<PAGE> 1
As filed with the Securities and Exchange Commission on May 18, 2000
Registration No. 333-35682
===============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
NEW ERA OF NETWORKS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
--------------------------------
DELAWARE 84-1234845
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
6550 SOUTH GREENWOOD PLAZA BOULEVARD
ENGLEWOOD, CO 80111
(303) 694-3933
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
--------------------------------
GEORGE F. (RICK) ADAM, JR.
CHIEF EXECUTIVE OFFICER
NEW ERA OF NETWORKS, INC.
6550 SOUTH GREENWOOD PLAZA BOULEVARD
ENGLEWOOD, CO 80111
(303) 694-3933
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
--------------------------------
Copies to:
MARK A. BERTELSEN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CALIFORNIA 94304
(650) 493-9300
--------------------------------
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), other than securities offered only in
connection with dividend or interest reinvestment plans, check the following
box.[ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
--------------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER SHARE AGGREGATE OFFERING PRICE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED (1) (1) REGISTRATION FEE
- ------------------------------------- ------------------ ---------------------------- ---------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock par value $0.0001 754,417 $28.25 $21,312,280.25 $5,627
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</TABLE>
(1) Estimated solely for the purpose of computing the registration fee required
by Section 6(b) of the Securities Act and computed pursuant to Rule 457(c)
under the Securities Act based upon the average of the high and low prices
of the Common Stock on May 11, 2000, as reported on The Nasdaq National
Market.
(2) A registration fee of $4,016 was paid in connection with the original
filing on April 26, 2000.
--------------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRATION SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATES AS THE COMMISSION, ACTING PURSUANT TO SUCH
SECTION 8(a), MAY DETERMINE.
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PROSPECTUS
(Subject to completion, dated May 18, 2000)
754,417 Shares
NEW ERA OF NETWORKS, INC.
Common Stock
----------------------
This prospectus is part of a registration statement that we filed with the
SEC relating to the public offering of 754,417 shares (the "Shares") of our
common stock that are held by some of our current stockholders. We issued such
shares to these selling stockholders in connection with the acquisitions of
SECCO Software-Engineering Computing and Consulting Gmbh, a German corporation,
and PaperFree Systems, Inc., a Delaware corporation. The sale of the Shares is
not being underwritten.
Our common stock is listed on The Nasdaq Stock Market's National Market
under the symbol "NEON." On May 17, 2000, the last sale price of our common
stock was $29.19 per share.
THIS OFFERING INVOLVES MATERIAL RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 5.
----------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The information contained in this prospectus is not complete and may be
changed. These securities may not be sold until the registration statement filed
with the Securities and Exchange Commission is effective. This prospectus is not
an offer to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
----------------------
Prospectus dated May __, 2000
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TABLE OF CONTENTS
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PAGE
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<S> <C>
WHERE YOU CAN FIND MORE INFORMATION.................................................................................2
FORWARD-LOOKING STATEMENTS..........................................................................................3
THE COMPANY.........................................................................................................4
RISK FACTORS........................................................................................................5
USE OF PROCEEDS....................................................................................................12
SELLING STOCKHOLDERS...............................................................................................12
PLAN OF DISTRIBUTION...............................................................................................13
LEGAL MATTERS......................................................................................................15
EXPERTS............................................................................................................15
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----------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS AND IN ANY ACCOMPANYING PROSPECTUS SUPPLEMENT. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION.
THE SHARES OF COMMON STOCK ARE NOT BEING OFFERED IN ANY JURISDICTION WHERE
AN OFFER IS NOT PERMITTED.
YOU SHOULD NOT ASSUME THAT THE INFORMATION IN THIS PROSPECTUS OR ANY
PROSPECTUS SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE
FRONT OF THE DOCUMENTS.
WHERE YOU CAN FIND MORE INFORMATION
o GOVERNMENT FILINGS. We file annual, quarterly and special reports and
other information with the Securities and Exchange Commission (the
"SEC"). You may read and copy any document that we file at the SEC's
public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also
available to you free of charge at the SEC's web site at
http://www.sec.gov.
o STOCK MARKET. The common stock is traded on The Nasdaq Stock Market's
National Market. Material filed by NEON can be inspected at the
offices of The Nasdaq Stock Market, Reports Section, 1735 K Street,
N.W., Washington, D.C. 20006.
o INFORMATION INCORPORATED BY REFERENCE. The SEC allows us to
"incorporate by reference" the information we file with them, which
means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file
later with the SEC will automatically update and supersede previously
filed information, including information contained in this document.
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We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934, as amended, until this offering has been
completed:
1. Our Annual Report on Form 10-K for the fiscal year ended December
31, 1999.
2. Our Quarterly Report on Form 10-Q for the fiscal quarter ended
March 31, 2000.
3. Our Current Report on Form 8-K filed on April 7, 2000.
4. The description of our common stock, which is contained in our
registration statement on Form 8-A filed on January 23, 1997 and
amended by our registration statement on Form 8-A/A filed on June
5, 1997.
