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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION NOVEMBER 3, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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E.DIGITAL CORPORATION
(Name of small business issuer in its charter)
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<TABLE>
<S> <C>
DELAWARE NONE
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
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13114 EVENING CREEK DRIVE SOUTH
SAN DIEGO, CALIFORNIA 92128
(858) 679-1504
(Address and telephone number of principal executive offices
and principal place of business)
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ALFRED H. FALK, PRESIDENT
E.DIGITAL CORPORATION
13114 EVENING CREEK DRIVE SOUTH
SAN DIEGO, CALIFORNIA 92128
(858) 679-1504
(Name, address and telephone number of agent for service)
Copy to:
CURT C. BARWICK, ESQ.
HIGHAM, MCCONNELL & DUNNING LLP
28202 CABOT ROAD, SUITE 450
LAGUNA NIGUEL, CALIFORNIA 92677
(949) 365-5515
COUNSEL FOR THE COMPANY
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES
EFFECTIVE.
IF THE ONLY SECURITIES REGISTERED ON THIS FORM ARE BEING OFFERED
PURSUANT TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING
BOX: [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE 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]
<PAGE> 2
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE FEE
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<S> <C> <C> <C> <C>
Common Stock,$.001 par value 1,969,514 Shares $3.25(1) $6,400,921(1) $1,689.84
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Total Registration Fee $1,689.84
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Total Due $1,689.84
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(1) These figures are estimates made solely for the purpose of calculating the
registration fee pursuant to Rule 457(c). The average of the bid and asked
prices for the common stock on November 1, 2000, as reported by the OTC Bulletin
Board, was $3.25.
THE REGISTRANT HEREBY AMENDS THE 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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<PAGE> 3
PROSPECTUS
1,969,514 SHARES
E.DIGITAL CORPORATION
COMMON STOCK
Selling stockholders identified in this prospectus are selling
1,969,514 shares of e.Digital Corporation common stock. e.Digital Corporation
will not receive any of the proceeds from the sale of shares by the selling
stockholders. Our common stock is listed in the over-the-counter market on the
National Association of Securities Dealers OTC Electronic Bulletin Board System
under the symbol "EDIG." The closing sale price of the common stock, as reported
on the National Association of Securities Dealers OTC Electronic Bulletin Board
System on November 1, 2000, was $3.25 per share.
The shares of common stock described in this prospectus are
issuable to the selling stockholders upon the conversion of shares of Series C
preferred stock and the exercise of warrants. These securities had been acquired
from us on October 5, 2000 in a private transaction and are considered
"restricted securities" under the Securities Act of 1933. We received gross
proceeds of $4,000,000 from the sale of these securities. This prospectus
registers the shares of common stock under the Securities Act of 1933 and allows
for future sales by the selling stockholders to the public without restriction.
We have agreed to pay for the preparation and filing of the registration
statement and this prospectus. More information is provided in the section
entitled "Selling Stockholders."
The selling stockholders may sell the shares in public or
private transactions, on or off the National Association of Securities Dealers
OTC Electronic Bulletin Board System, at prevailing market prices, or at
privately negotiated prices. The selling stockholders may sell shares directly
to purchasers or through brokers or dealers. Brokers or dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholders. The selling stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933. Any commissions
received by a broker or dealer in connection with resales of the shares may be
deemed to be underwriting commissions or discounts under the Securities Act.
More information is provided in the section entitled "Plan of Distribution."
Information contained in this prospectus is not complete and may
be changed. These securities may not be sold to you until the registration
statement filed with the Securities and Exchange Commission becomes effective.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any State where the offer or sale
is not permitted.
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THIS INVESTMENT INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
PURCHASE SHARES ONLY IF YOU CAN AFFORD A COMPLETE LOSS. SEE "RISK FACTORS,"
BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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November __, 2000
<PAGE> 4
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and
current reports, proxy statements and other information with the Securities and
Exchange Commission. You may read and copy these reports, proxy statements and
other information at the public reference facilities maintained by the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the following Regional Offices of the Securities and Exchange
Commission: 75 Park Place, New York, New York 10007; and the Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621. You can
request copies of these documents by writing to the Securities and Exchange
Commission and paying a fee for the copying cost. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for more information about the operation
of the public reference rooms. In addition, such information may be accessed
electronically at the Securities and Exchange Commission's web site on the
Internet at www.sec.gov.
The Securities and Exchange Commission allows us to "incorporate
by reference" information that we file with them, which means that we can
disclose important information to you by referring you to those documents. The
information incorporated by reference is an important part of this prospectus,
and information that we file later with the Securities and Exchange Commission
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934:
- Annual Report on Form 10-KSB for the year ended March
31, 2000;
- Quarterly Report on Form 10-QSB for the quarterly period
ended June 30, 2000;
- The description of our common stock contained in the
registration statement on Form 10 filed with the
Securities and Exchange Commission on December 13, 1992
pursuant to Section 12(g) of the Securities Exchange Act
of 1934, together with all amendments or reports filed
for the purpose of updating such description.
You may request a copy of these filings at no cost, by writing
or telephoning us at the following address or telephone number:
e.Digital Corporation
13114 Evening Creek Drive South
San Diego, California 92128
Attn: Alfred H. Falk, President
(858) 679-1504
THIS PROSPECTUS IS PART OF A LARGER REGISTRATION STATEMENT WE
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE
INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THE DOCUMENT.
