As filed with the Securities and Exchange Commission
on September 29, 2000 Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PIVOTAL CORPORATION
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(Exact name of Registrant as specified in its charter)
British Columbia, Canada Not Applicable
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(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation)
300 - 224 West Esplanade
North Vancouver, British Columbia, Canada V7M 3M6
(604) 988-9982
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(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
CT Corporation System
111 Eighth Ave., 13th Floor
New York, New York 10011
(212) 664-1666
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(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, please check the following box
and list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering. |_|______________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. |_|______________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
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CALCULATION OF REGISTRATION FEE
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Title of Securities Amount to Proposed Maximum Proposed Maximum Amount of
to be Registered be Registered(1) Offering Price Per Share(2) Aggregate Offering Price(2) Registration Fee
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, without par 2,116,713 shares $56.47 $119,530,783 $31,557
value
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</TABLE>
(1) Pursuant to Rule 416 under the Securities Act of 1933, as amended, this
registration statement also covers such indeterminate number of common
shares as may be required to prevent dilution resulting from share splits,
share dividends or similar events, or changes in the exercise price of the
warrants.
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(2) Estimated solely for purposes of computing the registration fee calculated
in accordance with Rule 457(c) and (h) based upon the average of the high
and low price for the Registrant's common shares on September 25, 2000, as
quoted on the Nasdaq National Market.
The Registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933, as amended, or until this registration statement shall
become effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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Subject to completion, dated September 29, 2000
PROSPECTUS
PIVOTAL CORPORATION
2,116,713 Common Shares
Common shares of Pivotal are being offered by this prospectus. The shares
will be sold from time to time by the selling shareholders named in this
prospectus. We will not receive any of the proceeds from the sale of the shares.
Our common shares are traded on the Nasdaq National Market under the symbol
"PVTL" and on The Toronto Stock Exchange under the symbol "PVT." On September
28, 2000, the last sale price of our common shares as quoted on the Nasdaq
National Market was $58 per share.
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Investment in the common shares involves a high degree of risk. See section
entitled "Risk Factors" beginning on page 2 to read about certain factors you
should consider before buying the common shares.
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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 in this prospectus is not complete and may be changed. The
selling shareholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is declared
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.
The date of this prospectus is o, 2000.
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TABLE OF CONTENTS
Prospectus Summary............................................................1
Risk Factors..................................................................2
Forward-Looking Statements...................................................13
Use Of Proceeds..............................................................13
Selling Shareholders.........................................................14
Plan Of Distribution.........................................................15
Legal Matters................................................................16
Experts......................................................................16
Where You Can Find More Information..........................................16
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to the more
detailed information and consolidated financial statements appearing elsewhere
or incorporated by reference in this prospectus.
ABOUT PIVOTAL
Pivotal Corporation's technology solutions enable large and medium-sized
businesses worldwide to increase, serve and manage their customer base. We refer
to our solutions as demand chain network solutions because they automate and
manage marketing, selling and servicing processes over the Internet by
integrating customer relationship management, electronic selling, electronic
commerce and wireless technologies. Our demand chain solutions are designed to
compliment and integrate with a business' supply chain, therefore enabling
businesses to increase efficiency and revenues. Our solutions include
award-winning, Internet-based applications supported by an array of professional
services and Pivotal's global Pivotal Alliance network of third-party
distributors. Pivotal's solutions are designed and optimized exclusively for the
Internet, Microsoft Windows NT, Microsoft Windows 2000 and Microsoft BackOffice
platforms.
Pivotal's products serve the needs of every stakeholder in the customer life
cycle, including employees, customers and partners and improve collaboration and
sharing of information among these stakeholders. Users can access Pivotal's
solutions with convenient portable computing devices. Pivotal's solutions
provide other access options, including local-area network-based, mobile and Web
browser users, as well as a special option that extends customer relationship
management capabilities to all Microsoft Outlook users. Our products are fully
integrated with one another and share a common database.
The businesses Pivotal serves are typically large businesses, divisions of large
businesses and mid-size companies. These businesses need to maintain the same or
higher levels of customer service as their smaller competitors and must respond
quickly to changes in their competitive environment. As a result, many of these
businesses often adopt business models that require close integration and
collaboration with their customers and partners. Pivotal's scalable, XML-based
demand chain network solutions are designed to meet the needs of all businesses,
ranging from emerging companies in the new digital economy to traditional
businesses that are seeking to integrate the opportunities presented by the
Internet into their business model.
We sell our products through a direct sales force and over 50 independent
members of the Pivotal Alliance, which is comprised of third party solution
providers that resell Pivotal's products. Pivotal's direct sales force is
located in the United States, Canada, the United Kingdom and France, and the
Pivotal Alliance solution providers are located in North and South America,
Europe, the Middle East and Asia.
Pivotal's marketing efforts are directed at promoting our products and services,
creating market awareness and generating leads. Pivotal's marketing activities
include online business seminars, print and online advertising campaigns and
attendance at industry trade show events and trade conferences. We use the
Internet extensively to communicate with potential customers, existing
customers, partners and others. We also conduct comprehensive public
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relations programs that establish and maintain relationships with key trade
press, business press and industry analysts. Pivotal has a customer
communications team targeted at working directly with our customers to obtain
feedback and to track ongoing customer success stories.
Pivotal also provides customers with access to a combination of services to
successfully implement and effectively maintain an electronic business
relationship management solution.
Pivotal solutions are sold in 35 countries and are available in English, French,
German, Spanish, Portuguese, Swedish, Japanese and Chinese. Pivotal's worldwide
customer base includes more than 1000 organizations in traditional, commercial,
public market sectors and in the new digital economy and includes companies such
as ING Barings LLC, Deutsche Bank, KPMG, Intrawest Corporation, USFilter, NEC,
Ericsson, Emerson Electric, Norsat International, Ford Credit Denmark A/S,
Nissan Motor (Denmark), Fairmont Hotels and Resorts, Amazon.com (Auctions),
Digital Insight, Headhunter.net, Clarus Corporation, insLogic, Qiagen,
Capitalthinking, Software Spectrum, Heller Financial, Uniglobe Travel, InterCon
Security Limited, HarperCollins Publishing, Trader.com, Southern Company,
Deloitte & Touche, and Principal Financial Group. We market and sell our
solutions through a direct sales force as well as through third party solution
providers.
Pivotal is listed on the Nasdaq National Market under the symbol "PVTL" and The
Toronto Stock Exchange under the symbol "PVT." Our home page on the Internet can
be found at www.pivotal.com. Information contained on our Web site does not
constitute part of this prospectus.