5. The description of our preferred shares rights, which is contained
in our registration statement on Form 8-A filed on August 14, 1998
and amended by our registration statement on Form 8-A/A filed on
August 17, 1998.
You may request free copies of these filings by writing or telephoning us
at the following address:
New Era of Networks, Inc.
6550 South Greenwood Plaza Boulevard
Englewood, CO 80111
Attention: Investor Relations
(303) 694-3933
FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated into this prospectus by
reference contain forward-looking statements. Such forward-looking statements
are not historical facts but rather are based on current expectations, estimates
and projections about NEON's industry, management's beliefs, and assumptions
made by management. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates" and variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and other factors, some of which are beyond our control,
that are difficult to predict and could cause actual results to differ
materially from those expressed or forecasted in such forward-looking
statements. Such risks and uncertainties include those described in "Risk
Factors" in this prospectus and in the documents incorporated into this
prospectus by reference. You are cautioned not to place undue reliance on these
forward-looking statements which reflect management's view only as of the date
of this prospectus. We undertake no obligation to update such statements or
publicly release the result of any revisions to these forward-looking statements
which it may make to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
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THE COMPANY
New Era of Networks, Inc. ("NEON" or the "Company") is a leading supplier
of Internet infrastructure software and services. Specifically, NEON helps
automate e-Business by providing a range of products and services, which
integrate Internet-facing applications with core operational systems for goods
and services providers, and which facilitate the creation of Net markets. By
enabling information sharing between systems, businesses can automate end-to-end
processes, such as fulfilling an order, at the speed and volume required in the
e-Business environment. NEON products enable e-markets by routing messages and
transforming information at the needed speed and volume. NEON's software
solutions support integration of leading Internet and core business packaged
applications, application server platforms, industry standard protocols, and
proprietary systems. Additionally, the Company provides design, development and
implementation services through its Professional Services organization.
To date, over 2,500 customers worldwide, spanning all major industries
including financial services, healthcare, insurance, manufacturing, and
telecommunications, use NEON products. Various customers of the Company include
ADP, Citibank, GTE Corporation, IBM, JP Morgan & Company, Monsanto Company, Open
Interactive, Primark Financial Services, Sumitomo Bank of California and The
Street.com. As part of its strategy, NEON has established reseller and joint
marketing relationships with complementary e-Business entities such as BEA,
BroadVision, Commerce One, IBM, Microsoft and Sun Microsystems, Inc.
RECENT EVENTS
Acquisitions. We announced the March 2000 acquisition of PaperFree Systems,
Inc. in our Current Report on Form 8-K filed April 7, 2000. In April 2000 we
acquired SECCO Software-Engineering Computing and Consulting Gmbh, located in
Frankfurt, Germany ("SECCO"). Pursuant to this acquisition, SECCO stockholders
received a total of approximately 86,925 shares of our common stock and
$12,000,000 in cash in exchange for their interests in SECCO. This summary
description of the SECCO acquisition is qualified in its entirety by reference
to the full text of the SECCO acquisition agreement, a copy of which is attached
hereto as Exhibit 2.2.
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RISK FACTORS
As described by the following factors, past financial performance should
not be considered a reliable indicator of future performance and investors
should not use historical trends to anticipate results or trends in future
periods.
OUR OPERATING RESULTS FLUCTUATE SIGNIFICANTLY AND WE MAY NOT BE ABLE TO MAINTAIN
OUR HISTORICAL GROWTH RATES.
Although we have had significant revenue growth in recent quarters, such
growth rates may not be sustainable, and you should not use these past results
to predict future operating margins and results. Our quarterly operating results
have fluctuated significantly in the past and may vary significantly in the
future. Our future operating results will depend on many factors, including the
following.
o the continued growth of the e-Business Integration and Enterprise
Application Integration ("EAI") software markets;
o the size of the orders for our products, and the timing of such
orders;
o potential delays in our implementations at customer sites;
o continued development of indirect distribution channels;
o increased demand for our products;
o the timing of our product releases;
o competition;
o the effects of global economic uncertainty on capital expenditures for
software.
Quarterly revenues and operating results depend upon the volume and timing
of customer contracts received during a given quarter, and the percentage of
each contract which we are able to recognize as revenue during each quarter,
each of which is difficult to forecast. In addition, as is common in the
software industry, a substantial portion of our revenues in a given quarter
historically have been recorded in the third month of that quarter, with a
concentration of such revenues in the last two weeks of the third month. If this
trend continues, any failure or delay in the closing of orders during the last
part of a quarter will have a material adverse effect on our business.
As a result of these and other factors, we believe that period-to-period
comparisons of our historical results of operations are not a good predictor of
our future performance. If our future operating results are below the
expectations of stock market analysts, our stock price may decline.
