S-8: Securities to be offered to employees in employee benefit plans
Published on May 18, 2001
As filed with the Securities and Exchange Commission on May 18, 2001
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8 / S-3
REGISTRATION STATEMENT
(INCLUDING REGISTRATION OF SHARES FOR RESALE BY MEANS OF A FORM S-3 PROSPECTUS)
UNDER
THE SECURITIES ACT OF 1933
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SCM MICROSYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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47211 BAYSIDE PARKWAY
FREMONT, CA 94538
(510) 360-2300
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL
EXECUTIVE OFFICES)
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L.A. VISION, INC. 1997 STOCK OPTION PLAN
DAZZLE MULTIMEDIA, INC. 1998 STOCK PLAN
DAZZLE MULTIMEDIA, INC. 2000 STOCK OPTION PLAN
(FULL TITLE OF THE PLANS)
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ANDREW WARNER
CHIEF FINANCIAL OFFICER
SCM MICROSYSTEMS, INC.
47211 BAYSIDE PARKWAY
FREMONT, CA 94538
(510) 388-2300
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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Copy to:
KURT BERNEY, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
CALCULATION OF REGISTRATION FEE
(1) Computed in accordance with Rule 457(h) under the Securities Act. Such
computation is based on the average of the high and low prices on the
Nasdaq National Market on May 16, 2001.
EXPLANATORY NOTE
This Registration Statement on Form S-8/S-3 ("Registration Statement") is
being filed pursuant to General Instruction E to Form S-8 for the purpose of
registering these additional shares of Common Stock, which have been issued
under Dazzle's La Vision, Inc. 1997 Stock Option Plan, Dazzle Multimedia, Inc.
1998 Stock Plan, and Dazzle Multimedia, Inc. 2000 Stock Option Plan and are of
the same class of Common Stock for which a registration statement on Form S-8
(Registration No. 333-51792) is effective. The contents of our Registration
Statement on Form S-8 (Registration No. 333-51792) are hereby incorporated by
reference.
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RESALE PROSPECTUS
SCM MICROSYSTEMS, INC.
UP TO 251,441 SHARES OF COMMON STOCK
WHICH THE SELLING STOCKHOLDERS MAY RESELL UNDER THIS PROSPECTUS
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The stockholders of SCM Microsystems, Inc. listed in this prospectus may
offer and resell up to 251,441 shares of our common stock under this prospectus
for their own accounts. We will not receive any proceeds from the sale of these
shares.
These shares were acquired by the selling stockholders pursuant to the
exercise of options to purchase shares of Dazzle common stock under Dazzle's La
Vision, Inc. 1997 Stock Option Plan, Dazzle Multimedia, Inc. 1998 Stock Plan,
and Dazzle Multimedia, Inc. 2000 Stock Option Plan which subsequently were
exchanged for shares of our common stock in connection with our acquisition of
Dazzle.
The selling stockholders may offer their common stock through public or
private transactions, at prevailing market prices or at privately negotiated
prices. These future prices are not currently known.
Our common stock is quoted on the Nasdaq National Market under the symbol
"SCMM". The last reported sale price of our common stock on the Nasdaq National
Market on May 17, 2001 was $10.15.
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CONSIDER CAREFULLY THE RISK FACTORS
BEGINNING ON PAGE 3 IN THIS PROSPECTUS.
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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 May 18, 2001.
TABLE OF CONTENTS
PROSPECTUS
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell, and
seeking offers to buy, shares of SCM common stock only in jurisdictions where
offers and sales are permitted. The information contained in this prospectus is
accurate as of the date of this prospectus, regardless of the time of delivery
of this prospectus or any sale of the shares.
In this prospectus, unless indicated otherwise, "SCM," the "Company,"
"we," "us" and "our" refer to SCM Microsystems, Inc. and its subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under the sections entitled "Prospectus Summary,"
"Risk Factors," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and "Business" in the documents incorporated by
reference herein and located elsewhere in this prospectus constitute
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. These statements relate to future
plans, objectives, events or our future financial performance. In some cases,
you can identify forward-looking statements by terminology such as "may,"
"will," "should," "could," "expect," "anticipate," "intend," "plan," "believe,"
"estimate," "potential," or "continue," the negative of these terms or other
comparable terminology. These forward-looking statements involve a number of
risks and uncertainties and are only predictions. Our actual events or results
may differ materially from any forward-looking statement. In evaluating these
statements, you should specifically consider various factors, including the
risks outlined under "Risk Factors."
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Moreover, neither we nor any
other person assume responsibility for the accuracy and completeness of the
forward-looking statements. Except as required by law, we undertake no
obligation to update publicly any forward-looking statements for any reason
after the date of this prospectus to conform these statements to actual results
or to changes in our expectations. Before you invest in our common stock, you
should be aware that the occurrence of the events described under "Risk Factors"
and elsewhere in this prospectus could harm our business.
SCM MICROSYSTEMS, INC.
We design, develop and sell hardware, software and silicon that enables
people to conveniently and securely access digital content and services,
including content and services that have been protected through digital
encryption.
We sell our products primarily into four markets:
- Digital Television, where our products are used to control access
to digital television broadcasts,
- Digital Video, where our products are used to capture, edit and
publish analog or digital video on the PC,
- PC Security, where our products are used to control access to PCs,
computer networks and the Internet to facilitate computer and
network security and secure online transactions, and
- Digital Media Transfer, where our products expedite the transfer
of information between PCs and digital devices such as digital
still cameras and Internet music players.
Our target customers are end user consumers as well as manufacturers in
the consumer electronics, computer, digital appliance, digital media and
conditional access system industries. We sell and license our products through a
direct sales and marketing organization, both to the retail channel and to
original equipment manufacturers, or OEMs. We also sell through distributors,
value added resellers and systems integrators worldwide.
RISK FACTORS
This offering and an investment in our common stock involve a high degree
of risk. You should carefully consider the following risk factors and the other
information in this prospectus before investing in our common stock. Our
business and results of operations could be seriously harmed by any of the
following risks. The trading price of our common stock could decline due to any
of these risks and you may lose part or all of your investment.
WE HAVE INCURRED OPERATING LOSSES AND WE MAY INCUR LOSSES IN THE FUTURE.
