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As filed with the Securities and Exchange Commission on April 29, 1997
Registration No. 333-24097
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GEOWORKS
(Exact Name of Registrant as specified in its charter)
<TABLE>
<S> <C>
CALIFORNIA 94-2920371
(State of incorporation) (I.R.S. Employer Identification No.)
</TABLE>
960 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(510) 814-1660
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
GORDON E. MAYER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
GEOWORKS
960 ATLANTIC AVENUE
ALAMEDA, CALIFORNIA 94501
(510) 814-1660
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
HERBERT P. FOCKLER
WILSON, SONSINI, GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(415) 493-9300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being registered on this Form are to be offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
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PROSPECTUS
1,282,754 SHARES
GEOWORKS
COMMON STOCK
This Prospectus relates to the public offering, which is not being
underwritten, of 1,282,754 shares of Common Stock, no par value (the "Common
Stock"), of Geoworks ("Geoworks" or the "Company"), which may be offered from
time to time by the Selling Shareholders named herein (the "Selling
Shareholders") for their own benefit. The Common Stock to which this Prospectus
relates was issued to the Selling Shareholders pursuant to the acquisition (the
"Acquisition") by the Company of all of the capital stock of Eden Group Limited,
a corporation organized under the laws of England and Wales. The Common Stock
issued to the Selling Shareholders in the Acquisition was issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Section 4(2) thereof and Regulation
S thereunder. None of the shares offered pursuant to this Prospectus have been
registered prior to the filing of the Registration Statement of which this
Prospectus is a part. The Company will receive no part of the proceeds of such
sales.
The Selling Shareholders intend to sell the shares offered hereby from
time to time in the over-the-counter market at prices prevailing therein, in
individually negotiated transactions at such prices as may be agreed upon, or in
a combination of such methods of sale. The Company will bear no expenses in
connection with any sale or other distribution of the shares by the Selling
Shareholders other than the expenses of preparation of this prospectus and the
related Registration Statement of which it is a part. The Selling Shareholders
will bear any selling commissions, stock transfer taxes, and fees and
disbursements of its counsel relating to such sale and distribution and any
other selling expenses. To the extent required, the specific shares of Common
Stock to be sold, the public offering price, the names of any agent dealer or
underwriter and any applicable commission or discount with respect to any
particular offer is set forth herein or will be set forth in an accompanying
Prospectus Supplement. See "Selling Shareholders" and "Plan of Distribution."
The Company's Common Stock is traded on the Nasdaq National Market under the
symbol GWRX. The last reported sales price of the Common Stock on the Nasdaq
National Market on April 25, 1997 was $5 5/8 per share.
SEE "RISK FACTORS" ON PAGE 5 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
The Selling Shareholders and any broker executing selling orders on behalf
of the Selling Shareholders may be deemed to be an "underwriter" within the
meaning of the Securities Act of 1933, as amended (the "Securities Act").
Commissions received by any such broker may be deemed to be underwriting
commissions under the Securities Act. See "Plan of Distribution" for information
relating to indemnification of the Selling Shareholders.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL __, 1997
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NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE SELLING
SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY OF THE SHARES OFFERED HEREBY TO ANY PERSON IN ANY
JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission (the "Commission") under the Securities Act. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which are omitted in accordance with the rules and regulations of the
Commission. For further information with respect to the Company and the shares
of Common Stock offered hereby, reference is hereby made to the Registration
Statement. Statements contained herein concerning the provisions of any document
are not necessarily complete, and each such statement is qualified in its
entirety by reference to the copy of such document filed with the Commission.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy and information statements and other information
with the Commission. Such reports, proxy and information statements and other
information may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, NW, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, Seven World Trade Center, New York, New York 10048, and Chicago Regional
Office, Northwest Atrium Center, 500 West Madison Street, Chicago, Illinois
60661. Copies of such material can be obtained from the Public Reference Section
of the Commission, 450 Fifth Street, NW, Washington, D.C. 20549 upon payment of
the prescribed fees. The Common Stock of the Company is quoted on the Nasdaq
National Market. Reports, proxy and information statements and other information
concerning the Company may be inspected at the Nasdaq Stock Market at 1735 K
Street, NW, Washington, D.C. 20006. The Commission maintains a World Wide Web
Site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of the site is http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended March 31,
1996;
(2) The Company's Quarterly Reports on Form 10-Q for the quarter ended
June 30, 1996 and on Form 10-Q (as amended on Form 10-Q/A) for the
quarters ended September 30, 1996 and December 31, 1996;
(3) The Company's Current Report on Form 8-K, filed March 10, 1997.
(4) The description of the Company's Capital Stock contained in its
Registration Statement on Form 8-A, which became effective on June
22, 1994.
All reports and other documents subsequently filed by the Company pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be deemed to be
incorporated by reference herein, to the extent required, and to be a part
hereof from the date of filing of such reports and documents. Any statement
incorporated herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus.
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The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of this Prospectus has been
delivered, upon written or oral request of such person, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests for such documents should be submitted in writing
to Jordan J. Breslow, Vice President, General Counsel, Geoworks, 960 Atlantic
Avenue, Alameda, California 94501 or by telephone at (510) 814-1660.
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THE COMPANY
The following information is qualified in its entirety by the more
detailed information and the Consolidated Financial Statements and the Notes
thereto appearing in the documents incorporated by reference herein.
Geoworks develops and markets operating system and application software
for the emerging market of mobile communications devices and electronic
organizers, focusing principally on smart phones. Smart phones are
next-generation, digital-cellular telephones that integrate voice and data
transmission capabilities - including voice mail, e-mail, facsimile and Internet
access to content and services - within one handheld device.
The Company's objective is to establish its GEOS system software as a
leading operating system for this market in the near term, and to leverage this
position by developing and marketing an array of products and services to the
installed base of GEOS-based devices. In particular, through its Wireless
Content and Services division, Geoworks is working with content providers,
hardware vendors, and integrated service vendors to create a complete,
end-to-end smart phone solution, delivering content and services to users of
GEOS-based smart phones. GEOS system software is currently licensed on an OEM
basis by Brother International Corporation, Ericsson Mobile Communications AB,
Hewlett-Packard Company ("Hewlett-Packard"), NEC, Nokia and Toshiba Corporation
("Toshiba"). In addition, Nokia, Novell, Inc. and Toshiba have made significant
equity investments in Geoworks.
