PROSPECTUS
RIMAGE CORPORATION
----------
625,614 SHARES OF
COMMON STOCK
($.01 PAR VALUE)
----------
This prospectus relates to an aggregate of 625,614 shares of
Common Stock, par value $.01 per share, of Rimage Corporation, a Minnesota
corporation, that may be sold from time to time by the selling shareholders
named on page 8 of this prospectus. We will not receive any proceeds from the
sale of the shares. We have agreed to pay the expenses of registration of the
shares, including legal and accounting fees.
The selling shareholders 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 of 1933.
Any or all of the shares may be offered from time to time in
transactions on the Nasdaq National Market in brokerage transactions at
prevailing market prices or in transactions at negotiated prices.
The shares offered by this prospectus have not been registered
under the blue sky or securities laws of any jurisdiction, and any broker or
dealer should assure the existence of an exemption from registration or
effectuate such registration in connection with the offer and sale of the
shares.
Our common stock is traded on the Nasdaq National Market under
the trading symbol "RIMG". On June 1, 2000, the last sale price of our common
stock as reported on the Nasdaq National Market was $16.50 per share.
THE ACQUISITION AND OWNERSHIP OF THE SHARES OF COMMON STOCK
SOLD UNDER THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. THE SHARES SHOULD BE
PURCHASED ONLY BY INVESTORS WHO ARE ABLE TO AFFORD THE RISK OF LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS ON PAGE 4."
Neither the Securities and Exchange commission nor any state
securities commission has approved or disapproved of these securities or passed
upon the adequacy or accuracy of this prospectus. Any representative to the
contrary is a criminal offense.
The date of this prospectus is June 2, 2000.
<PAGE>
TABLE OF CONTENTS
PAGE
Where You Can Find More Information ................................... 3
Incorporation of Certain Documents by Reference........................ 3
Risk Factors........................................................... 4
The Company............................................................ 7
Selling Shareholders................................................... 8
Plan of Distribution................................................... 10
Experts .............................................................. 10
Legal Matters.......................................................... 10
-2-
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission, and does not contain all the information
set forth in the registration statement and exhibits to the registration
statement. We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. Our reports,
proxy statements and other information filed can be inspected and copied at the
public reference facilities of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such materials can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. A copy of the registration statement is also
available on the Commission's EDGAR site on the World Wide Web at:
http:\\www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We "incorporate by reference" into this prospectus the information we
file with the Securities and Exchange Commission, which means that we can
disclose important information to you by referring you to those documents. We
incorporate the documents listed below:
(a) our Annual Report on Form 10-K for the year ended December
31, 1999;
(b) our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2000; and
(c) the description of our common stock contained in the
Registration Statement on Form S-1 pursuant to Section 12 of the
Securities Exchange Act of 1934, and any amendment or report filed for
the purpose of updating such description filed subsequent to the date
of this prospectus and prior to the termination of the offering
described herein.
We also incorporate by reference any filings we make with the
Securities and Exchange Commission under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of this prospectus and before
the termination of the offering of the shares. Any statement contained in this
prospectus or in a document all or part of which is incorporated or deemed to be
incorporated by reference in this prospectus shall be deemed to be modified or
superseded for purposes of this prospectus to the extent that a statement
contained in this prospectus or in any subsequently filed document which also is
or is deemed to be incorporated by reference in this prospectus modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
prospectus.
We will provide you without charge upon the written or oral request, a
copy of any or all of the documents incorporated herein by reference (other than
certain exhibits to such documents). Requests for such copies should be directed
to Chief Executive Officer, Rimage Corporation, 7725 Washington Avenue South,
Minneapolis, Minnesota 55439, telephone number (952) 944-8144.
-3-
<PAGE>
RISK FACTORS
ACQUIRING AND OWNING THE SHARES OFFERED BY THIS PROSPECTUS INVOLVES A
HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS,
IN ADDITION TO THE OTHER INFORMATION APPEARING IN OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS.
FLUCTUATIONS IN OUR OPERATING RESULTS MAY MAKE IT DIFFICULT TO PREDICT OUR
FUTURE PERFORMANCE
Our revenues and operating results are difficult to predict and may
fluctuate significantly from quarter to quarter. If our quarterly revenues or
operating results fall below the expectations of investors or securities
analysts, the price of our common stock could fall substantially. Our quarterly
revenues and operating results may fluctuate for several reasons, many of which
are outside of our control, including (i) demand for our products and services,
(ii) the timing of new product introductions and sales of our products and
services, (iii) increased expenses, whether related to sales and marketing,
research and development or administration, (iv) general economic conditions;
and (v) public announcements by our competitors.
