AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1999
REGISTRATION NO. 333-73333
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THRUSTMASTER, INC.
(Exact name of registrant as specified in its charter)
OREGON 93-1040330
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
SUITE 400, 7175 N.W. EVERGREEN PARKWAY
HILLSBORO, OREGON 97124
(503) 615-3200
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
FRANK G. HAUSMANN, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
THRUSTMASTER, INC.
SUITE 400, 7175 N.W. EVERGREEN PARKWAY
HILLSBORO, OREGON 97124
(503) 615-3200
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
PATRICK J. SIMPSON
DAVID S. MATHESON
PERKINS COIE LLP
SUITE 1500,
1211 S.W. FIFTH AVENUE
PORTLAND, OREGON 97204-3715
(503) 727-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THIS 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 of 1933, 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 of 1933, 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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THE REGISTRANT HEREBY UNDERTAKES TO AMEND 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 THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED JUNE 3, 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDERS 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 IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE
OFFER OF SALE IS NOT PERMITTED.
169,222 SHARES
THRUSTMASTER, INC.
COMMON STOCK
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The following shareholders of ThrustMaster or their successors may offer for
sale up to 169,222 shares of common stock at various times: Strong River
Investments, Inc. and RAM Capital Resources, LLC.
ThrustMaster will not receive any proceeds from the sale of the shares by
the selling shareholders.
Our common stock trades on the Nasdaq National Market under the symbol
"TMSR."
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is , 1999.
TABLE OF CONTENTS
ThrustMaster, Inc...................................................................... 2
Risk Factors........................................................................... 2
Because Period-to-Period Fluctuations in Our Revenue Are Difficult to Predict, You
Should Not Rely on Revenue For a Given Period as an Indicator of Revenue For Future
Periods............................................................................ 2
Although We Do Not have Firm Sales Forecasts, We Must Plan Our Expenditures Far In
Advance, Which May Magnify Revenue Shortfalls in Any Given Period.................. 2
Seasonal Fluctuations in Our Operating Results May Result in Volatility in the Market
Price of Our Stock................................................................. 3
Our Products Have Short Life Cycles, and We May Not be Able to Successfully Introduce
New Products Before Existing Cycles End............................................ 3
Shorter Than Expected Product Life Cycles May Result in Depressed Revenues and Gross
Margins in Affected Periods........................................................ 3
The Intense Competition in Our Markets May Lead to Reduced Sales of Our Products and
Reduced Profits.................................................................... 3
We May Not be Able to Develop Acceptable New Products or Enhancements to Our Existing
Products at the Rate Required by Our Rapidly Changing Markets, Which Could
Adversely Affect Us................................................................ 3
Prices for Products in Our Markets are Declining, Which May Reduce Our Revenue and
Gross Margins...................................................................... 4
Our Dependence Upon Offshore Manufacturing Contractors and Lack of Direct Control
Over Production Could Result in Product Delays and Quality Control Problems........ 4
Because We Depend on a Single Offshore Vendor and Its Production Facilities, Any
Disruption of That Vendor's Ability to Produce Our Products Would Adversely Affect
Us................................................................................. 4
The Loss of Any Key Customers Could Result in a Significant Loss of Revenue in a
Given Period....................................................................... 4
The Loss of Key Personnel Could Adversely Affect Our Business and Decrease the Value
of Your Investment................................................................. 4
Our Failure to Attract and Retain Additional Personnel Could Adversely Affect Our
Business and Decrease the Value of Your Investment................................. 5
The Strain that Changes in Our Growth Rate Place Upon Our Systems and Management
Resources May Adversely Affect Our Business and Decrease the Value of Your
Investment......................................................................... 5
We May Need to Access Additional Funds to Finance Ongoing Operations, Which May
Require Us to Commit Significant Amounts of Capital to Debt Service and Could
Result in Dilution to Our Shareholders............................................. 5
Our International Sales are Significant and Could Decrease for Reasons Additional to
Those Affecting Domestic Sales..................................................... 5
We May be Unable to Protect Our Intellectual Property, Which Could Result in
Competitors Obtaining Access to Proprietary Information............................ 6
Others May Bring Intellectual Property Infringement Claims Against Us, Which Could
Require Significant Resources to Defend and Could Lead to Restrictions on Our
Current Operations................................................................. 6
Product Defects Could Lead to Losses of Customers.................................... 7
We Depend on a Small Group of Suppliers for Critical Components, and an Increase in
Price or an Interruption or Delay in the Supply of these Components Could Adversely
Affect Us.......................................................................... 7
Changes in our Distribution Network Could Adversely Affect Us........................ 7
Slow Demand and Abundant Supplies of Products May Lead to Significant Price
Reductions, Which Could Reduce Our Revenue and Gross Margins....................... 8
We May Be Required to Issue Additional Shares to Recent Investors Without Receiving
Additional Payment, Which Could Result in Dilution to Our Shareholders............. 8
Sales of Our Common Stock May Reduce the Market Price of Our Stock................... 8
The Market Price for Our Common Stock, Like Other Technology Stocks, May be
Volatile........................................................................... 9
Our Anti-Takeover Provisions and Preferred Stock May Reduce the Market Price of Our
Common Stock....................................................................... 9
Some of Our Products May Not be Year 2000 Compliant, Which Could Result in Customer
Dissatisfaction, Claims Against Us or Business Interruptions....................... 9
Forward-Looking Information............................................................ 9
How To Obtain More Information......................................................... 10
Selling Shareholders................................................................... 11
Plan of Distribution................................................................... 13
Validity of Common Stock............................................................... 14
Experts................................................................................ 14
THRUSTMASTER, INC.
We develop and market realistic, high quality game controllers and software
solutions for the home personal computer and video console markets. The
ThrustMaster-Registered Trademark- brand name is recognized for quality, value,
durability and ease of use. Our products enhance the enjoyment of the personal
computer, video game, and Internet entertainment experience and appeal to a wide
variety of users, from occasional game players to avid enthusiasts. Our hardware
products include racing wheels, joysticks, game pads and flight simulation
controllers. These products are available in over 5,000 retail outlets in North
America and Europe. Our software product, called Talk n' Play, is an Internet
communications solution that allows up to four people in separate locations to
simultaneously talk and play games over the Internet.
We were incorporated in Oregon in 1990. Our principal executive offices are
located at Suite 400, 7175 N.W. Evergreen Parkway, Hillsboro, Oregon 97124. Our
main telephone number is (503) 615-3200.
