<PAGE>
Filed pursuant to Rule 424(b)(3)
Registration No. 333-86245
PROSPECTUS
NUMBER NINE VISUAL TECHNOLOGY CORPORATION
1,000,000 Shares of Common Stock
---------------------------------
. We have registered a total of up This Investment
to 1,000,000 shares of our common Involves
stock for sale by Silicon Graphics, A High Degree of Risk.
Inc. You Should Purchase
Shares Only If
You Can Afford
A Complete Loss.
. We will not receive any of the
proceeds from the selling See "Risk Factors"
stockholder's sale of its common Beginning on Page 3.
stock.
---------------------------------
Our common stock trades on the Nasdaq National Market under the symbol "NINE."
On September 17, 1999, the closing sale price of one share of our common stock
as quoted on the Nasdaq National Market was $1.62.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
September 20, 1999
<PAGE>
PROSPECTUS SUMMARY
You must consult the more detailed financial statements, and notes to
financial statements, incorporated by reference in this prospectus. This
prospectus contains forward-looking statements and actual results could differ
materially from those projected in the forward-looking statements as a result of
certain of the risk factors as outlined in this prospectus. Investing in our
common stock is very risky. You should be able to bear a complete loss of your
investment. You should carefully consider the information set forth under the
heading "Risk Factors."
THE COMPANY
Number Nine is a leading innovator and a supplier of high-performance
visual technology solutions, including:
. video/graphics accelerator subsystems,
. video/graphics chips,
. related video/graphics productivity-enhancing software, and
. flat-panel monitor bundled solutions.
Our products enable desktop personal computers or PCs to generate and
display the increasingly sophisticated visual content of today's computing
environment with greater speed, photorealistic color, high resolution and full-
motion video. We also provide high-performance visual technology subsystems that
render and control the graphics and video images transmitted to desktop PC
monitors. Our products enable a PC to operate with more color, higher
resolution, faster screen refresh rates and other features. Our primary products
are video/graphics accelerator subsystems incorporating our productivity-
enhancing software.
A video/graphics accelerator subsystem consists primarily of an accelerator
chip, memory chips, a digital-to-analog converter or DAC, and software drivers
and utilities. The accelerator chip is the graphics "engine" that enhances
speed, image clarity and color by performing functions that would otherwise be
executed by the Central Processing Unit or CPU. Memory chips are used to
temporarily store graphics information for display and are available in
configurations such as SDRAM, SGRAM and higher-performance VRAM and WRAM. The
DAC converts data from the digital format in which it is typically stored in the
graphics memory to the analog format required in order for the display monitor
to function. Software drivers enable the accelerator chip to interface with the
CPU and optimize the overall performance of the subsystem. Software utilities
increase the number and variety of display features of a PC and are increasingly
being added to accelerator subsystems as end-users seek greater functionality
and access to advanced features.
Number Nine Visual Technology Corporation was incorporated in Connecticut
in May 1982, reincorporated as a Massachusetts corporation in January 1987 and
reincorporated as a Delaware corporation in December 1994. Our executive offices
are located at 18 Hartwell Avenue, Lexington, Massachusetts 02421 and our
telephone number is (781) 674-0009.
2
<PAGE>
RISK FACTORS
Investing in our common stock is very risky. You should be able to bear a
complete loss of your investment. You should carefully consider the following
factors, in addition to other information in this prospectus.
Competing Technologies May Render Some or All of Our Products or Future
Products Noncompetitive or Obsolete. The pc industry in general, and the market
for our products in particular, are characterized by:
. rapid technological advances,
. frequent new product introductions,
. short product life cycles,
. product obsolescence,
. changes in customer requirements or preferences for competing
products,
. evolving industry standards,
. significant competition, and
. rapidly changing pricing.
In this regard, the life cycle of products in our markets is often as short
as nine to twelve months. Therefore, our future prospects depend, in part, upon
our ability to:
. continually update our existing products in a timely manner, and
. continue to identify, develop and achieve market acceptance of
products that incorporate new technologies and standards and meet
evolving customer needs.