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TABLE OF CONTENTS
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The Company................................................................................... 4
Use of Proceeds............................................................................... 4
Risk Factors.................................................................................. 4
Plan of Distribution.......................................................................... 10
Selling Stockholders.......................................................................... 11
Dividend Policy............................................................................... 13
Legal Matters................................................................................. 13
Experts....................................................................................... 13
Disclosure of Commission Position on Indemnification for Securities Act Liabilities........... 13
</TABLE>
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THE COMPANY
THE FOLLOWING DISCUSSION CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS. ACTUAL RESULTS COULD DIFFER MATERIALLY. SEE "RISK FACTORS -
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS."
e.Digital Corporation is a holding company that operates through
a wholly owned California subsidiary of the same name. We offer an engineering
partnership for leading electronics companies to create portable digital devices
that can link to PCs and the Internet. We market to original equipment
manufacturers complete end-to-end solutions for delivery and management of open
and secure digital media with a focus on music players/recorders and portable
digital voice recorders. Services offered by us range from the licensing of our
patented MicroOS(TM) file management system to custom software and hardware
development, industrial design and manufacturing services, often incorporating
the original equipment manufacturer's unique or proprietary features and/or
technology. We focus our marketing efforts on original equipment manufacturers
in a range of digital processing markets including dictation equipment, digital
music, consumer electronics, digital image and video and other portable product
markets. Our revenue will result from a combination of fees from licensing,
engineering services, manufacturing services, warranty services, industrial
design services, and unit royalty payments.
We deliver digital dictation products that we developed under
contract for Lanier Worldwide, Inc. Shipments of the products, known as "Cquence
Mobile," are pursuant to our agreement with Lanier signed in 1997, and which
expires at the end of December 2001. On April 27, 2000, Lanier announced that it
intends to sell its voice processing (dictation) business which, we are
informed, would include the Cquence Mobile line. Details of the transaction,
including the identity of the potential buyer or buyers and the time frame for
the transaction, are not known at this time. We do not know the impact, if any,
that any such transaction, if consummated, would have on future orders under the
Lanier agreement. The loss of Lanier as a customer could have a material adverse
impact on our company and its results of operations.
We recently developed a reference design for a portable,
Internet music player. In January 2000, we licensed our design and technology to
Maycom Company, Ltd., a turnkey manufacturer of digital audio and radio
communication products. Maycom has announced its intentions to incorporate our
technology into a portable, Internet music player scheduled to be introduced to
the consumer market in November 2000. In addition, Maycom has incorporated our
technology into a portable Internet music player design being marketed to third
party original equipment manufacturer customers and/or licensees by both Maycom
and our marketing personnel. It is anticipated that any such original equipment
manufacturer products would be manufactured by Maycom. To date, we have received
no revenues from the Maycom licensing arrangement. We also are developing
portable solutions for the emerging mobile enterprise industry that is
implementing voice and voice processing in corporate-wide environments involving
mobile, wireless, and/or desktop technology.
e.Digital was incorporated in the Province of British Columbia,
Canada on February 11, 1988 and on November 22, 1994 changed its domicile to the
Yukon Territory, Canada. On August 30, 1996, we continued our jurisdiction to
the State of Wyoming, then on September 4, 1996, to the State of Delaware. On
January 13, 1999, the stockholders approved a name change to e.Digital
Corporation. Our principal executive offices and primary operating facilities
are located at 13114 Evening Creek Drive South, San Diego, California 92128 and
our telephone number is (858) 679-1504. Our Internet site is located at
WWW.EDIG.COM. Information contained in our Internet site is not part of this
prospectus.
USE OF PROCEEDS
e.Digital Corporation will not receive any proceeds from the
sale of the shares of common stock offered by the selling stockholders.
RISK FACTORS
An investment in the shares being offered hereby involves a high
degree of risk. In deciding whether to purchase shares of our common stock, you
should carefully consider the following risk factors, in addition to other
information contained in this prospectus, in our most recent Form 10-KSB and in
any other documents incorporated by reference into this prospectus from our
other filings with the Securities and Exchange Commission.
In addition to the other information in this prospectus, the
factors listed below should be considered in evaluating our business and
prospects. This prospectus contains a number of forward-looking statements that
reflect our
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current views with respect to future events and financial performance. These
forward-looking statements are subject to certain risks and uncertainties,
including those discussed below and elsewhere herein, that could cause actual
results to differ materially from historical results or those anticipated. In
this report, the words "anticipates," "believes," "expects," "intends," "future"
and similar expressions identify forward-looking statements. Readers are
cautioned to consider the specific factors described below and not to place
undue reliance on the forward-looking statements contained herein, which speak
only as of the date hereof. We undertake no obligation to publicly revise these
forward-looking statements, to reflect events or circumstances that may arise
after the date hereof.
COMPANY RISKS
We Have a History of Losses and May Incur Future Losses. We have
incurred significant operating losses in prior periods and at June 30, 2000 we
had an accumulated deficit of $44,827,338. We had net losses of $714,163 for the
quarter ended June 30, 2000 and of approximately $2.6 million in fiscal 2000,
respectively. To date, we have not achieved profitability and given the level of
operating expenditures and the uncertainty of revenues and margins, we may
continue to incur losses and negative cash flows in future periods. The failure
to obtain sufficient revenues and margins to support operating expenses could
harm our business.
We Expect Our Operating Results May Fluctuate Significantly. Our
quarterly and annual operating results have fluctuated significantly in the past
and we expect that they will continue to fluctuate in the future. This
fluctuation is a result of a variety of factors, including the following:
- Unpredictable demand and pricing for our contract
development services;
- Market acceptance of original-quipment manufacturer
products by-nd users;
- Uncertainties with respect to future customer (original
equipment manufacturer) product orders, their timing and
the margins to be received, if any;
- Fluctuations in operating costs;
- Changes in research and related expenditures; and
- Changes in general economic conditions.
We May Experience Product Delays, Cost Overruns and Errors. We
have experienced development delays and cost overruns associated with contract
development services in the past. We may experience additional delays and cost
overruns on current projects or future projects. We have experienced delays in
bringing the Lanier products to production through our outside manufacturing
arrangement. Future delays and cost overruns could adversely affect our
financial results and could affect our ability to respond to technological
changes, evolving industry standards, competitive developments or customer
requirements. Our technology, the results of our contract services and the
products produced for original equipment manufacturer customers could contain
errors that could cause delays, order cancellations, contract terminations,
adverse publicity, reduced market acceptance of products, or lawsuits by
customers or their customers.
