<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 20, 1998
REGISTRATION NO. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------
GENERAL MAGIC, INC.
(Exact name of registrant as specified in its charter)
------------
<TABLE>
<S> <C>
DELAWARE 77-0250147
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
</TABLE>
420 NORTH MARY AVENUE
SUNNYVALE, CALIFORNIA 94086
(408) 774-4000
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
------------
STEVEN MARKMAN
PRESIDENT, CHIEF EXECUTIVE OFFICER
AND CHAIRMAN OF THE BOARD OF DIRECTORS
GENERAL MAGIC, INC.
420 NORTH MARY AVENUE
SUNNYVALE, CALIFORNIA 94086
(408) 774-4000
(Name, address, including zip code, and telephone number,
ncluding area code, of agent for service)
Copies to:
DIANE H. FRANKLE, ESQ.
Gray Cary Ware & Freidenrich LLP
400 Hamilton Avenue
Palo Alto, California 94301-1825
(650) 328-6561
- --------------------------------------------------------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time as described in the prospectus after the effective date of this
registration statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===========================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
Title of Each Class of Securities AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
to be Registered REGISTERED PER SHARE PRICE REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common stock ($0.001 par value) 234,104 shares(1) $5.875(2) $1,375,561 $382.35
===========================================================================================================================
</TABLE>
(1) Represents shares of General Magic common stock issued in connection with
our acquisition of the assets of NETalk Incorporated.
(2) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) of the Securities Act and based on the average of the high
and low sales prices of General Magic common stock as reported on the
Nasdaq National Market on November 19, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
SUBJECT TO COMPLETION DATED ________________, 1998
234,104 SHARES
GENERAL MAGIC, INC.
COMMON STOCK
This prospectus relates to the offer and sale of up to 234,104 shares of
our common stock by certain creditors and shareholders of NETalk Incorporated,
the selling stockholders. The 234,104 shares were issued in connection with our
acquisition of substantially all of the assets of NETalk. Our agreement with
NETalk is described in more detail on page 8.
Our common stock is quoted on The Nasdaq National Market under the symbol
"GMGC." On November 19, 1998, the last sale price of the common stock as
reported on The Nasdaq National Market was $5.75.
Our principal executive offices are located at 420 North Mary Avenue,
Sunnyvale, California 94086, and our telephone number is (408) 774-4000.
----------------------------------
AN INVESTMENT IN GENERAL MAGIC COMMON STOCK INVOLVES A HIGH DEGREE OF RISK.
PLEASE CAREFULLY CONSIDER THE INFORMATION UNDER THE HEADING "RISK FACTORS"
BEGINNING ON PAGE 3.
----------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------------------------
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND
IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is ____________, 1998.
1
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
Risk Factors.................................................................. 3
There Are Risks Related to Our New Business Strategy..................... 3
We Have Earned Minimal Revenues, We Have a History of
Losses and We Anticipate Losses in the Future............................ 3
Technology Development is Uncertain and Unpredictable.................... 3
We Are Dependent on Distribution Relationships........................... 3
We Are Dependent on Emerging Markets and the Acceptance of
Our Service is Uncertain................................................. 4
We Are Dependent on Third Party Technologies and Products................ 4
We Have Capable Competitors.............................................. 4
Protection of Our Intellectual Property is Uncertain..................... 4
Conversion of Preferred Stock Would Dilute Current Stockholders.......... 4
Our Service May Raise Security Issues.................................... 5
We Are Dependent on Key Personnel........................................ 5
Our Limited Resources May Restrict Our Operations........................ 5
We Will Have Future Capital Requirements and the Availability
of Additional Financing is Uncertain..................................... 5
Our Stock Price Has Been Extremely Volatile.............................. 5
Technology Changes Rapidly in Our Target Market.......................... 6
We Are Dependent on the Internet......................................... 6
We May Have Year 2000 Compliance Issues.................................. 6
We Have a Single California Location..................................... 7
About General Magic........................................................... 8
Use of Proceeds............................................................... 9
Selling Stockholders.......................................................... 10
Plan of Distribution.......................................................... 11
Legal Matters................................................................. 12
Experts....................................................................... 12
Where to Find More Information................................................ 13
Documents Incorporated by Reference........................................... 13
</TABLE>
2
<PAGE> 4
RISK FACTORS
You should carefully consider the following risk factors, together with the
other information contained or incorporated by reference in this prospectus, in
evaluating whether to purchase shares of our common stock.
This prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in these forward-looking statements as a result of a variety of
factors, including those set forth below.
THERE ARE RISKS RELATED TO OUR NEW BUSINESS STRATEGY. Our new business
strategy is subject to the risks inherent in a new business enterprise. To
address these risks, we must, among other things, continue to develop and
enhance the Portico(TM) service, enter into strategic development and
distribution arrangements, respond to competitive developments, and attract,
retain and motivate qualified personnel. Our decision to become a provider of an
advanced network service assumes that the number of subscribers to the service
will be large enough for us to make a profit. Our assumption may not be correct
or we may not be able to successfully compete as a network service provider.
