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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1999
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GENERAL MAGIC, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 77-0250147
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
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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)
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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, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
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TIMOTHY MOORE, ESQ. MARY E. DOYLE, ESQ.
ERIC J. LOUMEAU, ESQ. GENERAL MAGIC, INC.
COOLEY GODWARD LLP 420 NORTH MARY AVENUE
FIVE PALO ALTO SQUARE SUNNYVALE, CALIFORNIA 94086
3000 EL CAMINO REAL (408) 774-4000
PALO ALTO, CALIFORNIA 94306-2155
(650) 843-5000
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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. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS AMOUNT OFFERING AGGREGATE AMOUNT OF
OF SECURITIES TO BE PRICE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE PRICE FEE
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Common Stock ($0.001 par
value)...................... 10,000,000 shares $3.63(1) $36,300,000 $10,092
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(1) 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 the Common Stock of General Magic, Inc. reported on
the Nasdaq National Market on May 27, 1999.
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.
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SUBJECT TO COMPLETION, DATED JUNE 3, 1999
10,000,000 Shares
GENERAL MAGIC, INC.
Common Stock
This prospectus will allow us to issue common stock over time. This means:
- we may issue the shares offered in this prospectus from time to time;
- we will provide a prospectus supplement each time we issue common stock;
- the prospectus supplement will inform you about the specific terms of
that offering and also may add, update or change information contained in
this document; and
- you should read this document and any prospectus supplement carefully
before you invest.
General Magic's common stock is traded on the Nasdaq National Market under
the symbol "GMGC". On June 1, 1999, the last reported sale price for the Common
Stock on the Nasdaq National Market was $3.6875 per share.
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SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE PURCHASERS OF THE SHARES OFFERED HEREBY.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED
OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
-------------------------
THE DATE OF THIS PROSPECTUS IS , 1999.
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
SECURITIES AND EXCHANGE COMMISSION 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.
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TABLE OF CONTENTS
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PAGE
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About General Magic......................................... 3
Forward-Looking Statements.................................. 3
The Offering................................................ 3
Risk Factors................................................ 4
Where You Can Find More Information......................... 14
Use of Proceeds............................................. 15
Dilution.................................................... 16
Plan of Distribution........................................ 16
Legal Matters............................................... 17
Experts..................................................... 17
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ABOUT GENERAL MAGIC
We develop and market voice-enabled services designed to make it easy and
convenient for subscribers to access and act on information important to them.
Our primary offerings are the Portico(TM) virtual assistant service, introduced
in 1998, and voice-enabled services for the Web. One of our core technology
assets is the magicTalk(TM) voice user interface, used both in the Portico
service and for voice enabling Web content. We host voice-enabled services in
our network operations center, located in Sunnyvale, California.
General Magic was incorporated in California in May 1990 and was
reorganized as a Delaware corporation in February 1995. Our principal executive
offices are located at 420 North Mary Avenue, Sunnyvale, California 94086, and
our telephone number at that location is (408) 774-4000. In this prospectus,
"General Magic", "we" and "our" refer to General Magic, Inc., unless the context
otherwise requires.
You should rely only on the information provided or incorporated by
reference in this prospectus. We have authorized no one to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information in this prospectus or any prospectus supplement is accurate as of
any date other than the date on the front of the document.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus and the documents incorporated by
reference are forward-looking statements. These forward-looking statements are
subject to certain risks and uncertainties, including, among others, those
listed under "Risk Factors" below and in the documents incorporated by
reference.
In some cases, you can identify forward-looking statements by words such as
"anticipates," "believes," "expects," "future," "intends," and similar
expressions.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, events, levels of
activity, performance, or achievements. You are cautioned not to place undue
reliance on these forward-looking statements. We do not intend to update any of
the forward-looking statements after the date of this prospectus to conform them
to actual results.
THE OFFERING
Common stock offered in this
prospectus.................... 10,000,000 shares
Common stock outstanding after
the offering.................... 41,036,330 shares(1)
Use of proceeds................. For product development, capital
expenditure, sales and marketing and for
other general corporate purposes. See "Use
of Proceeds."
Nasdaq National Market symbol... GMGC
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(1) Based on shares outstanding as of June 1, 1999. Does not include 8,128,612
shares of common stock issuable upon exercise of outstanding options,
9,687,839 shares of common stock issuable upon conversion of outstanding
preferred stock or 780,000 shares of common stock issuable upon exercise of
outstanding warrants as of June 1, 1999.
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RISK FACTORS
An investment in the common stock offered pursuant to this prospectus
involves a high degree of risk and the common stock should not be purchased by
persons who cannot afford the loss of their entire investment. Purchasers should
carefully consider the following risk factors in conjunction with the other
information included and incorporated by reference in this Prospectus before
purchasing or otherwise acquiring the common stock offered hereby.