We May Need to Obtain Additional Financing. We believe that with
cash on hand and proceeds from existing development and production contracts
that we have sufficient proceeds to meet cash requirements for the next twelve
months. However, we may need to raise additional funds to:
- Finance unanticipated working capital requirements;
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- Pay for increased operating expenses or shortfalls in
anticipated revenues;
- Fund increases in research and related expenditures;
- Develop new technology, products or services;
- Respond to competitive pressures; and
- Support strategic and industry relationships.
We cannot assure you that additional financing will be available
on terms favorable to us, or at all. If adequate funds are not available to us
then we may not be able to continue operations or take advantage of
opportunities. If we raise additional equity funds, the percentage ownership of
our stockholders will be reduced.
We Rely on a Limited Number of Customers. A substantial portion
of our revenues have been derived primarily from a limited number of customers.
For the quarter ended June 30, 2000 and for the year ended March 31, 2000, the
provision of contract development services to Lanier accounted for approximately
100% and 90% of our revenues, respectively. We expect that the production of
Lanier products will account for a significant portion of fiscal 2001 revenues.
On April 27, 2000 Lanier announced that it intends to sell its voice processing
(dictation) business which we are informed would include the Cquence Mobile
line. Details of the transaction, including the identity of the potential buyer
or buyers and the time frame for the transaction, are not known at this time. We
do not know the impact, if any, that any such transaction, if consummated, would
have on future orders under the Lanier agreement. The loss of the Lanier
relationship, failure to produce products under our contract or a decline in the
economic prospects of Lanier or the products we produce would have a material
adverse effect on our operations.
We Have Limited Marketing Capability. We have limited marketing
capabilities and resources and are primarily dependent upon in-house executives
for the marketing of our original equipment manufacturer and licensing business.
Attracting new original equipment manufacturer customers requires ongoing
marketing and sales efforts and expenditure of funds to create awareness of and
demand for our technology. We cannot assure you that our marketing efforts will
be successful or result in future development contracts or other revenues.
We Depend On a Single Contract Manufacturer and a Limited Number
of Suppliers. We rely on Eltech Electronics for the manufacture and assembly of
products pursuant to our contract with Lanier. We depend on Eltech to (i)
allocate sufficient capacity to our manufacturing needs, (ii) produce acceptable
quality at agreed pricing and (iii) deliver on a timely basis. If Eltech is
unable to satisfy these requirements, our business, financial condition and
operating results could be materially and adversely affected. Under our supply
agreement with Eltech, we are obligated to provide six month rolling forecasts
for anticipated purchases and 90 days of purchase orders. The requirements of
the contract could result in shortages or excess product and adversely harm our
business. Any failure in performance by this manufacturer for any reason could
have a material adverse affect on our business. Production and pricing by Eltech
is subject to the risk of price fluctuations and periodic shortages of
components. We have no supply agreements with component suppliers and,
accordingly, we are dependent on the future ability of Eltech to purchase
components. Failure or delay by suppliers in supplying necessary components
could adversely affect our ability to deliver products on a timely and
competitive basis in the future.
Our Future Success Depends on Our Key Personnel. Our future
success depends to a significant extent on the continued service of our key
technical, sales and senior management personnel and their ability to execute
our strategy. The loss of the services of any of our senior level management, or
certain other key employees, could harm our business. Our future success also
depends on our ability to attract, retain and motivate highly skilled employees.
Competition for employees in our industry is intense. We may be unable to retain
our key employees or to attract, assimilate and retain other highly qualified
employees in the future. We have from time to time in the past experienced, and
we expect to continue to experience in the future, difficulty in hiring and
retaining highly skilled employees with appropriate qualifications.
Some of Our Management are Part-Time and Have Certain Conflicts
of Interest. Our Secretary, Robert Putnam, is also a Vice President, Investor
Relations of American Technology Corporation and Secretary of Patriot Scientific
Corporation. Mr. Putnam is the owner of approximately 4% of the issued and
outstanding shares of American Technology Corporation. Our controller, Renee
Warden, is also Chief Accounting Officer, Treasurer and
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Assistant Secretary of American Technology Corporation. As a result of their
ownership and involvement with American Technology Corporation and Patriot
Scientific Corporation, Mr. Putnam and Ms. Warden have in the past, and are
expected in the future to devote a substantial portion of their time to their
other endeavors and only part-time services to e.Digital. Certain conflicts of
interest now exist and will continue to exist between e.Digital and certain of
its officers and directors due to the fact that they have other employment or
business interests to which they devote some attention and they are expected to
continue to do so. It is conceivable that the respective areas of interest of
e.Digital, Patriot Scientific Corporation and American Technology Corporation
could overlap or conflict. It is possible that these factors could harm
e.Digital which does not have the benefit of a full-time executive team devoted
to executing our strategies.
INDUSTRY RISKS
The Electronic Products Market in Which We Compete is Highly
Competitive. We compete in the market for electronics products which is
intensely competitive and subject to rapid technological change. The market is
also impacted by evolving industry standards, rapid price changes and rapid
product obsolescence. Our competitors include a number of large foreign
companies with U.S. operations and a number of domestic companies, many of which
have substantially greater financial, marketing, personnel and other resources.
Our current competitors or new market entrants could introduce new or enhanced
technologies or products with features which render the Company=s technology or
products obsolete or less marketable, or could develop means of producing
competitive products at a lower cost. Our ability to compete successfully will
depend in large measure on our ability to maintain our capabilities in
connection with upgrading products and quality control procedures and to adapt
to technological changes and advances in the industry. Competition could result
in price reductions, reduced margins, and loss of contracts, any of which could
harm our business. There can be no assurance that we will be able to keep pace
with the technological demands of the marketplace or successfully enhance our
products or develop new products which are compatible with the products of the
electronics industry.
We Cannot Predict Product Acceptance in the Market. Our sales
and marketing strategy contemplates sales of developed products to the
electronics and computer software markets, by our original equipment
manufacturer customers. The failure of our original equipment manufacturer
customers to penetrate their projected markets would have a material adverse
effect upon our operations and prospects. Market acceptance of our customer=s
products will depend in part upon our ability to demonstrate and maintain the
advantages of our technology over competing products.