Geoworks was incorporated in California in September 1983. The Company's
executive offices are located at 960 Atlantic Avenue, Alameda, California 94501,
and its telephone number is (510) 814-1660.
RECENT FINANCIAL DEVELOPMENTS (UNAUDITED). On April 24, 1997, the
Company announced consolidated results of operations for the fourth quarter and
for all of fiscal year 1997. For the quarter ended March 31, 1997, the Company
reported revenues of $1,931,000 compared with revenues of $1,267,000 for the
same period a year ago. The Company reported a net loss of $5,823,000, or $0.38
per share, versus a net loss of $2,974,000, or $0.20 per share, for the same
period a year ago. The results for the fourth quarter of 1997 include a
one-time charge of $1,450,000, or $0.09 per share, for costs related to the
Acquisition of Eden Group Limited in February 1997.
For the year ended March 31, 1997, the Company reported revenues of
$11,096,000 compared with revenues of $6,279,000 for fiscal 1996. For fiscal
1997, the Company reported a net loss of $13,476,000, or $0.88 per share,
compared with a net loss of $9,711,000, or $0.75 per share, for fiscal 1996.
Results of operations for the quarter ended March 31, 1996 and for fiscal year
1996, as shown above, have been restated to include the effects of the
Acquisition, which was accounted for as a pooling of interests.
FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated herein by reference contain
forward-looking statements that are based on current expectations, estimates and
projections about the Company's industry, management's beliefs, and assumptions
made by management. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict; therefore,
actual results may differ materially from those expressed or forecasted in any
such forward-looking statements. Such risks and uncertainties include, in
addition to those set forth herein under "Risk Factors," those noted in the
documents incorporated herein by reference. The Company undertakes no obligation
to update publicly any forward-looking statements, whether as a result of new
information, future events or otherwise.
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RISK FACTORS
The Shares offered hereby are speculative in nature and involve a high
degree of risk. The following risk factors should be considered carefully in
addition to the other information contained in the documents incorporated by
reference herein before purchasing the Common Stock offered hereby:
EFFECT OF WHOLESALE PRICES ON ROYALTIES
Royalties from the licensing of Geoworks' operating system to hardware
manufacturers represent a significant component of Geoworks' current revenues,
and are expected to represent an increasing portion of Geoworks' revenues in
future fiscal periods. The royalties Geoworks receives from these licenses are
usually correlated to the wholesale or comparable transfer price of the devices
in which Geoworks' software is incorporated. The price of such devices is
expected to decline over time as a result of competitive pressures and consumer
demands and due to the efforts of Geoworks' OEM customers to achieve increased
sales volume through price reductions. To the extent that Geoworks' royalty is
determined as a percentage of such price, or to the extent that Geoworks
responds to market pressures by reducing the amount of fixed-dollar royalties,
any such reduction in the wholesale or comparable transfer price will have a
material adverse effect on the royalty per unit Geoworks receives. There can be
no assurance that an increase in sales volume will result from a decline in the
wholesale or comparable price and thereby compensate for any decline in
royalties per unit which Geoworks receives from its OEM licensees.
ACCEPTANCE OF GEOWORKS TECHNOLOGY
Geoworks' success in establishing the GEOS system software as a leading
operating system in the mobile communicating device market is critically
dependent on Geoworks' ability to establish and sustain business relationships
with key market participants. The Company has already established relationships
with several key hardware manufacturers and other companies which Geoworks
believes will be significant participants in the market. Despite the importance
of these relationships, Geoworks must secure additional strategic design wins
with its existing partners and other device manufacturers in order to establish
the GEOS system software as an accepted operating system. There can be no
assurance that Geoworks' existing or future relationships will result in
sustained partnerships, successful products or substantial revenues for
Geoworks. Furthermore, even if Geoworks is able to establish and sustain
relationships with particular participants in the communicating mobile device
market, Geoworks' success depends upon both the adoption of Geoworks' GEOS
system software as an accepted operating system by hardware manufacturers and
the development by Geoworks and others of aftermarket application products and
services for such products. There can be no assurance that Geoworks will be able
to establish any such relationships, that the GEOS system software will be
accepted as an operating system or that successful aftermarket products and
services will develop for mobile communicating devices. Geoworks' aftermarket
strategy includes developing relationships with a limited number of independent
software developers to create, produce and market GEOS-based applications and
services. There can be no assurance that a limited number of independent
software developer relationships will be sufficient for Geoworks to compete
effectively in the mobile communicating device market, or that Geoworks or
independent software developers will be able to develop GEOS-based applications
and services in a timely manner or, if developed, that such applications and
services will achieve market acceptance.
DEPENDENCE ON NEW MARKET
Geoworks' efforts are currently concentrated on developing and marketing
operating system software for use in mobile communicating devices. Geoworks'
success depends upon both the development of a new market for these products and
upon the adoption of Geoworks' GEOS system software as an accepted operating
system standard for such devices. Although the market for cellular telephones is
well established and is currently growing at an appreciable rate, the smart
phone market is in the early stages of development, and, to date, no smart phone
device has achieved broad market acceptance. In August 1996, Nokia released a
smart phone in selected geographic markets which incorporates the Company's GEOS
software. Although the device has been well received, market acceptance of these
products has not yet been fully established. More generally, the failure of
these or any other early, highly publicized products or the discontinuance of
any such products by their manufacturers could significantly affect the
marketability of other similar or related products and components and the
development of the market. The Company has no control over the pricing of
GEOS-based devices and, therefore, cannot guarantee that any devices will reach
the desired price points to achieve mass market acceptance. In addition, the
development of the smart phone market, like that of other computer and consumer
electronics markets, is dependent upon the simultaneous development of a
substantial infrastructure of related and supporting products and services,
including hardware and software products, distribution channels
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and services, communications services and support and repair services. The
Company has very limited influence over and, therefore, is substantially
dependent upon, the activities of third parties for the development of this
infrastructure. The success of smart phones also depends on a number of other
general market factors outside Geoworks' control, including consumer acceptance
of particular smart phone concepts. In addition, Geoworks' long-term results
will depend upon its success in developing and marketing aftermarket wireless
content products and services that operate on GEOS-based smart phones. There can
be no assurance, however, that the wireless content and services market will
develop as anticipated or that Geoworks will be able to execute its business
plan successfully.
