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935,029 SHARES
SITE TECHNOLOGIES, INC.
(FORMERLY DELTAPOINT, INC.)
COMMON STOCK
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The 935,029 shares (the "Shares") of Common Stock (the "Common Stock") of
Site Technologies, Inc., (formerly DeltaPoint, Inc.) a California corporation
(the "Company"), covered by this Prospectus are outstanding securities of the
Company that may be sold from time to time by certain shareholders of Site
Technologies, Inc. (the "Selling Shareholders"). The Company will not receive
any of the proceeds from the sale of the Shares by the Selling Shareholders.
The Shares may be offered by the Selling Shareholders from time to time in
transactions on the OTC bulletin board, in privately negotiated transactions, or
by a combination of such methods of sale, at fixed prices that may be changed,
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Shareholders may
effect such transactions by selling the Shares to or through broker-dealers and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Shareholders or the purchasers of
the Shares for whom such broker-dealers may act as agent or to whom they sell as
principal or both (which compensation to a particular broker-dealer might be in
excess of customary commissions). See "Selling Shareholders" and "Plan of
Distribution."
The Company has agreed to bear all of the cost of preparing and printing the
Registration Statement, Prospectus and any Prospectus Supplements and all filing
fees and legal and accounting expenses associated with registration under
federal and state securities law estimated at $10,000. The Selling Shareholders
will pay all other expenses including brokerage fees, if any, related to the
distribution of the Shares.
On April 3, 1998, the closing bid price of the Company's Common Stock on the
OTC bulletin board under the symbol SITE, was $0.5625.
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The Selling Shareholders and any broker-dealers or agents that participate
with the Selling Shareholders in the distribution of the Shares may be deemed to
be "underwriters" within the meaning of Section 2(11) of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act.
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THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" COMMENCING ON PAGE 5 FOR A DISCUSSION OF RISK FACTORS THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS IN THE SECURITIES OFFERED HEREBY.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
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THE DATE OF THIS PROSPECTUS IS APRIL 16, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's regional offices located at Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661-2511 and at Seven World
Trade Center, 13th Floor, New York, New York 10048. Copies of such materials may
be obtained by mail from the Public Reference Section of the Commission at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. The Commission also makes electronic filings publicly available on the
Internet following acceptance thereof. The Commission's Internet address is
http:// www.sec.gov. The Commission's web site also contains reports, proxy and
information statements, and other information regarding registrants that file
electronically with the Commission. The Company's Common Stock is quoted on the
OTC bulletinboard under the symbol SITE, and the reports, proxy statements and
other information referred to above can also be inspected at the offices of
Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.
ADDITIONAL INFORMATION
The Company has filed with the Commission a registration statement on Form
S-3, including this Prospectus and other information (herein, together with all
amendments, exhibits and schedules, referred to as the "Registration
Statement"), under the Securities Act, with respect to the Shares offered
hereby. This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, and to which reference is hereby
made. Statements made in this Prospectus as to the contents of any document
referred to are not necessarily complete. With respect to each such document
filed as an exhibit to the Registration Statement, reference is made to the
exhibit for a more complete description of the matter involved, and each such
statement shall be deemed qualified in its entirety by such reference. The
Registration Statement, including the exhibits and schedules thereto, may be
inspected at the public reference facilities maintained by the Commission at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
Copies of such material may be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
INFORMATION INCORPORATED BY REFERENCE
The following documents filed by the Company with the Commission (File No.
001-11741) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended December 31,
1997 filed with the Commission on March 31, 1998; and
2. The description of the Company's Common Stock contained in its
Registration Statement on Form 8-A as filed with the Commission on
February 24, 1997, including any amendments or reports filed for the
purpose of updating such description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus but prior to
the termination of the offering to which this Prospectus relates shall be deemed
to be incorporated by reference in this Prospectus and to be part hereof from
the date of filing of such documents. Any statement contained in a document
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is incorporated herein
modifies or supersedes such statement. Any statement so modified or superseded
shall not be deemed, in its unmodified form, to constitute a part of this
Prospectus.
Upon written or oral request, the Company will provide without charge to
each person to whom a copy of the Prospectus is delivered a copy of the
documents incorporated by reference herein (other than exhibits to such
documents unless such exhibits are specifically incorporated by reference
herein). Requests for such documents should be submitted to Sharon L. Fugitt,
Secretary, at the principal executive offices of the Company in writing at Site
Technologies, Inc. 380 El Pueblo Rd., Scotts Valley, Ca 95066 or by telephone at
(408) 461-3017.
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THE COMPANY
The Company currently develops and markets Web site development and
maintenance software solutions for Web-based business environments. The use of
Web sites by small to medium businesses ("SMBs") and enterprise departments has
recently emerged into a critical business application that provides greater
sales and marketing reach and allows these businesses to grow faster and more
cost effectively. To capitalize on the emerging opportunities in the SMB and
enterprise department user markets for scalable Web site development and
management software solutions, the Company is continuing to broaden its product
offerings to include a family of products designed to enable these users, in
addition to individuals and Small Office/Home Office ("SOHO") professionals, to
develop, manage, integrate, deploy and maintain next-generation Web sites. The
Company's objective is to become a leading provider of Web site development and
maintenance software solutions for Web-based business environments.
