As filed with the Securities and Exchange Commission on February 28, 1997
Registration Statement No.333-20529
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
EXPERT SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
Delaware
65-0359860
(State of
Incorporation)
(IRS Employer Identification Number)
800 Douglas Road, Suite 750
Coral Gables, Florida 33134
(305) 567-9990
(Address including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
-------------------------------
Kenneth P. Currier
Chief Executive Officer
Expert Software, Inc.
800 Douglas Road, Suite 750
Coral Gables, Florida 33134
(305) 567-9990
(Name, address, including zip code, and telephone number,
including area code of agent for service)
-------------------------------
With copies to:
John B. Steele, Esq.
Goodwin, Proctor & Hoar, L.L.P.
Exchange Place
53 State Street
Boston, Massachusetts 02109-2881
(617) 570-1000
Approximate date of commencement of proposed sale to the public: From time
to time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering |_|
If this Form is a post-effective amendment filed pursuant to Rule 452(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
---------------------
Page 1 of 18 pages.
Exhibit Index is at page 16.
CALCULATION OF REGISTRATION FEE
Title of Amount to Proposed Proposed Amount of
Shares to be Maximum Maximum Registration
be registered registered Offering Aggregate Fee (2)
Price Per Offering
Share (1) Price (1)
- ----------------------------------------------------------------------
Common Stock 315,409 $4.187 $1,320,617.50 $455.38
Shares
(1) Estimated solely for the purpose of calculating the registration
fee pursuant to Rule 457 of the Securities Act of l933 as amended.
(2) Pursuant to Rule 457(c) under the Securities Act of 1933, the
registration fee has been calculated based upon the average of the bid
and ask prices per share of Common Stock on the NASDAQ National Market System
on January 14, 1997.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay the effective date until the registrant
shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance
with Section 8(a) of the Securities Act of l933 or until the
registration statement shall become effective on such date as the Commission,
acting pursuant to said Section 8(a), may determine.
- -------------------------------------------------------------------------------
SUBJECT TO COMPLETION, DATED FEBRUARY 28, 1997
PROSPECTUS
315,409 Shares
EXPERT SOFTWARE, INC.
Common Stock
-------------
This prospectus relates to the offer and sale of 315,409 shares of
common stock, $.01 par value per share ("Common Stock") of Expert Software,
Inc. ("Expert" or the "Company") by certain stockholders of the Company named
herein (the "Selling Stockholders"). See "Selling Stockholders" and
"Plan of Distribution."
The Common Stock is quoted on The Nasdaq National Market System under
the trading symbol "XPRT".
------------------
See "Risk Factors" beginning on Page 4 for certain risk factors
relevant to an investment in the Common Stock
------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
The 315,409 shares of Common Stock offered hereby (the "Shares") may be
sold from time to time by the Selling Shareholders on The Nasdaq National
Market System on terms to be determined at the times of such sales. The
Selling Stockholders may also make private sales directly or through
a broker or brokers. Alternatively, the Selling Stockholders may from time
to time offer Shares offered hereby to or through underwriters, dealers or
agents who may receive consideration in the form of discounts and commissions.
Such compensation, which may be in excess of ordinary brokerage commissions,
may be paid by the Selling Stockholders and/or the purchasers of the Shares
offered hereby for whom such underwriters, dealers or agents may act. The
Company is registering the Shares to satisfy the Company's contractual
obligations to the Selling Stockholders to use best efforts to register such
Shares, but the registration of the Shares does not necessarily mean that any
of the Shares will be offered or sold hereunder. See "Selling Stockholders"
and "Plan of Distribution."
The Selling Stockholders and any dealers or agents that participate in
the distribution of the Securities offered hereby may be deemed to be
"underwriters" as defined in the Securities Act of 1933, as amended (the
"Securities Act") and any profit in the sale of such Shares offered hereby by
them and any discounts, commissions or concessions received by any such dealers
or agents might be deemed to be underwriting discounts and commissions under
the Securities Act.
The Company will receive no proceeds from the sale of the Shares by
Selling Stockholders hereunder, but the Company will pay the expenses incurred
by the Company in connection with the registration of the Shares with the
Securities and Exchange Commission. See "Plan of Distribution" for
indemnification arrangements between the Company and the Selling Stockholders.
-------------------
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR
AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT
BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION
STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES
LAWS OF ANY SUCH STATE.
