<PAGE>
As filed with the Securities and Exchange Commission on May 5, 1999
Registration No. 533-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.c. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
HELLO DIRECT, INC.
(Exact name of Registrant as specified in its charter)
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DELAWARE 5961 94-3043208
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(State or other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification Number)
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5893 RUE FERRARI
SAN JOSE, CA 94138
(408) 972-1990
(Address, including Zip Code, and telephone number, including area code,
of Registrant's principal executive offices)
DEAN WITTER III
CHIEF FINANCIAL OFFICER
HELLO DIRECT, INC.
5893 RUE FERRARI
SAN JOSE, CALIFORNIA 95138
(408) 972-1990
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
BARRY E. TAYLOR, ESQ.
CRAIG D. NORRIS, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304-1050
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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, 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. [_]
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CALCULATION OF REGISTRATION FEE
====================================================================================================================================
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
- - ------------------------------------------------------------------------------------------------------------------------------------
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Common Stock, $0.001 par value........ 50,000 $ 9.25 $ 462,500.00 $ 129.00
====================================================================================================================================
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(1) Estimated solely for the purpose of computing the amount of the
registration fee, based on the closing price of the Common Stock as
reported on the Nasdaq National Market on May 3, 1999 in accordance with
Rule 457 under the Securities Act of 1933.
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 SEC, acting pursuant to said Section 8(a), may
determine.
<PAGE>
Subject to Completion May 5, 1999
PROSPECTUS
50,000 SHARES
HELLO DIRECT, INC.
_______________
COMMON STOCK
($0.001 PAR VALUE)
______________________
This prospectus relates to the public offering, which is not being
underwritten, of up to 50,000 shares of our common stock which is held by some
of our current stockholders.
The prices at which such stockholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares.
Our common stock is listed on the Nasdaq National Market under the symbol
"HELO." On May 3, 1999, the closing price of our common stock was $9.25.
SEE "RISK FACTORS" BEGINNING AT PAGE 3 TO READ ABOUT CERTAIN FACTORS YOU
SHOULD CONSIDER BEFORE BUYING SHARES OF OUR COMMON STOCK.
______________________
THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE
NOT APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS
IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
______________________
The date of this Prospectus is May __, 1999.
The information in this prospectus is not complete and may be changed. The
selling stockholders named herein may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities, and the
selling stockholders are 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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Where You Can Find More Information........................................................ 2
Forward-Looking Statements................................................................. 3
Hello Direct............................................................................... 4
Risk Factors............................................................................... 4
Selling Stockholders....................................................................... 10
Plan of Distribution....................................................................... 11
Legal Matters.............................................................................. 12
Experts.................................................................................... 12
</TABLE>
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 the date of this prospectus, regardless of the time of
delivery of this prospectus or of any sale of our common stock. In this
prospectus, "Hello Direct," "we," "us," and "our" refer to Hello Direct, Inc.
WHERE YOU CAN FIND MORE INFORMATION
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, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public conference rooms. Our SEC filings are also available to the public
from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information 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, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
(1) Our Annual Report on Form 10-K for the year ended December 31, 1998;
(2) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999; and
(3) The description of our common stock contained in its registration
statement on Form 8-A filed with the SEC on February 7, 1995,
including any amendments or reports filed for the purpose of updating
such description.
We have also filed a registration statement on Form S-3 with the SEC under
the Securities Act of 1933. This prospectus does not contain all of the
information set forth in the registration statement. You should read the
registration statement for further information about our company and the common
stock.
<PAGE>
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Attn: Chief Financial Officer
Hello Direct, Inc.
5893 Rue Ferrari
San Jose, CA 95138
(408) 972-1990
You should rely on the information incorporated by reference or provided in
this prospectus or the prospectus supplement. 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 the prospectus supplement is accurate
as of any date other than the date on the front of the document.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains certain 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. Forward-looking statements deal with our
current plans, intentions, beliefs and expectations and statements of future
economic performance. Statements containing terms such as "believes," "does not
believe," "plans," "expects," "intends," "estimates," "anticipates" and other
phrases of similar meaning are considered to contain uncertainty and are
forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties which may cause our actual results in future periods to differ
materially from what is currently anticipated. We make cautionary statements in
certain sections of this prospectus, including under "Risk Factors." You should
read these cautionary statements as being applicable to all related forward-
looking statements wherever they appear in this prospectus, in the materials
referred to in this prospectus, in the materials incorporated by reference into
this prospectus, or in our press releases.
