As filed with the Securities and Exchange Commission on July 8, 2003
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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SBE, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1517641
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2305 CAMINO RAMON, SUITE 200
SAN RAMON, CA 94583
(925) 355-2000
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
DAVID W. BRUNTON
CHIEF FINANCIAL OFFICER, VICE PRESIDENT, FINANCE AND SECRETARY
SBE, INC.
2305 CAMINO RAMON, SUITE 200
SAN RAMON, CA 94583
(925) 355-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
JODIE M. BOURDET
COOLEY GODWARD LLP
ONE MARITIME PLAZA, 20TH FLOOR
SAN FRANCISCO, CA 94111
(415) 693-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
================================================= ==================== ==================== ===================== =================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION FEE
SECURITIES TO BE REGISTERED REGISTERED PER SHARE (1) OFFERING PRICE (2)
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COMMON STOCK, par value $0.001 per share 700,000 shares $1.40 $980,000 $79.29
================================================= ==================== ==================== ===================== =================
(1) Estimated in accordance with Rule 457(c) of the Securities Act solely for
the purpose of computing the amount of registration fee based on the
average of the high and low prices of the registrant's Common Stock as
reported on the Nasdaq National Market on July 1, 2003.
(2) Calculated in accordance with Rule 457(o) of the Securities Act of 1933.
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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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS 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 IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE 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 IT IS NOT SOLICITING OFFERS TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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SUBJECT TO COMPLETION, DATED JULY 8, 2003
PROSPECTUS
700,000 Shares
SBE, Inc.
Common Stock
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This prospectus relates to the offer and sale, from time to time, of up to
500,000 shares of SBE, Inc. common stock held by the selling security holders
listed on page 8 of this prospectus, and up to 200,000 shares of common stock
issuable to them upon exercise of warrants. The selling security holders
purchased common stock and common stock warrants from SBE in a private placement
that closed in June 2003. SBE will not receive any proceeds from the sale of the
shares by the selling security holders.
For a description of the plan of distribution of the shares, see page 10 of
this prospectus.
Our common stock is listed on the Nasdaq SmallCap Market under the symbol
"SBEI." On July 3, 2003, the last reported sale price for our common stock was
$1.45 per share.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING
ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is July __, 2003.
TABLE OF CONTENTS
PROSPECTUS SUMMARY................................ 3
RISK FACTORS...................................... 4
FORWARD-LOOKING STATEMENTS........................ 7
USE OF PROCEEDS................................... 7
SELLING SECURITY HOLDERS.......................... 8
PLAN OF DISTRIBUTION............................... 8
WHERE YOU CAN FIND MORE INFORMATION................ 9
LEGAL MATTERS...................................... 10
EXPERTS............................................ 10
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YOU SHOULD RELY ONLY ON THE INFORMATION OR REPRESENTATIONS PROVIDED IN THIS
PROSPECTUS OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS. WE HAVE NOT
AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY DIFFERENT INFORMATION OR TO MAKE ANY
DIFFERENT REPRESENTATIONS IN CONNECTION WITH ANY OFFERING MADE BY THIS
PROSPECTUS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, IN ANY STATE WHERE THE OFFER OR SALE IS
PROHIBITED. NEITHER THE DELIVERY OF THIS PROSPECTUS, NOR ANY SALE MADE UNDER
THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, IMPLY THAT THE INFORMATION IN
THIS PROSPECTUS IS CORRECT AS OF ANY DATE AFTER THE DATE OF THIS PROSPECTUS.
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2
PROSPECTUS SUMMARY
The following is a summary of our business. It does not contain all the
information that may be important to you. You should carefully read the entire
prospectus, including the section entitled "Risk Factors" in this prospectus and
the financial statements and other information incorporated by reference in this
prospectus, for more information on our business and the risks involved in
investing in our stock.
OUR BUSINESS
SBE, Inc. designs, markets, sells and supports network communications controller
solutions for original equipment manufacturers in the global networking
marketplace. Our solutions enable both data communications and
telecommunications companies to rapidly deliver advanced networking products and
services in order to compete effectively in today's fast-evolving public
switched telephone network and Internet environment. Our products include wide
area network ("WAN") and local area network ("LAN") interface adapters and high
performance intelligent communications controllers for workstations, media
gateways, routers, internet access devices, home location registers and data
messaging applications. Our products are distributed worldwide through a direct
sales force, distributors, independent manufacturers' representatives and
value-added resellers.
We currently market, sell and support four lines of high-speed networking
products: HighWire(TM), WAN Adapters, LAN Adapters and VMEbus. All of these
products are sold primarily to original equipment manufacturers. These products
are often customized for a specific customer's application, and they support
applications in a broad spectrum of industrial and commercial markets. Markets
and application areas that our products serve include enterprise servers, data
storage, process control, medical imaging, computer-aided engineering/automated
test equipment, government/military defense systems and telecommunications
networks.