We Depend on the Development of the Digital Music Market to
Create a Market for Consumer Devices. We believe the market for portable
consumer devices to play digital music will not develop significantly until
consumers are able to download popular digital recordings from the Internet. We
believe the availability of popular recordings will depend on the adoption of
one or more formats to limit the unauthorized reproduction and distribution of
music, called "pirated" copies. Piracy is a significant concern of record
companies and artists. The failure of the industry to adopt a standard format or
formats for protecting from piracy will delay or have an adverse impact on the
growth of this market. This failure could harm our business. We have designed
our digital music prototype to include piracy protection and to be adaptable to
different music industry and technology standards. Numerous standards in the
marketplace, however, could cause confusion as to whether our designs and
services are compatible. If a competitor were to establish products for original
equipment manufacturer customers with a dominant industry standard unavailable
to us, our business would be harmed.
Our Business Depends on Emerging Markets and New Products. In
order for demand for our technology, services and products to grow, the markets
for portable digital devices, such as digital recorders and digital music
players and other portable consumer devices, must develop and grow. If sales for
these products do not grow, our revenues could decline. To remain competitive,
we intend to develop new applications for our technology and develop new
technology and products. If new applications or target markets fail to develop,
or if our technology, services and products are not accepted by the market, our
business, financial condition and results of operations could suffer.
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Our Technology May Become Obsolete. The electronics, contract
manufacturing and computer software markets are characterized by extensive
research and development and rapid technological change resulting in very short
product life cycles. Development of new or improved products, processes or
technologies may render our technology and developed products obsolete or less
competitive. We will be required to devote substantial efforts and financial
resources to enhance our existing products and methods of manufacture and to
develop new products and methods. There can be no assurance we will succeed with
these efforts. Moreover, there can be no assurance that other products will not
be developed which would render our technology and products obsolete.
We Continue to Face Year 2000 Risks. Many existing computer
programs cannot distinguish between a year beginning with "20" and a year
beginning with "19" because they use only the last two digits to refer to a
year. For example, these programs cannot tell the difference between the year
2000 and the year 1900. As a result, these programs may malfunction or fail
completely. If we or any third parties with whom we have a material relationship
fail to achieve year 2000 readiness, our business may be seriously harmed. In
particular, year 2000 problems could temporarily prevent us from offering our
goods and services.
We Depend on Proprietary Rights to Develop and Protect Our
Technology. Our success and ability to compete substantially depends on our
internally developed software, technologies and trademarks, which we protect
through a combination of patent, copyright, trade secret and trademark laws.
Patent applications or trademark registrations may not be approved. Even when
they are approved, our patents or trademarks may be successfully challenged by
others or invalidated. If our trademark registrations are not approved because
third parties own such trademarks, our use of these trademarks would be
restricted unless we enter into arrangements with the third-party owners, which
may not be possible on commercially reasonable terms or at all. We generally
enter into confidentiality or license agreements with our employees, consultants
and strategic and industry partners, and generally control access to and
distribution of our software, technologies, documentation and other proprietary
information. Despite our efforts to protect our proprietary rights from
unauthorized use or disclosure, parties may attempt to disclose, obtain or use
our solutions or technologies. The steps we have taken may not prevent
misappropriation of our solutions or technologies, particularly in foreign
countries where laws or law enforcement practices may not protect our
proprietary rights as fully as in the United States. We have licensed, and we
may license in the future, certain proprietary rights to third parties. While we
attempt to ensure that the quality of our brand is maintained by our business
partners, they may take actions that could impair the value of our proprietary
rights or our reputation. In addition, these business partners may not take the
same steps we have taken to prevent misappropriation of our solutions or
technologies.
We May Face Intellectual Property Infringement Claims That May
Be Costly To Resolve. Although we do not believe we infringe the proprietary
rights of any third parties, we cannot assure you that third parties will not
assert such claims against us in the future or that such claims will not be
successful. We could incur substantial costs and diversion of management
resources to defend any claims relating to proprietary rights, which could harm
our business. In addition, we are obligated under certain agreements to
indemnify the other party for claims that we infringe on the proprietary rights
of third parties. If we are required to indemnify parties under these
agreements, our business could be harmed. If someone asserts a claim relating to
proprietary technology or information against us, we may seek licenses to this
intellectual property. We may not be able to obtain licenses on commercially
reasonable terms, or at all. The failure to obtain the necessary licenses or
other rights may harm our business.
Risks Related To Government Regulation, Content And Intellectual
Property Government Regulation May Require Us To Change The Way We Do Business.
Our business is subject to rapidly changing laws and regulations. Although our
operations are currently based in California, the United States government and
the governments of other states and foreign countries have attempted to regulate
activities on the Internet. Evolving areas of law that are relevant to our
business include privacy law, proposed encryption laws, content regulation and
import/export regulations. Because of this rapidly evolving and uncertain
regulatory environment, we cannot predict how these laws and regulations might
affect our business. In addition, these uncertainties make it difficult to
ensure compliance with the laws and regulations governing the Internet. These
laws and regulations could harm us by subjecting us to liability or forcing us
to change how we do business.
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INVESTMENT RISKS
Our Stock Price May Continue to be Volatile. The trading price
of our common stock has been subject to significant fluctuations to date, and
will likely be subject to wide fluctuations in the future due to:
- quarter-to-quarter variations in operating results
- announcements of technological innovations by us, our
customers or competitors
- new products or significant original equipment
manufacturer design wins by us or our competitors
- general conditions in the markets for our products or in
the electronics industry
- the price and availability of products and components
- changes in operating factors including delays of
shipments, orders or cancellations
- general financial market conditions
- market conditions for technology stocks
- litigation or changes in operating results or estimates
by analysts or others
- other events or factors.
We do not endorse and accept no responsibility for the estimates
or recommendations issued by stock research analysts or others from time to time
or comments on any electronic chat boards. The public stock markets in general,
and technology stocks in particular, have experienced extreme price and trading
volume volatility. This volatility has significantly affected the market prices
of securities of many high technology companies for reasons frequently unrelated
to the operating performance of the specific companies. These broad market
fluctuations may adversely affect the market price of the our common stock in
the future.