OUR BUSINESS STRATEGY IS NEW, AND WE MAY BE UNABLE TO IMPLEMENT IT SUCCESSFULLY.
In early 1997, we changed our business strategy to focus on the marketing
and sale of voice-enabled services. We are still at an early stage in the
implementation of our new strategy. We face many of the risks faced by new
businesses, especially companies in new and rapidly evolving markets. Such risks
include, among others:
- our business model has not been tested;
- the market for voice-enabled services is not established;
- we may not be able to capture a significant part of the market;
- we may not be able to anticipate and adapt to changes in the market; and
- we may be unable to secure profitable relationships with additional
partners, including telecommunications carriers, device manufacturers,
and Internet companies.
In order to compete successfully as a provider of voice-enabled services,
among other things, we believe we must:
- develop and maintain at reasonable cost a significant subscriber base for
our Portico and other voice-enabled services;
- establish and maintain relationships with companies seeking to private
label our services and with companies seeking to voice enable their
services;
- enhance the features and functionality of the Portico(TM) service to
address the preferences and requirements of our subscribers, and to
respond to competitive developments;
- develop and enhance our core technologies, including our magicTalk(TM)
voice user interface platform, our network operations center, and our
second-generation agent technology, both to enhance the performance and
lower the cost of our services; and
- continue to attract, retain and motivate qualified personnel.
We may not have the resources necessary to fully execute each of these
goals. If we fail to accomplish any of them or otherwise address the risks
stated above, our ability to compete as a provider of voice-enabled services may
be compromised.
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WE MAY NEVER ACHIEVE AND SUSTAIN PROFITABILITY.
We may never achieve and sustain profitability. Since our inception, we
have generated only minimal revenues. We have incurred significant losses, and
we have substantial negative cash flow. As of March 31, 1999, we had an
accumulated deficit of $223.8 million, with a net loss of $13.7 million for the
three-month period ended March 31, 1999.
Historically, we have derived a large percentage of our total revenue from
license fees and customer support fees. As a consequence of our 1997 change in
business strategy, we expect to derive a significant portion of any future
revenues from sales of services and products by us and by our partners and not
from license fees. Although the Portico service was released on July 30, 1998,
we expect to incur significant losses through the year 1999, and we may never
achieve or sustain significant revenues or become profitable.
THE ACCEPTANCE OF OUR PRODUCTS AND SERVICES IS UNCERTAIN.
Our future financial performance depends in large part on growth in demand
for the Portico service and our other voice-enabled services and products. If
the market for voice-enabled services does not develop or if we are unable to
capture a significant portion of that market either directly or through our
partners, our revenues and our results of operations will be adversely affected.
The market for voice-enabled services is still evolving. Currently, there
are only a limited number of products and applications in this industry.
Negative consumer perceptions regarding reliability, cost, ease-of-use and
quality of speech-based products affects consumer demand and may impact the
growth of the market. As a result, we cannot guarantee that the market for
voice-enabled services and products will grow or that consumers will accept any
of the services or products built on our magicTalk voice user interface
platform.
In particular, our success is dependent upon the number of subscribers to
our services that we are able to attract and retain, and the number of
subscribers to private-label and other voice-enabled services that our partners
are able to attract and retain. Although Portico was launched in July 1998,
revenues from Portico subscriptions to date have not been significant. In
addition, although we have entered into arrangements with Qwest Communications
Corporation, Intuit(R) Inc., Wireless Knowledge and BellSouth Mobility, Inc., we
cannot guarantee that any of the services contemplated by these companies will
be commercially launched. Even if these services were commercially launched, our
partners may not be able to attract and retain a sufficient number of
subscribers to attain profitability. If we and our partners are not able to
attract and retain a sufficient number of subscribers, our revenues and results
of operations will be adversely affected.
WE WILL NEED TO EXPAND OUR DISTRIBUTION CHANNELS IN ORDER TO EXPAND OUR
BUSINESS, AND WE ARE DEPENDENT ON DISTRIBUTION RELATIONSHIPS.
We plan to distribute our services through multiple channels. If we do not
successfully implement this multi-channel strategy, our revenues and results of
operations may be adversely affected. We believe that to successfully market our
services, we must:
- undertake a marketing campaign to identify and successfully pursue
effective ways to market General Magic-labeled services to mobile
professionals and other users;
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- identify, establish and maintain arrangements with telecommunications
carriers, device manufacturers and other companies seeking private-label
versions of our services; and
- identify, establish and maintain arrangements with Internet companies and
other companies seeking to voice enable Web content and other
network-based services.
If one or more of these distribution channels fails, development and sales
of our products and services could be adversely affected.
Competition for relationships with telecommunications carriers, device
manufacturers and Internet companies is extremely intense. In addition,
decisions by these third parties, particularly telecommunications carriers, to
enter into distribution relationships can be a lengthy, expensive process, with
no assurance of success.