The market environment for our products is extremely competitive and we have
limited visibility into customer activity due to the downturn in the
communications equipment marketplace. In spite of this uncertain market, we have
been successful in selling and shipping our Adapter and HighWire products to 26
new customers during the first six months of fiscal 2003. One of our primary
sales goals is to diversify our customer base and at the same time provide
sources of revenues to fill the gap left by the HP end-of-life purchase of our
VME products. Since the fourth quarter of fiscal 2001 we have 17 new "design
wins" and have added a substantial number of new customers to our growing base
of customers. A design win is defined as a program with an OEM customer that
will generate at least $400,000 in recurring annual revenues typically within 12
to 18 months after the customer accepts and confirms the use of our product in
their platform. We believe the combination of new customers and design wins will
provide future revenue growth once there is a discernable recovery in the
communications equipment marketplace. A variety of risks such as schedule
delays, cancellations and changes in customer markets and economic conditions
can adversely affect a design win before or after production is reached. With
the current economic climate in the communications equipment marketplace, design
activity has slowed and reaching production volumes is proving to be elusive for
those products that have been designed. In these difficult economic times, poor
customer visibility is causing ordering delays. These factors often result in a
substantial portion of our revenues being derived from orders placed with in the
quarter and shipped in the final month of the quarter.
Our principal executive offices are located at 2305 Camino Ramon, Suite 200, San
Ramon, California, 94583, and our telephone number is (925) 355-2000. Our
Internet address is www.sbei.com. The information on our website is not
incorporated by reference into this prospectus.
RECENT DEVELOPMENT
In June 2003, we issued 500,000 shares of our common stock and warrants to
purchase 50,000 shares of common stock to investors for gross proceeds of
$550,000. The placement agent in the transaction and its associates received a
cash commission of $33,000 and warrants to purchase 150,000 shares of common
stock. The placement agent also received a non-refundable retainer of $15,000
for the purpose of reimbursing the placement agent's expenses in connection with
the financing. The net proceeds raised will be used to pursue potential
acquisitions and for general corporate purposes.
3
RISK FACTORS
An investment in our common stock involves a high degree of risk. We operate in
a dynamic and rapidly changing environment that involves numerous risks and
uncertainties. You should carefully consider the factors described below in
addition to other information contained in this prospectus or incorporated by
reference into this prospectus before purchasing our shares. Additional risks
and uncertainties not presently known to us or that we currently see as
immaterial may also impair our business operations.
RISKS RELATED TO OUR BUSINESS
WE DEPEND UPON A SMALL NUMBER OF OEM CUSTOMERS. THE LOSS OF ANY OF THEM, OR
THEIR FAILURE TO SELL THEIR PRODUCTS, WOULD LIMIT OUR ABILITY TO GENERATE
REVENUES.
In fiscal 2002 and the first two quarters of fiscal 2003, most of our sales were
derived from a limited number of original equipment manufacturers (OEMs). In the
first two quarters of fiscal 2003 and fiscal 2002, 2001 and 2000, sales of VME
products to HP accounted for 49%, 30%, 34% and 66%, respectively, of our net
sales. A substantial portion of such sales was attributable to sales of VME
products pursuant to a long-term supply agreement with HP. We shipped $1.6
million of VME products to HP over the first two quarters of fiscal 2003
pursuant to an end of life purchase order. We do not expect sales of VME
products to HP to be a substantial portion of our revenues after fiscal 2003 and
are dependent on our ability to sell products to other customer in sufficient
quantities to replace the revenues previously generated by sales of VME products
to HP.
Orders by our OEM customers are affected by factors such as new product
introductions, product life cycles, and inventory levels, manufacturing
strategy, contract awards, competitive conditions and general economic
conditions. Our sales to any single OEM customer are also subject to significant
variability from quarter to quarter. Such fluctuations may have a material
adverse effect on our operating results. A significant reduction in orders from
any of our OEM customers, particularly HP, Nortel and Lockheed Martin, would
have a material adverse effect on our operating results, financial condition and
cash flows. In addition, we anticipate a significant portion of future sales
will be dependent on a few new OEM customers, and there can be no assurance that
we will become a qualified supplier with new OEM customers or that we will
remain a qualified supplier with existing OEM customers.
WE HAVE BEEN GENERATING LOSSES. OUR FUTURE CAPITAL NEEDS MAY EXCEED OUR PROFITS
AND OUR ABILITY TO RAISE CAPITAL.