SOFTWARE LICENSE REVENUE GROWTH IS DEPENDENT ON OUR RELATIONSHIP WITH IBM AND
OTHER PARTNERS.
Our revenue growth in 1998, and in particular the fourth quarter, reflected
strong sales of the MQIntegrator and MQSeries Integrator through IBM's
distribution and reseller channel. In 1999 and 1998, royalty revenue from IBM
sales of MQIntegrator and MQSeries Integrator accounted for between 10% and 20%
of our total software license revenues. We expect that IBM and our other
partners will account for a
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material percentage of our software license revenue in 2000. Any delay or
shortfall in such revenues from our partners could have a material adverse
effect on our business and operating results.
IF OUR SALES CYCLE IS LONGER THAN WE ANTICIPATE, OUR OPERATING RESULTS MAY
SUFFER.
Although our sales cycles have shortened in the e-Business marketplace,
historically our customers typically have taken a long time to evaluate our
products. Therefore the timing of license revenue is difficult to predict. A
sale of our products to a customer typically involves a significant technical
evaluation and a commitment of capital and other resources by the customer. This
evaluation process frequently results in a sales cycle that lasts several
months. Additional delays are caused by customers' internal procedures to
approve large capital expenditures and to test, implement and accept new
technologies that affect key operations within their organization. Our operating
expense levels are relatively fixed in the short-term and are based in part on
expectations of future revenues. Consequently, any delay in the recognition of
revenue due to a longer sales cycle caused by these factors could result in
operating losses.
WE HAVE A SHORT OPERATING HISTORY AND A HISTORY OF OPERATING LOSSES.
An investor in our common stock must evaluate the risks, uncertainties,
expenses and difficulties frequently encountered by early stage companies in
rapidly evolving markets. We have had only a limited operating history upon
which an evaluation of our Company and its prospects can be based. Prior to
1996, we recorded only nominal product revenue and, including
acquisition-related charges, we have not been profitable on an annual basis. At
December 31, 1999, our Company had an accumulated deficit of approximately $66.3
million (which includes acquisition-related costs). To address these risks and
uncertainties, we must do the following:
o successfully implement our sales and marketing strategy;
o expand our direct sales channels;
o further develop our indirect distribution channels;
o respond to competition;
o continue to attract and retain qualified personnel;
o continue to develop and upgrade our products and technology more
rapidly than competitors;
o commercialize our products and services with future technologies.
We may not successfully implement any of our strategies or successfully
address these risks and uncertainties. Even if we accomplish these objectives we
may not be profitable in the future.
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INABILITY TO INTEGRATE ACQUIRED COMPANIES MAY INCREASE THE COSTS OF RECENT
ACQUISITIONS.
We may from time to time acquire companies with complementary products and
services in the application integration or other related software markets.
Between September 1997 and March 2000, we acquired eight companies. These
acquisitions will expose us to increased risks and costs, including the
following:
o assimilating new operations, systems, technology and personnel;
o diverting financial and management resources from existing operations.
We may not be able to generate sufficient revenues from any of these
acquisitions to offset the associated acquisition costs. We will also be
required to maintain uniform standards of quality and service, controls,
procedures and policies. Our failure to achieve any of these standards may hurt
relationships with customers, employees, and new management personnel. In
addition, our future acquisitions may result in additional stock issuances which
could be dilutive to our stockholders.
We may also evaluate joint venture relationships with complementary
businesses. Any joint venture we enter into would involve many of the same risks
posed by acquisitions, particularly those risks associated with the diversion of
resources, the inability to generate sufficient revenues, the management of
relationships with third parties, and potential additional expenses, any of
which could have a harmful effect on our business, financial condition and
results of operations.
OUR FAILURE TO MANAGE GROWTH OF OPERATIONS MAY ADVERSELY AFFECT US.
We must plan and manage effectively in order to successfully offer products
and services and implement our business plan in a rapidly evolving market. We
continue to increase the scope of our operations domestically and
internationally and have grown our headcount substantially. For example, at
January 1, 1996, we had a total of 35 employees and at December 31, 1999 we had
a total of 975 employees. We may further expand domestically or internationally
through internal growth or through acquisitions of related companies and
technologies. This growth will continue to place a significant strain on our
management systems and resources.
For us to effectively manage our growth, we must continue to enact the
following measures:
o improve our operational, financial and management controls;
o improve our reporting systems and procedures;
o install new management and information control systems;
o expand, train and motivate our workforce.
In particular, we are currently migrating our existing accounting software
to a packaged application that will allow greater flexibility in reporting and
tracking results. If we fail to install this accounting and forecasting software
in an efficient and timely manner or if the new systems fail to adequately
support our levels of operations, then we could incur substantial additional
expenses to remedy such failure.
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OUR OPERATING RESULTS ARE SUBSTANTIALLY DEPENDENT ON OUR SUITE OF E-BUSINESS AND
EAI PRODUCTS.
