<PAGE>
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION NUMBER 333-35249
8,348,532 Shares
PROSOFTTRAINING.COM
Common Stock
Shares of common stock of ProsoftTraining.com are being offered for resale
by certain of our stockholders by this Prospectus. The Shares being offered
include 4,348,810 presently outstanding shares, 1,993,472 shares which are
issuable upon exercise of outstanding common stock purchase warrants and
2,006,250 shares which are issuable upon conversion of outstanding convertible
promissory notes. The Shares will be sold from time to time by the Selling
Stockholders named in this Prospectus through public or private transactions, on
or off the Nasdaq SmallCap Market, at prevailing market prices, or at privately
negotiated prices. We will not receive any of the proceeds from the sale of the
Shares, other than the exercise price of any common stock purchase warrants
which are exercised.
The Common Stock is traded on the Nasdaq SmallCap Market under the symbol
"POSO." The closing bid price of the Common Stock was $4.25 on February 25,
1999.
______________________________
Investing in the Common Stock Involves a High Degree of Risk. You Should
Purchase Shares Only if You Can Afford a Complete Loss. See "Risk Factors"
beginning on Page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is
a criminal offense.
Prospectus dated March 3, 1999
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ABOUT THIS PROSPECTUS
This Prospectus is part of a Registration Statement that we filed with the
Securities and Exchange Commission (the "SEC"). The Prospectus relates to
8,348,532 shares (the "Shares") of our common stock ("Common Stock") which the
selling stockholders named in this Prospectus (the "Selling Stockholders") may
sell from time to time. We will not receive any of the proceeds from such
sales.
The Shares have not been registered under the securities laws of any state
or other jurisdiction as of the date of this Prospectus. Brokers or dealers
should confirm the existence and exemption from registration or effectuate such
registration in connection with any offer and sale of the Shares.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Risk Factors.............................................................. 3
Where You Can Find More Information....................................... 6
Forward-Looking Statements................................................ 8
About ProsoftTraining.com................................................. 8
The Offering.............................................................. 9
Use of Proceeds........................................................... 9
Selling Stockholders...................................................... 10
Plan of Distribution...................................................... 13
Experts................................................................... 15
</TABLE>
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RISK FACTORS
AN INVESTMENT IN THE SHARES INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD
CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS, TOGETHER WITH THE OTHER
INFORMATION IN THIS PROSPECTUS, BEFORE BUYING ANY SHARES. YOU SHOULD ALSO BE
AWARE OF CERTAIN STATEMENTS CONTAINED IN THIS PROSPECTUS THAT DO NOT RELATE TO
HISTORICAL RESULTS OR FORWARD-LOOKING STATEMENTS. THESE FORWARD-LOOKING
STATEMENTS, SUCH AS STATEMENTS OF OUR STRATEGIES, PLANS, OBJECTIVES,
EXPECTATIONS AND INTENTIONS, INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS.
Expectation of Continuing Losses
However, we expect to continue incurring losses on a quarterly basis
through at least the second quarter of our fiscal year ending July 31, 1999. We
have incurred net losses of approximately $40 million from our inception in
December 5, 1995 through July 31, 1998. For the year ended July 31, 1998, we
incurred a net loss of $16,525,123. Our ability to generate significant revenues
in the future is subject to uncertainty. In order to achieve profitability, we
must increase our revenues. We can not assure you that we will be able to
increase revenues or achieve profitability.
Uncertainty of Future Capital Requirements
Since our inception, we have been dependent on outside financing to fund
our operations and growth. We began realizing increasing revenues in late fiscal
1998 due to our sales reorganization and refocusing efforts. This shift in our
business strategy should result in a reduction in overhead expenses and, if
revenues continue to grow as demonstrated in fiscal 1998, we hope to reach
quarterly profitability in the second half of fiscal 1999. We believe that our
existing resources will be sufficient to meet our needs for working capital
expenditures through at least fiscal 1999. However, if we do not achieve
profitability and generate positive cash flow as anticipated, our ability to
continue as a going concern will be jeopardized unless additional outside
financing can be obtained.