The Company introduced QuickSite 1.0 in February 1996 to enable individuals
and SOHO professionals to rapidly create, manage and enhance robust Internet Web
sites. Since its introduction, the Company has received a number of industry
analyst awards for QuickSite 1.0's management capabilities and database
architecture (including the PC Week Analyst's Choice award, PC Week Labs IT
Excellence Award and PC Computing 5 Star Rating) and has successfully sold this
product through its distribution channels (including certain original equipment
manufacturers ("OEM's") with whom the Company has a strategic relationship, such
as Sony Computer). In September 1996 the Company introduced QuickSite 2.0,
targeted at Web site developers. QuickSite 2.0 received the PC Computing 5 Star
Rating.
In February 1997, the Company introduced QuickSite 2.5, its second
generation Web site development and management solution targeted at individuals,
SOHO professionals and SMB's seeking to conduct electronic commerce over the
Internet. In addition to the features incorporated in QuickSite 1.0, QuickSite
2.5, which began shipping in May 1997, includes advanced features such as
WYSIWIG++ (What You See Is What You Get) layout editor, an electronic commerce
enabled catalogue builder and an enhanced HTML (hypertext markup language)
editor. The Company has historically distributed QuickSite 2.5 through its
distribution channels (including OEMs such as MacMillan Press and Anawave,
Inc.). QuickSite 2.5 has received numerous industry awards including the ZD
Online Internet Editor's Choice Award, Info World High-Point Award, and
Entrepreneur Magazine 4 out of 4 rating. In March 1998, the Company released
QuickSite 3.0 in an electronic distribution format.
In July 1997, the Company acquired Site/technologies/inc. ("Site", with such
transaction being referred to herein as the "Site Tech Acquisition") pursuant to
which the Company acquired, among other things, SiteSweeper 1.0, a Web site
quality control and maintenance product. In September 1997, the Company released
SiteSweeper 2.0. SiteSweeper 2.0 has received the VAR Business Editors Choice
Award and the Internet World Best of Test Award.
In November 1997, the Company acquired certain proprietary core technology
from Inlet Inc. ("Inlet", with such transaction being referred to herein as the
"Inlet Technology Acquisition"). This technology serves as the basis for the
Company's client/server, multi-authoring, dynamic site development and
management product, SiteMaster 4.0, which was released in March 1998.
As part of the Company's continuing strategy to focus its development, sales
and marketing efforts on Internet software products, on June 27, 1997, the
Company consummated the sale of its DeltaGraph charting and graphics product
line (the "DeltaGraph Disposition") to SPSS, Inc. ("SPSS").
The Company was incorporated in California in 1989, its headquarters are
located at 380 El Pueblo Rd., Scotts Valley, California 95066, and its telephone
number is (408) 461-3017.
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RISK FACTORS
THIS PROSPECTUS, INCLUDING THE DOCUMENTS INCORPORATED BY REFERENCE HEREIN,
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE
STATEMENTS CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY REFERENCE HEREIN THAT
ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT AND SECTION 21E OF THE EXCHANGE ACT, INCLUDING
WITHOUT LIMITATION STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS,
INTENTIONS OR STRATEGIES REGARDING THE FUTURE. ALL FORWARD-LOOKING STATEMENTS
INCLUDED IN THIS DOCUMENT OR INCORPORATED BY REFERENCE HEREIN ARE BASED ON
INFORMATION AVAILABLE TO THE COMPANY ON THE DATE HEREOF, AND THE COMPANY ASSUMES
NO OBLIGATION TO UPDATE ANY SUCH FORWARD-LOOKING STATEMENTS. THE COMPANY'S
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-
LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE SET FORTH IN
"RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS.
RECENT AND EXPECTED LOSSES; ACCUMULATED DEFICIT; GOING CONCERN ASSUMPTIONS;
FUTURE CAPITAL NEEDS; NO ASSURANCE OF FUTURE FINANCING
The Company incurred a net loss of $8,159,000 for the year ended December
31, 1997 and had an accumulated deficit of $21,837,000 as of December 31, 1997.
The Company expects to incur losses for at least the next 12 months, and perhaps
longer. There can be no assurance that the Company will not incur significant
additional losses, will generate positive cash flow from its operations, or that
the Company will attain or thereafter sustain profitability in any future
period. To the extent the Company continues to incur losses or grows in the
future, its operating and investing activities may use cash and, consequently,
such losses or growth will require the Company to obtain additional sources of
financing in the future or to reduce operating expenses. There can be no
assurance that additional financing can be obtained on acceptable terms or at
all.
The Company's independent accountants' report on its financial statements as
of and for the years ended December 31, 1996 and 1997 contains an explanatory
paragraph indicating that the Company's accumulated deficit and historical
operating losses raise substantial doubts about its ability to continue as a
going concern. The Company may require substantial additional funds in the
future, and there can be no assurance that any independent accountant's report
on the Company's future financial statements will not include a similar
explanatory paragraph if the Company is unable to raise sufficient funds or
generate sufficient cash from operations to cover the cost of its operations.
The existence of the explanatory paragraph may have a material adverse effect
on, among other things, the Company's relationships with prospective customers
and suppliers, and therefore could have a material adverse effect on the
Company's business, financial condition and results of operations. See Note 1 to
the consolidated Financial Statements.
