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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 30, 1999.
REGISTRATION NO. 333-90849
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
PRE-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------------
HIE, INC.
(Exact name of registrant as specified in its charter)
GEORGIA 58-2112366
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1850 PARKWAY PLACE, SUITE 1100
MARIETTA, GEORGIA 30067
(770) 423-8450
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
----------------------
ROBERT I. MURRIE
PRESIDENT AND CHIEF EXECUTIVE OFFICER
HIE, INC.
1850 PARKWAY PLACE, SUITE 1100
MARIETTA, GEORGIA 30067
(770) 423-8450
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
----------------------
With a copy to:
PATRICIA A. WILSON, ESQ.
TROUTMAN SANDERS LLP
BANK OF AMERICA PLAZA
SUITE 5200
600 PEACHTREE STREET, N.E.
ATLANTA, GEORGIA 30308-2216
(404) 885-3000
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
----------------------
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended, other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box. [X]
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please check the
following box and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH CLASS OF AMOUNT TO BE MAXIMUM MAXIMUM AMOUNT OF
SECURITIES TO BE REGISTERED OFFERING PRICE PER AGGREGATE REGISTRATION FEE(3)
REGISTERED (1) SHARE(2) OFFERING PRICE(2)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01
per share (together with
associated preferred stock
purchase rights) 302,458 shares $1.875 $567,109 $157.66
=====================================================================================================================
</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, any additional
shares of common stock issuable to prevent dilution as a result of
stock splits, stock dividends and similar transactions are registered
hereby.
(2) Estimated solely for the purpose of determining the registration fee
and calculated in accordance with Rule 457(c) under the Securities Act
on the basis of the average of the high and low prices of HIE's common
stock on November 9, 1999 as quoted on the Nasdaq National Market.
(3) This registration fee was previously paid with the filing of the
Registration Statement on November 12, 1999.
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 THE REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT 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.
===============================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES OR A SOLICITATION OF AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED DECEMBER 30, 1999
PROSPECTUS
302,458 SHARES
[HIE LOGO]
COMMON STOCK
------------------
The selling shareholders are offering for resale up to 302,458 shares
of our common stock. These shares may be acquired by the selling shareholders
upon their conversion of 65,000 shares of our 8.5% Series B cumulative
convertible exchangeable preferred stock, which we issued in a private
placement on September 29, 1999.
We will not receive any of the proceeds from the offering of the
shares of our common stock with this prospectus. The registration of the shares
pursuant to this prospectus does not necessarily mean that any shares will be
offered or sold.
The sale price of the shares offered with this prospectus will be
determined by the selling shareholders at the time of sale, and sales may be
made at negotiated prices, fixed prices, market prices prevailing at the time of
sale or prices related to prevailing market prices.
Our common stock is currently traded on the Nasdaq National Market
under the symbol "HDIE." On December 27, 1999, the last reported sales price of
the common stock was $3.375 per share.
YOU SHOULD CAREFULLY CONSIDER THE RISK FACTORS BEGINNING ON PAGE 3
BEFORE PURCHASING ANY SHARES OF COMMON STOCK OFFERED BY THE SELLING
SHAREHOLDERS.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
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December ___, 1999
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TABLE OF CONTENTS
About this Prospectus.......................................................iii
Special Note Regarding Forward-Looking Statements...........................iii
Prospectus Summary............................................................1
Risk Factors..................................................................3
Use of Proceeds..............................................................17
Selling Shareholders.........................................................17
Plan of Distribution.........................................................19
Legal Matters................................................................21
Experts......................................................................21
Where You Can Find More Information..........................................21
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ABOUT THIS PROSPECTUS
THIS PROSPECTUS IS PART OF A REGISTRATION STATEMENT THAT WE HAVE FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") USING A "SHELF"
REGISTRATION PROCESS. UNDER THIS PROCESS, THE SELLING SHAREHOLDERS MAY, FROM
TIME TO TIME, SELL THEIR SHARES OF OUR COMMON STOCK IN ONE OR MORE OFFERINGS.
PLEASE CAREFULLY READ BOTH THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS
SUPPLEMENT TOGETHER WITH ADDITIONAL INFORMATION DESCRIBED UNDER THE HEADING
"WHERE YOU CAN FIND MORE INFORMATION."
YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES IN ANY STATE WHERE THE OFFER
IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS
IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS DOCUMENT
AND NEITHER THE DELIVERY OF THIS PROSPECTUS NOR THE SALE OF SECURITIES
HEREUNDER SHALL CREATE AN IMPLICATION TO THE CONTRARY.
IN THIS PROSPECTUS, THE "COMPANY," "HIE," "WE," "US," AND "OUR" REFER
TO HIE, INC. AND ITS SUBSIDIARIES.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements included in or incorporated by reference into this
prospectus are considered "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended (the "Securities Act"),
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). These statements involve known and unknown risks and relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"intends," "seeks," "predicts," "potential" or "continue" or the negative of
such terms or other comparable terminology.
Forward-looking statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors, including those outlined under the
section entitled "Risk Factors." The risks, uncertainties and factors that may
cause our actual results to differ materially from any forward-looking
statement include:
- the effect of changing economic and business conditions
- risks associated with product demand and market acceptance
- changes in our business strategy and development plans
- changes in government regulation
- the loss of significant distributors or customers
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- delays in new product development and technological risks
- other risk factors identified in this prospectus
Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
events, levels of activity, performance or achievements. We do not assume
responsibility for the accuracy and completeness of forward-looking statements.
We do not intend to update or revise any forward-looking statement after the
date of this prospectus to reflect any change in our expectations with regard
to such statement or any change in events, conditions or circumstances on which
the forward-looking statement is based.
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PROSPECTUS SUMMARY
ABOUT HIE, INC.
We develop, market and support enterprise application integration
("EAI") software products and provide related services. Our products enable
organizations to connect multiple, disparate Information Technology ("IT")
systems, including applications and databases, thus allowing such systems to
share data in real time. Since 1994, we have been providing solutions to
healthcare companies and have recently begun providing our solutions to
financial/banking institutions.
We offer the Cloverleaf EAI Suite, which helps companies to speed the
process of connecting disparate applications and databases by using pre-made
integration engines and adapters, among other components. These products seek
to simplify the problem of programmers being forced to recreate new integration
software every time they need to link systems together. Furthermore, we believe
industry-specific solutions are important because companies within an industry
often adhere to standardized protocols and formats that require EAI solutions
to be tailored to account for such circumstances. Our products are currently
available to customers in versions specifically designed to meet the needs of
companies in the healthcare and financial/banking vertical markets.
In addition, EMerge, our Enterprise Master Person Index ("EMPI")
product, is a process-oriented implementation of EAI specifically designed to
enable healthcare companies to continuously track patients, physicians,
insurance plan members and records across different organizations and
information systems. EMPIs are enablers for clinical data repositories,
enterprise-wide data warehouses and electronic medical records.
Our Cloverleaf EAI Suite and EMerge products are sold through
third-party distributors and directly to end-users.
We offer an array of professional services, including a variety of
short-term, project-based technical services, extensive training programs,
long-term integration management services and Solution Sourcing, our family of
outsourcing solutions.
We were organized as a Georgia corporation on June 15, 1994. Our
principal executive offices are located at 1850 Parkway Place, Suite 1100,
Marietta, Georgia 30067, and our telephone number is (770) 423-8450. We
maintain a web site at http://www.hie.com. The reference to our web address
does not constitute incorporation by reference of the information contained at
that site.
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THE OFFERING
In September 1999 we issued and sold 65,000 shares of a newly
designated 8.5% Series B Cumulative Convertible Exchangeable Preferred Stock
(the "Series B Preferred Stock") to the selling shareholders in a private
offering for gross proceeds of $650,000. On behalf of the selling shareholders,
we are registering for resale up to 302,458 shares of our common stock that are
issuable upon conversion of the Series B Preferred Stock, based upon the
current conversion price.
Each share of Series B Preferred Stock, valued at its liquidation
preference of $10.00, is convertible at any time, at the option of the holder,
into that number of shares of our common stock determined by dividing $10.00 by
$2.1491 (the "Fixed Conversion Price," which is 115% of the average closing bid
prices of our common stock for the five business days prior to the closing
of the sale of the Series B Preferred Stock). Each share of Series B Preferred
Stock is currently convertible into approximately 4.6532 shares of common
stock.