No forward-looking statement is a guarantee of future performance, and you
should not place undue reliance on any forward-looking statement.
<PAGE>
HELLO DIRECT
Founded in 1987, we are a Delaware corporation with principal executive
offices located at 5893 Rue Ferrari, San Jose, California 95138. Our main
telephone number is (408) 972-1990.
Hello Direct is a leading developer and direct marketer of desktop
telephony products and equipment interface solutions to business end users. We
design and sell our own products and also offer a wide variety of products and
accessories from other manufacturers. Our primary channel to our business end
users is direct mail solicitation through catalogs. During 1998, we distributed
28.0 million catalogs and processed 315,000 orders from customers.
RISK FACTORS
In addition to reviewing other information in this prospectus and the
Company's Annual Report on Form 10-K and the other documents incorporated herein
by reference, you should consider carefully the following factors in evaluating
us and our business before purchasing shares of our common stock..
OUR FUTURE OPERATING RESULTS ARE UNCERTAIN.
We have grown rapidly and achieved profitability as a result of the growth
in net sales generated by our outbound telemarketing efforts and our Internet
site, and the success of our product offering, particularly of our proprietary
headset products. We may not be able to maintain profitability on a quarterly or
annual basis or continue to increase our net sales. Our net sales will continue
to grow only if we are able to, among other things, increase sales to existing
customers, grow our customer base and expand our product offering. Our operating
results could be harmed if we were to experience lower than anticipated sales
from our outbound telemarketing efforts and our Internet site or higher than
anticipated product return rates. We may not be able to continue to achieve
growth in net sales, and any such growth may not offset increases in operating
expenses. Our operating results could also be harmed by delays in new product
introductions, poor product selection and market acceptance of new products or
increased competition.
OUR QUARTERLY OPERATING RESULTS ARE LIKELY TO FLUCTUATE.
We have experienced and will experience quarterly variations in net sales
and net income as a result of many factors, including the following:
. the number and timing of catalog mailings;
. catalog response rates;
. product mix;
. the level of selling, general and administrative expenses;
. the timing and level of product development expenses; and
. the timing and success of our and our competitors' new product
introductions.
We plan our operating expenditures based on sales forecasts. If our net
sales are below our expectations in any given quarter, our operating results
will suffer. Due to the foregoing factors, in some future quarter our operating
results may be below the expectations of public market analysts and investors.
In such event, the price of our common stock would likely suffer.
<PAGE>
WE NEED TO SUCCESSFULLY DEVELOP NEW PRODUCTS.
The market for telecommunications products is generally characterized by
rapidly changing technology that can render existing products obsolete and
unmarketable. We believe our current and future success will depend on our
ability to identify, develop or source and successfully introduce and market, in
a timely manner, enhancements to our existing products and new products that
respond effectively to technological change. To accomplish this, we intend to
consult with our direct customer contacts and use our product development
capabilities. We have experienced delays in the past in introducing certain of
our products and could encounter similar technical difficulties in the future
that could result in delayed product introductions or expensive recalls. We may
not successfully anticipate technological changes or select and develop new and
enhanced products on a timely basis. In addition, if we are able to develop or
source any products, these products may not gain market acceptance.
WE DEPEND ON HEADSET PRODUCTS.
We derived more than 50% of our net sales in the first quarter of 1999 from
our proprietary telephone headset products. These products have higher gross
margins than our other products. We anticipate that these headset products will
continue to account for a significant portion of our net sales and profits in
the foreseeable future.* If sales of our telephone headset products were to
decline significantly, or the gross margins on such products were to decrease
significantly, as a result of competitive pressures or technological
obsolescence, our operating results would be harmed.
WE RELY ON SOLE OR LIMITED SOURCE SUPPLIERS AND FOREIGN MANUFACTURING.