We may not be successful in managing product transitions, including
controlling inventory of older generation products when introducing new
products. We have experienced and could, in the future, experience reductions in
sales of older generation products as customers delay purchases in anticipation
of new product introductions. We establish reserves for anticipated product
returns, based upon historical return rates of product returns and other
factors. However, reductions in sales and returns of older generation products
by distributors, primarily attributable to customer stock rotation, may give
rise to charges for obsolete or excess inventory or substantial price protection
charges.
Dramatic Reductions in Sales to Significant Customers May Adversely
Affect Our Sales. The volume and timing of orders received during a particular
quarter are very difficult to forecast. Our customers can change delivery
schedules or cancel orders with limited or no penalties. For example, in
September 1996 Dell decided to stop buying our merchant graphics solution
starting in the fourth quarter of 1996. In addition, during the third quarter of
1997, Dell reduced its purchases of our proprietary Imagine 128 Series 2 4MB
VRAM product. As a result, our net sales to Dell decreased dramatically from
$62.7 million during 1996 to $4.9 million during 1997. Future sales to
significant customers are uncertain and depend upon the performance and pricing
of our new products and their acceptance by these customers.
Customers generally order on an as-needed basis, and as a result, we have
historically operated without significant backlog. Moreover, as is often the
case in the PC industry, a disproportionate percentage of our net sales in any
quarter may be generated in the final month or weeks of a quarter. Consequently,
a shortfall in sales in any quarter as compared to management expectations may
not be identifiable until the end of the quarter. Because significant portions
of operating expense levels are relatively fixed, the timing of expense levels
is based in large part on our expectations of future sales. If sales do not meet
our expectations, we may be unable to quickly adjust spending, which could have
a material adverse effect on our business.
3
<PAGE>
If Our Common stock is Delisted From The Nasdaq Stock Market, It Would Be
More Difficult for Stockholders to Sell Shares of Our Common Stock. In order for
our common stock to continue to be listed on The Nasdaq Stock Market, we must
comply with all of Nasdaq's continued listing requirements. If Nasdaq determines
that we have violated any of its continued listing requirements, our common
stock could be delisted. For instance, Nasdaq requires listed companies to have
net tangible assets of at least $4 million in order to continue its listing. We
currently do not meet the net tangible assets requirement for continued listing
on the National Market System on the Nasdaq Stock Market. On May 20, 1999 Nasdaq
notified us of its intention to change the listing status of our common stock,
currently on the National Market System. We formally appealed this decision,
which prevented any action by Nasdaq until Nasdaq renders a final decision
following the hearing, and attended the appeal hearing with Nasdaq regarding
this matter. We have not yet been informed of Nasdaq's final decision.
Even if our common stock is not delisted from the Nasdaq Stock Market, the
issuance and conversion rights of our series B preferred stock could cause
Nasdaq to determine that we have violated up to three of its continued listing
requirements. The first of the three applicable Nasdaq rules requires that our
common stock have a minimum bid price per share of $1.00. Our bid price was
currently approximately $1.5625 per share as of August 26, 1999. If the series B
preferred stock is converted at its current discount price and the common stock
issued upon conversion is subsequently sold in the public market, the bid price
of our common stock may be reduced to less than $1.00 per share, in which case
Nasdaq may determine that a violation exists and our common stock may be
delisted. The second applicable Nasdaq rule requires us to comply with the more
onerous requirements for initial listing if Nasdaq determines that we have
undergone a change in control or a change in financial structure. Depending on
the number of shares of common stock issued upon conversion of the series B
preferred stock, Nasdaq may deem the issuance of such preferred stock to be a
change in control or a change in financial structure and a violation that could
result in delisting. The third applicable Nasdaq rule permits Nasdaq to delist a
security if it deems it necessary to protect investors and the public interest.
Therefore, if Nasdaq determines that the returns on the series B preferred stock
are excessive compared with the returns received by our common stockholders, and
such excess returns are egregious, Nasdaq could delist our common stock.
Our Success Depends Heavily Upon Sales to a Limited Group of OEMs. We try
to provide a broad line of high-performance hardware and software video/graphics
solutions, targeting both OEMs and two-tier and retail distribution customers.
The PC industry has a limited number of major OEMs driving the majority of PC
sales. While we are pursuing a significant portion of our business derived from
the limited number of major OEMs, we may not be successful in establishing
profitable relationships with major OEMs. In addition, major OEMs exercise
significant price pressure on their suppliers, generating lower gross margins
than those of retail and distribution customers. Our failure to establish
profitable relationships with major OEM customers or to maintain and increase
the volume and profitability of the products manufactured for such customers
would have a material adverse effect on our business.
