As filed with the Securities and Exchange Commission on November 17, 1997
Registration No. 333-39697
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
___________
ACCENT SOFTWARE INTERNATIONAL LTD.
(Exact name of Registrant as specified in its charter)
Israel 7372 N.A.
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Numbers) Identification No.)
28 Pierre Koenig Street
Jerusalem 91530, Israel
Telephone: 972-2-679-3723
(Address and telephone number of Registrant's principal executive offices)
Todd A. Oseth
Accent Worldwide, Inc.
Suite 340
2864 South Circle Drive
Colorado Springs, CO 80906
(719) 576-2610
(Name, address and telephone number of agent for service of process)
___________
Copies to:
Herbert H. Davis III, Esq. Barry P. Levenfeld, Esq.
Rothgerber, Appel, Powers & Johnson LLP Yigal Arnon & Co.
1200 Seventeenth Street, Suite 3000 3 Daniel Frisch Street
Denver, CO 80202-5839 Tel Aviv 64731, Israel
Telephone: (303) 623-9000 Telephone: 972-3-692-6868
___________
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 to be 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, please 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 462(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. / /
___________
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 WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PROSPECTUS
ACCENT SOFTWARE INTERNATIONAL LTD.
11,990,000 ORDINARY SHARES (1)
___________
THIS PROSPECTUS RELATES TO THE PUBLIC OFFERING, WHICH IS NOT BEING
UNDERWRITTEN, OF UP TO 11,990,000 ORDINARY SHARES, NOMINAL VALUE NIS 0.01 PER
SHARE (THE "SHARES"), OF ACCENT SOFTWARE INTERNATIONAL LTD. ("ACCENT" OR THE
"COMPANY"), WHICH MAY BE OFFERED FROM TIME TO TIME BY CERTAIN SHAREHOLDERS OF
THE COMPANY OR BY AUTHORIZED TRANSFEREES (THE "SELLING SHAREHOLDERS").
THE SHARES ARE ISSUABLE TO THE SELLING SHAREHOLDERS (I) UPON CONVERSION
OF 6% DEBENTURES OF THE COMPANY ("DEBENTURES") OR SHARES OF PREFERRED STOCK
ISSUABLE IN EXCHANGE FOR THE DEBENTURES ("PREFERRED SHARES"); (II) AS PAYMENT
OF INTEREST DUE ON THE DEBENTURES; (III) UPON EXERCISE OF WARRANTS TO
PURCHASE AN AGGREGATE OF 1,150,000 ORDINARY SHARES ISSUED IN CONNECTION WITH
THE SALE OF THE DEBENTURES; AND (IV) UPON EXERCISE OF WARRANTS TO PURCHASE AN
AGGREGATE OF 787,500 ORDINARY SHARES ISSUED TO THE SHEMANO GROUP AS THE
PLACEMENT AGENT. THE COMPANY WILL RECEIVE NO PART OF THE PROCEEDS OF SALES OF
THE SHARES. HOWEVER, THE COMPANY WILL RECEIVE PROCEEDS FROM THE EXERCISE OF
THE WARRANTS, IF THE WARRANTS ARE EXERCISED. THE EXERCISE PRICE OF THE
INVESTOR AND PLACEMENT WARRANTS IS $4,746,875 IN THE AGGREGATE. THE SHARES
HAVE BEEN RESERVED BY THE COMPANY FOR ISSUANCE AND THE EXERCISE OF THE
WARRANTS. THE SHARES ARE BEING REGISTERED BY THE COMPANY PURSUANT TO
AGREEMENTS BETWEEN IT AND THE SELLING SHAREHOLDERS.
ONCE ISSUED, THE SHARES MAY BE OFFERED BY THE SELLING SHAREHOLDERS FROM
TIME TO TIME IN ONE OR MORE TRANSACTIONS IN THE OPEN MARKET AT PRICES
PREVAILING THEREIN, IN NEGOTIATED TRANSACTIONS AT SUCH PRICES AS MY BE AGREED
UPON, OR IN A COMBINATION OF SUCH METHODS OF SALE. SEE "PLAN OF
DISTRIBUTION." THE PRICE AT WHICH ANY OF THE SHARES MAY BE SOLD, AND THE
COMMISSIONS, IF ANY, PAID IN CONNECTION WITH ANY SUCH SALE, ARE UNKNOWN AND
MAY VARY FROM TRANSACTION TO TRANSACTION. THE COMPANY WILL PAY ALL EXPENSES
INCIDENT TO THE REGISTRATION OF THE SHARES. SEE "SELLING SHAREHOLDERS" AND
"PLAN OF DISTRIBUTION."
On November 14, 1997, the last reported sale of the Ordinary Shares on
the Nasdaq Small Cap Market was $2.25. Ordinary Shares are traded under the
Nasdaq symbol ACNTF.
___________
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. PROSPECTIVE PURCHASERS OF THE
SECURITIES OFFERED HEREBY SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH
UNDER THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 10.
___________
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.
- -------------------------
(1) To the extent allowable under the Act, including Rule 416 thereto, this
Prospectus shall be deemed to cover an indeterminate number of additional
Ordinary Shares of the Company as may become issuable upon conversion of the
debentures and/or Convertible Preferred Shares of the Company issuable in
exchange for the debentures and the exercise of the warrants (i) to prevent
dilution resulting from stock splits, stock dividends or similar
transactions, or (ii) by reason of changes in the conversion price of the
debentures and/or the Preferred Shares or the exercise price of the warrants
in accordance with the terms thereof.
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THE COMPANY HAS RECEIVED FROM THE SECURITIES AUTHORITY OF THE STATE OF ISRAEL
AN EXEMPTION FROM THE OBLIGATION TO PUBLISH THIS PROSPECTUS IN THE MANNER
REQUIRED PURSUANT TO THE PREVAILING LAWS OF THE STATE OF ISRAEL. NOTHING IN
SUCH EXEMPTION SHALL BE CONSTRUED AS AUTHENTICATING THE MATTERS CONTAINED IN
THIS PROSPECTUS OR AS AN APPROVAL OF THEIR RELIABILITY OR ADEQUACY OR AS AN
EXPRESSION OF OPINION AS TO THE QUALITY OF THE SECURITIES HEREBY OFFERED.
The date of this Prospectus November 17, 1997
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy and information statements and other information can be
inspected and copied at the Public Reference Section of the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and the following regional offices: Northeast Regional Office, Suite 1300,
Seven World Trade Center, 13th Floor, New York, New York 10048, and Midwest
Regional Office, Northwestern Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511, and copies of such material may also be
obtained from the Public Reference Section of the Commission at prescribed
rates. The Commission maintains a 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
reports, proxy, information statements and other information filed by the
Company with the Commission are also filed with The Nasdaq Small Cap Market
and can be inspected at its facility at 1735 K Street, N.W., Washington, D.C.
20006. The Company intends to furnish its shareholders with annual reports
containing audited financial statements and such other periodic reports as
the Company deems appropriate or as may be required by law.
The Company has filed with the Commission a registration statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933, as
amended (the "Securities Act"), with respect to the securities offered by
this Prospectus. This Prospectus, which constitutes a part of such
Registration Statement, does not contain all of the information set forth in,
or annexed as exhibits to, the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulation of the Commission.
For further information with respect to the Company and this offering,
reference is made to the Registration Statement, including the exhibits filed
therewith, which may be inspected without charge at the offices of the
Commission at the addresses set forth above. Copies of the Registration
Statement may be obtained from the Commission at its principal office upon
payment of prescribed fees. Statements contained in this Prospectus as to the
contents of any contract or other documents are not necessarily complete and,
where the contract or other document has been filed as an exhibit to the
Registration Statement, each statement is qualified in all respects by
reference to the applicable document filed with the Commission.
The Company has received from the Securities Authority of the State of
Israel (the "Israel Securities Authority") an exemption from the reporting
obligations as specified in Chapter Six of the Israel Securities Law
5728-1968, which include the obligation to submit periodic and immediate
reports to the Israel Securities Authority, provided that a copy of each
report submitted in accordance with applicable United States law shall be
available for public review at the Company's principal offices in Israel.
FORWARD LOOKING STATEMENTS
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Certain non-historical statements contained in this Prospectus are
forward-looking statements, which involve known and unknown risks and
uncertainties. The Company is including this statement for the express
purpose of availing itself of the protections of the safe harbor provided by
the Private Securities Litigation Reform Act of 1995 with respect to all such
forward looking statements. Examples of forward looking statements include,
but are not limited to: (i) projections of capital expenditures, revenues,
growth, prospects, capital structure and other financial matters; (ii)
statements of plans or objectives of the Company; and (iii) statements using
the words "anticipate," "expect," "may," "project," "intend" or similar
expressions.
The Company's ability to predict projected results or the effects of
certain events on the Company's operating results is inherently uncertain.