LIMITED SUCCESS OF PREVIOUS-GENERATION, NON-COMMUNICATING DEVICES
Prior to the emergence of the smart phone market, the Company licensed its
GEOS operating system software to manufacturers of non-communicating mobile
devices, such as personal digital assistants and handheld electronic organizers.
These noncommunicating devices - including the Hewlett-Packard OmniGo and the
Casio Z-7000, as well as those introduced by competitors, such as the Apple
Newton, Sony MagicLink and Motorola Envoy - have achieved only modest unit sales
to date, and the Casio Z-7000, a first-generation personal digital assistant
based upon the Company's GEOS system software, has been discontinued. Sharp and
Toshiba have each developed a non-communicating GEOS-based device and
subsequently elected to cancel introduction of such devices into the market.
Other market participants have announced restructurings of their efforts
relating to such devices. In addition, sales of low-cost, GEOS-based educational
computer systems and sales of Hewlett-Packard's OmniGo, a second generation
electronic organizer, fell short of the Company's expectations. In particular,
these third-party product discontinuances and disappointments contributed to the
Company recognizing lower then expected recurring license revenues during the
fiscal year ended March 31, 1996.
DEPENDENCE ON HARDWARE MANUFACTURERS
Geoworks' business is critically dependent upon the timely introduction
and successful marketing and sale of GEOS-based smart phones by a limited number
of consumer product companies. Geoworks, however, has no direct control over any
particular smart phone's hardware design, product functionality, pricing
strategy, release dates, market positioning, manufacturability and production
schedule, product promotion or distribution, all of which affect the product's
success and therefore Geoworks' business results. In addition, foreign currency
fluctuations may (a) limit the ability of foreign consumer product companies to
achieve production costs low enough to meet the pricing requirements of the
smart phone market or (b) otherwise affect the pricing of their products in
foreign markets to the extent that pricing is denominated in U.S. dollars. If a
particular GEOS-based smart phone does not achieve broad market acceptance and
generate anticipated sales volume, Geoworks' operating system royalties from
such product and Geoworks' opportunity for aftermarket sales of products and
services to users of such product will be materially adversely affected.
Furthermore, under the terms of Geoworks' agreements with hardware
manufacturers, the manufacturer is generally permitted to add product
enhancements or new products to the agreement. In such event, Geoworks may be
obligated to apply advance payments under the agreement against license revenue
to be earned by Geoworks on per unit sales of such additional products. Geoworks
may incur additional research and development expenses to provide software for
such products. Any such activities are generally subject to reaching agreement
on specifications, delivery, pricing and additional payments.
DEVELOPMENT OF WIRELESS CONTENT AND SERVICES
Even if the general smart phone market develops as anticipated by Geoworks
and the GEOS system software becomes a leading platform for hardware and
software products, Geoworks' long-term financial success is dependent on its
ability to derive revenue from the delivery of wireless content and services for
GEOS-based smart phones. Geoworks' plan for generating such revenue includes:
sales by Geoworks of internally developed client and server software and
services for, as well as upgrades to and associated products for, the GEOS-based
smart phones; license revenue from communication services providers; and
distribution by Geoworks of its own and third-party applications, content and
services. There can be no assurance, however, that Geoworks will be able to
derive significant revenue from any of these sources. The Company currently
offers only a very limited number of aftermarket applications in selected smart
phone market segments. The Company's wireless server and client development
resources, experience and market presence are more limited than that of many
other developers. There can be no assurance that Geoworks will be able to
successfully develop additional aftermarket products or services or obtain
distribution rights to third-party products or content, or that any such
products or content will achieve market acceptance. Further, Geoworks has
historically marketed an integrated package of operating systems and
applications, and has only limited experience marketing
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server and client applications to communication service providers. There can be
no assurance that Geoworks will be able to offer sufficiently attractive
additional functionality in GEOS system software and associated products to
generate significant revenue. Moreover, Geoworks may be required to respond to
competitive products and to customer demands by including features of its
aftermarket products or services in updated versions of Geoworks' operating
system software. To the extent that Geoworks is required to so include such
products and services, Geoworks may be unable to derive the level of revenue
from such products and service that Geoworks would derive if such products or
services were sold separately. While, in the past, Geoworks has been able to
obtain recurring license revenue from certain communication service providers,
there can be no assurance that Geoworks will be able to obtain similar
arrangements with other providers. Finally, practicable and effective cellular
distribution of content and services is an unproved concept which depends on
many factors for success, including the size of the data and applications to be
distributed and the presence of an appropriate infrastructure. Accordingly,
there can be no assurance that cellular distribution will prove to be feasible.
Regardless of the success of the GEOS system software, if Geoworks is unable to
derive significant revenue from one or more of the foregoing after market
sources, Geoworks' long term business, results of operations and financial
condition will be materially adversely affected.
RISK OF SOFTWARE PRODUCT DEVELOPMENT
Geoworks' future success will depend on its ability to develop and release
new operating system and application software products and upgrades on a timely
basis. Because of the short product life cycles and intense competition expected
in the smart phone market in which Geoworks participates, the timeliness of new
product introductions and shipments can be critical to whether a particular
product will ever achieve market acceptance. There can be no assurance that
Geoworks will be able to develop, introduce and ship new products or upgrades on
a timely basis. Furthermore, from time to time, Geoworks and others may announce
new products, features or technologies that have the potential to replace or
shorten the life cycle of Geoworks' existing product offerings. There can be no
assurance that announcements by Geoworks or competitors will not cause customers
to defer purchasing existing products of Geoworks or its hardware partners, or
cause distributors and dealers to return products. Delays or difficulties
associated with developing or introducing new products could have a material
adverse effect on Geoworks' business and results of operations.