We incurred net losses of $1.7 million in the fiscal year ended October 31, 2002
and $9.9 million in the fiscal year ended October 31, 2001. Our most
recently-completed fiscal quarter, we had a net profit of only $51,000. The
development and marketing of our products is capital-intensive, and has been
constrained in recent periods due to our lack of profitability. Our former
auditors expressed in their audit opinion, which is included in our most recent
annual report on Form 10-K, substantial doubt about our ability to continue as a
going concern. While we believe that our existing cash balances and our
anticipated cash flow from operations will satisfy our working capital needs for
the next 12 months, we cannot assure you that this will be the case, or our
current auditors, BDO Seidman LLP, will not include a similar "going concern"
qualification in future reports. Further declines in our sales or a failure to
keep expenses in line with revenues could require us to seek additional
financing in fiscal 2003 or the future. In addition, should we experience a
significant growth in customer orders, we may be required to seek additional
capital to meet our working capital needs. There can be no assurance that
additional financing, if required, will be available on reasonable terms or at
all. To the extent that additional capital is raised through the sale of
additional equity or convertible debt securities, the issuance of such
securities could result in substantial dilution to our stockholders.
IF WE FAIL TO DEVELOP AND PRODUCT NEW HIGHWIRE AND ADAPTER PRODUCTS, WE MAY LOSE
SALES AND OUR REPUTATION MAY BE HARMED.
Since late 1998, we have focused a significant portion of our research and
development, marketing and sales efforts on HighWire and Adapter products. The
success of these products is dependent on several factors, including timely
completion of new product designs, achievement of acceptable manufacturing
quality and yields, introduction of competitive products by other companies and
market acceptance of our products. If the HighWire and Adapter products or other
new products developed by us do not gain market acceptance, our business,
operating results, financial condition and cash flows would be materially
adversely affected.
4
THE COMMUNICATIONS PRODUCTS MARKET IS INTENSELY COMPETITIVE, AND OUR FAILURE TO
COMPETE EFFECTIVELY COULD REDUCE OUR REVENUES AND MARGINS.
We compete directly with traditional vendors of terminal servers, modems, remote
control software, and terminal emulation software and application-specific
communications solutions. We also compete with suppliers of routers, hubs,
network interface cards and other data communications products. In the future,
we expect competition from companies offering client/server access solutions
based on emerging technologies such as switched digital telephone services. In
addition, we may encounter increased competition from operating system and
network operating system vendors to the extent such vendors include full
communications capabilities in their products. We may also encounter future
competition from telephony service providers (such as AT&T or the regional Bell
operating companies) that may offer communications services through their
telephone networks.
Increased competition with respect to any of our products could result in price
reductions and loss of market share, which would adversely affect our business,
operating results, financial condition and cash flows. Many of our current and
potential competitors have greater financial, marketing, technical and other
resources than we do. There can be no assurance that we will be able to compete
successfully with our existing competitors or will be able to compete
successfully with new competitors.
OUR OPERATING RESULTS IN FUTURE PERIODS ARE LIKELY TO FLUCTUATE SIGNIFICANTLY
AND MAY FAIL TO MEET THE EXPECTATIONS OF SECURITIES ANALYSTS OR INVESTORS,
CAUSING OUR STOCK PRICE TO FALL.
Our quarterly operating results have fluctuated significantly in the past and
are likely to fluctuate significantly in the future due to several factors, some
of which are outside our control, including timing of significant orders from
OEM customers, fluctuating market demand for, and declines in the average
selling prices of, our products, delays in the introduction of our new products,
competitive product introductions, the mix of products sold, changes in our
distribution network, the failure to anticipate changing customer product
requirements, the cost and availability of components and general economic
conditions. We generally do not operate with a significant order backlog, and a
substantial portion of our revenues in any quarter is derived from orders booked
in that quarter. Accordingly, our sales expectations are based almost entirely
on our internal estimates of future demand and not on firm customer orders.
Due to the adverse economic conditions in the telecommunications industry, our
OEM telecommunications customers may hold excess inventory of our products. A
result of the economic downturn is that certain of our customers have cancelled
or delayed many of their new design projects and new product rollouts that
included our products. Due to the current economic uncertainty, our customers
now typically require a "just-in-time" ordering and delivery cycle where they
will place a purchase order with us after they receive an order from their
customer. This "just-in-time" inventory purchase cycle by our customers has made
forecasting of our future sales volumes very difficult.
Based on the foregoing, we believe that quarterly operating results are likely
to vary significantly in the future and that period-to-period comparisons of our
results of operations are not necessarily meaningful and should not be relied
upon as indications of future performance. Further, it is likely that in some
future quarter our revenues or operating results will be below the expectations
of public market analysts and investors. In such event, the price of our common
stock is likely to fall.
IF WE WERE UNABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGES THAT
CHARACTERIZE OUR INDUSTRY, OUR BUSINESS WOULD SUFFER.