The conversion price will be reset on June 20, 2000 if the average
of the closing bid prices of our common stock for the five business days prior
to June 20, 2000 (the "Reset Conversion Price") is less than $2.1491. If the
conversion price is reset, the number of shares of our common stock into which
each share of Series B Preferred Stock is convertible will be determined by
dividing $10.00 by the Reset Conversion Price.
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RISK FACTORS
You should carefully consider the risks described below before making
an investment decision. The risks and uncertainties described below are not the
only ones that we face. Additional risks and uncertainties that we do not yet
know of or that we currently consider immaterial may also impair our business
operations or financial condition.
If any of the following risks occur, our business, financial condition
or results of operations could be materially harmed. In that case, the trading
price of our common stock could decline, and you may lose all or part of your
investment.
This prospectus also contains forward-looking statements that involve
risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including the risks faced by us described below and elsewhere in this
prospectus.
OUR OPERATING RESULTS VARY SIGNIFICANTLY AND OUR PAST OPERATING RESULTS MAY NOT
BE INDICATIVE OF OUR FUTURE PERFORMANCE
Although we experienced revenue growth in 1998, such growth may not be
sustainable, as evidenced by the fact that our revenue declined 1% for the
nine-month period ended September 30, 1999, compared to the same period in the
prior year. You should not use our past results to predict future operating
margins and results. Additionally, we have a limited operating history upon
which you can base your evaluation of our business and prospects. Prior to 1998
and in the first nine months of 1999, we experienced a history of losses and we
have not yet been consistently profitable on an annual basis. At September 30,
1999, we had an accumulated deficit of approximately $24.7 million. Our future
operating results will depend on many factors, including the following:
- the growth of the EAI software market
- the continued growth of demand for our EMerge product
- the size and timing of orders for our products and the collection of
the related accounts receivable, especially from major distributors
- the amount and timing of services revenue
- the impact of the Year 2000 issue on sales of our products (See "--
Year 2000 Risks May Result in Material Adverse Effects on Our
Business.")
- the length of the sales cycle for our products
- potential delays in our implementations at customer sites
- continued development of distribution channels
- changes in demand for our products
- introduction of new products or product enhancements by us or our
competitors
- changes in prices of our products and those of our competitors
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- the effects of global economic conditions on capital expenditures
for software
- amount, availability and timing of expenditures relating to
expansion of our business
- variability in the mix of services that we perform versus those
performed by our third-party service providers
WE HAVE INCURRED LOSSES AND THERE CAN BE NO ASSURANCES REGARDING IF AND WHEN WE
WILL AGAIN GENERATE POSITIVE EARNINGS
Prior to 1998 and in the first nine months of 1999, we experienced a
history of losses, and we have not yet been consistently profitable on an annual
basis. We believe this is primarily due to the fact that we have experienced a
shift in the composition of our overall revenue from relatively high-margin
software license fees to the lower-margin service component of our business.
Therefore, our overall gross profit has been reduced, contributing significantly
to the overall losses that we have incurred. Unless we are able to generate
increased unit sales of our Cloverleaf EAI Suite in the healthcare and
financial/banking markets or generate significant sales from our EMerge software
product, as well as develop and market new enhancements and new products, we may
continue to see our lower-margin service business dominate our overall revenue
composition. If this trend continues, unless we are able to continue to make
cost cutting measures, including improvements to the gross profit of the service
business, such losses may continue to occur. In addition, such losses have
contributed to our inability to satisfy certain financial covenants of our
revolving line of credit, which defaults have been waived by the lender. See
"--We Have Incurred A Technical Default In Our Line Of Credit." We are unable to
assure you that we will be able to remedy this situation in the near future, if
at all, and therefore, there can be no assurance if and when we will return to
profitability. See "--We Depend on Services Revenue."
WE HAVE AMENDED THE FINANCIAL COVENANTS IN OUR LINE OF CREDIT
In August 1998, we entered into a $5.0 million line of credit
facility (the "Credit Facility") with Silicon Valley Bank (the "Bank"). We were
in default of two of the financial covenants under the Credit Facility at March
31, 1999: (1) quarterly profitability; and (2) the minimum Quick Ratio, as
defined therein. Subsequent to March 31, 1999, HIE and the Bank amended the
Credit Facility whereby the Bank waived these defaults, increased the interest
rate by 0.5% annually (to 1.5% over prime) and secured the line of credit with
the Company's intellectual property.
At June 30, 1999, HIE was in default of the same two financial
covenants under the Credit Facility. Subsequent to June 30, 1999, HIE and the
Bank amended the Credit Facility whereby the Bank waived the defaults,
increased the interest rate by 0.5% (to 2% over prime), and extended the term
of the Credit Facility to September 30, 1999.
On September 30, 1999, HIE and the Bank again amended the Credit
Facility to extend the term until November 30, 1999. The Credit Facility was
amended again on November 30, 1999 to extend the term until December 31, 1999.
The balance outstanding under the Credit Facility was $3.9 million on November
30, 1999 and $200,000 was available for borrowing at November 30, 1999 due to
certain borrowing base limitations. The Credit Facility currently bears interest
at the Bank's prime rate (8.50% at November 30, 1999) plus 2%.
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The increases in our interest rate charged by the Bank reduced our
earnings and contributed to our operating losses.
We are engaged in discussions with the Bank regarding an extension or
replacement of the Credit Facility as well as with other potential financing
sources to provide additional capital for our ongoing and future operations.
There can be no assurance that we will be successful in our negotiations with
the Bank or in attracting additional capital on terms acceptable to us, if at
all.
FACTORS AFFECTING FLUCTUATIONS IN OUR QUARTERLY RESULTS
Our quarterly operating results have fluctuated significantly in the
past and may vary significantly in the future. Quarterly revenue and operating
results depend upon, among other things, the volume and timing of customer
contracts and service orders received, as well as the amount of each contract
that we are able to recognize as revenue. These factors are difficult to
forecast. In addition, as is common in the software industry, a significant
portion of our license revenue in a given quarter historically has been
recorded in the last month of that quarter. Our expense levels for each
quarter, however, are based primarily on our estimates of future revenue and
are largely fixed. As a result, we may be unable to adjust spending rapidly
enough to compensate for any unexpected revenue shortfall. Any significant
shortfall in revenue in relation to our planned expenditures would seriously
harm our business, financial condition and results of operations.
Our Dependence On Sales To Distributors May Impact Our Quarterly
Results
We use distributors to sell EAI solutions in our targeted markets.
Sales of our products to a limited number of distributors may account for a
significant amount of revenue for a particular quarter. For example, one
distributor, Trace Financial LTD, accounted for 29% and 58% of our software
revenue for the three months ended March 31, 1999 and June 30, 1999,
respectively. One customer, Columbia/HCA Healthcare Corporation, accounted for
69% of our software revenue and 23% of our total revenue for the three months
ended September 30, 1999. Additionally, in the fourth quarter of 1998, sales to
a major distributor, McKesson HBOC, Inc., accounted for almost one half of our
total revenue and substantially all of our software revenue. Our distributors
may not purchase significant amounts of our products in a particular quarter,
if at all. Further, changes or delays in distributor orders may cause
significant variability in our revenue for any particular quarter.
Collection Of Accounts Receivable From Our Major Customers May Impact
Our Quarterly Results
At September 30, 1999, the accounts receivable balance of one
distributor, McKesson HBOC, Inc., comprised approximately 30% of our total
accounts receivable balance. Also, three customers, Trace Financial LTD,
Columbia/HCA Healthcare Corporation and McKesson HBOC, Inc., comprised
approximately 45% of our total accounts receivable balance at September 30,
1999. A downturn in the software market generally or other financial problems
of these customers could affect our ability to collect outstanding accounts
receivable. Our failure to collect accounts receivable owed to us by our major
customers on a timely basis could have a material adverse effect on our
business, financial condition and cash flow and could cause significant
variability in our revenue for any particular quarter.