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE SALE OF ANY
SHARES PURSUANT TO THIS PROSPECTUS TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN AS CONTAINED IN THIS PROSPECTUS, AND IF GIVEN
OR MADE, ANY SUCH INFORMATION OR REPRESENTATION MAY NOT BE RELIED ON AS HAVING
BEEN AUTHORIZED BY THE COMPANY.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE PURSUANT TO THIS
PROSPECTUS SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE COMPANY'S AFFAIRS SINCE THE DATE OF THIS PROSPECTUS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES COVERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER OR SOLICITATION OF ANY PERSON IN
ANY JURISDICTION IN WHICH AN OFFER OR SOLICITATION MAY NOT BE LAWFULLY MADE.
-------------------
The date of this Prospectus is February 28, 1997
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"SEC" or "Commission") a Registration Statement on Form S-3 under the
Securities Act with respect to the Shares. This Prospectus, which constitutes
part of the Registration Statement, omits certain of the information
contained in the Registration Statement and the exhibits thereto on file
with the Commission pursuant to the Securities Act and the rules and
regulations of the Commission thereunder. The Registration Statement,
including exhibits thereto, may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the Commission's Regional Offices at
7 World Trade Center, 13th Floor, New York, New York, 10048, and Citicorp
Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and
copies may be obtained at the prescribed rates from the Public Reference
Section of the Commission at its principal office in Washington, D.C.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete, and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified
in all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information can be
inspected and copied at the locations described above. Copies of such materials
can be obtained by mail from the Public Reference Section of the Commission at
450 Fifth Street, N.W. Room, 1024, Washington, D.C. at prescribed rates.
In addition, the Company is required to file electronic versions of these
documents with the Commission through the Commission's Electronic Data
Gathering, Analysis and Retrieval (EDGAR) system. The Commission maintains a
World Wide Web site at http//www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that
file electronically with the Commission.
The Company's Common Stock is quoted on the Nasdaq National Market under
the symbol "XPRT". Reports, proxy statements and other information about the
Company may also be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Commission pursuant to the Exchange Act are incorporated by reference in this
Prospectus:(i) Annual Report on Form 10-K for the fiscal year ended December
31, 1995, (ii) Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, l996,(iii) Quarterly Report on Form 10-Q for the fiscal quarter ended June
30, 1996, (iv) Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1996, (v) Form 8-K dated October 23, l996, and (vi) the
description of the Common Stock contained in the Company's Form 8-A
filed with the Commission pursuant to the Exchange Act, including all
amendments and reports updating such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this offering shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
subsequently filed document that is incorporated by reference herein modifies
or supersedes such earlier statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide, without charge, to each person, including a
beneficial owner to whom a copy of the Prospectus is delivered, at the written
or oral request of such person, a copy of any or all of the documents
incorporated herein by reference(other than exhibits thereto, unless such
exhibits are specifically incorporated by reference into such documents).
Written requests for such copies should be directed to Chief Financial
Officer, Expert Software, Inc., 800 Douglas Road, Suite 750, Coral Gables,
Florida 33134 (Telephone: 305-567-9990).
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Company's actual results may differ materially
from the results discussed on the forward-looking statements. Factors that
might cause such a difference include, but are not limited to, those discussed
below.
RISK FACTORS
An investment in the Company involves various risks. In addition to
other matters referenced in the Company's documents which are filed with
the Commission and which are incorporated by reference herein,
prospective stockholders should consider the following risk factors:
Liquidity and Capital Resources. Since December 31, 1995, the Company
has experienced a reduction in its stockholders' equity, working capital and
ratio of current assets to current liabilities, primarily as a result of net
losses realized during that period. Management has responded by reducing
expenses, including among other actions, reducing personnel significantly.
As of September 30, 1996, the Company had $3.8 million in working
capital, including $1.9 million in cash. Net cash used by operating activities
was $4.5 million for the nine months ended September 30, 1996, primarily due to
the payment of approximately $2.7 million for income taxes related to 1995 and
1996, and increased investment in accounts receivable. Increases in gross
accounts receivable were offset by increases in provisions for returns and
doubtful accounts. Net cash provided by investing activities was $5.5 million,
primarily due to the maturity and sales of certain marketable securities,
offset by purchases of property and equipment.