The markets for our products are characterized by rapidly changing technologies,
evolving industry standards and frequent new product introductions. Our future
success will depend on our ability to enhance our existing products and to
introduce new products and features to meet and adapt to changing customer
requirements and emerging technologies such as Frame Relay, DSL ("Digital
Subscriber Line"), ATM ("Asynchronous Transfer Mode"), VoIP ("Voice over
Internet Protocol") and 3G Wireless ("Third Generation Wireless Services").
There can be no assurance that we will be successful in identifying, developing,
manufacturing and marketing new products or enhancing our existing products. In
addition, there can be no assurance that services, products or technologies
developed by others will not render our products noncompetitive or obsolete.
WE DEPEND ON OUR KEY PERSONNEL. IF WE WERE UNABLE TO RETAIN OUR CURRENT
PERSONNEL AND HIRE ADDITIONAL QUALIFIED PERSONNEL AS NEEDED, OUR BUSINESS WOULD
BE HARMED.
5
We are highly dependent on the technical, management, marketing and sales skills
of a limited number of key employees. We do not have employment agreements with,
or life insurance on the lives of, any of our key employees. The loss of the
services of any key employees could adversely affect our business and operating
results. Our future success will depend on our ability to continue to attract
and retain highly talented personnel to the extent our business grows.
Competition for qualified personnel in the networking industry, and in the San
Francisco Bay Area, is intense. There can be no assurance that we will be
successful in retaining our key employees or that we can attract or retain
additional skilled personnel as required.
BECAUSE OF OUR DEPENDENCE ON SINGLE SUPPLIERS FOR SOME COMPONENTS, WE MAY BE
UNABLE TO OBTAIN AN ADEQUATE SUPPLY OF SUCH COMPONENTS, OR WE MAY BE REQUIRED TO
PAY HIGHER PRICES OR TO PURCHASE COMPONENTS OF LESSER QUALITY.
The chipsets used in most of our products are currently available only from
Motorola. In addition, certain other components are currently available only
from single suppliers. The inability to obtain sufficient key components as
required, or to develop alternative sources if and as required in the future,
could result in delays or reductions in product shipments or margins that, in
turn, would have a material adverse effect on our business, operating results,
financial condition and cash flows.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WHICH COULD REDUCE ANY
COMPETITIVE ADVANTAGE WE HAVE.
Although we believe that our future success will depend primarily on continuing
innovation, sales, marketing and technical expertise, the quality of product
support and customer relations, we must also protect the proprietary technology
contained in our products. We do not currently hold any patents and rely on a
combination of copyright, trademark, trade secret laws and contractual
provisions to establish and protect proprietary rights in our products. There
can be no assurance that steps taken by us in this regard will be adequate to
deter misappropriation or independent third-party development of our technology.
Although we believe that our products and technology do not infringe on the
proprietary rights of others, there can be no assurance that third parties will
not assert infringement claims against us.
RISKS ASSOCIATED WITH OUR COMMON STOCK
OUR COMMON STOCK IS AT RISK FOR DELISTING FROM THE NASDAQ SMALLCAP MARKET. IF IT
IS DELISTED, OUR STOCK PRICE AND YOUR LIQUIDITY MAY BE IMPACTED.
Our common stock is currently listed on the Nasdaq SmallCap Market. Nasdaq has
requirements that a company must meet in order to remain listed on the Nasdaq
SmallCap Market. These requirements include maintaining a minimum closing bid
price of $1.00 and minimum stockholders' equity of $2.5 million. The closing bid
price for our common stock has had periods of time when it traded below $1.00
for more than 30 consecutive trading days. Our stockholders' equity as of April
30, 2003 was $3.9 million. We currently meet all the minimum continued listing
requirements for the Nasdaq SmallCap Market.
If we fail to maintain the standards necessary to be quoted on the Nasdaq
SmallCap Market and our common stock is delisted, trading in our common stock
would be conducted on the OTC Bulletin Board as long as we continue to file
reports required by the Securities and Exchange Commission. The OTC Bulletin
Board is generally considered to be a less efficient market than the Nasdaq
SmallCap Market, and our stock price, as well as the liquidity of our Common
Stock, may be adversely impacted as a result.
THE MARKET PRICE OF OUR COMMON STOCK IS LIKELY TO CONTINUE TO BE VOLATILE. YOU
MAY NOT BE ABLE TO SELL YOUR SHARES AT OR ABOVE THE PRICE AT WHICH YOU PURCHASED
SUCH SHARES.