The Highly Competitive Market for Our Products May Adversely Affect Our
Business Results. Our current and prospective competitors include many companies
that have substantially greater name recognition and financial, technical,
manufacturing and marketing resources than we have. We may not be able to
compete successfully against current and future competitors.
The market for our products is highly competitive. Our ability to compete
successfully depends upon a number of factors both within and beyond our
control, including:
. Product performance,
. Product features,
. Product availability,
4
<PAGE>
. Price,
. Quality,
. Timing of our new product introductions compared with the timing of our
competitors' product introductions,
. Emergence of new video/graphics and PC standards,
. Customer support, and
. Industry and general economic trends.
We compete by offering products emphasizing high performance and quality,
utilizing merchant chips. Commencing in the third quarter of 1999, we no longer
design and manufacture our own chips. The trend in our industry is towards
establishing close alliances between chip and board manufacturers leveraging
their respective competitive advantages for the benefit of the customer. We
strive to improve our current products and to introduce new products in order to
provide a broad product line where demand justifies it. Our current principal
competitors include ATI Technologies, Inc., Diamond Multimedia Systems, Inc.,
which was recently acquired by S3 Incorporated, a chip manufacturer, and Matrox
Electronic Systems, Inc. Each of these named competitors markets graphics
accelerator products that are marketed in competition with our 64-bit and 128-
bit graphics accelerator products.
Numerous competitors, particularly in higher-volume, lower-priced product
categories, have lowered their prices, which may result in reduced sales and/or
lower margins for our products. In addition, many companies compete on the basis
of their integrated circuit design capabilities by:
. supplying accelerator chips on a merchant basis,
. producing board-level products, and
. integrating the accelerator chip that will be placed directly on the CPU
motherboard.
We expect this trend to continue for low-end video/graphic accelerator
subsystems; however, we believe the market for video/graphic accelerator
subsystems in mid-range to high-end PCs will continue to exist.
Several of our board-level competitors, as well as various independent
software developers, offer software products with features comparable to our
HawkEye software utilities. Future enhancements to such competing software
products that we do not match, or the inclusion of comparable features in future
versions of the Windows operating system, reduce the demand for our HawkEye
utilities software. In addition, we may eventually experience indirect
competition from suppliers of memory components, CPU manufacturers and others to
the extent they integrate advanced graphics processing capabilities into future
generations of products.
We May Not Be Profitable or Generate Cash from Operations in the Future.
We have incurred significant losses in the last several years. We intend to
continue to expend significant financial and management resources on the
development of additional products, sales and marketing, improved technology and
expanded operations. Although we believe that operating losses and negative cash
flows may diminish in the near future, we may not be profitable or generate cash
from operations in the foreseeable future.
If We Do Not Secure Additional Financing, We May Be Unable to Develop or
Enhance Our Services, Take Advantage of Future Opportunities or Respond to
Competitive Pressures. We require substantial working capital to fund our
business. We have had significant operating losses and negative cash flow from
operations. Additional financing may not be available when needed on favorable
terms or at all. If adequate funds are not available or are not available on
acceptable terms, we may be unable to develop or enhance our services, take
advantage of future opportunities or respond to competitive
5
<PAGE>
pressures, which could materially adversely affect our business. Our capital
requirements depend on several factors, including the rate of market acceptance
of our products, the ability to expand our customer base, the growth of sales
and marketing and other factors. If capital requirements vary materially from
those currently planned, we may require additional financing sooner than
anticipated.
We Depend Upon a Limited Group of Suppliers for Key Components. We depend
on sole or limited source suppliers for certain key components and have
experienced:
. limited availability,
. delays in shipments, and
. unanticipated cost fluctuations related to the supply of components,
particularly memory chips.
We actively work with memory component suppliers to secure pricing and
volume commitments for future production. Additionally, our suppliers could make
key components, such as memory graphics accelerator chips, less available to the
extent that they reduce our lines of credit and payment terms. In such an event,
we could have difficulty securing sufficient supply to meet customer
requirements. We may not secure commitments in sufficient amounts to meet our
needs or at prices that will enable us to attain profitability.