Therefore, the Company wishes to caution readers of this Prospectus to
carefully consider the matters set forth under the caption "Risk Factors" and
certain other matters discussed herein and in other publicly available
information. Such factors and many other factors beyond the control of the
Company's management could cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements that may be expressed or implied by such
forward-looking statements. See "Risk Factors."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File
No. 0-26394) Pursuant to the Exchange Act are hereby incorporated by
reference in this Prospectus:
(1) The Company's Annual Report on Form 10-K for the year ended December 31,
1996;
(2) The Company's Current Report on Form 8-K dated February 5, 1997;
(3) The Company's Quarterly Report on Form 10-Q for the quarter ending
March 31, 1997;
(4) The Company's Proxy Statement for its Annual Meeting of Shareholders held
on May 28, 1997;
(5) The Company's Quarterly Report on Form 10-Q for the quarter ending
June 30, 1997
(6) The Company's Current Report on Form 8-K dated August 20, 1997;
(7) The Company=s Registration Statement on Form S-3 dated August 27, 1997;
(8) The Company=s Amended Registration Statement on Form S-3 dated
September 29, 1997;
(9) The Company=s Proxy Statement for its Extraordinary Meeting of
Shareholders to be held on October 6, 1997;
(10) The Company=s Registration Statement on Form S-3 dated October 16, 1997;
(11) The Company=s Amended Registration Statement on Form S-3 dated October 23,
1997;and
(12) The description of the Company's Ordinary Shares contained in its
Registration Statement on Form 8-A, filed with the Commission on July 11,
1995, as amended by the Company's Registration Statement filed on Form
8-A/A filed on July 14, 1995;
(13) The Company's Current Report on Form 8-K dated November 6, 1997;
(14) The Company's Quarterly Report on Form 10-Q for the quarter ending
September 30, 1997.
All reports and other documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the
date of this Prospectus and prior to the termination of this offering shall
be deemed to be incorporated by reference into this Prospectus, to the extent
required, and to be a part of this Prospectus from the date of filing of such
reports and documents.
Any statement contained in a document incorporated by reference into
this Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any
other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not, except as so modified or
superseded, be deemed to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner,
3
to whom a copy of this Prospectus has been delivered, upon written or oral
request of such person, a copy of any or all of the foregoing documents
incorporated by reference into this Prospectus (other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests for such documents should be submitted in
writing to Corporate Secretary, Accent Software International Ltd., POB
53063, 28 Pierre Koenig Street, Jerusalem 91530 Israel, or by e-mail:
corpsec@accentsoft.com.
Unless the context otherwise requires, all references to Accent or the
Company include its wholly owned United States subsidiary, Accent Worldwide,
Inc. ("Accent Worldwide"), its wholly owned United Kingdom subsidiary, Accent
Software International (Europe) Ltd. ("Accent Europe"), and its
majority-owned subsidiary, AgentSoft Ltd. ("AgentSoft"). ACCENT is a
registered trademark of the Company in the United States, the United Kingdom,
Germany and the Benelux. The Company has applied to register AGENTSOFT,
GLOBAL DEVELOPMENT KIT and WEBTAMER as trademarks in the United States and in
certain other countries.
Windows is a registered trademark and Windows NT and Windows 95 are
trademarks of Microsoft Corporation ("Microsoft"). All other trademarks
appearing in this Prospectus are the property of their respective holders.
Unless otherwise indicated, all references to Microsoft Windows are to the
3.xx versions of Windows or Windows 95 and references to Netscape Navigator
are to 2.0 and subsequent versions.
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THE COMPANY
Accent is a language solutions company which designs, develops, markets
and supports multilingual software development tools as well as multilingual
Internet and text processing software products. Accent's products address the
growing need for organizations and individuals to view, create, edit and
exchange information in languages other than English and in multiple
languages. In addition, through the Company's majority-owned subsidiary
AgentSoft , it also develops and markets intelligent agent based software
tools and products for process automation over the Internet. Through 1996 and
prior, Accent's products were marketed in more than 30 countries, primarily
through retail and OEM distribution channels. Beginning in 1997, Accent's
market focus has shifted to one of providing its technology and experience in
developing language solutions and intelligent agent software primarily to OEM
and corporate customers.
Accent has used its multilingual software globalization technology as a
platform to launch several multilingual Internet products addressing the
needs of its target users. In December 1995, Accent introduced INTERNET WITH
AN ACCENT, which enables users to browse the Web in a wide variety of
languages and alphabets independent of the local language version of the
Windows operating system and which contains Web authoring tools and e-mail
with broad multilingual capabilities. Accent broadened its Internet product
line through the release in June 1996 of NAVIGATE WITH AN ACCENT, a
multilingual browser plug-in for Netscape Navigator. In the first half of
1997, Accent released the first versions of WEBTAMER, an integrated group of
utilities for the World Wide Web, which includes AgentSoft's advanced LIVE
AGENT intelligent agent technology, and the ACCENT GLOBAL DEVELOPMENT KIT, a
set of standards and tools that enables the globalization of any Windows
software application.
As the Internet continues to grow in terms of the number of users,
geographic diversity and breadth of information, Accent management believes
that demand for software applications in the areas of information access and
management, electronic commerce and workflow management and systems and
network management will increase significantly. Accent management believes
that many of these software applications will be based on intelligent agent
technology. Intelligent agents are electronic assistants that will help
automate the Internet by performing complex, repetitive or time-consuming
operations. Accent established AgentSoft in February 1996 in order to
capitalize on the expected growth of this market and to broaden its Internet
product line beyond multilingual-based software. AgentSoft is dedicated to
the development of intelligent agent-based technology and applications for
the Internet and enterprise Intranet. Through the introduction of WEBTAMER
and other innovative applications of intelligent agent technology, the
Company is seeking to establish itself as a leading participant in the
emerging market for Internet software based on intelligent agent technology.
Accent is seeking to strengthen its position as a leading provider of
multilingual Internet and word processing applications and development tools.
To achieve these objectives, Accent's business strategy is to (i) emphasize
software globalization and intelligent agent technologies; (ii) leverage its
experience in multilingual software development; (iii) add new technologies,
including intelligent agents, to its core technology platforms; and (iv)
develop strategic relationships with leading industry participants.
Accent was organized in 1988 under the laws of the State of Israel. The
Company's principal executive offices are located at 28 Pierre Koenig Street,
Jerusalem 91530, Israel, and its telephone number is 972-2-679-3723.
RECENT DEVELOPMENTS
In response to the Company's recent operating results, the Company
implemented a revised business plan designed to decrease operating expenses
and to improve its operating and financial performance while maintaining
product development activities. Specifically, the Company effected a 30%
reduction in the number of its employees. In addition, the Company reduced
(i) its expenditures on marketing and advertising by approximately 50% and
(ii) its other operating expenses by approximately 50% in all areas exclusive
of research and development, which expenses have remained relatively level
through the date of this Prospectus. The Company believes that these
reductions and the maintenance of the research and development expenditures
will help enable the Company to
5
achieve its strategic product development objectives. Roger R. Cloutier II,
who is currently a vice president of Jacobs Investors, Inc. and a general
partner of IMR (a significant shareholder of the Company), was appointed
Co-Chairman of the Board on October 23, 1996. Mr. Cloutier, along with Robert
Rosenschein, Elliott Broidy and Mark Tebbe, constitute the Executive
Committee of the Board of Directors responsible for monitoring the
implementation of the Company's revised business plan. Furthermore, the
Company, in the first quarter of 1997, successfully recruited a new
President/Chief Executive Officer and a Chief Financial Officer, both of whom
have extensive industry experience. Based in Accent's new Colorado Springs
office, the new management team has begun to shift certain sales and
management functions to the United States to enable such personnel to be more
effective in targeting customers and end-users of the Company's products.
On August 5, 1997, the Company completed a financing arrangement with CC
Investments LDC (the "August Investor"), pursuant to Regulation D of the
Securities Act of 1933. The Company received $2,000,000 in cash before
expenses (approximately $1,850,000 net of expenses) and, in return, issued
the August Investor a debenture carrying six percent (6%) annual interest
(payable in cash or Ordinary Shares, at the Company's option) and convertible
into the Company's Ordinary Shares at a conversion rate equal to the lesser
of (i) $2.09; or (ii) 75% of the average bid price of the Ordinary Shares for
the five trading day period preceding the date of conversion (the "August
Debenture"). The August Debenture automatically converts into Ordinary Shares
on August 5, 1999, two years after the date of the closing, and may be
converted at the August Investor's option anytime after the earlier of
November 2, 1997, or that date on which the resale of the Ordinary Shares
issuable upon conversion of the August Debenture is registered with the SEC.
Such registration occurred on September 29, 1997. At any time prior to
November 5, 1997, the Company may convert the August Debenture into 2000
newly authorized Preferred Shares designated Class A for purposes of such
conversion. The Class A Preferred Shares will have a liquidation preference
of $1,000 per share plus a premium of 6% per annum. The Class A Preferred
Shares will not be entitled to any dividends nor will it have any voting
rights except as provided by Israeli law with respect to extraordinary
corporate transactions. The Class A Preferred Shares will be convertible
into Ordinary Shares on the same terms as the August Debenture as described
above. The terms of the Class A Preferred Shares will also prohibit the
issuance of Preferred Shares with terms superior or equal to the terms of the
Class A Preferred Shares for some period of time, without the August
Investor=s consent. In addition, the Company has the right to redeem the
August Debenture on or after July 31, 1998, as long as no event of default
has occurred thereunder, at a redemption price of not less than 125% of the
principal amount thereof and any accrued and unpaid interest or other
payments thereon.
On October 16, 1997, the August Investor converted $1,000,000 of the
August Debenture, together with accrued interest. Based upon a conversion
price of approximately $1.88 per share, the Company issued 538,300 Ordinary
Shares to the August Investor on October 21, 1997.