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Seasonality May Impact Our Quarterly Results
Our operating results have also experienced certain seasonal
fluctuations. Historically, our revenue has been higher in the fourth quarter
and lower in the first quarter of each year. We believe that our seasonality is
due in part to the calendar year budgeting cycles of many of our customers and
our incentive compensation policies, which tend to reward our sales personnel
for achieving annual rather than quarterly revenue quotas. In future periods,
we expect that these seasonal trends may continue to cause first quarter
license revenue to decrease from the level achieved in the preceding quarter.
As a result of these and other factors, our quarterly revenue may
fluctuate significantly, and we cannot predict with certainty our quarterly
revenue and operating results. Further, we believe that period-to-period
comparisons of our operating results are not necessarily a meaningful
indication of future performance. It is likely that in one or more future
quarters our results may fall below the expectations of securities analysts and
investors. If this occurs, the trading price of our common stock would likely
decline.
OUR REVENUE IS PRIMARILY GENERATED IN THE HEALTHCARE AND FINANCIAL/BANKING
MARKETS
Substantially all of our revenue comes from customers in the
healthcare and the financial/banking markets. Sales to healthcare organizations
accounted for substantially all of our total revenue for the year ended
December 31, 1998 and the nine months ended September 30, 1999. As a result,
our business, financial condition and results of operations are influenced by
conditions affecting these industries. Our distributors and customers may not
continue to purchase our products and services. Consequently, our failure to
maintain our relationships with our current distributors and customers or to
add new distributors or customers that make significant purchases of our
products and services would seriously harm our business, financial condition
and results of operations.
Many healthcare organizations are consolidating to create integrated
healthcare delivery systems with greater market power. These organizations may
try to use their market power to negotiate price reductions for our
applications and services. As the healthcare industry consolidates, competition
for customers will become more intense and the importance of acquiring each
customer will become greater. If we were forced to reduce prices for our
products or services, our operating results would suffer.
The healthcare market itself is highly regulated and is subject to
changing political, economic and regulatory influences. These factors affect
the purchasing practices and operations of healthcare organizations. Changes in
current healthcare financing and reimbursement systems could cause us to make
unplanned enhancements of software applications or services, or result in
delays or cancellations of orders or in the revocation of endorsement of our
applications and services by healthcare participants. Federal and state
legislatures have periodically considered programs to reform or amend the U.S.
healthcare system at both the federal and state level. These programs may
contain proposals to increase governmental involvement in healthcare, lower
reimbursement rates or otherwise change the environment in which healthcare
market participants operate. Healthcare market participants may respond by
reducing their investments
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or postponing investment decisions, including investments in our applications
and services. We do not know what effect any proposals would have on our
business.
We have been selling in the financial/banking market for less than 18
months with a limited amount of success. Prior to 1999, we generated little
revenue from the financial/banking market. We cannot reasonably predict future
revenue from this market due to our limited experience and sales success in
this market.
OUR SOFTWARE LICENSE REVENUE IS SUBSTANTIALLY DEPENDENT ON ONE PRODUCT SUITE
Substantially all of our software license revenue in 1998 and the nine
months ended September 30, 1999, was derived from sales of our Cloverleaf EAI
Suite. Our future success will depend on continued market acceptance of our
Cloverleaf EAI Suite and enhancements to these products. Competition,
technological change or other factors could reduce demand for, or market
acceptance of, our Cloverleaf EAI Suite. A decline in demand for our Cloverleaf
EAI Suite would seriously harm our business, financial condition and results of
operations. To date, EMerge has only a limited sales history upon which you can
base your evaluation of its prospects. If we are unable to achieve significant
sales of our software products, the composition of our revenue may continue to
be dominated by our lower-margin services business, which may contribute to
ongoing losses.
WE DEPEND ON SERVICES REVENUE
Services revenue represented a majority of our total revenue for the
first nine months of 1999 and for each of 1998, 1997 and 1996. We anticipate
that services revenue will continue to account for a substantial amount of our
total revenue for the foreseeable future.
- Because services revenue has lower gross margins than software
license revenue, an increase in the percentage of total revenue
represented by services revenue or an unexpected decrease in
software license revenue could have a detrimental effect on our
overall gross profit and our operating results
- We subcontract certain product implementation, customer support and
training services to third-party service providers. Revenue from
these third-party service providers generally carries lower gross
margins than our service business overall; as a result, our services
revenue and related margins may vary from period to period,
depending on the mix of revenue from third-party service providers
- Services revenue depends in part on ongoing renewals of support
contracts by our customers, some of which may not renew their
support contracts
If our services revenue is lower than anticipated, our business,
financial condition and results of operations could be seriously harmed. Our
ability to increase services revenue will depend in large part on our ability
to increase the scale of our professional services organization. We may not be
able to do so. In addition, we believe our success depends in part on
introducing new service offerings.
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OUR GROWTH IS DEPENDENT UPON THE DEVELOPMENT OF OUR DISTRIBUTOR SALES MODEL
We believe that our future growth depends heavily on developing and
maintaining successful strategic relationships with third-party distributors.
Currently, we are focusing on sales to distributors in the healthcare and
financial/banking markets as opposed to direct sales to end-users for our
Cloverleaf EAI Suite. As such, we place a strong emphasis on developing and
maintaining relationships with entities in a position to distribute our
products. Approximately 9%, 34%, 16% and 16% of our total revenue in the first
nine months of 1999 and for the years ended December 31, 1998, 1997 and 1996
were generated by third-party distributors of our products.
Although we have entered into written distribution agreements with all
of our significant distributors, these agreements typically do not restrict
them from distributing our competitors' products and do not require them to
purchase any minimum amount of our products. Additionally, many of our
distributors pre-purchase our products in volume and, consequently, may not
make purchases of our products every quarter. We cannot assure you that we will
be able to maintain existing relationships, develop new relationships or that
any such relationships will prove to be effective in distributing our products.
If we lose any of our distributor relationships or fail to establish new
relationships or if our distributors fail to successfully sell our products, we
would not be able to execute our business strategy and our business would
suffer significantly.
WE MAY BE UNABLE TO EXPAND OUR DIRECT SALES AND PROFESSIONAL SERVICES
ORGANIZATIONS
Currently, we market our products to distributors and end-users in
certain vertical markets through our internal sales force. Additionally,
clients that license our products often engage our professional services
organization to assist with support, training, consulting and implementation of
our EAI solutions. Our ability to achieve significant revenue growth in the
future will greatly depend on our ability to recruit and train sufficient
technical, customer support and direct sales personnel. Any new professional
services personnel will require training and education and take time to reach
full productivity. We have in the past and may in the future experience
difficulty in recruiting qualified sales, technical and support personnel. To
meet our needs for such personnel, we may need to use more costly third-party
consultants and independent contractors to supplement our own professional
services organization. Our inability to maintain an adequate direct sales force
and professional services organization could seriously harm our business,
financial condition and results of operations.
OUR FAILURE TO MANAGE GROWTH OF OPERATIONS MAY ADVERSELY AFFECT US
Our current information systems, procedures and controls may not
continue to support any growth in our operations and may hinder our ability to
exploit the market for EAI and EMPI products and services. We cannot be certain
that we will continue to experience or successfully manage growth. Our
inability to sustain or manage our growth could seriously harm our business,
financial condition and results of operations. To manage any growth, we must
continue to:
- expand our sales, marketing and customer support organizations
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- invest in the development of enhancements to existing products and
new products that meet changing customer needs
- further develop our technical and marketing expertise in our
targeted vertical markets so that we can influence and respond to
emerging industry standards
- improve our operational processes and management controls
- further develop our EAI and EMPI service offerings
SALES AND IMPLEMENTATION CYCLES FOR OUR EAI AND EMPI SOLUTIONS CAN BE LENGTHY
Sales cycles for our EAI and EMPI solutions can be lengthy. Our
typical sales cycle to customers in the healthcare and financial/banking
markets ranges between three to nine months from our initial contact with a
potential customer to the sales of our solutions. We are unable to control many
factors that will influence our customers' buying decisions. The sales and
implementation process involves a significant technical evaluation and
commitment of capital and other resources by our customers. The sale and
implementation of our solutions are subject to delays due to our customers'
internal budgets and procedures for approving large capital expenditures and
deploying new technologies.