OUR SUCCESS WILL DEPEND ON OUR ABILITY TO UPDATE OUR PRODUCTS
The computer data storage industry served is subject to rapid
technological changes. Both the capacity and size of storage devices has
improved dramatically in recent years. Alternate data storage media exist and
are under development, including high capacity hard drives, optical disks, and
file servers accessible through computer networks, and may affect the usage of
CD-R and DVD technology. While we have achieved some success in transitioning
our product focus from diskette storage to CD-R and DVD technology, a
significant change in the usage of CD-R or DVD-R as storage media in the future
would significantly affect sales of our products. In addition, our competitors
may develop alternative storage technologies. We expend a significant portion of
our revenues on research and development and product enhancement efforts. Our
technology, and the products based thereon, may become obsolete by technologies
developed by others.
THE INTENSE COMPETITION IN OUR INDUSTRY MAY REDUCE FUTURE SALES AND PROFITS
The storage technology industry is intensely competitive and rapidly
changing. A number of companies offer products similar to our products that
target the same markets. Some of our existing competitors, as well as a number
of new potential competitors, have larger technical staffs, more established and
larger marketing and sales organizations and significantly greater financial
resources than us. Such competitors may develop products that are superior to
our products or that achieve greater market acceptance. Our future success will
depend upon our ability to increase our share of our target markets and to
license additional products and product enhancements to existing customers. We
may not be able to compete with larger companies that have significantly greater
resources and contacts within the industry and our results of operations may
suffer.
-4-
<PAGE>
SOME OF THE COMPONENTS TO OUR PRODUCTS ARE ONLY AVAILABLE FROM A LIMITED NUMBER
OF SUPPLIERS
We have multiple sources for most of the components used in our
products. A few components, however, are available only from a limited number of
vendors. The inability to obtain such components on a timely basis from such
vendors would have a material adverse impact on our ability to fill orders from
our customers or, in some cases, to obtain such orders.
OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY
We rely heavily on our proprietary hardware designs and technology.
Although we use a variety of methods to protect our technology, we rely most
heavily on patents and trade secrets. The steps taken by us may not be adequate
to deter misappropriation of our technology. In addition, any patents issued to
us may be challenged, invalidated or circumvented, or the rights granted under
the patent may not provide us a competitive advantage. Furthermore, others may
"reverse engineer" our products to determine their method of operation and may
introduce competing products. Others may also develop competing technology
independently. Any such adverse circumstances could have a material adverse
effect on our results of operations.
As the number of our products increases, the markets in which our
products are sold expands, and the functionality of those products grows and
overlaps with products offered by competitors, we believe that we may become
increasingly subject to infringement claims. Although we do not believe any of
our products or proprietary rights infringe the rights of third parties,
infringement claims may be asserted against us in the future and any claims may
require us to enter into royalty arrangements or result in costly litigation.
OUR SUCCESS DEPENDS ON OUR ABILITY TO HIRE AND RETAIN KEY PERSONNEL AND
MANAGEMENT.
Our operations are materially dependent upon the services of Bernard P.
Aldrich, President, Chief Executive Officer and Chief Financial Officer, and
David J. Suden, Chief Technical Officer. The loss of the services of Mr. Aldrich
or Mr. Suden would materially and adversely affect our business. We do not have
employment agreements or "key man" life insurance on Mr. Aldrich and Mr. Suden
and have no plans to obtain such agreements or insurance.
SIGNIFICANT FLUCTUATION IN THE MARKET PRICE OF OUR COMMON STOCK COULD RESULT IN
SECURITIES LITIGATION AGAINST US
In the past, securities class action litigation has been brought
against publicly held companies following periods of volatility in the price of
their securities. If we were subject to such litigation due to volatility in our
stock price, we may incur substantial costs. Such litigation could divert the
attention of our senior management away from our business, which could have a
material adverse effect on our business, operating results and financial
condition. The market price of our common stock may be affected by many factors,
some of which are outside of our control, including (i) variations in quarterly
operating results, (ii) changes in estimates by securities analysts, (iii)
changes in market valuations of companies in the industry, (iv)
-5-
<PAGE>
announcements by us of significant events, such as major sales, acquisitions of
businesses or losses of major customers, (v) additions or departures of key
personnel and (vi) sales of our equity securities.
WE CAN ISSUE SHARES OF COMMON OR PREFERRED STOCK WITHOUT SHAREHOLDER APPROVAL,
WHICH COULD ADVERSELY AFFECT THE RIGHTS OF THE HOLDERS OF OUR COMMON STOCK
Our articles of incorporation currently authorize our Board of
Directors, without shareholder approval, to issue up to 10,000,000 shares of
capital stock, which may be either preferred stock or common stock. The Board of
Directors may issue stock in one or more classes or series from time to time and
with such provisions as are determined by the Board of Directors prior to
issuance of any particular class or series. The issuance of stock with rights
and preferences determined by the Board of Directors could dilute the stock
ownership of, or adversely affect the rights of, holders of the Common Stock,
including voting rights. The existence of the undesignated shares could have the
effect of discouraging an attempt to acquire control of our company.