Stocks Traded on the OTC Bulletin Board are Subject to Special
Regulations. Our shares of common stock are traded on the OTC Bulletin Board, an
electronic, screen-based trading system operated by the National Association of
Securities Dealers, Inc. Securities traded on the OTC Bulletin Board are, for
the most part, thinly traded and are subject to special regulations not imposed
on securities listed or traded on the NASDAQ system or on a national securities
exchange. As a result, an investor may find it difficult to dispose of, or to
obtain accurate quotations as to the price of, our common stock. Sales of
substantial amounts of our outstanding common stock in the public market could
materially adversely affect the market price of our common stock. To date, the
price of our common stock has been extremely volatile with the sale price
fluctuating from a low of $1.50 to a high of $24.50 in the last twelve months.
Our Number of Common Shares has Increased Dramatically and May
Affect Future Stock Prices. Our outstanding shares of common stock have
increased from 97,321,297 shares at March 31, 1999 to 126,261,182 shares at
March 31, 2000 and to 127,238,572 shares at November 1, 2000. This dramatic
increase of shares has resulted primarily from the conversion of preferred
shares and exercise of options and warrants at low prices in comparison to
recent trading prices. Accordingly, there may be significant shares in the
public float acquired by holders at significantly lower prices. Additional
shares may also be issued in the future from existing dilutive securities
outstanding or from the issuance of new equity securities in the future. These
factors could increase the volatility of our stock price in the future.
Our Series C Preferred Stock is Redeemable for Cash under
certain circumstances. On October 5, 2000 we issued 400 shares of Series C stock
for cash of $10,000 per share and gross proceeds of $4,000,000. Dividends of 7%
per annum are payable, with certain exceptions, either in cash or in shares of
common stock at our election. The stated dollar amount of Series C stock, is
convertible into fully paid and nonassessable shares of common stock at a
conversion price $4.33 per share which is fixed for the first 90 days following
the original issue date, and commencing 90 days following the original issue
date, the conversion price shall equal the lower of (i) $4.33 and (ii) 90% of
the average of the five lowest per share market values during the twenty
consecutive trading days immediately preceding the conversion date. The maximum
number of shares of common stock that we are required to issue upon conversions
of the Series C preferred stock and payment of dividends thereon in shares of
common stock is 2,666,666, except as may be subsequently modified as a
consequence of certain possible penalties and other adjustments. Such penalties
include payment of a liquidated damages amount equal to 2% of the purchase price
paid, which is to be payable monthly in cash in the event the registration
statement ceases to be effective as to all registrable securities and under
certain other circumstances. The Series C stock shall be subject to automatic
conversion on October 5, 2002 subject to certain conditions. At November 3,
2000, the Series C stock was convertible into approximately 923,788 shares of
common stock. The Series C stock is redeemable for cash in certain instances at
our option and at the holder's election upon the occurrence of certain
triggering events including, without limitations, a lapse of a registration
statement for ten non-consecutive trading days and certain other events. The
redemption price upon such election following a triggering event is the greater
of (a) 110% of the stated value or (b) the product of the number of preferred
shares multiplied by the closing market price multiplied by the stated value per
share divided by the then conversion price per share. In addition, certain
shares of common stock, which are converted within 30 trading days of an event
triggering redemption are subject to repurchase. Because the redemption
provisions are not entirely within our control, the Series C stock is presented
as preferred stockholders' equity on the consolidated balance sheet.
Important Factors Related to Forward-Looking Statements and
Associated Risks. This prospectus contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section
9
<PAGE> 12
21E of the Securities Exchange Act of 1934 and we intend that such
forward-looking statements be subject to the safe harbors created thereby. These
forward-looking statements include our plans and objectives of management for
future operations, including plans and objectives relating to the products and
our future economic performance. The forward-looking statements included herein
are based upon current expectations that involve a number of risks and
uncertainties. These forward-looking statements are based upon assumptions that
we will design, manufacture, market and ship new products on a timely basis,
that competitive conditions within the computer and electronic markets will not
change materially or adversely, that the computer and electronic markets will
continue to experience growth, that demand for the our products will increase,
that we will obtain and/or retain existing development partners and key
management personnel, that future inventory risks due to shifts in market demand
will be minimized, that our forecasts will accurately anticipate market demand
and that there will be no material adverse change in our operations or business.
Assumptions relating to the foregoing involve judgments with respect, among
other things, to future economic, competitive and market conditions and future
business decisions, all of which are difficult or impossible to predict
accurately and many of which are beyond our control. Although we believe that
the assumptions underlying the forward-looking statements are reasonable, any of
the assumptions could prove inaccurate and, therefore, there can be no assurance
that the results contemplated in forward-looking information will be realized.
In addition, as disclosed above, our business and operations are subject to
substantial risks which increase the uncertainty inherent in such
forward-looking statements. Any of the other factors disclosed above could cause
our net sales or net income (or loss), or our growth in net sales or net income
(or loss), to differ materially from prior results. Growth in absolute amounts
of costs of sales and selling and administrative expenses or the occurrence of
extraordinary events could cause actual results to vary materially from the
results contemplated in the forward-looking statements. Budgeting and other
management decisions are subjective in many respects and thus susceptible to
interpretations and periodic revisions based on actual experience and business
developments, the impact of which may cause us to alter our marketing, capital
expenditure or other budgets, which may in turn affect our results of
operations. In light of the significant uncertainties inherent in the
forward-looking information included herein, the inclusion of such information
should not be regarded as a representation by us or any other person that our
objectives or plans will be achieved.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees
and successors-in-interest may, from time to time, sell any or all of their
shares of common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. These sales may be at
fixed or negotiated prices. Subject to contractual limitations, the selling
stockholders may use any one or more of the following methods when selling
shares:
- ordinary brokerage transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to
sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the
transaction;
- purchases by a broker-dealer as principal and resale by
the broker-dealer for its account;
- an exchange distribution in accordance with the rules of
the applicable exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling stockholders
to sell a specified number of such shares at a
stipulated price per share;
- a combination of any such methods of sale; and
10
<PAGE> 13
- any other method permitted pursuant to applicable law.