RISK FACTORS
Before investing in our common stock, you should consider carefully the
following factors, as well as the information contained in the rest of this
prospectus and in the documents we incorporate by reference.
BECAUSE PERIOD-TO-PERIOD FLUCTUATIONS IN OUR REVENUE ARE DIFFICULT TO PREDICT,
YOU SHOULD NOT RELY ON REVENUE FOR A GIVEN PERIOD AS AN INDICATOR OF REVENUE
FOR FUTURE PERIODS
Our revenue has fluctuated, and likely will continue to fluctuate,
significantly from period to period. Because these fluctuations are difficult to
predict, you should not rely on our revenue for a given period as an indicator
of revenue for future periods. The factors listed below determine our revenue
for a given period and make forecasting future revenue difficult. The first five
factors also relate to other risks discussed elsewhere in this Risk Factors
section
- The volume and timing of orders received during the period, with customers
generally ordering on an as-needed basis;
- The timing of new product introductions by us and our competitors;
- Product line maturation;
- The impact of price competition on our average selling prices;
- The availability of components for our products;
- Changes in product or distribution channel mix;
- The level of inventory carried by our distribution and retail channel
customers; and
- Product returns and price protection charges from customers.
As a result of these factors and our historically small backlog,
fluctuations in revenue may not be identifiable until at or near the end of a
period.
ALTHOUGH WE DO NOT HAVE FIRM SALES FORECASTS, WE MUST PLAN OUR EXPENDITURES FAR
IN ADVANCE, WHICH MAY MAGNIFY THE EFFECT OF REVENUE SHORTFALLS IN ANY GIVEN
PERIOD
Notwithstanding the difficulty in forecasting future sales and the
relatively small level of backlog at any given time, we generally must plan
production, order components and undertake our development, sales and marketing
activities and other commitments months in advance. Accordingly, the effect of
shortfalls in revenue may be magnified due to our inability to adjust expenses
or inventory levels during the quarter to match the level of revenue for the
quarter. Conversely, in our efforts to adjust inventory levels to a slower order
rate, we may overcorrect our component purchases and inventory levels, resulting
in
2
periodic shortages of inventory and delivery delays and negatively affecting our
revenue, market share and customer satisfaction levels in the current quarter or
in future quarters.
SEASONAL FLUCTUATIONS IN OUR OPERATING RESULTS MAY RESULT IN VOLATILITY IN THE
MARKET PRICE OF OUR STOCK.
We generally experience seasonality in our operating results. Our revenues
typically are substantially higher in the fourth quarter of the year, reflecting
traditional retail seasonality patterns. This seasonality may result in quarter
to quarter volatility in the market price of our stock.
OUR PRODUCTS HAVE SHORT LIFE CYCLES, AND WE MAY NOT BE ABLE TO SUCCESSFULLY
INTRODUCE NEW PRODUCTS BEFORE EXISTING CYCLES END
The markets for our products are characterized by frequent new product
introductions and product obsolescence. These factors typically result in short
product life cycles, frequently ranging from 12 to 18 months. If we do not
successfully introduce new products within a given product cycle, our sales will
be adversely affected for that cycle and possibly for subsequent cycles. Failure
to timely introduce these products could also impair our brand name and ability
to command retail shelf space in future periods. In addition, each new product
cycle presents new opportunities for competitors to gain a product advantage or
increase their market share.
SHORTER THAN EXPECTED PRODUCT LIFE CYCLES MAY RESULT IN DEPRESSED REVENUES AND
GROSS MARGINS IN AFFECTED PERIODS
If a product's life is shorter than expected, unexpected distribution
channel inventory returns and end-of-life and obsolete inventory and tooling
charges could result, which would depress our revenue and gross margin in the
affected periods. Our gross margins are affected by all of the following:
- The mix of products sold;
- The mix of distribution channels used;
- Competitive price pressures;
- The availability and cost of components from our suppliers,
- Component price inflation or deflation; and
- End-of-life inventory write downs.
Any adverse change in these factors could adversely affect our business,
results of operations, and financial condition. Individual product lines
generally provide higher margins at the beginning of the typical 12-to-18-month
product life cycle, and lower margins as the product line matures.
THE INTENSE COMPETITION IN OUR MARKETS MAY LEAD TO REDUCED SALES OF OUR PRODUCTS
AND REDUCED PROFITS
Competition from competitors such as Microsoft often results in pricing
pressures, reduced sales, reduced margins, or the failure of products to achieve
or maintain market acceptance. Any of these factors could have a material
adverse effect on our business, results of operations, and financial condition.
Microsoft and other competitors have greater name recognition, access to larger
customer bases, and substantially greater financial, technical, marketing,
distribution, service, support, and other resources than we have. Consequently,
these competitors may be able to respond more quickly than we can to new or
changing opportunities, technologies, standards, or customer requirements.
3
WE MAY NOT BE ABLE TO DEVELOP ACCEPTABLE NEW PRODUCTS OR ENHANCEMENTS TO OUR
EXISTING PRODUCTS AT THE RATE REQUIRED BY OUR RAPIDLY CHANGING MARKETS, WHICH
COULD ADVERSELY AFFECT US
Our future success depends upon our ability to address the rapidly changing
needs of our customers by developing and introducing high quality products,
product enhancements, and services on a timely basis and by keeping pace with
technological developments and emerging industry standards. The markets for our
products are rapidly evolving. Failure to develop and release enhanced or new
products, or delays or quality problems in doing so, could have a material
adverse effect on our business, results of operations, and financial condition.
As is common in rapidly evolving markets, demand and market acceptance for
recently introduced products are subject to high levels of uncertainty and risk.
New products can also quickly render obsolete products that were only recently
in high demand or otherwise impair the orders for or the prices of our existing
products. The markets for our existing products may not be sustainable at their
current levels. The markets for recently introduced and planned products may not
expand or develop.
PRICES FOR PRODUCTS IN OUR MARKETS ARE DECLINING, WHICH MAY REDUCE OUR REVENUE
AND GROSS MARGINS
Our markets are characterized by intense ongoing competition coupled with
declining average selling prices. Accordingly, our average selling prices,
measured over a given period of time, may decline from the levels experienced to
date. A decline could cause our revenue and gross margins to decline relative to
prior periods.