The terms "Pivotal," "our company" and "we" in this filing refer to Pivotal
Corporation, a British Columbia company and all of Pivotal Corporation's wholly
owned subsidiaries including Pivotal Corporation, incorporated in Washington
State, Pivotal Corporation Limited, incorporated in the United Kingdom, Pivotal
Corporation France S.A., incorporated in France, Exactium Ltd., incorporated in
Israel, Exactium, Inc., incorporated in Delaware State, Pivotal Technologies
Corporation Limited, incorporated in the Republic of Ireland, Pivotal
Corporation (N.I.) Limited, incorporated in Northern Ireland, Pivotal GmbH,
incorporated in Germany, Digital Conversations Inc., incorporated in British
Columbia, and Pivotal Corporation Australia Pty. Ltd., incorporated in
Australia.
SUMMARY OF THE OFFERING
Common shares registered for resale by this prospectus: 2,116,713
Common shares outstanding: 22,466,823(1)
Use of proceeds: See "Use of Proceeds"
Nasdaq National Market symbol: PVTL
(1) Based on shares outstanding as of September 1, 2000. Does not include
2,716,080 common shares issuable upon exercise of outstanding options (of
which 319,443 are presently exercisable).
RISK FACTORS
Factors Relating To Our Business And The Market For Demand Chain Network
Solutions Make Our Future Operating Results Uncertain And May Cause Them To
Fluctuate From Period To Period
Our operating results have varied in the past and we expect that they may
continue to fluctuate in the future. In addition, our operating results may not
follow any past trends. Some of the factors that could affect the amount and
timing of our revenues from software licenses and related expenses and cause our
operating results to fluctuate include:
o market acceptance of our solutions;
o the length and variability of the sales cycle for our solutions, which
typically ranges between two and six months from our initial contact
with a potential customer to the signing of a license agreement;
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o the timing of customer orders, which can be affected by customer order
deferrals in anticipation of new product introductions, product
enhancements and customer budgeting and purchasing cycles;
o our ability to successfully expand our sales force and marketing
programs;
o our ability to successfully expand our international operations;
o the introduction or enhancement of our solutions or our competitors'
solutions;
o changes in our or our competitors' pricing policies;
o our ability to develop, introduce and market new solutions on a timely
basis; and
o general economic conditions, which may affect our customers' capital
investment levels in management information systems.
Our product revenues are not predictable with any significant degree of
certainty and future product revenues may differ from historical patterns.
Historically, we have recognized a substantial portion of our revenues in the
last month of a quarter. If customers cancel or delay orders, it can have a
material adverse impact on our revenues and results of operations from quarter
to quarter. Because our results of operations may fluctuate from quarter to
quarter, you should not assume that you could predict results of operations in
future periods based on results of operations in past periods.
Even though our revenues are difficult to predict, we base our expected expense
levels in part on future revenue projections. Many of our expenses are fixed and
we cannot quickly reduce spending if revenues are lower than expected. This
could result in significantly lower earnings or greater losses than we
anticipate for any given period.
We Expect Seasonal Trends To Cause Our Quarterly License Revenues To Fluctuate
And In Recent Years Our License Revenues For The Fourth Quarter Of Our Fiscal
Year Have Exceeded The Revenues For The Following Quarter
We have experienced, and expect to continue to experience, seasonality with
respect to product license revenues. In recent years, we have experienced
relatively greater revenues from licenses in the fourth quarter of our fiscal
year, which ends June 30th, than in each of the first three quarters,
particularly the first quarter. We have historically recognized more license
revenues in the fourth quarter of our fiscal year and recognized less license
revenues in the subsequent first quarter. We believe that these fluctuations are
caused in part by customer buying patterns and the efforts of our direct sales
force to meet or exceed fiscal year-end quotas. In addition, our sales in Europe
are generally lower during the summer months than during other periods. We
expect that these seasonal trends are likely to continue in the future. If
revenues for a quarter ending September 30 are lower than the revenues for the
prior quarter, it may be hard to determine whether the reason for the reduction
in revenues involves seasonal trends or other factors adversely affecting our
business.
Our Limited Operating History Makes It Difficult To Predict How Our Business
Will Develop And Future Operating Results
We commenced operations in January 1991. We initially focused on the development
of application software for pen computers. In September 1994, we changed our
focus to research and development of demand chain network solutions. We
commercially released the initial versions of our solutions on the following
dates:
o Pivotal Relationship in April, 1996;
o Pivotal eRelationship in February, 1999;
o Pivotal Anywhere in October, 1999;
o Pivotal eRelationship 2000 in February, 2000;
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o Pivotal eSelling 2000 in June, 2000; and
o Pivotal ePower 2000 (originally a component of eRelationship) in June,
2000.
We have a limited operating history and we face many of the risks and
uncertainties encountered by early-stage companies in rapidly evolving markets.
These risks and uncertainties include:
o no history of profitable operations;
o uncertain market acceptance of our solutions;
o our reliance on a limited number of solutions;
o the risks that competition, technological change or evolving customer
preferences could adversely affect sales of our solutions;
o the need to expand our sales and support capabilities;
o our reliance on third parties to market, install and support our
solutions;
o our dependence on a limited number of key personnel, including our
co-founders; and
o the risk that our management will not be able to effectively manage
growth or acquisitions we have undertaken or may undertake in the
future.
The new and evolving nature of the demand chain network solutions market
increases these risks and uncertainties. Our limited operating history makes it
difficult to predict how our business will develop and our future operating
results.
We Have A History Of Losses, We May Incur Losses In The Future And Our Losses
May Increase Because Of Our Plan To Increase Operating Expenses
We have incurred net losses in each fiscal year since inception, except for the
year ended June 30, 1998, in which we had net income of approximately $4,000. As
at June 30, 2000, we had an accumulated deficit of approximately $15.8 million.
We have increased our operating expenses in recent periods and plan further
increases in the future. Our planned increases in operating expenses may result
in larger losses in future periods. As a result, we will need to generate
significantly greater revenues than we have to date to achieve and maintain
profitability. We cannot assure you that our revenues will increase. Our
business strategies may not be successful and we may not be profitable in any
future period.
The Market For Our Solutions Is Highly Competitive
The market for our software is intensely competitive, fragmented and rapidly
changing. We face competition from companies in two distinct markets, the demand
chain network solutions market and the electronic commerce software market.
In addition, as we develop new solutions, particularly applications focused on
electronic commerce or specific industries, we may begin competing with
companies with whom we have not previously competed. It is also possible that
new competitors will enter the market or that our competitors will form
alliances that may enable them to rapidly increase their market share.