Uncertainty of Future Funding
If we do not achieve profitability and generate positive cash flow as
anticipated, we may need additional outside financing. Even if we do achieve
profitability and positive cash flow, we may need outside financing to fund
further growth of our business. We do not know at this time when we may need
additional funds, and we cannot be certain that if we do need additional funds
in the future that we will be able to obtain them on terms satisfactory to us,
if at all. If we are unable to raise additional funds when necessary, we may
have to reduce planned capital expenditures, scale back our operations or growth
or enter into financing arrangements on terms which we would not otherwise
accept.
Intense Competition in Training Market
We face substantial competition in the training market. Competition in the
Internet/intranet training market is intense, rapidly changing and affected by
the rapidly evolving nature of the Internet/intranet industry. A number of
other companies offer products and services similar to ours, and additional new
competitors may emerge in the near future. Many of our existing competitors
have substantially greater capital resources, technical expertise, marketing
experience, research and development status, established customers and
facilities than we do. As a result, there is a risk that we
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will not be able to successfully compete with existing and future competitors
which would adversely affect our financial performance.
Need to Respond to Rapid Technological Changes
In our industry, technology advances rapidly and industry standards change
frequently. To remain competitive and achieve profitability, we must
continually enhance our existing products and services and promptly introduce
new products, services and technologies to meet the changing demands of our
customers. Our failure to respond to technological changes quickly will
adversely affect our financial performance.
Effect of Market Overhang on Stock Price
Future sales of our Common Stock could depress the market price of our
Common Stock. In addition, the perception that such sales will occur could also
adversely effect the price. Under this Prospectus, the selling stockholders may
sell up to 8,348,532 shares (or approximately 47.8% of the shares of Common
Stock currently outstanding). Any such sales, or even the market perception
that such sales could be made, may depress the price of the Common Stock.
Volatility of Stock Price
Our Common Stock has experienced substantial price volatility and such
volatility may continue to occur in the future. Additionally, the stock market
from time to time experiences significant price and volume fluctuations that are
unrelated to the operating performance of particular companies. These broad
market fluctuations may also adversely effect the market price of our Common
Stock. In addition to such broad market fluctuations, factors such as the
following may have a significant effect on the market price of our Common Stock:
. Fluctuations in our operating results.
. The perception by others of our ability to obtain any necessary new
financing.
. Limited trading market for our Common Stock.
. Announcements of new ventures or products and services by us or our
competitors.
No Foreseeable Dividends
We have never paid cash dividends and we do not anticipate paying any cash
dividends in the foreseeable future. We intend to retain future earnings for
reinvestment in our business. Any future determination to pay cash dividends
will be at the discretion of our Board of Directors and will be dependent upon
our financial condition, results of operations, capital requirements and such
other factors as the Board of Directors deems relevant.
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Year 2000 Issue Risks
Many existing computer systems and applications, and other control devices,
use only two digits to identify a year in the date field, without considering
the impact of the upcoming change in the century. As a result, such systems and
applications could fail or create erroneous results unless corrected so that
they can process data related to the year 2000. We rely on our systems,
applications and devices, including financial systems, registration systems,
embedded computer chips, networks and telecommunications equipment.
We have completed our Year 2000 assessment and determined our financial
system needed to be updated at an expected cost of less than $3,000. We expect
the update to be completed in fiscal 1999. We have received assurances from our
other software vendors that their systems are Year 2000 compliant. In addition,
we have conducted an inventory, review and assessment of our personal computers,
networks and servers and desktop software applications to determine whether they
support Year 2000 date codes and we believe that all are Year 2000 compliant. In
the event of an unexpected failure in one of our systems, our employees would be
able to continue operations on a manual basis until such systems have been
restored to full operating capacity. We estimate that the total cost of our Year
2000 compliance will not be significant.