A substantial majority of our revenues come from the NEON e-Business and
EAI suite of products and related services, and we expect this pattern to
continue. Accordingly, our future operating results will depend on the demand
for our suite of e-Business and EAI products and related services by future
customers, including new and enhanced releases that are subsequently introduced.
There can be no assurance that the market will continue to demand our current
products or that we will be successful in marketing any new or enhanced
products. If our competitors release new products that are superior to our
products in performance or price, demand for our products may decline. A decline
in demand for NEON as a result of competition, technological change or other
factors would have a harmful effect on our business, financial condition and
results of operations.
FAILURE TO ADD CUSTOMERS OR EXPAND INTO NEW MARKETS MAY BE HARMFUL TO OUR
BUSINESS.
A significant portion of our revenue has come from a small number of large
purchasers. For example, in 1999 our top ten customers accounted for 38% of
total revenues. In 1999, Industrial Bank of Japan accounted for approximately 7%
of our total revenues. Historically, our revenues have been derived primarily
from sales to large banks and financial institutions. Sales to large banks and
financial institutions accounted for 32% of total revenues in 1999 and
approximately 57% of total revenues in 1998. These customers or other customers
may not continue to purchase our products. Our failure to add new customers that
make significant purchases of our products and services would have a harmful
effect on our business, financial condition and results of operations.
While we have developed experience marketing our products to financial
institutions, we have less experience with other vertical market segments. New
market segments that we are currently targeting are likely to have significantly
different characteristics than the financial institutions segment. As a result,
we may change our pricing structures, sales methods, sales personnel, consulting
services and customer support. We may not be successful in selling our products
and services to the additional segments targeted. Our inability to expand sales
of our products and services into these additional markets would have a harmful
effect on our business, financial condition and results of operations.
OUR GROWTH IS DEPENDENT UPON THE SUCCESSFUL DEVELOPMENT OF OUR DIRECT AND
INDIRECT SALES CHANNELS.
We sell our products primarily through our direct sales force and we
support our customers with our internal technical and customer support staff. We
will continue to rely on our ability to recruit and train additional sales
people and qualified technical support personnel. Our ability to achieve
significant revenue growth in the future will greatly depend on our ability to
recruit and train sufficient technical, customer and direct sales personnel,
particularly additional sales personnel focusing on the new vertical market
segments that we target. We have in the past and may in the future experience
difficulty in recruiting qualified sales, technical and support personnel. Our
inability to rapidly and effectively expand our direct sales force and our
technical and support staff could harm our business, financial condition and
results of operations.
We believe that future growth also will depend on developing and
maintaining successful strategic relationships with distributors, resellers, and
systems integrators. Our strategy is to continue to increase the proportion of
customers served through these indirect channels. We are currently investing,
and plan to continue to invest, significant resources to develop these indirect
channels. This could harm our operating results if these efforts do not generate
license and service revenues necessary to offset such investment. Also, our
inability to recruit and retain qualified distributors, resellers and systems
integrators could harm our results of operations. Another risk is that because
lower unit prices are typically charged on sales made
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through indirect channels, increased indirect sales could harm our average
selling prices and result in lower gross margins.
THERE ARE MANY RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS.
We continue to expand our international operations, and these efforts
require significant management attention and financial resources. Each version
of our product also has to be localized within each country. We have committed
resources to the opening and integration of additional international sales
offices and the expansion of international sales and support channels. Our
efforts to develop and expand international sales and support channels may not
be successful. International sales are subject to a number of risks, including
the following:
o longer payment cycles;
o unexpected changes in regulatory requirements;
o difficulties and expenses associated with complying with a variety of
foreign laws;
o import and export restrictions and tariffs;
o difficulties in staffing and managing foreign operations;
o difficulty in accounts receivable collection and potentially adverse
tax consequences;
o currency fluctuations;
o currency exchange or price controls;
o political and economic instability abroad.
Additionally, intellectual property may be more difficult to protect
outside of the United States. International sales can also be affected to a
greater extent by seasonal fluctuations resulting from the lower sales that
typically occur during the summer months in Europe and other parts of the world.
In addition, the market for our products is not as developed outside of North
America. We may not be able to successfully penetrate international markets or
if we do, there can be no assurance that we will grow these markets at the same
rate as in North America.
WE MUST KEEP PACE WITH TECHNOLOGICAL CHANGE TO REMAIN COMPETITIVE.
The market for our products is characterized by rapid technological change,
frequent new product introductions and enhancements, changes in customer demands
and evolving industry standards. Our existing products could be rendered
obsolete if we fail to keep up in any of these ways. We have also found that the
technological life cycles of our products are difficult to estimate, partially
because they may vary according to the particular application or vertical market
segment. We believe that our future success will depend upon our ability to
continue to enhance our current product line while we concurrently develop and
introduce new products that keep pace with competitive and technological
developments. These developments require us to continue to make substantial
product development investments.