Some of our actual and potential competitors are larger, more established
companies and have greater technical, financial and marketing resources.
Increased competition may result in price reductions, lower gross margins or
loss of our market share, any of which could materially adversely affect our
business, financial condition and operating results.
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We Depend Upon Microsoft And The Continued Adoption And Performance Of The
Microsoft Windows 2000 And Microsoft Backoffice Platforms
We have designed our solutions to operate on the Microsoft Windows 2000 and
Microsoft BackOffice platforms. The Windows 2000 operating system is a new
product of Microsoft released in February 2000. We have spent considerable
resources testing the compatibility of our product with the Windows 2000
operating system. The performance of our solutions with the Windows 2000
operating system has limited experience in the marketplace. As a result, we
market our solutions exclusively to customers who have developed their computing
systems around these platforms.
Our future financial performance will depend on continued growth in the number
of businesses that successfully adopt the Microsoft Windows 2000 and Microsoft
BackOffice computing platforms. The Microsoft Windows 2000 and Microsoft
BackOffice computing platforms face increasing competition, particularly from
platforms such as Unix and Linux, databases from companies such as Oracle and
IBM and Internet server software from companies such as Sun Microsystems, Inc.
Acceptance of the Microsoft Windows 2000 and Microsoft BackOffice platforms may
not continue to increase in the future. The market for software applications
that run on these platforms has in the past been significantly affected by the
timing of new product releases, competitive operating systems and enhancements
to competing computing platforms. If the number of businesses that adopt
Microsoft Windows 2000 and Microsoft BackOffice fails to grow or grows more
slowly than we currently expect, or if Microsoft delays the release of new or
enhanced solutions, our revenues from Pivotal eRelationship 2000 could be
adversely affected.
The performance of our solutions depends, to some extent, on the technical
capabilities of the Microsoft Windows 2000 and Microsoft BackOffice platforms.
If these platforms do not meet the technical demands of our solutions, the
performance or scalability of our solutions could be limited and, as a result,
our revenues from Pivotal eRelationship 2000 could be adversely affected. It is
also possible that Microsoft Corporation may decide to introduce solutions or
services that compete with ours.
Broad antitrust actions initiated by federal and state regulatory authorities
have resulted in a verdict against Microsoft. The government has proposed that,
as a result of the verdict, Microsoft should be divided into two companies.
Microsoft has appealed the verdict to the U.S. Court of Appeals for the District
of Columbia. Any outcome to these actions that weakens the competitive position
of Microsoft Windows 2000 or BackOffice solutions could adversely affect the
market for our solutions.
The Market For Our Solutions Is New And Highly Uncertain And Our Plan To Focus
On Internet-Based Applications And To Integrate Electronic Commerce Features
Adds To This Uncertainty
The market for demand chain network solutions is still emerging and continued
growth in demand for and acceptance of demand chain network solutions remains
uncertain. Even if the market for demand chain network solutions grows,
businesses may purchase our competitors' solutions or develop their own. We
believe that many of our potential customers are not fully aware of the benefits
of demand chain network solutions and, as a result, these solutions may never
achieve full market acceptance.
The development of our Internet-based solutions for demand chain management
presents additional challenges and uncertainties. We are uncertain how
businesses will use the Internet as a means of communication and commerce and
whether a significant market will develop for Internet-based demand chain
network solutions. The use of the Internet is evolving rapidly and many
companies are developing new solutions and services that use the Internet. We do
not know what forms of solutions and services may emerge as alternatives to our
existing solutions or to any future Internet-based or electronic commerce
features and services we may introduce. We have spent and will continue to
spend, considerable resources educating potential customers about our solutions
and demand chain network solutions in general. However, even with these
educational efforts, market acceptance of our solutions may not increase. If the
markets for our solutions do not grow or grow more slowly than we currently
anticipate, our revenues may not grow and may even decline.
We commenced our PivotalHost program in October 1999, whereby we provide
customers access to our software applications on a monthly subscription basis
over the Internet through an application service provider. Since the inception
of the PivotalHost program, a majority of our new customers have continued to
purchase perpetual licenses rather than subscribing to the PivotalHost program.
We do not know if this will prove to be a successful business model
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in the future. If it proves to be a successful business model in the future, we
may experience a significant change in our revenue recognition due to the
recognition of license revenue over the extended life of the contract rather
than revenue recognition on delivery of the product.
We commenced our PivotalWeb .NET in October 1999 (formerly known as the
business-to-business (B2B) Syndicate program). Under this program, we use the
Internet to furnish our customers with information or services provided by the
PivotalWeb .NET members. We do not know if this will continue to be a successful
business model or if it will result in any material revenue for Pivotal.
Our Success Will Depend Upon The Success Of Our Solutions
We anticipate that a majority of our revenues and growth in the foreseeable
future will come from sales of our integrated product suite, consisting of
Pivotal eRelationship 2000, IntraHub, eRelationship 2000 CustomerHub and
eRelationship 2000 PartnerHub product suite licenses and related services.
Accordingly, failure of our integrated product suite to gain increased market
acceptance and to compete successfully would adversely affect our business,
results of operations and financial condition. Our future financial performance
will depend on our ability to succeed in the continued sale of our integrated
product suite and related services, as well as the development of new versions
and enhancements of these products.
The Success Of Our Solutions Will Depend Upon The Continued Use And Expansion Of
The Internet
Increased sales of our solutions and any future Internet-based applications and
electronic commerce features we integrate with our current solutions, will
depend upon the expansion of the Internet as a leading platform for commerce and
communication. If the Internet does not continue to become a widespread
communications medium and commercial marketplace, the demand for our solutions
could be significantly reduced and our solutions and any future Internet-based
and electronic commerce features may not be commercially successful. The
Internet infrastructure may not be able to support the demands placed on it by
continued growth. The Internet could lose its viability due to delays in the
development or adoption of new equipment, standards and protocols to handle
increased levels of Internet activity, security, reliability, cost, ease of use,
accessibility and quality of service.
Other concerns that could inhibit the growth of the Internet and its use by
business as a medium for communication and commerce include:
o concerns about security of transactions conducted over the Internet;
o concerns about privacy and the use of data collected and stored
recording interactions over the Internet;
o the possibility that federal, state, local or foreign governments will
adopt laws or regulations limiting the use of the Internet or the use
of information collected from communications or transactions over the
Internet; and
o the possibility that governments will seek to tax Internet commerce.