The selling stockholders also may sell shares under Rule 144 of
the Securities Act of 1933, if available, rather than under this prospectus.
Subject to contractual limitations, the selling stockholders
also may engage in short sales against the box, puts and calls and other
transactions in securities of e.Digital or its derivative securities and may
sell or deliver shares in connection with these trades. The selling stockholders
may pledge their shares to their brokers under the margin provisions of customer
agreements. If a selling stockholder defaults on a margin loan, the broker may,
from time to time, offer and sell the pledged shares.
Broker-dealers engaged by the selling stockholders may arrange
for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders and any broker-dealers or agents that
are involved in selling the shares may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act in connection with such sales. In
such event, any commissions received by such broker-dealers or agents 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.
e.Digital Corporation is required to pay all fees and expenses
incident to the registration of the shares, including fees and disbursements of
counsel to the selling stockholders. We also have agreed to indemnify the
selling stockholders against certain losses, claims, damages and liabilities,
including liabilities under the Securities Act.
Under applicable rules and regulations under the Securities
Exchange Act of 1934, any person engaged in a distribution of the shares may not
bid for or purchase shares of common stock during a period which commences one
business day (five business days, if our public float is less than $25 million
or its average daily trading volume is less than $100,000) prior to such
person=s participation in the distribution, subject to exceptions for certain
passive market making activities. In addition, each selling stockholder will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the
rules and regulations thereunder, including, without limitation, Regulation M
which provisions may limit the timing of purchase and sales of shares of our
common stock by such selling stockholder.
SELLING STOCKHOLDERS
The following table sets forth the selling stockholders, and the
number of shares of common stock owned beneficially by them as of November 1,
2000 which may be offered pursuant to this prospectus. This information is based
upon information provided to us by either the named selling stockholder or our
transfer agent. Because the selling stockholders may offer all, some or none of
their respective shares of common stock, no definitive estimate as to the number
of shares thereof that will be held by the selling stockholders after such
offering can be provided. The term "selling stockholder" includes the
stockholders listed below and their transferees, pledgees, donees or other
successors. Except as set forth below, none of the selling stockholders is
currently an affiliate of e.Digital, and none of them has had a material
relationship with e.Digital during the past three years.
11
<PAGE> 14
The certificate of designation governing the Series C preferred stock and
the warrants issued to each Series C preferred stockholder each prohibit the
holder thereof from converting shares of Series C preferred stock or exercising
the warrant to the extent that such conversion or exercise, as the case may be,
would result in the holder, together with any affiliate thereof, beneficially
owning in excess of 4.999% of the outstanding shares of common stock following
such conversion or exercise, as the case may be. Such restrictions may be waived
by the holder of the Series C preferred stock and the warrant as to itself upon
not less than 61 days' notice to us. The number of shares of common stock listed
as beneficially owned by each Series C preferred stockholder represents the
number of shares of common stock issuable to such Series C preferred
stockholder, subject to the limitation set forth in the first sentence of this
footnote, upon (i) conversion of 400 shares of Series C preferred stock, at a
conversion price of $4.33 (which price will be adjusted on the 90th day
following the original issue date of October 5, 2000), and (ii) exercise of the
warrants issued to the Series C preferred stockholders in conjunction with the
sale of the Series C preferred stock for the purchase (in the aggregate) of
369,514 shares of common stock.
<TABLE>
<CAPTION>
Shares Beneficially Owned Number of Shares Beneficially
before Offering Shares Being Owned After Offering
Selling Stockholders(1) Number Percent(2) Offered(3) Number(7) Percent
------------------------ ------ -------- ------------ ---------- -------
<S> <C> <C> <C> <C> <C>
Jesup & Lamont Securities Corp. 138,568(4) * 138,568(4) 0 *
Millenium Partners, L.P. 915,473(5) * 915,473(6) 0 *
AIG SoundShore Holdings Ltd. 389,076(5) * 389,076(6) 0 *
AIG SoundShore Opportunity Fund Ltd. 219,714(5) * 219,714(6) 0 *
AIG SoundShore Strategic Holding Fund Ltd. 192,249(5) * 192,249(6) 0 *
AIG SoundShore Private Investors Fund Ltd. 114,434(5) * 114,434(6) 0 *
</TABLE>
----------
* Less than 1%
(1) To our knowledge, the selling stockholders have sole voting and investment
power with respect to all common stock shown as beneficially owned by them,
subject to community property laws where applicable. Except as otherwise set
forth herein, the table includes shares of common stock that the selling
stockholders have the right to acquire pursuant to the exercise of warrants and
options exercisable within 60 days and shares of common stock issuable to the
selling stockholders upon the conversion of preferred stock held by them.
(2) Percentage ownership is based on 127,238,572 shares of common stock
outstanding as of November 1, 2000 and, except as otherwise set forth herein, in
each case assumes exercise and/or conversion of warrants, options and preferred
stock.
(3) Pursuant to the Registration Rights Agreement between the selling
stockholders and us, we are required to register such number of shares of common
stock equal to the sum of (i) the number of shares of common stock issuable upon
conversion in full of the outstanding preferred stock, assuming for such
purposes that such shares of preferred stock are outstanding for five years, and
that all accrued dividends are added to the stated value of the preferred shares
and (ii) the number of shares of common stock issuable upon exercise in full of
warrants. Includes warrants exercisable into an aggregate of 369,514 shares of
common stock.
(4) Represents shares of common stock issuable upon the exercise of the warrant
issued to Jesup & Lamont for the purchase of 138,568 shares of common stock.
(5) Includes the shares of common stock issuable to the respective
stockholders, subject to the 4.999% limitation upon conversion of their
preferred stock and exercise of warrants.
(6) Represents the shares of common stock issuable to such Series C preferred
stockholder upon (i) conversion of the Series C preferred stock issued to such
Series C preferred stockholder at an assumed conversion price of $4.33 at a
stated value of $10,000 and (ii) exercise of the warrants issued to such Series
C preferred stockholder.