The trading price of our common stock is subject to wide fluctuations in
response to quarter-to-quarter fluctuations in operating results, the failure to
meet analyst estimates, announcements of technological innovations or new
products by us or our competitors, general conditions in the computer and
communications industries and other events or factors. In addition, stock
markets have experienced extreme price and trading volume volatility in recent
years. This volatility has had a substantial effect on the market prices of
securities of many high technology companies for reasons frequently unrelated to
the operating performance of the specific companies. These broad market
fluctuations may adversely affect the market price of our common stock.
6
OUR CERTIFICATE OF INCORPORATIONS AND BYLAWS AND THE DELAWARE GENERAL
CORPORATION LAW CONTAIN PROVISIONS THAT COULD DELAY OR PREVENT A CHANGE IN
CONTROL.
Our board of directors has the authority to issue up to 2,000,000 shares of
preferred stock and to determine the price, rights, preferences and privileges
of those shares without any further vote or action by the stockholders. The
rights of the holders of common stock will be subject to, and may be materially
adversely affected by, the rights of the holders of any preferred stock that may
be issued in the future. The issuance of preferred stock could have the effect
of making it more difficult for a third party to acquire a majority of our
outstanding voting stock. Furthermore, certain other provisions of our
certificate of incorporation and bylaws may have the effect of delaying or
preventing changes in control or management, which could adversely affect the
market price of our common stock. In addition, we are subject to the provisions
of Section 203 of the Delaware General Corporation Law, an anti-takeover law.
FORWARD-LOOKING STATEMENTS
This prospectus contains forward looking statements, which include statements
based on our current expectations, assumptions, estimates and projections about
us and our industry, including statements about:
- our expectation regarding sales to HP in fiscal 2003;
- the belief that the market for data and telecommunications controller
products is slowly recovering from an economic downturn;
- the adequacy of anticipated sources of cash and planned capital
expenditures;
- our expectations regarding quarterly operating expense levels and gross
profit for fiscal 2003;
- trends or expectations regarding our operations;
- the concentration of our customers;
- delays in testing and introducing new products;
- changes in product demand;
- rapid technology changes;
- the highly competitive market in which we operate; - the pricing and
availability of equipment, materials and inventories;
- the financial stability of our contract manufacturers;
- various inventory risks due to market conditions;
- delays or cancellation of customer orders; and
- the entry of new well-capitalized competitors into our markets.
We use words such as "believes," "anticipates," "expects," "intends," "plans"
and similar expressions to identify forward-looking statements, but these are
not the exclusive means of identifying these statements. Actual results could
differ materially from those projected in any forward-looking statements for the
reasons detailed in "Risk Factors" or elsewhere in this prospectus. Before you
decide to invest in our common stock, you should be aware that if any of the
events described in the "Risk Factors" section and elsewhere in this prospectus
occur, they could have an adverse affect on our business. We assume no
obligation to update any forward-looking statement.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares by the
selling security holders. All proceeds from the sale of the shares will be for
the accounts of the selling security holders.
7
SELLING SECURITY HOLDERS
We are registering for resale shares of our common stock that have been sold to
the selling security holders identified below or that may be issued upon
exercise of the warrants held by the selling security holders. Pursuant to a
securities purchase agreement dated as of June 27, 2003 among us and certain of
the selling security holders, we issued and sold, for an aggregate purchase
price of $550,000:
o an aggregate of 500,000 shares of our common stock; and
o warrants to purchase an aggregate of 50,000 shares of our common stock
bearing an exercise price of $1.50 per share, which warrants are
exercisable at the election of the selling security holders prior to
June 27, 2008.
In connection with the issuance described above, associates of the placement
agent in the transaction, Puglisi & Co., received warrants to purchase 150,000
shares of our common stock, one third of which bear an exercise price of $1.50,
one third of which bear an exercise price of $1.75 and one third of which bear
an exercise price of $2.00. These warrants also have a five-year term, and the
shares issuable upon exercise are being registered for resale hereunder.
The table below presents information as of July 3, 2003 regarding the selling
security holders and the shares that they may offer and sell from time to time
under this prospectus. The shares of common stock covered, as to their resale,
under this prospectus include shares of common stock sold at the financing and
issuable upon exercise of warrants.
This table is prepared based in part on information supplied to us by the listed
selling security holders. The table assumes that the selling security holders
sell all of the shares offered under this prospectus. However, because the
selling security holders may offer from time to time all or some of their shares
under this prospectus, or in another permitted manner, we cannot assure you as
to the actual number of shares that will be sold by the selling security holders
or that will be held by the selling security holders after completion of the
sales. Except as otherwise disclosed below, the selling security holders have
not, or within the past three years had any position, office or other material
relationship with us. Information concerning the security holders may change
from time to time and changed information will be presented in a supplement to
this prospectus if and when necessary and required.