The Loss of Key Members of Our Management Staff Could Delay and May
Prevent the Achievement of Our Business Objectives. Our future success will
depend, to a significant extent, upon the efforts and abilities of our senior
management and professional, technical, sales and marketing personnel. The
competition for such personnel is intense. The loss and failure to promptly
replace any one of these key members could significantly delay and may prevent
the achievement of our business objectives. Accordingly, our failure to hire,
retain or adequately replace key personnel could have a material adverse effect
on our business.
The Value of Our Stock Has in the Past and May in the Future Change
Suddenly and Significantly. The trading price of our common stock has been
subject to significant fluctuations to date and could be subject to wide
fluctuations in the future, in response to many factors, including the
following:
. Quarter-to-quarter variations in our operating results,
. Announcements of technological innovations,
. New products or significant OEM system design wins by us or our
competitors,
. General conditions in the markets for our products or the computer
industry,
. The price and availability of purchased components,
. General financial market conditions,
. Changes in earnings estimates by analysts, or
. Other events or factors.
In this regard, we do not endorse or accept responsibility for the
estimates or recommendations issued by stock research analysts from time to
time. The volatility of public stock markets, and technology stocks
specifically, have frequently been unrelated to the operating performance of the
specific companies. These market fluctuations may adversely affect the market
price of our common stock.
Costs of Defending Shareholder Litigation and the Possible Liability
Relating to Such Litigation Could Divert Funds and Management Efforts Away from
the Manufacturing, Marketing and Sales of Our Products. We have been served
notice of three lawsuits seeking class action status on or about June 11, 1996,
July 16, 1996 and October 16, 1996, respectively, filed in the United States
District Court for the District of Massachusetts naming as defendants our
company, the members of the Board of Directors during the period in question,
our former Chief Financial Officer and Treasurer, and the selling
6
<PAGE>
shareholders and managing underwriters of our 1995 initial public offering. The
alleged class of plaintiffs consists of all persons who purchased shares of our
common stock on the open market between and including May 26, 1995 through
January 31, 1996. The plaintiffs, who seek unspecified damages, interest, costs
and fees, allege, among other things, that our Registration Statement and
Prospectus in our initial public offering and other public statements and
reports filed with the Securities and Exchange Commission during the class
period in question contained false and materially misleading statements. The
defendants deny liability, believe they have meritorious defenses and intend to
vigorously defend against these and any similar lawsuits that may be filed,
although the ultimate outcome of these matters cannot yet be determined. By
order of the District Court, these actions have been consolidated into a single
action. On June 1, 1999, the District Court dismissed certain of the claims
asserted by the plaintiffs. The parties presently are engaged in discovery. If
the lawsuit is not resolved satisfactorily for us, there could be a material
adverse effect on our business.
We May Have to Indemnify or Pay Damages to Some of Our OEM Customers for
Possible Intellectual Property Infringement Claims Filed or Threatened to Be
Filed. It is common in the PC industry for companies to assert intellectual
property infringement claims against other companies. As a consequence, we
indemnify some OEM customers in certain respects against intellectual property
claims relating to our products. If an intellectual property claim were to be
brought against us, or any of our OEM customers, and we, or any of our OEM
customers, were found to be infringing upon the rights of others, we could be
required to:
. pay infringement damages,
. pay licensing fees,
. modify our products so that they are not infringing, or
. discontinue offering products that were found to be infringing.
Any of the above-listed actions could have a material adverse effect on our
business. Several OEM customers recently sent us notices of potential indemnity
claims based upon notices of infringement that they have received from a patent
owner. Subsequently, the patent owner filed patent infringement lawsuits in the
U.S. and elsewhere against several of such OEM customers and a number of other
major PC systems manufacturers. We provide multimedia subsystems to our OEM
customers for use in such OEM customers' products that are alleged to infringe
on the patent owner's rights. Based upon our preliminary evaluation of the
patent, we do not believe the infringement claims are meritorious as to our
products sold to our customers. However, under the indemnity agreements or if we
are directly sued, we may be required to dedicate significant management time
and expense to defending ourselves or assisting our OEM customers in their
defense of this or other infringement claims, regardless of merit, which could
have a material adverse effect on our business. If an intellectual property
claim were to be brought against any of our suppliers and the supplier were
found to be infringing upon the rights of others, the supplier could be enjoined
from further shipments of our products to us, which could have a material
adverse effect on our business.
