Filed On 6/13/07 2:15pm ET · SEC File 333-140630 · Accession Number 950134-7-13351
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
6/13/07 ShoreTel Inc S-1/A 2:249 Bowne of Dallas I..01/FA
Pre-Effective Amendment to Registration Statement (General Form) · Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment to Form S-1 HTML 1,430K
2: EX-23.2 Consent of Experts or Counsel HTML 5K
This is an EDGAR HTML document rendered as filed. [ Alternative Formats ]
As filed with the Securities and Exchange Commission on
June 13, 2007
UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
Pre-Effective
Amendment No. 4 to
Form S-1
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
SHORETEL, INC.
(Exact name of Registrant as
specified in its charter)
| |
|
|
|
|
|
|
|
3661
|
|
77-0443568
|
(State or other jurisdiction of
incorporation or organization)
|
|
(Primary standard industrial
code number)
|
|
(I.R.S. employer
identification no.)
|
960 Stewart Drive
Sunnyvale, CA
94085-3913
(Address, including zip code,
and telephone number, including area code, of Registrant’s
principal executive offices)
John W. Combs
Chairman, President and Chief Executive Officer
ShoreTel, Inc.
960 Stewart Drive
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copies to:
| |
|
|
|
Dennis
DeBroeck, Esq.
|
|
Jeffrey D.
Saper, Esq.
|
|
Jeffrey R.
Vetter, Esq.
|
|
Steven V.
Bernard, Esq.
|
|
Fenwick & West
LLP
|
|
Wilson Sonsini
Goodrich & Rosati, P.C.
|
|
801 California Street
|
|
650 Page Mill Road
|
|
Mountain View, California
94041
|
|
Palo Alto, California
94304
|
|
(650) 988-8500
|
|
(650)
493-9300
|
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date of this Registration Statement.
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, check the
following box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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. o
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. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) 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. o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment that
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act of 1933, as amended, or until the
Registration Statement shall become effective on such date as
the Commission, acting pursuant to said Section 8(a), may
determine.
The
information in this preliminary prospectus is not complete and
may be changed. These securities may not be sold until the
registration statement filed with the Securities and Exchange
Commission is effective. This preliminary prospectus is not an
offer to sell nor does it seek an offer to buy these securities
in any jurisdiction where the offer or sale is not permitted.
|
7,900,000 Shares
Common Stock
This is our initial public offering, and no public market
currently exists for our shares of common stock. We are offering
7,900,000 shares of common stock. We anticipate that the
initial public offering price will be between $8.50 and
$10.50 per share.
We have applied to have our common stock approved for quotation
on the NASDAQ Global Market under the symbol “SHOR.”
Investing in our common stock involves risks. See “Risk
Factors” beginning on page 7.
| |
|
|
|
|
|
|
|
|
|
|
|
Per Share
|
|
|
Total
|
|
|
|
|
Initial public offering price
|
|
$
|
|
|
|
$
|
|
|
|
Underwriting discount
|
|
$
|
|
|
|
$
|
|
|
|
Proceeds, before expenses, to
ShoreTel
|
|
$
|
|
|
|
$
|
|
|
To the extent that the underwriters sell more than
7,900,000 shares of common stock, the underwriters have the
option to purchase up to an additional 1,185,000 shares
from us at the initial public offering price less the
underwriting discount.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
The underwriters expect to deliver the shares on or
about ,
2007.
|
|
|
| Piper
Jaffray |
JMP
Securities |
Wedbush
Morgan Securities |
Prospectus
dated ,
2007
TABLE OF
CONTENTS
| |
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
1
|
|
|
|
|
|
7
|
|
|
|
|
|
24
|
|
|
|
|
|
25
|
|
|
|
|
|
25
|
|
|
|
|
|
26
|
|
|
|
|
|
28
|
|
|
|
|
|
30
|
|
|
|
|
|
32
|
|
|
|
|
|
56
|
|
|
|
|
|
67
|
|
|
|
|
|
74
|
|
|
|
|
|
90
|
|
|
|
|
|
92
|
|
|
|
|
|
95
|
|
|
|
|
|
99
|
|
|
|
|
|
101
|
|
|
|
|
|
106
|
|
|
|
|
|
106
|
|
|
|
|
|
106
|
|
|
|
|
|
F-1
|
|
| EXHIBIT 23.2 |
No dealer, salesperson or other person is authorized to give
any information or to represent anything not contained in this
prospectus.