OUR DEPENDENCE UPON OFFSHORE MANUFACTURING CONTRACTORS AND LACK OF DIRECT
CONTROL OVER PRODUCTION COULD RESULT IN PRODUCT DELAYS AND QUALITY CONTROL
PROBLEMS
Virtually all ThrustMaster products are manufactured and assembled in China
and Taiwan by independent contractors. In addition to customary risks of doing
business abroad, the use of independent manufacturing contractors to manufacture
and assemble products offshore has required us to increase production lead times
and has reduced our ability to adjust production in response to short-term
market conditions. As a result, our failure to adequately forecast demand of
products manufactured offshore could materially and adversely affect our sales
and results of operations. In addition, although we seek to control the quality
of our products manufactured and assembled offshore, quality problems have
occasionally arisen, and may in the future arise, that are beyond our direct
control.
BECAUSE WE DEPEND ON A SINGLE OFFSHORE VENDOR AND ITS PRODUCTION FACILITIES, ANY
DISRUPTION OF THAT VENDOR'S ABILITY TO PRODUCE OUR PRODUCTS WOULD ADVERSELY
AFFECT US
For the year ended December 31, 1998, approximately 84.4% of our products
were manufactured and assembled through a single vendor utilizing factories
located in Taiwan and the Guangdong province of China. Manufacturing at one
factory accounted for more than half of our production. If this or any of the
other manufacturing facilities utilized by us become unavailable, or if the
manufacturing operations at these facilities are slowed, interrupted or
terminated, our business, results of operation, and financial condition could be
materially and adversely affected.
THE LOSS OF ANY KEY CUSTOMER COULD RESULT IN A SIGNIFICANT LOSS OF REVENUE IN A
GIVEN PERIOD
For the year ended December 31, 1998, two customers accounted for an
aggregate of approximately 24.9% of our revenues. The loss of one or more key
customers or any significant reduction in orders by key customers could have a
material adverse effect on our business, results of operations or financial
condition. We anticipate that a significant portion of our revenues and accounts
receivable will continue to be derived from a limited number of key customers.
4
THE LOSS OF KEY PERSONNEL COULD ADVERSELY AFFECT OUR BUSINESS AND DECREASE THE
VALUE OF YOUR INVESTMENT
Our success depends largely upon the continued services of our executive
officers and other key management and development personnel. The loss of the
services of one or more of our executive officers, engineering personnel, or
other key employees could have a material adverse effect on our business,
results of operations, and financial condition. Our employees do not have
employment agreements and could terminate their employment with us at any time
without penalty. We do not maintain key person life insurance policies on any of
our employees.
OUR FAILURE TO ATTRACT AND RETAIN ADDITIONAL PERSONNEL COULD ADVERSELY AFFECT
OUR BUSINESS AND DECREASE THE VALUE OF YOUR INVESTMENT
Our future success also depends on our ability to attract and retain highly
qualified personnel. We may not be successful in attracting or retaining
qualified personnel, which could have a material adverse effect on our business,
results of operations, and financial condition. The competition for qualified
personnel in the computer software and game markets is intense, and we may be
unable to attract, assimilate, or retain additional highly qualified personnel
in the future. We attempt to hire engineers with high levels of experience in
designing and developing software and personal computer-related products in
time-pressured environments. There is a limited number of qualified engineers in
our geographic location, resulting in intense competition for their services.
THE STRAIN THAT CHANGES IN OUR GROWTH RATE PLACE UPON OUR SYSTEMS AND MANAGEMENT
RESOURCES MAY ADVERSELY AFFECT OUR BUSINESS AND DECREASE THE VALUE OF YOUR
INVESTMENT
Any failure to properly manage our growth could have a material adverse
effect on our business, results of operations, and financial condition. The
growth and contractions that we have experienced place significant challenges on
our management, administrative, and operational resources. To properly manage
our business, we must, among other things, implement and improve additional and
existing administrative, financial, and operational systems, procedures, and
controls on a timely basis. We may not be able to complete the necessary
improvements to our systems, procedures, and controls necessary to support our
future operations in a timely manner. Management may not be able to hire, train,
retain, motivate, and manage required personnel and may not be able to
successfully identify, manage, and exploit existing and potential market
opportunities.
WE MAY NEED TO ACCESS ADDITIONAL FUNDS TO FINANCE ONGOING OPERATIONS, WHICH MAY
REQUIRE US TO COMMIT SIGNIFICANT AMOUNTS OF CAPITAL TO DEBT SERVICE AND COULD
RESULT IN DILUTION TO OUR SHAREHOLDERS
As of May 1, 1999, we believe that available funds together with borrowings
from our credit facility will be adequate to meet our anticipated cash needs
during the next 12 months. However, additional capital beyond the amounts
currently forecast by us will not be required and may not be available on
reasonable terms, if at all,. Additional financing may involve public or private
offerings of debt or equity securities, and may include bank debt. Debt
financing may increase our leveraged position, require us to devote significant
cash to service debt and limit funds available for working capital, capital
expenditures, and general corporate purposes. Any of these results could
increase our vulnerability to adverse economic and industry conditions and
competitive pressures. Equity financing may cause additional dilution to
purchasers of our common stock.
5
OUR INTERNATIONAL SALES ARE SIGNIFICANT AND COULD DECREASE FOR REASONS
ADDITIONAL TO THOSE AFFECTING DOMESTIC SALES
Approximately 29.6% and 35.7% of our total revenue for the years ended
December 31, 1997 and 1998, respectively, were attributable to sales made
outside the United States. Any reduction in international sales, or our failure
to further develop our international distribution channels, could have a
material adverse effect on our business, results of operations, and financial
condition.
Our international operations are subject to the risks inherent in
international business activities, including, in particular:
- Management of an organization operating in various countries;
- Compliance with a variety of foreign laws and regulations;
- Overlap of different tax structures;
- Foreign currency exchange rate fluctuations, which may affect demand for
our products in international markets or our consolidated multinational
financial results;
- Trade restrictions, changes in tariffs, and freight rates; and
- Regional economic and political conditions.