A foreign investor has asserted claims against several PC manufacturers,
including our customers, that the graphics technology included in our customers'
systems infringes the inventor's patents. Certain of our customers have notified
us of these assertions and their intent to seek indemnification from us in the
event these claims are successful and the infringing technology was included in
products that we sold. We believe there are meritorious defenses to these claims
and that if the technology in fact infringes the inventor's rights, we would
have rights of indemnification from its suppliers. While we cannot assure you,
we do not expect this matter to have a material adverse effect on us.
7
<PAGE>
If the Series A or Series B Preferred Stock is Converted or We Issue
Additional Shares of Equity Securities, the Value of Those Shares of Common
Stock Then Outstanding May Be Diluted. To the extent that we raise additional
capital by issuing equity securities at a price or a value per share less than
the then current price per share of common stock, the value of the shares of
common stock then outstanding will be diluted or reduced. At present, we have
two arrangements to issue additional equity securities which could result in
dilution to the present common stockholders. One arrangement involves the
issuance of our series A preferred stock, each share of which was purchased or
acquired for $2.75 and all of which are convertible into shares of common stock
on a one for one basis. In May 1999, the holders of the series A preferred stock
converted 850,000 shares into common stock. Based on the number of shares of
series A preferred stock presently outstanding and an outstanding warrant to
purchase additional shares of series A preferred stock, as of August 26, 1999,
we would be required to issue up to 2,794,894 shares of common stock at a price
per share that is approximately $1.1562 more than the last sale price of the
common stock of $1.5938 on August 26, 1999. If the sale price of the common
stock increases, we may be required to issue shares of common stock at a price
per share that would be less than the then current price per share.
We also have an arrangement which involves the issuance of our series B
preferred stock (and payment of dividends thereunder in shares of common stock),
which is convertible into shares of common stock at a price per share equal to
the lesser of:
. $4.2703, or
. 88% of the average of the 10 lowest closing bid prices during the 30
trading days immediately prior to the date of conversion.
Based on the number of shares of series B preferred stock presently
outstanding and the applicable conversion price as of August 23, 1999, we would
be required to issue up to 1,934,236 shares of common stock at a price per share
that is approximately $.07 less than the last sale price of the common stock of
$1.6250 on August 23, 1999. In anticipation of price fluctuations that may
reduce the conversion price, we have registered for resale up to 3,022,137
shares of common stock which would become issuable upon conversion of the series
B preferred stock if the conversion price fell as low as approximately $1.05 per
share. If the conversion price fell even further, then more than 3,022,137
shares of common stock would be issuable upon conversion of the series B
preferred stock.
If additional funds are raised through the issuance of equity securities,
the percentage ownership of our stockholders will be reduced, stockholders may
experience additional dilution, or such equity securities may have rights,
preferences or privileges senior to those of our common stockholders.
Our Computer System or Our Suppliers' Computer System Could Fail When the
Year Changes to 2000. We use a number of computer software programs and
operating systems in our internal operations, including applications used in
financial business systems and various administration functions. We also include
software programs in our products. The Year 2000 issue refers to potential
problems with computer systems or any equipment with computer chips or software
that use dates where the date has been stored as just two digits to represent
the year, such as 98 for 1998. On January 1, 2000, any clock or date recording
mechanism which incorporates date sensitive software, using only two digits to
represent the year, may recognize a date using 00 as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculations, causing
disruption of operations, or, among other things, a temporary inability to
process transactions, send invoices, or engage in normal operating business
activities.
We have conducted an assessment of our Year 2000 readiness to determine the
extent of any potential problems. Our assessment revealed that all our products
are not keyed to a two digit date storage system. That is, our drivers and BIOS
do not reference or update the time or date, nor are they affected by the system
clock. Based upon our assessment, we consider all our products to be Year 2000
compliant.
8
<PAGE>
Our assessment also revealed that our principal information systems correctly
define the Year 2000 and do not require any modification. As a result, we do not
expect to incur any material costs associated with Year 2000 issues. However, we
may not have identified all material Year 2000 issues associated with our
products.