The Company believes that cash generated by operations may be affected by
an increase in working capital requirements as it continues to expand
operations. In response to such growth in working capital requirements, the
Company entered into a two year, $5.0 million unsecured revolving line of
credit in May, 1996. Availability under the line is based on an advance rate
applied to eligible receivables and the maintenance of certain financial ratios.
As a result of the Company's performance in the second and third quarters of
fiscal 1996, the Company was no longer in compliance with the original
financial ratios under its revolving line of credit. Amendments to the line
of credit were entered into, modifying the financial ratios to reflect its year
to date results of operations and granting a security interest in the
Company's assets. There can be no assurance that the Company's results of
operations will continue to be in compliance with the line of credit covenants,
which among other things, prohibit two consecutive quarterly losses commencing
with the third quarter of 1996, or that the line of credit will be otherwise
available to the Company.
Competition. The Company competes with many companies, including
large software publishing companies. Many of these companies have
substantially greater financial and other resources, larger development staffs,
and more extensive manufacturing and marketing organizations than those of the
Company. The Company has experienced consolidation of the software industry
among both customers and competitors, evolving distribution channels, the
growth in popularity of the Internet and other new technologies among
competitors which could impact the distribution and purchase of software.
Dependence Upon Key Personnel. The Company is highly dependent on
the members of its management and development staff, the loss of one or more
of which could have a material adverse effect on the Company. In addition,
the Company believes that its future success will depend in large part upon
its ability to attract and retain highly skilled, technical, managerial, and
marketing personnel. The Company faces significant competition for such
personnel from other companies, research and academic institutions,
government entities and other organizations. There can be no assurance that the
Company will be successful in hiring or retaining the personnel it requires.
The failure to hire and retain such personnel could materially and adversely
affect the Company's prospects.
Potential Volatility of Stock Price. The market price of shares of
the Company's Common Stock has been, and in the future will likely be,
highly volatile. Factors such as announcements of new commercial products or
technological innovations by the Company or its competitors, results of
operations of the Company, its primary competitors or significant customers,
and general market conditions may have a significant effect on the market price
of the Company's Common Stock.
Changes in Technology and Industry Standards. The consumer software
industry is undergoing rapid changes, including evolving industry standards,
frequent new product introductions and changes in consumer requirements and
preferences. The introduction of new technologies, including operating systems
and media formats, can render the Company's existing products obsolete or
unmarketable. In 1993, for example, there was a significant shift in consumer
demand from DOS-based software to Windows-based software. More recently,
consumer demand has been shifting from disk-based software to software on
CD-ROM's. There can be no assurance that the current demand for the Company's
Windows and CD-ROM products will continue or that the mix of the Company's
future product offerings will keep pace with technological changes or satisfy
evolving consumer preferences. The success of the Company will be dependent
upon its ability to develop, introduce and market products which respond to
such changes in a timely fashion. There can be no assurances that the Company
will be successful in developing and marketing products for certain advanced
and emerging operating systems and formats. Failure to develop and introduce
new products and product enhancements in a timely fashion could result in
significant product returns and inventory obsolescence and could impair the
Company's business operating results and financial condition.
Dependence on Retailers and Distributors. The Company sells its products
primarily on a direct basis to retailers as well as to distributors for resale
to retailers. The Company's retail customers include office supply stores,
software specialty stores, warehouse clubs, consumer electronic stores,
mall-based chains and mass merchants. The Company's customers are not
contractually required to make future purchases of the Company's products and
therefore could discontinue carrying the Company's products in favor of a
competitor's product or for any other reason. Retailers and distributors
compete in a volatile industry that is subject to rapid change, consolidation,
financial difficulty and increasing competition from new distribution channels.
Due to increased competition for limited shelf space, retailers and
distributors are increasingly in a better position to negotiate favorable terms
of sale, including price discounts and product return policies. Retailers
often require software publishers to pay fees in exchange for preferred shelf
space. Retailers may give higher priority to products other than the Company's
thus reducing their efforts to sell the Company's products. There can be no
assurance that the Company will be able to increase or sustain its current
amount of retail shelf space or promotional resources, and as a result, the
Company's operating results could be adversely affected. In addition, other
types of retail outlets and methods of product distribution may become
important in the future, such as on-line services. It is critical to the
success of the Company that as those changes occur the Company gains access
to those channels of distribution.