On November 6, 1998, we entered into an agreement with Intuit Inc. to
develop voice access to certain financial services and information on Intuit's
Quicken.com(TM) Web site. The agreement provides for an initial two-year term,
with automatic one-year renewal terms unless either party provides written
notice to the other 60 days prior to the end of the then current term. However,
the agreement will automatically terminate if the services to be provided under
the agreement are not commercially released by December 31, 1999. We cannot
guarantee that this deadline will be met. In addition, Intuit may terminate the
agreement if we fail to perform or observe any material term or obligation under
the agreement.
On November 11, 1998, we entered into an agreement with Qwest
Communications Corporation to develop a Qwest-branded version of our Portico
service. The agreement provides for an initial six-month term, with automatic
one-year renewal terms thereafter. However, either party has the right to
terminate the agreement for any reason by providing written notice of
non-renewal 60 days prior to the end of the then current term. We cannot
guarantee that Qwest will renew the agreement in any given year. In addition,
Qwest may terminate the agreement if we fail to perform or observe any material
term or obligation under the agreement.
In February 1999, we, along with Wireless Knowledge LLC, announced plans to
provide Revolv service users with voice-enabled access to information and
corporate groupware. Although we have signed a letter of intent with Wireless
Knowledge, the letter of intent is non-binding. Wireless Knowledge may terminate
the arrangement at any time.
In May 1999, BellSouth announced its intention to begin a 3 - 4 month
initial deployments of the Portico service in the Atlanta area, and if the
initial deployment is successful, to expand the availability of the service in
Atlanta and other markets. We cannot guarantee that the initial deployment will
be successful. In addition, BellSouth may terminate the arrangement at any time.
We may not succeed in maintaining these distribution relationships. In
addition, we may not be successful in establishing additional relationships.
Even if we are able to establish and maintain these relationships, these
companies may be unable to successfully remarket our voice-enabled services. Our
control over the marketing efforts of Qwest, Intuit, Wireless Knowledge and
BellSouth is limited under our arrangements. We cannot guarantee that Qwest,
Intuit, Wireless Knowledge, BellSouth or any future partner will actively market
the services incorporating our technology.
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OUR LIMITED RESOURCES MAY RESTRICT OUR OPERATIONS AND OUR ABILITY TO IMPLEMENT
OUR NEW STRATEGY.
Building, maintaining and enhancing our Portico and other voice-enabled
services, and developing private-label services with third parties are complex
processes that require significant financial and other resources. Among other
things, we must:
- enhance the features and functionality of the Portico service to address
the preferences and requirements of our subscribers, and to respond to
competitive developments;
- develop and deploy private-label versions of the Portico service for
existing and future partners;
- develop and deploy our magicTalk voice user interface to voice enable Web
content and other network-based services, such as Intuit's Quicken.com
Web site;
- continue to identify, establish and maintain relationships with
telecommunications carriers, device manufacturers, Internet firms and
other companies for the resale, remarketing and distribution of our
services;
- enhance our core technologies, including our magicTalk voice user
interface platform, network operations center, second-generation agent
technology and Internet appliance; and
- undertake related marketing and advertising campaigns.
We have limited technical, business development, sales and marketing staffs
and such personnel may not be able to manage and successfully complete all of
the tasks necessary to support the various aspects of our business.
In addition, we must conserve cash because we have generated minimal
revenues to date and do not expect to generate significant revenues until the
second half of 1999, if at all. As a result, we may not be able to fund all of
the product development and marketing efforts required to successfully introduce
all of our services.
WE WILL HAVE TO SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE NEEDS, 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
services, private-label Portico services and services built on our magicTalk
voice user interface platform, we will need to seek additional sources of
capital. The Portico service was introduced in July 1998, and to date we have
not generated significant revenue. In addition, although we have entered into
arrangements with Qwest, Intuit, Wireless Knowledge or BellSouth, we cannot
guarantee that we will be able to generate significant revenue from these
arrangements. We have no commitments or arrangements to obtain any additional
funding. We may not be able to obtain such additional funding if it becomes
necessary. The unavailability or timing of any financing could prevent or delay
the continued development and marketing of our services and may require us to
curtail our operations.
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WE ARE DEPENDENT ON THE INTERNET, AND WE ARE NOT CERTAIN THAT THE BUSINESS MODEL
FOR SERVICES TO BE PROVIDED THROUGH THE INTERNET WILL SUCCEED.
Voice enabling content on the Internet is a key element of our strategy,
and we plan to seek additional partnerships with Internet companies. However,
the business model common among Internet companies is untested. Many Internet
companies provide free services which are supported by advertising revenue and
revenue generated from upgrades to fee-based services. We expect to be required
to adopt a similar business model, and we cannot guarantee that revenue
generated from advertising or from upgrades to fee-based services, if any, will
be sufficient to offset the cost of providing a free baseline service to users.