(7) Assumes sale of all shares of common stock offered hereby.
12
<PAGE> 15
DIVIDEND POLICY
e.Digital Corporation has never declared or paid any cash dividends on
its common stock and does not currently intend to do so. e.Digital intends to
retain any future earnings to support the development and growth of its
business. Any future determination to pay cash dividends will be at the
discretion of our board of directors and will be dependent upon our financial
condition, results of operations, cash requirements, plans for expansion,
contractual restrictions, if any, and other factors deemed relevant by the board
of directors.
LEGAL MATTERS
The validity of the securities offered will be passed on for the Company
by Higham, McConnell & Dunning LLP, Laguna Niguel, California.
EXPERTS
The consolidated financial statements of e.Digital Corporation and
subsidiary appearing in e.Digital Corporation's Annual Report (Form 10-KSB) for
the year ended March 31, 2000 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
included herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
As permitted by Delaware law, our Certificate of Incorporation provides
that the we will indemnify our officers, directors, employees and agents against
attorneys= fees and other expenses and liabilities they incur to defend, settle
or satisfy any civil or criminal action brought against them arising out of
their association with or activities on behalf of us unless, in any such action,
they are adjudged to have acted with gross negligence or to have engaged in
willful misconduct. We may also bear the expenses of such litigation for any
such persons upon their promise to repay such sums if it is ultimately
determined that they are not entitled to indemnification. Such expenditures
could be substantial and may not be recouped, even if we are so entitled.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act") may be permitted to directors,
officers or persons controlling us pursuant to the foregoing provisions, we have
been informed that, in the opinion of the Securities and Exchange 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 us of expenses incurred or
paid by a director, officer or controlling person of American Technology
Corporation 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 hereunder, we 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.
Pursuant to the General Corporation Law of Delaware, our Certificate of
Incorporation excludes personal liability on the part of its directors to the
Company for monetary damages based upon any violation of their fiduciary duties
as directors, except as to liability for any breach of the duty of loyalty, acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, acts in violation of Section 174 of the General
Corporation Law of Delaware, or any transaction from which a director receives
an improper personal benefit. This exclusion of liability does not limit any
right which a director may have to be indemnified and does not affect any
director=s liability under federal or applicable state securities laws.
13
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses payable in connection with the distribution of the securities
being registered (estimated except for the registration fee), all of which will
be borne by the Registrant, are as follows:
<TABLE>
<S> <C>
Registration Fee $ 1,690
Blue Sky Fees and Expenses $ 0
Legal Fees and Expenses $ 22,000
Accounting Fees and Expenses $ 5,000
Miscellaneous Expenses $ 2,000
Total $ 30,690
=========
</TABLE>
Item 15. Indemnification of Directors and Officers.
Article TENTH of the Certificate of Incorporation of the Company
provides:
"TENTH: The corporation shall, to the fullest extent legally
permissible under the provisions of the Delaware General Corporation Law, as the
same may be amended and supplemented, shall indemnify and hold harmless any and
all persons whom it shall have power to indemnify under said provisions from and
against any and all liabilities (including expenses) imposed upon or reasonably
incurred by him in connection with any action, suit or other proceeding in which
he may be involved or with which he may be threatened, or other matters referred
to in or covered by said provisions both as to action in his official capacity
and as to action in another capacity while holding such office, and shall
continue as to a person who has ceased to be a director or officer of the
corporation. Such indemnification provided shall not be deemed exclusive of any
other rights to which those indemnified may be entitled under any Bylaw,
Agreement or Resolution adopted by the shareholders entitled to vote thereon
after notice."
Our Bylaws provide that an officer, director, employee or agent
is entitled to be indemnified for the expenses, judgments, fines and amounts
paid in settlement actually and reasonably incurred by him by reason of any
action, suit or proceeding brought against him by virtue of his acting as such
officer, director, employee or agent, provided he acted in good faith or in a
manner he reasonably believed to be in or not opposed to the best interests of
our company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
We have directors and officers liability insurance. The
insurance policy covers liability for claims made against directors and officers
for their wrongful acts involving errors, misstatements, misleading statements
or acts or omissions or neglect or breach of duty, while acting in their
individual or collective capacities for any matter claimed against them solely
by reason of their being directors or officers of our company. The coverage
includes damages, judgment, settlements and costs of legal actions, claims or
proceedings and appeals therefrom but does not include fines or penalties
imposed by law for matters which may be deemed uninsurable under the law.
II-1
<PAGE> 17
If Delaware law and California law are in conflict with regard
to our power or obligation to indemnify, and the issue were to be contested in
the Delaware and/or California, the legal outcome is unpredictable.
Item 16. Exhibits.
The exhibits are listed in the Exhibit Index commencing at page
II-5 hereof.
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:
(i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in this
Registration Statement; and
(iii) to include any material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the Registration
Statement.
Provided however, that paragraphs (1)(i) and (1)(ii) shall not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered 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 post-effective
amendment to this Registration Statement 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 of 1933, each filing of
the issuer's Annual Report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Registrant pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-2
<PAGE> 18
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 San Diego, State of California on November 3, 2000.
Digital Corporation
By: /s/ Allen Cocumelli
-------------------------------------
ALLEN COCUMELLI,
CHAIRMAN OF THE BOARD
----------
POWER OF ATTORNEY
Each person whose signature to this Registration Statement appears below
hereby appoints Alfred H. Falk and Robert Putnam, and each of them, as his
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all amendments and post-effective amendments to this
Registration Statement as such attorney-in-fact may deem necessary or
appropriate.