We have conducted an assessment of our Year 2000 readiness of the
applications used in financial business systems and various administrative
functions to determine the extent of any potential problems. We obtained Year
2000 compliance statements from the manufacturers of our core internal
information systems. While these applications have been tested by their
manufacturers, we will continue to test our mission critical applications for
Year 2000 compliance. As a result, we do not expect to incur any material costs
associated with Year 2000 issues. However, we may not have identified all
material Year 2000 issues associated with internal information systems which
could have a material adverse effect on our business.
We are in the process of contacting our customers, suppliers, financial
institutions, creditors, service providers and governmental agencies, with whom
we have a material relationship, in an effort to verify the Year 2000 readiness
of these third parties that are in a position to impact us materially. We have
limited or no control over the actions of these third parties. Thus, while we
expect that we will be able to resolve any significant Year 2000 problems, all
material Year 2000 issues associated with third parties may not be identified
and corrected on a timely basis, and corrections made by third parties may not
be compatible with our information systems. The failure of our systems and
applications or those operated by third parties to properly operate or manage
dates beyond 1999 could have a material adverse effect on our business.
At this point, we do not believe we will be adversely affected, in a
material manner, by the Year 2000 issue. We are actively developing a
contingency plan to address any Year 2000 issues that may arise. We intend to
design and implement such a contingency plan prior to the end of the third
quarter of 1999, which will be based in part upon the balance of the responses
we expect to receive from third parties. We will attempt to identify and resolve
all Year 2000 problems that could materially affect our business operations.
However, management believes that it is not possible to determine with complete
certainty, that all Year 2000 problems affecting us have been identified or
corrected. The number of devices that could be affected and the interactions
among such devices are simply too numerous. In addition, we cannot accurately
predict how many Year 2000 problem-related failures will occur or the severity,
duration or financial consequences of these perhaps inevitable and unforeseen
failures. As a result, we are uncertain whether we or our clients might
experience:
. a significant number of operational inconveniences and inefficiencies
that may divert our time and attention, and financial and human
resources, from our ordinary business activities, and/or
. a lesser number of serious system failures that may require significant
efforts by us or our clients to prevent or alleviate material business
disruptions.
Based on the foregoing, we do not believe that the Year 2000 problem will
have a material adverse effect on our business. Our ability to achieve Year 2000
compliance and the level of incremental costs associated therewith could be
adversely impacted by, among other things, the availability and cost of
programming and testing resources, vendors' abilities to modify proprietary
software and unanticipated problems identified in the ongoing compliance review.
Currently, we estimate that we have spent approximately $500,000 on Year 2000
compliance. We estimate that our expense during the last half of 1999 will
approximate an additional $200,000.
9
<PAGE>
WHERE TO FIND MORE INFORMATION
We are a public company and file annual, quarterly and special reports,
proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any document we file at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference room. Our SEC filings are also available
to the public at the SEC's web site at "http://www.sec.gov." In addition, you
can read and copy our SEC filings at the office of the National Association of
Securities Dealers, Inc. at 1735 K Street, Washington, DC 20006.
This prospectus is only part of a Registration Statement on Form S-3 that
we have filed with the SEC under the Securities Act of 1933 and therefore omits
certain information contained in the Registration Statement. We have also filed
exhibits and schedules with the Registration Statement that are excluded from
this prospectus, and you should refer to the applicable exhibit or schedule for
a complete description of any statement referring to any contract or other
document. You may:
. inspect a copy of the Registration Statement, including the exhibits and
schedules, without charge at the public reference room, or
. obtain a copy from the SEC upon payment of the fees prescribed by the
SEC.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with it, 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 and information we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the selling stockholder sells all of its shares of common stock. The
documents we are incorporating by reference are:
. Annual Report on Form 10-K for the year ended January 2, 1999, filed on
April 2, 1999;
. Amendment to the Annual Report on Form 10-K/A for the year ended January
2, 1999, filed on April 30, 1999;
. Current Report on Form 8-K, filed on April 12, 1999;
. Quarterly Report on Form 10-Q for the quarter ended April 3, 1999, filed
on May 18, 1999;
. Quarterly Report on Form 10-Q for the quarter ended July 3, 1999, filed
on August 17, 1999; and
. The description of the common stock contained in our Registration
Statement on Form S-1 filed with the SEC on April 7, 1995, including any
amendments or reports filed for the purpose of updating such
description.