We have contacted our key vendors and service suppliers to determine the
extent to which we are vulnerable to their failure to address the Year 2000
problem. We have received verbal assurances from these key suppliers that their
systems are Year 2000 compliant. Although we do not believe our operations will
be significantly disrupted even if third parties with whom we have relationships
are not Year 2000 compliant, we cannot guarantee that any Year 2000 compliance
problems of our suppliers will not negatively affect our financial performance.
If our key suppliers are unable to provide us sufficient quantities of materials
or goods as a result of their failure to be Year 2000 compliant, we believe that
we can obtain adequate supplies of materials and goods at comparable prices from
other sources. Because uncertainty exists concerning the potential costs and
effects associated with any Year 2000 compliance, we intend to continue to make
efforts to ensure that third parties with whom we have relationships are Year
2000 compliant.
The Year 2000 problem could also have an effect on our customers. If
customers delay or forego purchasing our products based upon Year 2000 related
issues, it could affect our operating results. Based upon our evaluation of our
current information, we do not believe such an occurrence is likely. However, we
cannot control the Year 2000 readiness of third parties and such a risk is
possible.
Impact of Certain Anti-Takeover Provisions On Market Value of Stock
Our Bylaws contain certain provisions that may discourage other persons
from attempting to acquire control of us. These provisions include, but are not
limited to:
. A staggered Board of Directors.
. The elimination of the right of stockholders to act by written consent
without a meeting, except unanimously.
. The establishment of advance notice requirements for director
nominations and actions to be taken at annual meetings.
Such provisions, as well as the provisions of Section 203 of the
Delaware General Corporation Law (to which we are subject), could impede a
merger, consolidation, takeover or other business combination involving us or
discourage a potential acquiror from making a tender offer or otherwise
attempting to take control of us. In certain circumstances, the fact that
corporate devices are in place that will inhibit or discourage takeover attempts
could reduce the market value of our Common Stock.
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WHERE YOU CAN FIND MORE INFORMATION
Federal securities law requires us to file information with the SEC
concerning our business and operations. We file annual, quarterly and special
reports, proxy statements and other information with the SEC. You can read and
copy these documents at the public reference facility maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. You
can also copy and inspect such reports, proxy statements and other information
at the following regional offices of the SEC:
New York Regional Office Chicago Regional Office
7 World Trade Center Citicorp Center
Suite 1300 500 West Madison Street
New York, NY 10048 Suite 1400
Chicago, IL 60661
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 on the SEC's
web site at http://www.sec.gov. You can also inspect our reports, proxy
-------------------
statements and other information at the offices of the Nasdaq Stock Market.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information that we incorporate by
reference is considered to be part of this Prospectus, and later information
that we file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below (File No.
000-21535) and any future filings made with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934:
. Annual Report on Form 10-K/A for the fiscal year ended July 31, 1998
(including information specifically incorporated by reference into our
Form 10-K from our Proxy Statement for our 1998 Annual Meeting of
Stockholders);
. Quarterly Report on Form 10-Q for the quarter ended October 31, 1998
. The description of our Common Stock contained in the Registration
Statement on Form 8-A dated October 11, 1996.
This Prospectus is part of three Registration Statements we filed with the
SEC (Nos. 333-11247, 333-28993 and 333-35249). You may request a free copy of
any of the above filings by writing or calling:
Investor Relations
ProsoftTraining.com
2333 North Broadway, Suite 300
Santa Ana, California 92706
(714) 953-1200, ext. 375
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You should rely only on the information incorporated by reference or
provided in this Prospectus or any supplement to this Prospectus. We have not
authorized anyone else to provide you with different information. The Selling
Stockholders should not make an offer of these Shares in any state where the
offer is not permitted. You should not assume that the information in this
Prospectus or any supplement to this Prospectus is accurate as of any date other
than the date on the cover page of this Prospectus or any supplement.
7
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FORWARD-LOOKING STATEMENTS
This Prospectus, including the documents incorporated by reference in this
Prospectus, contain forward-looking statements which reflected our views at the
time the documents were filed regarding future events and financial performance.