Customer Concentration and Credit Risk. In the first nine months of
1996, the Company's two largest customers each accounted for more than 10% of
gross sales less actual returns ("Sales") and in the aggregate accounted
for approximately 26% of the Company's outstanding gross accounts receivable
at September 30, 1996. In 1995, the Company's three largest customers each
accounted for more than 10% of Sales and in the aggregate accounted for
approximately 36% of the Company's gross outstanding accounts receivable
at December 30, 1995.
The loss of any of the Company's major customers, a significant decrease
in product shipments to any one or more of them or an inability to
collect receivables from one or more of them could adversely affect the
Company's business, operating results and financial condition.
Product Returns; Collection of Accounts Receivable. Consistent with
industry practices, the Company may accept product returns or provide other
credits in the event that a retailer or distributor holds excess inventory of
the Company's products. The Company's sales are made on credit terms and it
does not generally hold collateral to secure payment. Therefore, a default in
payment on a significant scale could adversely affect the Company's business,
results of operations and financial condition. It is difficult for the Company
to ascertain current demand for its existing products and anticipated
demand for newly introduced products. Accordingly, the Company is exposed to
the risk of product returns from retailers and distributors. There can be no
assurance that actual returns and uncollectible accounts receivables will not
exceed the Company's reserves. Any significant increase in product returns or
uncollected accounts receivable beyond the reserves provided could have a
material adverse effect on the Company's business, results of operations and
financial condition.
Dependence on External Development Resources. The Company relies on
external development resources for the development of a significant number of
the software products it publishes. Due primarily to the increased demand for
consumer software programs, the payment of advance and guaranteed royalties
to independent developers has increased in the industry and may continue to
increase. As independent developers are in high demand, there can be no
assurance that independent developers, including those which have developed
products for the Company in the past, will be available to develop products for
the Company in the future. Many independent developers have limited financial
resources, which could expose the Company to the risk that such developers may
be out of business prior to completing a project. In addition, due to the fact
that the Company has less control over the scheduling and quality of the work of
independent developers than it does over its own employees, there can be no
assurance that such developers will complete products for the Company on a
timely basis, within acceptable guidelines, or at all. Furthermore, under the
Company's typical agreements with its independent software developers, the
Company's licenses to publish and market their software programs have initial
five year terms, which automatically renew annually until canceled by either
party. The Company's success depends in part on its continued ability to obtain
and renew product development agreements with independent software developers.
The Company's success is also dependent on its ability to obtain content for its
products from external sources. There can be no assurance that the Company will
be able to obtain or renew product development agreements or to obtain
such content on favorable terms, or at all.
Management of Growth. The Company's ability to manage its growth
effectively will require it to continue to improve its operational, financial
and management information systems, and to attract, train, motivate, manage
and retain key employees. The Company has implemented a new management
information system and may make additional investments in capital equipment to
address increasing sales volume. No assurance can be given that these new
systems will be fully implemented successfully and the failure to do so could
have a material adverse effect on the Company's business, operating results,
and financial condition. If the Company's management becomes unable to manage
growth effectively, the Company's business operating results and financial
condition could be adversely affected.
Limited Protection of Intellectual Property and Proprietary Rights. The
Company regards its software as proprietary and relies primarily on a
combination of trademark, copyright and trade secret laws, employee and third
party nondisclosure agreements and other methods to protect its proprietary
rights. The Company does not include in its products any mechanism to prevent
or inhibit unauthorized copying. Unauthorized copying occurs within the
software industry, and if a significant amount of unauthorized copying of the
Company's products were to occur, the Company's business, operating results and
financial condition could be adversely affected. Also, as the number of
software products in the industry increases and the functionality of these
products further overlaps, software developers and publishers may increasingly
become subject to infringement claims. There can be no assurance that third
parties will not assert infringement claims against the Company in the future
with respect to current and future products. Although the Company has not
been the subject of any actual pending or threatened intellectual property
litigation, there has been substantial litigation among software companies
regarding copyright, trademark, or other intellectual property rights. Any such
claims or litigation, with or without merit, could be costly and a diversion of
management's attention which could have a material adverse effect on the
Company's business, operating results and financial condition. Adverse
determinations in such claims or litigation could have a material adverse
effect on the Company's business, operating results and financial condition.