DEPENDENCE ON INTERNET SOFTWARE PRODUCTS AND RELATED STRATEGY; DEPENDENCE ON
CONTINUED EMERGENCE OF INTERNET SOFTWARE MARKET
Prior to 1996, DeltaPoint derived substantially all of its product revenues
from licenses of DeltaGraph charting and graphics software products. With the
DeltaGraph Disposition, the Company's future operating results will depend on
the successful development, introduction and commercial acceptance of the
Company's Internet software products. The Company's current Internet software
products consist of: QuickSite 1.0, its Web page creation and site management
product introduced in February 1996; WebTools, its Web publishing capability
tool introduced in March 1996; WebAnimator, its multimedia authoring tool for
the Web introduced in July 1996; and QuickSite Developer's Edition, its enhanced
version of QuickSite for Web site developers and corporate Intranet developers
introduced in September 1996; QuickSite 2.5, its updated version of QuickSite
1.0, introduced in May 1997; SiteSweeper 2.0, its quality control product for
the Web professional; QuickSite 3.0, its updated version of QuickSite 2.5,
introduced in March 1998; and SiteMaster 4.0 its client/server, multi-authoring,
dynamic site development and management product. The Company's future operating
results are dependent on the commercial
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acceptance of the products targeted at the SMB and enterprise department user
markets and the size of these markets. There can be no assurance that the
Company's strategy of targeting SMB and enterprise department user markets will
be successful and that the Company can successfully manage the introduction and
distribution of new versions of its existing Internet software products or any
other potential products will achieve significant market acceptance. Failure of
any of the Company's existing or potential products (particularly those targeted
at the SMB and enterprise department user markets) to achieve significant market
acceptance would have a material adverse effect on the Company's business,
financial condition and results of operation. See "--Risks Associated with Site
Tech Acquisition and Inlet Technology Acquisition; General Acquisition Risks"
and "--Distribution Risk; Substantial Reseller Customer Concentration."
RISKS ASSOCIATED WITH SITE TECH ACQUISITION AND INLET TECHNOLOGY ACQUISITION;
GENERAL ACQUISITION RISKS
In an effort to capitalize on the emerging opportunities in the SMB and
enterprise department user markets for scalable Web site development and
management solutions, the Company consummated the Site Tech Acquisition in July
1997 and the Inlet Technology Acquisition in November 1997. The Company has
introduced SiteSweeper 2.0, an updated version of the SiteSweeper 1.0 product
acquired in the Site Tech Acquisition and has announced and introduced
SiteMaster 4.0, a client/server, multi-authoring site, dynamic development and
management solution based on the technology acquired in the Inlet Technology
Acquisition. There can be no assurance that any technology acquired in the Site
Tech Acquisition and the Inlet Technology Acquisition can be successfully
developed or integrated into the Company's current technology on a timely basis
or at all, or that any products based on this technology will receive market
acceptance. In order to market products to the SMB and enterprise departmental
user markets, the Company must significantly increase its non-retail
distribution channels. The failure to successfully develop and integrate the
acquired technologies into the Company's web site development and management
technology or to successfully market products based upon the acquired
technologies would adversely impact the Company's strategy of marketing to the
SMB and enterprise department user markets (in addition to individuals and SOHO
professionals) and would have a material adverse effect on the Company's
business, operating results and financial condition.
The Company frequently evaluates potential acquisitions of complementary
businesses, products and technologies. As part of the Company's expansion plans,
the Company may acquire companies that have an installed base of products not
yet offered by the Company, have strategic distribution channels or customer
relationships, or otherwise present opportunities which management believes may
enhance the Company's competitive position. The success of any acquisition could
depend not only upon the ability of the Company to acquire such businesses,
products and technologies on a cost-effective basis, but also upon the ability
of the Company to integrate the acquired operations or technologies effectively
into its organization, to retain and motivate key personnel of the acquired
businesses, and to retain the significant customers of the acquired businesses.
Any acquisition, depending upon its size, could result in use of a significant
portion of the Company's cash, or if such acquisition is made utilizing the
Company's securities, could result in significant dilution to the Company's
shareholders. Moreover, such transactions involve the diversion of substantial
management resources and evaluation of such opportunities requires substantial
diversion of administrative, marketing and sales and engineering and
technological resources. In addition, such transactions could result in large
one-time write-offs or the creation of goodwill or other intangible assets that
would result in amortization expense. For example, in the quarter ended
September 30, 1997 and the quarter ended December 31, 1997, the Company expensed
a significant portion of the Site Tech purchase price and the Inlet purchase
price, respectively, because the acquired technology had not reached
technological feasibility. The failure to successfully evaluate, negotiate,
effect and integrate acquisition transactions could have a material adverse
effect on the Company's business, operating results and financial condition.
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DEPENDENCE ON LIMITED NUMBER OF KEY PERSONNEL; PERSONNEL LIMITATIONS; ABILITY TO
MANAGE GROWTH
The Company's success depends substantially upon the contributions of
several key personnel, some of whom were only recently hired by the Company. The
failure to attract and retain key personnel could have a material adverse effect
on the Company's business, financial condition and results of operations.