You should rely only on the information contained in this
prospectus and any free writing prospectus prepared by or on
behalf of us. This prospectus is an offer to sell only the
shares offered hereby but only under circumstances and in
jurisdictions where it is lawful to do so. The information
contained in this prospectus is current only as of its date.
Through and
including ,
2007 (the 25th day after the date of this prospectus), all
dealers effecting transactions in these securities, whether or
not participating in this offering, may be required to deliver a
prospectus. This is in addition to a dealer’s obligation to
deliver a prospectus when acting as an underwriter and with
respect to an unsold allotment or subscription.
i
PROSPECTUS
SUMMARY
This summary highlights information contained elsewhere in
this prospectus and does not contain all of the information you
should consider before buying shares of our common stock. Before
deciding to invest in shares of our common stock, you should
read the entire prospectus carefully, including our consolidated
financial statements and the related notes and the information
set forth under the headings “Risk Factors” and
“Management’s Discussion and Analysis of Financial
Condition and Results of Operations,” in each case included
elsewhere in this prospectus. Except where the context requires
otherwise, in this prospectus, “Company,”
“ShoreTel,” “we,” “us,” and
“our” refer to ShoreTel, Inc., a Delaware corporation,
and our predecessor, ShoreTel, Inc., a California corporation,
and where appropriate, their respective subsidiaries.
ShoreTel,
Inc.
Overview
We are a leading provider of Internet Protocol, or IP,
telecommunications systems for enterprises. Our systems are
based on our distributed software architecture and switch-based
hardware platform which enable multi-site enterprises to be
served by a single telecommunications system. Our systems enable
a single point of management, easy installation and a high
degree of scalability and reliability, and provide end users
with a consistent, full suite of features across the enterprise,
regardless of location. As a result, we believe our systems
enable enhanced end user productivity and provide lower total
cost of ownership and higher customer satisfaction than
alternative systems.
Our solution is comprised of ShoreGear switches, ShorePhone IP
telephones and ShoreWare software applications. We provide our
systems to enterprises across all industries, including to
small, medium and large companies and public institutions. Our
enterprise customers include multi-site Fortune
500 companies with tens of thousands of employees. As of
March 31, 2007, we had sold our IP telecommunications
systems to more than 4,500 enterprise customers, including
CNET Networks, Robert Half International and the City of
Oakland, California. We sell our systems through our extensive
network of more than 400 channel partners.
We have achieved broad industry recognition for our technology
and high customer satisfaction. Our enterprise IP
telecommunications systems received PC Magazine’s Best of
the Year 2005 Editors’ Choice designation. For the last
four years, IT executives surveyed by Nemertes Research, an
independent research firm, have rated ShoreTel highest in
customer satisfaction among leading enterprise
telecommunications systems providers.
We increased our total revenue over the last two fiscal years,
from $18.8 million in fiscal 2004 to $61.6 million in
fiscal 2006, and we generated net income of $4.0 million in
fiscal 2006 and net income of $4.2 million for the
nine-month
period ended
March 31, 2007. As of
March 31, 2007, we had
an accumulated deficit of $86.7 million and total
shareholders’ deficit of $34.5 million.
Industry
Background
Enterprises have historically operated separate networks for
voice and data communications which resulted in significant
complexity and high cost. Multi-site enterprises typically
operated separate telecommunications systems at each of their
sites that often were difficult to install and manage. These
systems also required significant additional investments to
scale and did not enable delivery of a uniform set of features
and functions across all sites. Enterprises are increasingly
migrating to a single IP network for both voice and data
communications to reduce costs and network complexity and
increase end user productivity. This migration is creating a
significant opportunity for providers of IP telecommunications
systems. Gartner, Inc., an independent research firm, estimates
that worldwide enterprise telephony systems equipment end user
revenue was $17.2 billion in 2006, including legacy TDM
PBX/KTS equipment,
IP-enabled
PBX equipment and
IP-PBX
equipment. According to Gartner, the
IP-PBX
market was estimated to have been $3.9 billion in 2006 and
is expected to grow to $7.9 billion by 2010, which
represents a 19.1% compound annual growth rate. We refer to the
TDM PBX/KTS equipment as “TDM systems,”
IP-enabled
PBX equipment as “hybrid systems,” and
IP-PBX
equipment as “IP systems.”