In addition, our future success is in part dependent upon continued growth
in the use of the Internet. The Internet may prove not to be a viable means of
conducting commerce or communications for a number of reasons, including
potentially unreliable network infrastructure and poor performance. 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 an adverse effect on our
business.
WE MAY EXPERIENCE INTERRUPTIONS IN SERVICE DUE TO ERRORS IN OUR SOFTWARE AND
SYSTEM ARCHITECTURE, AND OUR NETWORK OPERATIONS CENTER MAY NOT BE ABLE TO
ACCOMMODATE POTENTIAL GROWTH.
The ability to provide the Portico service and the services of our partners
depends on the integrity of our software, computer hardware systems and network
infrastructure. Since launching the Portico service, we have encountered errors
in our software and our system design which have resulted in interruptions of
service. Although we were able to correct such errors, we may encounter
additional errors. These errors may be expensive to correct, and may lead to
substantial interruptions in our service.
In addition, in the event that the number of subscribers to our services
increases substantially in a short period of time or we are successful in
establishing a relationship with a partner with a large existing customer base,
our network operations center may not be capable of meeting the resulting
increase in demand. Although we believe that our systems are scalable, we cannot
test conclusively for scalability. A sudden increase in demand could lead to
slow-downs or failures in our services.
Currently, our only network operations center is located at our
headquarters in Sunnyvale, California. Operation of our Portico and other
voice-enabled services is dependent upon our ability to protect the network
operations center against physical damage from power outages, telecommunications
failures, physical break-ins and other similar events. 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
services or a natural disaster.
Any damage to or failure of our systems could lead to interruptions in
service and/or the loss of customer information. Such interruptions or loss
could damage our reputation
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and ability to attract and retain subscribers and partners. In addition, we may
experience negative publicity that could adversely affect our stock price.
CONVERSION OF PREFERRED STOCK OR ISSUANCE OF OTHER SECURITIES WOULD DILUTE
CURRENT STOCKHOLDERS.
We have two series of preferred stock outstanding, all of which are
convertible into common stock. In some cases, the number of shares of common
stock issuable upon the conversion of the preferred stock depends on the prices
of the common stock as quoted on Nasdaq shortly before the date of conversion.
We cannot predict the price of the common stock in the future. If the price of
our common stock decreases over time, the number of shares of common stock
issuable upon conversion of the preferred stock will increase and the holders of
common stock would experience substantial dilution of their investment. The
following shares of preferred stock are currently outstanding:
- 50,000 shares of Series A preferred stock. Each share of Series A
preferred stock is convertible into 72.58 shares of common stock, subject
to adjustment for stock splits, dividends and similar events and for
future issuances of stock at a price below $1.24 per share. The 50,000
shares of Series A preferred stock outstanding as of June 1, 1999, would
be convertible into approximately 3,630,000 shares of common stock.
- 2,000 shares of Series D preferred stock. Each share of Series D
preferred stock is convertible into that number of shares of common stock
equal to: (A) $10,000 plus accrued but unpaid dividends divided by (B)
110% of the average of closing bid prices of a share of common stock
during the ten trading days after June 28, 1999. The number of shares of
common stock issuable upon conversion is subject to adjustment: for stock
splits, dividends and similar events; for future issuances of stock at a
price below the initial conversion price; on December 31, 1999, June 30,
2000, and on the last day of each September and March through March 2002,
depending on the closing bid prices of our common stock at such times;
for future issuances of convertible stock with a variable conversion
price; and in the event we fail to comply with certain requirements.
Assuming a conversion price based on the average of the closing sales
prices during the ten consecutive trading days immediately after March
30, 1999 ($3.33), the 2,000 shares of Series D preferred stock
outstanding as of June 1, 1999, would be convertible into approximately
6,057,839 shares of common stock.
In order to comply with the rules of the Nasdaq Stock Market, we must
obtain stockholder approval prior to issuing shares of common stock upon
conversion of our Series D preferred stock in excess of 19.9% of our common
stock outstanding as of March 30, 1999, the date of issuance of the Series D
preferred stock. If we do not obtain approval, we could in certain circumstances
be required to redeem the outstanding shares of the Series D preferred stock. In
addition, certain other events could require us to redeem Series D preferred
stock. Redemption of any series of preferred stock could significantly deplete
our cash reserves, which would materially adversely affect our financial
condition.
Our board of directors has the authority to issue 433,000 additional shares
of preferred stock that are convertible into common stock without any action by
our stockholders. In addition, our board of directors may sell additional shares
of common stock or other equity securities that are convertible into common
stock without any action by our stockholders.
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The issuance and conversion of any such preferred stock or equity securities
would further dilute the percentage ownership of our stockholders.
WE MAY EXPERIENCE DELAYS IN PRODUCT DEVELOPMENT.