As a result of its cash constraints during most of 1997, and in connection
with its reduced level of operations and its focus on Internet software
products, the Company has significantly rationalized its workforce, including
administrative and engineering resources. There can be no assurance that the
Company will not be required to further rationalize its workforce. While the
Company endeavors to identify and develop, license or acquire technologies or
products to extend product functionality and market position in the areas of Web
site development and management, its ability to successfully undertake these
activities could be limited by, among other things, existing administrative,
engineering and other resource limitations. The failure to attract and retain
adequate levels of engineering, sales and marketing and other resources needed
to timely respond to customer needs or market conditions or to develop products
to address targeted markets would have a material adverse effect on the
Company's business, financial condition and result of operations. See
"--Distribution Risks; Substantial Reseller Customer Concentration" and "Rapid
Technological Change; Risk of Product Delays; Risk of Product Defects."
The Company's rationalization of its workforce has challenged, and is
expected to continue to challenge, the Company's management and operations,
including its sales and marketing, customer support, research and development
and finance and administrative operations. The Company's future performance will
depend in part on its ability to manage growth, should it occur, both in its
domestic and international operations and to adapt its operational and financial
control systems, if necessary, to respond to changes resulting from such growth.
The Company intends to continue to invest in improving its financial systems and
controls in connection with anticipated increases in the level of its
operations. The Company anticipates that it may need to add additional personnel
beyond its present needs and expand and upgrade its financial systems to manage
any future growth. The failure of the Company's management to respond to and
manage growth effectively could have a material adverse effect on the Company's
business, financial condition and results of operations. See "Management's
Discussion and Analysis of Financial Condition and Plan of Operations."
DISTRIBUTION RISKS; SUBSTANTIAL RESELLER CUSTOMER CONCENTRATION
The Company currently sells its software products targeted at the individual
and SOHO professional market to distributors for resale to certain retailers,
including computer superstores and mass merchandisers. The Company plans to
de-emphasize the distribution of its Internet software products in this retail
distribution channel because the Company has found that the retail distribution
channel is highly competitive and requires significant sales and marketing
spending in order to maintain a presence in this market.
The Company has introduced and intends to continue introducing products
targeted at the SMB and enterprise department user markets. Successful
development of products targeted at the SMB and enterprise department user
markets will depend in part on the Company's ability to successfully integrate
the technology acquired in the Site Tech Acquisition and the Inlet Technology
Acquisition. See "--Risks Associated with Inlet Technology Acquisition and Site
Tech Acquisition; General Acquisition Risks." In addition, the Company has not
historically sold products targeted at these markets and, in order to do so,
must develop a sales and marketing department with specialized expertise in the
development of value added reseller ("VAR's"), original equipment manufacturer
("OEM") and Internet Service Provider ("ISP") relationships to provide SMB and
enterprise department users Internet software solutions. There can be no
assurance that the Company will be able to develop such a sales and marketing
team on a timely basis or at all. In addition, this market is competitive and
there can be no assurance that the Company will
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be successful in establishing significant relationships with VARs, OEMs or ISPs
or, if developed, there can be no assurance as to amount of support that the
Company's products will receive from these VARs, OEMs or ISPs who may offer
products that compete with the Company's products. See "--Competition." To the
extent that the Company succeeds in its strategy to target the SMB and
enterprise department user markets, among other things, the Company's results of
operations may be subject to greater or different fluctuations as a result of
potentially larger individual product sales, a longer sales cycle and longer
payment terms.
Sales to a limited number of distributors and retailers in the retail
distribution channel have constituted, and are anticipated to continue to
constitute in the near term, a significant portion of the Company's retail
software sales. Sales to Ingram Micro Inc. constituted approximately 19% of the
Company's revenues from the sale of Internet products for the year ended
December 31, 1997. Any termination or significant disruption of the Company's
relationship with any major distributor or retailer, or any significant
reduction in sales volume attributable to any of such entities, would, unless or
until replaced, materially adversely affect the Company's business, financial
condition and results of operations. A deterioration in financial condition or
other business difficulties of a distributor or retailer could render the
Company's accounts receivable from such entity uncollectible, which could have a
material adverse effect on the Company's business, financial condition and
results of operations. There can be no assurance that the Company's existing
distributors and retailers will continue to provide the Company's products with
adequate levels of shelf space or promotional support.
RAPID TECHNOLOGICAL CHANGE; RISK OF PRODUCT DELAYS; RISK OF PRODUCT DEFECTS
The markets in which the Company competes are characterized by ongoing
technological developments, frequent new product announcements and
introductions, evolving industry standards and changing customer requirements.
The introduction of products embodying new technologies and the emergence of new
industry standards and practices can render existing products obsolete and
unmarketable. The Company's future success depends upon its ability on a timely
basis to enhance its existing products, introduce new products that address the
changing requirements of its customers and anticipate or respond to
technological advances, emerging industry standards and practices in a timely,
cost-effective manner. There can be no assurance that the Company will be
successful in developing, introducing and marketing new products or enhancements
to existing products or will not experience difficulties that could delay or
prevent the successful development, introduction or marketing of these products,
or that its new products and product enhancements will adequately meet the
requirements of the marketplace and achieve any significant degree of commercial
acceptance. Software products such as those offered by the Company often contain
errors or "bugs" that can adversely affect the performance of the product or
damage a user's data. The Company has in the past discovered software defects in
its products that have adversely affected its business and operating results. If
the Company is unable, for technological or other reasons, to develop and
introduce new products or enhancements of existing products in a timely manner
or if new versions of existing products contain unacceptable levels of product
defects or do not achieve a significant degree of market acceptance, or any of
the above situations occur there could be a material adverse effect on the
Company's business, financial condition and results of operations.