TDM systems, hybrid systems and a common form of IP systems,
server-centric IP telecommunications systems, each have
significant limitations. TDM systems require a dedicated voice
network that consists of circuits
1
and phones, as well as a separate PBX switch for each office
site, which results in a series of standalone telecommunications
systems within a single enterprise. This also results in high
installation, integration, and on-going management and
maintenance costs. Hybrid systems are based on a TDM
infrastructure and suffer from many of the same shortcomings as
TDM systems. Hybrid systems also require enterprises to maintain
two telecommunications systems, further increasing management
complexity and cost and leading to inconsistent features for end
users across the enterprise. Server-centric IP systems typically
have a centralized software architecture and require system
management to be performed on a
site-by-site
basis. These systems can be costly to scale because significant
additional equipment is often required to accommodate growth
while maintaining adequate redundancy. Server-centric IP systems
also run on operating systems that were not optimized for
real-time voice processing, which we believe results in lower
reliability and decreased performance.
Our
Solution
We provide switch-based IP telecommunications systems for
enterprises that address the limitations of TDM, hybrid and
server-centric IP systems. Our systems are based on our
proprietary distributed software architecture and switch-based
hardware platform. Our software applications are distributed
across each site of an enterprise, providing end users with a
consistent, full suite of features across the enterprise,
regardless of location. Our switch-based hardware platform uses
our proprietary software to allow for a single point of
management of an enterprise’s telecommunications system
across all sites.
As a result of our distributed software architecture and
switch-based hardware platform, our systems provide enterprise
customers with a number of key benefits, including:
|
|
|
| |
•
|
Ease of use. We provide a wide range of
innovative, high performance phones that we combine with our
feature-rich desktop software application, Personal Call
Manager. Personal Call Manager allows end users to control their
phones from their PCs, regardless of their location, and
integrates with enterprise software applications, such as
Microsoft Outlook and salesforce.com.
|
| |
| |
•
|
Ease of installation and management. Our
systems are easy to install as a result of our proprietary
installation software, which automatically recognizes and
configures the elements of our solution as they are added to the
systems. Our systems also feature a single point of management
with a simple, intuitive interface that allows IT managers to
modify their systems from anywhere through a web browser. We
believe our systems are also easier to install and manage
because they require fewer hardware elements than alternative
systems.
|
| |
| |
•
|
Scalability. We believe our distributed
software architecture and the modular design of our system
hardware allow enterprises to incrementally scale our systems
more cost-effectively than alternative systems, which can
require replacement of substantial amounts of system equipment
to increase capacity. In contrast, all of the investment an
enterprise customer makes in our systems will continue to
operate as their implementation of our systems expands to
support their growth.
|
| |
| |
•
|
Reliability. Our switches are designed to be
highly reliable and operate independently. Each switch in our
systems is capable of independently establishing and terminating
calls without relying on a centralized call control server, as
is the case with alternative systems. As a result, enterprise
telecommunications can survive a variety of LAN, WAN and
hardware failures using our systems.
|
| |
| |
•
|
Low total cost of ownership. Our systems allow
enterprise customers to lower the overall capital expenditures
and on-going operating expenses typically associated with the
deployment and management of enterprise telecommunications
systems.
|
Our
Strategy
Our goal is to become the leading provider of IP
telecommunications systems for enterprises. Key elements of our
strategy include:
|
|
|
| |
•
|
Extend our technology advantage. We intend to
continue our research and development activities and expand our
relationships with technology partners to enhance our product
functionality, feature set and end
|
2
|
|
|
| |
|
user experience. We also intend to continue to develop
additional applications for our systems and expand the
interoperability of our systems with additional enterprise
applications.
|
|
|
|
| |
•
|
Grow our distribution network. We intend to
increase our market penetration and extend our geographic reach
by expanding our business with existing channel partners and by
adding channel partners that serve specific target markets. We
are particularly focused on expanding our relationships with
channel partners that are focused on large enterprise accounts
and with channel partners that operate in strategic
international markets.