You may request a copy of these filings at no cost by writing or
telephoning our chief financial officer at the following address and number:
Number Nine Visual Technology Corporation
18 Hartwell Avenue
Lexington, MA 02421
(781) 674-0009
10
<PAGE>
This prospectus is part of a Registration Statement we filed with the SEC.
You should rely on the information incorporated by reference provided in this
prospectus and the Registration Statement.
FORWARD LOOKING STATEMENTS
We also caution you that 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. These statements are based
on management's beliefs and assumptions and on information currently available
to management. Forward-looking statements include the information concerning
possible or assumed future results of operations and embody statements in which
we use words such as "expect," "anticipate, " "intend," "plan," "believe,"
"estimate," or similar expressions.
Forward-looking statements necessarily involve risks and uncertainties,
including those set forth in the Risk Factors section and elsewhere in this
prospectus. Our actual results could differ materially from those anticipated in
the forward-looking statements. The factors set forth in the Risk Factors
sections and other cautionary statements made in this prospectus should be read
and understood as being applicable to all related forward-looking statements
wherever they appear in this prospectus.
USE OF PROCEEDS
All net proceeds from the sale of the common stock being offered will go to
the selling stockholder who offers and sells its shares. Accordingly, we will
not receive any proceeds from the selling stockholder's sale of its common
stock.
DIVIDEND POLICY
We have not declared or paid dividends on our common stock in the past and
do not intend to declare or pay such dividends in the foreseeable future. Our
current bank debt agreement prohibits the payment of cash dividends without
obtaining advance written approval from the lender.
SELLING STOCKHOLDER
The table below identifies the selling stockholder and provides other
information regarding the beneficial ownership of the common stock by the
selling stockholder. The second column of the table lists, as of August 27,
1999, the number of the shares of common stock beneficially owned by the selling
stockholder and includes as of August 27, 1999 (i) 395,000 shares of common
stock directly owned by Silicon Graphics, Inc. ("SGI"), (ii) 2,500,894 shares of
common stock for SGI (based on its ownership of series A preferred stock) which
would be issuable to SGI upon conversion of the series A preferred stock held by
SGI, and (iii) 294,000 shares of common stock for SGI (based on ownership of a
Series A Convertible Preferred Stock Purchase Warrant (the "SGI Warrant")) which
would be issuable to SGI upon conversion of the series A preferred stock which
would be issuable to SGI upon exercise of the SGI Warrant. The third column of
the table lists the amount of common stock being registered for sale. The fourth
column assumes the sale of all of the shares offered by the selling stockholder.
The percent of shares beneficially owned by SGI after the offering was
calculated by dividing the amount of shares beneficially owned by SGI by
13,086,527, which is comprised of 10,291,633 shares of common stock issued and
outstanding as of August 27, 1999, 2,500,894 shares of common stock based on
SGI's ownership of series A preferred stock and 294,000 shares of common
11
<PAGE>
stock which would be issuable to SGI upon conversion of the series A preferred
stock which would be issued to SGI upon exercise of the SGI Warrant.
The information provided in the table below has been obtained from the
selling stockholder. The selling stockholder may sell all, some or none of its
shares in this offering. See "Plan of Distribution."
<TABLE>
<CAPTION>
Number of Shares
Beneficially Owned Maximum Number Shares Beneficially
Selling Prior to of Shares Being Owned After Offering
---------------------------------
Stockholder Offering Offered Number Percent
- ------------------------- ------------------------ ------------------------- -------------- ---------------
<S> <C> <C> <C> <C>
Silicon Graphics, Inc. 3,189,894 1,000,000 2,189,894 16.7%
</TABLE>
PLAN OF DISTRIBUTION
Silicon Graphics, Inc. is offering shares of common stock, $.01 par value
per share, which are issuable to it upon conversion of a portion of the series A
convertible preferred stock, $.01 par value per share, it acquired from us upon
conversion of a secured subordinated convertible promissory note, pursuant to a
Securities Purchase Agreement, dated as of May 7, 1998. This prospectus covers
the resale by Silicon Graphics, Inc. of up to 1,000,000 shares of common stock.