NO DIVIDENDS
We have never paid or declared a dividend on our capital stock and do
not anticipate doing so for the foreseeable future.
-6-
<PAGE>
RIMAGE CORPORATION
We design, manufacture and market our CD recordable, or CD-R, and DVD
duplication and production equipment. Our Producer line of CD-R production
systems provides turnkey premastering, recording and label printing in a single
machine that may be used alone or on a network to allow the user to record and
label large volumes of digital information for information distribution,
archiving and other applications. Our Perfect Image CD Printer and Autoprinter
are fast, affordable manual and unattended systems for professional quality
printing on the surface of both CDs and DVDs.
We were incorporated as IXI, Inc. in Minnesota in February 1987 and
changed our name to Rimage Corporation in April 1988. We acquired the assets of
a company that produced diskette duplication equipment in 1987 and of a
California-based manufacturer of duplication equipment in 1988 and our
operations through 1995 consisted primarily of the design, manufacture and sale
of diskette and tape duplication equipment. In 1992, we created a formal
presence in Europe, forming Rimage Europe GmbH as a wholly-owned subsidiary to
conduct sales and service. In December 1993, We acquired Duplication Technology,
Inc., a company located in Boulder, Colorado that manufactures tape and CD-R
duplication equipment and provides duplication services. In September 1994, we
acquired a company in California, Knowledge Access International, which provided
customized browser and archiving software. We formed a separate division in
early 1996, Rimage Optical Systems, to act as a distributor of CD-ROM stamping
presses manufactured by a European company.
In September 1995 we acquired Dunhill Software Services, Inc., an
affiliated corporation that was formed in 1988 and that offered diskette
duplication and production services. Dunhill was merged into our company and,
together with a portion of Duplication Technology, represents most of our
Services Division operations. We operated in two divisions: 1) Systems and 2)
Services, until June1999, at which time our Services Division was discontinued.
In early 1997, we shutdown Knowledge Access and ceased operations of
our Optical Systems division. During the third quarter of 1998, we ceased
operations of our Bloomington, Minnesota Service Division (previously known as
Dunhill Software Services, Inc.) and sold the equipment and inventory associated
with its operations. Also on June 30, 1999, we ceased operations of our
subsidiary in Boulder, Colorado and sold all of the assets associated with its
operations. These changes, together with increased distribution and market
acceptance of our CD-R products, resulted in record earnings for the 1999
calendar year.
Our operations during the past five years have been affected by the
timing of the foregoing acquisitions and subsequent phasing out of unprofitable
operations, new product introductions and the expenses associated with
development of such new products, by changes in preferred formats for media
storage, and by increasing competition in the services businesses. The shift
from diskette to CD-R storage technologies precipitated the introduction of our
new CD-R products in 1995. These new CD-R products continued to generate
significant sales increases in 1997, 1998 and 1999.
-7-
<PAGE>
SELLING SHAREHOLDERS
As previously disclosed on our Current Report on Form 8-K, dated March
1, 2000, we acquired all of the outstanding shares of common stock of Cedar
Technologies, Inc. on March 1, 2000. In connection with the acquisition, each
share of common stock of Cedar Technologies was exchanged for .4838106 shares of
our common stock and each outstanding option and warrant to purchase common
stock of Cedar Technologies was exchanged for an option or warrant to purchase
shares of our common stock based on the same exchange ratio. The shares offered
by this prospectus represents the shares or warrants issued by us in connection
with the acquisition, excluding shares issued by us in connection with the
acquisition that are currently held in escrow. The Selling Shareholders listed
below are the former shareholders of Cedar Technologies.
The following table sets forth certain information with respect to the
beneficial ownership of our common stock by the Selling Shareholders as of May
10, 2000, and as adjusted to reflect the sale of shares pursuant to this
prospectus.