On October 17, 1997, the Company notified the August Investor that it was
exercising its right to exchange the debenture for Preferred Shares,
effective 31 October 1997. Because the August Investor had converted
$1,000,000 of the August Debenture into Ordinary Shares as set forth in the
previous paragraph, the Company issued 1,000 Preferred Shares to the August
Investor on 31 October 1997 in exchange for the remainder of the August
Debenture.
On October 31, 1997, the August Investor converted 500 of its Series A
Preferred Shares, together with accrued interest. Based upon a conversion
price of approximately $1.64 per share, the Company issued 308,240 Ordinary
Shares to the August Investor on November 3, 1997.
Assuming that the Company's share price remains at its November 4, 1997
level of $ 2.50 per share, the Preferred Shares will be convertible into
approximately 265,957 Ordinary Shares. If the share price decreases below
$2.50, the conversion price may decrease and there will be a corresponding
increase in the number of shares into which the remaining 500 Series A
Preferred Shares will be converted.
The August Investor was also granted warrants to purchase 250,000
Ordinary Shares of the Company at an exercise price of $2.80 per share and
additional warrants to purchase 50,000 Ordinary Shares at an exercise price
of $3.20 per share. For facilitating the completion of this investment, The
Shemano Group, Inc., San Francisco, California, and Equity Management
Partners, Atlanta, Georgia, (the "August Placement Agents") were granted
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warrants to purchase a total of 300,000 Ordinary Shares at an exercise price
of $1.725 (equal to 115% of the closing bid price on the day of closing).
The warrants expire on August 5, 2002, if not exercised earlier.
The Company has entered into an agreement with Investor Resource
Services, Inc. ("IRSI") by which IRSI will provide financial advisory,
strategic business planning, and investor and public relations services
designed to make the investing public knowledgeable about the benefits of
stock ownership in the Company. Pursuant to this Agreement, the Company
agreed to issue 612,000 Ordinary Shares to IRSI as compensation for the
services to be provided ("IRSI Shares"). Of these IRSI Shares, 312,000 shares
were included in a Registration Statement filed on October 16, 1997, and
amended on October 23, 1997, and 300,000 shares are to be registered within
twelve months of their delivery to IRSI.
The Company has also engaged Mr. Brad Gillingham as a consultant in the
areas of strategic sales and marketing. Mr. Gillingham received warrants to
purchase 100,000 Ordinary Shares at $2.00 per share. The warrants expire on
August 1, 1999, if not exercised earlier. The agreement with Mr. Gillingham
also provides for the grant of additional warrants to purchase 100,000
Ordinary Shares at an exercise price of $4.00 per share provided that the
Company receives $1,000,000 of revenue attributable to his efforts within 12
months of the execution of the agreement.
Pursuant to the terms of the agreements between the Company and the
August Placement Agents, IRSI and Gillingham, the Company filed a
registration statement on Form S-3 on October 16, 1997, for the Ordinary
Shares to be issued to IRSI and reserved for issuance upon exercise of the
warrants granted to the August Placement Agents and Gillingham. This
Registration Statement was declared effective on October 24, 1997, after the
filing of an amended Regisration Statement the prior day.
On December 9, 1996, the Company issued warrants to purchase a total of
200,000 Ordinary Shares as compensation for consultant services by Robert J.
Laikin, Michael Mosher and the Manufacturers Indemnity and Insurance Company
of America ("MIICA") (the "Laikin Consultants"). Half of these warrants
(100,000) vested immediately and the remainder vested one year later provided
that each of the Laikin Consultants were still providing consulting services
to the Company on September 30, 1997. On August 18, 1997, the Company
terminated the consultant agreements with the Laikin Consultants. Thus, the
condition precedent to the vesting of the second 100,000 warrants do not
exist. The exercise price of the warrants to purchase 100,000 Ordinary Shares
is $7.00 per share and the warrants expire on December 9, 2003, if not
exercised earlier.
The warrants issued to the Laikin Consultants provide the warrant holders
with the right to "piggyback" on certain registration statements filed by the
Company. All three of the Laikin Consultants chose to exercise such right.
Accordingly, the shares to be issued to the Laikin Consultants upon the
exercise of their warrants were included in the Registration Statement filed
on October 16, 1997, and amended on October 23, 1997.
On November 6, 1997, the Company completed a financing arrangement with
the Investors, pursuant to Regulation D of the Securities Act of 1933. The
Company received $4,000,000 in cash before expenses, and a commitment that
upon the occurrence of certain conditions, including the effectiveness of
this Registration Statement, the Company would receive an additional
$1,750,00 in cash before expenses. In return for the aggregate purchase price
of $4,000,000, the Company issued the Investors debentures in the amount of
$4,000,000, carrying six percent (6%) annual interest (payable in cash or
Ordinary Shares, at the Company's option) and convertible into the Company's
Ordinary Shares at a conversion rate equal to the lesser of (i) $ 2.45; or
(ii) 80% of the average bid price of the Ordinary Shares for the five trading
day period preceding the date of conversion (the "First Closing Debentures")
and warrants to purchase a total of 800,000 Ordinary Shares of the Company at
an exercise price of $2.45.
Upon the closing of the additional $1,750,000 investment, the Company
shall issue the Investors 1,750 Series B Preferred Shares which will be
convertible into Ordinary Shares upon the same terms and conditions as
contained in the First Closing Debentures (the "Second Closing Preferred
Shares") (The First Closing Debentures and Second Closing Preferred Shares
are collectively referred to as the "November Convertible Securities.") As
part of
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the $1,750,000 aggregate purchase price, the Investors will receive
additional warrants to purchase a total of 350,000 Ordinary Shares of the
Company at an exercise price of $2.45. The November Convertible Securities
automatically convert into Ordinary Shares on November 6, 1999, two years
after the date of the closing, and may be converted at the Investors= option
anytime after the earlier of November 11, 1997, or that date on which the
resale of the Ordinary Shares issuable upon conversion of the November
Convertible Securities is registered with the SEC, provided that no more than
50% of the principal amount of such securities may be converted prior to
December 15, 1997. At any time prior to November 11 , the Company may convert
all or part of the First Closing Debentures into up to 4,000 newly authorized
Preferred Shares designated Series B for purposes of such conversion. The
Series B Preferred Shares will have a liquidation preference of $1,000 per
share plus a premium of 6% per annum. The Series B Preferred Shares will not
be entitled to any dividends nor will it have any voting rights except as
provided by Israeli law with respect to extraordinary corporate transactions.
The Series B Preferred Shares will be convertible into Ordinary Shares on
the same terms as the November Convertible Securities as described above.
The terms of the Series B Preferred Shares will also prohibit the issuance of
Preferred Shares with terms superior or equal to the terms of the Series B
Preferred Shares for some period of time, without the Investors= consent. In
addition, the Company has the right to redeem the November Convertible
Securities on or after November 6, 1998, as long as no event of default has
occurred thereunder, at a redemption price of not less than 125% of the
principal amount thereof and any accrued and unpaid interest or other
payments thereon.
Conversion of the November Convertible Securities into Ordinary Shares
will result in dilution of the Company's current shareholders. The November
Convertible Securities will be convertible into approximately 2,346,938
Ordinary Shares. If the share price decreases below $2.45, the conversion
price may decrease and there will be a corresponding increase in the number
of shares into which the November Convertible Securities will be converted.
It can not be predicted whether the share price will decrease in this manner.
For facilitating the completion of this investment, The Shemano Group,
Inc., San Francisco, California, (the "November Placement Agent") was granted
warrants to purchase a total of 787,500 Ordinary Shares at an exercise price
of $2.45. The warrants expire on November 6, 2002, if not exercised earlier.
The 11,990,000 Ordinary Shares being registered pursuant to this
Registration Statement are the shares issuable to the Selling Shareholders
(i) upon conversion of the November Convertible Securities; (ii) as payment
of interest due on the First Closing Debentures; (iii) upon exercise of
warrants to purchase an aggregate of 1,150,000 Ordinary Shares issued in
connection with the sale of the November Convertible Securities; and (iv)
upon exercise of warrants to purchase an aggregate of 787,500 Ordinary Shares
issued to the November Placement Agent.
LITIGATION AND OTHER CLAIMS
On September 9, 1997, the AgentSoft was served with a complaint filed by
its former president and vice president. The complaint named as defendants
AgentSoft, Accent, Todd Oseth, as Chief Executive Officer of AgentSoft and
Jeffrey Rosenschein as Chairman of the Board of Directors of AgentSoft, as
defendants in Israeli Labor Court. The complaint alleges wrongful termination
of the plaintiffs= employment agreements in May 1997, failure to pay the
contractually required severance, and failure to pay, in a complete and
timely manner, the statutory severance payments required by Israeli law upon
the termination of an employee. Plaintiffs seek compensation in excess of NIS
650,000 (or approximately $186,000). The Company believes that the
termination of their employment was done properly and lawfully and that,
therefore, any claim by these former employees in connection with such
termination is without grounds. Accordingly, the Company estimates that the
chances of an outcome favorable to the Company and the other defendants is
high.