The Company has historically engaged in significant customization of its
GEOS system software for each hardware partner. The software development and
customization process is inherently unpredictable. Development time and the
achievability of design objectives may not be determinable until very late in
the development process. Problems and delays in product development or
customization may result in the delay or cancellation of planned product or
service offerings by Geoworks and its strategic partners and, consequently,
could have an adverse effect on the Company's operating results. In the past,
Geoworks has experienced significant delays in the completion of development and
customization projects and the release of new products to hardware partners.
Consequently, the receipt of development fees and license revenue from these
partners has at times also been delayed. In particular, Geoworks experienced two
significant delays relating to OEM projects in 1993, the more significant of
which resulted in the OEM delaying payment of US$2.6 million owed to Geoworks
for a period of approximately 12 months and forced Geoworks to cover its capital
needs through short-term borrowings and extended payment terms with certain key
vendors. Such delays have resulted from a number of factors, including changes
in specifications initiated by Geoworks' hardware partners. The extent of these
delays has varied depending upon the size and scope of the product and the
nature of the problems encountered. There can be no assurance that Geoworks will
not experience similar problems and delays in the future, resulting in material
adverse effects on Geoworks' operating results. Furthermore, no complex software
product is totally free of errors and significant errors may go undetected for
some time. Discovery of significant errors may delay or cancel product releases
and, if not discovered until after product release, may necessitate recall of
products by Geoworks and its strategic partners and expose Geoworks to
substantial expense and claims for reimbursement.
DEPENDENCE ON COMPLEMENTARY TECHNOLOGIES
In certain markets, widespread adoption and use of smart phones may depend
on the commercial availability of other technologies and business relationships.
For example, widespread use of cellular telephones for data transfer in the
United States or other regions may depend upon the development and rollout of a
cellular network infrastructure capable of digital transmission. Other markets
may depend upon the development of reliable, affordable and convenient wireless
transmission of data. For smart phones and other communicating devices to
achieve consumer level pricing, technologies which reduce the cost of
manufacturing and the cost of goods may need to be developed and implemented.
These cost reductions will also require Geoworks' OEM
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licensees to achieve economies of scale in manufacturing. There can be no
assurance that such complementary technologies will develop, or that such cost
and price reductions will be achieved.
ACQUISITIONS; INTEGRATION OF OPERATIONS
Geoworks expects that the Acquisition of Eden Group Limited will result in
long-term strategic benefits. These anticipated benefits will depend in part on
whether the companies' operations can be integrated in an efficient and
effective manner. There can be no assurance that this will occur. The
combination of the companies will require, among other things, the integration
of the companies' respective product offerings and the coordination of the
companies' sales, marketing and research and development efforts. There can be
no assurance that the combined company will be able to take full advantage of
these combined efforts. The success of this process will be significantly
influenced by the ability of the combined company to attract and retain key
management, sales, marketing and research and development personnel and to
integrate personnel with disparate business backgrounds working in different
corporate cultures. Integrating the two companies will require the dedication of
management resources, which may distract attention from the day-to-day
operations of the combined company. In addition, Geoworks expects to incur
significant additional operating costs in connection with the integration of the
two companies. The inability of management to successfully integrate the
operations of the companies in an efficient and cost-effective manner, the loss
of customers or key personnel or the disruption of operations as a result of
such integration could have a material adverse effect upon the business,
operating results or financial condition of the combined company.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends in large part on the continued
service of its key technical, marketing and management personnel and on its
ability to continue to attract and retain qualified employees, particularly
highly skilled software design engineers involved in the development of new
products. The competition for such personnel is intense, and there can be no
assurance that the Company will be successful in attracting and retaining such
personnel. In addition, the Company does not have employment contracts with most
of its key personnel. The loss of key employees could have a material adverse
effect on the Company's business, operating results and financial condition.
UNDESIGNATED PREFERRED STOCK
The Company's Board of Directors can, without obtaining shareholder
approval, issue shares of Preferred Stock having rights, preferences, privileges
and restrictions, including voting rights, that could adversely affect the
rights of holders of the Company's Common Stock. The issuance of the Preferred
Stock, while providing desirable flexibility in connection with possible
acquisitions and other corporate purposes, could have the effect of making it
more difficult for a third party to acquire a majority of the outstanding voting
stock of the Company, thereby delaying, deferring or preventing a change in
control of the Company. Furthermore, such Preferred Stock may have other rights
including economic rights senior to the Common Stock, and, as a result, the
issuance of such stock could have a material adverse effect on the market value
of the Common Stock. The Company may in the future adopt other measures that may
have the effect of delaying, deferring or preventing a change in control of the
Company, even though such a change in control might be at a premium price or
favored by a majority of unaffiliated shareholders. Certain of such measures may
be adopted without any further vote or action by the shareholders.
VOLATILITY OF STOCK PRICE; ABSENCE OF DIVIDENDS; DILUTION
There has been significant volatility in the market price of securities of
technology companies similar in size to the Company. Factors such as
announcements of technological developments or new products by the Company or
its competitors, variations in the Company's quarterly operating results, or
general economic or stock market conditions unrelated to the Company's operating
performance may have a significant effect on the market price of the Common
Stock. The Company has not been profitable in the last five years and has never
declared or paid cash dividends on its capital stock. To the extent the Company
becomes profitable, the Company intends to retain any future earnings to finance
the growth and development of its business. As of March 31, 1997, the net
tangible book value of the Company was $36,553,000, or $2.36 per share. The
Company will not receive any of the proceeds from the sale of shares covered
hereby, and net tangible book value will not be affected thereby. Accordingly,
purchasers may incur immediate and substantial book value dilution from the
amount of their purchase.
-8-
<PAGE> 10
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale from time
to time of the Shares. All proceeds from the sale of the Shares will be for the
account of the Selling Shareholders, as described below. See "Selling
Stockholders" and "Plan of Distribution" described below.
-9-
<PAGE> 11
SELLING STOCKHOLDERS
The shares of Common Stock to be sold by the Selling Shareholders pursuant
to this Prospectus represent shares issued to the Selling Shareholders by the
Company in connection with the Acquisition (the "Acquisition Shares"). No
Selling Shareholder beneficially owns any shares of Common Stock other than
Acquisition Shares. The following table sets forth as of the date of this
Prospectus, the name of each of the Selling Shareholders, the number of shares
held by each such Selling Shareholder (all of which shares may be offered for
sale from time to time by this Prospectus), and the number of shares to be held
by each such Selling Shareholder assuming the sale of all the Common Stock
offered hereby. Except as indicated, none of the Selling Shareholders has held
any position or office or had a material relationship with the Company or any of
its affiliates within the past three years other than as a result of the
ownership of the Company's Common Stock. The Company may amend or supplement
this Prospectus from time to time to update the disclosure set forth herein.