|
| |
| |
•
|
Maintain focus on customer satisfaction. We
intend to continue to work closely with enterprise customers to
gain valuable knowledge about their existing and future product
requirements to help us develop new products and product
enhancements that address their evolving requirements. We will
continue to actively measure, and develop programs to continue
to enhance, customer satisfaction.
|
| |
| |
•
|
Increase our brand awareness. We believe that
increased visibility and awareness of the ShoreTel brand will
enhance our ability to participate in enterprise customer
evaluations of telecommunications systems, and will enable us to
continue to grow our enterprise customer base. We intend to
increase our sales and marketing activities to both channel
partners and enterprise customers through targeted marketing
programs, such as participation in seminars, trade shows and
conferences, and advertising and public relations initiatives.
|
| |
| |
•
|
Increase penetration of our installed base. We
plan to leverage our installed enterprise customer base to
increase future sales. Since many organizations initially deploy
our systems at a single location, we believe we can drive
further penetration of our systems at multiple locations within
these enterprises.
|
Corporate
Information
We were originally incorporated in California in September 1996,
and we plan to reincorporate into Delaware prior to the
completion of this offering. Our principal offices are located
at 960 Stewart Drive,
Sunnyvale,
CA 94085, and our telephone
number is
(408) 331-3300.
Our world wide web address is http: //
www.shoretel.com. The
information found on, or accessible through, our
website is not
a part of this prospectus.
ShoreTel, our logo, ShorePhone, ShoreGear and ShoreWare are
registered trademarks of ShoreTel. All other trademarks,
tradenames and service marks appearing in this prospectus are
the property of their respective owners.
3
THE
OFFERING
|
|
|
|
Shares of common stock offered by ShoreTel |
|
7,900,000 shares |
| |
|
Shares of common stock to be outstanding after this offering |
|
41,255,916 shares |
| |
|
Use of proceeds |
|
We estimate that we will receive net proceeds of
$67.6 million from our sale of the 7,900,000 shares of
common stock offered by us in this offering, based on an assumed
initial public offering price of $9.50 per share, the
midpoint of the range set forth on the cover page of this
prospectus, after deducting estimated underwriting discounts and
commissions and estimated expenses payable by us. We intend to
use the net proceeds of this offering for working capital and
general corporate purposes. In addition, we may use up to
$5.0 million of the net proceeds of this offering to
acquire technology to extend and enhance the functionality of
our existing products. See “Use of Proceeds.” |
| |
|
Proposed NASDAQ Global Market symbol |
|
SHOR |
The number of shares of common stock to be outstanding after
this offering is based on 33,355,916 shares outstanding as
of
March 31, 2007, and excludes:
|
|
|
| |
•
|
3,243,485 shares of common stock issuable upon exercise of
outstanding options as of March 31, 2007, at a weighted
average exercise price of $1.31 per share;
|
|
|
|
| |
•
|
1,302,038 shares of common stock issuable upon exercise of
options granted between April 1, 2007 and June 13,
2007, at a weighted average exercise price of $11.34 per
share;
|
|
|
|
| |
•
|
70,883 shares of common stock issuable upon exercise of
outstanding warrants as of March 31, 2007, at a weighted
average exercise price of $2.77 per share; and
|
| |
| |
•
|
3,697,962 shares of common stock reserved for future grant
or issuance under our 2007 equity incentive plan and
500,000 shares of common stock to be available for issuance
under our 2007 employee stock purchase plan effective upon the
completion of this offering.
|
Except as otherwise noted, all information in this prospectus:
|
|
|
| |
•
|
reflects our reincorporation into Delaware and the filing of our
restated certificate of incorporation prior to the completion of
this offering;
|
| |
| |
•
|
reflects the conversion of all our outstanding shares of
redeemable convertible preferred stock into an aggregate of
23,316,406 shares of common stock effective upon the
completion of this offering;
|
| |
| |
•
|
reflects the conversion of all outstanding warrants to purchase
shares of our redeemable convertible preferred stock into
warrants to purchase an aggregate of 67,703 shares of
common stock effective upon completion of this offering;
|
| |
| |
•
|
reflects a 1-for-10 reverse split of our outstanding capital
stock to be effective prior to the completion of this
offering; and
|
| |
| |
•
|
assumes no exercise of the underwriters’ option to purchase
up to an additional 1,185,000 shares from us.
|
4
SUMMARY
CONSOLIDATED FINANCIAL DATA
The following tables summarize our consolidated financial data.
