than the Company. In addition, the
market for the Company's products is characterized by significant price
competition, and the Company expects that it will face increasing pricing
pressures from its current competitors. Accordingly, there can be no assurance
that the Company will be able to provide products that compare favorably with
the products of the Company's competitors or that competitive pressures will not
require the Company to further reduce its prices. Any material reduction in the
price of the Company's products could negatively affect gross profit as a
percentage of net revenue and could require the Company to increase unit sales
in order to maintain net revenue. There can be no assurance, however, that the
Company would be able to increase its unit sales or maintain its present level
of net revenue. Any failure to so increase unit sales or maintain the Company's
net revenue would have a material adverse effect on the Company's financial
condition and results of operations.
DEPENDENCE ON MANUFACTURERS
The Company's manufacturing operations consist primarily of turnkey
managers, program managers, quality assurance, packaging and shipping personnel.
For substantially all of its hardware assemblies, the Company purchases fully
manufactured and tested units from CMC, a "turnkey" manufacturing subcontractor.
Components and manufacturing services from the Company's suppliers are obtained
on an as-needed basis. To date, the Company's turnkey manufacturer has provided
credit to the Company as part of its relationship to manufacture the Company's
products. While the Company believes its relationship with its turnkey
manufacturer is good, if such party were to change its policies regarding
providing credit to the Company, the Company could be required to expend
additional funds for the production of its products, which could materially
adversely affect the Company's financial condition. While the Company believes
that there are a number of alternative contract manufacturers that could produce
the Company's products, it could take a significant period of time and result in
significant additional expense to qualify an alternative subcontractor and
commence manufacturing in the event of a reduction or interruption of
production. Therefore, the company is highly dependent on its continued
relationship with its turnkey manufacturing subcontractor and any reduction,
interruption or termination of this relationship could have a material adverse
effect on the operating results of the Company.
DEPENDENCE ON SUPPLIERS
The Company is dependent on sole or limited source suppliers for certain
key components used in its products, particularly the modem chip sets designed
and manufactured by Rockwell International and Texas Instruments. The Company
has no guaranteed supply arrangements with its sole or limited source suppliers.
The Company at times in the past has experienced delays in its ability to
manufacture sufficient product to meet demand due to the inability of certain
suppliers to meet the Company's volume and schedule requirements. There can be
no assurance that the Company's suppliers will be able to meet the Company's
volume and scheduling requirements in the future. Any failure of such a supplier
to meet such requirements could have a material adverse effect on the Company's
business and results of operation and working capital.
RELIANCE ON DISTRIBUTORS
A majority of the Company's net revenue is derived from sales to
distributors that are not under the direct control of the Company. These
distributors carry multiple product lines and could reduce their support of the
Company's products in favor of a competitor's products or for any other reason.
The loss of any of the Company's major distributors would have a material
adverse effect on the Company's business, financial condition and results of
operations. Therefore, the Company is exposed to the risk of product returns
from distributors and direct reseller customers. There can be no assurance that
the Company's recorded allowances for returns will be adequate and a material
increase in returns over historical rates would have a material adverse effect
on the Company's results of operations.
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RISKS OF INVENTORY OBSOLESCENCE
As a result of changing technology and market factors, the Company is
subject to the risk that its inventories may rapidly become obsolete or that the
Company may carry quantities of certain products that exceed current or
projected demand. While the Company has written down inventory that it considers
to be excess or obsolete, there can be no assurance that the Company's recorded
allowances for such write-offs and returns will be adequate, and a material
increase in such write-offs and returns over historical rates could have a
material adverse effect on the Company's results of operations.
INTERNATIONAL SALES
International sales represented approximately 15%, 19%, and 11% of the
Company's net revenue in fiscal 1997, 1996, and 1995, respectively. The Company
utilizes distributors in Europe, the Middle East, Australia and Asia. There can
be no assurance that the Company will be able to maintain or increase
international demand for the Company's products or that the Company's
distributors will be able to effectively meet that demand. Global Village
generally requires its distributors to commit to a minimum sales volume and to
provide local support, marketing and sales coverage for their specific
territory. In addition to regulatory approval requirements, each country has
local competitors with significant market share. In January 1995, the Company
created a European subsidiary, Global Village Communication Europe B.V. to
support its distribution channels in the sale, marketing and support of its
products.