In addition to covering the resale of the above mentioned shares of common
stock, this prospectus covers an indeterminate number of additional shares as
may from time to time become issuable upon conversion of the series A preferred
stock by reason of stock splits, stock dividends and other similar transactions,
but does not cover an indeterminate number of shares of common stock based on
the conversion formula of the series A preferred stock.
In accordance with the registration rights granted to the selling
stockholder pursuant to a Registration Rights Agreement dated March 31, 1999, we
agreed to register its shares under the Securities Act of 1933, and we have
filed a Registration Statement on Form S-3 with the SEC. The Registration
Statement covers the resale of the common stock from time to time on the Nasdaq
National Market or in privately-negotiated transactions. This prospectus forms a
part of the Registration Statement. We have also agreed to prepare and file such
amendments and supplements to the Registration Statement as may be necessary to
keep such Registration Statement effective until no longer required for the
selling stockholder to sell its shares.
The selling stockholder and any of its pledgees, assignees and successors-
in-interest may, from time to time, sell any or all of its shares of common
stock on any stock exchange, market or trading facility on which the shares are
traded or in private transactions. These sales may be at fixed or negotiated
prices. The selling stockholder may use any one or more of the following methods
when selling shares:
. ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers,
. block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction,
. purchases by a broker-dealer as principal and resale by the broker-
dealer for its account,
. an exchange distribution in accordance with the rules of the
applicable exchange,
. privately negotiated transactions,
. short sales,
12
<PAGE>
. broker-dealers may agree with the selling stockholder to sell a
specified number of such shares at a stipulated price per share,
. a combination of any such methods of sale, and
. any other method permitted pursuant to applicable law.
The selling stockholder may also sell shares under Rule 144 under the
Securities Act of 1933, if available, rather than under this prospectus.
The selling stockholder may pledge its shares to its brokers under the
margin provisions of customer agreements. If the selling stockholder defaults on
a margin loan, the broker may, from time to time, offer and sell the pledged
shares.
Broker-dealers engaged by the selling stockholder may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholder (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholder does not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholder and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933 in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act of 1933.
We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling
stockholder. We have agreed to indemnify the selling stockholder against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act of 1933.
In order to comply with the securities laws of certain states, the shares
must be offered or sold only through registered or licensed brokers or dealers.
In addition, in certain states, the shares may not be offered or sold unless
they have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
Under the Securities Exchange Act of 1934, any person engaged in the
distribution of the shares may not simultaneously engage in market-making
activities with respect to the common stock for five business days prior to the
start of the distribution. In addition, the selling stockholder and any other
person participating in a distribution will be subject to the Securities and
Exchange Act of 1934, which may limit the timing of purchases and sales of
common stock by the selling stockholder or any such other person. These factors
may affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
These shares were originally issued to the selling stockholder pursuant to
an exemption from the registration requirements under Sections 4(2) or 3(a)(9)
of the Securities Act of 1933 or otherwise.
LEGAL MATTERS
Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. of Boston,
Massachusetts, will deliver its opinion that the shares of common stock offered
in this prospectus have been validly issued and are fully paid and non-
assessable.
13
<PAGE>
EXPERTS
The consolidated financial statements as of January 2, 1999 and December
27, 1999 and for each of the three years in the period ended January 2, 1999
incorporated in this Prospectus by reference to the Annual Report on Form 10-K
for the year ended January 2, 1999, have been so incorporated in reliance on the
report (which contains an explanatory paragraph relating to the Company's
ability to continue as a going concern as described in Note B of the financial
statements) of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
14
<PAGE>
============================================================================
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell and
seeking offers to buy shares of our common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate only as of September 20, 1999. You should not assume that this
prospectus is accurate as of any other date.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary.......................................... 2
Risk Factors................................................ 3
Where to Find More Information.............................. 10
Incorporation of Documents by Reference..................... 10
Forward Looking Statements.................................. 11
Use of Proceeds............................................. 11
Dividend Policy............................................. 11
Selling Stockholder......................................... 12
Plan of Distribution........................................ 13
Legal Matters............................................... 14
Experts..................................................... 14
</TABLE>
============================================================================
Number Nine Visual
Technology Corporation
1,000,000 shares of
COMMON STOCK
________________________
PROSPECTUS
________________________
September 20, 1999
============================================================================