In the course of its business, the Company is the subject of claims, some
or which may mature into litigation. Although the Company is aware of claims
asserted against it, the Company is not aware, except as discussed in the
preceding paragraph, of any claims which have a reasonable possibility of
adverse outcome in a material amount. However, unforeseen circumstances may
cause such claims, or other, currently unknown claims, to result in adverse
outcomes in material amounts.
8
RISK FACTORS
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK
FACTORS, IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, PRIOR TO
MAKING AN INVESTMENT DECISION. CERTAIN STATEMENTS IN THIS PROSPECTUS THAT ARE
NOT HISTORICAL ARE FORWARD-LOOKING, INVOLVING KNOWN AND UNKNOWN RISKS AND
UNCERTAINTIES. MANY FACTORS, INCLUDING THE RISK FACTORS IDENTIFIED BELOW,
COULD CAUSE THE ACTUAL RESULTS, PERFORMANCE OR ACHIEVEMENTS OF THE COMPANY TO
BE MATERIALLY DIFFERENT FROM ANY FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS
THAT MAY BE EXPRESSED OR IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS.
HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT; ANTICIPATED FUTURE LOSSES;
LIMITED OPERATING HISTORY
The Company has incurred net losses since 1992 of approximately $0.7
million, $3.1 million, $7.8 million and $21 million for the years ended
December 31, 1993, 1994, 1995 and 1996, respectively, and a net loss of
approximately $4.8 million for the six months ended June 30, 1997. As of June
30, 1997, the Company had an accumulated deficit of $38 million and a total
shareholders' deficit of $1.7 million. Pursuant to its revised business plan,
the Company intends to continue to make expenditures on new product
introductions, marketing, research and development, customer support and
administrative infrastructure over the near term. As a result, the Company
expects to incur net losses through the end of 1997, and possibly beyond.
The Company commenced operations in 1988 and shipped its first
multilingual word processing product in Israel in 1992, and internationally
in 1994.The Company shifted the focus of its operations in 1997 to the
development and distribution of multilingual software development tools for
the non-retail markets, and its first such products were released in the
second quarter of 1997.The Company, therefore, has a limited operating
history upon which to base an evaluation of its current principal business
and prospects. Operating results for future periods are subject to numerous
uncertainties, and there can be no assurance that the Company will achieve or
sustain profitability on an annual or quarterly basis. The Company's
prospects must be considered in light of the risks encountered by companies
in the early stage of development, particularly companies in new and rapidly
evolving markets. Future operating results will depend upon many factors,
including the demand for the Company's Internet products, the level of
product and price competition, the ability of the Company to develop and
market new products and product enhancements, the success of the Company in
attracting and retaining motivated and qualified personnel, the ability of
the Company to control its costs and general economic conditions. There can
be no assurance that the Company will be successful in addressing such risks.
INDEPENDENT PUBLIC ACCOUNTANT'S DOUBT AS TO COMPANY'S ABILITY TO CONTINUE AS A
GOING CONCERN
The report of the Company's independent public accountants attached as
part of the Company's 1996 Annual Report on Form 10K contains an explanatory
paragraph as to the Company's ability to continue as a going concern. Among
the factors cited by the accountants as raising substantial doubt as to the
Company's ability to continue as a going concern is that the Company has
incurred losses from operations of approximately $21 million during the year
ended December 31, 1996, and had an accumulated deficit of approximately $33
million as of December 31, 1996.
9
SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL FINANCING
The Company's capital requirements in connection with its development and
marketing activities have been and will continue to be significant. The
Company has been dependent upon the proceeds of sales of its securities, as
well as various government guaranteed and private loans, to fund its
development and marketing activities. The Company is not generating
sufficient revenues from its operations to fund its activities and is,
therefore, dependent on the proceeds of the sale of equity and other
financing devices to continue the development of its technology and the
marketing of its products. The Company anticipates, based on its currently
proposed assumptions relating to its operations and financing plans, that it
will have sufficient cash to satisfy its contemplated needs through the end
of 1997. In the event that financings and cash flow prove to be insufficient
to fund operations (due to a change in the Company's plans or a change, or an
inaccuracy, in its assumptions or as a result of unanticipated expenses,
technical difficulties, problems or otherwise), the Company would be required
to seek additional financing sooner than currently anticipated. There can be
no assurance that additional financing will be available to the Company on
commercially reasonable terms, or at all. The Company has no current
arrangement with respect to, or sources of, additional financing. The
inability to obtain additional financing, when needed, would have a material
adverse effect on the Company, including possibly requiring the Company to
curtail or cease its operations.
SUBSTANTIAL INDEBTEDNESS AND ENCUMBRANCES OF ASSETS
The Company's operations have been and continue to be financed in part
from short-term and long-term indebtedness provided by various financial
institutions. As of June 30, 1997, the outstanding balances of the Company's
short-term and long-term indebtedness were approximately $1.6 million and
$1.9 million, respectively. All of the Company's assets are pledged as
collateral to secure the Company's indebtedness. If the Company is unable to
generate sufficient cash flow from operations to meet scheduled debt payments
or otherwise to comply with the terms of such indebtedness, it may be
required to refinance all or a portion of its existing debt or to obtain
additional financing. There can be no assurance that the Company will be able
to obtain such refinancing or additional financing. If no such refinancing or
additional financing is available when needed, the Company may be forced to
default on its debt obligations which would have a material adverse effect on
the Company, including the possibility of receivership or liquidation of the
Company. In such an event, the Company's secured creditors could elect to
foreclose on the Company's assets and it is likely that the debenture, the
warrants and the Shares would be worthless. In addition, the agreements
relating to the Company's bank indebtedness provide for an event of default
(and the ability to accelerate and demand repayment of outstanding loans) if
there is a material adverse change in the Company's financial condition.
There can be no assurance that a deterioration of the Company's results of
operations or financial condition will not result in an event of default
under the Company's bank indebtedness.
10
UNPROVEN ACCEPTANCE OF THE COMPANY'S PRODUCTS
The Company's future operating results will depend primarily upon its
ability to gain market acceptance of its multilingual software development
tools and its Internet productivity tools, such as WEBTAMER. Because the
market for the Company's Internet-related products is new and evolving, it is
difficult to assess or predict with any assurance the growth rate, if any, or
the size of the market for such products. There can be no assurance that the
market for the Company's products and services will develop, or that the
Company's products and services will achieve market acceptance. If the market
fails to develop, develops more slowly than expected or becomes saturated
with competitors, or if the Company's products do not achieve significant
market acceptance, the Company's business, operating results or financial
condition will be materially adversely affected.
UNCERTAINTY OF PRODUCT AND TECHNOLOGY DEVELOPMENT
The Company has not completed development and testing of a number of its
proposed products, some of which are still in the planning stage or in
relatively early stages of development. The Company's success will depend in
part upon the ability of its proposed products to meet targeted performance
and cost objectives, and will also depend upon the timely introduction of its
products into the marketplace and the acceptance of its products by
end-users. The Company will be required to commit considerable time, effort
and resources to finalize development of its proposed products and product
enhancements. Product development efforts may be subject to unanticipated
delays, expenses, difficulties, and the possible insufficiency of funding to
complete development and other risks inherent in the development of new
products and technologies. There can be no assurance as to when, or whether,
such product development efforts will be successfully completed.
DEPENDENCE ON COMPATIBLE THIRD-PARTY SOFTWARE MANUFACTURERS' PRODUCTS AND DESIGN
The Company's products are currently designed, and its proposed products
are being designed, to be utilized with the Windows operating system and with
the products and standards established by certain other software
manufacturers. Accordingly, the performance of certain of the Company's
existing products depends on the actions of other manufacturers, in
particular Microsoft. Such manufacturers may change their products or take
actions that could make it more difficult for the Company to develop its
products or that could significantly impair the performance of the Company's
products. For example, if Microsoft were to modify future versions of Windows
in ways that required the redesign of the Company's Windows-based products,
such modification could be detrimental to the Company. Although the Company
anticipates that it will be able to adapt its products if necessary, there
can be no assurance that changes in existing products or the introduction of
new products by third parties will not have a material adverse effect on the
performance of the Company's products and technology and on the Company's
financial performance. In addition, the Company's products may need to be
adapted in the future in order to be compatible with other or new operating
systems so that the Company may maintain and expand its product offerings.
There can be no assurance that the Company will be able to make any necessary
adaptations on a timely basis.
11
PRODUCT CONCENTRATION
Until the beginning of 1996, substantially all of the Company's revenues
were attributable to the sale of its multilingual word processing products.
Beginning in the first quarter of 1996, a substantial portion of the
Company's revenues has been derived from the sale of the Company's
Internet-related products. During the first quarter of 1997, the Company
began to de-emphasize the retail sale of its products and increased its focus
on the development and sale of software tools and products to be sold to
other software developers, corporations and original equipment manufacturers
("OEM"). The Company currently expects that sales of these products will
account for a substantial portion of its revenues for the foreseeable future.
As a result, factors adversely affecting the pricing of or demand for such
products and services, such as competition or technological change, could
have a material adverse effect on the Company's business, operating results
or financial condition.
COMPETITION; TECHNOLOGICAL OBSOLESCENCE
The market for general and Internet-based software and services is new,
intensely competitive, rapidly evolving and subject to rapid technological
change. In addition, there are relatively few barriers to entry into the
software business in general, including into those areas in which the Company
offers and intends to offer products. The Company expects competition in the
market for multilingual software tools for the globalization of software
products and for Internet-based products to increase substantially in the
future. To the extent that the Company's multilingual Internet products are
substitutes for single or dual language products, the Company's products
presently compete with those of numerous well-established companies,
including Microsoft, Netscape Communications Corporation ("Netscape"),
CompuServe, Inc. ("CompuServe") and Quarterdeck Office Systems, Inc.