We have a history of losses with an accumulated deficit of $24.4 million
as of March 31, 2001. We were not profitable in the first quarter of 2001
(before or after one-time charges). We may be unable to attain or, if attained,
sustain profitability on an annual or quarterly basis in the future.
OUR QUARTERLY OPERATING RESULTS WILL LIKELY FLUCTUATE.
Our quarterly operating results have varied greatly in the past and will
likely vary greatly in the future depending upon a number of factors. Many of
these factors are beyond our control. Our revenues, gross margins and operating
results may fluctuate significantly from quarter to quarter due to, among other
things:
- - the timing and amount of orders we receive from our customers which, in
the case of our consumer products and products sold to the government,
may be tied to seasonal demand or budgetary cycles;
- - cancellations or delays of customer product orders, or the loss of a
significant customer;
- - our backlog and inventory levels;
- - our customer and distributor inventory levels and product returns;
- - new product announcements or introductions by us or our competitors;
- - our ability to develop, introduce and market new products and product
enhancements on a timely basis, if at all;
- - the sales volume, product configuration and mix of products that we sell;
- - our success in expanding our sales and marketing organization and
programs;
- - technological changes in the market for our products;
- - increased competition or reductions in the average selling prices that we
are able to charge;
- - fluctuations in the value of foreign currencies against the U.S. dollar;
- - the timing and amount of marketing and research and development
expenditures;
- - our investment experience related to our strategic minority equity
investments;
- - costs related to events such as acquisitions, litigation and write-off of
investments; and
- - business and economic conditions overall and in our markets.
Due to these and other factors, our revenues may not increase or remain
at their current levels. Should market conditions cause us to take write-offs
against inventory, doubtful accounts or investments, our operating expenses
could increase. In addition, because a high percentage of our operating expenses
are fixed, a small variation in our revenue can cause significant variations in
our earnings from quarter to quarter and our operating results may vary
significantly in future periods. Therefore, our historical results may not be a
reliable indicator of our future performance.
THE TIMING AND AMOUNT OF OUR REVENUES ARE SUBJECT TO A NUMBER OF FACTORS THAT
MAKE IT DIFFICULT TO ESTIMATE OPERATING RESULTS PRIOR TO THE END OF A QUARTER.
We do not typically maintain a significant level of backlog. As a result,
revenues in any quarter are dependent on contracts entered into or orders booked
and shipped in that quarter. In recent periods, customers, including
distributors of our consumer products, have tended to make a significant portion
of their purchases towards the end of the quarter, in part because they are
able, or believe that they are able, to negotiate lower prices and more
favorable terms. This trend makes predicting revenues more difficult. The timing
of closing larger orders increases the risk of quarter-to-quarter fluctuation.
If orders forecasted for a specific group of customers for a particular quarter
are not realized or revenues are not otherwise recognized in that quarter, our
operating results for that quarter could be materially adversely affected.
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WEAKNESS IN THE ECONOMY COULD DECREASE DEMAND FOR OUR PRODUCTS OR FOR OUR
CUSTOMERS' PRODUCTS, CAUSING CUSTOMERS TO DECREASE OR CANCEL ORDERS TO US OR TO
DELAY PAYMENT.
In recent months, economic uncertainty in the U.S. has resulted in
decreased demand from end users for many companies' products, including ours.
Specifically, in the first quarter of 2001 we experienced decreased demand for
our Dazzle digital video editing products and for our digital media
reader/writers sold through the retail and OEM channels. In addition to
impacting our retail business, reductions in consumer spending may impact our
OEM business as well, as OEM customers may reduce or cancel orders for our
products if their own visibility of future orders is compromised by decreased
demand. Reduced or canceled orders for our products could lead to decreased
sales in a particular period, and could also cause us to write off inventory, as
many of our products are custom made for particular customers. In some cases,
customers could delay payment or be unable to pay for orders made to us, causing
us to increase our allowance for doubtful accounts or to write off certain
receivables. Decreased sales or any write-offs, or both, could have a materially
adverse affect on our operating results in any given period.
OUR LISTING ON THE NEUER MARKT OF THE FRANKFURT STOCK EXCHANGE IN ADDITION TO
OUR LISTING ON THE NASDAQ NATIONAL MARKET EXPOSES OUR STOCK PRICE TO ADDITIONAL
RISKS OF FLUCTUATION.
Our common stock experiences a significant volume of trading on the Neuer
Markt of the Frankfurt Stock Exchange. Because of this, factors which would not
otherwise affect a stock traded solely on Nasdaq may cause our stock price to
fluctuate. Investors outside the United States may react differently and more
negatively than investors in the U.S. to events such as acquisitions, one-time
charges, lower than expected revenue or earnings announcements. Any negative
reaction by investors in Europe to such events could cause our stock price to
decrease. In addition, European market conditions in general, or downturns on
the Neuer Markt specifically, regardless of the Nasdaq market conditions, could
negatively impact our stock price.
OUR STOCK PRICE HAS BEEN AND IS LIKELY TO REMAIN VOLATILE.
The stock market has recently experienced significant price and volume
fluctuations that have particularly affected the market prices of the stocks of
technology companies. During the 12-month period from May 17, 2000 to May 17,
2001, the reported last sale price for our common stock on the Nasdaq market
ranged from $9.26 to $101.34 per share. Volatility in our stock price may result
from a number of factors, including:
- - variations in our or our competitors' financial and/or operational
results;
- - the fluctuation in market value of comparable companies in any of our
markets;
- - comments and forecasts by securities analysts;
- - expected or announced relationships with other companies;
- - any loss of key management;
- - announcements of technological innovations or new products by us or our
competition;
- - litigation developments; and
- - general market downturns.
In addition, we may not discover, or be able to confirm, revenue or
earnings shortfalls until the end of a quarter, which could result in an
immediate drop in our stock price. In the past, companies that have experienced
volatility in the market price of their stock have been the object of securities
class action litigation. If we were the object of securities class action
litigation, it could result in substantial costs and a diversion of our
management's attention and resources.
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OUR SALES ARE DEPENDENT ON SEVERAL EMERGING MARKETS, WHICH MAY NOT DEVELOP.