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Shares Which May After Offering(3)
Beneficially be Sold Pursuant to -------------------------
Selling Stockholder Owned(1) this Prospectus(2) Number Percent
- -------------------------------------------- ------------ ------------------- --------- --------
<S> <C> <C> <C> <C>
David Edward John Crisp(4) 11,258 11,258 0 --
David Lee Stevens 6,227 6,227 0 --
Alistair Jenkins 8,529 8,529 0 --
Dennis Phillip Taylor 30,723 30,723 0 --
Skanco Trustees Limited as trustee for
The David Edward John Crisp Settlement 88,466 88,466 0 --
Skanco Trustees Limited as trustee of the
David Lee Stevens Settlement 15,611 15,611 0 --
Skanco Trustees Limited as trustee of the
Alistair Jenkins Settlement 15,611 15,611 0 --
3i Group plc 353,010 353,010 0 --
A.I.I. Holding Corporation 141,365 141,365 0 --
Mr. John Emmerson 4,336 4,336 0 --
Steven Randall 429 429 0 --
Skanco Trustees Limited (as trustee of
The Steven Randall Settlement) 88,466 88,466 0 --
Citifriends Nominee Limited 105,764 105,764 0 --
Robert and Sophie Peterson 3,469 3,469 0 --
Christopher Michael Batterham, Esq. 2,116 2,116 0 --
Childs Nominees Limited 2,116 2,116 0 --
Jeremy Guy Brassington 5,290 5,290 0 --
Fieldhelm Limited c/o National Leasing &
Finance Co. 50,973 50,973 0 --
SPRL ETS De Groodt 21,681 21,681 0 --
Pershing Keen Nominees Limited A/C
HCL 20,220 20,220 0 --
Mrs. Patricia Ann Renshaw 2,115 2,115 0 --
Southwind Limited c/o AS & K Services
(Guernsey) Limited 13,009 13,009 0 --
Pershing Keen Nominees Limited A/C
HCLCGT 17,949 17,949 0 --
David William Balfe, Esq. 10,580 10,580 0 --
Ronald Britton, Esq. 2,116 2,116 0 --
Steven Charles Hirst, Esq. 2,116 2,116 0 --
</TABLE>
-10-
<PAGE> 12
<TABLE>
<CAPTION>
Shares Beneficially Owned
Shares Shares Which May After Offering(3)
Beneficially be Sold Pursuant to -------------------------
Selling Stockholder Owned(1) this Prospectus(2) Number Percent
- -------------------------------------------- ------------ ------------------- --------- --------
<S> <C> <C> <C> <C>
Robert Thomas Kerr Brown, Esq. 7,866 7,866 0 --
Claybrooke Investments Limited c/o S.G.
Associates Limited 31,655 31,655 0 --
Elewill Limited 3,174 3,174 0 --
Emron Publishing Limited 5,290 5,290 0 --
Frank Sanderson, Esq. 3,174 3,174 0 --
Adrian Charles O'Donnell, Esq. c/o IOC
International plc 2,961 2,961 0 --
Michael and Erica Louise Gordon 5,287 5,287 0 --
St. Georges Street Trustees 10,576 10,576 0 --
Firmanent Investments Limited 2,168 2,168 0 --
John Anthony Condon, Esq. 2,168 2,168 0 --
Frederick Hendrik Fentener
van Vlissingen, Esq. 10,840 10,840 0 --
Frederick Horth, Esq. 4,230 4,230 0 --
Proneddim Holdings BV 2,168 2,168 0 --
Matthew and Cristina Sugarman 5,922 5,922 0 --
Chafbury Investments Limited 2,115 2,115 0 --
David Emanuel Merton Mond, Esq. 2,115 2,115 0 --
Stuart Andrew Goldsmith, Esq. 2,115 2,115 0 --
Ian Arthur Folkes, Esq. 2,168 2,168 0 --
Peter D. Davies, Esq. 2,116 2,116 0 --
Raymond Joseph and Shirley Ann Dobson 2,116 2,116 0 --
Derek Hartle, Esq. 2,116 2,116 0 --
John Kenneth and Antonia Mary Smith 2,116 2,116 0 --
Malcolm and Sylvia Moss 2,116 2,116 0 --
Jonathan A. Edelstein, Esq. 2,537 2,537 0 --
Stanley Arthur Elston, Esq. 2,116 2,116 0 --
A&B Securities Limited as Trustee for
Robert Stephen Holdings Limited 42,305 42,305 0 --
Jonathan Axtell 745 745 0 --
Martin Charles Alexander Baxter 745 745 0 --
Brian Bennett 223 223 0 --
Gillian Brookman 223 223 0 --
Hayden Gownie Clark 1,491 1,491 0 --
John G. Doggett 223 223 0 --
Anthony Glen Ford 2,983 2,983 0 --
John Stephen Hargreaves 223 223 0 --
Andrew Law 1,491 1,491 0 --
Ian Miles Standish 745 745 0 --
John Stuart Tune 223 223 0 --
Henry Cooke Lumsden (London) Ltd 21,152 21,152 0 --
</TABLE>
- ---------
(1) The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act, and the information is not
necessarily indicative of beneficial ownership for any other purpose.
Under such rule, beneficial ownership includes any shares as to which the
individual has sole or shared voting power or investment power and also
any shares which the individual has the right to acquire within 60 days of
the date of this Prospectus through the exercise of any stock option or
other right. Unless otherwise indicated in the footnotes, each person has
sole voting and investment power (or shares such powers with his or her
spouse) with respect to the shares shown as beneficially owned.