("Quarterdeck"). The Company expects that AgentSoft will continue to develop
intelligent agent technology that the Company will use in its Internet
productivity products and that the Company will apply artificial intelligence
concepts to document processing and other applications. To the extent that
the Company and AgentSoft are successful in developing such technologies, the
Company will compete with some of the same well-established companies listed
above as well as with companies to which Accent or AgentSoft will license
such technology. These companies have substantially greater financial,
technical, personnel and other resources than the Company and have
established reputations for success in the development, licensing and sale of
their products and technology. In addition, certain companies have
developed, or may be expected to develop, technologies or products that may
be functionally similar to some or all of those being developed by the
Company. The markets for the technology and products being developed by the
Company are characterized by rapid changes and evolving industry standards,
often resulting in product obsolescence or short product life cycles.
Accordingly, the ability of the Company to compete will depend upon, among
other factors, its ability to develop and introduce to the marketplace in a
timely manner new products and product enhancements. There can be no
assurance that the Company will be able to compete successfully, that its
present or future competitors will not develop technologies or products that
render the Company's products and technology obsolete or less marketable or
that the Company will be able to introduce new products and product
enhancements that are competitive with other products marketed by industry
participants.
DEPENDENCE ON THE INTERNET
Sales of AgentSoft's products and the products of Accent which
incorporate AgentSoft technology will depend in large part upon the
development and maintenance of a robust industry and infrastructure for
providing Internet access and carrying Internet traffic. Because global
commerce and online exchange of information on the Internet and other similar
open wide area networks are new and evolving, there can be no assurance that
the Internet will prove to be a viable commercial marketplace or a viable
medium for the publication and distribution of information. Further, there
can be no assurance that the necessary infrastructure, such as a reliable
network backbone or timely development of complementary products, such as
high speed modems, necessary to make the Internet a viable commercial
marketplace or a viable medium for the publication and distribution of
information will be developed, or, if developed, that the Internet will
become a viable commercial marketplace or a viable medium for the publication
and distribution of information. If the necessary infrastructure or
complementary products are not developed, or if the Internet does not become
a viable commercial marketplace or a viable medium for the publication and
distribution of information, the Company's business, operating results or
financial condition will be
12
materially adversely affected.
PRODUCT RETURNS; COLLECTION OF ACCOUNTS RECEIVABLE; CONSIGNMENT ARRANGEMENTS
Consistent with industry practices, the Company may accept product
returns or provide other credits in the event that a distributor or a
retailer holds excess inventory of the Company's products. Although the
Company is moving away from the retail market toward the OEM and
business-to-business market where product returns are less likely, the risk
of product returns and customer defaults from prior period activities could
have an adverse impact on the Company's future operating results. In
addition, the Company's sales are normally made on credit terms and it does
not hold collateral to secure payment. Therefore, default in payment by one
or more of the Company's customers could adversely affect the Company's
business, operating results or financial condition. There can be no assurance
that actual returns and uncollectible receivables will not exceed the
Company's reserves for such items and any significant increase in product
returns or uncollected accounts receivable beyond reserves could have a
material adverse effect on the Company's business, operating results or
financial condition. Consistent with industry practice, the Company also, on
occasion, transfers products through the distribution channel on a
consignment basis. There can be no assurance that such consignment
arrangements will result in additional sales for the Company or that they
will not result in excess inventory or increased working capital requirements
for the Company.
MANAGEMENT OF A RAPIDLY CHANGING BUSINESS
The Company's business is currently undergoing major change as its new
management shifts its focus from the retail market to the developer,
corporate and OEM markets. This shift in the Company's focus has placed, and
is expected to continue to place, a significant strain on the Company's
management and operations, including its sales, customer support, research
and development, finance and administrative operations. The Company has
recently been able to recruit a chief executive officer and chief financial
officer who have experience in managing large or rapidly growing business
organizations. However, the Company anticipates that continued growth, if
any, may require it to recruit and hire additional new development,
managerial, finance, sales and marketing and support personnel. There can be
no assurance that the Company will be successful at hiring or retaining such
personnel. The Company's ability to compete effectively and its future
growth, if any, will require the Company to continually improve its financial
and management controls, reporting systems and procedures on a timely basis,
implement new systems as necessary and expand, train and manage its employee
workforce. There can be no assurance that the Company's controls, systems or
procedures will be adequate to support the Company's operations. The failure
of the Company's management to respond effectively to changing business
conditions could have a material adverse effect on the Company's business,
operating results or financial condition.
PRODUCT DEFECTS AND PRODUCT LIABILITY
The Company's software products are highly complex and sophisticated and
could from time to time contain design defects or software errors that could
be difficult to detect and correct. Errors, bugs or viruses may result in the
loss of or the delay in market acceptance or the loss of customer data.
Although the Company has not experienced any material adverse effect
resulting from any software defects or errors, there can be no assurance
that, despite testing by the Company and its customers, errors will not be
found in new products, which could result in a delay in or inability to
achieve market acceptance and thus could have a material adverse impact upon
the Company's business, operating results or financial condition.
DEPENDENCE ON KEY PERSONNEL
The success of the Company is substantially dependent on the performance
of its executive officers and key employees. Five members of senior
management are parties to employment agreements with the Company, three of
which expire in July 1998, and one of which expires in February 2000. The
Company believes that the loss of the services of one or more of such key
personnel
13
could have a material effect on its ability to develop new products and
product enhancements. In addition, Dr. Jeffrey Rosenschein, Chief Technology
Officer-Agents, and one of the five senior managers with an employment
agreement, has an academic affiliation with Hebrew University in Jerusalem.
Dr. Rosenschein was granted a leave of absence from Hebrew University for the
two-year period which expires in October 1997, at which time Dr. Rosenschein
plans to return to his full-time position at the University. Dr. Rosenschein
plans to continue as a director of the Company and as a paid consultant to
the Company, and his termination as a full-time Company employee is not
expected to have a material adverse affect on the Company. The success of
the Company also is dependent upon its ability to hire and retain additional
qualified executive, scientific and marketing personnel. There can be no
assurance that the Company will be able to hire or retain such necessary
personnel. Moreover, there can be no assurance that the loss of the services
of any of its executive officers or other key employees would not have a
material adverse effect on the Company's business, operating results or
financial condition.
PROTECTION OF PROPRIETARY INFORMATION
The Company's success and ability to compete is dependent in part upon
its proprietary software technology. While the Company relies on a
combination of trade secret and copyright law, nondisclosure agreements and
technical measures to establish and protect its proprietary rights and has
also filed patent applications for certain aspects of its technology, there
can be no assurance that the steps taken by the Company to protect its
proprietary rights will be adequate to prevent misappropriation of the
technology or independent development by others of software products with
features based upon, or otherwise similar to, those of the Company's
products. To license its retail products, the Company primarily relies on
"shrink wrap" licenses that are not signed by the end-user and, therefore,
may be unenforceable under the laws of certain jurisdictions. In addition,
effective copyright and trade secret protection may be unavailable or limited
in certain foreign countries, and the global nature of the Internet makes it
virtually impossible to control the ultimate destination of the Company's
products. Despite the Company's efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of the Company's products or
to obtain and use information that the Company regards as proprietary.
Litigation may be necessary in the future to enforce the Company's
intellectual property rights, to determine the validity and scope of the
proprietary rights of others, or to defend against claims of infringement or
invalidity. Such litigation could result in substantial costs and diversion
of resources and could have a material adverse effect on the Company's
business, operating results or financial condition.
IMPACT OF INFLATION AND CURRENCY FLUCTUATION
The vast majority of the Company's sales are made in dollars and most of
the Company's expenses are in dollars and New Israeli Shekels ("NIS"). The
cost of the Company's operations in Israel, as expressed in dollars, is
influenced by the extent to which any increase in the rate of inflation in
Israel over the rate of inflation in the U.S. is not offset by the
devaluation of the NIS in relation to the dollar. The change in the cost of
the Company's operations in Israel, as expressed in dollars, relates
primarily to the cost of salaries in Israel, a substantial portion of which
are paid in NIS linked to the Consumer Price Index in Israel (the "Israeli
CPI"). While the Company may in the future, to the extent it deems
advisable, purchase currency options or other hedging instruments to decrease
the risk of the NIS devaluation against the dollar being less than the rate
of inflation in Israel, no assurance can be given that any such financial
strategy will be successful in limiting the Company's risk.