Either circumstance would have a material adverse affect on our business.
WE HAVE EARNED MINIMAL REVENUES, WE HAVE A HISTORY OF LOSSES AND WE
ANTICIPATE LOSSES IN THE FUTURE. Since we began operations, we have generated
minimal revenues, have incurred significant losses and have substantial negative
cash flow. As of September 30, 1998, we had an accumulated deficit of $193.3
million, with net losses as follows:
<TABLE>
<CAPTION>
Period Loss
- ------ ----
<S> <C>
Nine Months Ended September 30, 1998 $23.8 million
Year Ended December 31, 1997 $28.4 million
Year Ended December 31, 1996 $45.6 million
</TABLE>
Historically, we have derived a large percentage of our total revenue from
up-front license fees and customer support fees. Due to our recent change in
business strategy, we expect to derive a significant portion of our future
revenues from direct sales of our service and not from license fees. Although
the Portico service was released on July 30, 1998, we expect to incur
significant losses through at least the end of the year, and we may never
achieve or sustain significant revenues or become profitable.
TECHNOLOGY DEVELOPMENT IS UNCERTAIN AND UNPREDICTABLE. To be successful, we
must develop technology to enable us to provide, bill for and enhance the
Portico service. Software product development schedules are difficult to predict
because they involve creativity, and the use of new development tools and
learning processes. Our software development efforts have been delayed in the
past and we may have delays in our current or future development activities.
Such delays could have a material adverse effect on our business. Moreover,
complex software products like those we are developing for the Portico service
frequently contain undetected errors or shortcomings, and may fail to perform or
scale as expected. Although we have tested and will continue to test the Portico
service, such tests may not accurately simulate actual use of the service by
customers. As a result, errors or deficiencies may be found in the commercial
release of the Portico service which may reduce or delay market acceptance of
the service.
WE ARE DEPENDENT ON DISTRIBUTION RELATIONSHIPS. In connection with our
recent change in business strategy, we must establish and maintain relationships
with new distribution channels for the Portico service. We believe that in order
to successfully market the Portico service, we must, among other things, enter
into distribution arrangements with (1) resellers, (2) telephony providers such
as wireless and wireline carriers, and (3) Internet-based information and
electronic commerce providers. Competition for such relationships is extremely
intense. Moreover, decisions by these third parties, particularly
telecommunications providers, to enter into distribution relationships can be a
lengthy, expensive process without any assurance of success. We may not succeed
in establishing or maintaining the necessary distribution relationship and any
such relationships may not result in
3
<PAGE> 5
sales of the Portico service. Our failure to successfully establish and maintain
distribution relationships for the Portico service would have a material adverse
effect on our business.
WE ARE DEPENDENT ON EMERGING MARKETS AND THE ACCEPTANCE OF OUR SERVICE IS
UNCERTAIN. Our future financial performance depends in large part on growth in
demand for the Portico service. This emerging market is rapidly evolving, is
attracting increased competition and will be subject to frequent and continuing
changes in customer preferences and technology. Because the market for the
Portico service is evolving, it is difficult to predict its size or growth rate.
The market for services like the Portico service may not develop as quickly as
expected, or at all, and the Portico service may not achieve market acceptance.
Any of these circumstances would have a material adverse effect on our business.
WE ARE DEPENDENT ON THIRD PARTY TECHNOLOGIES AND PRODUCTS. To develop the
Portico service, we have incorporated and will continue to incorporate
technology developed by third parties. We have limited control over whether or
when such third party technologies will be developed or enhanced. Moreover, we
have limited control over whether interests in such third parties or third party
technologies may be acquired by our competitors. A third party's failure or
refusal to timely develop, license or support the technology of the Portico
service, or the occurrence of errors in the technology, could prevent or delay
introduction, market acceptance and continued maintenance and support of the
Portico service. Any of these circumstances could have a material adverse effect
on our business.
WE HAVE CAPABLE COMPETITORS. Many of our present and potential competitors
have substantially greater financial resources, research and development
capabilities, sales and marketing staffs, and better developed distribution
channels than we do. The services that we offer may not achieve sufficient
quality, functionality or cost-effectiveness to compete with existing or future
alternatives. Furthermore, our competitors may succeed in developing competing
products or services which are more effective and cheaper than ours, or which
render the Portico service obsolete.
We believe that the principal competitive factors affecting the market for
the Portico service are:
o the quality, performance and functionality of the Portico service;
o our effectiveness in marketing and distributing the service; and
o price.
We may not be successful in the face of increasing competition from new
technologies, products or services introduced by existing competitors or by new
companies entering the market.