-11-
<PAGE> 13
(2) Does not include 65,212 shares of Common Stock beneficially owned by
Messrs. Crisp, Jenkins and Stevens that are subject to an escrow
established pursuant to an Escrow Agreement entered into among the Company
and such Selling Shareholders in connection with the Acquisition (the
"Escrowed Shares"). Such escrow will expire on December 31, 1997 to the
extent no claims on the escrow are outstanding at that time. A number of
shares equivalent to the Escrowed Shares has been included in this
Registration Statement, but is not reflected in this column of the table.
An amended prospectus will be filed to reflect any change in the number of
shares offered by these individual Selling Shareholders.
(3) Assumes the sale of all Common Stock offered hereby.
(4) Following the Acquisition of Eden Group Limited, Mr. Crisp was appointed
as the Company's Vice President, General Manager Europe.
PLAN OF DISTRIBUTION
The shares covered by this Prospectus may be offered and sold from time to
time by the Selling Shareholders. The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Shareholders may sell the shares being
offered hereby on the Nasdaq National Market, or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
at negotiated prices. The shares may be sold by one or more of the following
means of distribution: (a) a block trade in which the broker-dealer so engaged
will attempt to sell shares as agent, but may position and resell a portion of
the block as principal to facilitate the transaction; (b) purchases by a
broker-dealer as principal and resale by such broker-dealer for its own account
pursuant to this Prospectus; (c) an over-the-counter distribution in accordance
with the rules of the Nasdaq National Market; (d) ordinary brokerage
transactions and transactions in which the broker solicits purchasers; and (e)
in privately negotiated transactions. To the extent required, this Prospectus
may be amended and supplemented from time to time to describe a specific plan of
distribution. In connection with distributions of the shares or otherwise, the
Selling Shareholders may enter into hedging transactions with broker-dealers or
other financial institutions. In connection with such transactions,
broker-dealers or other financial institutions may engage in short sales of the
Company's Common Stock in the course of hedging the positions they assume with
Selling Shareholders. The Selling Shareholders may also sell the Company's
Common Stock short and redeliver the shares to close out such short positions.
The Selling Shareholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of shares offered hereby,
which shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Shareholders may also pledge shares to a broker-dealer
or other financial institution, and, upon a default, such broker-dealer or other
financial institution, may effect sales of the pledged shares pursuant to this
Prospectus (as supplemented or amended to reflect such transaction). In
addition, any shares that qualify for sale pursuant to Rule 144 may be sold
under Rule 144 rather than pursuant to this Prospectus.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Shareholders (and, if acting as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees may be paid by the Selling Shareholder. Broker-dealers may agree with the
Selling Shareholders to sell a specified number of shares at a stipulated price
per share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the Selling Shareholder, to purchase as principal any unsold shares at
the price required to fulfill the broker-dealer commitment to the Selling
Shareholder. Broker-dealers who acquire shares as principal may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or by a combination of such
methods of sale or otherwise at market prices prevailing at the time of sale or
at negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions as described above.
The Company has advised the Selling Shareholders that the
anti-manipulation Regulation M under the Exchange Act may apply to sales of
shares in the market and to the activities of the Selling Shareholders and their
affiliates. In addition, the Company will make copies of this Prospectus
available to the Selling Shareholders and has informed them of the need for
delivery of copies of this Prospectus to purchasers at or prior to the time of
any sale of the shares offered hereby. The Selling Shareholders may indemnify
any broker-dealer that participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act. Any commissions paid or any discounts or concessions allowed to
any such broker-dealers, and any profits received on the resale of such shares,
may be deemed to be underwriting discounts and commissions under the Securities
Act if any such broker-dealers purchase shares as principal.
-12-
<PAGE> 14
In order to comply with the securities laws of certain states, if
applicable, the shares offered hereby will be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition, in certain
states, the shares may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
At the time a particular offer of the shares of Common Stock registered
hereunder is made, if required, a Prospectus Supplement will be distributed that
will set forth the number of shares being offered and the terms of the offering,
including the name of any underwriter, dealer or agent, the purchase price paid
by any underwriter, any discount, commission and other item constituting
compensation, any discount, commission or concession allowed or reallowed or
paid to any dealer, and the proposed selling price to the public.
The sale of shares by the Selling Shareholders is subject to compliance by
the Selling Shareholders with certain contractual restrictions with the Company.
There can be no assurance that the Selling Shareholders will sell all or any of
the shares.
The Company has agreed to indemnify the Selling Shareholders and any
person controlling a Selling Shareholder against certain liabilities, including
liabilities under the Securities Act. The Selling Shareholders have agreed to
indemnify the Company and certain related persons against certain liabilities,
including liabilities under the Securities Act.
The Company has agreed with the Selling Shareholders to keep the
Registration Statement of which this Prospectus constitutes a part effective for
up to two years following February 24, 1997, the closing date of the
Acquisition. This period may be shortened under certain circumstances. The
Company intends to de-register any of the shares not sold by the Selling
Shareholders at the end of such two year period; however it is anticipated that
at such time any unsold shares may be freely tradable subject to compliance with
Rule 144 of the Securities Act.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby will be passed
upon by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California, counsel to the Company.
EXPERTS
The consolidated financial statements of Geoworks incorporated by
reference in the Annual Report (Form 10-K) of Geoworks for the year ended March
31, 1996, have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon incorporated by reference therein and incorporated
herein by reference. Such consolidated 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.
-13-
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Company will bear no expenses in connection with any sale or other
distribution by the Selling Shareholders of the shares being registered other
than the expenses of preparation of this Registration Statement and the
Prospectus included in this Registration Statement. Such expenses are set forth
in the following table. All of the amounts shown are estimates except the
Securities and Exchange Commission ("SEC") registration fee.
<TABLE>
<S> <C>
SEC registration fee .......... $ 2,577
Legal fees and expenses........ 5,000
Accounting fees and expenses... 3,000
Miscellaneous expenses......... 1,423
Total................. $12,000
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article IV of the Registrant's Articles of Incorporation and Article VI
of the Registrant's Bylaws provide for indemnification of its directors,
officers, employees and agents to the maximum extent permitted by law. In
addition, the Registrant has entered into Indemnification Agreements with its
officers and directors. Reference is also made to Section 7 of the Underwriting
Agreement for Registrant's public offering (Exhibit 1.1 to Registration
Statement on Form S-3, declared effective November 13, 1995 (File No. 33-78104))
and Section 7 of the Underwriting Agreement for the Registrant's initial public
offering (Exhibit 1.1 to Registration Statement on Form S-1, declared effective
on June 22, 1994 (File No. 33-78014)), each of which provides for the
indemnification of officers, directors and controlling persons of the Registrant
against certain liabilities. A registration rights agreement entered into by the
Registrant and certain holders of its Common Stock provides for
cross-indemnification of such holders and the Registrant, its officers and
directors for certain liabilities arising under the Securities Act or otherwise.