A relatively small number of manufacturers produce a substantial portion of
our proprietary products. Only three sources manufacture most of these products,
including all of our headset products. To date, we have been able to obtain
adequate supplies of these products, although on occasion we have incurred
additional delivery costs to air ship products to obtain inventory in a timely
manner. If we are unable in the future to obtain sufficient quantities of sole
or limited source products, or to develop alternative sources, shortages of such
products would occur. This would harm our net sales and operating results.
Seo Won K-Tec, Inc., with operations in South Korea and the Philippines;
Sinoca Enterprises Co. Ltd., located in Taiwan; and Tru-Tech Electronics,
located in Malaysia, manufacture a substantial portion of our proprietary
products to our specifications. Each of these manufacturers is also one of our
substantial suppliers. Products manufactured by these manufacturers represented
more than 50% of our net sales in the first quarter of 1999. We have contracts
of varying terms with these manufacturing sources, and we compete with other
companies for production facilities. Although we believe that we have
established close relationships with these foreign manufacturing sources, our
future success will depend in large measure upon our ability to maintain such
relationships.
In addition, we face a number of risks inherent in doing business in
international markets, including, among others:
______________________
* This statement is a forward-looking statement reflecting current
expectations. There can be no assurance that our actual future performance will
meet our current expectations.
<PAGE>
. unexpected changes in regulatory requirements,
. potentially adverse tax consequences,
. tariffs and other trade barriers,
. fluctuations in currency exchange rates,
. political unrest,
. disruptions or delays in shipments, and
. changes in economic conditions in countries in which our manufacturing
sources are located.
We cannot predict the effect that such factors will have on our business
arrangements with foreign manufacturing sources. If any of these factors were to
render the conduct of business in a particular country undesirable or
impractical, or if our current foreign manufacturing sources were to cease doing
business with us for any reason, our business and operating results could
suffer.
OUR BUSINESS IS HIGHLY COMPETITIVE.
The market for customer premise telecommunications products is highly
competitive. We compete with a variety of traditional dealers and retailers,
including catalog companies, electronics specialty stores and office products
and computer superstores. A variety of external and internal factors could harm
our ability to compete, including:
. the functions, performance, price and reliability of the products
offered by us and our competitors;
. the timing and success of our and our competitors' new product
development efforts; and
. the effectiveness of our and our competitors' marketing efforts.
Certain of our competitors have greater financial, technical, sales and
marketing and other resources than we have. We may not be able to compete
effectively against existing competitors or against new competitors that may
enter the market. In addition, while we currently do not know of any competitor
specializing in distributing a broad line of telecommunications products
directly to business end-users via catalog, we may not be able to compete
successfully in the future in either the direct marketing catalog channel, which
may attract new market entrants, or in other channels that we may enter or that
may be developed for the sale of telecommunications products.
POTENTIAL ACQUISITIONS INVOLVE RISKS.
We have acquired complementary technologies or businesses in the past, and
may or may not do so in the future. Future acquisitions may involve potentially
dilutive issuances of stock, the incurrence of additional debt and contingent
liabilities or large one-time write-offs and amortization expenses related to
goodwill and other intangible assets. Any of these factors could harm our
results of operations or stock price. Acquisitions involve numerous risks,
including:
. difficulties in assimilating the operations, products, technology,
information systems and personnel of the acquired company;
. diverting management's attention from other business concerns;
. impairing relationships with our customers;
. being unable to maintain uniform standards, controls, procedures and
policies;
. entering markets in which we have no direct prior experience; and
. losing key employees of the acquired company.
<PAGE>
In January 1999, we acquired PhoneZone.com, Inc., an Internet publisher of
a buyers guide covering telecommunications and networking products and services.
As a result of this acquisition, we hired three employees. We may not be able to
successfully integrate the business and personnel we acquired from PhoneZone.com
or any other businesses, technologies or personnel that we acquire in the
future.
OUR INTERNET SALES RELY ON THE CONTINUED GROWTH IN ELECTRONIC COMMERCE AND
INTERNET INFRASTRUCTURE DEVELOPMENT.
Sales of telecommunications products using the Internet do not currently
represent a significant portion of overall telecommunications products sales.