PROTECTION OF OUR INTELLECTUAL PROPERTY IS UNCERTAIN. We seek to protect
our proprietary information and technology through contractual confidentiality
provisions and applications for United States and foreign patents, trademarks
and copyrights. Third parties may seek to challenge, invalidate or circumvent
these applications or any resulting patents, trademarks or copyrights.
Additionally, competitors may develop equivalent or superior non-infringing
technologies. Our revenue could be adversely affected if these competing
technologies do not infringe our patents. Furthermore, third parties may assert
claims of infringement against us. These claims may lead to litigation and/or
require us to significantly modify or even discontinue sales of our service. Any
such event could have a material adverse effect on our business.
CONVERSION OF PREFERRED STOCK WOULD DILUTE CURRENT STOCKHOLDERS. The number
of shares of common stock issuable upon conversion of the 5 1/2% Cumulative
Convertible Series B Preferred Stock we issued in March and June 1998 is
dependent upon the trading price of the common stock at the time of conversion.
If the lowest sale price of the common stock in the five trading days prior to
conversion is less than $3.53, the number of shares of common stock issuable
upon conversion of the Series B stock will increase. The number of shares of
common stock issuable upon conversion of the Series C Convertible Preferred
Stock we issued in June 1998 is dependent upon the trading price of the common
stock during the 20 days prior to the date of conversion. If the average sale
price of the common stock decreases, the number of shares of common stock
issuable upon conversion of the Series C stock will increase. Our board of
directors has the authority to issue additional series of preferred stock that
are convertible into common stock without any action by our stockholders. The
issuance and conversion of any such preferred stock would dilute the percentage
ownership of our then-current stockholders.
4
<PAGE> 6
OUR SERVICE MAY RAISE SECURITY ISSUES. The implementation of the Portico
service poses several security issues, including the possibility of break-ins
and other similar disruptions. We continue to incorporate authentication,
encryption and other security technologies in the Portico service. Such
technologies may not be adequate to prevent break-ins. In addition, weaknesses
in the medium by which users access the Portico service, including the Internet,
telephones, cellular phones and other wireless devices, may compromise the
security of the electronic information accessed from the Portico service. Our
failure to provide a secure service may result in significant liability to us
and may deter potential users of the service. We intend to limit our liability
to users, including liability arising from failure of the authentication,
encryption and other security technologies incorporated into the Portico
service, through contractual provisions. However, such limitations may not
eliminate liability. We currently do not have liability insurance to protect
against risks associated with forced break-ins or disruptions to the Portico
service. Security vulnerabilities and weaknesses may be discovered in the
Portico service or licensed technology incorporated into the service or in the
mediums by which subscribers access the service. Any security problems in the
Portico service or the licensed technology incorporated in the service may
require us to expend significant capital and resources to alleviate the
problems, may result in lawsuits against us, may limit the number of subscribers
of the Portico service and may cause interruptions or delays in the development
of enhancements to the service. Any of these circumstances could have a material
adverse effect on our business.
WE ARE DEPENDENT ON OUR KEY PERSONNEL. We must continue to attract, retain
and motivate qualified personnel. Silicon Valley remains a highly competitive
job market, and our key management, engineering, marketing, sales,
administrative and customer support personnel may not remain with us, or we may
not be able to attract sufficient additional personnel to execute our business
plan. We experienced significant attrition of engineering, marketing,
administrative and sales personnel during the latter part of 1996 and the first
half of 1997, including an approximate one-half reduction in our workforce
between October 1996 and January 1997. These reductions adversely affected, and
may in the future adversely affect, our ability to attract, retain and motivate
qualified personnel. Our current employees may not remain with us and we may not
be able to obtain the services of the additional personnel necessary for growth.
Our failure to attract or retain qualified personnel could have a material
adverse effect on our business.
OUR LIMITED RESOURCES MAY RESTRICT OUR OPERATIONS. Building, maintaining
and enhancing the Portico service is a complex process that requires significant
engineering and financial resources. Among other things, we must develop
enhancements to the Portico service, establish strategic distribution
arrangements and undertake a substantial marketing campaign. We have limited
technical, sales and marketing staffs and such personnel may not be able to
manage and successfully complete all of the tasks necessary to support the
Portico service. In addition, because we have generated minimal revenues to date
and do not expect to generate substantial revenues through at least 1998, we
must conserve cash. As a result, we may not be able to fund the marketing
efforts required to successfully introduce the service to customers.
Alternatively, in the event that the market accepts the Portico service our
limited resources may be overwhelmed so that we are unable to adequately respond
to and satisfy customers' demand for the Portico service. Our failure to timely
enhance the Portico service, or to respond to market demand for the service,
would have a material adverse effect on our business.
WE WILL HAVE FUTURE CAPITAL REQUIREMENTS AND THE AVAILABILITY OF ADDITIONAL
FINANCING IS UNCERTAIN. If expenditures required to achieve our plans are
greater than projected or if we are unable to generate adequate cash flow from
sales of our Portico service, we may need to seek additional sources of capital.