Existing Products. We currently serve a customer base with a wide variety
of hardware, software, database, and networking platforms. To gain broad market
acceptance, we believe that we will have to
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support our products on a variety of platforms. Our success will depend, among
others, on the following factors:
o our ability to integrate our products with multiple platforms,
especially relative to our competition;
o the portability of our products, particularly the number of hardware
platforms, operating systems and databases that our products can
source or target;
o the integration of additional software modules under development with
existing products;
o our management of software development being performed by third-party
developers.
Future Products. There can be no assurance that we will be successful in
developing and marketing future product enhancements or new products that
respond to technological changes, shifting customer preferences, or evolving
industry standards. We may experience difficulties that could delay these
products. If we are unable to develop and introduce new products or enhancements
of existing products in a timely manner or if we experience delays in the
commencement of commercial shipments of new products and enhancements, then
customers may forego purchases of our products and purchase those of our
competitors.
OUR FAILURE TO MAINTAIN CLOSE RELATIONSHIPS WITH KEY SOFTWARE VENDORS WILL
ADVERSELY AFFECT OUR PRODUCT OFFERING.
We believe that in order to provide competitive solutions for
heterogeneous, open computing environments, it is necessary to develop, maintain
and enhance close relationships with a wide range of vendors, including
database, enterprise resource planning, supply chain and electronic data
interchange software vendors, as well as hardware and operating system vendors.
There can be no assurance that we will be able to maintain our existing
relationships or develop additional relationships with such vendors. Our failure
to do so could adversely affect the portability of our products to existing and
new platforms and databases and the timing of the release of new and enhanced
products.
OUR FAILURE TO ADEQUATELY PROTECT OUR PROPRIETARY RIGHTS MAY ADVERSELY AFFECT
US.
Our success and ability to compete is dependent in part upon our
proprietary technology. We rely on a combination of copyright, trademark and
trade secret laws, as well as confidentiality agreements and licensing
arrangements, to establish and protect our proprietary rights. We presently have
three patents and one patent application pending. Despite our efforts to protect
our proprietary rights, existing copyright, trademark and trade secret laws
afford only limited protection. In addition, the laws of certain foreign
countries do not protect our rights to the same extent as do the laws of the
United States. Attempts may be made to copy or reverse engineer aspects of our
products or to obtain and use information that we regard as proprietary.
Accordingly, there can be no assurance that we will be able to protect our
proprietary rights against unauthorized third-party copying or use. Any
infringement of our proprietary rights could materially adversely affect our
future operating results. Furthermore, policing the unauthorized use of our
products is difficult and litigation may be necessary in the future to enforce
our intellectual property rights, to protect our trade secrets or to determine
the validity and scope of the proprietary rights of others. Such litigation
could result in substantial costs and diversion of resources and could have a
material adverse effect on our future operating results.
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OUR STOCK PRICE HAS BEEN HIGHLY VOLATILE.
The trading price of our common stock has fluctuated significantly since
our initial public offering in June 1997. In addition, the trading price of our
common stock could be subject to wide fluctuations in response to quarterly
variations in operating results, announcements of technological innovations or
new products by us or our competitors, developments with respect to patents or
proprietary rights, changes in financial estimates by securities analysts and
other events or factors. In addition, the stock market has experienced
volatility that has particularly affected the market prices of equity securities
of many high technology companies and that often has been unrelated or
disproportionate to the operating performance of such companies. These broad
market fluctuations may adversely affect the market price of our common stock.
OUR INABILITY TO ATTRACT AND RETAIN PERSONNEL MAY ADVERSELY AFFECT US.
Our success depends on the continued service of our key technical, sales
and senior management personnel. None of these persons are bound by an
employment agreement. The loss of any of our senior management or other key
research, development, sales and marketing personnel, particularly if lost to
competitors, could have a harmful effect on our future operating results. In
particular George F. (Rick) Adam, our Chief Executive Officer, would be
difficult to replace. Our future success will depend in large part upon our
ability to attract, retain and motivate highly skilled employees. We face
significant competition for individuals with the skills required to perform the
services we offer. We cannot assure that we will be able to retain sufficient
numbers of these highly skilled employees. Because of the complexity of the
e-Business and EAI software and Internet integration markets, we have in the
past experienced a significant time lag between the date on which technical and
sales personnel are hired and the time at which such persons become fully
productive, and we expect this pattern to continue.
INTELLECTUAL PROPERTY CLAIMS CAN BE COSTLY AND RESULT IN THE LOSS OF SIGNIFICANT
RIGHTS.
It is also possible that third parties will claim that we have infringed
their current or future products. We expect that e-Business and EAI software
developers will increasingly be subject to infringement claims as the number of
products in different industry segments overlap. Any claims, with or without
merit, could be time-consuming, result in costly litigation, cause product
shipment delays, or require us to enter into royalty or licensing agreements,
any of which could have a harmful effect upon our operating results. There can
also be no assurance that such royalty or licensing agreements, if required,
would be available on terms acceptable to us, if at all. There can be no
assurance that legal action claiming patent infringement will not be commenced
against us, or that we would prevail in such litigation given the complex
technical issues and inherent uncertainties in patent litigation. In the event a
patent claim against us was successful and we could not obtain a license on
acceptable terms or license a substitute technology or redesign to avoid
infringement, our business, financial condition and results of operations would
be harmed.