These factors could have a material adverse effect on our future international
sales and, consequently, our business, results of operations, and financial
condition.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WHICH COULD RESULT IN
COMPETITORS OBTAINING ACCESS TO PROPRIETARY INFORMATION
We regard substantial elements of our products as proprietary and attempt to
protect them by relying on patent, trademark, service mark, trade dress,
copyright, and trade secret laws and restrictions, as well as confidentiality
procedures and contractual provisions. Any steps we take to protect our
intellectual property may be inadequate, time consuming, and expensive. In
addition, despite our efforts, we may be unable to prevent third-parties from
infringing upon or misappropriating our intellectual property. Any infringement
or misappropriation could have a material adverse effect on our business,
results of operations, and financial condition. Currently issued patents or any
new patent applications may not provide us with any competitive advantages, or
may be challenged by third parties. Effective trademark, copyright, and trade
secret protection may not be available in every country in which our products
are distributed. In addition, our competitors may independently develop similar
technology that substantially limits the value of our intellectual property.
OTHERS MAY BRING INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS AGAINST US, WHICH
COULD REQUIRE SIGNIFICANT RESOURCES TO DEFEND AND COULD LEAD TO RESTRICTIONS
ON OUR CURRENT OPERATIONS
In addition to the technology we have developed internally, we also have
acquired or licensed technologies from other companies. Our internally developed
technology or the technology we acquired or licensed may infringe on a third
party's intellectual property rights and third parties may bring claims against
us alleging infringement of their intellectual property rights. Any infringement
or claim of infringement could have a material adverse affect on our business,
result of operations, and financial condition.
In recent years, there has been significant litigation in the United States
involving patents and other intellectual property rights. We are not currently
involved in any intellectual property litigation. We may, however, be a party to
litigation in the future to protect our intellectual property or as a result of
an alleged infringement of others' intellectual property. These potential claims
and any resulting litigation could subject us to significant liability for
damages and invalidation of our proprietary rights. Any litigation
6
involving intecllectual property, regardless of its success, likely would be
time-consuming and expensive to defend and would divert management time and
attention. Any potential intellectual property litigation could also force us to
do one or more of the following:
- Cease selling, incorporating, or using products or services that
incorporate the challenged intellectual property;
- Obtain from the holder of the infringed intellectual property right a
license to sell or use the relevant technology, which license may not be
available on reasonable terms, or at all; and
- Redesign those products or services that incorporate the technology at
issue.
Any of these results could have a material adverse effect on our business,
results of operations, and financial condition.
PRODUCT DEFECTS COULD LEAD TO LOSSES OF CUSTOMERS
Our products may contain undetected errors or "bugs" when first introduced
or as new versions or enhancements are released. Despite our internal testing,
these errors may be discovered only after our products have been installed and
used by customers. These undetected errors may relate to components supplied to
us. Our products are complex as a result of factors including:
- Advanced functionality;
- The diverse operating environments in which the products may be deployed;
- The need for interoperability; and
- The multiple versions of our products that must be supported for diverse
operating platforms and standards.
The complexity of our products increases the likelihood that they may
contain errors when introduced. Problems encountered by customers or product
recalls could materially adversely affect our business, financial condition and
results of operations.
WE DEPEND ON A SMALL GROUP OF SUPPLIERS FOR CRITICAL COMPONENTS, AND AN INCREASE
IN PRICE OR AN INTERRUPTION OR DELAY IN THE SUPPLY OF THESE COMPONENTS COULD
ADVERSELY AFFECT US
A number of important components used in our products are often obtained
from one or a limited group of suppliers. Any reduction, interruption of or
delay in supply could materially and adversely affect our business, results of
operations or financial condition. We have had and may in the future have,
shortages of supplies and delays in deliveries of necessary components. To date,
we have not experienced any material shortages or delays in deliveries of
necessary components, and no shortage or delay has had a material adverse effect
on our business, results of operations or financial condition. Substantially all
components used in our products are purchased from sources located outside the
United States. Trading policies adopted by the United States or foreign
governments could restrict the availability of components or increase the cost
of obtaining them. Any significant increase in component prices or decrease in
component availability could materially and adversely affect our business,
results of operations and financial condition.
CHANGES IN OUR DISTRIBUTION NETWORK COULD ADVERSELY AFFECT US
We sell our products through a network of domestic and international
distributors, and directly to major retailers and mass merchants. Personal
computer distribution and retail channels historically have been characterized
by rapid change, including periods of widespread financial difficulties and
consolidation and the emergence of alternative sales channels. These alternative
channels include direct mail order sales, telephone sales by PC manufacturers
and electronic commerce on the Internet. Changes in distribution
7
channel patterns, such as increased commerce on the Internet, increased use of
mail-order catalogs, increased use of consumer-electronics channels for personal
computer sales, or increased personalized configuration of PC systems by PC
manufacturers to fit customers' requirements could affect us in unforeseen ways.
In addition, changes in the types of products we sell or additions to our
products, such as the introduction of our Talk n' Play Internet conferencing
product or the software products, may require specialized channel partnerships.
We may not be able to establish partnerships or maintain them after they are
established. Failure to maintain our current distribution channels, to adjust to
changes in distribution patterns or to establish or maintain channel
partnerships may have a material adverse effect on our business, results from
operations or financial condition.
SLOW DEMAND AND ABUNDANT SUPPLIES OF PRODUCTS MAY LEAD TO SIGNIFICANT PRICE
REDUCTIONS, WHICH COULD REDUCE OUR REVENUE AND GROSS MARGINS
We believe that we are currently operating in a period of slow demand and
low sales and a market characterized by abundant products. In this environment,
price declines are more likely to occur and, should they occur, are more likely
to be severe. High distribution channel inventory levels may also result and
lead to substantial price protection charges. Declining prices and sales and
increased price protection charges will adversely affect our business, results
of operations, and financial condition. Periods characterized by slow demand,
low sales and abundant products generally lead to existing distribution channel
inventory levels of older product that are higher than desirable. The
distribution channels used by ThrustMaster generally maintain inventory levels
in a range of one to three months of customer demand. These channel inventory
levels tend toward the low end of the months-of-supply range when demand is
stronger, sales are higher and products are in short supply. Conversely, when
demand is slower, sales are lower and products are abundant, these channel
inventory levels tend toward the high end of the months-of-supply range. In
these situations, we frequently attempt to ensure that distributors and
retailers devote their working capital, sales and logistics resources to
ThrustMaster products to a greater degree than to those of competitors.
Similarly, our competitors attempt to ensure that their own products are
receiving a disproportionately higher share of the distributors' working capital
and logistics resources.