COMPETITION
The Company competes on the basis of certain factors, including product
quality, first-to-market product capabilities, product performance, ease of use,
customer support and price. The Company believes it currently competes favorably
overall with respect to these factors.
The market in which the Company competes are highly competitive and
characterized by rapid technological change, frequent new product introductions,
short product lives, evolving industry standards and significant price erosion
over the life of a product. The Company anticipates increased competition in
these markets from both existing vendors and new market entrants.
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In the market for Internet software tools targeted at individual and SOHO
professional users, the Company has encountered competition primarily from
Microsoft, Adobe Systems Incorporated, SoftQuad, Inc. Systems and NetObjects,
Incorporated (majority owned by IBM). In the market for Internet software
solutions targeted at the SMB and corporate departmental user markets, in
addition to these competitors, the Company expects competition from HAHT
Software Incorporated, Wallop Software Incorporated, Aziza, a division of
Objectivity Incorporated, Eventus Software Incorporated, Interwoven Corporation
and Vignette Corporation. In addition, some existing vendors in the enterprise
wide Internet software solution market (such as IBM/Lotus, Oracle Corporation,
Informix Software Inc. and Sybase Incorporated, Inc.) may enter into the
Company's existing and planned markets. The Company expects that existing
vendors and new market entrants will develop products that will compete directly
with the Company's products and that competition will increase significantly to
the extent that markets for the Company's products grow. Increased competition
is likely to result in price reductions, reduced gross margins and loss of
market share, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations. Most of the Company's
current and potential competitors have substantially greater financial,
technical, marketing, sales and customer support resources, greater name
recognition and larger installed customer bases than the Company. Because there
are minimal barriers to entry into the software market, the Company believes
sources of competition will continue to proliferate. The market for the
Company's products is characterized by significant price competition, and the
Company expects that it will face increasing pricing pressures. There can be no
assurance the Company will be able to maintain its historic pricing structure
for its existing products or will be able to obtain its desired pricing
structure for planned products. If the Company is unable to do so or if the
Company is unable to compete effectively against current and future competitors,
the Company's business, financial condition and results of operations will be
materially adversely affected.
In the future, vendors of operating system software or other software (such
as office or back office software suites) may continue to enhance their products
(including separate products that are bundled together) to include functionality
that is provided by the Company's current and planned products. This enhancement
could be achieved through the addition of functionality to operating system
software or other software or the bundling of Internet software tools with
operating system software or other products. For example, Microsoft incorporates
into its BackOffice product its Web page creation software product, FrontPage.
The inclusion of the functionality of Internet software tool products as
standard features of operating system software or other software could render
the Company's products obsolete and unmarketable, particularly if the quality of
such functionality were comparable, or perceived to be comparable, to that of
the Company's products. Furthermore, even if the Internet software tool
functionality provided as standard features by operating systems or other
software is more limited than that of the Company's products, there can be no
assurance that a significant number of customers would not elect to accept such
functionality in lieu of purchasing additional software. If the Company were
unable to develop new Internet software tool products to further enhance
operating systems or other software and to replace successfully any obsolete
products, the Company's business, financial condition and results of operations
would be materially adversely affected.
RISKS ASSOCIATED WITH PRODUCT RETURNS; PRICE PROTECTION
Consistent with industry practice, the Company allows distributors,
retailers and end users to return products for credits towards the purchase of
additional products. In addition, the Company's promotional activities,
including free trial and satisfaction guaranteed offers and competitors'
promotional or other activities could cause returns to increase sharply at any
time. Further, the Company expects that the rate of product returns could
increase to the extent that the Company introduces new versions of its existing
products. For example, product returns may increase above historical levels as a
result of new product introductions. In addition, if the Company reduces its
prices, the Company credits its distributors for the difference between the
purchase price of products remaining in their inventory and the Company's
reduced price for such products. Although the Company provides allowances for
anticipated returns and
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price protection obligations, and believes its existing policies have resulted
in the establishment of allowances that are adequate and have been adequate in
the past, there can be no assurance that such product returns and price
protection obligations will not exceed such allowances in the future and as a
result will not have a material adverse effect on future operating results,
particularly since the Company seeks to continually introduce new and enhanced
products and is likely to face increasing price competition. See "Management's
Discussion and Analysis of Financial Condition and Plan of Operations."
QUARTERLY FLUCTUATIONS IN PERFORMANCE
The Company's results of operations have historically varied substantially
from quarter to quarter and the Company expects they will continue to do so. In
the past, the Company's operating results have varied significantly as a result
of a number of factors, including the size and timing of customer orders or
license agreements, product mix, the revenues derived from product sales and
license fees, the existence and terms of royalty and packaging arrangements,
seasonality, the timing of the introduction and customer acceptance of new
products or product enhancements by the Company's competitors, new product or
version releases by the Company, changes in pricing policies by the Company or
its competitors, marketing and promotional expenditures, research and
development expenditures and changes in general economic conditions.
Furthermore, the Company has often recognized a substantial portion of its
revenues in the last month of the quarter, with these revenues frequently
concentrated in the last week or weeks of the quarter.