<TABLE>
<CAPTION>
Number of Maximum
shares Number of Number of
Underling Shares to Shares
Number of Warrants be Sold 0wned
Shares Owned Owned Pursuant After
Prior to Prior to to this Offering
Name Offering (1) Offering Prospectus (1)(2)
------------------------------------------------------ --------------- -------------- ------------ -----------
<S> <C> <C> <C> <C>
Paul Benton 0 724 724 0
BJB, Inc. 79,827 0 71,845 7,982
Nolan L. Bjorge 3,627 1,813 5,078 362
Bob Inc. 18,142 18,142 34,470 1,814
Mark C. Bruce 3,627 0 3,265 362
Patrick J. Codute 3,627 0 3,265 362
Henry Deyle 4,352 0 3,917 435
David Dovenberg 0 1,087 1,087 0
Dan Elling 0 29,028 29,028 0
Jay Friedrichs 5,441 0 4,897 544
Brad Friedrichs 1,814 0 1,633 181
Carol Friedrichs 3,627 0 3,265 362
Jerome Friedrichs 1,814 0 1,633 181
Craig W. Funk 9,070 0 8,163 907
Bob Gearou 18,142 18,142 34,470 1,814
Cossette Y. Guertin 2,538 0 2,285 253
Vincent R. Guertin 2,538 1,813 4,098 253
Ira Hackner 3,627 0 3,265 362
Robert B. Herling 1,814 0 1,633 181
Dorothy Holst 1,814 0 1,633 181
Industricorp & Co., Inc. FBO Gunderson Sales Keogh Plan 3,627 0 3,265 362
Don F. Jeske 7,074 0 6,367 707
Kevin Karpesh 0 1,813 1,813 0
Robert D. Keller 1,086 0 978 108
Kevin C. Koempel, IRA 5,441 0 4,897 544
John Kubinski 45,356 18,142 58,963 4,535
Dennis Lee & Jodi B. Larson, JTWROS 3,627 0 3,265 362
MICROBOARDS Technology, Inc. 45,356 0 40,821 4,535
Joseph Novagratz 72,571 21,771 87,085 7,257
S. R. Penn, Jr. 18,142 0 16,328 1,814
John & Dayla Quest 1,814 0 1,633 181
Holly F. & Jeffrey D. Schramm, JTWROS 905 0 815 90
Alden E. Schultz 905 1,813 2,628 90
Stan J. & Mary Jane Schuster, JTWROS 1,086 0 978 108
Brad Severson 0 3,628 3,628 0
C&S Smith TTEES; Nat'l Nursing Review PPS Plan U/A 3/1/77 9,433 0 8,490 943
Mike Swinford 68,942 3,628 62,048 6,894
-8-
<PAGE>
William Thompson 3,627 0 3,265 362
Roger Thorkelson 1,814 0 1,634 181
Peter H. Tracy 4,026 0 3,624 402
Gary G. Troyer & Leslie J. Troyer, JTWROS 22,678 22,678 43,088 2,267
William L. Vangen 14,513 0 13,062 1,451
Elizabeth Wicklund 0 33,658 33,658 0
--------------- -------------- ------------ -----------
497,463 177,880 625,614 49,729
</TABLE>
--------------
(1) Includes the shares issued by us in connection with the acquisition, but
currently held in escrow.
(2) Assumes the sale of all shares covered by this prospectus.
-9-
<PAGE>
PLAN OF DISTRIBUTION
The shares will be offered and sold by the selling shareholders for
their own account. We will not receive any proceeds from the sale of the shares
pursuant to this prospectus. We have agreed to pay the expenses of registration
of the shares, including legal and accounting fees.
The shares offered hereby may be sold by the selling shareholders, from
time to time in transactions on the Nasdaq National Market, in brokerage
transactions at prevailing market prices or in transactions at negotiated
prices. Sales may be made to or through brokers or dealers who may receive
compensation in the form of discounts, concessions or commissions from the
selling shareholders or the purchasers of shares for whom such brokers or
dealers may act as agent or to whom they may sell as principal, or both. As of
the date of this prospectus, we are not aware of any agreement, arrangement or
understanding between any broker or dealer and the selling shareholders.
The selling shareholders and any broker-dealer or agents that
participate with the selling shareholders in the distribution of the shares may
be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act of 1933, 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 of 1933.
EXPERTS
Our consolidated financial statements incorporated herein and in the
registration statement by reference to our Annual Report on Form 10-K have been
audited by KPMG LLP, independent certified public accountants, as indicated in
their report included therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
LEGAL MATTERS
The validity of the shares offered hereby has been passed upon for us
by Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota 55402.
-10-
<PAGE>
--------------------------------------------------------------------------------
No dealer, salesperson or any other 625,614 Shares
person has been authorized to give any
information or to make any
representations other than those
contained in this prospectus, and, if
given or made, such information or
representations must not be relied upon
as having been authorized by the RIMAGE CORPORATION
Company, any Selling Shareholders or
any other person. This Prospectus does
not constitute an offer to sell or a
solicitation of an offer to buy to any
person in any jurisdiction in which
such offer or solicitation would be
unlawful or to any person to whom it is Common Stock
unlawful. Neither the delivery of this
prospectus nor any offer or sale made
hereunder shall, under any
circumstances, create any implication
that there has been no change in the
affairs of the Company or that the
information contained herein is correct
as of any time subsequent to the date ------------
hereof. PROSPECTUS
------------
----------
TABLE OF CONTENTS
Page
----
Where you can
Find More Information........... 3
Incorporation of Certain
Documents By Reference.......... 3
Risk Factors....................... 4
Rimage Corporation................. 7
Selling Shareholders............... 8
Plan of Distribution...............10
Experts............................10
Legal Matters......................10 June 2, 2000
-11-