GLOBAL ECONOMIC UNCERTAINTY MAY AFFECT THE CAPITAL EXPENDITURES OF OUR
CUSTOMERS.
The e-Business and EAI software and Internet integration markets could be
negatively impacted by certain generic factors, including global economic
difficulties and uncertainty, reductions in capital expenditures by large
customers, and increasing competition. These factors could in turn give rise to
longer sales cycles, deferral or delay of customer purchasing decisions, and
increased price competition. The presence of such factors in the e-Business and
EAI software market could harm our operating results.
11
<PAGE> 13
ADOPTION OF THE EURO PRESENTS UNCERTAINTIES FOR OUR COMPANY.
In the first part of 1999, the new "Euro" currency was introduced in
certain European countries that are part of the European Monetary Union, or EMU.
By 2002, all EMU countries are expected to be operating with the Euro as their
single currency. A significant amount of uncertainty exists as to the effect the
Euro will have on the marketplace generally and, additionally, all of the final
rules and regulations have not yet been defined and finalized by the European
Commission with regard to the Euro currency. We are currently assessing the
effect the introduction of the Euro will have on our internal accounting systems
and the sales of our products. We are not aware of any material operational
issues or costs associated with preparing our internal systems for the Euro.
However, we do utilize third party vendor equipment and software products that
may or may not be EMU compliant. Although we are currently taking steps to
address the impact, if any, of EMU compliance for such third party products, the
failure of any critical components to operate properly post-Euro could have a
harmful effect on the business, financial condition and results of operations of
our Company or require us to incur expenses to remedy such problems.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock by the
Selling Stockholders. All net proceeds from the sale of the common stock covered
by this prospectus will go to the Selling Stockholders who offer and sell their
shares.
SELLING STOCKHOLDERS
The following table sets forth the number of shares owned by each of the
Selling Stockholders as of May 18, 2000. None of the Selling Stockholders has
had a material relationship with NEON within the past three years other than as
described below or as a result of the ownership of the shares or other
securities of NEON. None of the Selling Stockholders holds a number of shares
that exceeds 1% of NEON's outstanding capitalization. No estimate can be given
as to the amount of shares that will be held by the Selling Stockholders after
completion of this offering because the Selling Stockholders may offer all or
some of the shares and because there currently are no agreements, arrangements
or understandings with respect to the sale of any of the shares. The shares
offered by this prospectus may be offered from time to time by the Selling
Stockholder named below.
<TABLE>
<CAPTION>
NUMBER OF SHARES WHICH
NUMBER OF SHARES MAY BE SOLD PURSUANT TO
NAME OF SELLING STOCKHOLDER BENEFICIALLY OWNED(1) THE PROSPECTUS (2)
--------------------------- --------------------- ------------------------
<S> <C> <C>
Ira A. Apatoff ............... 104,872 81,276
Albert F. Cameron ............ 647 501
Michele J. Darnell ........... 20,715 16,054
Don M. Honeycutt ............. 194 150
Guy M. Jillings .............. 647 501
Zari Karimi .................. 161 125
Daniel Kazzaz ................ 137,052 106,215
Eric Leibowitz ............... 194 150
Nikoleta Lelis ............... 323 250
Patrick J. Lynch ............. 161 125
Robert A. McNeece ............ 2,136 1,655
James M. Miller .............. 161 125
Eric G. Nilson ............... 15,536 12,040
Boris J. Shur ................ 80 62
David Sien ................... 194 150
John C. Tantaro .............. 161 125
Christine A. Whalen .......... 647 501
Maik Thurm ................... 52,155 46,939
Goetz Nourney ................ 34,770 31,293
</TABLE>
12
<PAGE> 14
- --------------
(1) Does not include an aggregate of 383,611 shares of common stock that the
Company anticipates that it will distribute to the Selling Stockholders
pursuant to certain "make whole" provisions contained in the acquisition
agreements pursuant to which the Selling Stockholders received their
shares. A number of shares which are, in the Company's best estimation,
equivalent to these shares have been included in this registration
statement, but they are not included in either column of the table. We
intend to file a prospectus supplement to reflect any change in the number
of shares offered by the individual Selling Stockholders as a result of
these provisions.
(2) Does not include an aggregate of 72,569 shares of common stock beneficially
owned by the Selling Stockholders that have been deposited in escrow to
secure the indemnification obligations of the Selling Stockholders. A
number of shares equivalent to these escrow shares have been included in
this registration statement, but they are not included in this column of
the table. We intend to file a prospectus supplement to reflect any change
in the number of shares offered by the individual selling stockholders as a
result of the expiration of the escrow or the effect of the provisions
described in the prior footnote.