The consolidated statements of operations data for the fiscal
years ended
June 30, 2004,
2005 and
2006 have been derived
from our audited consolidated financial statements included
elsewhere in this prospectus. The consolidated statements of
operations data for the nine-month periods ended
March 31,
2006 and
2007 have been derived from our unaudited consolidated
financial statements included elsewhere in this prospectus. The
unaudited consolidated financial statements include, in the
opinion of management, all adjustments, which include only
normal recurring adjustments, that management considers
necessary for the fair presentation of the financial information
set forth in those financial statements. You should read this
data together with our consolidated financial statements and the
notes to those statements included elsewhere in this prospectus
and the information under
“Selected Consolidated Financial
Data” and
“Management’s Discussion and Analysis
of Financial Condition and Results of Operations.” Our
historical results are not necessarily indicative of the results
to be expected in any future period.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended June 30,
|
|
|
Nine Months Ended March 31,
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
|
|
(Dollars in thousands, except per share amounts)
|
|
|
|
|
Consolidated statement of
operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product
|
|
$
|
16,587
|
|
|
$
|
31,970
|
|
|
$
|
55,300
|
|
|
$
|
37,972
|
|
|
$
|
61,473
|
|
|
Support and services
|
|
|
2,241
|
|
|
|
3,512
|
|
|
|
6,308
|
|
|
|
4,552
|
|
|
|
7,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenue
|
|
|
18,828
|
|
|
|
35,482
|
|
|
|
61,608
|
|
|
|
42,524
|
|
|
|
68,904
|
|
|
Cost of revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Product (1)
|
|
|
7,725
|
|
|
|
13,961
|
|
|
|
21,855
|
|
|
|
15,723
|
|
|
|
21,271
|
|
|
Support and services (1)
|
|
|
1,660
|
|
|
|
2,907
|
|
|
|
5,425
|
|
|
|
3,942
|
|
|
|
4,853
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of revenue
|
|
|
9,385
|
|
|
|
16,868
|
|
|
|
27,280
|
|
|
|
19,665
|
|
|
|
26,124
|
|
|
Gross profit
|
|
|
9,443
|
|
|
|
18,614
|
|
|
|
34,328
|
|
|
|
22,859
|
|
|
|
42,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development (1)
|
|
|
5,517
|
|
|
|
7,034
|
|
|
|
9,720
|
|
|
|
6,520
|
|
|
|
11,450
|
|
|
Sales and marketing (1)
|
|
|
8,004
|
|
|
|
10,050
|
|
|
|
15,699
|
|
|
|
10,855
|
|
|
|
18,441
|
|
|
General and administrative (1)
|
|
|
2,166
|
|
|
|
3,045
|
|
|
|
4,936
|
|
|
|
3,108
|
|
|
|
8,383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
15,687
|
|
|
|
20,129
|
|
|
|
30,355
|
|
|
|
20,483
|
|
|
|
38,274
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
(6,244
|
)
|
|
|
(1,515
|
)
|
|
|
3,973
|
|
|
|
2,376
|
|
|
|
4,506
|
|
|
Other income (expense) —
net
|
|
|
(7
|
)
|
|
|
124
|
|
|
|
248
|
|
|
|
96
|
|
|
|
(7
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before provision for
income taxes
|
|
|
(6,251
|
)
|
|
|
(1,391
|
)
|
|
|
4,221
|
|
|
|
2,472
|
|
|
|
4,499
|
|
|
Income tax provision
|
|
|
—
|
|
|
|
(11
|
)
|
|
|
(219
|
)
|
|
|
(140
|
)
|
|
|
(311
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
|
(6,251
|
)
|
|
|
(1,402
|
)
|
|
|
4,002
|
|
|
|
2,332
|
|
|
|
4,188
|
|
|