However, our future growth may depend on the growing use and acceptance of the
Internet as an effective medium of commerce by end users. Rapid growth in the
use of and interest in the Internet and other online services is a recent
development. No one can be certain that acceptance and use of the Internet and
other online services will continue to develop or that a sufficiently broad base
of consumers will adopt, and continue to use, the Internet and other online
services as a medium of commerce. We will be able to achieve increased sales
over the Internet only if purchasers of telecommunications products who have
historically used traditional means of commerce to purchase these products view
the Internet as a preferred alternative. If our Internet efforts are to be
successful, these purchasers must accept and use the Internet as a means of
purchasing telecommunications products, and we cannot predict the rate at which
purchasers will do so.
The Internet may fail as a commercial marketplace for a number of reasons,
including potentially inadequate development of the necessary network
infrastructure or delayed development of enabling technologies and performance
improvements. If the number of Internet users or their use of Internet resources
continues to grow, it may overwhelm the existing Internet infrastructure. Delays
in the development or adoption of new standards and protocols required to handle
increased levels of Internet activity or increased governmental regulation could
also have a similar effect. In addition, growth in Internet usage that is not
matched by comparable growth in the infrastructure supporting Internet usage
could result in slower response times or adversely affect usage of the Internet.
COSTS OF CATALOG MAILING, PAPER AND PRINTING MAY INCREASE.
Increases in postal rates and paper and printing costs increase the cost of
our catalog mailings. An increase in postal rates or higher than anticipated
paper and printing costs could harm our financial position and results of
operations to the extent that we are unable to pass such increase directly on to
customers by raising prices or to offset such increase by implementing more
efficient printing, mailing and delivery systems.
WE FACE RISKS ASSOCIATED WITH MANAGING A GROWING BUSINESS.
We have experienced significant growth in our operations that has placed
significant demands on our administrative, operational and financial resources.
The growth in our customer base and changes in our product offering have placed,
and we expect will continue to place, a significant strain on our management and
operations, including on our product development, customer service and finance
and administration staffs. Our future performance will depend in part on our
ability to successfully implement enhancements to our management information
systems and to adapt those systems, as necessary, to respond to changes in our
business. If we are unable to successfully integrate and train new hires, or if
we are unable to respond to and manage changing business conditions, our
business could suffer.
<PAGE>
WE RELY ON A SINGLE FACILITY.
We house our telemarketing, customer service and distribution functions in
a single facility in San Jose, California. We have taken precautions to protect
ourselves from events that could interrupt order fulfillment and customer
service, such as storing computer backup data offsite and implementing backup
power sources. Notwithstanding these precautions, a fire, flood, earthquake or
other disaster affecting our facility may disable these functions. Any
significant damage to this facility would harm our business.
WE RELY ON KEY PERSONNEL.
Our future success depends to a significant extent on the efforts of our
key management personnel. The loss of the services of any of these individuals
could harm our business. Competition for employees with technical, management,
customer service and other skills is intense. Our failure to retain and attract
additional qualified employees could harm our business.
WE FACE RISKS RELATING TO STATE SALES TAX COLLECTION.
We presently collect retail occupation tax, commonly referred to as sales
tax, or other similar tax, only on sales of products to residents of the State
of California. Several states have sought to impose on direct marketers the
burden of collecting state sales taxes on the sale of products shipped to those
states' residents. The United States Supreme Court has held that it is
unconstitutional for a state to impose tax collection obligations on an out-of-
state mail order company whose only contacts with the taxing state are the
distribution of catalogs and other advertisement materials through the mail and
whose subsequent delivery of purchased goods is by United States mail or
interstate common carriers. In the event of a change in present law, which we
have no reason to expect, the imposition of a tax collection obligation on us by
states into which we ship products may result in additional administrative
expenses to us and price increases to the customer, which could harm our
business.
WE FACE GOVERNMENT REGULATIONS RELATING TO MAILING LISTS.
We are seeking to expand our in-house list of customers and potential
customers by continually renting appropriate mailing lists and sending our
catalogs to prospects obtained from these lists. In the event that the federal
or state governments enact privacy legislation resulting in the increased
regulation of mailing lists, we may be unable to enhance and expand our customer
list. In such event, we could also experience increased costs in complying with
potentially burdensome regulations concerning the solicitation of consents to
keep or add customer names to our mailing lists.