In addition, a Declaration of Registration Rights executed by the Company for
the benefit of the Selling Shareholders provides a cross-indemnification of such
Selling Shareholders and any persons controlling any such Selling Shareholder,
on the one hand, and the Registrant, on the other, its officers and directors
for certain liabilities arising under the Securities Act or otherwise.
ITEM 16. EXHIBITS.
5.1* Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional
Corporation
23.1 Consent of Independent Auditors
23.2* Consent of Counsel (included in Exhibit 5.1)
24.1* Power of Attorney
99.1 Press Release of Geoworks dated April 24, 1997
- --------
* Previously filed.
Item 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-1
<PAGE> 16
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
Registration Statement to include any material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change
to such information in the Registration Statement.
(2) That, for the purpose of determining any
liability under the Securities Act, each post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of this
offering.
(4) That, for purposes of determining any
liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by
reference in 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.
II-2
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Geoworks
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 amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Alameda, State of California, on April 29, 1997.
GEOWORKS
By: *
-------------------------------------
Gordon E. Mayer
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
amendment to registration statement has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ----------------------------- ------------------------------------ --------------
<S> <C> <C>
* Chairman of the Board April 29, 1997
- -----------------------------
Brian P. Dougherty
* President, Chief Executive April 29, 1997
- ----------------------------- Officer and Director
Gordon E. Mayer (Principal Executive Officer)
/s/ Daniel L. Sicotte Controller (Principal Financial April 29, 1997
- ----------------------------- and Accounting Officer)
Daniel L. Sicotte
* Director April 29, 1997
- -----------------------------
Clive G. Smith
* Director April 29, 1997
- -----------------------------
Bruce W. Dunlevie
* Director April 29, 1997
- -----------------------------
Eric E. Schmidt
* Director April 29, 1997
- -----------------------------
R. Duff Thompson
* Director April 29, 1997
- -----------------------------
Reijo Paajanen
</TABLE>
- -----------------------------
*By: /s/ Daniel L. Sicotte
------------------------
Daniel L. Sicotte,
Attorney-in-Fact
II-3
<PAGE> 18
INDEX TO EXHIBITS
Exhibit
Number Description
5.1* Opinion of Wilson, Sonsini, Goodrich & Rosati, Professional
Corporation
23.1 Consent of Independent Auditors
23.2* Consent of Counsel (included in Exhibit 5.1)
24.1* Power of Attorney
99.1 Press Release of Geoworks dated April 24, 1997
- ---------
* Previously filed.
II-4
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3/A) and related Prospectus of Geoworks for
the registration of 1,282,754 shares of its common stock and to the
incorporation by reference therein of our reports dated April 18, 1996 with
respect to the consolidated financial statements of Geoworks incorporated by
reference in its Annual Report (Form 10-K) for the year ended March 31, 1996
and the related financial statements schedule included therein, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Walnut Creek, California
April 29, 1997
<PAGE> 1
EXHIBIT 99.1
CONTACT: Deborah Dawson FOR IMMEDIATE RELEASE
Geoworks
(510) 814-1660
Neal Rosen, Kalt, Rosen & Associates
(415) 397-2686
GEOWORKS REPORTS FOURTH QUARTER AND YEAR END RESULTS
(ALAMEDA, CA), April 24, 1997 -- Geoworks (NASDAQ National Market
Symbol: GWRX), a leading developer of operating system software for the
emerging mobile communicating device market, today announced results for the
fourth quarter and all of fiscal 1997.
For the quarter ended March 31, 1997, Geoworks reported revenues of
$1,931,000 compared with revenues of $1,267,000 for the same period a year ago.
The company reported a loss of $5,823,000, or $.38 per share, versus a loss of
$2,974,000, or $.20 per share, for the same period a year ago. The results for
the fourth quarter of 1997 include a one-time charge of $1,450,000, or $.09 per
share, related to Geoworks' acquisition of the Eden Group in February, 1997.
For the year ended March 31, 1997, the company reported revenues of
$11,096,000 compared with revenues of $6,279,000 for fiscal 1996. For fiscal
1997, Geoworks reported a loss of $13,476,000, or $.88 per share, compared
with a loss of $9,711,000, or $.75 per share, for fiscal 1996. Results of
operations for the quarter ended March 31, 1996 and for fiscal year 1996, as
shown above, have been restated to include the effects of Geoworks' acquisition
of the Eden Group.
"As we announced last month, the lower than anticipated revenues during
the quarter are due to several factors. These include delays in NRE
(non-recurring engineering fees) and the company's adoption of a more
conservative approach to estimating OEM product shipments which has resulted in
the company reporting
<PAGE> 2
GEOWORKS REPORTS FOURTH QUARTER AND YEAR END RESULTS
PAGE 2
nominal royalty revenues in the fourth quarter of fiscal 1997," said Gordon
Mayer, president and chief executive officer of Geoworks.
"We are incorporating this more conservative estimation approach
because tracking early quarterly shipments of new products is inherently
difficult," he continued. "We believe focusing on product sell-through to the
ultimate consumer will be a more accurate and predictable measure of the
company's progress."
Mayer said that the company is initiating a number of strategic
programs to pursue its goal of achieving break-even operations by the fourth
quarter of fiscal 1998. "Specifically, we are going to become more conservative
in our estimates of early product acceptance rates and we intend to hold
operating costs to a lower level than initially planned for this coming year.
"In March, we hired a new chief financial officer, David Thatcher, whose
objectives will be to complete a financial review and to revisit our strategic
plan with an emphasis on enabling Geoworks to reach its goal of break-even
operations within the next 12 months," Mayer noted.