Anti-takeover Provisions. The Company's Board of Directors has the authority
to issue shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions of those shares without any further
vote or action by the stockholders. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect
of making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company. The Company has no present plans to
issue shares of Preferred Stock except as provided by the Company's Shareholder
Rights Agreement. In addition, the Company is subject to the anti-takeover
provisions of Section 203 of the Delaware General Corporation Law. In general,
this statute prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the "business combination" is approved in a
prescribed manner. For purposes of Section 203, a "business combination"
includes a merger, asset sale or other transaction resulting in a
financial benefit to the "interested stockholder" and an interested stockholder
is a person who, together with affiliates and associates, owns (or within three
years prior, did own) 15% or more of the corporation's voting stock. Although
Section 203 applies generally to the Company and its stockholders, it does not
apply to any of the Company's stockholders who owned, together with any
affiliates and associates, 15% or more of the Common Stock immediately after
the Company's initial public offering. Furthermore, certain other provisions of
the Company's Certificate of Incorporation and By-laws may have the effect of
discouraging, delaying or preventing a merger, tender offer, or proxy contest,
which could adversely affect the market price of the Company's Common Stock.
Such provisions include, among other things, a classified Board of Directors
serving staggered three-year terms, the removal of directors only for cause,
exclusive authority to determine the size of the entire Board of Directors and
subject to certain limited exceptions, to fill vacancies thereon, exclusive
authority of the Board of Directors (except as otherwise required by law) to
call special meetings of stockholders, elimination of stockholder action by
written consent and certain advance notice requirements for stockholders
proposals and nominations for election to the Board of Directors.
The Company has adopted a Shareholder Rights Agreement. The purpose of the
Shareholders Rights Agreement is, among other things, to ensure that
stockholders receive fair and equal treatment in the event of any proposed
acquisition of the Company. The adoption of the Shareholder Rights Agreement
could make it more difficult for a third party to acquire, or could discourage
a third party from acquiring, the Company or a large block of the Company's
Common Stock.
Potential Impact of Shares Eligible for Future Sale. There are
currently approximately 7,507,804 shares of Common Stock outstanding, of
which 315,409 shares of Common Stock are being registered hereby. The holders
of approximately 2,269,690 shares of Common Stock have contractual rights to
have those shares registered with the Securities and Exchange Commission for
resale to the public. In addition, the Company has filed a registration
statement covering the shares of Common Stock reserved for issuance under the
Company's 1992 Stock Option Plan and, accordingly, such shares issued under the
1992 Stock Option Plan will be eligible for sale in the public market, subject,
with respect to affiliates of the Company, to compliance with applicable
Rule 144 limitations. Sales of substantial amounts of these shares of Common
Stock in the public market could have an adverse effect on the market price of
the Common Stock.
THE COMPANY
Expert Software, Inc. is a Delaware corporation with its
principal executive offices at 800 Douglas Road, Executive Tower,
Suite 750, Coral Gables, Florida 33134. Its telephone number is
(305) 567-9990.
"Expert Software", "Swfte", and all of Expert's logos and product names are
trademarks of the Company. This prospectus also contains trademarks of
companies other than those of the Company. The Company's executive offices are
located at 800 Douglas Road, Executive Tower, Suite 750, Coral Gables, Florida
33134-3160, and its telephone number is (305) 567-9990.
RECENT DEVELOPMENTS
On October 21, 1996, the Company reported that it had settled litigation
with David H. Goodman, the former Chairman and Chief Executive Officer of Swfte
International, Ltd., and others. The original dispute involved the contingent
purchase price pursuant to a certain Agreement and Plan of Merger among Expert,
ES I Acquisition Corp., Swfte and the stockholders of Swfte, dated as of
October 16, 1995. The suit, as well as counterclaims filed by the Company were
settled in the Court of Chancery, New Castle County, Delaware. The Company's
results for the third quarter ended September 30, 1996 included expenses of
$1.9 million for the settlement and related legal and associated costs.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Shares by the
Selling Stockholders.
SELLING STOCKHOLDERS
The following table provides the names of and the number of shares offered
for sale by each Selling Stockholder in the Offering. The Selling Stockholders
acquired their shares as part of the Swfte acquisition by the Company. Since
the Selling Stockholders may sell all, some, or none of their Shares, no
estimate can be made of the number or percentage of Shares that each Selling
Stockholder will own upon completion of the Offering. Assuming that all of the
Shares offered hereby are sold, no Selling Stockholder would own more than 1%
of the outstanding shares of the Company's Common Stock after the Offering.