Additional risks inherent in the Company's international business
activities generally include unexpected changes in regulatory requirements,
tariffs and other trade barriers, costs and risks of localizing products for
foreign countries, longer accounts receivable payment cycles, difficulties
managing international distributors, potentially adverse tax consequences,
repatriation of earnings, the burdens of complying with a wide variety of
foreign laws and changes in demand resulting from fluctuations in exchange
rates. In addition, the laws of certain foreign countries do not provide
protection for the Company's intellectual property to the same extent as do the
laws of the United States.
DEPENDENCE ON KEY PERSONNEL; ATTRACTION OF NEW MANAGEMENT
The Company's future success depends to a significant extent on its
senior management and other key employees, including key development personnel.
The loss of the services of any of these individuals or group of individuals
could have a material adverse effect on the Company's results of operations. The
Company has no employment agreements with any of its key employees. The Company
believes that its future success will depend in large part on its ability to
attract and retain additional key employees. Competition for such personnel in
the computer industry is intense, and there can be no assurance that the Company
will be successful in attracting and retaining such personnel. If the Company
were to fail to replace or retain its key employees or attract additional key
employees, the Company's results of operations could be materially adversely
affected.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company relies primarily on a combination of copyright and trademark
laws, trade secrets, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company has no patents or patent
applications pending. The Company seeks to protect its hardware, software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection.
The Company seeks to protect its brand names under trademark and unfair
competition laws. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information that the Company regards as
proprietary. Policing unauthorized use of the Company's products is difficult,
and while the Company is unable to determine the extent to which piracy of its
software products exists, software piracy can be expected to be a persistent
problem. In addition, the laws of some foreign countries do not protect the
Company's proprietary rights to as great an 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.
-8-
<PAGE> 10
The Company believes that, due to the rapid pace of innovation within
the communications software industry, the Company's success in establishing and
maintaining a technological leadership position is likely to depend more upon
the technological and creative skills of its personnel, continued innovation,
its marketing skills and customer support than on the various legal means of
protection its existing technology.
The Company is aware of products in addition to its own that are
marketed under the trademarks "PowerPort," "TelePort," "GlobalFax," "Focal
Point," and "OneWorld." The Company also is aware of a company that operates
under and has a trademark name for the name "Global Villages" and provides
computer-related services. There can be no assurance that litigation with
respect to these trademarks will not be instituted by any third parties. If any
such litigation were successful, the Company could be required to pay damages
and cease all use of a particular trademark. There can be no assurance that any
loss of the right to use a trademark would not reduce sales of the Company's
products. In any event, even if the Company were successful in any such
litigation, the legal and other costs associated with such litigation could be
substantial. As is customary in the Company's industry, the Company from time to
time receives communications from third parties asserting that the Company's
products infringe, or may infringe, the proprietary rights of third parties or
seeking indemnification against such infringement. There can be no assurance
that any such claims would not result in protracted and costly litigation.
VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock has been volatile and
trading volumes have been relatively low. Factors such as variations in the
Company's revenue, operating results and cash flow and announcements of
technological innovations or price reductions by the Company, its competitors,
Apple, PC manufacturers, or providers of alternative products could cause the
market price of the Company's Common Stock to fluctuate substantially. In
addition, the stock markets have experienced significant price and volume
fluctuations that particularly have affected technology-based companies and
resulted in changes in the market prices of the stocks of many companies that
have not been directly related to the operating performance of those companies.
Such broad market fluctuations may adversely affect the market price of the
Company's Common Stock.
ANTI-TAKEOVER PROVISIONS
The Company's Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences and privileges of those shares without any further vote or action by
the stockholders. The rights of the holders of the Company's Common Stock will
be subject to, and may be adversely affected by, the rights of the holders of
any Preferred Stock that may be issued in the future. While the Company has no
present intention to issue shares of Preferred Stock, any such issuance could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. In addition, the
Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which could have the effect of delaying or
preventing a change of control of the Company. Furthermore, certain provisions
of the Company's Certificate of Incorporation may have the effect of delaying or
preventing changes in control or management of the Company, which could
adversely affect the market price of the Company's Common Stock.
-9-
<PAGE> 11
SELLING STOCKHOLDER
The following table sets forth the names of the Selling Stockholder and
the number of Shares being offered hereby. Upon completion of the offering,
assuming all Shares being offered are sold, the Selling Stockholder will not own
any shares of Common Stock. The Shares are being registered to permit secondary
trading of the Shares, and the Selling Stockholder may offer Shares for resale
from time to time. See "Plan of Distribution."
The Shares being offered by the Selling Stockholder were acquired from
the Company in a transaction exempt from the registration requirements of the
Securities Act provided by Section 4(2) thereof pursuant to a Stock Purchase
Agreement (the "Stock Purchase Agreement") by and between the Company and the
Trustees of the KNX Pension Scheme.