We have no commitments or arrangements to obtain any additional funding and we
may not be able to obtain such additional funding, if necessary. The
unavailability or timing of any financing could prevent or delay the continued
development and marketing of our service and may require curtailment of our
operations. Our failure to raise funds when needed could have a material adverse
effect on our business.
OUR STOCK PRICE HAS BEEN EXTREMELY VOLATILE. Like the stock of other high
technology companies, the market price of our common stock has been and may
continue to be extremely volatile. Since our initial public offering in February
1995, the closing price of our common stock has ranged from a high of $26.625 to
a low of $0.938 per share. Factors such as quarterly fluctuations in results of
operations, the announcement of technological innovations, strategic alliances
or the introduction of new products or services by us or our competitors may
have a significant impact on the market price of our common stock.
5
<PAGE> 7
TECHNOLOGY CHANGES RAPIDLY IN OUR TARGET MARKET. The communications
technology market is characterized by rapid technological change, changing
customer needs, frequent new product introductions and evolving industry
standards. The introduction of products or services embodying new technologies
and the emergence of new industry standards could render our service obsolete
and unmarketable. Our success will depend upon our ability to timely develop and
introduce new products and services, as well as enhancements to such products
and services, to keep pace with technological developments and emerging industry
standards and address the increasingly sophisticated needs of users. We may not
be successful in developing and marketing new products and services that respond
to technological changes or evolving industry standards. We may experience
difficulties that could delay or prevent the successful development,
introduction and marketing of new products and services, and our new products
and services may not adequately meet the requirements of the marketplace and
achieve market acceptance. Our inability to timely develop and introduce new
products and services in response to changing market conditions or consumer
requirements would have a material adverse effect on our business.
WE ARE DEPENDENT ON THE INTERNET. We believe that our future success is in
part dependent upon continued growth in the use of the Internet. The Internet
may not prove to be a viable means of conducting commerce or communications for
a number of reasons, including potentially unreliable network infrastructure and
untimely development of performance improvements. In addition, if the Internet
continues to experience significant growth in the number of users and level of
use, the Internet infrastructure may not be able to support the demands placed
on it by such growth. Failure of the Internet as a mode of conducting commerce
and communications could have a material adverse effect on our business.
WE MAY HAVE YEAR 2000 COMPLIANCE ISSUES. We use a significant number of
computer systems and software applications in our internal operations, and in
our service. If these systems and applications cannot correctly interpret the
calendar year 2000, we may need to modify or replace these systems and
applications. We are conducting a comprehensive inventory and evaluation of our
business systems and applications, equipment and facilities. The cost of upgrade
or remediation for the non-"Year 2000" compliant systems and applications
discovered thus far is not expected to be material. We expect to conclude
evaluation of our exposure, remediation requirements, and cost estimates by the
end of 1998. A delay in putting replacement systems in place or the discovery of
significant new non-compliance issues could materially adversely effect our
business.
We are also contacting our key suppliers to determine that their operations
and the products and services they provide are Year 2000 compliant. We believe
that the non-compliance of products and services supplied by third parties, such
as our billing system and network operations center software and equipment, or
of third party products and services over which we have no control, such as
telecommunications and power, present the greatest Year 2000 compliance risks
that we may confront. For example, if our telecommunications service, power, or
the network operations center software or equipment were to fail, Portico
subscribers would be unable to access the Portico service. If the billing system
were to fail, we would be unable to invoice Portico subscribers. We have already
obtained written assurance from certain of our suppliers, including the
developer of our billing system, that their products and services are Year 2000
compliant. We also believe that our network operations center software and
equipment, including our Portico service, is Year 2000 compliant. Nevertheless,
we will begin detailed testing of its Year 2000 compliance in the first quarter
of 1999. Moreover, where practicable, we will attempt to reduce the risk of
third-party suppliers' failure to be Year 2000 compliant. We will do this by
seeking alternative suppliers whose products and services are compliant and
developing Year 2000 contingency plans. We now have in place a business
resumption plan that addresses recovery from certain disasters, including
recovery from significant loss of voice/data communications access. We are using
that plan as a starting point for developing specific Year 2000 contingency
plans, which we expect to complete by approximately the second quarter of 1999.
However, we may not be able to complete our contingency planning by that time.
If our suppliers are not Year 2000 compliant, if we are not able to complete our
contingency plans, or if our contingency plans are not effective, these
circumstances may have a material adverse effect on our business.
6
<PAGE> 8
WE HAVE A SINGLE CALIFORNIA LOCATION. Currently, our only network
operations center is located at our headquarters in Sunnyvale, California.