We Depend On Third-Party Wireless Service Providers For The Successful
Implementation Of Our Pivotal Anywhere Solution
Our Pivotal Anywhere solution provides a wireless platform that allows our other
solutions to be accessed wirelessly. We depend on third-party providers of
wireless services for the successful implementation of Pivotal Anywhere. Because
Pivotal Anywhere relies on wireless services developed and maintained by third
parties, we depend on these third parties' abilities to deliver and support
reliable wireless services. The wireless industry is new and rapidly developing
and involves many risks, including:
o extensive government regulation in licensing, construction, operation,
sale and interconnection arrangements of wireless telecommunications
systems which may prevent our third-party providers from successfully
expanding their wireless services;
o rapid expansion of the wireless services infrastructure which may
result in flaws in the infrastructure; and
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o concerns over radio frequency emissions or other health and safety
risks which may discourage use of wireless services.
Our Future Revenue Growth Could Be Impaired If We Are Unable To Expand Our
Direct Sales And Support Infrastructure
Our future revenue growth will depend in large part on our ability to
successfully expand our direct sales force and our customer support capability.
We may not be able to successfully manage the expansion of these functions or to
recruit and train additional direct sales, consulting and customer support
personnel. There is presently a shortage of qualified personnel to fill these
positions. If we are unable to hire and retain additional highly skilled direct
sales personnel, we may not be able to increase our license revenue to the
extent necessary to achieve profitability. If we are unable to hire highly
trained consulting and customer support personnel we may be unable to meet
customer demands. We are not likely to be able to increase our revenues as we
plan if we fail to expand our direct sales force or our consulting and customer
support staff. Even if we are successful in expanding our direct sales force and
customer support capability, the expansion may not result in revenue growth.
We Rely On Our Pivotal Alliance Network Of Independent Companies To Sell,
Install And Service Our Solutions And To Provide Specialized Software For Use
With Them And Our Pivotal Host Program Relies On Third-Party Application Service
Providers
We do not have the internal implementation and customization capability to
support our current level of sales of licenses. Accordingly, we have established
and relied on our international network of independent companies we call the
Pivotal Alliance. Members of the Pivotal Alliance market and sell our solutions,
provide implementation services, provide technical support and maintenance on a
continuing basis and provide us with software applications that we can bundle
with our solutions to address specific industry and customer requirements.
Approximately 24% and 28% of our revenues for the years ended June 30, 2000 and
1999, respectively, were from sales made through third-party resellers. Almost
all of our customers retain members of the Pivotal Alliance to install and
customize our solutions. If we fail to maintain our existing Pivotal Alliance
relationships, or to establish new relationships, or if existing or new members
of the Pivotal Alliance do not perform to our expectations, our ability to sell,
install and service our solutions may suffer.
There is an industry trend toward consolidation of systems integrators that
implement, customize and maintain solutions. Some of the systems integrators in
the Pivotal Alliance have engaged in discussions concerning business
consolidations. We are uncertain as to the effect that any consolidation may
have on our relationships with members of the Pivotal Alliance.
The success of our PivotalHost program will depend on the commitment and
performance of third-party application service providers to successfully
implement and market services that incorporate our solutions.
The Loss Of Our Co-Founders Or Other Key Personnel Or Our Failure To Attract And
Retain Additional Personnel Could Adversely Affect Our Business
Our success depends largely upon the continued service of our executive officers
and other key management, sales and marketing and technical personnel. The loss
of the services of one or more of our executive officers or other key employees
could have a material adverse effect on our business, results of operations and
financial condition. In particular, we rely on our co-founders, Norman Francis,
President, Chief Executive Officer and director and Keith Wales, our Chief
Technical Officer and director. We do not have employment agreements with
Messrs. Francis and Wales and, therefore, Messrs. Francis and Wales could
terminate their employment with us at any time without penalty. Nor do we
maintain key man life insurance on the lives of Messrs. Francis and Wales.
Our future success also depends on our ability to attract and retain highly
qualified personnel. The competition for qualified personnel in the computer
software and Internet markets is intense and we may be unable to attract or
retain highly qualified personnel in the future. In addition, due to intense
competition for qualified employees, it may be necessary for us to increase the
level of compensation paid to existing and new employees to the degree that our
operating expenses could be materially increased.
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We Face Risks From The Expansion Of Our International Operations
We intend to substantially expand our operations outside the United States and
Canada. We began by acquiring Transitif in France and opening offices in the
Republic of Ireland, the United Kingdom, the Netherlands, Germany, Japan,
Australia and New Zealand. We expect to continue this expansion of our
international operations. International operations are subject to numerous
inherent potential risks, including:
o unexpected changes in regulatory requirements;
o export restrictions, tariffs and other trade barriers;
o changes in local tax rates or rulings by local tax authorities;
o challenges in staffing and managing foreign operations, differing
technology standards, employment laws and practices in foreign
countries;
o less favorable intellectual property laws;
o longer accounts receivable payment cycles and difficulties in
collecting payments;
o political and economic instability; and
o fluctuations in currency exchange rates and the imposition of currency
exchange controls.
Any of these factors could have a material adverse effect on our business,
financial condition or results of operations.
Our international expansion will require significant management attention and
financial resources. We will have to significantly enhance our direct and
indirect international sales channels and our support and services capabilities.
We may not be able to maintain or increase international market demand for our
solutions. We may not be able to sustain or increase international revenues from
licenses or from consulting and customer support.
In some foreign countries we rely on selected solution providers to translate
our software into local languages, adapt it to local business practices and
complete installations in local markets. We are highly dependent on the ability
and integrity of these solution providers and if any of them should fail to
properly translate, adapt or install our software, our reputation could be
damaged and we could be subjected to liability. If any of these solution
providers should fail to adequately secure our software against unauthorized
copying, our proprietary software could be compromised.
Political Unrest May Adversely Affect The Operation Of Our European Customer
Support Center Located In Northern Ireland
We have 15 employees located in our Belfast, Northern Ireland customer support
center. This center provides customer support primarily to all of our customers
in Europe and provides back-up support for other customers around the world.
Northern Ireland has historically experienced periods of religious, civil and
political unrest. Northern Ireland may experience further unrest which could
disrupt our ability to provide customer support to our customers and have a
material adverse effect on our results of operations and financial condition.
Fluctuations In Currency Exchange Rates And Risks Associated With Our Hedging
Policies May Affect Our Operating Results
Substantially all of our revenues and corresponding receivables are in United
States dollars. However, a majority of our research and development expenses,
customer support costs and administrative expenses are in Canadian dollars. In
the quarter ended March 31, 1999, we adopted a hedging policy intended to reduce
the effects of foreign exchange fluctuations on our results of operations. As
part of our hedging policy, we identify our future Canadian currency
requirements related to payroll costs, capital expenditures and operating lease
commitments and purchase forward exchange contracts at the beginning of an
operational period to cover these currency needs. The operational period for our
contracts is generally limited to two quarters. If our actual currency
requirements differ materially from our hedged
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position during periods of currency volatility, or if we do not continue to
hedge our Canadian currency commitments, we could experience unanticipated
currency gains or losses.
