<PAGE>
This document consists of 16 pages, of which this page is number 1.
The Index to Exhibits is on page 7.
As filed with the Securities and Exchange Commission on May 21, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
RETIX
(Exact name of Registrant as specified in its charter)
CALIFORNIA 95-3948704
(State of incorporation) (I.R.S. Employer Identification No.)
2401 COLORADO AVENUE
SANTA MONICA, CALIFORNIA 90404
(Address of principal executive offices)
----------------
1995 EXECUTIVE STOCK OPTION PLAN
(Full title of the Plan)
----------------
M. Y. STEPHAN
PRESIDENT AND CHIEF EXECUTIVE OFFICER
RETIX
2401 COLORADO AVENUE
SANTA MONICA, CALIFORNIA 90404
(310) 828-3400
(Name, address and telephone number, including area code, of agent for service)
----------------
Copy to:
ELIAS J. BLAWIE, ESQ.
DAVID M. JARGIELLO, ESQ.
Venture Law Group
2800 Sand Hill Road
Menlo Park, California 94025
(415) 854-4488
Page 1 of 16 Pages
Exhibit Index on Page 7
- -------------------------------------------------------------------------------
(Calculation of Registration Fee on following page)
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
Proposed Proposed
Maximum Maximum
Maximum Offering Aggregate Amount of
Amount to be Price Per Offering Registration
Title of Securities to be Registered Registered(1) Share Price Fee
------------------------------------ --------------- ------------ --------------- --------------
1995 EXECUTIVE STOCK OPTION PLAN
<S> <C> <C> <C> <C>
Common Stock, $.01 par value . . . . . 1,000,000 $9.5625(2) $9,562,500.00 $3,297.41
</TABLE>
- ----------------
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable under the Plan being registered
pursuant to this Registration Statement by reason of any stock dividend,
stock split, recapitalization or any other similar transaction effected
without the receipt of consideration which results in an increase in the
number of the Registrant's outstanding shares of Common Stock.
(2) Computed in accordance with Rule 457(h) under the Securities Act of 1933
(the "Securities Act") solely for the purpose of calculating the
registration fee. The computation is based upon the average high and
low sale prices of the Registrant's Common Stock as reported on the
Nasdaq National Market on May 17, 1996. The shares of Common Stock
issued upon exercise of options granted under the referenced plan are
registered hereby. See Item 7 below ("Exemption from Registration
Claimed").
2
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
The following documents filed with the Securities and Exchange
Commission (the "Commission") are hereby incorporated by reference:
(a) The Registrant's Annual Report on Form 10-K for the fiscal year
ended December 30, 1995 pursuant to Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), which contains audited
financial statements for the Registrant's latest fiscal year for which such
statements have been filed.
(b) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Annual Report
referred to in (a) above.
(c) The description of the Registrant's Common Stock contained in the
Registrant's Registration Statement on Form 8-A filed with the Commission
under Section 12 of the Exchange Act on November 5, 1991, including any
amendment or report filed for the purpose of updating such description.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered hereby
have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration
Statement and to be part hereof from the date of filing such documents.
Item 4. DESCRIPTION OF SECURITIES. Not applicable.
Item 5. INTERESTS OF NAMED EXPERTS AND COUNSEL. Not applicable.
Item 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Articles of Incorporation reduce the liability of a
director to the corporation or its shareholders for monetary damages for
breaches of his or her fiduciary duty of care to the fullest extent
permissible under California law. The Bylaws of the Registrant further
provide for indemnification of corporate agents to the maximum extent
permitted by the California General Corporation Law. In addition, the
Registrant has entered into Indemnification Agreements with its officers and
directors.
Item 7. EXEMPTION FROM REGISTRATION CLAIMED.