The Company's operating and other expenses are relatively fixed in the short
term. As a result, variations in timing of revenues can cause significant
variations in quarterly results of operations. For example, if the Company
obtains additional financing, the Company intends to continue to make
significant expenditures to enhance its sales and marketing activities and to
continue to make significant expenditures for research and development
activities. As such expenditures occur, the Company may be unable to reduce such
expenditures quickly if revenue is less than expected. The Company generally
does not operate with a significant order backlog and a substantial portion of
its revenue in any quarter is derived from orders booked in that quarter, which
are difficult to forecast and which are typically concentrated at the end of the
quarter. Accordingly, the Company's sales expectations are based almost entirely
on its internal estimates of future demand and not on firm customer orders. Due
to the foregoing factors, the Company believes that quarter to quarter
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as indications of future performance. In addition, to
the extent that the Company succeeds in its strategy to target the SMB and
corporate department user markets, among other things, the Company's results of
operations and financial condition may be subject to greater or different
fluctuations as a result of potentially larger individual product sales,
seasonality, a longer sales cycle and longer payment terms. There can be no
assurance the Company will be profitable on a quarter to quarter or any other
basis in the future.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
The Company's revenues from international operations accounted for
approximately 11% and 8% of the Company's revenues from the sale of Internet
products in 1996 and 1997, respectively, all of which were derived from sales in
Japan to Nippon Polaroid Kabushiki Kaisha, the Company's Japanese distributor.
In light of the recent DeltaGraph Disposition, the Company expects that
international Internet revenues may decline until the relationship with its
Japanese distributor (principally sold DeltaGraph products) is clarified or
other international distribution channels can be established. In the longer
term, the Company intends to take measures, including the hiring of additional
sales and marketing persons, to increase its level of international sales. In
light of, among other things, the Company's need to develop additional
international sales capabilities and to timely introduce and gain broader market
acceptance for its existing and planned Internet software products, there can be
no assurance that the Company will be successful in such efforts. International
revenues are subject to a number of risks, including greater difficulties in
accounts receivable collection, longer payment cycles, exposure to currency
fluctuations,
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<PAGE>
political and economic instability and the burden of complying with a wide
variety of foreign laws and regulatory requirements. The Company also believes
that it is exposed to greater levels of software privacy in international
markets because of the weaker protection afforded to intellectual property in
some foreign jurisdictions.
LIMITED INTELLECTUAL PROPERTY PROTECTION
The Company's ability to compete effectively depends in large part on its
ability to develop and maintain proprietary aspects of its technology. Despite
precautions taken by the Company, it may be possible for unauthorized third
parties to copy aspects of the Company's products or to obtain and use
information that the Company regards as proprietary. Moreover, the laws of some
foreign countries do not protect the Company's proprietary rights in its
products to the same extent, as do the laws of the United States. The Company
licenses its products primarily under "shrink wrap" license agreements that are
included in products shipped by the Company and are not signed by licensees,
therefore they may be unenforceable under the laws of certain jurisdictions. In
addition, some aspects of the Company's products are not subject to intellectual
property protection.
The Company cannot be certain that others will not independently develop
substantially equivalent or superseding proprietary technology, or that an
equivalent product will not be marketed in competition with the Company's
products, thereby substantially reducing the value of the Company's proprietary
rights. There can be no assurance that any confidentiality agreements between
the Company and its employees will provide adequate protection for the Company's
proprietary information in the event of any unauthorized use or disclosure of
such proprietary information.
Although the Company is not currently engaged in any intellectual property
litigation or proceedings, there can be no assurance that the Company will not
become involved in such proceedings. An adverse outcome in litigation or similar
adversarial proceedings could subject the Company to significant liabilities to
third parties, require disputed rights to be licensed from others or require the
Company to cease the marketing or use of certain products, any of which could
have a material adverse effect on the Company's business, financial condition
and results of operations. The Company may be required to obtain licenses to
patents or proprietary rights of others, and there can be no assurance that any
licenses required under any patents or proprietary rights would be made
available on terms acceptable to the Company, if at all.
VOLATILITY OF STOCK PRICE
The Company's stock price has exhibited substantial volatility since the
Company's initial public offering in December 1995 and since its secondary
offering of shares in October 1997. The trading price of the Company's Common
Stock could be subject to significant fluctuations in response to variations in
quarterly operating results, changes in analysts' estimates, announcements of
technological innovations by the Company or its competitors, general conditions
in the Internet tools and visualization software industry and other factors. In
addition, the stock market is subject to price and volume fluctuations that
affect the market prices for companies in general, and small capitalization,
high technology companies in particular, and are often unrelated to operating
performance.
DE-LISTING FROM NASDAQ SMALLCAP MARKET; POTENTIAL DELISTING FROM PACIFIC
EXCHANGE; POSSIBLE INABILITY OF PRINCIPAL MARKET MAKER TO MAKE A MARKET IN THE
COMPANY'S COMMON STOCK
The Company's Common Stock was quoted on the Nasdaq SmallCap Market from
December 1995 until March 18, 1997 and is traded on the Pacific Exchange
(formerly the Pacific Stock Exchange) and quoted on the OTC Bulletin Board and
the "pink sheets." The Common Stock was delisted from the Nasdaq SmallCap Market
effective March 19, 1997 because of Nasdaq's determination that the Company
failed to maintain certain requirements for continued listing. The shares of
Common Stock are currently quoted on the Pacific Exchange. The Company has been
notified by the Pacific Exchange that it may take
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<PAGE>
action to delist the shares of Common Stock as a result of, among other things,
the Company's failure to maintain a minimal level stock price. As a result of
the foregoing, it is more difficult to dispose of, or to obtain accurate
quotations as to the price of, the Company's Common Stock. In addition, because
the Company's Common Stock was removed from the Nasdaq SmallCap Market and its
market price is less than $5.00 per share, it is subject to so-called "penny
stock" rules that impose additional sales practice and market making
requirements on broker-dealers who sell and/or make a market in such securities.