Our hedging policy subjects us to risks relating to the creditworthiness of the
commercial banks that we contract with in our hedging transactions. If one of
these banks cannot honor its obligations, we may suffer a loss.
We also invest in our international operations which will likely result in
increased future operating expenses in United Kingdom pound sterling, French
franc, Euro, German mark, Japanese yen, Australian dollars and New Zealand
dollars. We are exposed to fluctuations in the exchange rates between the United
States dollar and these currencies. Our exposure to exchange fluctuations in
these foreign currencies has been minimal to date. Accordingly, our current
hedging practice does not cover any foreign exchange risk related to these
operations.
The purpose of our hedging policy is to reduce the effect of exchange rate
fluctuations on our results of operations. Therefore, while our hedging policy
reduces our exposure to losses resulting from unfavorable changes in currency
exchange rates, it also reduces or eliminates our ability to profit from
favorable changes in currency exchange rates.
We Have Experienced Rapid Growth Which Has Placed A Strain On Our Resources And
Any Failure To Manage Our Growth Effectively Could Cause Our Business To Suffer
We have been expanding our operations rapidly and intend to continue this
expansion for the foreseeable future. The number of our employees increased from
151 on June 30, 1998 to 270 on June 30, 1999. As of June 30, 2000 we had 526
employees, 76 of which were added through acquisitions in the last quarter of
2000. This expansion has placed, and is expected to continue to place, a
significant strain on our managerial, operational and financial resources as we
integrate and manage new employees, more locations and more customers, supplier
and other business relationships. In the past we have decided to and in the
future we may need to improve or replace our existing operational and customer
service systems, procedures and controls. Any failure by us to properly manage
our growth of these systems and procedural transitions could impair our ability
to efficiently manage our business, to maintain and expand important
relationships with members of the Pivotal Alliance and other third parties and
to attract and service customers which could cause us to incur higher operating
costs and delays in the execution of our business plan or in the reporting or
tracking of our financial results.
The Integration Of Transitif, Exactium, Simba And Any Future Acquisitions May Be
Difficult And Disruptive
We are currently in the process of integrating the Transitif, Exactium and Simba
businesses with our business and we are expending significant financial
resources in this effort. The integration of these three companies is subject to
risks commonly encountered in acquisitions, including, among others, risk of
loss of key personnel, difficulties associated with assimilating ongoing
businesses and the ability of our sales force and consultants to integrate. We
will also need to integrate the solutions of Exactium and Simba into our product
offerings. We may not successfully overcome these risks or any other problems
that may be encountered in connection with the acquisitions of Transitif,
Exactium or Simba. Accordingly, it is uncertain whether we will receive the
benefits we anticipate from these acquisitions and we may not realize value from
these acquisitions comparable to the resources we have invested in them.
Amortization of intangible assets resulting from acquisitions will adversely
affect our reported income. In connection with the acquisitions of Exactium,
Simba and Transitif, we allocated an aggregate of $58.1 million of the purchase
prices to intangible assets that we are amortizing over a period of three years
on a straight-line basis. During the year ending June 30, 2001, we expect
amortization expenses related to these intangible assets to be approximately
$20.0 million. Future acquisitions may result in the creation of significant
additional intangible assets and related amortization expense.
As part of our business strategy, we may seek to grow by making additional
acquisitions. We may not effectively select acquisition candidates or negotiate
or finance acquisitions or integrate the acquired businesses and their personnel
or acquired solutions or technologies into our business. We cannot assure you
that we can complete any acquisition we pursue on favorable terms, or that any
acquisition will ultimately benefit our business.
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Our Sales Cycle Is Long And Sales Delays Could Cause Our Operating Results To
Vary Widely
We believe that an enterprise's decision to purchase a demand chain network
solutions system is discretionary, involves a significant commitment of its
resources and is influenced by its budget cycles. To successfully sell licenses
for our solutions, we typically must educate our potential customers regarding
the use and benefits of demand chain network solutions in general and our
solutions in particular, which can require significant time and resources.
Consequently, the period between initial contact and the purchase of licenses
for our solutions is often long and subject to delays associated with the
lengthy budgeting, approval and competitive evaluation processes that typically
accompany significant capital expenditures. We frequently must invest
substantial resources to develop a relationship with a potential customer and
educate its personnel about our solutions and services with no guarantee that
our efforts will be rewarded with a sale. Our sales cycles are lengthy and
variable, typically ranging between two and six months from our initial contact
with a potential customer to the signing of a license agreement, although sales
sometimes require substantially more time. Sales delays could cause our
operating results to vary widely.
Our Plan To Expand Our Service Capability Could Adversely Affect Gross Profit
Margins And Operating Results
Revenues from services and maintenance have lower gross margins than revenues
from licenses. Therefore, an increase in the percentage of revenues generated
from services and maintenance as compared to revenues from licenses will lower
our overall gross margins. In addition, an increase in the cost of revenues from
services and maintenance as a percentage of revenues from services and
maintenance could have a negative impact on overall gross margins.
Although margins related to revenues from services and maintenance are lower
than margins related to revenues from licenses, our services organization
currently generates gross profits and we are seeking to expand our service
capability and our revenues from services and maintenance.
Revenues from services and maintenance depend in part on renewals of technical
support contracts by our customers. However, there is no certainty that our
customers will renew their technical support contracts. Our ability to increase
revenues from services and maintenance will depend in large part on our ability
to increase the scale of our services organization, including our ability to
successfully recruit and train a sufficient number of qualified services
personnel. We may not be able to do so.
To meet our expansion goals, we expect to hire additional services personnel. If
demand for our services organization does not increase in proportion to the
number of additional personnel we hire, gross profits could fall, or we may
incur losses from our services activities. In addition, the costs of delivering
services could increase and any material increase in these costs could reduce or
eliminate the profitability of our services activities.
We Rely On Software Licensed To Us By Third Parties For Features We Include In
Our Solutions
We incorporate into our solutions software that is licensed to us by third-party
software developers including Microsoft SQL Server 7.0, Sheridan Calendar
Control, InstallShield 3, Seagate Crystal Reports, E.piphany E.4 and Interactive
Intelligence Enterprise Interaction Center. We are seeking to further increase
the capabilities of our solutions by licensing additional applications from
third parties. A significant interruption in the availability of any of this
licensed software could adversely affect our sales, unless and until we can
replace this software with other software that performs similar functions.