We sell our products primarily to emerging markets which have not yet
reached a stage of mass adoption or deployment. If demand for products in the
Digital TV, Digital Video, PC Security and/or Digital Media Transfer markets
does not develop and grow sufficiently, our revenues and profit margins could
level off or decline. We cannot predict the future growth rate, if any, or size
or composition of the market of our products in any of these markets. The demand
and market acceptance for our products, as is common for new technologies, will
be subject to high levels of uncertainty and risk and may be influenced by
several factors including:
- - the slow pace and uncertainty of adoption in Europe of conditional access
modules such as ours which use the DVB-CI standard;
- - the strength of entrenched security and set-top receiver suppliers in the
U.S. who may resist the use of removable conditional access modules such
as ours and prevent or delay opening the U.S. digital television market
to greater competition;
- - the ability of financial institutions and the U.S. government to create
and deploy smart card-based applications that will drive demand for smart
card readers such as ours;
- - the ability of flash memory card manufacturers to develop higher capacity
memory cards that will drive demand for readers that enable rapid
transfer of large amounts of data such as ours; and
- - general economic conditions.
OUR FUTURE SUCCESS WILL DEPEND ON OUR ABILITY TO KEEP PACE WITH TECHNOLOGICAL
CHANGE AND MEET THE NEEDS OF OUR TARGET MARKETS AND CUSTOMERS.
The markets for our Digital TV, Digital Video, PC Security and Digital
Media Transfer products are characterized by rapidly changing technology. Our
customers' needs change and new products are introduced frequently. Product life
cycles are short and industry standards are still evolving. These rapid changes
in technology or the adoption of new industry standards could render our
existing products obsolete and unmarketable. If one of our products is deemed to
be obsolete or unmarketable, then we might have to reduce revenue expectations
or write off inventories for that product. Our future success will depend upon
our ability to enhance our current products and to develop and introduce new
products on a timely basis that address the increasingly sophisticated needs of
our customers and that keep pace with technological developments, new
competitive product offerings and emerging industry standards.
For example, in the Digital TV market, our products provide a means of
controlling access to digital television broadcasts. We are currently
developing, with Microsoft, technology that will allow software-based
entertainment set-top boxes to access premium digital television broadcasts. If
we are not successful in making this technology highly reliable and easy to
implement, we may not be able to sell it to potential customers such as consumer
electronics companies or broadcasters.
In the PC Security market, our SmartReady, SmartSecure, SmartTrust and
SmartRetail product families are designed to provide smart card-based security
for PCs. Smart cards are beginning to be widely deployed by financial
institutions, the U.S. government, corporations and other large organizations,
in advance of anticipated security-oriented applications. However, the market
for network and electronic commerce security applications is still emerging and
the smart card may not become the industry standard. In this case, demand for
our readers will not grow. In addition, standards for smart card readers are
still emerging. We may not be able to comply with emerging standards in a timely
manner or at all. If we cannot meet the standards requirements of the market or
our prospective customers, we would likely lose orders to competitors.
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Because we operate in markets for which industry-wide standards have not
yet emerged, it is possible that any standards eventually adopted could prove
disadvantageous to or incompatible with our business model and product lines. If
any of the standards supported by us do not achieve or sustain market
acceptance, our business and operating results would be materially and adversely
affected.
OUR MARKETS ARE HIGHLY COMPETITIVE AND OUR CUSTOMERS MAY PURCHASE PRODUCTS FROM
OUR COMPETITORS.
The market for our products is intensely competitive and characterized by
rapidly changing technology. We believe that the principal competitive factors
affecting the market for digital data security and connectivity products
include:
- - the extent to which products support existing industry standards and
provide interoperability;
- - technical features;
- - ease of use;
- - quality and reliability;
- - level of security;
- - brand name, particularly in retail channels;
- - strength of distribution channels; and
- - price.
We believe that competition in our markets is likely to intensify as a
result of increasing demand for digital data security, access control and
connectivity products. We currently experience competition from a number of
sources, including:
- - Pinnacle in digital video capture and conversion products;
- - ActionTec, Carry Computer Engineering and Greystone in PC Card adapters;
- - Advanced Card Systems and O2 Micro in smart card interface chips;
- - Advanced Card Systems, Gemplus, Infineer, Litronic, PubliCard and
Towitoko in smart card readers and universal smart card reader
interfaces; and
- - Carry Computer Engineering, DataFab, Lexar, SanDisk, Simple Technology
and SmartDisk for digital media and connectivity.
We also experience indirect competition from some of our customers who
sell alternative products or are expected to introduce competitive products in
the future. We may in the future face competition from these competitors and new
competitors, such as Motorola, that develop digital information security
products. In addition, the market for digital data security, access control and
connectivity products may ultimately include technological solutions other than
ours.
Many of our current and potential competitors have significantly greater
financial, technical, marketing, purchasing and other resources than we do. As a
result, our competitors may be able to respond more quickly to new or emerging
technologies or standards and to changes in customer requirements. Our
competitors may also be able to devote greater resources to the development,
promotion and sale of products, and may be able to deliver competitive products
at a lower end user price. Current and potential competitors have established or
may establish cooperative relationships among themselves or with third parties
to increase the ability of their products to address the needs of our
prospective customers. Therefore, new competitors, or alliances among
competitors,
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may emerge and rapidly acquire significant market share. Increased competition
is likely to result in price reductions, reduced operating margins and loss of
market share.
WE FACE RISKS RELATED TO OUR INCREASED DEPENDENCE ON A RETAIL DISTRIBUTION
MODEL.
Historically, we sold substantially all our products directly to OEM
customers. Following our acquisitions of Dazzle Multimedia and Microtech, we now
sell a significant percentage of our products directly to the retail channel.
Direct retail distribution is a relatively new model for us and we face
additional risks and requirements including:
- - generally lower margins for products due to, among other factors, greater
price competition and increased promotional and distribution costs;
- - the need to develop, and the related marketing expense of developing
brand recognition for our Dazzle and Microtech branded products;
- - the need to protect the reputation of our brands for quality and value;
and
- - the need to successfully and cost-effectively develop new retail
distribution channels for these products.
We are contractually obligated to accept returned products from our
distributors and OEM customers only on a limited basis. However, if consumer
demand is less than anticipated our distributors and OEMs may seek to return
products to us. We may determine that it is in our best interest to accept
returns in order to maintain good relations. While we have experienced some
product returns to date, returns may increase even more than present levels in
the future.