On January 30, 1996, the Registrant issued 750,000 shares of its Common
Stock at a purchase price of $2.14 per share and on March 18, 1996 the
Registrant issued 250,000 shares of its Common Stock at a purchase price of
$3.98 per share (collectively, the "Restricted Shares") to M. Y. Stephan, the
Registrant's President and Chief Executive Officer. The Restricted Shares
were issued upon exercise of options granted to Mr. Stephan under the 1995
Executive Stock Option Plan. The Restricted Shares were issued pursuant to
the exemption from registration provided by Section 4(2) of the Securities
Act of 1933, as amended, as transactions by the Registrant not involving any
public offering. Mr. Stephan represented his intentions to acquire the
Restricted Shares for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were
affixed to the Restricted Shares. Mr. Stephan had adequate access to
information about the Company through his relationship therewith.
3
<PAGE>
Item 8. EXHIBITS.
Exhibit
Number
--------
5.1 Opinion of Venture Law Group, a Professional Corporation.
23.1 Consent of Venture Law Group, a Professional Corporation
(included in Exhibit 5.1).
23.2 Consent of Independent Auditors (see p. 6).
24.1 Powers of Attorney (see p. 5).
99.1 Prospectus
Item 9. 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 the registration statement.
(2) that, for purposes 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.
The undersigned Registrant hereby undertakes 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 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.
Insofar as the indemnification for liabilities arising under the
Securities Act 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 Commission such
indemnification is against public policy as expressed in the Securities 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 a successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered hereunder, the Registrant
will, unless in the opinion of its counsel the question has already been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question of 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.
[Signature Pages Follow]
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Retix, a corporation organized and existing under the laws of the
State of California, certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-8 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Santa Monica, State of California,
on this May 21, 1996.
RETIX
By: /s/ M. Y. Stephan
---------------------------------
M. Y. Stephan, President and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints M. Y. Stephan and Steven Waszak,
jointly and severally, his or her attorneys-in-fact and agents, each with the
power of substitution and resubstitution, for him or her and in his or her
name, place or stead, in any and all capacities, to sign any amendments to
this Registration Statement on Form S-8, and to file such amendments,
together with exhibits and other documents in connection therewith, with the
Securities and Exchange Commission, granting to each attorney-in-fact and
agent, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully
as he or she might or could do in person, and ratifying and confirming all
that the attorneys-in-fact and agents, or his or her 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.
Signature Title Date
- ------------------------- ----------------------- ----------------------
/s/ M. Y. Stephan Chairman, President, Chief May 21, 1996
- ------------------------ Executive Officer
(M. Y. Stephan) (Principal Executive Officer)
and Director
/s/ Steven Waszak Vice President, Finance and May 21, 1996
- ------------------------ Administration and Chief
(Steven Waszak) Financing Officer (Principal
Financial and Accounting Officer)
/s/ Jeffrey Drazan Director May 21, 1996
- ------------------------
(Jeffrey Drazan)
/s/ Neil Hynes Director May 21, 1996
- ------------------------
(Neil Hynes)
/s/ Craig W. Johnson Director May 21, 1996
- ------------------------
(Craig W. Johnson)
/s/ Gilbert P. Williamson Director May 21, 1996
- ------------------------
(Gilbert P. Williamson)
5
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Retix on Form S-8 of our report dated February 12, 1996, appearing the Annual
Report on Form 10-K of Retix for the year ended December 30, 1995 and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
DELOITTE & TOUCHE LLP
Los Angeles, California
May 17, 1996
6
<PAGE>
INDEX TO EXHIBITS
Exhibit Page
Number No.
--------- -------
5.1 Opinion of Venture Law Group, a Professional
Corporation 8
-------
23.1 Consent of Venture Law Group, a Professional
Corporation (included in Exhibit 5.1) 8
-------
23.2 Consent of Independent Auditors (see p. 6). 6
-------
24.1 Powers of Attorney (see p. 5). 5
-------
99.1 Prospectus 9
-------
7
<PAGE>
EXHIBIT 5.1
May 21, 1996
Retix
2401 Colorado Avenue
Santa Monica, CA 90404
REGISTRATION STATEMENT ON FORM S-8
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-8 (the
"Registration Statement") filed by you with the Securities and
Exchange Commission (the "Commission") on May 21, 1996 in
connection with the registration under the Securities Act of
1933, as amended, of a total of 1,000,000 shares of your Common
Stock (the "Shares") issued under the 1995 Executive Stock Option
Plan (the "Plan"). As your counsel in connection with this
transaction, we have examined the proceedings taken and are
familiar with the proceedings proposed to be taken by you in
connection with the sale and issuance of the Shares.