Because our solutions incorporate software developed and maintained by third
parties, we depend on these third parties' abilities to deliver and support
reliable solutions, enhance their current solutions, develop new solutions on a
timely and cost-effective basis and respond to emerging industry standards and
other technological changes. If third-party software offered now or in the
future in conjunction with our solutions becomes obsolete or incompatible with
future versions of our solutions, we may not be able to continue to offer some
of the features we presently include in our solutions unless we can license
alternative software or develop the features ourselves.
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We Must Continue To Develop Enhancements To Our Solutions And New Applications
And Features That Respond To Evolving Needs Of Our Customers. Rapid
Technological Change And Advances Introduced By Our Competitors
The software market in which we compete is characterized by rapid change due to
changing customer needs, rapid technological changes and advances introduced by
competitors. Existing solutions become obsolete and unmarketable when solutions
using new technologies are introduced and new industry standards emerge. New
technologies could change the way demand chain network solutions are sold or
delivered. As a result, the life cycles of our solutions are difficult to
estimate. We also may need to modify our solutions when third parties change
software we integrate into our solutions. To be successful we must continue to
enhance our current product line and develop new applications and features.
We may not be able to successfully develop or license the applications necessary
to offer these or other features, or to integrate these applications with our
existing solutions. We have delayed enhancements and new product release dates
several times in the past and may not be able to introduce new solutions,
product enhancements, new applications or features successfully or in a timely
manner in the future. If we delay release of our new solutions or product
enhancements or new applications or features or if they fail to achieve market
acceptance when released, we may not be able to keep up with the latest
developments in the market and our revenues may fall. We may not be able to
respond effectively to customer needs, technological changes or advances
introduced by our competitors and our solutions could become obsolete.
We May Be Unable To Adequately Protect Our Proprietary Rights
Our success depends in part on our ability to protect our proprietary software
and our other proprietary rights from copying, infringement or use by
unauthorized parties. To protect our proprietary rights we rely primarily on a
combination of copyright, trade secret and trademark laws, confidentiality
agreements with employees and third parties and protective contractual
provisions such as those contained in license agreements with consultants,
vendors and customers, although we have not signed these types of agreements in
every case. Despite our efforts to protect our proprietary rights, unauthorized
parties may copy aspects of our solutions and obtain and use information that we
regard as proprietary. Other parties may breach confidentiality agreements and
other protective contracts we have entered into. We may not become aware of, or
have adequate remedies in the event of, these types of breaches or unauthorized
activities.
Claims By Other Companies That Our Solutions Infringe Their Copyrights Or
Patents Could Adversely Affect Our Ability To Sell Our Solutions And Increase
Our Costs
If any of our solutions violates third-party proprietary rights, including
copyrights and patents, we may be required to reengineer our solutions or obtain
licenses from third parties to continue offering our solutions without
substantial reengineering. Although some of our current and potential
competitors have sought patent protection for similar demand chain network
solutions systems, we have not sought patent protection for our solutions. If a
patent has been issued or is issued in the future to a third-party that prevents
us from using technology included in our solutions, we would need to obtain a
license or re-engineer our product to function without infringing the patent.
Any efforts to re-engineer our solutions or obtain licenses from third parties
may not be successful and, in any case, could substantially increase our costs,
force us to interrupt product sales or delay product releases.
Our Software Solutions May Suffer From Defects Or Errors
Solutions as complex as ours may contain errors or defects, especially when
first introduced or when new versions are released. We have had to delay
commercial release of some versions of our solutions until software problems
were corrected and in some cases have provided product enhancements to correct
errors in released solutions. Enhancements, new applications and features to our
solutions may not be free from errors after commercial shipments have begun. Any
errors that are discovered after the commercial release of enhancements, new
applications and features to our solutions could result in loss of revenues or
delay in market acceptance, diversion of development resources, damage to our
reputation, increased service and warranty costs and liability claims.
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Our end-user licenses contain provisions that limit our exposure to product
liability claims, but, these provisions may not be enforceable in all
jurisdictions. In some cases, we have been required to waive these contractual
limitations. Further, we may be exposed to product liability claims in
international jurisdictions where our solution provider has supplied our
solutions and negotiated the license without our involvement. A successful
product liability claim could result in material liability and damage to our
reputation.
In addition, products we rely on, such as Microsoft platform products, may
contain defects or errors. Our solutions rely on these products to operate
properly. Therefore, any defects in these products could adversely affect the
operation of and market for our solutions, reduce our revenues, increase our
costs and damage our reputation.
If Our Customers Systems' Security Is Breached, Our Business And Reputation
Could Suffer
A fundamental requirement for online communications is the secure transmission
of confidential information over the Internet. Users of our solutions transmit
their and their customers' confidential information over the Internet. In our
license agreements with our customers, we disclaim responsibility for the
security of confidential data and have contractual disclaimers and indemnities
for any damages claimed against us. However, if unauthorized third parties are
successful in obtaining confidential information from users of our solutions,
our reputation and business may be damaged and, if our contractual disclaimers
and indemnities are not enforceable, we may be subjected to liability.
Changes In Accounting Standards And In The Way We Charge For Licenses Could
Affect Our Future Operating Results
We recognize revenues from the sale of software product licenses on delivery of
our solutions if:
o persuasive evidence of an arrangement exists;
o the fee is fixed or determinable;
o vendor specific objective evidence exists to allocate the total fee
among all elements of the arrangement; and
o collection of the license fee is probable.
Under certain license arrangements, with either a fixed or indefinite term, our
customers agree to pay for the license with periodic payments extending beyond
one year. We recognize revenues from these arrangements as the periodic payments
become due, provided all other conditions for revenue recognition are met. If
these arrangements become popular with our customers, we may have lower revenues
in the short-term than we would otherwise, because revenues for licenses sold
under these arrangements will be recognized over time rather than upon delivery
of our product.
We recognize maintenance revenues ratably over the contract term, typically one
year, and recognize revenues for consulting, education and implementation and
customization services as the services are performed.
Administrative agencies responsible for setting accounting standards, including
the Securities and Exchange Commission and the Financial Accounting Standards
Board, are also reviewing the accounting standards related to business
combinations and share-based compensation. Any changes to these accounting
standards, any other accounting standards, or the way these standards are
interpreted or applied could require us to change the manner in which we
recognize revenue, how we account for share compensation, for any future
acquisitions or other aspects of our business, which could adversely affect our
reported financial results.