The Shares offered by the Prospectus may be offered from time to time during
the 90-day effective period of the registration statement by the Selling
Stockholders named below.
SHARES OWNED SHARES OFFERED
NAME AS OF HEREBY
DECEMBER 26,
1996
-------------- -------------------------------------
Diane Bove 11,664 11,664
Irwin Bransky 62,027 62,027
Musa Brooker 97 97
Shawn Dewey 38 38
John Giannone 388 388
Zandra Gomez 38 38
David Goodman 225,686 225,626
Katie 38 38
Houghton
Pamela 2,916 2,916
Jasinski
Alex Kane 38 38
Daniel 1,944 1,944
Kearney
Maurice 38 38
Kimball
Loretta 291 291
Liskey
Brian Lofurno 388 388
Karen 388 388
Margolis
Darren 38 38
Mathewson
Kenneth May 194 194
Marilyn Minko 38 38
Joseph 777 777
Spector
Jeffrey Suwyn 97 97
David Thomas 38 38
Scott 291 291
Wasserman
Piper 8,017 8,017
Jaffray, Inc.
=====================================
Totals 315,469 315,409
=====================================
The information provided herein is based solely upon information provided
by each of the Selling Shareholders named above.
In recognition of the fact that Selling Stockholders may desire to sell
their Shares when they consider appropriate, the Company has filed with the
Commission a registration statement on Form S-3 (of which this Prospectus is a
part) with respect to the sale of the Shares by the Selling Stockholders.
The Company will prepare and file such amendments and supplements to the
registration statement as may be necessary to keep it effective for 90
days after the date of effectiveness.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold during the 90 day period following
the date of this Prospectus. The Selling Stockholders may sell the Shares on
The Nasdaq National Market on terms to be determined at the time of such sale.
The Selling Stockholders may also make private sales directly or through a
broker or brokers. Alternatively, the Selling Stockholders may, during the
effective period of the registration statement, offer Shares offered hereby to
or through underwriters, dealers, or agents who may receive consideration in
the form of discounts and commissions. Such compensation, which may be in
excess of ordinary brokerage commissions, may be paid by the Selling
Stockholders and/or the purchasers of the Shares offered hereby for whom such
underwriters, dealers and agents may act. The Selling Stockholders and any
dealers or agents that participate in the distribution of the Shares offered
hereby may be deemed "underwriters" as defined in the Securities Act and any
profit on the sale of such Shares offered hereby by them and any discounts,
commissions or concessions received by any such dealer or agents might be
deemed to be underwriting discounts and commissions under the Securities Act.
The aggregate proceeds to the Selling Stockholders from sales of the Shares
offered hereby will be the purchase price of such Shares less any broker's
commissions required to be paid by the Selling Stockholders.
To the extent required, the specific Shares of Common Stock to be sold, the
names of the Selling Stockholders, the respective purchase price and public
offering prices, the name of any such agent, dealer or underwriter, and any
applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying Prospectus supplement.
The Shares of Common Stock offered hereby may be sold from time to time in
one or more transactions at a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices.
In order to comply with the securities laws of certain states, if
applicable, the Shares offered hereby will be sold by the Selling Stockholders
in such jurisdictions only through registered or licensed brokers or dealers.
In addition, in certain states Shares may not be sold unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirements is available and is
complied with.
Under applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the Shares offered hereby may not
simultaneously engage in market making activities with respect to the Shares
for a period of two business days prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the Selling
Stockholders will be subject to applicable provisions of the Exchange Act
and the rules and regulations thereunder, including, without limitation,
Rules 10b-2, 10b-6, and 10b-7 which provisions may limit the timing of
purchases and sales of Shares by the Selling Stockholders.
The Company will pay the expenses incurred by the Company in connection
with the registration with the Commission of the Shares offered hereby.
The Company and each Selling Stockholder have agreed to indemnify each
other against certain liabilities, including liabilities under the Securities
Act.
LEGAL MATTERS
Certain legal matters will be passed upon for the Company by Goodwin,
Proctor & Hoar L.L.P., Boston, Massachusetts.