The Selling Stockholder that purchased Common Stock pursuant to the
Stock Purchase Agreement represented to the Company that it was acquiring the
Shares for investment and not with the present intention of distributing such
Shares. In lieu of granting the Selling Shareholder demand registration rights,
the Company has filed with the Commission, under the Act, a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares.
<TABLE>
<CAPTION>
Shares
Beneficially Owned
Prior to Offering(1) Number of
-------------------- Shares Being
Shareholders Number Percent Offered
- ----------------------------------------- ------- ------- ------------
<S> <C> <C>
The Trustees of the KNX Directors Pension
Scheme 142,392(2) * 142,392
TOTAL 142,392(2) * 142,392
</TABLE>
- --------------------
(1) Based on 16,981,163 shares of common stock issued and outstanding as of
December 15, 1997.
(2) Does not include 551,545 shares beneficially held by Michael O'Neil, the
beneficiary of the KNX Directors Pension Scheme, which shares constitute
approximately 3.2 percent of the Company's issued and outstanding common
stock.
* Less than one percent.
-10-
<PAGE> 12
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that it or its
donees or transferees intend to sell all or a portion of the Shares offered
hereby from time to time on the Nasdaq National Market, in privately negotiated
transactions or otherwise, and that sales will be made at fixed prices that may
be changed, at market prices prevailing at the times of such sales, at prices
related to such market prices or at negotiated prices. The Selling Stockholder
or its donees or transferees may also make private sales directly or through a
broker or brokers, who may act as agent or as principal. In connection with any
sales, the Selling Stockholder or its donees or transferees and any brokers
participating in such sales may be deemed to be underwriters within the meaning
of the Securities Act. The Company will receive no part of the proceeds of sales
made hereunder.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Selling Stockholder or its donees or transferees
(and, if they act as agent for the purchaser of such Shares, from such
purchaser). Brokerage fees may be paid by the Selling Stockholder or its donees
or transferees, which may be in excess of usual and customary brokerage fees.
Broker-dealers may agree with the Selling Stockholder or its donees or
transferees to sell a specified number of Shares at a stipulated price, and, to
the extent such a broker-dealer is unable to do so acting as agent for the
Selling Stockholder or its donees or transferees, to purchase as principal any
unsold Shares at the price required to fulfill the broker-dealer's commitment to
the Selling Stockholders or its donees or transferees. Broker-dealers who
acquire Shares as principal may thereafter resell such Shares from time to time
in transactions (which may involve crosses and block transactions and which may
involve sales to and through other broker-dealers, including transactions of the
nature described above) on the Nasdaq National Market in negotiated transactions
or otherwise at market prices prevailing at the time of sale or at negotiated
prices, and in connection with such resales may pay to or receive from the
purchasers of such Shares commissions computed as described above.
The Company and the Selling Stockholder has agreed to indemnify the
other against certain liabilities, including certain liabilities under the
Securities Act.
Any Shares covered by this Prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
There can be no assurance that the Selling Stockholder will sell any or
all of the Shares offered by it hereunder.
EXPERTS
The consolidated financial statements and schedules of the Company as of
March 31, 1997 and 1996, and for each of the years in the three-year period
ended March 31, 1997, all contained in the Company's Annual Report on Form 10-K
for the year ended March 31, 1997, have been incorporated by reference herein in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
Counsel for the Company, Wilson Sonsini Goodrich & Rosati, Professional
Corporation, 650 Page Mill Road, Palo Alto, California 94304-1050, has rendered
an opinion to the effect that the Common Stock offered hereby is duly and
validly issued, fully paid and nonassessable.
-11-
<PAGE> 13
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.*
<TABLE>
<S> <C>
SEC Registration Fee $ 70
Nasdaq listing fee $2,848
Accountant's fees and expenses $2,500
Legal fees and expenses $2,500
Miscellaneous $2,082
-------
Total $10,000
=======
</TABLE>
* Represents expenses relating to the distribution by the Selling Stockholder
pursuant to the Prospectus prepared in accordance with the requirements of
Form S-3. These expenses will be borne by the Company on behalf of the
Selling Stockholder. All amounts are estimates except for the SEC
Registration Fee and the Nasdaq listing fee.
Item 15. Indemnification of Directors and Officers.