OUR MARKETS ARE HIGHLY COMPETITIVE
We compete in markets that are intensely competitive. We will be
required to devote a significant amount of resources to expand our presence in
our targeted markets. Additionally, in order to maintain our market share in
the healthcare market, we must preserve our relationships with our current
customers as well as establish relationships with new customers. We expect the
markets for our products and services to become more competitive as current
competitors expand their product offerings and new competitors enter the
market. Increased competition could result in price reductions, reduced gross
margins and loss of market share, any of which could seriously harm our
business, financial condition and results of operations. Our principal
competitors include:
Internal IT Departments
We face competition and sales resistance from the internal IT
departments of potential customers that have developed or may develop in-house
systems that may substitute for our products. We expect that internally
developed application integration systems will continue to be a principal
source of competition for the foreseeable future. In particular, we may face
difficulties making sales to organizations whose internal development groups
have already progressed significantly toward completion of systems that our
products might replace, or where the underlying technologies used by such
groups differ fundamentally from our products.
Software and Middleware Vendors
We face competition from a variety of software and middleware vendors
that provide EAI and EMPI products in different vertical markets. These
competitors include:
- companies offering EAI products
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<PAGE> 15
- companies offering EMPI products
- IT consulting firms
- application vendors
Systems Integrators and Professional Service Organizations
We also may face competition from systems integrators and professional
service organizations that design and develop custom systems and perform custom
integration of systems and applications. Certain of these firms may possess
industry specific expertise or reputations among our potential customers. These
systems integrators and consulting firms can resell our products, and we may
engage in joint marketing and sales efforts with them. We may rely upon these
firms for recommendations of our products during the evaluation stage of the
purchase process, as well as for implementation and customer support services.
These systems integrators and consulting firms may have similar, and often more
established, relationships with our competitors, and there can be no assurance
that these firms will not market or recommend software products that are
competitive with our products.
Many of these companies have longer operating histories, significantly
greater financial, technical, marketing and other resources, significantly
greater name recognition, and a larger installed base of customers than we do.
Many of our competitors also may have well-established relationships with our
current and potential customers in our targeted markets. In addition, many of
these competitors have extensive knowledge of EAI and EMPI solutions generally
and in our targeted markets, and may be in a better position than we are to
devote significant resources toward the development, promotion and sale of
their products generally or in specific vertical markets.
Current and potential competitors may also respond more quickly than
we can to new or emerging technologies and changes in customer requirements.
They may have established or may establish cooperative relationships among
themselves or with third parties to increase the ability of their products to
address customer needs. Accordingly, it is possible that new competitors or
alliances among competitors may emerge and rapidly acquire significant market
share. We also expect that competition will increase as a result of software
industry consolidations. We cannot assure you that we will be able to compete
successfully against current and future competitors, or that competitive
pressure we face will not significantly harm our business, financial condition
and results of operations.
WE MUST KEEP PACE WITH RAPIDLY CHANGING TECHNOLOGY TO REMAIN COMPETITIVE
The market for our products is characterized by rapid technological
change, frequent new product introductions and enhancements, changes in
customer demands and evolving industry standards. Our existing products could
be rendered obsolete if we fail to keep up in any of these ways. We have also
found that the technological life cycles of our products are difficult to
estimate, partially because they may vary according to the particular
application or vertical market segment. We believe that our future success will
depend upon our ability to continue to enhance our current product line while
we concurrently develop and introduce new products that
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<PAGE> 16
keep pace with competitive and technological developments. These developments
require us to continue to make substantial product development investments.
Existing Products
We currently serve a customer base with a wide variety of hardware,
software, database and networking platforms. To gain broad market acceptance,
we believe that we will have to support our products on a variety of platforms.
Our success will depend on, among others, the following factors:
- our ability to integrate our products with multiple platforms,
especially relative to our competition in our targeted markets
- the portability of our products, particularly the number of hardware
platforms, operating systems and databases that our products can
source or target
- the integration of additional software modules under development
with existing products
- our management of technical personnel and sub-contractors
Future Products
We cannot assure you that we will be successful in developing and
marketing future product enhancements or new products that respond to
technological changes, shifting customer preferences or evolving industry
standards. We may experience difficulties that could delay product enhancements
or new products or increase our costs to develop these products. If we are
unable to develop and introduce new products or enhancements of existing
products in a timely and affordable manner or if we experience delays in the
commencement of commercial shipments of new products and enhancements, then
customers may forego purchases of our products and purchase those of our
competitors.
OUR SUCCESS DEPENDS ON OUR ABILITY TO PROTECT OUR PROPRIETARY TECHNOLOGY
Our success depends upon our ability to maintain the proprietary and
confidential technology incorporated in our products. We rely on a combination
of copyright, trademark and trade secret laws, as well as confidentiality
agreements and licensing arrangements, to establish and protect our proprietary
rights. We presently have no patents. Despite our efforts to protect our
proprietary rights, existing copyright, trademark and trade secret laws afford
only limited protection. In addition, the laws of certain foreign countries do
not protect our rights to the same extent as do the laws of the United States.
Attempts may be made to copy or reverse engineer aspects of our products or to
obtain and use information that we regard as proprietary. We cannot assure you
that we will be able to protect our proprietary rights against unauthorized
third-party copying or use. Furthermore, policing the unauthorized use of our
products is difficult, and litigation may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets or to determine
the validity and scope of the proprietary rights of others. Such litigation
could result in substantial costs and diversion of our resources.
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<PAGE> 17
INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS CAN BE COSTLY AND RESULT IN THE LOSS
OF SIGNIFICANT RIGHTS
It is possible that third parties will claim that we have infringed
their current or future intellectual property rights. We expect that EAI
software developers may increasingly be subject to infringement claims as the
number of products in different industry segments overlap. Any claims, with or
without merit, could be time-consuming, result in costly litigation, cause
product shipment delays, or require us to enter into royalty or licensing
agreements, any of which could seriously harm our business, financial condition
and results of operations. We cannot assure you that such royalty or licensing
agreements, if required, would be available on terms acceptable to us, if at
all. Additionally, we cannot assure you that legal action claiming intellectual
property infringement will not be commenced against us, or that we would
prevail in such litigation given the complex technical issues and inherent
uncertainties in litigation. In the event an intellectual property claim
against us was successful and we could not obtain a license on acceptable terms
or license a substitute technology or redesign to avoid infringement, our
business, financial condition and results of operations would be seriously
harmed. Even if we prevail in litigation, the expense of litigation could be
significant and could seriously harm our business, financial condition and
results of operation.
WE RELY ON THIRD PARTIES FOR TECHNOLOGY IN OUR PRODUCTS
We depend upon third-party suppliers to provide software that is
incorporated in certain of our products. We do not have control over the
scheduling and quality of work of such third-party software suppliers.
Additionally, the third-party software may not continue to be available to us
on commercially reasonable terms, if at all. Our agreements to license certain
third-party software will terminate after specified dates unless they are
renewed. If we cannot maintain licenses to key third-party software, shipments
of our products could be delayed until equivalent software could be developed
or licensed and integrated into our products.
THERE ARE MANY RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
While approximately 90% of our revenue in the first nine months of
1999 and for the year ended December 31, 1998 was generated within the United
States, we have customers in several countries worldwide. International sales
in certain foreign markets are subject to a variety of risks, including
- difficulties in establishing and managing international distribution
channels
- localizing software products for sales in foreign markets and
enforcing intellectual property rights
- fluctuations in the value of foreign currencies, including the Euro
- changes in duties and quotas
- introduction of tariff or non-tariff barriers
- economic, political and regulatory changes
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<PAGE> 18
In addition, to the extent profit is generated or losses are incurred in
foreign countries, our effective income tax rate may be materially affected. We
do not currently engage in hedging transactions, but we may do so in the
future. We cannot assure you that any of the factors described above will not
seriously harm our business, financial condition and results of operations.
FAILURE TO RECRUIT AND RETAIN KEY EMPLOYEES WILL SERIOUSLY HARM OUR BUSINESS
Our success is highly dependent upon the continued service and skills
of our executive officers and other key technical, sales and marketing
employees. We do not maintain key man life insurance on any of our employees,
and we have not entered into employment agreements with any key employees that
provide for any fixed term of service. In addition, our future success will
depend considerably on our ability to attract and retain highly skilled
employees and management personnel. Competition for such personnel is intense.