Our retail distributors may have limited capital to invest in inventory,
and their decisions to purchase our products are partly a function of pricing,
terms and special promotions offered by us and our competitors over which we
have no control and which we cannot predict. Our distributor agreements are
generally nonexclusive and may be terminated by either party without cause.
Certain distributors have experienced financial difficulties in the past.
Distributors that account for significant sales of our consumer products may
experience financial difficulties in the future, which could lead to reduced
sales or write-offs.
WE HAVE GLOBAL OPERATIONS WHICH REQUIRE SIGNIFICANT MANAGERIAL AND
ADMINISTRATIVE RESOURCES.
Operating in diverse geographic locations imposes significant burdens on
our managerial resources. In particular our management must divert a significant
amount of time and energy to manage employees and contractors from diverse
cultural backgrounds and who speak different languages, manage different product
lines for different markets, manage our supply and distribution channels across
different countries and business practices, and coordinate these efforts to
produce an integrated business effort, focus and vision. In addition, we are
subject to the difficulties associated with operating in a number of time zones
which may subject us to additional unforeseen difficulties or logistical
barriers. Operating in widespread geographic locations requires us to implement
and operate complex information and operational systems. In the future we may
have to exert managerial resources and implement new systems which may be
costly. Any failure or delay in implementing needed systems, procedures and
controls on a timely basis or in expanding current systems in an efficient
manner could have a material adverse effect on our business and operating
results.
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MANY OF OUR CUSTOMERS ARE LOCATED IN OTHER COUNTRIES WHICH EXPOSES OUR BUSINESS
TO RISKS RELATED TO INTERNATIONAL SALES.
We were originally a German corporation and we continue to conduct a
substantial portion of our business in Europe. Approximately 58% of our revenues
for the three months ended March 31, 2001 and 48%, 52%, and 62% for the years
ended December 31, 2000, 1999, and 1998, respectively, were derived from
customers located outside the United States. Because a significant number of our
principal customers are located in other countries, we anticipate that
international sales will continue to account for a substantial portion of our
revenues. As a result, a significant portion of our sales and operations may
continue to be subject to certain risks, including:
- - foreign currency exchange rate change, especially since we do not
currently engage in hedging activities with respect to our foreign
currency exposure;
- - tariffs and other trade barriers, including import and export
restrictions;
- - potential adverse tax consequences;
- - political or economic instability;
- - compliance with foreign laws;
- - difficulties in protecting intellectual property rights in foreign
countries; and
- - transportation delays and interruptions.
WE HAVE EXPERIENCED SIGNIFICANT GROWTH IN OUR BUSINESS IN RECENT PERIODS AND WE
MAY NOT BE ABLE TO MANAGE THIS GROWTH OR ANY FUTURE GROWTH.
Our business has grown substantially, with net revenue increasing from
$23.6 million in 1995 to $157.8 million in 2000. Net revenue for the first
quarter of 2001 was $45.1 million. We have expanded our business from the PC
Security market to include the Digital TV, Digital Video and Digital Media
Transfer markets. Managing businesses in each of these markets requires skilled
management and substantial resources. To address our need for additional
resources and because of various acquisitions, we have increased in size from 67
employees at December 31, 1995 to 549 as of December 31, 2000. We had 554
employees at March 31, 2001.
Our growth and our growth plans have placed and are likely to continue to
place a significant burden on our operating and financial systems and increase
responsibility for senior management and other personnel. Our existing
management or any new members of management may not be able to improve our
existing systems and controls or implement new systems and controls in response
to our anticipated growth. In addition, our intention to reduce or redeploy
personnel to reduce expenses from time to time may limit our capacity to grow.
OUR OEM CUSTOMERS MAY DEVELOP TECHNOLOGY SIMILAR TO OURS, RESULTING IN A
REDUCTION IN RELATED CUSTOMER PURCHASES, CANCELED ORDERS AND DIRECT COMPETITION
FROM THESE CUSTOMERS.
We sell our products to many original equipment manufacturers who
incorporate our products into their offerings or who resell our products in
order to provide a more complete solution to their customers. If our OEM
customers develop their own products to replace ours, this would result in a
loss of sales to those customers as well as increased competition for our
products in the marketplace. In addition, these OEM customers could cancel
outstanding orders for our products, which could cause us to write down
inventory already designated for those customers. For example, in the past,
SanDisk Corporation has purchased various Digital Media Transfer products from
us and marketed them under the SanDisk brand. Recently, SanDisk developed a
Digital Media Transfer product of its own and has begun marketing it.
Consequently, in the first quarter of 2001, SanDisk canceled orders for our
digital media readers. Going forward, SanDisk may not place orders for our
products,
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which could decrease our revenues. In addition, SanDisk may market its competing
products to other potential customers.
SEASONAL TRENDS IN SALES OF OUR PRODUCTS MAY AFFECT OUR QUARTERLY OPERATING
RESULTS.
Our business and operating results reflect seasonal trends. We have
typically experienced lower revenue and operating income in the first quarter
and second quarter and higher revenue in the third quarter and fourth quarter of
each calendar year. We believe that the seasonal trends in our business and
operating results are primarily due to the retail selling cycles of our
consumer-oriented products, including our Digital Video and Digital Media
Transfer products. Because the market for consumer products is stronger in the
second half of the year, we expect that our sales to retail distributors and to
consumer-oriented OEMs will increase during that period.
WE FACE RISKS ASSOCIATED WITH OUR PAST AND FUTURE ACQUISITIONS.
A component of our business strategy is to seek to buy businesses,
products and technologies that complement or augment our existing businesses,
products and technologies. In 2000, we completed four acquisitions:
- - Microtech in June 2000;
- - 2-Tel B.V. in September 2000;
- - Dazzle Multimedia in December 2000, by acquiring substantially all of the
outstanding minority interest; and
- - the Personal Video Division of FAST Multimedia in July 2000, an
acquisition completed through Dazzle Multimedia.
The integration of the business and operations of any past or future
acquisition is a complex, time consuming and expensive process. In order to
successfully integrate any acquisition, we must, among other things,
successfully:
- - attract and retain key management and other personnel;
- - integrate, both from an engineering and a sales and marketing
perspective, the acquired products into our product offerings;
- - coordinate research and development efforts;
- - integrate sales forces;
- - consolidate duplicate facilities; and
- - cost effectively manage our combined business.