14
CONCENTRATION OF OWNERSHIP; POTENTIAL CONFLICTS OF INTEREST
As of the date of this Prospectus, IMR and its affiliates, together with
the Company's officers and directors, will beneficially own an aggregate of
approximately 33.3% of the issued and outstanding Ordinary Shares. Such
ownership will allow such persons to have significant influence over the
outcome of any matters that require shareholder approval, including the
election of all of the Company's directors (subject, in certain instances, to
the requirement of the affirmative vote of a specified percentage of
disinterested shareholders), and thereby to potentially control the affairs
of the Company. In addition, pursuant to the Stock Purchase Agreement, dated
as of May 11, 1994, by and among the Company, IMR Investments, Accent
Software Partnership, Pal-Ron Marketing, Ltd., KZ Overseas Holding Corp.,
Robert Rosenschein and Jeffrey Rosenschein, the Company agreed that IMR
Investments will be entitled to designate one person to serve on the Board of
Directors of the Company. The current designee of IMR Investments is Roger
Cloutier. Although the director designated by IMR Investments is required
under Israeli law to vote in a manner consistent with his fiduciary duty to
the Company, there can be no assurance that conflicts of interest will not
arise with respect to the foregoing or that such conflicts will be resolved
in a manner favorable to the Company.
NO DIVIDENDS
The Company has never paid cash dividends on its Ordinary Shares. Payment
of dividends on the Ordinary Shares is within the discretion of the Board of
Directors of the Company and will depend upon the Company's earnings, its
capital requirements and financial condition and other relevant factors. It
is the Company's intention to retain earnings, if any, to finance the
operation and expansion of its business and, therefore, it does not expect to
pay any cash dividends on its Ordinary Shares in the foreseeable future.
SIGNIFICANT OUTSTANDING TRADE PAYABLES
At June 30, 1997, the Company owed approximately $3.3 million to various
trade and other creditors of which approximately 50% was more than 60 days
past due. The inability to obtain credit on commercially reasonable terms, or
at all, resulting in an interruption of supplies or services, would have a
material adverse effect on the Company's operations.
MARKET PRICE VOLATILITY
The market price of the Company's Ordinary Shares has been highly
volatile and in the past 52 weeks the daily closing price has ranged from
$15.38 to $1.47. Factors such as the Company's financial results,
introduction of new products by the Company or its competitors, factors
affecting the software industry generally and factors relating to conditions
in the State of Israel may have a significant impact on the market price of
the Company's Ordinary Shares. Additionally, in recent years, the United
States stock markets have experienced a high level of price and volume
volatility and market prices for the stock of many companies (particularly of
small and emerging growth companies, the common stock of which trades in the
over-the-counter-market) have experienced wide price fluctuations that have
not necessarily been related to the operating performance of such companies.
SUBSTANTIAL DILUTION
The book value of the Company's Ordinary Shares was approximately $(0.15)
per share at June 30, 1997. Therefore, purchasers of Shares in this Offering
will experience immediate and substantial dilution.
POSSIBLE DELISTING OF SHARES FROM THE NASDAQ SMALL CAP MARKET;
RISKS RELATING TO PENNY STOCKS
The Ordinary Shares are quoted on the Nasdaq Small Cap Market. In order
to maintain its listing on the Nasdaq Small Cap Market, the Company must meet
certain requirements. As of June 30, 1997, the Company was in compliance
with all of the Nasdaq listing requirements except that the Company's total
capital and surplus was less than the required level. Specifically, on June
30, 1997, the Company's total capital and surplus of $(1,716,000) was below
the minimum Nasdaq requirement of $1,000,000. On August 15, 1997, the
Company was notified by The Nasdaq Stock Market, Inc. that it was no longer
in compliance with all of the Nasdaq Small Cap Market listing requirements.
The Company responded to Nasdaq with a plan for restoring its capital and
surplus to the required level. On September 15, 1997, the Company received a
letter from Nasdaq stating that the Company's plan to
15
restore its capital surplus to the required level was not acceptable and that
the Company's Ordinary Shares would be delisted. However, the delisting
action was stayed when the Company requested and was granted a hearing
regarding Nasdaq's decision to delist the Company's Ordinary Shares. The
hearing was held on October 9, 1997. On October 21, 1997, the Company
received the decision of the hearing panel to grant it a temporary exception
from Nasdaq listing requirements. The hearing panel ruled that the Company
had until November 10, 1997 to file with Nasdaq and the Securities and
Exchange Commission the Company's quarterly report on Form 10-Q and a report
on Form 8-K showing that it had at least $2,650,000 in capital and surplus.
Pending such filing and a further review by Nasdaq, the Company's stock
symbols would be changed to ACNFC and ACUFC for the Ordinary Shares and the
Units, respectively. On November 6, 1997, the Company filed a Current
Report on Form 8-K disclosing the pro forma effects of the $4,000,000
financing arrangement completed on that same day. On November 7, 1997, the
Company was notified by Nasdaq that it had met the requirement for continued
listing on the Nasdaq SmallCap Market. On November 11, 1997, the Company's
stock symbols reverted to ACNTF and ACNUF for the Ordinary Shares and the
Units, respectively. The Company believes that the completion of the
financing discussed in this Registration Statement and the subsequent
conversion of the November Debentures into Ordinary or Preferred Shares, will
allow it to remain in compliance with the relevant Nasdaq listing
requirements. However, there can be no assurance that the Company will be
able to continue to meet the continued listing requirements of Nasdaq.
Therefore, the Company's shares could be delisted from the Nasdaq Small Cap
Market.
In addition, the Nasdaq Stock Market adopted increases in the
quantitative standards for maintenance of listings on the Nasdaq Small Cap
Market. The new standards for continued listing on the Nasdaq Small Cap
Market, which the Company anticipates will be implemented in February 1998,
include maintenance of any of (a) $2,000,000 of net tangible assets, (b)
$35,000,000 of market capitalization or (c) $500,000 of net income for two of
the last three years and the elimination of the requirements to maintain
minimum total assets and a minimum capital and surplus. There can be no
assurance that the Company will be able to meet the new standards for
maintaining its listing on the Nasdaq Small Cap Market and, if it fails to
meet such standards, that it will not be delisted.
If the Company's securities were to become delisted from trading on The
Nasdaq Small Cap Market and the trading price of such securities were to
remain below $5.00 per share or per unit, trading in such securities would
also be subject to the requirements of certain rules promulgated under the
Exchange Act, which require additional disclosure by broker-dealers in
connection with any trades involving a stock defined as a penny stock
(generally, any non-Nasdaq equity security that has a market price of less
than $5.00 per share, subject to certain exceptions). Such rules require the
delivery, prior to any penny stock transaction, of a disclosure schedule
explaining the penny stock market and the risks associated therewith, and
impose various sales practice requirements on broker-dealers who sell penny
stock to persons other than established customers and accredited investors
(generally institutions). For these types of transactions, the broker-dealer
must make a special suitability determination for the purchase and have
received the purchaser's written consent to the transaction prior to sale.
The additional burdens imposed upon broker-dealers by such requirements may
discourage broker-dealers from effecting transactions in the Ordinary Shares
which could severely limit the market liquidity of the Ordinary Shares and
the ability of Selling Shareholders to sell their Shares in the secondary
market.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
As of the date of this Prospectus, 13,154,982 Ordinary Shares are issued
and outstanding, or are to be issued under a binding agreement, of which
8,674,835 are freely tradable. There are 3,871,907 Ordinary Shares eligible
for sale, without registration, under Rule 144 subject to certain volume
limitations and other conditions prescribed by such rule and to the
contractual restrictions described below. There are 300,000 additional IRSI
Shares that are to be registered within twelve months of their issuance, and
will be freely tradable upon an effective Registration Statement. There are
warrants outstanding for the purchase of 3,947,413 Ordinary Shares. Most of
the shares underlying these warrants have been or are being registered and
will be freely tradable. In addition, there are options outstanding for
1,518,583 shares, of which 1,168,583 will be freely tradable upon exercise.
In addition, the shares into which any remaining balance of the August
Debenture may be converted have been registered and will be freely tradeable
at such time as that debenture is converted. Finally, when this Registration
Statement is declared effective by the Commission, the shares into which the
November Debenture may be converted will be freely tradeable.
16
In addition, the Company has granted to certain of its security holders,
including certain of its executive officers, directors and IMR Investments,
certain registration rights. No prediction can be made as to the effect, if
any, that sales of such securities or the availability of such securities for
sale will have on the market prices prevailing from time to time.
LOCATION IN ISRAEL
The Company is incorporated under the laws of, and has its offices and a
significant portion of its operations (including all of its product
development activities) in, the State of Israel. Although most of the
Company's sales are currently made to customers outside Israel, the Company
is, nonetheless, directly influenced by the political, economic and security
conditions affecting Israel. Any major hostilities involving Israel, the
interruption or curtailment of trade between Israel and its trading partners
or a significant downturn in the economic or financial condition of Israel
could have a material adverse effect on the Company's business, financial
condition or results of operations. There can be no assurance that ongoing
or revived hostilities or other factors related to the political or economic
status of Israel will not have an adverse impact on the Company's business,
operating results or financial condition.
SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS
Service of process upon directors and officers of the Company and the
Israeli experts named herein, many of whom reside outside the United States,
may be difficult to effect within the United States. Furthermore, since the
majority of the Company's assets are located outside the United States, any
judgment obtained in the United States against the Company may not be
enforceable within the United States. The Company has been informed by its
legal counsel in Israel, Yigal Arnon & Co., that in such counsel's opinion
there is doubt as to the enforceability of civil liabilities under the
Securities Act and the Exchange Act, in original actions instituted in
Israel. However, subject to certain time limitations, Israeli courts are
empowered to enforce foreign (including United States) final executory
judgments for liquidated amounts in civil matters obtained after due trial
before a court of competent jurisdiction (according to the rules of private
international law currently prevailing in Israel) which enforces similar
Israeli judgments. The enforcement of such judgments is conditioned upon: (i)
adequate service of process having been effected and the defendant having had
a reasonable opportunity to be heard; (ii) such judgments or the enforcement
thereof not being contrary to the law, public policy, security or sovereignty
of the State of Israel; (iii) such judgments not being obtained by fraud and
not conflicting with any other valid judgment in the same matter between the
same parties; and (iv) an action between the same parties in the same matter
not pending in any Israeli court at the time the lawsuit is instituted in the
foreign court. The Company has irrevocably appointed Accent Worldwide as the
Company's agent to receive service of process in any action against the
Company in any federal or state court sitting in New York County, State of
New York arising out of the Offering or any purchase or sale of securities in
connection therewith.