WE MAY BE REQUIRED TO ISSUE ADDITIONAL SHARES TO RECENT INVESTORS WITHOUT
RECEIVING ADDITIONAL PAYMENT, WHICH COULD RESULT IN DILUTION TO OUR
SHAREHOLDERS
In connection with the sale of shares of our common stock on January 28,
1999 to three investors, including Strong River Investments, Inc., a selling
shareholder, we may be required to issue adjustment shares to them for no
additional consideration. Declines in the market price of our common stock could
result in the issuance of a significant number of adjustment shares. This could
have a substantial dilutive effect on our common stock. The number of adjustment
shares to be issued depends on the average of the lowest 10 days closing bid
prices for our common stock during each of the two consecutive 25-day periods
after the date of this prospectus. The following table sets forth the number of
adjustment shares that we would be required to issue to the investors if the
relevant average closing bid prices were at different levels, including if the
relevant average closing bid prices were $25.50 per share, the closing price of
our common stock on May 20, 1999. See "Selling Shareholders."
AVERAGE CLOSING BID PRICE
AVERAGE CLOSING BID AS A PERCENTAGE TOTAL ADJUSTMENT
PRICE PER SHARE OF 5/20/99 CLOSING PRICE SHARES
- ----------------------- --------------------------- ----------------
$ 25.50 100% 0
$ 19.125 75% 0
$ 12.75 50% 102,941
$ 6.375 25% 455,882
8
SALES OF OUR COMMON STOCK MAY REDUCE THE MARKET PRICE OF OUR STOCK
Sales of substantial amounts of our common stock in the public market by
existing shareholders or further issuances of capital stock by us could
adversely affect the price of our common stock. Any decline in the market price
of our common stock could encourage short sales of our common stock, material
amounts of which could place further downward pressure on the price of our
stock. As of May 1, 1999, nearly all of the outstanding shares of our common
stock, other than the shares offered by this prospectus, were freely tradable
under federal securities laws to the extent that they are not held by our
affiliates.
THE MARKET PRICE FOR OUR COMMON STOCK, LIKE OTHER TECHNOLOGY STOCKS, MAY BE
VOLATILE
The value of your investment in ThrustMaster could decline due to the impact
of any of the following factors upon the market price of our common stock:
- Variations in our actual and anticipated operating results;
- Changes in our earnings estimates by analysts;
- Our failure to meet analysts' performance expectations; and
- Lack of liquidity.
The stock markets have recently experienced stock price and volume
volatility that has affected companies' stock prices. The stock markets may
continue to experience volatility that may adversely affect the market price of
our common stock. Stock prices for many companies in the technology sector have
experienced wide fluctuations that have often been unrelated to their operating
performance. Fluctuations such as these may affect the market price of our
common stock.
OUR ANTI-TAKEOVER PROVISIONS AND PREFERRED STOCK MAY REDUCE THE MARKET PRICE OF
OUR COMMON STOCK
Provisions of our articles of incorporation and bylaws may have the effect
of delaying or preventing a merger or sale of ThrustMaster, or making a merger
or acquisition less desirable to a potential acquirer, even where shareholders
may consider the acquisition or merger favorable. These provisions include those
establishing a classified Board of Directors. Provisions of the Oregon Business
Corporation Act, including "business combination" provisions and the Control
Share Act, also may delay, prevent, or discourage someone from acquiring or
merging with us.
The issuance of preferred stock may have the effect of delaying, deferring,
or preventing a change in control without further action by the shareholders.
Any issuance of preferred stock may materially and adversely affect the market
price of our common stock and the voting rights of the holders of common stock.
The issuance of preferred stock may also result in the loss of the voting
control of holders of common stock to the holders of preferred stock. We are
authorized to issue up to 5,000,000 shares of preferred stock.
SOME OF OUR PRODUCTS MAY NOT BE YEAR 2000 COMPLIANT, WHICH COULD RESULT IN
CUSTOMER DISSATISFACTION, CLAIMS AGAINST US OR BUSINESS INTERRUPTIONS
We are currently reviewing our products, internal systems and infrastructure
in order to identify and modify those products and systems that are not year
2000 compliant. We expect any required modification to be made on a timely basis
and do not believe that the cost of any modification will have a material
adverse effect on our operating results. However, increased costs associated
with implementation of any modifications and the inability to implement these
modifications could have or material adverse effect on our business, results of
operations, and financial condition. In addition, if our suppliers, vendors,
major distributors, and partners fail to correct their year 2000 problems, their
failure could result in an
9
interruption in, or a failure of, our normal business activities or operations.
These failures could have a material adverse effect on our business, results of
operations, and financial condition.
FORWARD-LOOKING INFORMATION
This prospectus and the documents we incorporate by reference contain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Act provides a "safe harbor" for
forward-looking statements to encourage companies to provide prospective
information about themselves so long as they identify these statement as
forward-looking and provide meaningful cautionary statements identifying
important factors that could cause actual results to differ from the projected
results. All statements other than statements of historical fact we make in this
prospectus or in any document incorporated by reference are forward-looking. In
particular, statements regarding industry prospects and our future results of
operations or financial position are forward-looking statements. Words such as
"anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates,"
and similar expressions identify forward-looking statements. But the absence of
these words does not mean the statement is not forward-looking. We cannot
guarantee any of the forward-looking statements, which are subject to risks,
uncertainties and assumptions that are difficult to predict. Actual results may
differ materially from those we forecast in forward-looking statements due to a
variety of factors, including those set forth in the section entitled "Risk
Factors," elsewhere in this prospectus and in the documents we have incorporated
by reference. We do not intend to update any forward-looking statements due to
new information, future events or otherwise.
HOW TO OBTAIN MORE INFORMATION
We file reports, proxy statements and other information with the Securities
and Exchange Commission. You may read any document we file at the SEC's public
reference rooms in Washington, D.C., Chicago, Illinois and New York, New York.
Please call the SEC toll free at 1-800-732-0330 for information about its public
reference rooms. You may also read our filings at the SEC's web site at
http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act of 1933. This prospectus does not contain all of the information
in the registration statement. We have omitted parts of the registration
statement, as permitted by the rules and regulations of the SEC. You may inspect
and copy the registration statement, including exhibits, at the SEC's public
reference rooms or from its web site. Our statements in this prospectus about
the contents of any contract or other document are not necessarily complete. You
should refer to the copy of each contract or other document we have filed as an
exhibit to the registration statement for complete information.