These forward-looking statements are subject to certain risks and uncertainties
which could cause actual results to differ materially from historical results or
the results we expected at the time of filing. The words "believe," "expect,"
"anticipate" and similar expressions identify forward-looking statements, which
speak only as of the dates on which they were made. We undertake no obligation
to publicly update or revise any forward-looking statements, whether it is as
a result of new information, future events or otherwise. You should not unduly
rely on these forward-looking statements.
ABOUT PROSOFTTRAINING.COM
We provide comprehensive Internet skills training courses, Internet skills
certification programs and instructors to teach the training courses and
certification. We offer more than 50 instructor-led Internet skills courses
ranging from 1-day end-user workshops to 10-day certification programs. Our
Certified Internet Webmaster Program creates the professional skills required to
develop and implement e-business solutions in the Internet age. Our
certification testing program is administered worldwide by testing leader Sylvan
Prometric. We also sell our courseware to Authorized Training Center Resellers.
We originally incorporated in Nevada in March 1985 as Tel-Fed, Inc. Our
business was initially operated as a sole proprietorship (the "Proprietorship")
beginning in February 1995. In December 1995, ProSoft Development Corp., a
California corporation ("Old ProSoft") was incorporated and acquired the
business from the Proprietorship effective January 1, 1996. In March 1996, we
entered into a reorganization (the "Reorganization") with Old ProSoft and the
Old ProSoft shareholders. In the Reorganization, we issued shares of our Common
Stock to the Old ProSoft shareholders in exchange for their shares of Old
ProSoft and changed our name to ProSoft Development, Inc. As a result, Old
ProSoft became our wholly-owned subsidiary. From our incorporation until the
Reorganization, we had no significant operations. We changed our name to Prosoft
I-Net Solutions, Inc. in October 1996 and to prosofttraining.com in January
1999.
Under applicable accounting rules, for financial statement purposes, we are
required to account for the Reorganization as an acquisition of us by Old
ProSoft, with the additional shares held by our prior shareholders reflected as
a recapitalization of Old ProSoft. As a result, the consolidated financial
statements incorporated by reference in this Prospectus for ProsoftTraining.com
reflect, for the period prior to the Reorganization, the operations of Old
ProSoft. Financial statements of the Proprietorship are also incorporated by
reference herein. Our executive offices are located at 3001 Bee Caves Road,
Suite 100, Austin, Texas 78746, and our telephone number is (512) 328-6140.
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THE OFFERING
Common Stock Offered by the Selling
Stockholders........................ 8,348,532 shares(1)
Common Stock to be outstanding after
this Offering....................... 17,471,037 shares(1)(2)
Use of Proceeds..................... Other than the exercise price of the
common stock purchase warrants
("Warrants") which are exercisable, we
will receive none of the proceeds from the
sale of shares by the Selling
Stockholders. We would receive gross
proceeds of approximately $3,000,000 if
all of the Warrants are exercised. Any
proceeds we receive will be utilized for
working capital and general corporate
purposes.
NASDAQ SmallCap Symbol.............. POSO
____________________
(1) Includes 1,993,472 shares issuable upon exercise of the Warrants and
2,006,250 shares issuable upon conversion of outstanding convertible
promissory notes.
(2) Does not include 2,333,027 shares reserved for issuance upon the exercise
of outstanding stock options.
USE OF PROCEEDS
Other than the exercise price of such of the Warrants as may be exercised,
we will not receive any proceeds from the sale of Shares by the Selling
Stockholders. Holders of the Warrants are not obligated to exercise their
Warrants, and there can be no assurance that they will choose to exercise all or
any of their Warrants. The gross proceeds to us in the event that all of the
Warrants are exercised would be approximately $3,000,000. Proceeds we receive,
if any, will be utilized for working capital and general corporate purposes.