It is our opinion that upon conclusion of the proceedings
being taken or contemplated by us, as your counsel, to be taken
in connection with the issuance of the Shares, and upon
completion of the proceedings being taken in order to permit such
transactions to be carried out in accordance with the securities
laws of the various states where required, the Shares when issued
and sold in the manner described in the Registration Statement
will be legally and 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 in any amendment
thereto.
Very truly yours,
VENTURE LAW GROUP
A Professional Corporation
EJB
8
<PAGE>
RETIX
1,000,000 SHARES
COMMON STOCK
----------------
This Prospectus relates to the public offering, which is not being
underwritten, of 1,000,000 shares of Common Stock, $.01 par value per share,
of Retix, a California corporation ("Retix," the "Company" or the
"Registrant"). All 1,000,000 shares (the "Shares") may be offered by M.Y.
Stephan, the Company's President and Chief Executive Officer (the "Selling
Shareholder"). The Shares were issued to Mr. Stephan pursuant to the
Company's Executive Stock Option Plan and have been registered under the
Securities Act of 1933, as amended (the "Securities Act") pursuant to a
Registration Statement on Form S-8.
The Shares may be offered by the Selling Shareholder from time to time
in transactions in the over-the-counter market, in negotiated transactions,
or a combination of such methods of sale, at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices related
to prevailing market prices or at negotiated prices. The Selling Shareholder
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 Shareholder and/or
the purchasers of the Shares for whom such broker-dealers may act as agents
or to whom they sell as principals, or both (which compensation as to a
particular broker-dealer might be in excess of customary commissions). See
"Sale of the Shares."
The Company will not receive any of the proceeds from the sale of the
Shares. The Company has agreed to bear certain expenses in connection with
the registration of the Shares being offered and sold by the Selling
Shareholder.
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol RETX. On May 17, 1996 the average of the high and low price for
the Common Stock was $9.5625 per share.
----------------
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR
CERTAIN INFORMATION WHICH SHOULD BE CAREFULLY CONSIDERED BEFORE PURCHASING
SHARES OF COMMON STOCK OFFERED HEREBY.
----------------
The Selling Shareholder and any broker-dealers or agents that participate
with the Selling Shareholder in the distribution of the Shares may be deemed
to be "underwriters" within the meaning of Section 2(11) of the Securities
Act, and any commissions received by them and any profit on the resale of
the Shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act. See "Sale of the Shares" herein for a
description of indemnification arrangements.
----------------
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.
----------------
The date of this Prospectus is May 21, 1996
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection
with the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by the
Company, the Selling Shareholder or by any other person. Neither the delivery
of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as
of any time subsequent to the date hereof. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any security
other than the securities covered by this Prospectus, nor does it constitute
an offer to or solicitation of any person in any jurisdiction in which such
offer or solicitation may not lawfully be made.
AVAILABLE INFORMATION
Retix ("Retix," the "Company" or the "Registrant") is subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and in accordance therewith files reports, proxy
statements, information statements and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy statements and
other information filed by the Company may be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices located at 75 Park Place, New York, New York 10007 and 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained by mail from the Public Reference Branch of the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 at
prescribed rates. The Common Stock of the Company is quoted on the Nasdaq
National Market, and such material may also be inspected at the offices of
Nasdaq Operations, 1735 K Street, N.W. Washington, D.C. 2006.