Foreign judgments enforced by Israeli courts generally will be payable in
Israeli currency, and a special permit of the Israeli Controller of Foreign
Currency will be required to convert the Israeli currency into dollars and to
transfer such dollars out of Israel. The usual practice in an action to
recover an amount in a non-Israeli currency is for the Israeli court to
render judgment for the equivalent in Israeli currency at the rate of
exchange in force on the date thereof. Under existing law, a foreign judgment
payable in foreign currency may be paid in Israeli currency at the rate of
exchange on the date of payment, but the judgment debtor may also make
payment in foreign currency if the Israeli exchange control regulations then
in effect permit such foreign currency payment. Pending collection, the
amount of the judgment of an Israeli court stated in Israeli currency will
ordinarily be linked to the Israeli CPI plus interest at the annual rate (set
by Israeli regulations) prevailing at such time. Judgment creditors must bear
the risk that they will be unable to convert their award into foreign
currency that can be transferred out of Israel. All judgment creditors must
bear the risk of unfavorable exchange rates.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares. All proceeds from the sale of the Shares will be for the account of
the Selling Shareholders, as described below. The Company will use the
proceeds of any warrant exercise for general corporate purposes and working
capital. See "Selling Shareholders" and "Plan of Distribution" described
below.
17
SELLING SHAREHOLDERS
The following table sets forth the names of the Selling Shareholders and
the number of Ordinary Shares beneficially owned by such Selling Shareholders
as of November 17, 1997 (assuming the November Debenture is convertible on
such date, and assuming that all warrants described in this Prospectus are
exercised) and offered hereby. None of the Selling Shareholders has held any
position, office or other material relationship with the Company or any of
its affiliates within the past three years, other than as a result of its
ownership of the debenture or warrants. The Shares may be offered from time
to time by the Selling Shareholders named below. However, the Selling
Shareholders are under no obligation to sell all or any portion of the Shares
under this Prospectus or otherwise. Because the Selling Shareholders may
sell all or part of their Shares, no estimate can be given as the number of
Shares that will be held by any Selling Shareholder upon termination of any
offering made hereby.
Pursuant to Rule 416 of the Securities Act, the Selling Shareholders may
also offer and sell Shares issued with respect to the debenture, the
Preferred Shares and warrants as a result of anti-dilution provision,
including by reason of changes in the conversion price of the debenture and
Preferred Shares, and stock splits, dividends and similar events.
NUMBER OF SHARES SHARES BENEFICIALLY OWNED
BENEFICIALLY OWNED AFTER OFFERING
PRIOR TO THE OFFERING PERCENT
NAME OF SELLING SHAREHOLDER AND OFFERED HEREBY NUMBER OUTSTANDING
- ------------------------------------------------------------------------------------------------------------------
CC Investments LDC
c/o Citco Fund Services (Cayman Islands) Ltd.
Corporate Center
West Bay Road
PO Box 31106 SMB
Grand Cayman, Cayman Islands (# of OS upon conversion & 450,000
from warrants) 0 0%
Nelson Partners
c/o Leeds Management Services, Ltd.
129 Front Street
Hamilton HM12
Cayman Islands (# of OS upon conversion & 180,000
from warrants) 0 0%
Olympus Securities, Ltd.
18
c/o Leeds Management Services, Ltd.
129 Front Street
Hamilton HM12
Cayman Islands (# of OS upon conversion & 220,000
from warrants) 0 0%
Profinsa Investments Inc
C/o Krieger & Praeger, Esq.
319 Fifth Avenue
New York, NY 10016 (# of OS upon conversion & 200,000
From warrants) 0 0%
Marshall Companies
901 North Third Street
Minneapolis, MN 55401 (# of OS upon conversion & 100,000
from warrants) 0 0%
The Shemano Group
601 California Street, Suite 850
San Francisco, CA 94108 1,057,500 0 0%
PLAN OF DISTRIBUTION
The Shares covered by this Prospectus may be offered and sold from time
to time by the Selling Shareholders. The Selling Shareholders will act
independently of the Company in making decisions with respect to the timing,
manner and size of each sale. The Selling Shareholders may sell the Shares
being offered hereby on the Nasdaq Small Cap Market, or otherwise, at prices
and under terms then prevailing or at prices related to the then current
market price or at negotiated prices. The Shares may be sold by on or more of
the following means of distribution: (a) a block or cross trade in which the
broker, dealer or agent so engaged will attempt to sell Shares as agent, but
may position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker, dealer or agent as principal and
resale by such broker, dealer or agent for its own account pursuant to this
Prospectus; (c) an over-the-counter distribution in accordance with the rules
of the Nasdaq Small Cap Market; (d) ordinary brokerage transactions (which
may include long and short sales) and transactions in which the broker
solicits purchasers; (e) in privately negotiated transactions; (f) "at the
market" to or through market makers or into an existing market for the
Ordinary Shares; (g) in other ways not involving market makers or into an
existing market for the Ordinary Shares; (h) through transactions in options,
swaps or other derivatives (whether listed or not); or (i) any combination of
the foregoing or other legally available means. To the extent required, this
Prospectus may be amended and supplemented from time to time to describe a
specific plan of distribution. In connection with distributions of the
Shares or otherwise, the Selling Shareholders may enter into hedging
transactions with broker-dealers or other financial institutions. In
connection with such transactions, broker-dealers or other financial
institutions may engage in short sales of the Company's Ordinary Shares in
the course of hedging the positions they assume with Selling Stockholders.
The Selling Stockholders may also sell the Company's Ordinary Shares short
and redeliver the shares to close out such short positions. The Selling
Stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions which require the delivery to
such broker-dealer or other financial institution of Shares offered hereby,
which Shares such broker-dealer or other financial institution may resell
pursuant to this Prospectus (as supplemented or amended to reflect such
transaction). The Selling Stockholders may also pledge Shares to a
broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution may effect sales of the pledged
Shares pursuant to this Prospectus (as supplemented or amended to reflect
such transaction). In addition, any Shares that qualify for sale pursuant to
Rule 144 may be sold under Rule 144 rather than pursuant to this Prospectus.
19
In effecting sales, brokers, dealers or agents engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate.
Brokers, dealers or agents may receive commissions, discounts or concessions
from the Selling Shareholders in amounts to be negotiated prior to the sale.
Such brokers or dealers and any other participating brokers or dealers may be
deemed to be "underwriters" within the meaning of the Act in connection with
such sales, and any such commissions, discounts or concessions may be deemed
to be underwriting discounts or commissions under the Act. The Company will
pay all expenses incident to the registration of the Shares with the SEC.
In order to comply with the securities laws of certain states, if
applicable, the Shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states
the 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 requirement is available and is complied with. The Company has
agreed to use its best efforts to register and qualify the Shares under such
other securities or "blue sky" laws of such jurisdictions in the Unites
States as each Selling Shareholder reasonably requests.
There can be no assurance that the Selling Shareholders will sell all or
any of the Shares.
The Company has agreed to indemnify the October Investors and any person
controlling an October Investor for any claims arising out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading; (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the Shares.
The October Investors have agreed to indemnify the Company and certain
related persons for claims arising from the matters set forth above provided
that the violation upon which the claim is based occurred in reliance upon
and in conformity with written information furnished to the Company by an
October Investor expressly for use in connection with such Registration
Statement.
The Company has agreed to indemnify the Selling Shareholders and any
person controlling a Selling Shareholder for any claims arising out of or are
based upon (i) any untrue statement or alleged untrue statement of a material
fact in a Registration Statement or the omission or alleged omission to state
therein a material fact required to be stated or necessary to make the
statements therein not misleading; (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus
if used prior to the effective date of such Registration Statement, or
contained in the final prospectus (as amended or supplemented, if the Company
files any amendment or supplement thereto with the SEC) or the omission or
alleged omission to state therein any material fact necessary to make the
statements made therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation or
alleged violation by the Company of the Securities Act, the Exchange Act, any
other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the Shares.
The Selling Shareholders have agreed to indemnify the Company and certain
related persons for claims arising from the matters set forth above provided
that the violation upon which the claim is based occurred in reliance upon
and in conformity with written information furnished to the Company by a
Shareholder expressly for use in connection with such Registration Statement.
The Company has agreed with the Selling Shareholders to keep the
Registration Statement of which this Prospectus constitutes a part effective
until the earlier of the date on which all of the Shares have been sold and
the date on which all of the Shares may immediately be sold to the public
without registration pursuant to Rule 144(k) under the Act.