Under Section 145 of the Delaware General Corporation Law, the Company
has broad powers to indemnify its directors and officers against liabilities
they may incur in such capacities, including liabilities under the Securities
Act of 1933, as amended (the "Securities Act"). The Company's Bylaws also
provide that the Company will indemnify its directors and executive officers and
may indemnify its other officers, employees and other agents to the fullest
extent not prohibited by Delaware law.
The Company's Certificate of Incorporation provides for the elimination
of liability for monetary damages for breach of the directors' fiduciary duty of
care to the Company or its stockholders. These provisions do not eliminate the
directors' duty of care and, in appropriate circumstances, equitable remedies
such as injunctive or other forms of nonmonetary relief will remain available
under Delaware law. In addition, each director will continue to be subject to
liability for breach of the director's duty of loyalty to the Company or its
stockholders, for acts or omissions not in good faith or involving intentional
misconduct, for knowing violations of law, for any transaction from which the
director derived an improper personal benefit, or for payment of dividends or
approval of stock repurchases or redemptions that are unlawful under Delaware
law. The provision does not affect a director's responsibilities under any other
laws, such as the federal securities laws or state or federal environmental
laws.
The Company has entered into agreements with its directors and executive
officers that require the Company to indemnify such persons against any and all
expenses (including attorneys' fees), witness fees, damages, judgments, fines,
and amounts paid in settlement and any other amounts that such person becomes
legally obligated to pay because of any claim or claims made against or by such
person in connection with any threatened, pending or completed action, suit or
proceeding (including an action by or in the right of the Company) to which such
person is, was or at any time becomes a party, or is threatened to be made a
party, by reason of the fact that such person is, was or at any time becomes a
director, officer, employee or other agent of the Company, or is or was serving
or at any time serves at the written request of the Company as a director,
officer, employee or other agent of another corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, provided such
person's conduct was not knowingly fraudulent, deliberately dishonest or did not
constitute willful misconduct or a breach of such person's duty of loyalty to
the Company or result of any personal profit or advantage to which such person
was not legally entitled. The indemnification agreements also set forth certain
procedures that will apply in the event of a claim for indemnification
thereunder.
II-1
<PAGE> 14
Item 16. Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number
-------
<S> <C>
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of KPMG Peat Marwick LLP, independent auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit 5.1)
24.1 Power of Attorney (contained on Page II-3)
</TABLE>
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
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.
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 Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 15
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 on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Sunnyvale, State of California, on January 15, 1998.
GLOBAL VILLAGE COMMUNICATION, INC.
By: /s/ Neil Selvin
---------------------------------------
Neil Selvin
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Neil Selvin and Marc E. Linden jointly
and severally, his attorneys-in-fact, each with the power of substitution, for
him in any and all capacities, to sign any amendment to this Registration
Statement on Form S-3 and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Leonard A. Lehmann Chairman of the Board January 15, 1998
- -------------------------------------
Leonard A. Lehmann
/s/Neil Selvin President, Chief Executive Officer, and January 15, 1998
- ------------------------------------- Director (Principal Executive Officer)
Neil Selvin
/s/Marc E. Linden Chief Financial Officer, Senior Vice January 15, 1998
- ------------------------------------- President, Finance and Business
Marc E. Linden Development (Principal Financial and
Accounting Officer)
/s/Kevin R. Compton Director January 15, 1998
- -------------------------------------
Kevin R. Compton
Director
- -------------------------------------
Eugene Eidenberg
/s/Kenneth A. Goldman Director January 15, 1998
- -------------------------------------
Kenneth A. Goldman
</TABLE>
II-3
<PAGE> 16
INDEX TO EXHIBITS
Exhibit
Number Description
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of KPMG Peat Marwick LLP, independent auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati (included in Exhibit
5.1)
24.1 Power of Attorney (contained on Page II-3)
II-4
<PAGE> 1
Exhibit 5.1
January 26, 1998
Global Village Communication, Inc.
1144 E. Arques Avenue
Sunnyvale, CA 94086
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 (the
"Registration Statement") to be filed by you with the Securities and Exchange
Commission on or about the date hereof in connection with the registration for
resale under the Securities Act of 1933, as amended, of up to 142,392 previously
issued and outstanding shares of your Common Stock (the "Shares"). As your legal
counsel, we have also reviewed the proceedings taken by you in connection with
the issuance of the Shares.
It is our opinion that the Shares are validly issued, fully-paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Very truly yours,
/s/ WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Global Village Communication, Inc.
We consent to the use of our report incorporated herein by reference and to
the reference to our firm under the heading "Experts" in the prospectus.
Palo Alto, California
January 26, 1998
/s/ KPMG Peat Marwick LLP