The Company has filed with the Commission a registration statement on
Form S-8 (herein, together with all amendments and exhibits, referred to as
the "Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act") with respect to the Common Stock offered hereby. 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 Commission. For further information
regarding the Company and the Common Stock offered hereby, reference is
hereby made to the Registration Statement and to the exhibits and schedules
filed therewith. The Registration Statement, including the exhibits and
schedules thereto, may be inspected at the public reference facilities
maintained by the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and copies of all or any part thereof may be obtained
from such office upon payment of the prescribed fees.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission (File
No. 0-19640) pursuant to the Exchange Act are incorporated by reference in
this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended
December 30, 1995.
2. The Company's definitive Proxy Statement dated April 26, 1996,
filed in connection with the June 19, 1996 Annual Meeting of Shareholders of
Retix.
3. The descriptionsof the Company'sCommon Stock, $0.01par value
pershare, contained inits Registration Statementon Form 8-A dated November 5,
1991, including any amendment or report filed for the purpose of updating
such descriptions.
-2-
<PAGE>
4. The Company's Quarterly Reports on Form 10-Q for the quarters ended
September 30, July 1 and April 1, 1995 and March 30, 1996.
5. The description of the Company's Common Stock set forth in the
Company's Registration Statement on Form S-1 filed with the Commission on
October 25, 1991.
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 of the Common Stock offered hereby shall be
deemed to be incorporated by reference in this Prospectus. Any statement
contained in a document incorporated by reference herein shall be deemed to
be modified or superseded for purposes hereof to the extent that a statement
contained herein (or in any other subsequently filed document which also is
incorporated by reference herein) modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed to constitute a
part hereof, except as so modified or superseded.
The Company will furnish without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, on the written or
oral request of such person, a copy of any or all of the documents
incorporated by reference, other than exhibits to such documents. Requests
should be directed to Retix, 2401 Colorado Avenue, Santa Monica, California
90404, Attention Steve Waszak, Vice President of Finance and Administration
and Chief Financial Officer, telephone: (310) 828-3400.
THE COMPANY
Retix is a California corporation with executive offices located at 2401
Colorado Avenue, Santa Monica, California 90404. The Company was incorporated
in the State of California in 1985 and is traded on the Nasdaq National
Market under the symbol RETX.
RISK FACTORS
PROSPECTIVE PURCHASERS OF SHARES OF THE COMPANY'S COMMON STOCK OFFERED
HEREBY SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, IN ADDITION TO
THE OTHER INFORMATION IN THIS PROSPECTUS.
NEW PRODUCTS AND TECHNOLOGICAL CHANGES. The markets for the Company's
products are characterized by rapidly changing technology and frequent new
product introductions. Accordingly, the Company believes that its future
success will depend on its ability to enhance its existing products and to
develop and introduce in a timely fashion new products that achieve market
acceptance. There can be no assurance that the Company will be able to
identify, develop, manufacture, market or support such products successfully
or that the Company will be able to respond effectively to technological
changes, industry standards revisions or product announcements by
competitors. Delays in new product introductions or product enhancements, or
the introduction of unsuccessful products, could adversely affect the
Company. The Company's revenues are dependent on, among other things, the
acceptance of these products by customers, and no assurance concerning their
acceptance can be given. From time to time, the Company may announce new
products, capabilities or technologies that have the potential to replace the
Company's existing product offerings. There can be no assurance that
announcements of new product offerings will not cause customers to defer
purchasing or licensing existing Company products, adversely affecting the
Company.
The Company's products are very complex as a result of market
requirements for a high level of functionality, support of diverse operating
environments, the need for interoperability and support for
-3-
<PAGE>
multiple technological standards. These products may contain undetected
errors or failures 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 of commercial shipments, resulting in loss of or delay in market
acceptance. Such loss or delay could have a material adverse effect on the
Company's business, financial condition and results of operations.
PARTICIPATION IN EMERGING MARKETS. As part of its corporate strategy,
the Company has targeted emerging markets in the early stage of their
development, including the TMN and wireless data markets. There can be no
assurance that these markets will attain broad acceptance or generate
long-term growth opportunities in line with the Company's objectives.