PLAN OF DISTRIBUTION
We are registering all 754,417 shares of common stock (the "Shares") on
behalf of the Selling Stockholders. As used in this prospectus, "Selling
Stockholders" includes the pledgees, donees, transferees or other successors in
interest that receive such shares as a gift, partnership distribution or other
non-sale related transfer. The Shares may be offered and sold from time to time
by the Selling Stockholders. The Selling Stockholders will act independently of
NEON in making decisions with respect to the timing, manner and size of each
sale.
The Selling Stockholders may sell the Shares in the over-the-counter market
or otherwise, at (1) market prices prevailing at the time of sale, (2) prices
related to the prevailing market prices or (3) negotiated prices. The Selling
Stockholders may sell some or all of their Shares through:
o a block trade in which a broker-dealer may resell a portion of the
block, as principal, in order to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account;
o an over-the-counter distribution in accordance with the rules of the
Nasdaq National Market;
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers; or
o in privately negotiated transactions.
13
<PAGE> 15
To the extent required, this prospectus may be amended and supplemented
from time to time to describe a specific plan of distribution.
In connection with the distribution of the Shares, the Selling Stockholders
may also enter into hedging transactions with broker-dealers or other financial
institutions. In connection with such transactions, broker-dealers or other
financial institutions may engage in short sales of NEON's common stock in the
course of hedging the positions they assume with the Selling Stockholders. The
Selling Stockholders may also:
o sell NEON common stock short and redeliver the Shares to close out
such short positions;
o enter into option or other types of transactions that require the
Selling Stockholder to deliver the Shares to a broker-dealer, who will
then resell or transfer the Shares pursuant to this prospectus (as
supplemented or amended to reflect such transaction); or
o loan or pledge the Shares to a broker-dealer, who may sell the loaned
shares or, in the event of default, sell the pledged shares pursuant
to this prospectus (as supplemented or amended to reflect such
transaction).
In addition, any Shares that qualify for sale pursuant to Rule 144 may be
sold under Rule 144 rather than pursuant to this prospectus.
The Selling Stockholders may negotiate and pay broker-dealers commissions,
discounts or concessions for their services. Broker-dealers engaged by the
Selling Stockholders may allow other broker-dealers to participate in resales.
However, the Selling Stockholders and any broker-dealers involved in the sale or
resale of the Shares may qualify as "underwriters" within the meaning of the
Securities Act. In addition, the broker-dealers' commissions, discounts or
concessions may qualify as underwriters' compensation under the Securities Act.
If the Selling Stockholders qualify as "underwriters," they will be subject to
the prospectus delivery requirements of Section 153 of the Act, which may
include delivery through the facilities of the NASD. NEON will pay all expenses
incident to the offering and sale of the Shares to the public other than any
commissions and discounts of underwriters, dealers or agents and any transfer
taxes.
We have advised the Selling Stockholders that the anti-manipulation rules
of Regulation M under the Exchange Act may apply to sales of Shares in the
market and to the activities of the Selling Stockholders and their affiliates.
In addition, we will make copies of this prospectus available to the Selling
Stockholders, and we have informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the Shares
offered hereby. The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of Shares is made, if required, a Prospectus
Supplement will be distributed that will set forth the number of Shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
The sale of Shares by the Selling Stockholders is subject to compliance by
the Selling Stockholders with certain contractual restrictions they have with
us. There can be no assurance that the Selling Stockholders will sell all or any
of the Shares.
14
<PAGE> 16
NEON has agreed to indemnify certain Selling Stockholders against certain
liabilities, including liabilities under the Securities Act. In return, certain
Selling Stockholders have agreed to indemnify NEON and certain related persons
against certain liabilities, including liabilities under the Securities Act.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
NEON by Wilson Sonsini Goodrich & Rosati, Professional Corporation, Palo Alto,
California.
EXPERTS
The financial statements of NEON as of December 31, 1997, 1998 and 1999 and
for each of the three years in the period ended December 31, 1999 incorporated
by reference in this prospectus and elsewhere in the registration statement have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report with respect thereto, and are included herein in
reliance upon the authority of said firm as experts in giving said report.
15
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and discounts
of underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except the
Securities and Exchange Commission ("SEC") registration fee.
<TABLE>
<CAPTION>
AMOUNT TO BE
PAID BY REGISTRANT
------------------
<S> <C>
SEC registration fee ................. $ 5,627
Legal fees and expenses .............. 15,000
Accounting fees and expenses ......... 10,000
Miscellaneous expenses ............... 9,373
-------
Total ...................... $40,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law Code authorizes a court
to award, or a corporation's Board of Directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act"). Article VII of the Registrant's Certificate of Incorporation and Article
VI of the Registrant's Bylaws provide for mandatory indemnifications of its
directors and officers and permissible indemnifications of employees and offer
agents to the maximum extent permitted by the Delaware General Corporation Law.