The SEC allows us to "incorporate by reference" into this prospectus
information we file with it. This means that we can disclose important
information to you by referring you to those documents. The information we
incorporate by reference is considered a part of this prospectus, and later
information we file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 until this offering is completed:
1. ThrustMaster's Quarterly Report on Form 10-Q for the quarter ended March
31, 1999;
2. ThrustMaster's Annual Report on Form 10-K for the year ended December
31, 1998, as amended;
3. The description of our common stock in ThrustMaster's Registration
Statement on Form 8-A filed on February 8, 1995, including any amendment
or report filed to update the description; and
4. All other documents filed by ThrustMaster pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this prospectus
and prior to the termination of this offering.
10
You may obtain copies of these documents, other than exhibits, free of
charge by contacting ThrustMaster's corporate secretary at our principal
offices, which are located at Suite 400, 7175 N.W. Evergreen Parkway, Hillsboro,
Oregon 97124, telephone number (503) 615-3200.
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. We have not authorized
anyone to provide you with different information. The selling shareholders are
not making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of the document.
SELLING SHAREHOLDERS
The following table presents information regarding the selling shareholders
and the number of shares of our common stock they may offer by this prospectus.
The information under the column entitled "Number of Shares of Common Stock
Beneficially Owned After the Offering" assumes that all shares of common stock
offered by this prospectus have been sold.
NUMBER OF SHARES
OF COMMON STOCK SHARES OF COMMON STOCK BENEFICIALLY
BENEFICIALLY NUMBER OF SHARES OF OWNED AFTER THE OFFERING
OWNED PRIOR TO COMMON STOCK ----------------------------------------
SELLING SHAREHOLDER THE OFFERING OFFERED HEREBY NUMBER OF SHARES PERCENTAGE OF CLASS
- ----------------------------------- ---------------- ------------------- ----------------- ---------------------
Strong River Investments, Inc...... 151,534 151,534 0 *
RAM Capital Resources, LLC......... 17,688 17,688 0 *
------- ------- -------
Totals........................... 169,222 169,222 0 *
------- ------- -------
------- ------- -------
- ------------------------
* Represents less than one percent of our common stock outstanding.
The shares indicated in the table as beneficially owned by Strong River
Investments, Inc. and offered by this prospectus include 125,000 shares issued
to Strong River Investments, Inc. at the closing of the transaction described
below and 26,534 of 35,378 shares issuable upon the exercise of warrants issued
to Strong River Investments, Inc. at the closing. After the closing, Strong
River Investments, Inc. transferred to RAM Capital Resources, LLC warrants to
purchase the remaining 8,844 shares of common stock. All the shares indicated as
beneficially owned by RAM Capital Resources, LLC and offered by this prospectus
represent shares issuable upon the exercise of warrants issued to the investors
in the transaction that were later transferred to RAM Capital Resources, LLC.
The investors, including Strong River Investments, Inc., transferred these
warrants to RAM Capital Resources, LLC as compensation for advisory services
rendered in connection with the transaction. Half of the warrants held by each
of Strong River Investments, Inc. and RAM Capital Resources, LLC have an
exercise price of $20.00 per share; the exercise price for the other half of the
warrants is $22.40.
On January 28, 1999, we entered into an agreement with Strong River
Investments, Inc. and two other investors that provides for up to three
potential tranches of investment in ThrustMaster by the investors. For each
tranche of investment, we have agreed to issue shares of common stock, warrants
to purchase common stock and additional "adjustment" shares after the closing of
the investment.
Strong River Investments, Inc. and the other investors made the first
tranche of investment simultaneously with entering into the purchase agreement.
The investors paid us $4,000,000 for an aggregate of 250,000 shares of our
common stock, warrants to purchase an aggregate of 70,754 additional shares of
common stock, and our agreement to issue adjustment shares. Strong River
Investments, Inc. paid $2,000,000 of the amount invested, and only the shares
and warrant shares purchased by Strong River Investments, Inc. and the warrant
shares subsequently transferred to RAM Capital Resources, LLC are covered by
this prospectus. The market price of our common stock on the date preceding the
investment
11
was $16.00 per share. The exercise price for 35,377 of the shares issuable upon
exercise of the warrants is $20.00; the exercise price for the remaining 35,377
shares issuable upon exercise of the warrants is $22.40. The warrants expire on
January 28, 2008. We may elect to redeem unexercised warrants if the market
price of our common stock after August 1, 2000 exceeds 130% of the applicable
exercise price for a period of 10 consecutive days.
Any adjustment shares issued as part of the first tranche of investment will
be issued to the investors for no additional consideration. The number of
adjustment shares, if any, to be issued will depend upon the average of the
lowest 10 days' closing bid prices of our common stock during each of the two
consecutive 25-day periods after the date of this prospectus. In essence, the
adjustment share mechanism ensures that the investors will receive a minimum
return of 12.5% on their investment. The warrants will entitle the holders to
receive additional shares of common stock at a discount if the market price of
our common stock exceeds the exercise price. The following table indicates the
number of adjustment shares that we would be required to issue to the investors
in connection with the first tranche of investment if the relevant average
closing bid prices were at different levels, including $16.00, the market price
of our common stock on the date preceding the investment. The table also
indicates what the effective average price to the investors would be for the
250,000 shares issued at the closing of the first tranche of investment and all
adjustment shares.
AVERAGE CLOSING PRICE EFFECTIVE AVERAGE
PER SHARE FOR EACH AVERAGE CLOSING PRICE PURCHASE PRICE
PERIOD (TO DETERMINE PER SHARE AS A TOTAL OF SHARES ISSUED
NUMBER OF ADJUSTMENT PERCENTAGE OF CLOSING ADJUSTMENT AT CLOSING AND
SHARES) DATE PRICE ($16.00) SHARES ADJUSTMENT SHARES
- --------------------- --------------------- ----------- -----------------
$ 18.00 112.5% 0 $ 16.00
$ 16.00 100.0% 31,250 $ 14.22
$ 12.00 75.0% 125,000 $ 10.67
$ 8.00 50.0% 312,500 $ 7.11
$ 4.00 25.0% 875,000 $ 3.56
The purchase agreement provides that we may request, at our option, that the
investors make the second and third tranches of investment. The amount of each
tranche would range from $1.0 million to $6.0 million, depending upon the market
price of our common stock at the time of the investment. The investors'
obligation to make any further investment pursuant to the purchase agreement is
subject to the satisfaction of specified conditions. These conditions include
the following:
- we have not experienced a material adverse change in our business prior to
the investment;
- the registration statement required to be filed by us in connection with
the prior tranche of investment has been effective for at least 25 days;
- the average daily trading volume of our common stock on the Nasdaq
National Market is at least 50,000 shares for the 20 trading days
preceding the investment; and
- the average market price of our common stock for the 10 trading days
preceding the investment is at least $7.00.