Any delays in product development or market launch could adversely affect
our revenues or results of operations. To be successful, we must, among other
things, develop technology to enable us to provide, bill for and enhance our
Portico services and other voice-enabled services, including those we agree to
supply for third parties. 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. In addition to software development delays, we may also experience
delays in other aspects of product development. Any product development delays
could delay or prevent successful introduction or marketing of new or improved
products or services or the delivery of new versions of our products or
services.
WE ARE DEPENDENT ON THIRD-PARTY TECHNOLOGIES AND SERVICES.
We have incorporated technology developed by third parties in the Portico
service and the services to be provided to our partners. We will continue to
incorporate third-party technology in future products and services. We have
limited control over whether or when these third-party technologies will be
developed or enhanced. In addition, our competitors may acquire interests in
these third parties or their technologies, which may render the technology
unavailable to us. If a third party fails or refuses to timely develop, license
or support technology necessary to our services, market acceptance of our
services could be adversely affected. In addition, we rely and will continue to
rely on services supplied by third parties such as telecommunications, Internet
access and power. If these services fail to meet industry standards for quality
and reliability, market acceptance of our services could be adversely affected.
THE MARKET FOR VOICE-ENABLED SERVICES IS EXTREMELY COMPETITIVE.
The market for voice-enabled services is intensely competitive and subject
to rapid technological change. We may be unable to compete with existing
companies or new companies entering the market. Many of these companies have
greater financial resources, name recognition, 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 or which render our
services or technology obsolete. If we are unable to compete effectively, our
business would be adversely affected.
TECHNOLOGY CHANGES RAPIDLY IN OUR MARKET, AND OUR FUTURE SUCCESS WILL DEPEND ON
OUR ABILITY TO MEET THE NEEDS OF OUR CUSTOMERS.
The telecommunications services 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 voice-enabled services obsolete and unmarketable. If we fail to
timely develop and introduce new products and services in
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response to changing market conditions or consumer requirements our business
would be adversely affected.
Our success will depend upon our ability to timely develop and introduce
new products and services, as well as enhancements to our existing products and
services, to keep pace with technological developments and emerging industry
standards and address the changing 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. In addition, our new products and services may not
adequately meet the requirements of the marketplace or achieve market
acceptance.
WE ARE DEPENDENT ON KEY PERSONNEL.
Our success depends in part on our ability to attract, retain and motivate
qualified personnel. Silicon Valley remains a highly competitive job market, and
our key management, technical, marketing, sales, administrative and customer
support personnel may not remain with us. In addition, we may be unable to
attract sufficient additional personnel to execute our business plan.
OUR INVESTMENT IN AND OTHER COMMITMENTS TO DATAROVER MOBILE SYSTEMS, INC. MAY
RESULT IN A SIGNIFICANT LOSS TO US.
Effective October 1998, we divested our DataRover handheld communications
device division in a transaction with DataRover Mobile Systems, Inc. ("DSI"). In
connection with the transaction, we made an investment in DSI totaling
$3,361,000, and received non-voting, non-redeemable preferred stock and 49% of
the outstanding common stock of DSI. We accounted for our investment under the
modified equity method, and we will record 100% of the losses incurred by DSI up
to a total of $3,361,000, our initial investment. As of March 31, 1999, we had
recorded a decrease of $2,521,000 in the value of our investment to reflect 100%
of the losses incurred by DSI through that date. In the event that DSI incurs
further losses in any future period, we will be required to record a
corresponding decline in the value of our investment. In addition, if we
determine that the value of our investment in DSI has been impaired, we will be
required to write off our investment, in whole or in part.
In connection with this transaction, we also agreed to purchase DataRover
840 units for DSI from Oki Electric Industry Co., Ltd. under an existing letter
of credit. During March 1999, we purchased all units which we were obligated to
purchase from Oki Electric. As of March 31, 1999, DSI's obligation to us was
valued at $2,884,000. We are to be reimbursed by DSI the cost of such units upon
the earlier of five days following the sale of the units by DSI, or 120 days
following shipment by Oki Electric. DSI's obligation to reimburse us is secured
by all of its personal property. We cannot guarantee that DSI will be able to
reimburse us, or that our security interest in their personal property will be
adequate to satisfy their obligation to us. We will incur additional losses in
the event DSI is not able to reimburse us.
11
<PAGE> 13
PROTECTION OF OUR INTELLECTUAL PROPERTY IS UNCERTAIN.
We believe that our success depends, in part, on our ability to protect our
intellectual property. In order to do that, we must take the following measures:
- obtain patent, copyright and trademark protection where appropriate;
- preserve our trade secrets;
- defend our patents, copyrights, trademarks and trade secrets against
infringement;
- operate without infringing the intellectual property rights of others;
and
- prevent unauthorized disclosure of confidential information through the
use of confidentiality agreements with employees, consultants and
partners.