20
LEGAL MATTERS
The validity of the securities offered hereby and certain legal matters
in connection with the Offering with respect to Israeli law will be passed
upon for the Company by Yigal Arnon & Co., Tel Aviv, Israel. Certain legal
matters in connection with the Offering with respect to United States law
will be passed upon for the Company by Rothgerber, Appel, Powers & Johnson
LLP, Denver, Colorado.
EXPERTS
The audited consolidated financial statements referred to in this
Prospectus and/or included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1996, have been audited by Luboshitz, Kasierer &
Co., a Member Firm of Andersen Worldwide, SC, independent 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 giving said
reports. Reference is made to said reports, which include an explanatory
fourth paragraph with respect to the Company's ability to continue as a going
concern.
Statements concerning Israeli law included in this Prospectus or in any
document incorporated by reference herein have been examined by Yigal Arnon &
Co., and have been included upon the authority of such counsel as an expert
in the laws of the State of Israel.
21
No dealer, salesperson or any
other individual has been
authorized to give any information
or make any representations not
contained in this Prospectus in
connection with the Offering
covered by this Prospectus. If
given or made, such information or
representations must not be relied
upon as having been authorized by
the Company, any Selling
Shareholder or any other person.
This Prospectus does not constitute
an offer to sell, or a solicitation
of an offer to buy, the Shares in
any jurisdiction where, or to any
person to whom, 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 there has not been
any change in the facts set forth
in this Prospectus or in the
affairs of the Company since the
date hereof or that the information
contained herein is correct as of
any time subsequent to the date
hereof.
___________
TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION 2
FORWARD LOOKING STATEMENTS 3
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE 3
THE COMPANY 4
RECENT DEVELOPMENTS 5
RISK FACTORS 9
USE OF PROCEEDS 17
SELLING SHAREHOLDERS 17
PLAN OF DISTRIBUTION 18
LEGAL MATTERS 20
EXPERTS 20
22
11,990,000 ORDINARY SHARES
Accent Software
International Ltd.
___________
PROSPECTUS
___________
NOVEMBER 17, 1997
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses in connection with the issuance and distribution of the
securities registered under this Registration Statement are estimated to be
as follows:
Securities and Exchange Commission Registration Fee. . . . . . $8,974
The Nasdaq Stock Market Filing Fee . . . . . . . . . . . . . . .7,500
Israeli Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . .300
Printing and Engraving Expenses. . . . . . . . . . . . . . . . . .500
Legal Fees and Expenses. . . . . . . . . . . . . . . . . . . . 20,000
Accounting Fees and Expenses . . . . . . . . . . . . . . . . . 10,000
Transfer Agent Fees. . . . . . . . . . . . . . . . . . . . . . .1,000
Total . . . . . . . . . . . . . . . . . . . . . . .$ 48,274
-------
-------
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Articles of Association of the Company provide that, to the fullest
extent permitted by the Israeli Companies' Ordinance (New Version), 1983, as
amended (the "Companies Ordinance"), the Company may indemnify its directors
and officers for (i) any financial liability imposed upon them for the
benefit of a third party by a judgment, including a settlement or arbitration
decision certified by a court, as a result of an act or omission of such
person in his capacity as a director or officer of the Company; and (ii)
reasonable litigation expenses, including legal fees, incurred by such
director or officer or which he is obligated to pay by a court order, in a
proceeding brought against him by or on behalf of the Company or by others,
or in connection with a criminal proceeding in which he was acquitted, in
each case relating to acts or omissions of such person in his capacity as a
director or officer of the Company ("Indemnifiable Event").
The Company's Articles of Association provide that, to the fullest extent
permitted by the Companies Ordinance, the Company may procure directors' and
officers' liability insurance for (i) breach of the duty of care by any
director or officer owed to the Company or to any other person; (ii) breach
of fiduciary duty by any officer or director owed to the Company, provided
such person acted in good faith and had reasonable cause to assume that the
action would not prejudice the interests of the Company; and (iii) any
financial liability imposed upon any director or officer for the benefit of a
third party by reason of an act or omission of such person in his capacity as
a director or officer of the Company. The Company has a directors' and
officers' liability insurance policy that insures the Company's officers and
directors against certain liabilities.
Under the Companies Ordinance, the Company may not indemnify or procure
insurance coverage for the liability of its Office Holders (as defined in the
Companies Ordinance) in respect of any monetary obligation imposed by reason
of (i) an act or omission which constitutes a breach of fiduciary duty,
except to the extent described above; (ii) a willful breach of the duty of
care or reckless disregard of the circumstances or consequences of such
breach; (iii) an act or omission done with the intent to unlawfully realize
personal gain; or (iv) a fine or penalty imposed for a criminal offense.
II-1
The Companies Ordinance defines an "Office Holder" to include a director,
general manager, chief executive officer, executive vice president, vice
president, other managers directly subordinate to the general manager, and
any person assuming the responsibilities of the foregoing positions without
regard to such person's title.
In addition, pursuant to the Companies Ordinance, indemnification of, and
procurement of insurance coverage for, an Office Holder of the Company is
permitted if it is approved by the Company's Audit Committee and Board of
Directors. In certain circumstances, the Companies Ordinance also requires
approval of such indemnification and insurance by the Company's shareholders.
ITEM 16. EXHIBITS
4.1 -- Form of Securities Purchase Agreement dated November 6,
1997, between Accent Software International Ltd., and CC
Investments LDC, Nelson Partners, Olympus Securities, Ltd.,
Marshall Companies, Profinsa Investments, which includes the
Convertible Debenture, the Warrant Agreement, Registration
Rights Agreement and Certificate of Designation as exhibits
thereto.
4.2 -- Warrant Agreement with The Shemano Group, Inc.
5.1 -- Opinion of Yigal Arnon & Co.
23.1 -- Consent of Luboshitz, Kasierer & Co., a Member Firm of
Andersen Worldwide, SC.*
23.2 -- Consent of Yigal Arnon & Co., contained in their opinion
filed as Exhibit 5.1.
23.3 -- Consent of Rothgerber, Appel, Powers & Johnson LLP.*
24.1 -- Power of Attorney.*
___________
* Filed previously.
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 of 1933, as amended (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 thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Securities and Exchange Commission pursuant
to Rule 424(b) if, in the aggregate, with changes in volume and price
represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee"
table in the effective 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.
II-2
(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 securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof;
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering; and
(b) The undersigned 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 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 the provisions described under Item 14 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 and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
amendment to the registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Colorado Springs,
State of Colorado, on this 17th day of November 1997.
ACCENT SOFTWARE INTERNATIONAL LTD.
By: /S/ ROBERT J. BEHR
---------------------------------------------------
Name: Robert J. Behr
Title: Chief Financial Officer
(Principal Financial and Accounting Officer)
II-3
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following
persons in the capacities indicated:
SIGNATURE TITLE DATE
/S/ TODD A. OSETH President, Chief Executive Officer and Director November 17, 1997
- ----------------- (principal executive officer)
Todd A. Oseth
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
/S/ ROBERT J. BEHR Chief Financial Officer (principal financial and November 17, 1997
- ---------------------------- accounting officer)
Robert J. Behr
/S/ ROBERT ROSENSCHEIN Chief Technology Officer, Languages, and November 17, 1997
- ---------------------------- Co-Chairman of the Board of Directors
Robert Rosenschein
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
/S/ ROGER CLOUTIER Co-Chairman of the Board of Directors November 17, 1997
- ------------------
Roger Cloutier
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
/S/ ELLIOTT B. BROIDY Director November 17, 1997
- ----------------------------
Elliott B. Broidy
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
/S/ JEFFREY ROSENSCHEIN Chief Technology Officer, Intelligent Agents, and November 17, 1997
- ---------------------------- Director
Jeffrey Rosenschein
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
/S/ MELDON E. LEVINE Director November 17, 1997
- ----------------------------
Meldon E. Levine
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
/S/ MARK A. TEBBE Director November 17, 1997
- ----------------------------
Mark A. Tebbe
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
II-4
/s/ ESTHER DYSON Director November 17, 1997
- ----------------------------
Esther Dyson
By: /S/ ROBERT J. BEHR
- ----------------------------
Robert J. Behr, Attorney-in-fact
Authorized Representative in the United States:
ACCENT WORLDWIDE, INC.
/s/ TODD A. OSETH
- ----------------------------
Todd A. Oseth
By: /s/ ROBERT J. BEHR November 17, 1997
------------------------
Robert J. Behr
Attorney-in-fact
EXHIBIT INDEX
4.1 -- Form of Securities Purchase Agreement dated November 6,
1997, between Accent Software International Ltd., and CC
Investments LDC, Nelson Partners, Olympus Securities, Ltd.,
Marshall Companies, Profinsa Investments, which includes the
Convertible Debenture, the Warrant Agreement, Registration
Rights Agreement and Certificate of Designation as exhibits
thereto.
4.2 -- Warrant Agreement with The Shemano Group, Inc.
5.1 -- Opinion of Yigal Arnon & Co.
23.1 -- Consent of Luboshitz, Kasierer & Co., a Member Firm of
Andersen Worldwide, SC.*
23.2 -- Consent of Yigal Arnon & Co., contained in their opinion
filed as Exhibit 5.1.
23.3 -- Consent of Rothgerber, Appel, Powers & Johnson LLP.*
24.1 -- Power of Attorney.*
___________
* Filed previously.
II-5