Operation of the Portico service is dependent in part upon our ability to
protect the network operations center against physical damage from power
outages, telecommunications failures, physical break-ins and other similar
events. In addition, Northern California historically has been vulnerable to
certain natural disasters and other risks, such as earthquakes, fires and
floods, which at times have disrupted the local economy and pose physical risks
to our property. We presently do not have redundant, multiple site capacity in
the event of a technical failure of our Portico service or a natural disaster.
In the event of such a failure or disaster, our business could be materially
adversely affected.
7
<PAGE> 9
ABOUT GENERAL MAGIC
GENERAL
We develop and market integrated voice and data applications. We have
developed an advanced network service to meet the communication and information
management requirements of today's mobile professionals. The advanced network
service is named Portico(TM) and was released on July 30, 1998. The Portico
service allows subscribers to access and respond to information, either through
a leading Web browser or magicTalk(TM), our intelligent voice user interface
platform. Among other things, the Portico service is designed to:
o manage the subscriber's inbound and outbound calls;
o collect and consolidate the subscriber's email, and notify the
subscriber upon receipt of priority messages;
o maintain the subscriber's calendar, address book and task list;
o collect and forward stock quotes, news and selected public information
based on subscriber preferences; and
o retrieve press releases and other news and information concerning
thousands of publicly traded companies.
We are currently distributing the Portico service through value-added resellers,
and we are conducting trials of the service with telecommunications carriers.
We are also extending the magicTalk platform to provide telephony access to
Internet-based information and electronic commerce services.
Our current business strategy was announced early in 1997. In prior years,
we had developed and licensed two platform technologies, Magic Cap and
Telescript. Magic Cap is an integrated communication applications platform,
initially designed for handheld communication devices. Telescript was the first
implementation of our patented agent technology. It was comprised of two
significant components: a programming language that enabled the creation of
agents, and a virtual machine that executed agents and transported them from one
device to another over a network. We initially licensed our Magic Cap and
Telescript platform technologies to multinational consumer electronics companies
and to telecommunications network operators. However, the consumer market for
handheld communication devices was slow to develop and we did not generate
significant royalty revenues in connection with these licensing efforts. In
addition, the Internet emerged as the public data communications network of
choice, significantly reducing the market opportunity for the proprietary
Telescript platform.
During this period, demand for products and services that address the
communication and information management needs of an increasingly mobile society
rapidly expanded -- as evidenced by the proliferation of electronic devices and
the explosive growth of the Internet, corporate intranets and network services.
Advances in wireless telecommunication technologies enabled the growth of paging
and cellular telephone networks. Devices such as notebook and subnotebook
computers with modems (both wireline and wireless) allowed mobile professionals
to connect to their PCs from almost any location, as well as to access on-line
information and electronic mail while traveling worldwide. In response to the
growing demand by users for a single resource to access and manage communication
and information, we adopted our new business strategy to establish ourselves as
a leading provider of integrated voice and data applications. We have developed
the Portico service to provide a single, easy-to-use, cost-effective solution to
mobile professionals who need to access, sort and respond to a multitude of
messages, manage their business information, and obtain relevant news and other
information on demand.
AGREEMENT WITH NETALK
On August 28, 1998, we entered into an agreement with NETalk to acquire
substantially all of that company's assets. The transaction closed on October
22, 1998. We paid approximately $1.51 million, consisting of $100,000 in cash
and 234,104 shares of our common stock (valued at $6.00, the closing price on
October 21, 1998).
8
<PAGE> 10
Under the agreement with NETalk, we agreed to file a registration statement
covering the 234,104 shares within 15 business days of the closing of the
transaction and we also agreed to use all reasonable efforts to cause the
registration statement to become effective within 60 days following the closing.
We are obligated to keep the registration of the shares effective until the
earlier of (i) such time as all of the shares can be sold by the selling
stockholder in a three-month period in accordance with Rule 144 under the
Securities Act and (ii) one year following the closing date of the agreement
with NETalk.
OTHER INFORMATION
General Magic was incorporated in California in May 1990 and was
reorganized as a Delaware corporation in February 1995.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the selling
stockholders and all p roceeds will go to the selling stockholders to be used
for their own purposes.
9
<PAGE> 11
SELLING STOCKHOLDERS
The selling stockholders hold shares of common stock which were issued in
connection with the acquisition of the assets of NETalk. The table below lists
the selling stockholders, the number of shares of common stock which each owns
or will own as of the date of this prospectus, the number of shares of common
stock subject to sale under this registration statement and the number of shares
of common stock each selling stockholder would own assuming sale of all shares
of common stock registered by this registration statement.