We may be unable to accomplish these measures. In addition, we cannot be
certain that they will be adequate to protect our intellectual property. In
spite of our efforts, third parties may successfully copy our products or use
our confidential information. 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 products or services.
OUR SERVICE MAY RAISE SECURITY ISSUES.
The implementation of our voice-enabled services poses several security
issues, including the possibility of break-ins and other similar disruptions.
Failure to provide a secure service may result in significant liability to us.
In addition, failure to provide a secure service may deter potential users of
our services, and potential channel and strategic partners and may adversely
affect market acceptance.
Security vulnerabilities and weaknesses may be discovered in our services
or licensed technology incorporated into a service or in the media by which
subscribers access the service. Any security problems in a service or the
licensed technology incorporated in the service may require us to expend
significant capital and other resources to alleviate the problems. In addition,
these problems could limit the number of subscribers to our Portico service and
to services of our partners, which could lead to decreased revenues and
termination of our relationships with partners. These problems may also cause
interruptions or delays in the development of enhancements to our services and
those of third parties and may result in lawsuits against us.
We will continue to incorporate authentication, encryption and other
security technologies in our services. However, such technologies may not be
adequate to prevent break-ins. In addition, weaknesses in the media by which
users access these services, including the Internet, land-line telephones,
cellular phones and other wireless devices, may compromise the security of the
electronic information accessed from the service. We intend to continue to limit
our liability to end users and to our partners, including liability arising from
failure of the authentication, encryption and other security technologies
incorporated into our services, through contractual provisions. However, such
limitations may not eliminate liability. We do not currently have liability
insurance to protect against risks associated with forced break-ins or
disruptions.
12
<PAGE> 14
A PRODUCT LIABILITY CLAIM ASSERTED AGAINST US COULD MATERIALLY AND ADVERSELY
AFFECT OUR FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
We may be subject to claims for damages related to system errors and other
defects in our services. Agreements with end users of our services typically
contain provisions designed to limit exposure to potential product liability
claims. However, these provisions may not be sufficient to protect us from
liability. We currently have liability insurance to protect against certain
risks associated with system errors and other defects in our services. However,
we cannot guarantee that such insurance will be sufficient.
OUR STOCK PRICE HAS BEEN EXTREMELY VOLATILE.
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. The following factors may have a significant impact on the
market price of our common stock:
- any shortfall in our revenue or net income or in the revenue or net
income expected by securities analysts;
- conversion of preferred stock into common stock that results in
substantial dilution to the holders of our common stock;
- quarterly fluctuations in our financial results or the results of other
companies in our industry;
- changes in analyst's estimates of our financial performance or the
financial performance of our competitors;
- delays in product development or disruptions in our service;
- investments by large equity partners;
- the announcement of arrangements with channel or strategic partners by us
or our competitors;
- the announcement of technological innovations by us or our competitors;
- the introduction of new products or services by us or our competitors;
- sales of large blocks or significant short selling of our common stock;
and
- conditions in the financial markets in general and in our industry in
particular.
WE MAY HAVE YEAR 2000 COMPLIANCE ISSUES.
We face risks related to the inability of computer systems to accurately
identify and process dates beyond the year 1999. We are currently taking steps
to address these risks for all of our computer systems, including internal
systems and systems supplied to us by third parties. These systems include those
that are commonly thought of as information technology systems, such as our
billing, accounting and network systems. In addition, these systems include
those that are non-information technology systems, such as our building control
systems, building safety systems and communications systems. Based on currently
available information, we do not believe that year 2000 issues will have a
material adverse impact on our results of operations or financial condition.
However, we may fail to identify
13
<PAGE> 15
all critical year 2000 problems, may not properly assess, remediate or test our
systems, and may encounter unexpected delays or costs associated with our year
2000 effort. In addition, we have not completed our assessment of the year 2000
readiness of significant suppliers. We believe that noncompliance of products
and services supplied to us by third parties presents the most significant year
2000 risk. We rely on third-party suppliers for a significant number of systems
related to our Portico service, such as:
- the calendar and contact software;
- the voice recognition software;
- the text-to-speech software;
- the billing system; and
- the network operations center equipment.
In addition, we rely on third parties for key services, such as
telecommunications, Internet access and power. In the event that we, or any of
our third-party suppliers, are not year 2000 ready, we could experience
significant disruptions in our operations and service offerings. Such
interruptions could lead to lost sales, loss of relationships with partners and
damage to our business reputation.
DELAWARE LAW AND CERTAIN PROVISIONS OF OUR CHARTER DOCUMENTS MAY INHIBIT
POTENTIAL ACQUISITION BIDS.