Past and future acquisitions may disrupt ongoing operations, divert
management from day-to-day business and adversely impact our results of
operations. In addition, these types of transactions often result in charges to
earnings for such things as transaction expenses, amortization of goodwill, or
expensing of in-process research and development. Our available cash and our
securities may be used to buy or invest in companies or products, which could
result in significant acquisition-related charges to earnings and dilution to
our stockholders. Moreover, if we buy a company, we may have to incur or assume
that company's liabilities, including liabilities that are unknown at the time
of acquisition. We may be unable to complete any given acquisition which may
limit our future revenues.
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WE WILL EXPERIENCE SIGNIFICANT AMORTIZATION CHARGES AND FACE THE RISK OF FUTURE
CHARGES AS A RESULT OF PAST ACQUISITIONS.
In connection with our previous acquisitions accounted for under the
purchase method of accounting, in future periods we will experience significant
charges related to the amortization of purchased technology and goodwill. In
addition, if we later determine that this purchased technology and goodwill is
impaired, we will be required to take a related non-recurring charge to
earnings. The Financial Accounting Standards Board is addressing accounting for
business combinations which could cause our accounting of goodwill and acquired
intangibles to change.
WE COULD LOSE MONEY AND OUR STOCK PRICE COULD DECREASE AS A RESULT OF OUR
STRATEGIC INVESTMENTS.
We have made strategic minority investments in private and public
companies and in the future we may make additional strategic minority
investments. Our strategic investments involve a number of risks and we may not
realize the expected benefits of these transactions. We may lose all or a
portion of our investment, particularly in the case of our private investments.
If we were to lose these investments, or if the investments were determined to
be impaired, we would be forced to write off all or a portion of these
investments.
OUR KEY PERSONNEL ARE CRITICAL TO OUR BUSINESS AND SUCH KEY PERSONNEL MAY NOT
REMAIN WITH US IN THE FUTURE.
We depend on the continued employment of our senior executive officers
and other key management and technical personnel. If any of our key personnel
leave and are not adequately replaced, our business would be adversely affected.
We provide compensation incentives such as bonuses, benefits and option grants
(which are typically subject to vesting over four years) to attract and retain
qualified employees. In addition, certain of our executive officers are subject
to one-year non-compete agreements. Non-compete agreements are, however,
generally difficult to enforce. Even though we provide competitive compensation
arrangements to our executive officers and other employees, we cannot be certain
that we will be able to retain them, including those individuals that are
subject to non-compete agreements.
We believe that our future success will depend in large part on our
continuing ability to attract and retain highly qualified technical and
management personnel. Competition for such personnel is intense, and we may not
be able to retain our key technical and management employees or to attract,
assimilate or retain other highly qualified technical and management personnel
in the future.
WE MAY BE EXPOSED TO RISKS OF INTELLECTUAL PROPERTY INFRINGEMENT BY THIRD
PARTIES.
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality agreements and contractual provisions to protect our
proprietary rights. Our software, documentation and other written materials are
protected under trade secret and copyright laws, which afford only limited
protection. We generally enter into confidentiality and non-disclosure
agreements with our employees and with key vendors and suppliers. For example,
our SmartOS and SmartReady trademarks are registered in the United States. We
continuously evaluate the registration of additional trademarks as appropriate.
We currently have patents issued in both the United States and Europe and have
other patent applications pending worldwide. In addition, we have licenses for
various other United States and European patents associated with our products.
Although we often seek to protect our proprietary technology through patents, it
is possible that no new patents will be issued, that our proprietary products or
technologies are not patentable, and that any issued patent will fail to provide
us with any competitive advantages.
- 9 -
There has been a great deal of litigation in the technology industry
regarding intellectual property rights. Litigation may be necessary to protect
our proprietary technology. Despite our efforts to protect our proprietary
rights, unauthorized parties may attempt to copy aspects of our products or to
use our proprietary information and software. In addition, the laws of some
foreign countries do not protect proprietary and intellectual property rights to
as great an extent as do the laws of the United States. Because many of our
products are sold and a portion of our business is conducted overseas, primarily
in Europe, our exposure to intellectual property risks may be higher. Our means
of protecting our proprietary and intellectual property rights may not be
adequate.
OUR PRODUCTS MAY HAVE DEFECTS, WHICH COULD DAMAGE OUR REPUTATION, DECREASE
MARKET ACCEPTANCE OF OUR PRODUCTS, CAUSE US TO LOSE CUSTOMERS AND REVENUE, AND
RESULT IN LIABILITY TO US.
Highly complex products such as our Digital Video hardware and software
solutions may contain defects for many reasons, including defective design or
defective material. Often, these defects are not detected until after the
products have been shipped. If any of our products contains defects, or has
reliability, quality or compatibility problems, our reputation might be damaged
significantly, we could lose or experience a delay in market acceptance of the
affected product or products, and we might be unable to retain existing
customers or attract new customers. In addition, these defects could interrupt
or delay sales. We may have to invest significant capital, technical, managerial
and other resources to correct potential problems and potentially divert these
resources from other development efforts. If we fail to provide solutions to
potential problems, we could also incur product recall, repair or replacement
costs. These potential problems might also result in claims against us by our
customers or others.
WE MAY FACE CLAIMS OF INFRINGEMENT OF THE INTELLECTUAL RIGHTS OF THIRD PARTIES,
WHICH COULD SUBJECT US TO COSTLY LITIGATION, SUPPLIER AND CUSTOMER
INDEMNIFICATION CLAIMS AND THE POSSIBLE RESTRICTION ON THE USE OF OUR
INTELLECTUAL PROPERTY.
We have from time to time received claims that we are infringing upon
third parties' intellectual property rights. Our suppliers and customers may
also receive similar claims. We have historically agreed to indemnify suppliers
and customers for alleged patent infringement. The scope of this indemnity
varies, but may, in some instances, include indemnification for damages and
expenses, including attorney's fees. We may periodically engage in litigation as
a result of these indemnification obligations. Our insurance policies exclude
coverage for third party claims for patent infringement.
As the number of products and competitors in our target markets grows,
the likelihood of infringement claims also increases. Any claims or litigation
may be time-consuming and costly, cause product shipment delays, or require us
to redesign our products or enter into royalty or licensing agreements. If we
are unable to modify our products or obtain a license on commercially reasonable
terms, or at all, a competitor of ours or a claimant against us or our customers
may stop us or our customers from selling the allegedly infringing products.