Our Share Price May Continue To Be Volatile
Our share price has fluctuated substantially since our initial public offering
in August 1999. The trading price of our common shares is subject to significant
fluctuations in response to variations in quarterly operating results, the gain
or loss of significant orders, changes in revenues and earnings estimates by
securities analysts, announcements of technological innovations or new solutions
by us or our competitors, general conditions in the software and computer
industries and other events or factors. In addition, the stock market in general
has experienced extreme price and volume fluctuations that have affected the
market price for many companies in industries similar or related to ours and
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have been unrelated to the operating performance of these companies. These
market fluctuations have adversely affected and may continue to adversely affect
the market price of our common shares.
Certain Shareholders May Be Able To Exercise Control Over Matters Requiring
Shareholder Approval
Our current officers, directors and entities affiliated with us together
beneficially owned a significant portion of our outstanding common shares as of
June 30, 2000. While these shareholders do not hold a majority of our
outstanding common shares, they will be able to exercise significant influence
over matters requiring shareholder approval, including the election of directors
and the approval of mergers, consolidations and sales of our assets. This may
prevent or discourage tender offers for our common shares.
FORWARD-LOOKING STATEMENTS
Statements under "Prospectus Summary," "Risk Factors" and elsewhere in this
prospectus about our future results, levels of activity, performance, goals, or
achievements or other future events constitute forward-looking statements. These
statements involve known and unknown risks, uncertainties and other factors that
may cause actual results or events to differ materially from those anticipated
in our forward-looking statements. These factors include, among others, those
listed under "Risk Factors" or described elsewhere in this prospectus.
In some cases, you can identify forward-looking statements by our use of words
such as "may," "will," "should," "could," "expects," "plans," "intends,"
"anticipates," "believes," "estimates," "predicts," "potential" or "continue" or
the negative or other variations of these words, or other comparable words or
phrases.
Although we believe that the expectations reflected in our forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements or other future events. Moreover, neither
we nor anyone else assumes responsibility for the accuracy and completeness of
forward-looking statements. We are under no duty to update any of our
forward-looking statements after the date of this prospectus. You should not
place undue reliance on forward-looking statements.
USE OF PROCEEDS
The common shares offered hereby are being registered for the account of the
selling shareholders and, accordingly, we will not receive any of the proceeds
from the sale of the common shares.
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SELLING SHAREHOLDERS
The table below sets forth information concerning the beneficial ownership of
the common shares by the selling shareholders as of September 29, 2000 and as
adjusted to reflect the sale of the common shares in this offering.
The term "beneficial ownership" includes shares over which the indicated
beneficial owner exercises voting and/or investment power. The rules also deem
common shares subject to options or warrants currently exercisable, or
exercisable within 60 days, to be outstanding for purposes of computing the
percentage ownership of the person holding the options or warrants, but they do
not deem these common shares to be outstanding for purposes of computing the
percentage ownership of any other person. The applicable percentage of ownership
for each shareholder is based on 22,466,823 common shares outstanding as of
September 1, 2000, together with any applicable options for that shareholder.
Except as otherwise indicated, we believe the beneficial owners of the common
shares listed below, based on information furnished by them, have sole voting
and investment power over the number of shares listed opposite their names.
<TABLE>
Shares Beneficially Shares Beneficially
Owned Prior to the Number of Owned After the
Offering Shares Offering
----------------------------- Being ------------------------
Name Number Percent Offered Number Percent
--------------- ------------ ----------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Bank of Montreal Capital Corporation(1) 506,729 * 200,000 306,729 *
Eli Barak(2) 116,617 * 76,420 40,197 *
Michael P. Dunham(3) 5,227 * 5,227 0 *
Alon Hod(4) 116,617 * 76,420 40,197 *
Laurie M. Hood(5) 163 * 163 0 *
Industrial & Financial Systems AB(6) 830,932 * 610,852 220,080 *
Integral Capital Partners II, L.P. 1,025,608 * 383,802 641,806 *
Integral Capital Partners International II, C.V. 324,807 * 99,290 225,517 *
Jeanne Jambor(7) 13,051 * 5,227 7,824 *
Igal Korach(8) 2,613 * 2,613 0 *
John Lindahl(9) 2,613 * 2,613 0 *
Nir Mashkowski(10) 5,227 * 5,227 0 *
Gregory Plesnarski(11) 2,613 * 2,613 0 *
Noam Small(12) 13,051 * 5,227 7,824 *
Johann N. Senaratna(13) 15,680 * 15,680 0 *
Avron Tal(14) 2,613 * 2,613 0 *
Tony Topaz(15) 34,642 * 22,726 11,916 *
VW B.C. Technology Investment Fund Limited
Partnership(16) 1,666,529 7.42% 600,000 1,066,529 *
---------------------------------------------------------- -----------
4,685,332 20.85% 2,116,713 2,568,619 11.43%
</TABLE>
* Represents less than one percent (1%)
---------------
(1) Includes 39,772 shares of Pivotal acquired by Bank of Montreal Capital
Corporation upon Pivotal's acquisition of Simba Technologies Inc. of which
4,499 shares are held in escrow to indemnify against breaches in
representations and warranties. Bank of Montreal Capital Corporation is
managed by Ventures West Management TIP Inc., an entity wholly owned by
Ventures West Capital Ltd. Ventures West Management B.C. Ltd. is the
general partner of VW B.C. Technology Investment Fund Limited Partnership.
Ventures West Management B.C. Ltd. is also wholly owned by Ventures West
Capital Ltd. The following individuals are shareholders of Ventures West
Capital Ltd. and exercise the powers to direct the voting of the shares
beneficially owned by Bank of Montreal Capital Corporation and VW B.C.
Technology Investment Fund Limited Partnership: Edward G. Anderson, Barry
Gekiere, Nancy Harrison, Robert J. Louis, Howard L. Riback and Samuel
Znaimer. Mr. Louis, a director of Pivotal, also serves as a director and
the President of Ventures West Capital Ltd.
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(2) Includes 27,533 shares held in escrow. Mr. Barak was a shareholder of
Exactium Ltd. and also served as a director, the President and the Chief
Executive Officer of both Exactium Ltd. and Exactium, Inc., the wholly
subsidiary of Exactium Ltd. Upon Pivotal's acquisition of Exactium Ltd.,
Mr. Barak became a shareholder of Pivotal and currently serves as a Vice
President and a General Manager of Pivotal's eSelling Division.
(3) Mr. Dunham was a shareholder of Exactium Ltd. and also served as a director
of both Exactium Ltd. and Exactium, Inc. Upon Pivotal's acquisition of
Exactium Ltd., Mr. Dunham became a shareholder of Pivotal.