EXPERTS
The financial statements and schedule of Expert Software, Inc., as
of December 31, 1995, and for each of the three years in the period ended
December 31, 1995 incorporated by reference in the Prospectus, and in the
registration statement have been audited by Arthur Andersen, L.L.P.,
independent certified public accountants, as indicated in their reports with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in auditing and accounting in giving said reports.
================================ ================================
================================ ================================
No person has been
authorized in connection with
the offering made hereby to
give any information or to 315,409 Shares
make any representation not
contained in this Prospectus, Expert Software, Inc.
and if given or made, such
information or representation Common Stock
must not be relied upon as
having been authorized by the
Company, any Selling
Stockholder or any other
person. This Prospectus does
not constitute an offer to
sell or a solicitation of an
offer to buy any of the
Shares offered hereby to any
person or by anyone in any
jurisdiction in which it is
unlawful to make such offer
or solicitation. Neither the
delivery of this Prospectus
nor any sale made hereunder
shall, under any
circumstances, create any
implication that the
information contained herein
is correct as of any date
subsequent to the date hereof.
- --------------------------------
TABLE OF CONTENTS
Available Information........ 3
Incorporation of Certain
Documents by Reference...... 3
Risk Factors................. 4
--------------------------------
The Company, Recent PROSPECTUS
Developments................. 7
--------------------------------
Use of Proceeds.............. 7
Selling Stockholders......... 8
Plan of Distribution......... 8
Legal Matters................ 9
Experts...................... 9
================================ ================================
================================ ================================
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
Shares being registered are set forth in the following table (all amounts
except the registration fee are estimated):
Registration Fee.................. $ 455.38
Legal Fees and Expenses........... 3,500.00
Miscellaneous..................... 500.00
===========
Total....................... $4,455.38
===========
All expenses referenced above will be borne by the Company.
Item 15. Indemnification of Directors and Officers.
Reference is made to Article VII of the Company's Amended and Restated
Certificate of Incorporation which provides for certain limitations on the
liability of the Company's Directors for monetary damages to the Company and
its stockholders.
Reference is made to Article V of the By-laws of the Company which
provides for indemnification by the Company of its directors and officers under
certain circumstances against expenses (including attorneys' fees, judgments,
fines and amounts paid in settlement) incurred in connection with the defense
or settlement of any threatened, pending or completed legal proceedings in
which any such person is involved by reason of the fact that such person is or
was a director or officer of the Company if such person acted in good faith and
in a manner he or she reasonably believed to be in or not opposed to the
best interests of the Company, and, with respect to criminal actions or
proceedings, if such person had no reasonable cause to believe that his or her
conduct was unlawful.
Reference is made to the Company's Amended and Restated Stockholders
Agreement dated as of February 23, 1995 which provides for indemnification by
the Company of its existing principal stockholders and the controlling persons
of such stockholders (some of whom are directors of the Company) against
certain liabilities, including those arising in connection with the
registration, purchase, sale or ownership of any securities of the Company.
The Company carries directors' and officers liability insurance covering
its directors and officers.
Item 16. Exhibits.
Exhibit Description
No.
- -------------------------------------------------------------------
4.1 Amended and Restated Certificate of Incorporation of the
Company (1)
4.2 Amended and Restated By-laws of the Company (2)
4.3 Registration Rights Agreement dated as of November 2,
l995 containing undertaking by the Company to register
certain shares of Common Stock (2)
5.1 Opinion of Goodwin, Proctor & Hoar L.L.P. as to the
legality of the Shares being registered
10.14 Licensing and Royalty Agreement between the Company
and McDonald's Corporation dated as of January 2, 1997 (4)
23.1 Consent of Goodwin, Proctor & Hoar, L.L.P.(included in
Exhibit 5.1 hereto)
23.2 Consent of Accountants Arthur Andersen, L.L.P.
24.1 Powers of Attorney (included on signature page of
Registration Statement as filed)
(1) Incorporated by reference from Exhibit 3.1 to the Company's Form S-1
(File No. 33-99292) as filed with the Commission on November 14, 1995.
(2) Incorporated by reference from Exhibit 3.2 to the Company's Form S-1
(File No. 33-89758) as filed with the Commission on February 24, 1995.
(3) Incorporated by reference from Exhibit 10.11 to the Company's Form S-1
(File No. 33-99292) as filed with the Commission on November 14, 1995.
(4) Incorporated by reference from Exhibit 10.14 to the Company's Form 8-K
as filed with the Commission on February 26, 1997.