Certain provisions of Delaware law and certain provisions of our charter
may inhibit potential acquisition bids for General Magic. We are subject to the
antitakeover provisions of the Delaware General Corporation Law, which could
delay a merger, tender offer or proxy contest or make such a transaction more
difficult. In addition, certain provisions of our certificate of incorporation
and bylaws may have the effect of delaying or preventing a change in control or
in management, or may limit the price that certain investors may be willing to
pay in the future for shares of common stock. Furthermore, certain series of our
preferred stock provide holders rights to redemption of their preferred stock
upon a change in control, which could make an acquisition more difficult.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement on Form S-3 to register
the common stock offered by this prospectus. However, this prospectus does not
contain all of the information contained in the registration statement and the
exhibits and schedules to the registration statement. We strongly encourage you
to carefully read the registration statement and the exhibits and schedules to
the registration statement.
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, DC, New York, New York and Chicago,
Illinois. You can request copies of these documents by contacting the SEC and
paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's website at www.sec.gov.
14
<PAGE> 16
The SEC allows us to "incorporate by reference" the information contained
in documents that we file with them, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus.
Information in this prospectus supersedes information incorporated by reference
which we filed with the SEC prior to the date of this prospectus, while
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998,
filed with the Commission on March 31, 1999;
2. Our Report on Form 8-K filed with the Commission on April 2, 1999;
3. Our Report on Form 10-Q filed with the Commission on May 17, 1999; and
4. The description of the 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 for the purpose of
updating such description.
In addition, we incorporate by reference any future filings we will make
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934, as amended.
You may request a copy of these filings, at no cost to you, by writing or
telephoning us at:
General Magic, Inc.
Attention: Investor Relations
420 N. Mary Avenue
Sunnyvale, California 94086
Telephone: (408) 774-4000
USE OF PROCEEDS
We cannot guarantee that we will receive any proceeds in connection with
this offering.
We intend to use the net proceeds of this offering, if any, for product
development, capital expenditures, including those relating to the expansion of
our network operations center, sales and marketing and for other general
corporate purposes. The amounts actually expended for each purpose may vary
significantly depending upon numerous factors, including the amount and timing
of the proceeds from this offering, the progress of our product cycles, the
progress of our network operations center, the market acceptance of our products
and the status of competitive products. In addition, expenditures will also
depend on the establishment of strategic partnerships with other companies, the
availability of other financing and other factors.
We may also use a portion of the proceeds, if any, to acquire or invest in
complementary businesses or technologies. We are not planning or negotiating any
such transactions as of the date of this prospectus.
15
<PAGE> 17
DILUTION
The net tangible book value of General Magic at March 31, 1999 was $33.8
million or approximately $0.95 per share of common stock. Net tangible book
value per share represents the amount of General Magic's tangible assets less
total liabilities, divided by 35,453,728 shares of common stock.
Net tangible book value dilution per share represents the difference
between the amount per share paid by purchasers of shares of common stock in the
offering made hereby and the pro forma net tangible book value per share of
common stock immediately after completion of the offering. After giving effect
to the sale of 10,000,000 shares of common stock in this offering at an assumed
offering price of $3.69 per share and the application of the estimated net
proceeds therefrom (after deducting estimated offering expenses) the pro forma
net tangible book value of General Magic as of March 31, 1999 would have been
$70.7 million or $1.56 per share, an immediate increase in net tangible book
value of $0.61 per share to existing stockholders and an immediate dilution in
net tangible book value of $2.13 per share to purchasers of common stock in the
offering, as illustrated in the following table:
<TABLE>
<S> <C> <C>
Assumed public offering price per share................ $3.69
Net tangible book value per share at March 31,
1999.............................................. $0.95
Increase per share attributable to new investors..... 0.61
-----
Pro forma net tangible book value per share after
offering............................................. 1.56
-----
Net tangible book value dilution per share to new
investors............................................ $2.13
=====
</TABLE>
Net tangible book value does not include $40.3 million related to
manditorily redeemable preferred stock outstanding as of March 31, 1999. To the
extent that outstanding options, preferred stock and warrants are exercised or
converted, there will be further dilution to new investors.
PLAN OF DISTRIBUTION
We may offer the common stock:
- directly to purchasers;
- to or through underwriters;
- through dealers, agents or institutional investors; or
- through a combination of such methods.
Regardless of the method used to sell the common stock, we will provide a
prospectus supplement that will disclose:
- the identity of any underwriters, dealers, agents or investors who
purchase the common stock;
- the material terms of the distribution, including the number of shares
sold and the consideration paid;
- the amount of any compensation, discounts or commissions to be received
by the underwriters, dealers or agents;
16
<PAGE> 18
- the terms of any indemnification provisions, including indemnification
from liabilities under the federal securities laws; and
- the nature of any transaction by an underwriter, dealer or agent during
the offering that is intended to stabilize or maintain the market price
of the common stock.
LEGAL MATTERS
The legality of the shares of common stock offered hereby is being passed
upon by Cooley Godward LLP, Palo Alto, California.