We cannot assure you that we will be successful in attracting and retaining
highly skilled employees and management personnel. Further, we anticipate
growth and expansion into areas and activities which may require the addition
of new highly skilled employees and the development of additional expertise by
existing management personnel. Any new highly skilled personnel may require
training and education and take time to reach full productivity. The failure to
attract and retain such employees or to develop such expertise could seriously
harm our business, financial condition or operating results.
OUR PRODUCTS MAY BE AFFECTED BY UNKNOWN SOFTWARE DEFECTS
Our products depend on complex software, both internally developed and
licensed from third parties. Complex software often contains defects,
particularly when first introduced or when enhancements or new versions are
released. Although we conduct extensive testing, we may not discover software
defects that affect our new or current products or enhancements until after
they are deployed. Although we have not experienced any material software
defects to date, it is possible that, despite testing by us, defects may occur
in our software. These defects could cause performance interruptions, which
could damage our reputation with existing or potential customers, increase our
service costs, cause us to lose revenue, delay market acceptance or divert our
development resources, any of which could cause our business to suffer.
WE MAY INCUR MATERIAL COSTS IN CONNECTION WITH PRODUCT LIABILITY CLAIMS
Because many of our clients use our products to integrate important
applications in their organizations, any errors, defects or other performance
problems of our products could result in financial or other damages to our
clients. Additionally, we provide services to assist certain customers in
identifying and correcting potential Year 2000 problems. In the event of any
errors, defects or other performance problems in our products or services, our
clients could seek damages for losses from us, which, if successful, could
seriously harm our business, financial condition or results of operations.
Although our license agreements typically contain provisions designed to limit
our exposure to product liability claims, existing or future laws or
unfavorable judicial decisions could negate such limitation of liability
provisions. We have not experienced any product liability claims to date,
however, a product liability claim brought against us, even if not successful,
would likely be time consuming and costly.
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<PAGE> 19
YEAR 2000 RISKS MAY RESULT IN MATERIAL ADVERSE EFFECTS ON OUR BUSINESS
The Year 2000 issue refers generally to the data structure and
processing problem that may prevent systems from properly processing
date-sensitive information when the year changes to 2000. As a result, within
the next month or so, IT and non-IT systems used by many companies may need to
be upgraded to address Year 2000 problems. We formed a Year 2000 task force
that has systematically evaluated all existing systems, products and key
external relationships to ascertain material Year 2000 issues and solutions.
The Year 2000 issue could result in the following risks for us:
- we may not be able to modify our products, services offerings, IT
and non-IT systems in a timely and successful manner to comply with
the Year 2000 requirements, which could have a material adverse
effect on our operating results
- the system failures due to Year 2000 problems of third parties with
whom we have a material relationship may have a material adverse
effect on our operating results
- our customers may reallocate capital expenditures to fix Year 2000
problems and defer purchases of our software
- we may be subject to a claim involving our products or Year 2000
assessment services that could have a material adverse effect on our
business, results of operations and financial condition
- the spending and purchasing patterns of customers or potential
customers may be affected by the Year 2000 issue as companies expend
significant resources to correct or update their current systems for
Year 2000 compliance or delay purchases of new software until after
the Year 2000 in order to avoid implementing a formal Year 2000
compliance program with respect to the new software
GOVERNMENT REGULATION COULD ADVERSELY AFFECT OUR BUSINESS
Our business is subject to government regulation. Existing as well as
new laws and regulations could adversely affect our business. Some computer
applications and software are considered medical devices and are subject to
regulation by the United States Food and Drug Administration (the "FDA"). We do
not believe that our current products or services provided to the healthcare
industry are subject to FDA regulation. However, we may expand our application
and service offerings into areas that subject us to FDA regulation. We have no
experience in complying with FDA regulations. We believe that complying with
FDA regulations would be time consuming, burdensome and expensive and could
delay our introduction of new applications or services.
By virtue of our products and services provided to the healthcare
industry, we are subject to extensive regulation relating to the
confidentiality and release of patient records, which are included in our
databases. Federal and state regulations govern both the disclosure and the use
of confidential patient medical record information. Although compliance with
these laws and regulations is at present principally the responsibility of the
hospital, physician or other healthcare provider, regulations governing patient
confidentiality rights are evolving rapidly. Additional legislation governing
the distribution of medical records has been proposed at both
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<PAGE> 20
the state and federal level. This legislation may require holders of such
information to implement security measures. It may be expensive to implement
security or other measures designed to comply with any new legislation. We
cannot assure you that changes to state or federal laws will not materially
restrict the ability of healthcare organizations to submit information from
patient records using our software products.
OUR COMMON STOCK PRICE MAY BE HIGHLY VOLATILE
The trading price of our common stock may be volatile. The stock
market in general, and the market for technology and software companies in
particular, has, from time to time, experienced extreme volatility that often
has been unrelated to the operating performance of particular companies. These
broad market and industry fluctuations may significantly affect the trading
price of our common stock, regardless of our actual operating performance. The
trading price of our common stock could be affected by a number of factors,
including:
- changes in expectations of our future financial performance
- changes in securities analysts' estimates (or the failures to meet
such estimates)
- announcements of technological innovations
- customer and distributor relationship developments
- conditions affecting our targeted markets in general
- quarterly fluctuations in our revenue and financial results
In the past, following periods of volatility in the market price of a
company's securities, securities class action litigation has often been
instituted. If this were to happen to us, litigation would be expensive and
would divert management's attention.
PROVISIONS OF OUR ARTICLES OF INCORPORATION AND BYLAWS COULD HAVE ANTI-TAKEOVER
EFFECTS
Our articles of incorporation and bylaws, as well as our shareholder
rights plan, contain certain provisions that could have the effect of delaying
or preventing a change in control. These provisions could limit the price that
certain investors might be willing to pay in the future for shares of our
common stock. Certain of these provisions authorize the issuance of preferred
stock with rights senior to those of common stock and impose various procedural
and other requirements that could make it more difficult for shareholders to
effect certain corporate actions.
FUTURE SALES BY EXISTING SHAREHOLDERS COULD DEPRESS THE MARKET PRICE OF OUR
COMMON STOCK AND MAKE IT MORE DIFFICULT FOR US TO SELL STOCK IN THE FUTURE
After this registration statement becomes effective, the shares
registered hereunder will be eligible for resale in the market without
restriction. Sales of any substantial number of shares of our common stock in
the public market may have an adverse effect on the market price of our common
stock. The average daily trading volume of our common stock has been low. Any
sustained sales of shares by our existing or future shareholders or any
increase in the average volume of shares traded in the public market may
adversely affect the market price of our
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<PAGE> 21
common stock. These sales also may make it more difficult for us to sell equity
or equity-related securities in the future at a time and price that we deem
appropriate. This shelf registration will remain effective until September 29,
2000 or such earlier time as all of the shares of the common stock issued upon
conversion of the Series B Preferred Stock have been sold.
OUR BUSINESS OR OUR STOCK PRICE COULD BE ADVERSELY AFFECTED BY THE ISSUANCE OF
ADDITIONAL PREFERRED STOCK
Our board of directors is authorized to designate and issue up to an
additional 18,950,000 shares of preferred stock with such dividend rates,
liquidation preferences, voting rights, redemption and conversion terms and
privileges as our board of directors, in its sole discretion, may determine. The
issuance of additional shares of preferred stock may result in a decrease in the
value or market price of our common stock. The issuance of additional shares of
preferred stock could adversely affect the voting and other rights of the
holders of common stock.
LOW STOCK PRICE COULD RESULT IN OUR BEING DELISTED FROM NASDAQ, WHICH COULD
REDUCE OUR ABILITY TO RAISE FUNDS
If our stock price were to drop below $1.00 per share and remain below
$1.00 per share for an extended period of time, certain Nasdaq regulations
would require the delisting of our shares. Accordingly, our common stock could
no longer be traded on Nasdaq. In such an event, our shares could only be
traded on over-the-counter bulletin board systems. If our stock were to be
delisted, then we may face significant difficulties in raising additional
capital on favorable terms, if at all. Delisting would also negatively affect
shareholder liquidity.