In addition, the Registrant has entered into Indemnification Agreements with its
officers and directors.
ITEM 16. EXHIBITS AND FINANCIAL SCHEDULES
(a) Exhibits:
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
*2.1 Agreement and Plan of Reorganization dated March 21, 2000 by and
among Registrant, NEON Acquisition One Corporation and PaperFree
Systems, Inc. (which is incorporated herein by reference to the
exhibit filed with the Registrant's Report on Form 8-K dated
March 24, 2000).
*2.2 Share Acquisition Agreement by and among Registrant, SECCO
Software-Engineering, Computing and Consulting Gmbh, Maik Thrum
and Goetz Nourney dated April 7, 2000.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation regarding the legality of the securities being
registered.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
II-1
<PAGE> 18
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
* 24.1 Power of Attorney (which is included on page II-3, herein).
* Previously filed
(b) Financial Statement Schedules-- NONE
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the financial
statements or notes thereto.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
(iii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement.
(iv) To include any material information with respect to the plan of
distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
II-2
<PAGE> 19
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934, (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE> 20
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF DENVER, STATE OF COLORADO, ON MAY 18, 2000.
New Era of Networks, Inc.
By: /s/ Leonard M. Goldstein
----------------------------------------
Leonard M. Goldstein
Senior Vice President and Senior Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Chief Executive Officer May 18, 2000
- ------------------------------------------------- and Director (Principal Executive Officer)
George F. Adam, Jr.
* President, Chief Operating Officer and Director May 18, 2000
- -------------------------------------------------
Patrick Fortune
* Senior Vice President and Chief Financial Officer May 18, 2000
- ------------------------------------------------- (Principal Financial Officer)
Stephen E. Webb
* Director of Accounting and Financial Reporting May 18, 2000
- ------------------------------------------------- (Principal Accounting Officer)
Lonnie S. Clark
* Director May 18, 2000
- -------------------------------------------------
Harold A. Piskiel
* Director May 18, 2000
- -------------------------------------------------
Steven Lazarus
* Director May 18, 2000
- -------------------------------------------------
Mark L. Gordon
* Director May 18, 2000
- -------------------------------------------------
Elisabeth W. Ireland
* Director May 18, 2000
- -------------------------------------------------
Joseph E. Kasputys
* Director May 18, 2000
- -------------------------------------------------
Melvyn E. Bergstein
</TABLE>
*By: /s/ LEONARD M. GOLDSTEIN
----------------------------------------------
Leonard M. Goldstein
(Attorney-in-fact)
II-4
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF DOCUMENT
------ -----------------------
<S> <C>
*2.1 Agreement and Plan of Reorganization dated March 21, 2000 by and
among Registrant, NEON Acquisition One Corporation and PaperFree
Systems, Inc. (which is incorporated herein by reference to the
exhibit filed with the Registrant's Report on Form 8-K dated
March 24, 2000).
*2.2 Share Acquisition Agreement by and among Registrant, SECCO
Software-Engineering, Computing and Consulting Gmbh, Maik Thrum
and Goetz Nourney dated April 7, 2000.
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation regarding the legality of the securities being
registered.
23.1 Consent of Wilson Sonsini Goodrich & Rosati, Professional
Corporation (included in Exhibit 5.1).
23.2 Consent of Arthur Andersen LLP.
*24.1 Power of Attorney (which is included on page II-3, herein).
</TABLE>
* Previously filed
<PAGE> 1
EXHIBIT 5.1
May 18, 2000
New Era of Networks, Inc.
7400 East Orchard Parkway, Suite 230
Englewood, CO 80111
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We have examined the Registration Statement on Form S-3 to be filed by you
with the Securities and Exchange Commission on or about the date hereof (the
"Registration Statement") in connection with the registration under the
Securities Act of 1933, as amended, of up to 754,417 shares of your Common Stock
$.0001 par value (the "Shares"). All of the Shares are issued and outstanding
and may be offered for sale for the benefit of the selling stockholders named in
the Registration Statement. We understand that the Shares are to be sold from
time to time in the over-the-counter-market at prevailing prices or as otherwise
described in the Registration Statement. As your legal counsel, we have also
examined the proceedings taken by you in connection with the issuance of the
Shares.
It is our opinion that the Shares are validly issued, fully paid and
non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to the use of our name wherever appearing in the
Registration Statement, including the Prospectus constituting a part thereof,
and any amendments thereto.
Sincerely,
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
/s/ Wilson Sonsini Goodrich & Rosati
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of New Era of Networks, Inc. on Form
S-3 of our report dated January 26, 2000, appearing in the Annual Report on Form
10-K for the year ended December 31, 1999 of New Era of Networks, Inc. filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934.
/s/ ARTHUR ANDERSEN LLP
Denver, Colorado
May 17, 2000