WE FACE RISKS ASSOCIATED WITH INTELLECTUAL PROPERTY RIGHTS.
We rely on a combination of patent, copyright, trademark and trade secret
laws and contractual provisions to protect our proprietary rights in our
products. As part of our confidentiality procedures, we generally enter into
non-disclosure agreements with our employees, distributors and corporate
partners, and limit access to and distribution of our software, documentation
and other proprietary information. Despite these precautions, a third party may
possibly copy or otherwise obtain and use our products or technology
independently. In addition, effective protection of intellectual property rights
may be unavailable or limited in certain foreign countries.
<PAGE>
No material claims are currently pending regarding the infringement by
our products, trademarks or other proprietary rights of the proprietary rights
of third parties. However, we may receive, in the future, communications from
third parties asserting that our products infringe, or may infringe, the
proprietary rights of third parties. In the event of litigation to determine the
validity of any third-party claims, such litigation, whether or not determined
in our favor, could result in significant expense to us and divert the efforts
of our technical and management personnel from productive tasks. In the event of
an adverse ruling in such litigation, we might be required to discontinue the
use and sale of infringing products, expend significant resources to develop
non-infringing technology or obtain licenses to infringing technology. We may
not be able to obtain a license for the disputed third-party technology on
reasonable commercial terms or at all. If someone asserts a successful claim
against us and we are unable to develop or license a substitute technology, our
business would suffer.
WE MAY FACE PRODUCT LIABILITY CLAIMS.
Our sale of proprietary and other products through our catalog and
alternate channels entails the risk of product liability claims, although we
have not experienced any material claims to date. While we believe that our
product liability insurance coverage is currently adequate, this coverage is
limited. We may be unable to maintain this insurance in the future at a
reasonable cost or in amounts sufficient to protect us against losses due to
liability. A successful product liability claim brought against us in excess of
relevant insurance coverage could harm our business.
OUR STOCK PRICE COULD BE AFFECTED AS A RESULT OF ACQUISITIONS.
We have agreed to register shares as a result of our acquisition of
PhoneZone and expect to make similar agreements in connection with future
acquisitions. As a result of issuances in connection with the PhoneZone and
potential future acquisitions, the trading price of our shares could be
materially adversely affected. We expect that the recipients of our Common Stock
in the completed acquisition or future acquisitions will sell all or a portion
of their shares of our Common Stock upon receipt or soon thereafter.
OUR STOCK PRICE IS VOLATILE.
The market price of our common stock has been volatile and may be
significantly affected by a number of factors, including:
. actual or anticipated fluctuations in our operating results;
. announcements of technological innovations or new products by us or
our competitors;
. developments with respect to intellectual property and proprietary
rights;
. conditions and trends in the telecommunications and telephone
headset industries;
. changes in earnings estimates or recommendations by securities
analysts; and
. general market conditions.
In addition, the stock market has from time to time experienced
significant price and volume fluctuations that have particularly affected the
market prices for the common stocks of emerging growth companies and that have
often been unrelated to the operating performance of particular companies. These
broad market fluctuations may also harm the market price of our common stock.
<PAGE>
SELLING STOCKHOLDERS
The shares of common stock to be sold by the selling stockholders
pursuant to this prospectus represent shares issued to the selling stockholders
by us in connection with our acquisition of PhoneZone.com. The following table
sets forth the aggregate number of shares of common stock held by each selling
stockholder and the aggregate number of shares of common stock offered by each
selling stockholder. No selling stockholder holds more than 1% of our
outstanding common stock.