COMPETITION. The computer networking industry is characterized by rapid
technological advances and evolving industry standards. The Company competes
in the internetworking products, wireless data solutions and TMN technology
markets. The Company's ability to compete depends on such factors as product
features, ease of use, price, quality, technical support and service, product
development capability, marketing, distribution channels, and ability to meet
delivery schedules.
The Company experiences significant competition in both the
telecommunications and enterprise networking markets from bridge and
multi-protocol router manufacturers such as Cisco Systems, Inc., Bay
Networks, 3Com Corporation, and from major telecommunication vendors such as
AT&T. In particular, the market for bridges, switching and low-end routers
has been characterized by intense price competition. The router and wireless
data markets have existing dominant competitors with strong market presence.
There can be no assurance that the Company will be able to identify,
develop, manufacture, market or support products successfully or that the
Company will be able to respond effectively to technological changes or
product announcements by its competitors. The complexities of the Company's
existing products could result in delays to product releases or product
enhancements. Delays in new product introductions or product enhancements or
the introduction of unsuccessful products could adversely affect the Company.
Many of the Company's current and potential competitors have longer
operating histories and have greater financial, technical, sales, marketing
and other resources than the Company. Moreover, the Company's current and
potential competitors may respond more quickly than the Company to new or
emerging technologies or changes in customer requirements. There can be no
assurance that the Company will be able to compete successfully with such
competitors.
FLUCTUATIONS IN OPERATING RESULTS; HISTORY OF RECENT LOSSES. The
Company's operating results may vary significantly from period to period
depending on factors such as the timing of significant licenses or orders for
the Company's products, product mix, changes in distribution channels, the
introduction of new products by the Company or its competitors, increased
competition, changes in product demand resulting from fluctuations in foreign
currency exchange rates, seasonal fluctuations in business activities and
changes in operating costs and material costs. In fiscal 1994 and 1995 and in
the first quarter of 1996, the Company experienced operating losses and a
decrease in revenues from the results of the prior year. There can be no
assurance that the Company will be able to regain profitability or resume
revenue growth on a quarterly or annual basis. The Company's expense levels
are based in part on its expectation of future revenues. As a result of
failure to meet these expectations, the Company has had to undertake several
reorganizations in the past, including in 1995. Delays in new product
introductions or product enhancements or the introduction of unsuccessful
products could adversely affect the Company. If revenues are below
expectations, results of operations may be adversely affected. The Company's
gross margins
-4-
<PAGE>
vary on direct sales of a given product compared to sales of the same product
through distributors, VARs or OEMs. As a result of these and other factors,
the Company could experience significant fluctuations in results of
operations in future periods.
FLUCTUATIONS IN MARKET PRICE OF COMMON STOCK. Announcement of new
products by the Company or its competitors and quarterly variations in
financial results could cause the market price of the Company's Common Stock
to fluctuate substantially. In addition, the stock market has experienced
price and volume fluctuations from time to time that have affected the market
prices of many technology based companies and that are not necessarily
related to the operating performance of such companies. These broad market
fluctuations may adversely affect the price of the Company's Common Stock.
INTERNATIONAL SALES AND OPERATIONS. Sales to third party customers
outside of North America accounted for approximately 54% of the Company's net
revenues for 1993, 1994 and 1995. The Company expects that international
sales will continue to be a significant portion of the Company's business.
Operating costs in many countries, including some of those in which the
Company operates, are often higher than in the United States. International
sales and operations may also be subject to risks such as the imposition of
governmental controls, export license requirements, restrictions on the
export of critical technology, currency exchange fluctuations, political
instability, trade restrictions, changes in tariffs and difficulties in
staffing and managing international operations. In addition, sales in Europe
are adversely affected in the third quarter of each year as many customers
and end users reduce their business activities during the summer months.
These seasonal factors and currency fluctuation risks may have an effect on
the Company's quarterly results of operations. Further, because the Company
has operations in different countries, the Company's management must address
differences in regulatory environments and cultures. Failure to address these
differences successfully could have a material adverse effect on the
Company's business, financial condition and results of operations. In
addition, the Company must obtain governmental and public telephone company
approvals for certain of its products in most countries.