If we decide to incorporate third party technology into our products or
if we are found to infringe on others' intellectual property, we could be
required to license intellectual property from a third party. We may also need
to license some of our intellectual property to others in order to enable us to
obtain cross-licenses to third party patents. We cannot be certain that licenses
will be offered when we need them, or that the terms offered will be acceptable.
If we do obtain licenses from third parties, we may be required to pay license
fees or royalty payments. In addition, if we are unable to obtain a license that
is necessary to the manufacture of our products, we could be required to suspend
the manufacture of products or stop our suppliers from using processes that may
infringe the rights of third parties. We may be unsuccessful in redesigning our
products or in obtaining the necessary licenses under reasonable terms or at
all.
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WE MAY FACE CLAIMS BASED ON PRODUCT LIABILITY THAT WOULD SUBJECT US TO COSTLY
LITIGATION AND DECREASED PRODUCT DEMAND.
Customers rely on our token-based security products to prevent
unauthorized access to their digital information. A malfunction of or design
defect in our products could result in legal or warranty claims. Although we
place warranty disclaimers and liability limitation clauses in our sales
agreements and maintain product liability insurance, these measures may be
ineffective in limiting our liability. Liability for damages resulting from
security breaches could be substantial and could have a material adverse effect
on our business and operating results. In addition, a well-publicized security
breach involving token-based and other security systems could adversely affect
the market's perception of products like ours in general, or our products in
particular, regardless of whether the breach is actual or attributable to our
products. In that event, the demand for our products could decline, which would
cause our business and operating results to suffer.
A SIGNIFICANT PORTION OF OUR SALES COMES FROM A SMALL NUMBER OF CUSTOMERS AND
THE LOSS OF ONE OF MORE OF THESE CUSTOMERS COULD NEGATIVELY IMPACT OUR OPERATING
RESULTS.
Our products are generally targeted at OEM customers in the consumer
electronics, computer, digital appliance, digital media and conditional access
system industries, and to retail distributors. Sales to a relatively small
number of customers historically have accounted for a significant percentage of
our total sales. For example, sales to our top 10 customers accounted for
approximately 37% of our total net revenues in 2000, with no customer accounting
for 10% or more of our revenues. Sales to our top 10 customers accounted for
approximately 47% of our total net revenues for the first quarter of 2001, with
one customer accounting for 12% of our revenues. We expect that sales of our
products to a limited number of customers will continue to account for a high
percentage of our total sales for the foreseeable future. The loss or reduction
of orders from a significant OEM or retail customer, including losses or
reductions due to manufacturing, reliability or other difficulties associated
with our products, changes in customer buying patterns, or market, economic or
competitive conditions in the digital information security business, could
result in decreased revenues and/or inventory or receivables write-offs and
otherwise harm our business and operating results.
ANY DELAYS IN OUR NORMALLY LENGTHY SALES CYCLE COULD RESULT IN SIGNIFICANT
FLUCTUATIONS IN OUR QUARTERLY OPERATING RESULTS.
When we obtain a new OEM customer or retail distributor, our initial
sales to that customer usually take six to nine months. During this sales cycle,
we may expend substantial financial resources and our management's time and
effort with no assurance that a sale will ultimately result. The length of a new
customer's sales cycle depends on a number of factors that we may not be able to
control. These factors include the customer's product and technical requirements
and the level of competition we face for that customer's business. Any delays in
the sales cycle for new customers would limit our receipt of new revenue and
might cause us to expend more resources to obtain new customer wins.
OUR BUSINESS COULD SUFFER IF WE OR OUR CONTRACT MANUFACTURERS CANNOT MEET
PRODUCTION REQUIREMENTS.
Most of our products are manufactured outside the United States because
we believe that global sourcing enables us to achieve greater economies of
scale, improve gross margins and maintain uniform quality standards for our
products. Any significant delay in our ability to obtain adequate supplies of
our products from our current
- 11 -
or alternative sources would materially and adversely affect our business and
operating results. In an effort to reduce our manufacturing costs, we have
shifted volume production of many of our product components to our wholly owned
subsidiary in Singapore, SCM Microsystems (Asia) Pte. Ltd. In addition, we
utilize contract manufacturers in Europe and Asia. Foreign manufacturing poses a
number of risks, including transportation delays and interruptions, difficulties
in staffing, currency fluctuations, potentially adverse tax consequences and
unexpected changes in regulatory requirements, tariffs and other trade barriers,
and political and economic instability. If we or any of our contract
manufacturers cannot meet our production requirements, we may have to rely on
other contract manufacturing sources or identify and qualify new contract
manufacturers. Despite efforts to do so, we may be unable to identify or qualify
new contract manufacturers in a timely manner and these new manufacturers may
not allocate sufficient capacity to us in order to meet our requirements.
We design and manufacture new products and technologies to address
emerging markets that are early in their life cycles. In many cases our products
are the first of their kind to address the evolving business requirements of our
customers. While we perform initial beta testing on all our products, in certain
cases we are unable to test the efficacy of the design or functionality of our
products for mass production. If we are successful in securing large contracts
for our products, we cannot be certain that we will be able to produce them in
sufficient quantities and that they will meet customer specifications.
WE HAVE A LIMITED NUMBER OF SUPPLIERS OF KEY COMPONENTS.
We rely upon a limited number of suppliers of several key components of our
products. For example, we currently purchase ASICs for our Digital TV modules
exclusively from TEMIC, Philips and Atmel, smart card connectors exclusively
from ITT Canon and another supplier and DTV/SwapSmart mechanical components
exclusively from Stocko. Our reliance on only one supplier could impose several
risks, including an inadequate supply of components, price increases, late
deliveries and poor component quality. Disruption or termination of the supply
of these components could delay shipments of our products which could have a
material adverse effect on our business and operating results. These delays
could also damage relationships with current and prospective customers.
FACTORS BEYOND OUR CONTROL COULD DISRUPT OUR OPERATIONS AND INCREASE OUR
EXPENSES.