Consequently, removal from the Nasdaq SmallCap Market and the applicability of
such "penny stock" rules could adversely affect the ability or willingness of
broker-dealers to sell and/or make a market in the Company's Common Stock and
the ability of purchasers of the Company's Common Stock to sell their securities
in the secondary market. While the Company intends to apply for relisting on the
Nasdaq SmallCap Market should it ever satisfy the conditions of listing and
intends to take actions to prevent delisting from the Pacific Exchange, there
can be no assurance that relisting will occur or that delisting will not occur
in the future. Even if the Company achieves relisting for the Common Stock on
the Nasdaq SmallCap Market, the liquidity of the Common Stock will remain
limited as the Nasdaq SmallCap Market and the Pacific Exchange are a
significantly less liquid markets then the Nasdaq National Market. If the
Company should continue to experience losses from operations, it may be unable
to maintain the standards for continued quotation on the Nasdaq SmallCap Market
(if relisted) and the Pacific Exchange, and the shares of Common Stock could be
subject to removal from the Nasdaq SmallCap Market and the Pacific Exchange.
Any limitation on the ability of any principal market maker in the Company's
Common Stock, to make a market in the Company's Common Stock could adversely
impact the liquidity or trading price of the Company's Common Stock, which could
have a material adverse impact on the market price of the Company's Common
Stock. For example, the Chicago office of the Securities and Exchange Commission
conducted a private, nonpublic investigation of H.J. Meyers & Co. Inc. ("HJ
Meyers") pursuant to a Formal Order of Investigation issued by the Commission.
The investigation focused on whether H.J. Meyers may have violated applicable
securities laws and the rules and regulations thereunder, with respect to sales
of certain securities. The Company is unable to assess the potential impact of
the outcome of such investigation by the staff on the ability of any market
maker to make a market in the Company's Common Stock or trading in the Company's
securities.
The Company has not previously paid any dividends on its Common Stock and
for the foreseeable future intends to continue its policy of retaining any
earnings to finance the development and expansion of its business.
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<PAGE>
SELLING SHAREHOLDERS
The following table lists the Selling Shareholders, the number of shares of
the Company's Common Stock which each owned or had the right to acquire as of
March 31, 1998. Because the Selling Shareholders may offer all or some of the
Shares which they hold pursuant to the offering contemplated by this Prospectus,
and because there are currently no agreements, arrangements or understandings
with respect to the sale of any of the Shares, no estimate can be given as to
the amount of Shares that will be held by the Selling Shareholders after
completion of this offering. The Shares are being registered to permit public
secondary trading of the Shares, and the Selling Shareholders may offer the
Shares for resale from time to time. See "Plan of Distribution."
The Shares being offered by the Selling Shareholders were acquired from the
Company in connection with the Company's (i) acquisition of all of the issued
and outstanding stock of Site, (ii) acquisition of all the issued and
outstanding stock of Inlet, and (iii) the issuance of shares relating to a
separation agreement. The Site Tech Acquisition was accomplished pursuant to the
terms of a Stock Exchange Agreement, dated July 11, 1997, whereby all issued and
outstanding shares of Site were exchanged for an aggregate of 550,029 shares of
the Company's Common Stock. The Inlet Acquisition was accomplished pursuant to
the terms of an Agreement and Plan of Reorganization, dated as of November 19,
1997, among the Company, Inlet, Inc. and Inlet Acquisition Corp., a wholly owned
subsidiary of the Company whereby the Company paid approximately $875,000 in
cash and issued an aggregate of 360,000 shares of the Company's Common Stock in
exchange for all of the issued and outstanding shares of Inlet Divestiture Corp.
The Company has filed with the Commission, under the Act, a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Shares from time to time on OTC bulletin board or in
privately-negotiated transactions or any combination thereof. The Company has
agreed to use reasonable efforts to keep such Registration Statement effective
for 183 days from the date of effectiveness of the Registration Statement on
Form S-3, of which this Prospectus forms a part, subject to certain
restrictions, or, if earlier, until the distribution contemplated in this
Prospectus has been completed.
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<PAGE>
The Shares offered by this Prospectus may be offered from time to time by
the Selling Shareholders named below:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY OWNED
PRIOR TO THE PERCENTAGE OF
NAME OF SELLING SHAREHOLDER OFFERING OUTSTANDING SHARES
- --------------------------------------------------------------- ------------------- -----------------------
<S> <C> <C>
Matthew Adler.................................................. 5,291 *
Benjamin Brodey M.D............................................ 4,128 *
Chrysalis Ventures L.P. ....................................... 105,840 1.2%
Darroll Cannon................................................. 881 *
Sallie Van Dyke DeGolia........................................ 621 *
Richard DeGolia................................................ 881 *
Daniel Egger................................................... 36,337 *
JG Partnership Ltd............................................. 123,480 1.5%
Gordon Link.................................................... 3,528 *
Ron Sauers..................................................... 8,572 *
Todd Schafer................................................... 1,763 *
SLF Partners II, L.P........................................... 109,909 1.3%
SLF Partners III, L.P.......................................... 13,804 *
Windcrest Partners, a New York L.P. ........................... 88,200 1.0%
WS Investment Co............................................... 6,613 *
Allan Kaplan................................................... 33,250 *
Shawn Cannon................................................... 6,717 *
Anil Peres-Da-Silva............................................ 214 *
Inlet Corp..................................................... 360,000 4.2%
William G. Pryor (1)........................................... 166,535 1.9%
</TABLE>
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* Less than 1%
(1) Includes 101,894 shares of Common Stock subject to stock options currently
exercisable or exercisable within sixty (60) days after March 16, 1998.