DEPENDENCE ON SUPPLIERS AND LICENSES. Although the Company generally
uses standard parts for its hardware products, certain components, circuit
boards, connectors, mechanical assemblies, and power supplies, are presently
available only from a single source or from limited sources. The Company has
generally been able to obtain adequate supplies of all components in a timely
manner from existing sources or, when necessary, from alternative sources of
supply. The inability to obtain sufficient sole or limited source components
or subassemblies as required or to develop alternative sources if and as
required could adversely affect the Company's operating results. The Company
intends to shift to an outsourcing strategy for the manufacture of its
products. Failure to make this shift on a timely basis or any difficulties
experienced by the Company's manufacturing partners, on which the Company
could become solely dependent for the supply of its products, could adversely
affect the Company's operating results. The Company licenses certain
technology included in its products; if the Company becomes unable to utilize
such technology, the Company could be adversely affected.
DEPENDENCE ON KEY PERSONNEL. The Company's success depends to a
significant degree upon the continued contributions of its key management,
sales, marketing, research and development and manufacturing personnel, many
of whom would be difficult to replace. If certain of these employees were to
leave, the Company could be adversely affected. The Company believes its
future success will also depend in large part upon its ability to attract and
retain highly skilled software and hardware engineers, and managerial, sales
and marketing personnel. Competition for such personnel is intense, and there
can be no assurance that the Company will be successful in attracting and
retaining the necessary personnel. In addition, the Company is undertaking a
reorganization and refocusing of its business. To the extent the
-5-
<PAGE>
Company is not successful in attracting or retaining key personnel, the
Company could also be adversely affected.
CURRENCY FLUCTUATIONS. While the Company's consolidated financial
statements are prepared in United States dollars, a portion of the Company's
worldwide operations have a functional currency other than the United States
dollar. In particular, the Company maintains a development and customer
service operation in Ireland where the functional currency is the Irish
Pound, and a customer service and sales operation in the United Kingdom where
the functional currency is the British Pound Sterling. A portion of the
Company's revenues are also denominated in currencies other than the United
States dollar. Fluctuations in exchange rates may have a material adverse
effect on the Company's results of operations and could also result in
exchange losses. The impact of future exchange rate fluctuations cannot be
predicted adequately. To date, the Company has not sought to hedge the risks
associated with fluctuations in exchange rates, but may undertake such
transactions in the future. The Company does not have a policy relating to
hedging. There can be no assurance that any hedging techniques implemented by
the Company would be successful or that the Company's results of operations
will not be materially adversely affected by exchange rate fluctuations.
RISKS ASSOCIATED WITH INTELLECTUAL PROPERTY. The Company regards its
products as proprietary and relies primarily on a combination of statutory
and common law copyright, trademark, and trade secret laws, customer
licensing agreements, employee and third-party nondisclosure agreements and
other methods to protect its proprietary rights. The Company generally enters
into confidentiality and invention assignment agreements with its employees
and consultants. Additionally, the Company enters into confidentiality
agreements with certain of its customers and potential customers and limits
access to, and distribution of, its proprietary information. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use the Company's technologies without authorization, or to develop
similar technologies independently. Furthermore, the laws of certain
countries in which the Company does business do not protect the Company's
software and intellectual property rights to the same extent as do the laws
of the United States. The Company does not include in its software any
mechanisms to prevent or inhibit unauthorized use, but generally either
requires the execution of an agreement that restricts copying and use of the
Company's products or provides for the same in a break-the-seal license
agreement. If unauthorized copying or misuse of the Company's products were
to occur to any substantial degree, the Company's business, financial
condition and results of operations could be materially adversely affected.
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.
While the Company has not received claims alleging infringement of the
proprietary rights of third parties which the Company believes would have a
material adverse effect on the Company's business, financial condition or
results of operations, nor is it aware of any similar threatened claims,
there can be no assurance that third parities will not claim that the
Company's current or future products infringe the proprietary rights of
others. Any such claim, with or without merit, could result in costly
litigation or might 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.