Accretion of preferred stock
|
|
|
(26
|
)
|
|
|
(32
|
)
|
|
|
(51
|
)
|
|
|
(38
|
)
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) available to
common shareholders
|
|
$
|
(6,277
|
)
|
|
$
|
(1,434
|
)
|
|
$
|
3,951
|
|
|
$
|
2,294
|
|
|
$
|
4,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share
available to common shareholders (2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.27
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
0.60
|
|
|
$
|
0.36
|
|
|
$
|
0.50
|
|
|
Diluted
|
|
$
|
(1.27
|
)
|
|
$
|
(0.27
|
)
|
|
$
|
0.39
|
|
|
$
|
0.24
|
|
|
$
|
0.34
|
|
|
Shares used in computing net income
(loss) per share available to common shareholders (2):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
4,934,507
|
|
|
|
5,351,706
|
|
|
|
6,609,170
|
|
|
|
6,358,839
|
|
|
|
8,341,561
|
|
|
Diluted
|
|
|
4,934,507
|
|
|
|
5,351,706
|
|
|
|
10,114,513
|
|
|
|
9,574,631
|
|
|
|
12,176,351
|
|
|
Unaudited pro forma net income per
share available to common shareholders (3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
$
|
0.13
|
|
|
|
|
|
|
$
|
0.13
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
$
|
0.12
|
|
|
|
|
|
|
$
|
0.12
|
|
|
Unaudited shares used in computing
pro forma net income per share available to common shareholders
(3):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
|
|
|
|
|
|
29,925,576
|
|
|
|
|
|
|
|
31,657,967
|
|
|
Diluted
|
|
|
|
|
|
|
|
|
|
|
33,430,919
|
|
|
|
|
|
|
|
35,492,757
|
|
5
|
|
|
|
(1)
|
|
Includes stock-based compensation
expense as follows:
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
|
|
|
|
|
Year Ended June 30,
|
|
|
Ended March 31,
|
|
|
|
|
2004
|
|
|
2005
|
|
|
2006
|
|
|
2006
|
|
|
2007
|
|
|
|
|
(In thousands)
|
|
|
|
|
Cost of product revenue
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7
|
|
|
Cost of support and services revenue
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
|
14
|
|
|
|
55
|
|
|
Research and development
|
|
|
—
|
|
|
|
—
|
|
|
|
14
|
|
|
|
6
|
|
|
|
190
|
|
|
Sales and marketing
|
|
|
—
|
|
|
|
—
|
|
|
|
7
|
|
|
|
2
|
|
|
|
331
|
|
|
General and administrative
|
|
|
45
|
|
|
|
82
|
|
|
|
45
|
|
|
|
24
|
|
|
|
1,470
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
$
|
45
|
|
|
$
|
82
|
|
|
$
|
82
|
|
|
$
|
46
|
|
|
$
|
2,053
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2)
|
|
See note 2 to our consolidated
financial statements for a description of the method used to
compute basic and diluted net income (loss) per share available
to common shareholders, which gives effect to the
1-for-10
reverse split of our outstanding common stock prior to the
closing of this offering.
|
| |
|
(3)
|
|
See note 2 to our consolidated
financial statements for a description of the method used to
compute basic and diluted net income (loss) per share available
to common shareholders. Unaudited pro forma basic and diluted
net income per share available to common shareholders have been
computed to give effect to the
1-for-10
reverse split of our outstanding common stock prior to the
closing of this offering and the assumed conversion of
redeemable convertible preferred stock upon the closing of this
offering on an if-converted basis for the fiscal year ended
June 30, 2006 and the nine-month period ended
March 31, 2007.