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SELLING STOCKHOLDERS
All of the Shares offered by this Prospectus are being offered by the
Selling Stockholders for their own respective accounts. Substantially all of the
Selling Stockholders purchased their Shares in private placement investments in
us or Old Prosoft which we believe were exempt from the registration
requirements of federal securities law under the Regulation D private placement
exemption. The following table sets forth certain information as of February 1,
1999 with respect to the Selling Stockholders:
<TABLE>
<CAPTION>
Shares Shares Shares
Name of Selling Stockholder Beneficially Owned Covered Beneficially Owned
- -------------------------------------------------------- Prior to By after the
Offering Prospectus Offering(1)
-------- ---------- -----------
<S> <C> <C> <C>
AGAPE International Center of Truth 4,000 4,000 0
Anderson, Erik T. 6,188 6,188 0
Baco, Raymundo C. 8,840 8,840 0
Baird, Jerrell M. (2) 245,500 112,500 133,000(3)
Betlem Service Corporation 9,524 9,524 0
Brown, David H. 70,000 70,000 0
Bussell, Mark 55,000 55,000 0
Bustin & Co. 12,750 12,750 0
Cahill, John 150,000 50,000 100,000(3)
Calamitous L.C. 15,000 15,000 0
Charles Schwab and Company
FBO Matthew Linsey 56,250 56,250 0
Clark Fork Medical Associates, P.C. 401(K)
Profit Sharing Plan 2,000 2,000 0
Clark Fork Medical Assn. Trust 22,500 22,500 0
Common Sense Partners 14,286 14,286 0
Corbin, Brooks A.(4) 168,708(5) 2,333 166,375(3)
Cranshire Capital, L.P. 328,869 328,869 0
D'Ambrosio, Louis J. 56,250 56,250 0
Davis, Anne T. 5,378 5,378 0
Davis, Gart D. 161,888 161,888 0
DiSanto, Frank J. 57,142 57,142 0
DLJSC FBO Franklin Coffey 40,000 40,000 0
Dorton, David 15,000 15,000 0
Dowling, Benjamin 300 300 0
Eagle Growth Limited Partnership 225,000 225,000 0
Ebbets Field International, Ltd. 281,250 281,250 0
EGS Securities 6,666 6,666 0
F&S Partnership 25,000 25,000 0
Fidelity Management Trust Co. FBO
Donald Holcomb IRA 50,000 50,000 0
Fidelity Management Trust Co. FBO
John Ryan IRA 25,000 25,000 0
Fidelity Management Trust Co. FBO
David I. Perl IRA(6) 41,249 10,000 31,249(3)
</TABLE>
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<TABLE>
<CAPTION>
Shares Shares Shares
Name of Selling Stockholder Beneficially Owned Covered Beneficially Owned
- -------------------------------------------------------- Prior to By after the
Offering Prospectus Offering(1)
-------- ---------- -----------
<S> <C> <C> <C>
Fliege, James Ritchie 28,125 28,125 0
Franklin, William I. 109,250 109,250 0
Fuller, J. William (7) 25,641 25,641 0
Fuller, Joyce 25,000 25,000 0
General Electric Pension Trust, Trustees 408,164 408,164 0
Geren, Preston M. III, Trustee 106,250 106,250 0
Gladstein, Gary 56,250 56,250 0
Glenn E. White Trust 19,048 19,048 0
Gramm, Colton 28,125 28,125 0
Investor Contacts Ltd. 80,666 80,666 0
JMB/FEB Partners 10,417 10,417 0
J.M. Bryan Family Trust 10,416 10,416 0
Judkins, Bary 5,000 5,000
Ketcher, Frederick 56,250 56,250 0
Keyway Investments Limited 76,200 76,200 0
Khaled, Michael E. 234,800(5) 25,000 209,800(8)
King, Bradley J. 6,188 6,188 0
Kopor, Betsy 500 500 0
Korn, Jeffrey G. (9) 78,000 20,000 58,000(3)
Luntz, Jerry 2,770 2,051 713(3)
MacNamara, John 150,000 50,000 100,000(3)
McDivitt, Kathleen 6,188 6,188 0
Mock, David 130,700(5) 130,700 0
Montesi, Terry 84,375 84,375 0