Pursuant to the purchase agreement, we granted the investors, including
Strong River Investments, Inc., a right of first refusal with respect to
non-public issuances of its securities during the period beginning on the date
of this prospectus and ending 180 days later. Issuances of securities not
subject to the right of first refusal include securities issued under our stock
option plans, shares issued upon exercise of currently outstanding securities,
and securities issued in connection with strategic transactions.
The selling shareholders have represented to us that they purchased or
acquired the shares for their own account for investment only and not with a
view towards selling or distributing them, except pursuant to sales registered
under the Securities Act or exemptions. We have agreed with the selling
shareholders to
12
file the registration statement to register the resale of the shares. We have
also agreed to prepare and file all necessary amendments and supplements to the
registration statement to keep it effective until the earlier of (1) the third
anniversary of the effective date of the registration statement related to this
prospectus and (2) the date on which the selling shareholders have sold all the
shares.
This prospectus covers the shares of our common stock issued to Strong River
Investments, Inc. at the closing of the first tranche of investment. It also
covers the shares issuable upon exercise of warrants issued at the closing and
held by Strong River Investments, Inc. and RAM Capital Resources, LLC as of the
date of this prospectus. This prospectus does not cover any shares held by the
two investors other than Strong River Investments, Inc., any adjustment shares
that may be issued in connection with the first tranche of investment, or any
adjustment or other shares that may be issued in connection with the potential
second or third tranches of investment. Following the issuance of any adjustment
shares or the closing of the second or third tranche of investment, we will file
additional registration statements to register the adjustment shares or other
common stock issued or issuable in connection with the investment.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling shareholders and
their successors, including donees and pledgees who may sell shares they receive
from the selling shareholders after the date of this prospectus. We will not
receive any proceeds from the sale of shares by the selling shareholders or
their successors. The selling shareholders or their successors may sell all of
the shares from time to time in transactions in the over-the-counter market
through Nasdaq, on one or more other securities markets and exchanges, or in
privately negotiated transactions. They may sell the shares at fixed prices, at
market prices prevailing at the time of sale, or at negotiated prices. The
selling shareholders may use any one or more of the following methods when
selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling shareholders to sell a specified
number of the shares at a stipulated price per share;
- a combination of any of the methods of sale; and
- any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under SEC Rule 144, if
available, rather than under this prospectus.
The selling shareholders may effect short sales against the box, puts and
calls and other transactions in our securities or derivatives of our securities.
The selling shareholders may sell or deliver the shares in connection with these
trades. The selling shareholders may pledge the shares to their brokers under
the margin provisions of customer agreements. If a selling shareholder defaults
on a margin loan, the broker may offer and sell the pledged shares from time to
time.
The selling shareholders have advised us that they have not entered into any
agreements, understandings or arrangements for the sale of the shares with any
underwriters or broker-dealers. They have also
13
advised us that no underwriter or coordinating broker is now acting in
connection with the proposed sale of shares.
If a selling shareholder notifies us that any material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, we will file a supplement to this prospectus if required
pursuant to Rule 424(b) under the Securities Act. The supplement will disclose:
- the name of each selling shareholder and of the participating
broker-dealer;
- the number of shares involved;
- the price at which the shares were sold;,
- any applicable commissions paid or discounts or concessions allowed to a
broker-dealer;
- that the broker-dealer did not conduct any investigation to verify the
information set forth or incorporated by reference in this prospectus; and
- other facts material to the transaction.
In addition, if a selling shareholder notifies us that a donee or pledgee
intends to sell more than 500 shares, a supplement to this prospectus will be
filed. To the extent required, we will also set forth in a supplement to this
prospectus or, if appropriate, a post-effective amendment to the related
registration statement:
- the number of the shares to be sold;
- purchase prices and public offering prices;
- the names of any agents, dealers or underwriters; and
- any applicable commissions, discounts or concessions with respect to the
offer.
Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions,
concessions or discounts from the selling shareholders and the purchasers. The
selling shareholders do not expect these commissions, concessions and discounts
to exceed what is customary in the types of transactions involved.
The selling shareholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act. In that event, any commissions received by them and any
profit on the resale of the shares may be deemed to be underwriting commissions
or discounts under the Securities Act. Selling shareholders who are
"underwriters" within the meaning of Section 2(11) of the Securities Act will be
subject to the prospectus delivery requirements of the Securities Act. We have
informed the selling shareholders that the anti-manipulation provisions of
Regulation M of the Securities Exchange Act may restrict their sales in the
market.
We will pay all expenses of the registration and sale of the shares, other
than selling commissions and fees and stock transfer taxes. We have also agreed
to indemnify the selling shareholders and broker-dealers who assist in the sale
of the shares against liabilities based upon any untrue or alleged untrue
statements of material fact in this prospectus or the related registration
statement or upon any omission or alleged omission of a material fact required
to be included in this prospectus or the registration statement or necessary to
make the statements herein and therein not misleading. We will not be required
to provide indemnification to the extent any untrue or alleged untrue statement
was included, or an omission or alleged omission was made, as a result of
information furnished by the selling shareholders.
We cannot guarantee that the selling shareholders will sell any or all of
the shares.
14
VALIDITY OF COMMON STOCK
Perkins Coie LLP, Portland, Oregon, has provided us with an opinion as to
the due authorization and valid issuance of the shares of common stock offered
by this prospectus and as to the fully paid and nonassessable nature of the
shares.
EXPERTS
The financial statements incorporated in this prospectus by reference to the
Annual Report on Form 10-K for the year ended December 31, 1998, have been
incorporated in reliance on the report given by PricewaterhouseCoopers LLP,
independent accountants, on their authority as experts in auditing and
accounting.
15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
Registrant in connection with the sale of Common Stock being registered. All
amounts are estimates except the SEC registration fee and the Nasdaq National
Market additional listing fee. The selling shareholders will pay all selling
commissions and fees and stock transfer taxes.