SHARES OWNED PRIOR TO NUMBER OF SHARES OWNED AFTER
OFFERING(1) SHARES BEING OFFERING
SECURITY HOLDERS NUMBER PERCENT OFFERED NUMBER PERCENT
---------------- ------ ------- ------- ------ -------
Jeffrey J. Puglisi (2)
399 Park Avenue, 37th Floor
New York, NY 10022 270,000 5.7% 270,000 0 0
Richard Schottenfeld (3)
399 Park Avenue, 37th Floor
New York, NY 10022 260,000 5.5% 260,000 0 0
Willam Austin Lewis IV (4) 225,900 4.8% 50,000 175,900 3.7%
Puglisi Capital Partners, L.P. (5) 220,000 4.7% 220,000 0 0
Schottenfeld Qualified Associates, L.P. (6) 220,000 4.7% 220,000 0 0
David Koch (7) 37,500 * 37,500 0 0
Gina Storelli (8) 27,500 * 27,500 0 0
Craig Bass (8) 27,500 * 27,500 0 0
Christopher DiVecchio (8) 27,500 * 27,500 0 0
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* Less than 1%.
(1) The shares of common stock owned prior to the offering equals the sum of
(a) shares of common stock and (b) shares of common stock issuable upon
exercise of warrants. Percentages are based on 4,682,417 shares of our
common stock that were outstanding (on an as-converted to common stock
basis) on July 3, 2003. In calculating the percentage for each selling
security holder, the shares represented by item (b) above are included in
the denominator of the shares outstanding for that selling security holder
but are not included in the denominator for any other person.
8
(2) Includes warrants to purchase 50,000 shares of common stock held by Mr.
Puglisi, 200,000 shares of common stock held by Puglisi Capital Partners,
L.P. and warrants to purchase 20,000 shares of common stock held by Puglisi
Capital Partners, L.P. Mr. Puglisi, as managing member of the general
partner of Puglisi Capital Partners L.P., is deemed to have voting and
dispositive control over the shares held by Puglisi Capital Partners, L.P.
See footnote (5).
(3) Includes warrants to purchase 40,000 shares of common stock held by Mr.
Schottenfeld, 200,000 shares of common stock held by Schottenfeld Qualified
Associates L.P. and warrants to purchase 20,000 shares of common stock
held by Schottenfeld Qualified Associates L.P. Mr. Schottenfeld, as
managing member of the general partner of Schottenfeld Qualified
Associates, L.P., is deemed to have voting and dispositive control over the
shares held by Schottenfeld Qualified Associates, L.P. See footnote (6).
(4) Includes warrants to purchase 50,000 shares of common stock.
(5) Includes warrants to purchase 20,000 shares of common stock. See footnote
(2).
(6) Includes warrants to purchase 20,000 shares of common stock. See footnote
(3).
(7) Includes warrants to purchase 12,500 shares of common stock.
(8) Includes warrants to purchase 2,500 shares of common stock.
9
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling security
holders in one or more transactions at fixed prices, at market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. As used in this prospectus, "selling security holders" includes donees,
pledgees, transferees and other successors in interest selling shares received
from the selling security holders after the date of this prospectus as a gift,
pledge, partnership distribution or other non-sale transfer. Upon receiving
notice from the selling security holders that a donee, pledgee, transferee or
other successor in interest intends to sell more than 500 shares, we will file a
supplement to this prospectus. The selling security holders may offer their
shares of common stock:
- on any national securities exchange or quotation service on which the
common stock may be listed or quoted at the time of sale, including the
Nasdaq SmallCap Market;
- in the over-the-counter market;
- in private transactions;
- through options;
- by pledge to secure debts and other obligations; or
- a combination of any of the above transactions.
The shares of common stock described in this prospectus may be sold from time to
time directly by the selling security holders. Alternatively, the selling
security holders may from time to time offer shares of common stock to or
through underwriters, broker/dealers or agents. The selling security holders and
any underwriters, broker/dealers or agents that participate in the distribution
of the shares of common stock may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933. Any profits on the resale of shares of
common stock and any compensation received by any underwriter, broker/dealer or
agent may be deemed to be underwriting discounts and commissions under the
Securities Act of 1933. We have agreed to indemnify the selling security holders
against certain liabilities, including liabilities arising under the Securities
Act of 1933. The selling security holders may agree to indemnify any agent,
dealer or broker-dealer that participates in the sale of shares of common stock
described in this prospectus against certain liabilities, including liabilities
arising under the Securities Act of 1933.
Any shares covered by this prospectus that qualify for sale pursuant to Rule 144
under the Securities Act of 1933 may be sold under Rule 144 rather than pursuant
to this prospectus. The selling security holders may elect to not sell the
shares they hold. The selling security holders may transfer, devise or gift such
shares by other means not described in this prospectus. To comply with the
securities laws of certain jurisdictions, the common stock must be offered or
sold only through registered or licensed brokers or dealers. In addition, in
certain jurisdictions, the shares of common stock may not be offered or sold
unless they have been registered or qualified for sale or an exemption is
available and complied with.