We face a number of potential business interruption risks that are beyond our
control. The State of California has recently experienced intermittent power
shortages, sharp increases in the cost of energy and even interruptions of
service to some business customers. If power shortages continue to be a problem
our business may be materially adversely effected. Additionally, we may
experience natural disasters that could interrupt our business. Our corporate
headquarters is located near a major earthquake fault. The impact of a major
earthquake on our facilities, infrastructure and overall operations is not
known. Safety precautions have been implemented; however there is no guarantee
that an earthquake would not seriously disturb our entire business process.
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SELLING STOCKHOLDERS
The selling stockholders acquired ownership of all the shares of the
Company's Common Stock listed below pursuant to the exercise of options to
purchase shares of Dazzle common stock under Dazzle's La Vision, Inc. 1997 Stock
Option Plan, Dazzle Multimedia, Inc. 1998 Stock Plan, and Dazzle Multimedia,
Inc. 2000 Stock Option Plan which subsequently were exchanged for shares of our
common stock in connection with our acquisition of Dazzle. In accordance with
Item 507 of Regulation S-K, the following table shows in each case as of May 10,
2001:
- the name of each selling stockholder;
- how many shares the selling stockholder owns prior to the
offering;
- how many shares the selling stockholder can resell under this
prospectus; and
- assuming a selling stockholder sells all shares listed next to his
or her name, how many shares the selling stockholder will own
after completion of the offering.
SCM may amend or supplement this prospectus from time to time in the
future to update or change this list of selling stockholders and shares which
may be resold.
- ----------
(1) As of the date of this prospectus, the selling stockholder is employed by
the Company.
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PLAN OF DISTRIBUTION
We have been advised by the selling stockholders that they intend to sell
all or a portion of the shares offered hereby from time to time in the Nasdaq
National Market and that sales will be made at prices prevailing in the Nasdaq
National Market at the times of such sales. The selling stockholders may also
make private sales directly or through a broker or brokers, who may act as agent
or as principal. Further, the selling stockholders may choose to dispose of the
shares offered hereby by gift to a third party or as a donation to a charitable
or other non-profit entity. In connection with any sales, the selling
stockholders and any brokers participating in such sales may be deemed to be
underwriters within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders (and, if such broker acts as agent for
the purchaser of such shares, from such purchaser). Usual and customary
brokerage fees will be paid by the selling stockholders. Broker-dealers may
agree with the selling stockholders to sell a specified number of shares at a
stipulated price per share, and, to the extent such a broker-dealer is unable to
do so acting as agent for the selling stockholders, to purchase as principal any
unsold shares at the price required to fulfill the broker-dealer commitment to
the selling stockholders. Broker-dealers who acquire shares as principal may
thereafter resell such shares from time to time in transactions (which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above) in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above.
We have advised the selling stockholders that Regulation M promulgated
under the Exchange Act may apply to sales in the market and have informed them
of the possible need for delivery of copies of this prospectus. The selling
stockholders may indemnify any broker-dealer that participates in transactions
involving the sale of the shares against certain liabilities, including
liabilities arising under the Securities Act. Any commissions paid or any
discounts or concessions allowed to any such broker-dealers, and, if any such
broker-dealers purchase shares as principal, any profits received on the resale
of such shares, may be deemed to be underwriting discounts and commissions under
the Securities Act.
Upon our being notified by the selling stockholders that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a cross or block trade, a supplemental prospectus will be filed under
Rule 424(c) under the Securities Act, setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the selling stockholders, the commissions paid or
discounts or concessions allowed by the selling stockholders to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this prospectus.
Any securities covered by this prospectus which qualify for sale pursuant
to Rules 144 and 701 under the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus. In general, under Rule 144 as currently in
effect, a person (or persons whose shares are aggregated), including any person
who may be deemed to be our "affiliate," is entitled to sell within any three
month period "restricted shares" beneficially owned by him or her in an amount
that does not exceed the greater of (i) 1% of the then outstanding shares of
common stock or (ii) the average weekly trading volume in shares of common stock
during the four calendar weeks preceding such sale, provided that at least one
year has elapsed since such shares were acquired from us or our affiliate. Sales
are also subject to certain requirements as to the manner of sale, notice and
availability of current public information regarding us. However, a person who
has not been our "affiliate" at any time within three months prior to the sale
is entitled to sell his or her shares without regard to the volume limitations
- 14 -
or other requirements of Rule 144, provided that at least two years have elapsed
since such shares were acquired from us or our affiliate. In general, under Rule
701 as currently in effect, any employee, consultant or advisor of us who
purchases shares from us in connection with a compensatory stock or option plan
or other written agreement related to compensation is eligible to resell such
shares in reliance on Rule 144, but without compliance with certain restrictions
contained in Rule 144.
There can be no assurance that the selling stockholders will sell any or
all of the shares of common stock offered hereunder.
WHERE TO FIND MORE INFORMATION ABOUT SCM
We file special reports, proxy statements and other information with the
Securities and Exchange Commission (the "SEC"). You may read and copy any
document we file at the SEC's public reference rooms in Washington, D.C., New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms. Our SEC filings are also
available to the public from the SEC's Web site at http://www.sec.gov.
This prospectus contains information concerning the Company and the sale
of its Common Stock by the Selling Stockholders, but does not contain all the
information set forth in the Registration Statement on Form S-8/S-3 (the
"Registration Statement") which the Company has filed with the SEC under the
Securities Act of 1933, as amended (the "Securities Act"). Statements made in
this Prospectus as to the contents of any referenced contract, agreement or
other document are not necessarily complete, and such statement shall be deemed
qualified in its entirety by reference thereto. The Registration Statement,
including various exhibits, may be obtained upon payment of the fee prescribed
by the SEC, or may be examined without charge at the SEC's office in Washington,
D.C.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents that we have previously filed with the SEC or
documents that we will file with the SEC in the future. The information
incorporated by reference is considered to be part of this prospectus, and later
information that we file with the SEC will automatically update and supercede
this information. We incorporate by reference the documents listed below, and
any future filings made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act, until the selling stockholders sell all the shares. This
prospectus is part of a Registration Statement we filed with the SEC. The
documents we incorporate by reference are:
(1) SCM's Registration Statement on Form S-8 (File No. 333-51792)
filed December 14, 2000;
(2) SCM's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 filed April 2, 2001;
(3) SCM's Quarterly Report on Form 10-Q for the quarter ended March
31, 2001 filed May 14, 2001;
(4) SCM's Definitive Proxy Statement on Schedule 14A, as filed with
the Commission on April 30, 2001; and
(5) The description of the SCM's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed with the
Commission on September 5, 1997.