Morgan Guaranty Trust Company of New York, as 214,744 214,744 0
Investment Manager for the Alfred F. Sloan
Foundation (Multi-Market Account) (10)
Morgan Guaranty Trust Company of New York, as 214,744 214,744 0
Trustee of the Multi-Market Special Investment Trust
Fund of Morgan Guaranty Trust Company of
New York (10)
Morgan Guaranty Trust Company of New York, as 1,040,959 1,040,959 0
Trustee of the Commingled Pension Trust Fund
(Multi-Market Special Investment Fund II) of Morgan
Guaranty Trust Company of New York (10)
Morgan Guaranty Trust Company of New York, as 605,297 605,297 0
Trustee of the Commingled Pension Trust Fund
(Multi-Market Special Investment Fund 1) of Morgan
Guaranty Trust Company of New York (10)
Morning Star Partners 8,333 8,333 0
Olafson, Gregory 100,000(5) 55,000 45,000(3)
Pabrai, Tina Malkai 279,896 279,896 0
</TABLE>
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<TABLE>
<CAPTION>
Shares Shares Shares
Name of Selling Stockholder Beneficially Owned Covered Beneficially Owned
- -------------------------------------------------------- Prior to By after the
Offering Prospectus Offering(1)
-------- ---------- -----------
<S> <C> <C> <C>
Pabrai, Uday Om(11) 459,860 459,860 0
PAL Employer Services, Inc. 8,000 8,000 0
Peninsula Fund L.P. 202,083 202,083 0
Peterson, Melvin D. 5,000 5,000 0
Quota Rabbico N.V.-Shapiro 168,750 168,750 0
Redmond, Richard & Diana 20,000 20,000 0
Richardson, Eric W. (12) 140,166(5) 2,666 137,500(3)
Richardson, William E. (13) 123,750(5) 25,000 98,750(3)
Ropar LLC 30,000 30,000 0
Rosen, Harvey 160,000 160,000 0
Rousseau, Darren A. 2,620 2,620 0
Ruenitz & Associates 28,125 28,125 0
Schmidt Family Trust 20,000 20,000 0
Service Master Company Limited Partnership 142,857 142,857 0
Service Master Venture Fund, LLC 562,500 562,500 0
Shapiro, Steven 22,500 22,500 0
Siegfried & Jenson 401K Plan
FBO Michael R. Richman 5,000 5,000 0
Siegfried & Jenson 401K Plan
FBO Ned Siegfried 10,000 10,000 0
Siegel, Richard 28,125 28,125 0
Stallman, Andrew (14) 131,834 15,000 116,834(3)
Suleiman, Anver 10,978 8,126 2,852(3)
Suleiman, John 5,892 4,364 1,528(3)
Travelers Indemnity Co. 285,714 285,714 0
Trimble, Kelly 148,450(5) 56,250 92,200(3)
Turnbow Investment Co. L.C. 5,625 5,625 0
Turnbow, Lynn 191,250 191,250 0
Vanderhoof, Clark D. 10,000 10,000 0
Vanderhoof, Michael D. 324,490(5) 127,500 196,990(15)
VanZandt, Gloria 22,500 22,500 0
Whittal Company Limited 19,100 19,100 0
Williams, David R. 10,000 10,000 0
Wilson, D. Ross 10,000 10,000 0
WWW Internet Fund 162,500 162,500 0
---------- ---------- ----------
9,839,323(16) 8,348,532(17) 1,490,791
========== ========== ==========
</TABLE>
____________________
(1) Assumes that each Selling Stockholder sells all of the Shares to which
this Prospectus relates.
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(2) Mr. Baird is Chairman of the Board and Chief Executive Officer of the
Company.
(3) Represents less than 1% of our shares after this offering.
(4) Mr. Corbin is a former officer of the Company.
(5) These Selling Stockholders have agreed generally not to sell, under this
Prospectus, more than 1% of their respective Shares held as of November
27, 1996 for each month that elapses after that date unless our consent is
obtained.
(6) Mr. Perl is Chief Operating Officer of the Company.
(7) Mr. Fuller is a Director of the Company.
(8) Represents 1.2% of our shares after this offering.