Under the Securities Exchange Act of 1934, any person engaged in a distribution
of the common stock 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, each selling security holder and any other person
participating in a distribution will be subject to the Securities Exchange Act
of 1934, which may limit the timing of purchases and sales of common stock by
the selling security holder 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.
We will bear all costs, expenses and fees in connection with the registration of
the shares. The selling security holders will pay all commissions and discounts,
if any, associated with the sale of the shares.
10
WHERE YOU CAN FIND MORE INFORMATION
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT ON FORM S-3 WE FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION. YOU SHOULD RELY ONLY ON THE INFORMATION
CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE. WE HAVE NOT
AUTHORIZED ANYONE ELSE 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 IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT PAGE OF THIS
PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS OR ANY SALE OF
COMMON STOCK.
We are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended, and in accordance therewith, file reports, proxy statements
and other information with the Securities and Exchange Commission. Such reports,
proxy statements and other information filed by us may be inspected and copied
at the Commission's Public Reference Room located at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Copies of such material also can be obtained from the
Public Reference Room of the Commission at 450 Fifth Street, N.W, Washington,
D.C. 20549, at prescribed rates. Please call the Commission at 1-800-SEC-0330
for more information about the operation of the public reference rooms. The
Commission also makes electronic filings publicly available on the Internet. The
Commission's Internet address is http://www.sec.gov. The Commission's web site
also contains reports, proxy and information statements and other information
regarding us that has been filed with the Commission. Our common stock is quoted
on the Nasdaq National Market. Reports, proxy statements and other information
concerning us may be inspected at the National Association of Securities
Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
This prospectus constitutes a part of a registration statement on Form S-3 filed
by us with the Commission under the Securities Act of 1933, as amended,
including amendments thereto relating to the common stock offered hereby. This
prospectus does not contain all of the information set forth in the registration
statement.
The Commission allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus, and information that we file later with
the Commission will automatically update and supersede this information.
Further, all filings we make under the Securities Exchange Act of 1934 after the
date of the initial registration statement and prior to effectiveness of the
registration statement shall be deemed to be incorporated by reference into this
prospectus. We incorporate by reference the documents listed below and any
future filings we will make with the Commission under Section 13(a), 13(c), 14
or 15(d) of the Securities Exchange Act of 1934:
(i) Our Annual Report on Form 10-K for the fiscal year ended
October 31, 2002, including all material incorporated by
reference therein;
(ii) Our Quarterly Report on Form 10-Q for the quarter ended
January 31, 2003;
(iii) Our Quarterly Report on Form 10-Q for the quarter ended April
30, 2003;
(iv) Our Current Report on Form 8-K dated April 22, 2003,
announcing a change in our independent accountants; and
(v) The description of the common stock contained in our
Registration Statement on Form 8-A.
We will provide without charge to each person, including any beneficial owner,
to whom this prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the documents that have been incorporated by
reference in this prospectus (not including exhibits to such documents, unless
such exhibits are specifically incorporated by reference in this prospectus or
into such documents). Such request may be directed to: SBE, Inc., 2305 Camino
Ramon, Suite 200, San Ramon, California, 95483, Attention: Chief Financial
Officer, telephone (925) 355-2000.
LEGAL MATTERS
For the purpose of this offering, Cooley Godward LLP, San Francisco, California,
is giving an opinion as to the validity of the common stock offered by this
prospectus.
11
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K for the year ended October 31, 2002 have been so
incorporated in reliance on the report (which contains an explanatory paragraph
relating to the ability of SBE, Inc. to continue as a going concern, as
described in Note 1 to the financial statements) of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM: 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth all expenses, other than the underwriting
discounts and commissions, payable by the registrant in connection with the sale
of the shares of common stock being registered. All the amounts shown are
estimates except for the registration fee.
Securities and Exchange Commission registration fee .............. $ 80
Nasdaq SmallCap Market additional shares listing fee ............. $14,000
Legal fees and expenses .......................................... $ 5,000
Accounting fees and expenses ..................................... $ 7,500
Miscellaneous .................................................... $ 750
-------
Total .......................................... $27,330
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
As permitted by Section 145 of the Delaware General Corporation Law, our Bylaws
provide that (i) we are required to indemnify our directors and executive
officers to the fullest extent permitted by the Delaware General Corporation
Law, (ii) we may, in our discretion, indemnify other officers, employees and
agents as set forth in the Delaware General Corporation Law, (iii) to the
fullest extent permitted by the Delaware General Corporation Law, we are
required to advance all expenses incurred by our directors and executive
officers in connection with a legal proceeding (subject to certain exceptions),
(iv) the rights conferred in our Bylaws are not exclusive, (v) we are authorized
to enter into indemnification agreements with our directors, officers, employees
and agents and (vi) we may not retroactively amend the Bylaws provisions
relating to indemnity.