The company realized several major accomplishments during the quarter,
Mayer noted. These include the strategic acquisition of the Eden Group, a
United Kingdom-based provider of system software for RISC-based mobile devices.
This transaction will enable Geoworks to provide a more complete operating
system solution to its existing hardware customers, as well as attract
additional hardware customers.
Geoworks also recently announced that Toshiba had introduced its new
Genio PCV100 Pocket Communicator based on Geoworks' operating system.
"This is the first product with the Geoworks operating system to be introduced
in the Japanese domestic market, which is the world's fastest growing digital
cellular market in the world," Mayer commented.
Also during the quarter, Geoworks continued to enhance its relationship
with Nokia by jointly introducing a major expansion of the Geoworks Developer
Program, an instructional training, services and support program, to help
developers create
<PAGE> 3
GEOWORKS REPORTS FOURTH QUARTER AND YEAR END RESULTS
PAGE 3
applications for smart phones, such as the Nokia 9000, built upon the GEOS(R)
operating system platform.
"The Nokia 9000, which is now shipping in more than 30 countries,
continues to receive industry recognition and is expected to be available in
the U.S. during the second half of 1997," Mayer said. "We expect that
developers will respond enthusiastically to the availability of tools enabling
them to build applications for the device's growing customer base."
The company also has announced that it has licensed Java(TM) technology
from JavaSoft, a business unit of Sun Microsystems, Inc. Under the agreement,
Java will be ported to the GEOS operating system platform, enabling developers
to build applications for GEOS-based smart phones using the industry-standard
Java language. This enables Java developers to extend the functionality of
GEOS-based smart phones by developing existing and new Java applications.
Based in Alameda, California, Geoworks is a leading software provider for
the cellular industry and manufacturers of mobile communicating devices,
including smart phones. The company has licensed its GEOS operating system to
leading manufacturers such as Nokia, Ericsson, NEC, Toshiba Corporation,
Hewlett-Packard Company, Brother International Corp. and Canon Business
Machines. In addition, the company intends to work with content and services
providers, and international cellular operators.
In keeping with U.S. law, Geoworks notes that this press release
includes forward looking statements, including the company's plan to achieve
future revenues and profitability, anticipated third party software
development, estimates concerning market growth, and the timing and
availability of new product and service offerings. Actual results may vary
significantly due to various risks and uncertainties. The smart communicator
market and third party application market may not emerge to the degree or in
the timing anticipated; and new technologies are inherently subject to
development, timing and consumer acceptance risks. To date, the company has
<PAGE> 4
GEOWORKS REPORTS FOURTH QUARTER AND YEAR END RESULTS
PAGE 4
incurred significant losses, has had substantial negative cash flows and has
realized limited revenues. The company expects to continue to incur substantial
annual operating losses at least through the fiscal year ended March 31, 1998.
Future results depend upon the emergence of the smart communicator market,
establishment of licensing relationships with leading market participants,
introduction of successful products and services, and achievement and
maintenance of a competitive advantage. Additional information is available in
the Risk Factors and Business discussions in the company's Forms 10-K, 10-Q and
other filings available from the company or from the Securities and Exchange
Commission.
For additional information on Geoworks and the GEOS operating system,
contact Geoworks on the World Wide Web at http://www.geoworks.com.
<PAGE> 5
GEOWORKS
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Twelve Months Ended
------------------ -------------------
March 31, March 31 March 31, March
1997 1996 1997 31, 1996
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Net revenues:
License revenue and product sales $ 460 $ 648 $ 6,620 $ 4,649
Research and development fees 1,371 619 4,176 1,630
Service revenue 100 -- 300 --
------- ------- -------- --------
Total net revenue 1,931 1,267 11,096 6,279
Operating expenses:
Cost of license revenue and product sales (7) 18 624 122
Sales and marketing 1,984 1,294 7,108 4,510
Research and development 3,889 2,618 13,698 9,109
General and administrative 854 910 3,708 3,254
Cost of merger 1,450 1,450
------- ------- -------- --------
Total operating expenses 8,170 4,840 26,588 16,995
------- ------- -------- --------
Operating loss (6,239) (3,573) (15,492) (10,716)
Other income (expense):
Interest income 458 702 2,324 1,377
Interest expense (33) (103) (244) (372)
------- ------- -------- --------
Loss before income taxes (5,814) (2,974) (13,412) (9,711)
Provision for income taxes 9 -- 64 --
------- ------- -------- --------
Net Loss $(5,823) $(2,974) $(13,476) $ (9,711)
======= ======= ======== ========
Net loss per share $ (0.38) $ (0.20) $ (0.88) $ (0.75)
======= ======= ======== ========
Shares used in per share computation 15,407 14,867 15,234 13,032
======= ======= ======== ========
</TABLE>
<PAGE> 6
GEOWORKS
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, MARCH 31,
1997 1996
--------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 6,319 $11,052
Marketable securities 30,501 39,625
Prepaid expenses and other current assets 907 709
------- -------
Total current assets 37,727 51,386
Furniture and equipment, net 3,546 2,494
Other assets 120 160
------- -------
$41,393 $54,040
======= =======
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
Current liabilities
Accounts payable and accrued liabilities $ 1,629 $ 1,565
Deferred revenue 1,444 5,529
Other current liabilities 1,028 707
------- -------
Total current liabilities 4,101 7,801
Other liabilities 739 2,927
------- -------
Total liabilities 4,840 10,728
Shareholders' equity (deficit) 36,553 43,312
------- -------
$41,393 $54,040
======= =======
</TABLE>
<PAGE> 7
GEOWORKS
CONDENSED CONSOLIDATED FINANCIAL SUMMARY
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED TWELVE MONTHS ENDED
MARCH 31, MARCH 31, MARCH 31, MARCH 31,
1997 1996 1997 1996
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Net revenues $ 1,931 $ 1,267 $ 11,096 $ 6,279
======= ======= ======== =======
Net loss $(5,823) $(2,974) $(13,476) $(9,711)
======= ======= ======== =======
Net loss per share $ (0.38) $ (0.20) $ (0.88) $ (0.75)
======= ======= ======== =======
Shares used in per share
computation 15,407 14,867 15,234 13,032
======= ======= ======== =======
</TABLE>