II-1
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereto) which individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement; and
(iii) 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;
provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) herein do not
apply if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the undersigned
registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that
are incorporated by reference in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the Shares offered therein, and the
offering of such Shares at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the Shares being registered which remain unsold at
the termination of the offering.
(b) The registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the
Securities Act of 1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
Shares offered therein, and the offering of such Shares at that time shall be
deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item
15 above, 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 of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the Shares being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Expert
Software, Inc. certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized in Coral Gables, Florida, on February 27, 1997.
EXPERT SOFTWARE, INC.
BY: /s/ Kenneth P. Currier
------------------------
Kenneth P. Currier
Chief Executive Officer
EXHIBIT INDEX
Exhibit Description Page
No.
- -------------------------------------------------------------------------
4.1 Amended and Restated Certificate of Incorporation of the -
Company (1)
4.2 Amended and Restated By-laws of the Company (2) -
4.3 Registration Rights Agreement dated as of November 2, -
l995 containing undertaking by the Company to register
certain shares of Common Stock (2)
5.1 Opinion of Goodwin, Proctor & Hoar L.L.P. as to the 17
legality of the Shares being registered
10.14 Licensing and Royalty Agreement between the Company
and McDonald's Corporation dated as of January 2, 1997 (4) -
23.1 Consent of Goodwin, Proctor & Hoar, L.L.P.(included in 17
Exhibit 5.1 hereto)
23.2 Consent of Accountants Arthur Andersen, L.L.P. 18
24.1 Powers of Attorney (included on signature page of 15
Registration Statement as filed)
(1) Incorporated by reference from Exhibit 3.1 to the Company's Form S-1
(File No. 33-99292) as filed with the Commission on November 14, 1995.
(2) Incorporated by reference from Exhibit 3.2 to the Company's Form S-1
(File No. 33-89758) as filed with the Commission on February 24, 1995.
(3) Incorporated by reference from Exhibit 10.11 to the Company's Form S-1
(File No. 33-99292) as filed with the Commission on November 14, 1995.
(4) Incorporated by reference from Exhibit 10.14 to the Company's Form 8-K
as filed with the Commission on February 26, 1997.
II-4
GOODWIN, PROCTER & HOAR LLP
counselors at law
exchange place
Boston, Massachusetts 02109-2881
telephone (617) 570-1000
telecopier (617) 523-1231
January 24, 1997
Expert Software, Inc.
800 Douglas Road
Executive Tower, Suite 750
Coral Gables, FL 33134
Ladies and Gentlemen:
We have assisted in the preparation and filing with the Securities and
Exchange Commission (the "Commission") of a Registration Statement on Form
S-3, (the "Registration Statement"), relating to the sale by certain
stockholders of up to 315,409 shares of Common Stock, $.01 par value per share
(the "Shares"), of Expert Software, Inc., a Delaware corporation
(the "Company").
We have examined the Amended and Restated Certificate of Incorporation
and By-laws of the Company, and have examined and relied upon the originals,
or copies certified to our satisfaction, of such records of meetings of
directors and stockholders of the Company, documents and other instruments
as in our judgment are necessary or appropriate to enable us to render the
opinion expressed below.
In our examination of the foregoing documents, we have assumed the
genuineness of all signatures and authenticity of all documents submitted to
us a originals, the conformity to original documents of all documents submitted
to us as certified or photostatic copies, and the authenticity of the originals
of such latter documents.
We assume that the appropriate action will be taken, prior to the offer
and sale of the Shares to register and qualify the Shares for sale under
all applicable state securities or "blue sky" laws.
Based upon the foregoing, we are of the opinion that the issuance of the
Shares was duly authorized, and that such Shares were validly issued and
are fully paid and non-assessable.
We hereby consent to the use of our name in the Registration Statement
and under the caption "Legal Matters" in the related Prospectus, and consent to
the filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
/s/ GOODWIN, PROCTER & HOAR LLP
GOODWIN, PROCTER & HOAR LLP
349969.c1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in Amendment No. 1 to Form S-3
Registration Statement (No. 333-20529) of our reports dated February
13, 1996, included in Expert Software, Inc.'s Form 10-K for the year ended
December 31, 1995, and to all references to our Firm included in this
Registration Statement.
/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
Miami, Florida,
February 27, 1997.