----------
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>
Name Position Date
<S> <C> <C>
/s/ Allen Cocumelli Chairman of the Board and Director November 3, 2000
---------------------------
Allen Cocumelli
/s/ Alfred H. Falk President, Chief Executive Officer November 3, 2000
--------------------------- and Director (Principal Executive Officer)
Alfred H. Falk
/s/ Renee Warden Controller and Assistant Secretary November 3, 2000
--------------------------- (principal financial and accounting
Renee Warden officer)
/s/ Robert Putnam Vice President, Secretary, and Director November 3, 2000
---------------------------
Robert Putnam
/s/ Robert Jecmen Director November 3, 2000
---------------------------
Robert Jecmen
/s/ Walter Matthews Director November 3, 2000
---------------------------
Walter Matthews
/s/ Victor G. Ramsauer Director November 3, 2000
---------------------------
Victor G. Ramsauer
</TABLE>
II-3
<PAGE> 19
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER SEQUENTIAL DESCRIPTION
------- ----------------------
<S> <C>
2.1 Share Exchange Agreement among the Company, Norcom Communications
Corporation, and American Technology Corporation, dated for reference
March 23, 1988 and filed as an Exhibit to the Company's Registration
Statement on Form 10, as amended.
2.1.1 Amendment of Agreement among the Company, Norcom Communications
Corporation, and American Technology Corporation, dated for reference
March 23, 1988 and filed as an Exhibit to the Company's Registration
Statement on Form 10, as amended.
2.2 Plan and Agreement of Reorganization among the Company, American Surface
Mounted Devices, Inc. and ASMD, Inc.,dated August 11, 1989 and filed as
an Exhibit to the Company's Registration Statement on Form 10, as
amended.
2.3 Plan and Agreement of Reorganization among the Company, Sage
Microsystems, Inc., and Sage Micro, Inc., dated November 7, 1991 and
filed as an Exhibit to the Company's Registration Statement on Form 10,
as amended.
2.4 Plan and Agreement of Reorganization among the Company, C.A.D. Co.
Engineering, Inc. and CADCO Design Group, Inc., dated June 1, 1992 and
filed as an Exhibit to the Company's Registration Statement on Form 10,
as amended.
2.5 Plan and Agreement of Reorganization between American Surface Mounted
Devices, Inc. and Comp General Corporation, Inc., dated March 31 1995
and filed previously as an Exhibit to Registration Statement No.
33-92978.
2.6 Plan of Reorganization and Agreement of Merger, dated July 1996 and
filed as Exhibit A to the Company's July 3, 1996 Proxy Statement.
3.1 Certificate of Incorporation of Norris Communications, Inc. (as amended
through May 28, 1996) and filed as Exhibit B to the Company's July 3,
1996 Proxy Statement.
3.1.1 Certificate of Amendment of Certificate of Incorporation of Norris
Communications, Inc. filed with the State of Delaware on January 14,
1998 and filed as Exhibit 3.1.1 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended December 31, 1997.
3.1.2 Certificate of Amendment of Certificate of Incorporation of Norris
Communications Inc. filed with the State of Delaware on January 13, 1999
and filed as Exhibit 3.1.2 to the Company's Quarterly Report on Form
10-QSB for the quarter ended December 31, 1998.
3.2 Bylaws of the Company, filed as Exhibit C to the Company's July 3, 1996
Proxy Statement.
3.3 Certificate of Designation of Preferences, Rights and Limitations of
Series A Redeemable Convertible Preferred Stock filed with the State of
Delaware on September 19, 1997 and filed as Exhibit 3.3 to the Company's
Current Report on Form 8-K dated October 3, 1997.
3.4 Certificate of Designation of Preferences, Rights and Limitations of
Series B Redeemable Convertible Preferred Stock filed with the State of
Delaware on June 24, 1999, and filed as Exhibit 3.4 to the Company's
Annual Report on Form 10-KSB dated March 31, 1999.
</TABLE>
II-4
<PAGE> 20
<TABLE>
<S> <C>
3.5 Certificate of Designation of Preferences, Rights and Limitations of
Series C Redeemable Convertible Preferred Stock filed with the State of
Delaware on October 4, 2000.*
4.1 Certificate of Incorporation of Norris Communications, Inc. (as amended
through May 28, 1996) and filed as Exhibit B to the Company's July 3,
1996 Proxy Statement.
4.1.1 Certificate of Amendment of Certificate of Incorporation of Norris
Communications, Inc. filed with the State of Delaware on January 14,
1998 and filed as Exhibit 3.1.1 to the Company's Quarterly Report on
Form 10-QSB for the quarter ended December 31, 1997.
4.1.2 Certificate of Amendment of Certificate of Incorporation of Norris
Communications Inc. filed with the State of Delaware on January 13, 1999
and filed as Exhibit 3.1.2 to the Company's Quarterly Report on Form
10-QSB for the quarter ended December 31, 1998.
4.1.3 Certificate of Designation of Preferences, Rights and Limitations of
Series B Redeemable Convertible Preferred Stock filed with the State of
Delaware on June 24, 1999, and filed as Exhibit 3.4 to the Company's
Annual Report on Form 10-KSB dated March 31, 1999.
4.1.4 Certificate of Designation of Preferences, Rights and Limitations of
Series C Redeemable Convertible Preferred Stock filed with the State of
Delaware on October 4, 2000, filed herewith as Exhibit 3.5.
4.2 Bylaws of the Company, filed as Exhibit C to the Company's July 3, 1996
Proxy Statement.
4.3 Form of Warrant Agreement for an aggregate of 230,946 shares (dated
October 5, 2000) between the Company and the Series C preferred
stockholders.*
4.4 Form of Warrant Agreement for 138,568 shares (dated October 5, 2000)
between the Company and Jesup & Lamont Securities Corporation.*
4.5 Convertible Preferred Stock Purchase Agreement between the Company and
the Series C preferred stockholders dated October 5, 2000.*
4.6 Registration Rights Agreement between the Company and the Series C
preferred stockholders dated October 5, 2000.*
5.1 Opinion of Higham, McConnell & Dunning LLP.*
23.1 Consent of Higham, McConnell & Dunning LLP, included in Exhibit 5.1.
23.2 Consent of Ernst & Young LLP.*
</TABLE>
----------
* Each exhibit marked with an asterisk is filed concurrently herewith.
Each exhibit not marked with an asterisk is incorporated by reference to
an exhibit previously filed by the Company as indicated above.
II-5