YOU WILL EXPERIENCE DILUTION IF THE CONVERSION PRICE OF THE SERIES B PREFERRED
STOCK IS RESET
We may be obligated to issue additional shares of common stock upon
conversion of the Series B Preferred Stock. Using the Fixed Conversion Price,
each share of the Series B Preferred Stock is currently convertible into
approximately 4.6532 shares of common stock. The total number of shares of
common stock currently issuable is approximately 302,458, or approximately 1.2%
of the total shares outstanding on November 30, 1999. On June 20, 2000, the
conversion price may be reset. The Reset Conversion Price will be the applicable
price if the average of the closing prices of our common stock on the five
business days prior to June 20, 2000 is less than $2.1491. The lower the Reset
Conversion Price (assuming it is less than $2.1491 and the conversion price is
reset), the more shares of common stock into which the Series B Preferred Stock
is convertible.
To the extent that additional shares of our common stock are issuable
upon conversion of the Series B Preferred Stock, our shareholders will
experience dilution of their ownership percentages. The following table
illustrates such dilution, based upon the total number of shares of our common
stock outstanding as of November 30, 1999 (25,484,658) and the market price of
our common stock as of November 30, 1999 ($2.4375):
<TABLE>
<CAPTION>
POTENTIAL MARKET RESULTING RESULTING SHARES % OF TOTAL SHARES
DECLINE(%) CONVERSION PRICE ISSUABLE OUTSTANDING
- ---------------- ---------------- ---------------- -----------------
<S> <C> <C> <C>
0% $2.1491 302,458 1.2%
25% $1.6118 403,276 1.6%
50% $1.0746 604,876 2.3%
75% $0.5373 1,209,752 4.5%
</TABLE>
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USE OF PROCEEDS
The selling shareholders will receive all of the proceeds from the
sale of the common stock offered with this prospectus.
SELLING SHAREHOLDERS
On September 29, 1999, we issued 65,000 shares of the Series B
Preferred Stock to the selling shareholders for gross proceeds of $650,000 in a
private placement to accredited investors pursuant to an exemption from
registration provided by Regulation D of the Securities Act. This prospectus
relates to shares of our common stock that may be acquired by the selling
shareholders upon conversion of the shares of the Series B Preferred Stock held
by the selling shareholders.
To our knowledge, none of the selling shareholders is a broker-dealer
or an affiliate of a broker-dealer, and all of the shares of Series B Preferred
Stock were acquired by the selling shareholders for investment purposes. No
selling shareholder has held any position or office or had any other material
relationship with us in the past three years.
MATERIAL CONVERSION TERMS OF THE SELLING SHAREHOLDERS' SERIES B PREFERRED STOCK
The selling shareholders may convert, at any time, any or all of the
Series B Preferred Stock into shares of our common stock at a conversion rate
equal to $10.00 divided by a conversion price equal to:
- the Fixed Conversion Price - 115% of the average of the closing bid
prices of our common stock for the five business days prior to the
closing date of the private placement. The Fixed Conversion Price
is $2.1491 and accordingly, each share of Series B Preferred Stock
is convertible, and will be convertible (subject to the possibility
of the reset as described below), into approximately 4.6532 shares
of common stock; or
- the Reset Conversion Price - the average of the closing bid
prices of the common stock for the five business days prior to June
20, 2000. The conversion price will be reset and thus the Reset
Conversion Price will be used to calculate the conversion rate, if
on June 20, 2000, the Reset Conversion Price is less than $2.1491.
As noted above, the conversion rate is currently 4.6532 shares of our
common stock for each share of Series B Preferred Stock. Only on June 20, 2000
may this rate change and then only if the Reset Conversion Price is less than
$2.1491. Accordingly, if on June 20, 2000 the Reset Conversion Price is at least
$2.1491, the Fixed Conversion Price will be the applicable conversion price for
the life of the Series B Preferred Stock. If on June 20, 2000 the Reset
Conversion Price is less than $2.1491, such Reset Conversion Price will be the
applicable conversion price for the life of the Series B Preferred Stock. In
either case, the applicable conversion rate is subject to adjustments for stock
splits, stock dividends and recapitalizations.
If the maximum number of shares under this prospectus does not cover
all of the shares of common stock issued in connection with the conversion of
the Series B Preferred Stock due to the triggering of the Reset Conversion
Price, we will register the excess shares with the SEC.
POTENTIAL FOR DILUTION
If the Reset Conversion Price is triggered, we will be obligated to
issue additional shares of our common stock upon conversion of the Series B
Preferred Stock. The selling shareholders will be able to convert their shares
of Series B Preferred Stock on more favorable terms. To the extent that
additional shares of common stock are issuable upon conversion of the Series B
Preferred Stock, our shareholders will experience dilution of their ownership
percentages. See "Risk Factors - You Will Experience Dilution If The Conversion
Price of the Series B Preferred Stock Is Reset."
NUMBER OF SHARES THAT CAN BE SOLD
Upon the effectiveness of this registration statement, the shares of
common stock issuable upon conversion of the Series B Preferred Stock will be
eligible for resale in the market without restriction. To the extent that the
selling shareholders convert their shares of Series B Preferred Stock and sell
shares of our common stock, the price of our common stock may decline as a
result of the additional shares in the market. See "Risk Factors - Future Sales
By Existing Shareholders Could Depress The Market Price Of Our Common Stock and
Make It More Difficult For Us To Sell Stock In The Future."
As of November 30, 1999, we had 25,484,658 shares of common stock and
65,000 shares of Series B Preferred Stock issued and outstanding.
Under the rules of the SEC, a person is deemed to be a beneficial
owner of a security if he or she has or shares the power to vote or to direct
the voting of such security, or the power to dispose or to direct the
disposition of such security. A person is also deemed to be a beneficial owner
of any securities which that person has the right to acquire within 60 days, as
well as any securities owned by such person's spouse, children or relatives
living in the same house. Accordingly, more than one person may be deemed to be
a beneficial owner of the same securities.
The following table sets forth the name of each selling shareholder,
the number of and percentage of the outstanding shares of our common stock
beneficially owned by each selling shareholder as of the date of this
prospectus and a good faith estimate of the number of shares of our common
stock that may be offered by each selling shareholder pursuant to this
prospectus.
The table treats all shares of common stock issuable upon conversion
of the selling shareholders' Series B Preferred Stock (at the Fixed Conversion
Price of $2.1491) as being outstanding, notwithstanding that the SEC's rules
would not necessarily deem such conversion shares to be outstanding and
disregarding the facts that:
- closing prices of our common stock during the five days prior to
June 20, 2000 may result in the triggering of the Reset Conversion
Price and therefore cause the Series B Preferred Stock to be
convertible at a rate more favorable to the selling shareholders,
and
- anti-dilution adjustments.
The selling shareholders may offer all, some or none of their shares of
our common stock; we are thus unable to determine the exact number of shares
that will actually be sold. The table assumes that the selling shareholders sell
all of their shares that are registered on this prospectus. Unless otherwise
indicated, each person has sole investment and voting power with respect to the
shares set forth in the table below.
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<PAGE> 23
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
-------------------------- SHARES -------------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENTAGE OFFERED(1) NUMBER PERCENTAGE
- ------------------------ ------ ---------- ---------- ------ ----------
<S> <C> <C> <C> <C> <C>
Robert L. Abelman 11,633 * 11,633 -- *
Joe T. and Frances E. Bates 34,899 * 34,899 -- *
Edward & Barbara Cornell 11,633 * 11,633 -- *
Frank H. DiCristina, III (2) 28,266 * 23,266 5,000 *
Cecil Franseen 11,633 * 11,633 -- *
F. Marion & Ann Frazier 11,633 * 11,633 -- *
Gregory R. Herrell 11,633 * 11,633 -- *
Kenneth & Sherry Higgins (3) 27,633 * 11,633 16,000 *
Arthur James Hook 11,633 * 11,633 -- *
Herbert Jacobs 23,266 * 23,266 -- *
Joseph R. Kasperski 11,633 * 11,633 -- *
John Madfis 23,266 * 23,266 -- *
E. Pat Manuel 46,532 * 46,532 -- *
John E. & Noriko Ragan 11,633 * 11,633 -- *
Eugene P. & Mary H. Schumacher(4) 24,133 * 11,633 12,500 *
William Vasey 11,633 * 11,633 -- *
Rusty Vest 23,266 * 23,266 -- *
</TABLE>
- ---------------
* Less than 1% of our outstanding common stock.