(9) Mr. Korn is a Director of the Company.
(10) J.P. Morgan & Co., Incorporated is the ultimate parent of the trustee of
each of these stockholders.
(11) Mr. Pabrai is Vice Chairman and Chief Technology Officer of the Company.
(12) Mr. Eric Richardson is a former officer of the Company.
(13) Mr. William Richardson is a former member of the Board of Directors of the
Company.
(14) Mr. Stallman is a Director of the Company.
(15) Represents 1.1% of our shares after this offering.
(16) Includes 571,458 shares subject to currently exercisable options,
1,993,472 shares subject to currently exercisable warrants and 2,006,250
shares issuable upon conversion of promissory notes of the Company.
(17) Includes 1,993,472 shares subject to currently exercisable warrants and
2,006,250 shares issuable upon conversion of promissory notes of the
Company.
PLAN OF DISTRIBUTION
We are registering the Shares on behalf of the Selling Stockholders. As
used in this Prospectus, the term "Selling Stockholder" includes donees and
pledgees selling Shares received from a named Selling Stockholder after the date
of this Prospectus. All costs, expenses and fees in connection with the
registration of the Shares offered hereby will be borne by us. The Selling
Stockholders will pay any brokerage commissions or similar selling expenses
attributable to the sale of the Shares. The Selling Stockholders may effect
sales of Shares from time to time in one or more types of transactions (which
may include block transactions) on the Nasdaq SmallCap Market, in negotiated
transactions, through put or call options transactions relating to the Shares,
through short sales of Shares, or a combination of such methods of sale, at
market prices prevailing at the time of sale, or at negotiated prices. These
transactions may involve brokers or dealers.
The Selling Stockholders may effect such transactions by selling Shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling Stockholders or the
purchasers of the Shares for whom such broker-dealers may act as agents or to
whom they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Stockholders and any broker-dealers that act in connection
with the sale of Shares might be deemed to be "underwriters" within the meaning
of Section 2(11) of the Securities Act of 1933 (the "Securities Act"), and any
commissions received by such broker-dealers and any profit on
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the resale of the Shares sold by them while acting as principals might be deemed
to be underwriting discounts or commissions under the Securities Act. We have
agreed to indemnify each Selling Stockholder against certain liabilities,
including liabilities arising under the Securities Act. The Selling Stockholders
may agree to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act.
The Selling Stockholders will be subject to the prospectus delivery
requirements of the Securities Act because they may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act. We
have informed the Selling Stockholders that the anti-manipulative provisions of
Regulation M promulgated under the Securities Exchange Act of 1934 may apply to
their sales in the market.
Selling Stockholders also may resell all or a portion of the Shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
Upon notification to us by a Selling Stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
Prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing (i) the name of each such Selling Stockholder and of
the participating broker-dealers, (ii) the number of Shares involved, (iii) the
price at which such Shares were sold, (iv) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable, (v) that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus and (vi) other facts
material to the transaction. In addition, upon notification to us by a Selling
Stockholder that a donee or pledgee intends to sell more than 500 Shares, a
supplement to this Prospectus will be filed.
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EXPERTS
The consolidated financial statements of the Company as of July 31, 1998,
and for the year ended July 31, 1998, appearing in our Annual Report on Form
10-K for the year ended July 31, 1998, have been audited by Grant Thornton, LLP,
Independent Auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements as of July 31, 1997, and for the year ended July 31, 1997
and the period from December 8, 1995 (date of incorporation) to July 31, 1996,
included in our Annual Report on Form 10-K for the year ended July 31, 1998, as
set forth in their report, which is incorporated in this prospectus by
reference. Our consolidated financial statements are incorporated by reference
in reliance on their report, given on their authority as experts in accounting
and auditing.
The financial statements of Professional Development Institute as of
December 31, 1995, and for the period from February 1, 1995 (date of inception)
to December 31, 1995, appearing in our Annual Report on Form 10-K for the year
ended July 31, 1998, have been audited by Kelly & Company, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
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