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<PAGE>
PLAN OF DISTRIBUTION
All or a portion of the Shares offered hereby by the Selling Shareholders
may be delivered and/or sold from time to time in transactions on the OTC
Bulletin Board, in privately negotiated transactions, or by a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. After the effectiveness of the Registration
Statement of which this Prospectus is a part, the Selling Shareholders may make
short sales of the Company's Common Stock and may use the Shares to cover the
resulting short positions. The Selling Shareholders may effect such transactions
by selling the Shares to or through broker-dealers and such broker-dealers may
receive compensation in the form of discounts, concessions or commissions from
the Selling Shareholders or the purchasers of the Shares for whom such
broker-dealers may act as agent or to whom they sell as principal or both (which
compensation to a particular broker-dealer might be in excess of customary
commissions). There is no assurance that any of the Selling Shareholders will
sell any or all of the Shares offered by them.
Any Selling Shareholder and any broker-dealers that participate in the
distribution may under certain circumstances be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by such
broker-dealers and any profits realized on the resale of Shares may be deemed to
be underwriting discounts and commissions under the Securities Act. Each Selling
Shareholder may agree to indemnify such broker-dealers against certain
liabilities, including liabilities under the Securities Act. In addition, the
Company has agreed to indemnify in certain circumstances certain Selling
Shareholders against certain liabilities, including liabilities arising under
the Securities Act and Exchange Act. Certain Selling Shareholders have agreed to
indemnify in certain circumstances the Company and certain related persons
against certain liabilities, including liabilities arising under the Securities
Act and Exchange Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from a Selling Shareholder (and, if it acts as agent for the
purchase of such Shares, from such purchaser). Broker-dealers may agree with
such Selling Shareholder to sell a specified number of Shares at a stipulated
price per share, and, to the extent such a broker-dealer is unable to do so
acting as agent for such Selling Shareholder, to purchase as principal any
unsold Shares. Broker-dealers who acquire Shares as principal may thereafter
resell such Shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) on the OTC
Bulletin Board, in privately negotiated transactions, or by a combination of
such methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices, and in connection with such resales may pay to
or receive from the purchasers of such Shares commissions computed as described
above.
Each Selling Shareholder will be subject to applicable provisions of the
Exchange Act, and the rules and regulations thereunder, including, without
limitation, Regulation M, which provisions may limit the time of bids for and
purchases of shares of the Company's Common Stock by such Selling Shareholder.
Each Selling Shareholder will pay all commissions and other expenses
associated with the sale of the Shares by such Selling Shareholder. The Shares
offered hereby are being registered pursuant to contractual obligations of the
Company, and the Company has agreed to bear certain expenses in connection with
the registration and sale of the Shares being offered by every such Selling
Shareholder. The Company has not made any underwriting arrangements with respect
to the sale of Shares offered hereby.
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<PAGE>
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock by
the Selling Shareholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by California law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director. The Company's Bylaws
provide that the Company shall indemnify its officers and directors and may
indemnify its employees and other agents to the fullest extent permitted by
California law. The Company has entered into indemnification agreements with its
officers and directors containing provisions which are in some respects broader
than the specific indemnification provisions contained in the California General
Corporation Law. The indemnification agreements require the Company, among other
things, to indemnify such officers and directors against certain liabilities
that may arise by reason of their status or service as directors or officers
(other than liabilities arising from willful misconduct of a culpable nature),
to advance their expenses incurred as a result of any proceeding against them as
to which they could be indemnified, and to obtain directors' and officers'
insurance, if available on reasonable terms. The Company believes that these
agreements are necessary to attract and retain qualified persons as directors
and officers.
Section 204(a) of the California General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed 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.
LEGAL MATTERS
The legality of the securities offered hereby will be passed upon for the
Company by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo
Alto, California.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-KSB for the year ended December 31, 1997, have been
incorporated in reliance on the report (which contains an explanatory paragraph
relating the Company's ability to continue as a going concern, as described in
Note 1 to the financial statements) of Price Waterhouse LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
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NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER
THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING SHAREHOLDERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION
IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS
NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
THE PROSPECTUS.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information..................................................... 2
Additional Information.................................................... 2
Information Incorporated by Reference..................................... 2
The Company............................................................... 4
Risk Factors.............................................................. 5
Selling Shareholders...................................................... 13
Plan of Distribution...................................................... 15
Use of Proceeds........................................................... 16
Indemnification of Directors and Officers................................. 16
Legal Matters............................................................. 16
Experts................................................................... 16
</TABLE>
935,029 SHARES
SITE TECHNOLOGIES, INC.
COMMON STOCK
APRIL 16, 1998
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