<TABLE>
<CAPTION>
Shares Beneficially Shares Offered Shares Beneficially
Owned Prior to the by the Owned After the
Selling Stockholder(1) Offering(2) Prospectus(2) Offering(2)
- ---------------------- ------------------- -------------- -------------------
<S> <C> <C>
NETalk Incorporated 103,432 103,432 --
Charles Blalack 6,883 6,883 --
Doll Technology Investment Fund 35,587 35,587 --
Doll Technology Affiliates Fund 2,094 2,094 --
Doll Technology Side Fund 1,363 1,363 --
John B. Goodrich 2,010 2,010 --
John Groobey 5,931 5,931 --
Jon B. Victor 6,314 6,314 --
George White 8,298 8,298 --
WS Investment Company 96B 5,253 5,253 --
Greenwich Ventures, L.P. 15,753 15,753 --
Vantage Ventures, C.V. 5,251 5,251 --
Wilson Sonsini Groodrich & Rosati, P.C. 31,190 31,190 --
David Atkinson 677 677 --
John Figueroa 2,497 2,497 --
Stephen Heymann 1,248 1,248 --
John Klabius II 182 182 --
William Meisel 141 141 --
TOTALS: 234,104 234,104 --
</TABLE>
- ---------------------
10
<PAGE> 12
(1) The persons named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned by them,
subject to applicable community property laws.
(2) The number of shares set forth in the table represents an estimate of the
number of shares of common stock to be offered by the selling stockholder.
Pursuant to our agreement with NETalk, the actual number of shares of
common stock offered hereby, and included in the registration statement in
which this prospectus is a part, includes such additional number of shares
of common stock as may be issued upon any stock split, stock dividend or
similar transaction involving the common stock, in order to prevent
dilution, in accordance with Rule 416 under the Securities Act.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of selling stockholders. "Selling
stockholders" includes donees and pledgees selling shares received from a named
selling stockholder after the date of this prospectus. All costs, expenses and
fees in connection with the registration of the shares offered hereby will be
paid by us. Brokerage commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by the selling stockholders.
Sales of shares may be effected by selling stockholders from time to time on one
or more types of transactions (which may include block transactions) on Nasdaq,
in the over-the-counter market, in negotiated transactions, through put or call
options transactions relating to the shares, through short sales of shares, or a
combination of such methods of sale, at market prices prevailing at the time of
sale, or at negotiated prices. Such transactions may or may not involve brokers
or dealers. The selling stockholders have advised us that they have not entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities, nor is there an
underwriter or coordinating broker acting in connection with the proposed sale
of shares by the selling stockholders.
The selling stockholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling stockholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The selling stockholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. We have agreed to indemnify each selling stockholder
against certain liabilities, including liabilities arising under the Securities
Act. The selling stockholders may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
Because selling stockholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling stockholders will be
subject to the prospectus delivery requirements of the Securities Act, which may
include delivery through the facilities of the Nasdaq National Market pursuant
to Rule 153 under the Securities Act. We have informed the selling stockholders
that the anti-manipulative provisions of Regulation M promulgated under the
Securities Exchange Act may apply to their sales in the market.
Selling stockholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of such rule.
Upon being notified by a selling stockholder that any material arrangement
has been entered into with a broker-dealer for the sale of shares through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to
11
<PAGE> 13
Rule 424(b) under the Act, disclosing (i) the name of each such selling
shareholder and of the participating broker-dealer(s), (ii) the number of shares
involved, (iii) the price at which such shares were sold, (iv) the commissions
paid or discounts or concessions allowed to such broker-dealer(s), where
applicable, (v) that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this prospectus
and (vi) other facts material to the transaction. In addition, when we are
notified by a selling stockholder that a donee or pledgee intends to sell more
than 500 shares, a supplement to this prospectus will be filed.
We will pay all expenses related to the registration of the shares,
including: (1) registration and filing fees imposed by the Securities and
Exchange Commission, the National Association of Securities Dealers, Inc. and
blue sky laws; (2) printing expenses; (3) transfer agents' and registrars' fees;
and (4) the reasonable fees and costs of our outside counsel and independent
accountants. We will not pay transfer or other taxes and other costs related to
the issuance of the shares.
LEGAL MATTERS
The legality of the shares is being passed upon by Gray Cary Ware &
Freidenrich LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of General Magic as of December 31,
1997 and 1996, and for each of the years in the three-year period ended December
31, 1997 and for the period from May 1, 1990 (inception) to December 31, 1997
have been incorporated herein by reference and in the registration statement in
reliance upon the report of KPMG Peat Marwick LLP, independent auditors,
incorporated herein by reference and upon the authority of said firm as experts
in accounting and auditing.