SEC registration fee............................................... $ 2,338
Nasdaq National Market listing fee................................. $ 12,665
Legal fees and expenses............................................ $ 7,500
Accounting fees and expenses....................................... $ 1,500
Miscellaneous fees and expenses.................................... $ 997
---------
Total.......................................................... $ 25,000
---------
---------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
As an Oregon corporation, the Registrant is subject to the Oregon Business
Corporation Act. Pursuant to Section 60.047(2)(d) of the Oregon Business
Corporation Act, Article X of the Registrant's Articles of Incorporation
(Exhibit 4.1 hereto) eliminates the liability of the Registrant's directors to
the Registrant or its shareholders, except for any liability related to (1) any
breach of the duty of loyalty to the Registrant or its shareholders; (2) acts or
omissions not in good faith or that involve intentional misconduct or a knowing
violation of law; (3) any distribution that is unlawful under the Oregon
Business Corporation Act; or (4) any transaction from which the director derived
an improper personal benefit.
Sections 60.391 and 60.407(2) of the Oregon Business Corporation Act allow
corporations to indemnify their directors and officers, respectively, against
liability where the director or officer has acted in good faith and with a
reasonable belief that actions taken were in the best interests of the
corporation or at least not opposed to the corporation's best interests and, if
in a criminal proceeding, the individual had no reasonable cause to believe the
conduct in question was unlawful. Under the Oregon Business Corporation Act,
corporations may not indemnify against liability in connection with a claim by
or in the right of the corporation or for any improper personal benefit in which
the director or officer was adjudged liable to the corporation. Sections 60.394
and 60.407(1) of the Oregon Business Corporation Act mandate indemnification of
directors and officers, respectively, for all reasonable expenses incurred in
the successful defense of any claim made or threatened, whether or not such
claim was by or in the right of the corporation. Finally, pursuant to the
Sections 60.401 and 60.407(1) of the Oregon Business Corporation Act, a court
may order indemnification in view of all the relevant circumstances, whether or
not the director or officer met the good-faith and reasonable belief standards
of conduct set out in Section 60.391 of the Oregon Business Corporation Act or
was adjudged liable to the corporation.
Section 60.414 of the Oregon Business Corporation Act also provides that the
statutory indemnification provisions are not deemed exclusive of any other
rights to which directors or officers may be entitled under a corporation's
articles of incorporation or bylaws, any agreement, general or specific action
of the board of directors, vote of shareholders or otherwise.
The Registrant's Amended and Restated Bylaws require indemnification of
directors and officers of the Registrant to the fullest extent not prohibited by
law. The Registration Rights Agreement (Exhibit 4.7 hereto) provides that the
selling shareholders will indemnify each director of the Registrant, each
officer of the Registrant and each person who controls the Registrant for
certain liabilities, including liabilities under the Securities Act.
II-1
ITEM 16. EXHIBITS
EXHIBIT
NO. DESCRIPTION
- ------ --------------------------------------------------------------------------
*4.1 Description of Capital Stock contained in the Articles of Incorporation,
as amended
(@)4.2 Description of Rights of Security Holders contained in the Amended and
Restated Bylaws
($)4.3 Form of Certificate for Shares of Common Stock
($)4.4 Form of Representatives' Warrant Agreement among the Registrant,
Cruttenden Roth and Black & Company, Inc.
(#)4.5 Securities Purchase Agreement dated as of January 28, 1999 among the
Registrant and the Purchasers party thereto
(#)4.6 Form of Callable Warrant
(#)4.7 Registration Rights Agreement dated as of January 28, 1999 among the
Registrant and the Purchasers party thereto
5.1 Opinion of Perkins Coie LLP, counsel to the Registrant, regarding the
legality of the Common Stock (previously filed)
23.1 Consent of PricewaterhouseCoopers LLP, independent auditors (incorporated
by reference to Exhibit 23 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 1998)
23.2 Consent of Perkins Coie LLP (contained in Exhibit 5.1)
24.1 Power of Attorney (previously filed)
- ------------------------
* Incorporated by reference to Exhibit 3.1 to the Registration Statement on
Form SB-2 filed on January 5, 1995, as amended on February 7, 1995, and
February 24, 1995 (File No. 33-88252-LA).
(@) Incorporated by reference to Exhibit 3.2 to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1996.
($) Incorporated by reference to the same exhibit number from the Registrant's
Registration Statement on Form SB-2 filed on January 5, 1995, as amended on
February 7, 1995, and February 24, 1995 (File No. 33-88252-LA).
(#) Incorporated by reference to the same exhibit number to the Registrant's
Current Report on form 8-K filed on February 16, 1999.
ITEM 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
material information with respect to the plan of distribution not previously
disclosed in this Registration Statement or any material change to such
information in this 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; and
II-2
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
B. The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
C. 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 Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of 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.
D. The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
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 Amendment No. 3 to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Hillsboro, State of Oregon, on June 3, 1999.
THRUSTMASTER, INC.
By: /s/ FRANK G. HAUSMANN, JR.
-----------------------------------------
Frank G. Hausmann, Jr.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to Registration Statement has been signed by the following persons in the
capacities indicated on June 3, 1999.
/s/ C. NORMAN WINNINGSTAD*
- ------------------------------ Chairman of the Board
C. Norman Winningstad
Director, President, Chief
/s/ FRANK G. HAUSMANN, JR. Executive Officer and
- ------------------------------ Chief Financial Officer
Frank G. Hausmann, Jr. (principal executive and
financial officer)
/s/ ALLEN ROBISON*
- ------------------------------ Controller (principal
Allen Robison accounting officer)
/s/ ROBERT L. CARTER*
- ------------------------------ Director
Robert L. Carter
/s/ GRAHAM E. DORLAND*
- ------------------------------ Director
Graham E. Dorland
/s/ MERRILL A. MCPEAK*
- ------------------------------ Director
Merrill A. McPeak
/s/ G. GERALD PRATT*
- ------------------------------ Director
G. Gerald Pratt
II-4
/s/ MILTON R. SMITH*
- ------------------------------ Director
Milton R. Smith
/s/ FREDERICK M. STEVENS*
- ------------------------------ Director
Frederick M. Stevens
*By: /s/ FRANK G. HAUSMANN,
JR.
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Frank G. Hausmann, Jr.
ATTORNEY-IN-FACT
II-5