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NUMBER OF SHARES NUMBER OF NUMBER OF SHARES
BENEFICIALLY OWNED SHARES BEING BENEFICIALLY OWNED
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING OFFERED AFTER OFFERING
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Michael Downey............................................ 234 234 0
Brian Fraser.............................................. 436 436 0
H. Boden Gregory.......................................... 2,161 2,161 0
Patrick Howard............................................ 2,507 2,507 0
Sheree Hu................................................. 1,450 1,450 0
David Krupinski........................................... 4,847 4,847 0
Brian McConnell........................................... 36,279 36,279 0
Timothy Miller............................................ 1,359 1,359 0
Michael Santullo.......................................... 727 727 0
------------------ ------------ ------------------
TOTAL................................................ 50,000 50,000
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<PAGE>
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time
to time by the selling stockholders. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders may sell the shares being offered
hereby on the Nasdaq National Market, or otherwise, at prices and under terms
then prevailing or at prices related to the then current market price or at
negotiated prices. Shares may be sold by one or more of the following means of
distribution:
. Block trades in which the broker-dealer so engaged will attempt to
sell such 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 such
broker-dealer for its own account pursuant to this prospectus;
. Over-the-counter distributions in accordance with the rules of the
Nasdaq National Market;
. Ordinary brokerage transactions and transactions in which the
broker solicits purchasers; and
. Privately negotiated transactions.
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution. In connection
with distributions of such shares or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers or other financial
institutions. In connection with such transactions, broker-dealers or other
financial institutions may engage in short sales of our common stock in the
course of hedging the positions they assume with the selling stockholders. The
selling stockholders may also sell our common stock short and redeliver the
shares to close out such short positions. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealer or other financial
institution of the shares offered hereby, which shares such broker-dealer or
other financial institution may resell pursuant to this prospectus (as
supplemented or amended to reflect such transaction). The selling stockholders
may also pledge such shares to a broker-dealer or other financial institution,
and, upon a default, such broker-dealer or other financial institution, may
effect sales of such pledged shares pursuant to this prospectus (as supplemented
or amended to reflect such transaction). In addition, any such shares that
qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather than
pursuant to this prospectus.
In effecting sales, brokers, dealers or agents engaged by the selling
stockholder may arrange for other brokers or dealers to participate. Brokers,
dealers or agents may receive commissions, discounts or concessions from the
selling stockholders in amounts to be negotiated prior to the sale. Such brokers
or dealers and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 in connection
with such sales, and any such commissions, discounts or concessions may be
deemed to be underwriting discounts or commissions under the Securities Act of
1933. We will pay all reasonable expenses incident to the registration of the
shares being offered hereby other than any commissions and discounts of
underwriters, dealers or agents.
In order to comply with the securities laws of certain states, if
applicable, the shares being offered hereby must be sold in such jurisdictions
only through registered or licensed brokers or dealers. In addition, in certain
states such shares may not be 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 there has been compliance thereof.
<PAGE>
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Securities Exchange Act of 1934 may apply to
sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, we will make copies of this prospectus
available to the selling stockholder and have informed them of the need for
delivery of copies of this prospectus to purchasers at or prior to the time of
any sale of the shares offered hereby. The selling stockholders may indemnify
any broker-dealer that participates in transactions involving the sale of the
shares against certain liabilities, including liabilities arising under the
Securities Act of 1933.
At the time a particular offer of shares is made, if required, a
prospectus supplement will be distributed that will set forth the number of
shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
We have agreed to indemnify the selling stockholder and any person
controlling the selling stockholder against certain liabilities, including
liabilities under the Securities Act of 1933. The selling stockholders have
agreed to indemnify us and certain related persons against certain liabilities,
including liabilities under the Securities Act of 1933.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective for at least
ninety (90) days.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities
offered hereby will be passed upon for us by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California.
EXPERTS
The financial statements of Hello Direct, Inc. as of December 31, 1998
and 1997, and for each of the years in the three-year period ended December 31,
1998, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent auditors,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
<PAGE>
HELLO DIRECT, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM
NUMBER
- - ------
Item 14 OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except SEC fees are
estimates.
Registration Statement--SEC....................... $ 129
Accounting fees................................... $ 2,000
Legal fees........................................ $ 2,000
Miscellaneous..................................... $ 1,871
---------
Total............................................. $ 6,000
Item 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Hello Direct's Certificate of Incorporation limits, to the maximum
extent permitted by Delaware law, the personal liability of directors for
monetary damages for breach of their fiduciary duties as a director. Hello
Direct's Bylaws provide that Hello Direct shall indemnify its officers and
directors and may indemnify its employees and other agents to the fullest extent
permitted by Delaware law. Hello Direct has entered into indemnification
agreements with its officers and directors containing provisions which are in
some respects broader than the specific indemnification provisions contained in
the Delaware General Corporation Law. The indemnification agreements require
Hello Direct, among other things, to indemnify such officers and directors
against certain liabilities that may arise by reason of their status or service
as directors or officers (subject to certain exceptions) and to advance their
expenses incurred as a result of any proceeding against them as to which they
could be indemnified.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and is therefore unenforceable.