We have entered into agreements with our directors and officers that require us
to indemnify such persons against expenses, judgments, fines, settlements and
other amounts that such person becomes legally obligated to pay (including
expenses of a derivative action) in connection with any proceeding, whether
actual or threatened, to which any such person may be made a party by reason of
the fact that such person is or was our director or officer or any of our
affiliated enterprises. Our obligation to indemnify our officers and directors
is subject to certain limitations set forth in the indemnification agreements.
The indemnification agreements also set forth certain procedures that will apply
in the event of a claim for indemnification thereunder.
The selling security holders have entered into an agreement with us whereby they
jointly and severally agree, to the extent permitted by law, to indemnify and
hold harmless SBE, each officer of SBE who signs this registration statement and
each director of SBE, against all losses, claims, damages or liabilities, joint
or several, to which SBE or such officer or director may become subject under
the 1933 Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
this registration statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or exhibit thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading in each case,
and will reimburse SBE and each such officer and director for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that the selling security holders will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with information
pertaining to such selling security holders, as such, furnished in writing to
SBE by or on behalf of a selling security holder specifically for use in such
registration statement or prospectus, and provided, further, however, that the
liability of the selling security holders hereunder shall be limited to the
gross proceeds (net of the amount of any damages the selling security holders
have otherwise been required to pay by reason of such untrue statement or
omission or alleged untrue statement or omission) received by the selling
security holders from the sale of the common stock covered by this registration
statement. The agreement also sets forth certain procedures that will apply in
the event of a claim for indemnification thereunder. ITEM 16. EXHIBITS AND
FINANCIAL STATEMENT SCHEDULES
II-1
(a) Exhibits
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
4.1 Securities Purchase Agreement, dated as of July 27, 2003, by
and among the Company and the purchasers named therein (the
"Purchasers")
4.2 Form of warrant issued to the Purchasers and to associates of
Puglisi & Co. ($1.50 exercise price)
4.3 Form of warrant issued to associates of Puglisi & Co. ($1.75
and $2.00 exercise price)
5.1 Opinion of Cooley Godward LLP
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Cooley Godward LLP included in Exhibit 5.1
24.1 Power of Attorney. See signature page.
ITEM 17. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the provisions described in Item 15 above, the registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by registrant
of expenses incurred or paid by a director, officer or controlling person of
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, 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 Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement;
(iii) To include any material information with respect to the
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
II-2
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Ramon, State of California, on the 7th day of
July, 2003.
SBE, INC.
By: /s/ David W. Brunton
-----------------------------------------
David W. Brunton
Chief Financial Officer, Vice President,
Finance and Secretary
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints jointly and severally, William B. Heye and
David W. Brunton, and each or any one of them, his or her true and lawful
attorney-in-fact and agent, each with the full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
way and all capacities, to sign any and all amendments (including post-effective
amendments and registration statements filed pursuant to Rule 462) to this
registration statement and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he might or could do in person, hereby ratifying and confirming all
that each said attorney-in-fact, or his 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 in the capacities and
on the dates indicated.
NAME TITLE DATE
---- ----- ----
/s/ Raimon L. Conlisk Chairman of the Board July 7, 2003
--------------------------------------------
Raimon L. Conlisk
President, Chief Executive Officer
/s/ William B. Heye and Director (principal executive
-------------------------------------------- officer) July 7, 2003
William B. Heye
Chief Financial Officer, Vice
President, Finance and Secretary
/s/ David W. Brunton (principal financial and accounting
-------------------------------------------- officer) July 7, 2003
David W. Brunton
/s/ Randall L-W. Caudill Director July 7, 2003
--------------------------------------------
Randall L-W. Caudill
/s/ Ronald J. Ritchie Director July 7, 2003
--------------------------------------------
Ronald J. Ritchie
II-4
INDEX OF EXHIBITS
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT PAGE NUMBER
------ ----------------------- -----------
4.1 Securities Purchase Agreement, dated as of July 27, 2003, by
and among the Company and the purchasers named therein (the
"Purchasers")
4.2 Form of warrant issued to the Purchasers and to associates of
Puglisi & Co. ($1.50 exercise price)
4.3 Form of warrant issued to associates of Puglisi & Co. ($1.75
and $2.00 exercise price)
5.1 Opinion of Cooley Godward LLP
23.1 Consent of PricewaterhouseCoopers LLP, Independent Accountants
23.2 Consent of Cooley Godward LLP included in Exhibit 5.1 --
24.1 Power of Attorney. See signature page. --
II-5