-6-
<PAGE>
SELLING SHAREHOLDER
The following table shows the Selling Shareholder's name and position
with the Company, the number of shares of the Company's Common Stock
beneficially owned by the Selling Shareholder as of May 17, 1996, and the
number of shares covered by this Prospectus.
<TABLE>
AMOUNT TO BE HELD AFTER
OFFERING(1)
-----------------------
NUMBER OF NUMBER OF
SHARES SHARES COVERED
POSITION WITH BENEFICIALLY BY NUMBER
SELLING SHAREHOLDER THE COMPANY OWNED THIS PROSPECTUS OF SHARES PERCENTAGE(2)
- ------------------ -------------- ------------ --------------- --------- -------------
<S> <C> <C> <C> <C> <C>
M.Y. Stephan President, Chief 1,050,000 1,000,000 50,000 *
Financial Officer
and Director
</TABLE>
- --------------------------
* Less than one percent.
(1) Assumes that all shares offered hereby are sold.
(2) As of May 17, 1996, the Company had approximately 22,246,431 shares of
Common Stock outstanding.
SALE OF THE SHARES
The Company will receive no proceeds from this offering. The Shares
offered hereby may be sold by the Selling Shareholder from time to time in
transactions in the over-the-counter market, in negotiated transactions, or a
combination of such methods of sale, at fixed prices which may be changed, at
market prices prevailing at the time of sale, at prices related to prevailing
market prices or at negotiated prices. The Selling Shareholder 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 Shareholder and/or the purchasers
of the Shares for whom such broker-dealers may act as agents or to whom they
sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Shares may not be sold unless they have been registered or qualified for sale
in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
The Selling Shareholder and any broker-dealers or agents that
participate with the Selling Shareholder in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities
Act, and any commissions received by them and any profit on the resale of
the Shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
-7-
<PAGE>
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 of the
Company for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Shareholder will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Rules
10b-6 and 10b-7, which provisions may limit the timing of purchases and sales
of shares of the Company's Common Stock by the Selling Shareholder.
The Company agreed to register the Shares under the Securities Act and
to pay all reasonable fees and expenses incident to the filing of this
Registration Statement.
DESCRIPTION OF CAPITAL STOCK
The Company has 52,000,000 shares of authorized capital stock of which
50,000,000 shares have been designated as Common Stock $0.01 par value, and
2,000,000 shares of which have been designated as Preferred Stock, $0.01 par
value. The only equity securities currently outstanding are shares of Common
Stock. Holders of shares of Common Stock are entitled to one vote per share
on all matters to be voted on by shareholders. Subject to preferences that
may be applicable to any outstanding Preferred Stock, holders of Common Stock
are entitled to receive ratably such dividends as may be declared by the
Board of Directors in its discretion from funds legally available therefor.
In the event of a liquidation, dissolution or winding up of the Company,
holders of Common Stock are entitled to share ratably in all assets remaining
after payment of liabilities and the liquidation preference of any
outstanding Preferred Stock. Holders of Common Stock have no preemptive
rights and have no rights to convert their Common Stock into any other
securities. The outstanding shares of Common Stock are, and the Common Stock
to be outstanding upon completion of the offering will be, fully paid and
nonassessable.
The Company's Common Stock is traded over-the-counter on the Nasdaq
National Market under the symbol RETX. At May 17, 1996, the Company had
approximately 423 holders of record of its Common Stock and 22,246,431 shares
outstanding.
LEGAL MATTERS
Certain legal matters with respect to the validity of the Common Stock
offered hereby will be passed upon for the Company by Venture Law Group, A
Professional Corporation, 2800 Sand Hill Road, Menlo Park, California 94025.
EXPERTS
The consolidated financial statements of Retix incorporated in this
prospectus by reference from Retix's Annual Report on Form 10-K for the year
ended December 30, 1995 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report which is incorporated by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
-8-