<PAGE>
Item 16 EXHIBITS.
Exhibit
Number
-------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati (Included in
Exhibit 5.1)
24.1 Power of Attorney (Included on signature page)
Item 17 UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned hereby undertakes that, for purposes of determining any
liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
as that time shall be deemed to be the initial bona fide offering thereof.
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 is 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.
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 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 SEC such indemnification
is against public policy as expressed in the 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.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, certifies that it has reasonable cause 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 San Jose, State of California, on the 4th day of
May, 1999.
HELLO DIRECT, INC.
By: /s/ E. ALEXANDER GLOVER
----------------------------
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints E. Alexander Glover and Dean Witter III,
jointly and severally, his or her attorneys-in-fact, each with the power of
substitution, for him or her in any and all capacities, to sign any amendment to
this Registration Statement on Form S-3 (including post-effective amendments or
any abbreviated registration statement and any amendments thereto filed pursuant
to Rule 462(b) increasing the number of securities for which registration is
sought), and to file the same, with exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his or her
substitute or substitutes, may 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 below by the following persons on May 4,
1999 in the capacities indicated.
SIGNATURE TITLE
- - ------------------------------- ----------------------------------
/s/ E. ALEXANDER GLOVER Chief Executive Officer (Principal
- - -------------------------------
(E. Alexander Glover) Executive Officer)
/s/ DEAN WITTER III Chief Financial Officer (Principal
- - -------------------------------
(Dean Witter III) Financial and Accounting Officer)
/s/ JOHN B. MUMFORD Chairman of the Board, Director
- - -------------------------------
(John B. Mumford)
/s/ GERALD L. BECKWITH Director
- - -------------------------------
(Gerald L. Beckwith)
/s/ JOHN W. COMBS Director
- - -------------------------------
(John W. Combs)
_______________________________ Director
(Steven Gomo)
/s/ WILLIAM P. SOUSA Director
- - -------------------------------
(William P. Sousa)
/s/ CHARLES E. VOLWILER Director
- - -------------------------------
(Charles E. Volwiler)
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number
- - ------
5.1 Opinion of Wilson Sonsini Goodrich & Rosati
23.1 Consent of KPMG LLP, independent auditors
23.2 Consent of Wilson Sonsini Goodrich & Rosati (Included in Exhibit 5.1)
24.1 Power of Attorney (Included on signature page)
<PAGE>
EXHIBIT 5.1
May 4, 1999
Hello Direct, Inc.
5893 Rue Ferrari
San Jose, CA 94138
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by
you with the Securities and Exchange Commission on or about May 4, 1999 (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of a total of 50,000 shares of your Common
Stock (the "Shares"), to be offered for sale by the Selling Stockholders named
therein. As legal counsel for Hello Direct, Inc., we have examined the
proceedings taken in connection with the sale of the Shares by the Selling
Stockholders in the manner set forth in the Registration Statement in the
Section entitled "Plan of Distribution." It is our opinion that the Shares are
legally and validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement, including the prospectus constituting a part thereof, and further
consent to the use of our name wherever it appears in the Registration Statement
and any amendments thereto.
Very truly yours,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ WILSON SONSINI GOODRICH & ROSATI
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Hello Direct, Inc.
We consent to incorporation by reference in the registration statement on Form
S-3 of Hello Direct, Inc. of our report dated January 22, 1999, relating to the
balance sheets of Hello Direct, Inc. as of December 31, 1998 and 1997, and the
related statements of operations, stockholders' equity, and cash flows for each
of the years in the three-year period ended December 31, 1998, which report
appears in the December 31, 1998, annual report on Form 10-K of Hello Direct,
Inc. and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/ KPMG LLP
Mountain View, California
May 3, 1999