EXPERTS
The consolidated financial statements of General Magic, Inc. as of December
31, 1998 and December 31, 1997, and for each of the years in the three-year
period ended December 31, 1998 and for the period from May 1, 1990 (inception)
to December 31, 1998 have been incorporated herein by reference and in the
registration statement in reliance upon the report of KPMG LLP, independent
auditors, incorporated herein by reference and upon the authority of said firm
as experts in accounting and auditing.
17
<PAGE> 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10,000,000 Shares
GENERAL MAGIC, INC.
Common Stock
------------------------
PROSPECTUS
------------------------
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 20
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 Securities and Exchange Commission registration fees and Nasdaq
filing fee.
<TABLE>
<CAPTION>
TO BE PAID
BY THE
REGISTRANT
----------
<S> <C>
SEC Registration Fee........................................ $10,092
Nasdaq filing fee........................................... $17,500
Accounting fees and expenses................................ $ 7,500
Legal fees and expenses..................................... $ 3,000
Miscellaneous expenses...................................... $ 1,908
-------
Total............................................. $40,000
=======
</TABLE>
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> 21
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
<C> <S>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of KPMG LLP, independent auditors.
23.2 Consent of Cooley Godward 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>
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
II-2
<PAGE> 22
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 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-3
<PAGE> 23
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 June 3, 1999.
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 June 3, 1999
- ------------------------------------------ Officer, Chairman of the
Steven Markman Board, Director (Principal
Executive Officer)
/s/ JAMES P. MCCORMICK Chief Operating Officer and June 3, 1999
- ------------------------------------------ Chief Financial Officer
James P. McCormick (Principal Financial and
Accounting Officer)
Director June , 1999
- ------------------------------------------
Michael E. Kalogris
Director June , 1999
- ------------------------------------------
Carl F. Pascarella
</TABLE>
II-4
<PAGE> 24
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ ROEL PIEPER Director June 3, 1999
- ------------------------------------------
Roel Pieper
/s/ DENNIS F. STRIGL Director June 3, 1999
- ------------------------------------------
Dennis F. Strigl
/s/ SUSAN G. SWENSON Director June 3, 1999
- ------------------------------------------
Susan G. Swenson
/s/ PHILIP D. KNELL Director June 3, 1999
- ------------------------------------------
Philip D. Knell
</TABLE>
II-5
<PAGE> 25
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<C> <S>
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of KPMG LLP, independent auditors.
23.2 Consent of Cooley Godward 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
Cooley Godward LLP
ATTORNEYS AT LAW San Francisco, CA
415 693-2000
4365 Executive Drive Palo Alto, CA
Suite 1100 650 843-5000
San Diego, CA
92121-2128 Menlo Park, CA
Main 619 550-6000 650 843-5000
Fax 619 453-3555
Boulder, CO
303 546-4000
Denver, CO
303 606-4800
Kirkland, WA
425 893-7700
www.cooley.com
ERIC J. LOUMEAU
619 550-6024
[email protected]
June 3, 1999
General Magic, Inc.
420 North Mary Avenue
Sunnyvale, CA 94086
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in connection
with the filing by General Magic, Inc. (the "Company") of a Form S-3
Registration Statement (the "Registration Statement"), including a related
prospectus filed with the Registration Statement (the "Prospectus"), covering
the registration of an aggregate of 10,000,000 shares of the Company's Common
Stock, $.001 par value (the "Shares").
In connection with this opinion, we have examined the Registration Statement and
related Prospectus, your Amended and Restated Certificate of Incorporation and
Bylaws, and such other documents, records, certificates, memoranda and other
instruments as we deem necessary as a basis for this opinion. We have assumed
the genuineness and authenticity of all documents submitted to us as originals,
the conformity to originals of all documents submitted to us as copies thereof,
the due execution and delivery of all documents where due execution and delivery
are a prerequisite to the effectiveness thereof, that the Shares will be issued
pursuant to duly adopted resolutions of the Board of Directors of the Company
and that the consideration therefor shall be paid and shall be legally
sufficient.
On the basis of the foregoing, and in reliance thereon, we are of the opinion
that the Shares, when sold and issued in accordance with the Registration
Statement, as amended, and related Prospectus will be validly issued, fully paid
and nonassessable.
We consent to the reference to our firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Very truly yours,
COOLEY GODWARD LLP
By: /s/ ERIC J. LOUMEAU
---------------------------
Eric J. Loumeau
<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 June 3, 1999 on Form S-3 of General Magic, Inc. of our report dated
January 22, 1999, except as to note 17, which is as of March 30, 1999, relating
to the consolidated balance sheets of General Magic, Inc. and subsidiary (a
development stage enterprise) as of December 31, 1998 and 1997, 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, 1998,
and for the period from May 1, 1990 (inception) to December 31, 1998, which
report appears in the December 31, 1998 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 LLP
Mountain View, California
June 2, 1999
