Prospectus Summary
You should read the following summary together with the more detailed information regarding our company and the common stock being sold in this offering appearing elsewhere in this prospectus and in our Consolidated Financial Statements and related notes and other documents incorporated herein by reference.
Our Company
We design, develop and market multi-service broadband access systems that enable service providers to deliver high-speed data access to multi-tenant buildings such as apartments, hotel and office complexes. We use our proprietary FastCopper technology to deliver a cost-effective, scalable and easy to deploy solution to exploit the underutilized bandwidth of copper telephone wires within these buildings. Our collection of FastCopper technologies includes HomeRun, which was selected as the initial specification for a home networking standard promoted by the Home Phoneline Network Alliance, or Home PNA, and LongRun, a proprietary extension of HomeRun providing superior performance at longer distances. These technologies are deployed through our Expresso high-bandwidth access multiplexers and associated routers. Augmenting our Expresso access multiplexers are products that provide service providers with enhanced capabilities such as subscriber management, firewall protection, virtual private networking, and small business email and web servers.
As the demand for high-speed Internet access has increased significantly over the last couple of years, we believe that owners and managers of multi-tenant units, or MTUs, have begun to view high-speed Internet access as a critical enhanced service for their residents, guests and tenants. We market our products to a set of specialized service providers that have recently emerged to fill this growing demand by MTU owners and managers. In addition to Internet access, we believe that the delivery of multiple enhanced services will be critical to meeting future customer needs and driving service provider profitability through bundled service offerings.
Our products and services are designed with the specific requirements of the MTU market in mind and provide the following benefits to our service provider customers:
. Reliable, high performance, cost-effective broadband access technology. Our technology enables cost-effective Ethernet LANs to be quickly implemented over the telephone wires found in a business or residence, without interfering with existing telephone service that may be running over these same wires.
. Easy-to-deploy, scalable systems. Our Expresso access products, which are integrated with our proprietary technologies, are scalable and compact in order to meet the installation and operation requirements of MTUs.
. Multiple value-added, revenue-enhancing services. Our Expresso SMS 2000 and Expresso OCS systems provide plug-and-play functionality, subscriber management, credit card billing and other functions for the multi- dwelling unit, or MDU market. Our OneGate Internet appliance enables business-focused service providers to the multi-commercial unit, or MCU, market to provide key Internet access functions required by small businesses, such as firewall protection and virtual private networking.
Our objective is to be the dominant provider of advanced multi-service broadband access systems for the MTU market. The key elements of our strategy are to:
. Facilitate rapid growth in the MDU market, such as apartments and hotels;
. Accelerate penetration in the MCU market, such as office complexes;
. Enhance the service capabilities provided by our products and systems;
.Continue to leverage our HomeRun technology and partnerships; and . Expand our international presence.
Our principal executive offices are located at 5964 W. Las Positas, Pleasanton, California 94588. Our telephone number is (925) 460-3900. We were incorporated in California in August 1983, began operations in August 1991, and reincorporated in Delaware in September 1998.
The Offering
Common stock offered by the selling stockholders....................... 369,405 shares Common stock to be outstanding after this offering...................... 15,616,536 shares Use of proceeds..................... We will not receive any proceeds from the sale of common stock by the selling stockholders Nasdaq National Market symbol....... TUTS The number of shares of common stock outstanding after this offering is based on shares outstanding as of June 30, 2000 and excludes:
. 2,832,159 shares of common stock issuable upon exercise of outstanding options with a weighted average exercise price of $29.90 per share; and . 430,598 shares reserved for future grant under our option plans; and . 232,759 shares that have been reserved for future grant under our employee stock purchase plan.
Summary Consolidated Financial Data (in thousands, except per share data)
Six Months
Years Ended December 31, Ended June 30,
1995 1996 1997 1998 1999 1999 2000
(unaudited)
Consolidated Statement of Operations Data: Total revenues.......... $ 3,445 $ 4,454 $ 6,221 $ 10,555 $ 27,807 $ 8,901 $37,488 Gross margin............ 1,757 2,256 2,993 4,746 12,348 3,738 17,117 Loss from operations.... (3,443) (4,607) (9,351) (13,956) (13,329) (6,707) (8,022) Net loss attributable to common stockholders.... (4,084) (5,564) (10,784) (16,331) (11,969) (6,242) (5,416) Net loss per share attributable to common stockholders, basic and diluted................ $(32.56) $(37.51) $ (59.36) $ (60.62) $ (1.12) $ (0.64) $ (0.39) Shares used in computing net loss per share attributable to common stockholders, basic and diluted................ 125 148 182 269 10,729 9,695 13,869 As of June 30, 2000 (unaudited)
Consolidated Balance Sheet Data: Cash, cash equivalents and short-term investments........... $134,651 Working capital............................................. 156,666 Total assets................................................ 245,863 Total stockholders' equity.................................. 229,458
Recent Developments
On August 10, 2000, we entered into a non-binding letter of intent to acquire ActiveTelco, Inc., which is located in Fremont, California. ActiveTelco provides an Internet telephony platform that enables Internet and telecommunications service providers to integrate and deliver Web-based telephony applications such as unified messaging, long-distance service, voicemail and fax delivery, call forwarding, call conferencing and callback services. The letter of intent contemplates that we and ActiveTelco would negotiate a purchase agreement, under which we would issue to ActiveTelco shareholders and optionholders an aggregate of 340,000 shares and options to purchase shares of our common stock, worth approximately $34.6 million. We expect that this acquisition, if completed, will be accounted for as a purchase. Completion of the acquisition is subject to negotiation of the purchase agreement, satisfactory completion of our due diligence investigation and a number of other customary conditions. Unaudited pro forma combined financial information contemplating a completed transaction is presented herein (see "F-23").