We also incorporate by reference all documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act,
prior to the filing of a post-effective amendment which indicates that all
securities registered have been sold or which deregisters all securities then
remaining unsold.
- 15 -
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of the Registration Statement or this Prospectus to the extent that
a statement contained herein, in a Prospectus Supplement or in any other
document subsequently filed with the Commission which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of the Registration Statement or this
Prospectus.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address: SCM Microsystems, Inc., 47211 Bayside
Parkway, Fremont, California; the telephone number is (510) 360-2300.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Certificate of Incorporation, as amended and restated,
provides that its directors will not be personally liable for monetary damages
for breach of their fiduciary duties as directors except for liability arising
out of: (i) a breach of their duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law; or (iv) any transaction from which
the director derived an improper personal benefit. The Registrant's charter
documents provide that the Registrant shall indemnify its officers, directors
and agents to the fullest extent permitted by law, including those circumstances
where indemnification would otherwise be discretionary. The Registrant believes
that indemnification under its charter documents covers at least negligence and
gross negligence on the part of indemnified parties.
The Registrant has entered into indemnification agreements with each of
its directors and officers which may, in some cases, be broader than the
specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements may require the Registrant,
among other things, to indemnify each director and officer against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature) and to advance such persons' expenses incurred as a result of any
proceeding against him or her as to which such person could be indemnified.
SEC'S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification by SCM for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of SCM pursuant to the provisions referenced in Prospectus or otherwise, SCM has
been advised that in the opinion of the 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 SCM of expenses incurred or paid by a
director, officer, or controlling person of SCM 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 hereunder, SCM will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
- 16 -
SCM MICROSYSTEMS, INC.
REGISTRATION STATEMENT ON FORM S-8/S-3
PART II
ITEM 3. INCORPORATION OF DOCUMENTS BY REFERENCE.
There are hereby incorporated by reference into this Registration
Statement the following documents and information heretofore filed by SCM
Microsystems, Inc. (the "Registrant") with the Securities and Exchange
Commission (the "Commission"):
(1) SCM's Registration Statement on Form S-8 (File No. 333-51792)
filed December 14, 2000;
(2) SCM's Annual Report on Form 10-K for the fiscal year ended
December 31, 2000 filed April 2, 2001;
(3) SCM's Quarterly Report on Form 10-Q for the quarter ended March
31, 2001 filed May 14, 2001;
(4) SCM's Definitive Proxy Statement on Schedule 14A, as filed with
the Commission on April 30, 2001; and
(5) The description of the SCM's Common Stock contained in the
Company's Registration Statement on Form 8-A, filed with the
Commission on September 5, 1997.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold, shall be deemed
to be incorporated by reference in this Registration Statement and to be part
hereof from the date of filing of such documents.
ITEM 4. DESCRIPTION OF SECURITIES.
Not applicable.
ITEM 5. INTERESTS OF NAMED EXPERTS AND COUNSEL.
Not applicable.
ITEM 6. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation, as amended and restated,
provides that its directors will not be personally liable for monetary damages
for breach of their fiduciary duties as directors except for liability arising
out of: (i) a breach of the director's duty of loyalty to the corporation or its
stockholders; (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law; or (iv) any transaction from which
the director derived an improper personal benefit. The Registrant's charter
documents provide that the Registrant shall indemnify its officers, directors
and agents to the fullest extent permitted by law, including those circumstances
where indemnification would otherwise be discretionary. The Registrant believes
that indemnification under its charter documents covers at least negligence and
gross negligence on the part of indemnified parties.
II-1
The Registrant has entered into indemnification agreements with each of
its directors and officers which may, in some cases, be broader than the
specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements may require the Registrant,
among other things, to indemnify each director and officer against certain
liabilities that may arise by reason of their status or service as directors or
officers (other than liabilities arising from willful misconduct of a culpable
nature) and to advance such persons' expenses incurred as a result of any
proceeding against him or her as to which such person could be indemnified.
ITEM 7. EXEMPTION FROM REGISTRATION CLAIMED.
The issuance of the shares being offered by this Forms S-8/S-3 resale
prospectus were deemed to be exempt from registration under the Securities Act
in reliance on Section 4(2) of the Securities Act or Regulation D promulgated
thereunder, or Rule 701 promulgated under Section 3(b) of the Securities Act, as
transactions by an issuer not involving a public offering or transactions
pursuant to compensatory benefit plans and contracts relating to compensation as
provided under such Rule 701. The recipients of securities in each such
transaction represented their intention to acquire the securities for investment
only and not with a view to or for sale in connection with any distribution
thereof and appropriate legends were affixed to the share certificates and
instruments issued in such transactions. All recipients had adequate access,
through their relationship with the Registrant or otherwise, to information
about the Registrant.
ITEM 8. EXHIBITS.
+ Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 333-51792), filed with the
Securities and Exchange Commission on December 14, 2000.
ITEM 9. UNDERTAKINGS.
(a) The Registrant hereby undertakes:
(i) To file, during any period which offers or sales are being
made, a post-effective amendment to this registration
statement to include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(ii) That, for the purpose of determining any liability under
the Securities Act, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(iii) 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
(b) The 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 Section
15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plan's annual report pursuant to Section 15(d)
of the Exchange Act) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities 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 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to law, the
Registrant's Restated Certificate of Incorporation, Bylaws or
indemnification agreements, 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 a successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered
hereunder, 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.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8/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 Fremont, State of California, on the 17th day of
May, 2001.
SCM MICROSYSTEMS, INC.
By: /s/ Andrew Warner
----------------------------------------
Andrew Warner
Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Andrew
Warner or Steven Humphreys jointly and severally, as attorneys-in-fact, each
with the power of substitution, for him in any and all capacities, to sign any
amendment 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 to said attorneys-in-fact, and each of them, full
power and authority to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact or either of them, or their or his
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
INDEX TO EXHIBITS
- ----------
+ Incorporated by reference to the Registrant's Registration
Statement on Form S-8 (File No. 333-51792), filed with the
Securities and Exchange Commission on December 14, 2000.