(1) This amount reflects shares of our common stock issuable upon
conversion of the Series B Preferred Stock (assuming a conversion rate
of approximately 4.6532 shares of common stock for each share of
Series B Preferred Stock).
(2) This amount includes 5,000 shares of our common stock beneficially
owned by Mr. DiCristina and not issuable conversion of the
Series B Preferred Stock.
(3) This amount includes 16,000 shares of our common stock beneficially
owned by Mr. and Mrs. Higgins and not issuable upon conversion of the
Series B Preferred Stock.
(4) This amount includes 12,500 shares of our common stock beneficially
owned by Mr. and Mrs. Schumacher and not issuable upon conversion of
the Series B Preferred Stock.
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<PAGE> 24
PLAN OF DISTRIBUTION
We will not receive any of the proceeds of the sale of the common
stock offered with this prospectus. We have agreed to pay substantially all of
the expenses incidental to the registration, offering and sale of the common
stock to the public other than commissions, fees and discounts of underwriters,
brokers, dealers and agents. The shares of common stock offered with this
prospectus may be sold from time to time by the selling shareholders, or to the
extent permitted, by pledgees, donees, transferees or other successors in
interest. Such successors in interest will be named as a selling shareholder in
a supplement or post-effective amendment to this prospectus. The selling
shareholders may dispose of their shares through the following transactions:
- privately negotiated sales in the over-the-counter market or any
exchange on which the securities are listed
- by selling the shares through a broker/dealer, including
circumstances in which brokers or dealers attempt to sell the shares
to third parties, but, if they are initially unable to do so, they
may purchase the shares themselves and resell the shares as
principal
- an underwritten offering on a firm commitment or best efforts basis
Sales of selling shareholders' shares may also be made pursuant to
Rule 144 under the Securities Act, where applicable, rather than pursuant to
this prospectus.
Such sales may be made from time to time at
- negotiated prices
- fixed prices that may be changed
- market prices prevailing at the time of sale
- prices related to prevailing market prices
A selling shareholder may also use this prospectus in the following
ways:
- to enter into options or other transactions with broker/dealers that
involve the delivery of the shares to the broker/dealers who may
then resell or otherwise transfer those shares
- to pledge the common stock as security for any loan or obligation,
including pledges to brokers or dealers who may, from time to time,
themselves effect distributions of the common stock
The selling shareholders or their successors in interest, and any
underwriters, brokers, dealers or agents that participate in the distribution
of the common stock, may be deemed to be "underwriters" within the meaning of
the Securities Act, and any profit on the sale of the common stock by them and
any discounts, commissions or concessions received by any such underwriters,
brokers, dealers or agents may be deemed to be underwriting commissions or
discounts under the Securities Act. To the extent the selling shareholders may
be deemed to be underwriters, the selling shareholders may be subject to
certain statutory liabilities of the
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<PAGE> 25
Securities Act, including, but not limited to, Sections 11, 12 and 17 of the
Securities Act and Rule 10b-5 under the Exchange Act.
At any time a particular offer of the common stock is made, a revised
prospectus or prospectus supplement, if required, will be distributed. To the
extent required under the Securities Act, the following information will be set
forth in a post-effective amendment to this prospectus:
- the aggregate amount of selling shareholders' shares being offered
and the terms of the offering
- the names of any agents, brokers, dealers, transferees or
underwriters
- any applicable fee or commission with respect to a particular offer
Such prospectus supplement and, if necessary, a post-effective
amendment to the registration statement of which this prospectus is a part,
will be filed with the SEC to reflect the disclosure of additional information
with respect to the distribution of the common stock.
The selling shareholders and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including Regulation M, which may limit
the timing of purchases and sales of any of the common stock by the selling
shareholders and any other such person. Furthermore, under Regulation M under
the Exchange Act, any person engaged in the distribution of the common stock
may not simultaneously engage in market-making activities with respect to the
particular common stock being distributed for certain periods prior to the
commencement of such distribution. All of the foregoing may affect the
marketability of the common stock and the ability of any person or entity to
engage in market-making activities with respect to the common stock.
To comply with securities laws of certain states, if applicable, the
shares will be sold in those jurisdictions only through registered or licensed
brokers or dealers.
Pursuant to the Subscription Agreements, including Annex I attached to
each agreement, entered into in connection with the offer and sale of our
Series B Preferred Stock, each of HIE and the selling shareholders will be
indemnified by the other against certain liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution. We
have agreed to keep the registration statement of which this prospectus is a
part continuously effective until the earlier of September 29, 2000 or the date
that all of the shares of common stock covered by this prospectus have been
resold.
Because our common stock is listed on Nasdaq, there are certain rules
that were considered when we issued the Series B Preferred Stock. The failure to
comply with any such rules could result in our common stock being delisted from
Nasdaq. In compliance with one such rule, we filed a Listing of Additional
Shares with Nasdaq with respect to the shares of our common stock that are
issuable upon conversion of the Series B Preferred Stock.
As previously discussed, the sale of the common stock registered under
this registration statement will cause additional shares of our common stock to
enter the market, which may result in a decline in the price of our common
stock. If our stock price were to drop below $1.00 per share and remain below
$1.00 per share for an extended period of time, certain Nasdaq regulations
would require the delisting of our common stock.
To our best knowledge, there are currently no plans, arrangements or
understandings between any selling shareholders and any broker, dealer, agent
or underwriter regarding the sale of the common stock by the selling
shareholders. There is no assurance that any selling shareholder will sell any
or all of the common stock offered by it under this prospectus or that any such
selling shareholder will not transfer, devise or gift such common stock by
other means not described in this prospectus.
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<PAGE> 26
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be
passed upon for HIE by Troutman Sanders LLP, Atlanta, Georgia. Carl E. Sanders,
a partner in Troutman Sanders LLP, is a director of HIE and at October 31, 1999
was the beneficial owner of 82,950 shares of common stock.
EXPERTS
The consolidated financial statements and schedule of HIE, Inc. as of
December 31, 1998 and 1997, and for each of the years in the three-year period
ended December 31, 1998 have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG LLP, independent
certified public accountants, incorporated by reference herein and in the
registration statement, and upon the authority of said firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at:
- Judiciary Plaza
450 5th Street, N.W.
Room 1024
Washington, D.C. 20549
- 500 West Madison Street
Suite 1400
Chicago, Illinois 60606
- 7 World Trade Center
Suite 1300
New York, New York 10048
You can request copies of these documents by contacting the SEC and paying a
fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information
contained in documents that we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus. Information in this prospectus supersedes information incorporated
by reference that we filed with the SEC prior to the date of this prospectus,
while information that we file later with the SEC will automatically update and
supersede prior information. We
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<PAGE> 27
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act:
(1) our Annual Report on Form 10-K for the fiscal year ended December
31, 1998;
(2) our Quarterly Reports on Form 10-Q for the quarterly periods
ended March 31, 1999, June 30, 1999 and September 30, 1999;
(3) our Current Report on Form 8-K dated August 26, 1999;
(4) our Current Report on Form 8-K dated December 29, 1999; and
(5) the descriptions of our common stock and associated preferred
stock purchase rights contained in the Registration Statement on
Form 8-A dated October 24, 1995.
You may request a copy of these filings, at no cost, by writing or
telephoning us at:
HIE, Inc.