|
The actual consolidated balance sheet data as of
March 31,
2007 have been derived from our unaudited consolidated financial
statements included elsewhere in this prospectus. The pro forma
consolidated balance sheet data set forth below give effect to
the conversion of all outstanding redeemable convertible
preferred stock into common stock and the reclassification of
the preferred stock warrant liability to common stock upon the
completion of this offering. The pro forma as adjusted
consolidated balance sheet data set forth below give effect to
our receipt of the net proceeds from the sale of
7,900,000 shares of common stock offered by us at an
assumed initial public offering price of $9.50 per share,
the midpoint of the range set forth on the cover page of this
prospectus, after deducting the estimated underwriting discounts
and commissions and estimated offering expenses payable by us.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2007
|
|
|
|
|
|
|
|
|
|
|
Pro Forma As
|
|
|
|
|
Actual
|
|
|
Pro Forma
|
|
|
Adjusted(1)
|
|
|
|
|
(In thousands)
|
|
|
|
|
Consolidated balance sheet
data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
16,811
|
|
|
$
|
16,811
|
|
|
$
|
84,458
|
|
|
Working capital
|
|
|
22,443
|
|
|
|
22,443
|
|
|
|
90,090
|
|
|
Total assets
|
|
|
48,112
|
|
|
|
48,112
|
|
|
|
115,759
|
|
|
Preferred stock warrant liability
|
|
|
666
|
|
|
|
—
|
|
|
|
—
|
|
|
Redeemable convertible preferred
stock
|
|
|
56,329
|
|
|
|
—
|
|
|
|
—
|
|
|
Total shareholders’ equity
(deficit)
|
|
|
(34,453
|
)
|
|
|
22,542
|
|
|
|
90,189
|
|
|
|
|
|
(1)
|
|
Each $1.00 increase or decrease in
the assumed initial public offering price of $9.50 per
share would increase or decrease, respectively, the amount of
cash and cash equivalents, working capital, total assets and
total shareholders’ equity on a pro forma as adjusted basis
by approximately $7.3 million, assuming the number of
shares offered by us, as set forth on the cover of this
prospectus, remains the same and after deducting the estimated
underwriting discounts and commissions payable by us.
|
6
RISK
FACTORS
This offering and an investment in our common stock involve a
high degree of risk. You should carefully consider the risks and
uncertainties described below, together with all of the other
information in this prospectus, including the consolidated
financial statements and the related notes appearing at the end
of this prospectus, before deciding to invest in our common
stock. If any of the following risks actually occurs, our
business, financial condition, results of operations and future
prospects could be materially and adversely affected. In that
event, the market price of our common stock could decline and
you could lose part or all of your investment.
Risks
Related to Our Business
Our
recent profitability and growth rates may not be indicative of
our future profitability or growth, and we may not be able to
continue to maintain or increase our profitability or
growth.
While we have been profitable in recent periods, we had an
accumulated deficit of $86.7 million as of
March 31,
2007. This accumulated deficit is attributable to net losses
incurred from our inception in September 1996 through the end of
the third quarter of fiscal 2005. We may not succeed in
maintaining or increasing our profitability and could incur
losses in future periods. We expect to incur significant
additional operating expenses associated with being a public
company. We also expect that our operating expenses, including
recognition of stock-based compensation, will continue to
increase in all areas as we seek to grow our business. If our
gross profit does not increase to offset these expected
increases in operating expenses, our operating results will be
negatively affected. You should not consider our recent growth
rates in terms of revenue and net income as indicative of our
future growth. Accordingly we cannot assure you that we will be
able to maintain or increase our profitability in the future.
The
market in which we operate is intensely competitive, and many of
our competitors are larger, more established and better
capitalized than we are.
The market for IP telecommunications and other
telecommunications systems is extremely competitive. Our
competitors include companies that offer IP systems, such as
Cisco Systems, Inc. and 3Com Corporation, and that offer
hybrid systems, such as Alcatel-Lucent, Avaya, Inc., Inter-Tel
Incorporated, Mitel Networks Corporation (which recently
announced plans to acquire Inter-Tel Incorporated) and Nortel
Networks Corporation. Several of the companies that offer hybrid
systems are beginning to also offer IP telecommunications
systems. Many of our competitors are substantially larger and
have greater financial, technical, research and development,
sales and marketing, manufacturing, distribution and other
resources. We could also face competition from new market
entrants, whether from new ventures or from established
companies moving in to the market. These competitors have
various other advantages over us, including:
|
|
|
| |
•
|
greater market presence, name recognition and brand reputation;
|
| |
| |
•
|
a larger installed base of telecommunications and networking
systems with enterprise customers;
|
| |
| |
•
|
larger and more geographically distributed services and support
organizations and capabilities;
|
| |
| |
•
|
a broader offering of telecommunications and networking
products, applications and services;
|