12
<PAGE> 14
WHERE TO FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements (if
required) and other information with the SEC. These reports, proxy statements
and other information filed with the SEC may be inspected and copied at the SEC
Public Reference Room, 450 Fifth Street, N.W., Washington, D.C. 20549. You may
obtain information about the operation of the SEC Public Reference Room by
calling 1-800-SEC-0330. You can also inspect this material free of charge at a
Web site maintained by the SEC at http://www.sec.gov. Finally, you can also
inspect reports and other information concerning General Magic at the offices of
the National Association of Securities Dealers, Inc., Market Listing Section,
1735 K Street, N.W., Washington, D.C. 20006. General Magic common stock is
traded on The Nasdaq National Market under the symbol "GMGC." General Magic's
Web site is located at http://www.generalmagic.com.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents we have filed with the SEC are incorporated in this
prospectus by reference:
1. Quarterly Report on Form 10-Q for the period ended September 30, 1998,
filed on November 16, 1998;
2. Report on Form 8-K filed on October 27, 1998;
3. Quarterly Report on Form 10-Q for the period ended June 30, 1998,
filed on August 14, 1998;
4. Report on Form 8-K filed on June 29, 1998;
5. Quarterly Report on Form 10-Q for the period ended March 31, 1998,
filed on May 15, 1998;
6. Amended Annual Report on Form 10-K/A for the year ended December 31,
1997, filed on April 30, 1998;
7. Annual Report on Form 10-K for the year ended December 31, 1997, filed
on March 31, 1998;
8. The description of our common stock contained in our Registration
Statement on Form 8-A filed under the Securities Exchange Act of 1934,
as amended, including any amendment or report filed to update that
description.
All documents and reports we file under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act after the date of this prospectus shall be deemed
to be incorporated by reference in this prospectus. Any statement in a document
incorporated or deemed incorporated by reference in this prospectus may be
modified or superseded by statements from our more recent filings with the SEC.
We will provide free of charge to each person, including any beneficial owner,
to whom this prospectus is delivered, upon written or oral request, a copy of
any or all of the foregoing documents incorporated by reference in this
prospectus. Please direct such requests to Investor Relations, General Magic,
Inc., 420 North Mary Avenue, Sunnyvale, California 94086. The telephone number
is 408-774-4000.
13
<PAGE> 15
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION
OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. IF
GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED. THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF THE
DATE HEREOF. DELIVERY OF THIS PROSPECTUS AFTER THE DATE HEREOF DOES NOT MEAN
THAT THE INFORMATION IS STILL CORRECT.
234,104 SHARES
GENERAL MAGIC, INC.
COMMON STOCK
------------
PROSPECTUS
------------
_______________, 1998
<TABLE>
<CAPTION>
TABLE OF CONTENTS PAGE
----
<S> <C>
Risk Factors................................................................... 3
There Are Risks Related to Our New Business Strategy...................... 3
We Have Earned Minimal Revenues, We Have a History of Losses and
We Anticipate Losses in the Future...................................... 3
Technology Development is Uncertain and Unpredictable..................... 3
We Are Dependent on Distribution Relationships............................ 3
We Are Dependent on Emerging Markets and the Acceptance of
Our Service is Uncertain................................................ 4
We Are Dependent on Third Party Technologies and Products................. 4
We Have Capable Competitors............................................... 4
Protection of Our Intellectual Property is Uncertain...................... 4
Conversion of Preferred Stock Would Dilute Current Stockholders........... 4
Our Service May Raise Security Issues..................................... 5
We Are Dependent on Key Personnel......................................... 5
Our Limited Resources May Restrict Our Operations......................... 5
We Will Have Future Capital Requirements and the Availability
of Additional Financing is Uncertain.................................... 5
Our Stock Price Has Been Extremely Volatile............................... 5
Technology Changes Rapidly in Our Target Market........................... 6
We Are Dependent on the Internet.......................................... 6
We May Have Year 2000 Compliance Issues................................... 6
We Have a Single California Location...................................... 7
About General Magic............................................................ 8
Use of Proceeds................................................................ 9
Selling Stockholders........................................................... 10
Plan of Distribution........................................................... 11
Legal Matters.................................................................. 12
Experts........................................................................ 12
Where to Find More Information................................................. 13
Documents Incorporated by Reference............................................ 13
</TABLE>
- --------------------------------------------------------------------------------
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses in connection with
the sale and distribution of the securities being registered, other than
underwriting discounts and commissions. All of the amounts shown are estimates
except the SEC registration fee and Nasdaq filing fee.
<TABLE>
<CAPTION>
To be Paid
By The
Registrant
----------
<S> <C>
SEC Registration Fee $ 383*
Nasdaq filing fee $17,500
Accounting fees and expenses $ 5,000
Legal fees and expenses $25,000
Miscellaneous expenses $ 2,117
-------
Total..................................................... $50,000
=======
</TABLE>
* We will pay all expenses of registration and distribution of the shares
being sold by the selling stockholders, excluding underwriting commissions
and similar charges.