Attention: Investor Relations
1850 Parkway Place, Suite 1100
Marietta, Georgia 30067
Telephone (770) 423-8450
22
<PAGE> 28
[HIE LOGO]
<PAGE> 29
PART II. INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses to be paid in connection with the issuance and
distribution of the securities being registered are as follows:
SEC registration fee............................. $ 157.66
Nasdaq National Market listing fee............... $ 6,050.00
Accounting fees and expenses..................... $ 6,000.00
Legal fees and expenses.......................... $20,000.00
Miscellaneous.................................... $ 5,000.34
Total............................................ $37,208.00
All of the above items are estimates except the SEC registration fee. We will
bear all of such estimated expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 14-2-202(b)(4) of the Georgia Business Corporation Code
provides that a corporation's Articles of Incorporation may include a provision
that eliminates or limits the personal liability of directors for monetary
damages to the corporation or its shareholders for breach of their duty of care
and other duties as directors; provided, however, that the Section does not
permit a corporation to eliminate or limit the liability of a director for
appropriating, in violation of his duties, any business opportunity of the
corporation, engaging in intentional misconduct or a knowing violation of law,
obtaining an improper personal benefit, or voting for or assenting to an
unlawful distribution (whether as a dividend, stock repurchase or redemption or
otherwise) as provided in Section 14-2-832 of the Georgia Business Corporation
Code. Section 14-2-202(b)(4) also does not eliminate or limit the rights of a
corporation or any shareholder to seek an injunction or other non-monetary
relief in the event of a breach of a director's fiduciary duty. In addition,
Section 14-2-202(b)(4) applies only to claims against a director arising out of
his role as a director and does not relieve a director from liability arising
from his role as an officer or in any other capacity. The provisions of HIE's
Articles of Incorporation, as amended, are similar in all substantive respects
to those contained in Section 14-2-202(b)(4) of the Georgia Business
Corporation Code outlined above, and provide that the liability of directors of
HIE shall be limited to the fullest extent permitted by Georgia law, as the
same may from time to time be amended.
Sections 14-2-850 to 14-2-859, inclusive, of the Georgia Business
Corporation Code govern the indemnification of directors, officers, employees
and agents. Section 14-2-851 of the Georgia Business Corporation Code provides
for indemnification of a director of HIE for liability incurred by him in
connection with any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (including
civil actions brought as derivative actions by or in the right of HIE) in which
he may become involved by reason of being a director of HIE. Section 14-2-851
also provides such indemnity for directors who, at the request of HIE, act as
directors, officers, partners, trustees, employees or agents of
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another foreign or domestic corporation, partnership, joint venture, trust,
employee benefit plan or another enterprise. The Section permits
indemnification if the director acted in a manner he believed in good faith to
be in or not opposed to the best interest of HIE and, in addition, in criminal
proceedings, if he had no reasonable cause to believe his conduct was unlawful.
If the required standard of conduct is met, indemnification may include
judgments, settlements, penalties, fines or reasonable expenses (including
attorneys' fees) incurred with respect to a proceeding. However, if the
director is adjudged liable to HIE in a derivative action or on the basis that
personal benefit was improperly received by him, the director will only be
entitled to such indemnification for reasonable expenses as a court finds to be
proper in accordance with the provisions of Section 14-2-854.
Section 14-2-852 of the Georgia Business Corporation Code provides
that directors who are successful with respect to any claim brought against
them, which claim is brought because they are or were directors of HIE, are
entitled to indemnification against reasonable expenses as of right.
Conversely, if the charges made in any action are sustained, the determination
of whether the required standard of conduct has been met will be made, in
accordance with the provisions of Section 14-2-855 of the Georgia Business
Corporation Code, as follows: (i) by the majority vote of a quorum of the
disinterested members of the board of directors, (ii) if a quorum cannot be
obtained, by a committee thereof duly designated by the board of directors,
consisting of two or more disinterested directors, (iii) by special legal
counsel, or (iv) by the shareholders, but, in such event, the shares owned by
or voted under the control of directors seeking indemnification may not be
voted.
Section 14-2-857 of the Georgia Business Corporation Code provides
that an officer of HIE (but not an employee or agent generally) who is not a
director has the mandatory right of indemnification granted to directors under
Section 14-2-852, as described above. In addition, HIE may, as provided by its
Articles, By-laws, general or specific actions by its board of directors, or by
contract, indemnify and advance expenses to an officer, employee or agent who
is not a director to the extent that such indemnification is consistent with
public policy.
HIE's By-laws provide that HIE will indemnify its directors and
officers to the fullest extent permitted by the foregoing provisions of the
Georgia Business Corporation Code outlined above.
Reference is made to Section 5 of Revised Annex 1 - Registration
Rights to the Revised Subscription Agreement, the form of which is filed as
Exhibit 4.1 hereto, in which the Holders (as defined therein) agree to
indemnify the directors and officers of the Company and certain other persons
against certain civil liabilities.
Officers and directors of HIE are presently covered by insurance which
(with certain exceptions and within certain limitations) indemnifies them
against any losses or liabilities arising from any alleged "wrongful act"
including any alleged breach of duty, neglect, error, misstatement, misleading
statement, omissions or other act done or wrongfully attempted. The cost of
such insurance is borne by HIE as permitted by the By-laws of HIE and the laws
of the State of Georgia. At present, there is no pending litigation or
proceeding involving a director or officer of HIE as to which indemnification
is being sought nor is HIE aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
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<PAGE> 31
ITEM 16. EXHIBITS.
Exhibit
Number Description
- ------ -----------
2.1 Amended and Restated Articles of Incorporation.*
4.1 Form of Revised Subscription Agreement for Series B Preferred Stock
(with Revised Annex I - Registration Rights).**
5 Opinion of Troutman Sanders LLP.**
23.1 Consent of Troutman Sanders LLP (contained in Exhibit 5).**
23.2 Consent of KPMG LLP.
24 Powers of Attorney (included in the signature page to the
registration statement).**
- ---------------
* (Filed as Exhibit 3(i) to our Quarterly Report on Form 10-Q for the
quarter ended September 30, 1999 and incorporated by reference herein.)
** Previously filed on November 12, 1999 with our Registration Statement
on Form S-3.
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes: (1) to file, during
any period in which offers or sales are being made, a post-effective amendment
to this registration statement (i) to include any prospectus required by
Section 10(a)(3) of the Securities Act; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment 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 Commission pursuant to
Rule 424(b) if, in the aggregate, the 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; (iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or any
material change in such information in the registration statement; provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement; (2) that, for the purpose of
determining any liability under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof; and (3) to remove
from registration by
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<PAGE> 32
means of a post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(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 Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrant pursuant to the foregoing provisions, 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.
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<PAGE> 33
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 No. 1
to the registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Atlanta, State of Georgia, on
December 30, 1999.
HIE, INC.
By: /s/ Joseph A. Blankenship
-----------------------------------
Joseph A. Blankenship
Senior Vice President - Finance
and Chief Financial Officer
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<PAGE> 34
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities indicated
below and as of the date indicated above.
SIGNATURE TITLE
- --------- -----
/s/ Parker H. Petit* Chairman of the Board of Directors
- ----------------------------------
Parker H. Petit
/s/ Robert I. Murrie* Director, President and Chief Executive
- ---------------------------------- Officer (Principal Executive Officer)
Robert I. Murrie
/s/ Joseph A. Blankenship Senior Vice President - Finance, Chief
- ---------------------------------- Financial Officer, Treasurer and
Joseph A. Blankenship Secretary (Principal Financial Officer
and Principal Accounting Officer)
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<PAGE> 35
SIGNATURE TITLE
- --------- -----
/s/ Joseph G. Bleser* Director
- ----------------------------------
Joseph G. Bleser
/s/ J. Terry Dewberry* Director
- ----------------------------------
J. Terry Dewberry
/s/ William J. Gresham, Jr.* Director
- ----------------------------------
William J. Gresham, Jr.
/s/ Charles R. Hatcher, Jr.* Director
- ----------------------------------
Charles R. Hatcher, Jr.
/s/ John W. Lawless* Director
- ----------------------------------
John W. Lawless
/s/ Carl E. Sanders* Director
- ----------------------------------
Carl E. Sanders
/s/ Mark D. Shary* Director
- ----------------------------------
Mark D. Shary
/s/ Donald W. Weber* Director
- ----------------------------------
Donald W. Weber
/s/ Joseph A. Blankenship
- ----------------------------------
Joseph A. Blankenship
Attorney-in-fact
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<PAGE> 36
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
2.1 Amended and Restated Articles of Incorporation (filed as Exhibit
3(i) to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999 and incorporated herein by reference).
4.1 Form of Revised Subscription Agreement for Series B Preferred Stock
(with Revised Annex I - Registration Rights).*
5 Opinion of Troutman Sanders LLP.*
23.1 Consent of Troutman Sanders LLP (contained in Exhibit 5).*
23.2 Consent of KPMG LLP.
24 Powers of Attorney (included in the signature page to the
registration statement).*
* Previously filed on November 12, 1999 with our Registration
Statement on Form S-3.
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
HIE, Inc.
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Atlanta, Georgia
December 30, 1999