- ------------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law permits a corporation
to include in its charter documents and in agreements with its directors and
officers provisions expanding the scope of indemnification beyond that
specifically provided by the Delaware law. The Registrant's Bylaws provide that
the Registrant shall indemnify to the full extent authorized by law any person
made or threatened to be made a party to an action or a proceeding, whether
criminal, civil, administrative or investigative, by reason of the fact that he
or she, his or her testator or intestate was or is a director, officer or
employee of the Registrant or any predecessor of the Registrant or serves or
served any other enterprise as a director, officer or employee at the request of
the Registrant or a predecessor of the Registrant. The Registrant's Bylaws also
provide that the Registrant may enter into one or more agreements with any
person which provides for indemnification greater or different than that
provided in such Bylaws. We have entered into such indemnification agreements
with our directors and officers.
The Registrant maintains insurance on behalf of any person who is a
director or officer against any loss arising from any claim asserted against him
or her and incurred by him or her in any such capacity, subject to certain
exclusions.
See also the undertakings set out in response to Item 17 herein.
II-1
<PAGE> 17
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
</TABLE>
II-2
<PAGE> 18
- --------------------------
ITEM 17. UNDERTAKINGS.
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of
the Securities Act of 1933 (the "Securities Act");
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
D. 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 Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
II-3
<PAGE> 19
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.
E. The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of the
registration statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of prospectus
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-4
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Sunnyvale, State of California on November 20, 1998.
GENERAL MAGIC, INC.
By: /s/ Steven Markman
--------------------------------------
Steven Markman
President, Chief Executive Officer
and Chairman of the Board of Directors
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Steven Markman and James P. McCormick,
and each of them, as his or her true and lawful attorneys-in-fact and agents,
with full power of substitution and resubstitution, for him or her and in his or
her name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration Statement
on Form S-3, and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorney-in-facts and agents, or either of them, or
their or his substitute or substitutes, may lawfully do or cause to be done by
virtue hereof. Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Steven Markman President, Chief Executive Officer, November 20, 1998
- ------------------------------ Chairman of the Board, Director
Steven Markman (Principal Executive Officer)
/s/ James P. McCormick Chief Financial Officer (Principal November 20, 1998
- ------------------------------ Financial and Accounting Officer)
James P. McCormick
/s/Michael E. Kalogris Director November 20, 1998
- ------------------------------
Michael E. Kalogris
Director November , 1998
- ------------------------------
Philip D. Knell
/s/ Carl F. Pascarella Director November 20, 1998
- ------------------------------
Carl F. Pascarella
Director November , 1998
- ------------------------------
Roel Pieper
/s/ Dennis F. Strigl Director November 20, 1998
- ------------------------------
Dennis F. Strigl
Director November , 1998
- ------------------------------
Susan G. Swenson
</TABLE>
II-5
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
<S> <C>
5.1 Opinion of Gray Cary Ware & Freidenrich LLP.
23.1 Consent of KPMG Peat Marwick LLP, independent auditors.
23.2 Consent of Gray Cary Ware & Freidenrich LLP (included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page contained in Part II
of the Registration Statement).
</TABLE>
<PAGE> 1
EXHIBIT 5.1
[GRAY CARY WARE & FREIDENRICH LLP LETTERHEAD]
November 20, 1998
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
RE: GENERAL MAGIC, INC.
REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
As legal counsel for General Magic, Inc., a Delaware corporation (the
"Company"), we are rendering this opinion in connection with the preparation and
filing of a registration statement on Form S-3 (the "Registration Statement")
relating to the registration under the Securities Act of 1933, as amended, of
234,104 shares (the "Shares") of Common Stock, par value $0.001 per share (the
"Common Stock"), issued by the Company in connection with the acquisition of
substantially all of the assets of a privately-held company.
We have examined such instruments, documents and records as we deemed relevant
and necessary for the basis of our opinion hereinafter expressed. In such
examination, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity to
the originals of all documents submitted to us as copies.
Based on such examination, we are of the opinion that the Shares are, or when
issued will be, duly authorized shares, validly issued, fully paid, and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement referred to above and the use of our name wherever it
appears in said Registration Statement.
This opinion is to be used only in connection with the issuance of the Common
Stock while the Registration Statement is in effect.
Respectfully submitted,
/s/ GRAY CARY WARE & FREIDENRICH LLP
GRAY CARY WARE & FREIDENRICH LLP
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
General Magic, Inc.:
We consent to incorporation by reference in the registration statement to be
filed on November 20, 1998 on Form S-3 of General Magic, Inc. of our report
dated January 23, 1998, except for note 12, which is as of March 6, 1998,
relating to the consolidated balance sheets of General Magic, Inc. and
subsidiary (a development stage enterprise) as of December 31, 1997 and 1996,
and the related consolidated statements of operations, stockholders' equity
(deficit), and cash flows for each of the years in the three-year period ended
December 31, 1997, and for the period from May 1, 1990 (inception) to December
31, 1997, which report appears in the December 31, 1997, annual report on Form
10-K of General Magic, Inc. We also consent to the reference to our firm under
the heading "Experts" in the Prospectus.
/s/ KPMG PEAT MARWICK LLP
Mountain View, California
November 19, 1998