(4) Includes 27,533 shares held in escrow. Mr. Hod was a shareholder of
Exactium Ltd. and also served as a director and the Executive Vice
President of both Exactium Ltd. and Exactium, Inc. Upon Pivotal's
acquisition of Exactium Ltd., Mr. Hod became a shareholder of Pivotal and
currently serves as a Vice President of Pivotal's eSelling Division.
(5) Ms. Hood was a shareholder of Exactium Ltd. and also served as the Director
of Marketing for Exactium, Inc. from September 1997 to November 1998 and an
outside consultant for Exactium, Inc. from November 1998 to December 1998.
Upon Pivotal's acquisition of Exactium Ltd., Ms. Hood became a shareholder
of Pivotal.
(6) Includes 220,080 shares held in escrow. Industrial & Financial Systems AB
was a shareholder of Exactium Ltd. Upon Pivotal's acquisition of Exactium
Ltd., Industrial & Financial Systems AB became a shareholder of Pivotal.
(7) Ms. Jambor was a shareholder of Exactium Ltd. and also served as the Chief
Financial Officer and Vice President Finance and Administration for both
Exactium Ltd. and Exactium, Inc. Upon Pivotal's acquisition of Exactium
Ltd., Ms. Jambor became a shareholder of Pivotal.
(8) Mr. Korach was a shareholder of Exactium Ltd. and also served as the
Director of Product Integration for Exactium, Inc. Upon Pivotal's
acquisition of Exactium Ltd., Mr. Korach became a shareholder of Pivotal
and currently serves as a Director of Product Integration of Pivotal's
eSelling Division.
(9) Mr. Lindahl was a shareholder of Exactium Ltd. and also served as the
Senior Software Engineer for Exactium, Inc. Upon Pivotal's acquisition of
Exactium Ltd., Mr. Lindahl became a shareholder of Pivotal.
(10) Mr. Mashkowski was a shareholder of Exactium Ltd. and also served as the
Director of Professional Services of Exactium, Inc. Upon Pivotal's
acquisition of Exactium Ltd., Mr. Mashkowski became a shareholder of
Pivotal and currently serves as a Director of Professional Services of
Pivotal's eSelling Division.
(11) Mr. Plesnarski was a shareholder of Exactium Ltd. and also served as the
Director of Quality Assurance of Exactium, Inc. Upon Pivotal's acquisition
of Exactium Ltd., Mr. Plesnarski became a shareholder of Pivotal.
(12) Mr. Senaratna was a shareholder of Exactium Ltd. Upon Pivotal's acquisition
of Exactium Ltd., Mr. Senaratna became a shareholder of Pivotal.
(13) Mr. Small was a shareholder of Exactium Ltd. and also served as the Chief
Architect of Exactium, Inc. Upon Pivotal's acquisition of Exactium Ltd.,
Mr. Small became a shareholder of Pivotal and currently serves as the Chief
Architect for Pivotal's eSelling Division.
(14) Mr. Tal was a shareholder of Exactium Ltd. and also served as the Senior
Software Engineer of Exactium Ltd. Upon Pivotal's acquisition of Exactium
Ltd., Mr. Tal became a shareholder of Pivotal.
(15) Includes 8,188 shares held in escrow. Mr. Topaz was a shareholder of
Exactium Ltd. and also served as the Vice President of Configuration
Technology of Exactium, Inc. Upon Pivotal's acquisition of Exactium Ltd.,
Mr. Topaz became a shareholder of Pivotal and currently serves as a
Director of Configuration Technology for Pivotal's eSelling Division.
(16) Includes 137,069 shares of Pivotal acquired VW B.C. Technology Investment
Fund Limited Partnership upon Pivotal's acquisition of Simba Technologies
Inc. of which 15,555 shares are held in escrow to indemnify against
breaches in representations and warranties. Ventures West Management B.C.
Ltd. is the general partner of VW B.C. Technology Investment Fund Limited
Partnership. Ventures West Management B.C. Ltd. is wholly owned by Ventures
West Capital Ltd. The following individuals are shareholders of Ventures
West Capital Ltd. and exercise the powers to direct the voting of the
shares beneficially owned by Bank of Montreal Capital Corporation and VW
B.C. Technology Investment Fund Limited Partnership: Edward G. Anderson,
Barry Gekiere, Nancy Harrison, Robert J. Louis, Howard L. Riback and Samuel
Znaimer. Mr. Louis, a director of Pivotal, also serves as a director and
the President of Ventures West Capital Ltd.
PLAN OF DISTRIBUTION
The common shares may be sold from time to time by the selling shareholders, or
by pledgees, donees, transferees or other successors in interest. These sales
may be made on one or more exchanges or in the over-the-counter market, or
otherwise at prices and at terms then prevailing or at prices related to the
then current market price, or in negotiated transactions directly with
purchasers. The common shares may also be sold by one or more of the following:
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(1) a block trade in which the broker or dealer so engaged will attempt to sell
the common shares as agent but may position and resell a portion of the
block as principal to facilitate the transaction;
(2) purchase by a broker or dealer as principal and resale by the broker or
dealer for its account pursuant to this prospectus;
(3) an exchange distribution in accordance with the rules of the exchange; and
(4) ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
In effecting sales, brokers or dealers engaged by the selling shareholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from selling shareholders in amounts to be
negotiated immediately prior to the sale. These brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act 1933 in connection with these sales. In addition,
any securities covered by this prospectus that qualify for sale pursuant to Rule
144 may be sold under Rule 144 rather than pursuant to this prospectus.
LEGAL MATTERS
The validity of the issuance of the common shares offered hereby will be passed
upon for us by Borden Ladner Gervais LLP, Vancouver, British Columbia, Canada.
EXPERTS
The financial statements of Pivotal as of June 30, 2000, 1999 and 1998 and for
each of the three years ended June 30, 2000 have been audited by Deloitte &
Touche LLP, independent auditors, as indicated in their reports with respect
thereto, and are incorporated by reference herein in reliance upon the authority
of said firm as experts in accounting and auditing in giving said reports.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with the
Securities and Exchange Commission. You can read and copy these documents at the
public reference facility maintained by the Securities and Exchange Commission
at Judiciary Plaza, 450 Fifth Street, NW, Room 1024, Washington, DC 20549. You
can also copy and inspect such reports, proxy statements and other information
at the following regional offices of the Securities and Exchange Commission:
--------------------------------------------------------------------------------
New York Regional Office Chicago Regional Office
Seven World Trade Center Citicorp Center
Suite 1300 500 West Madison Street, Suite 1400
New York, NY 10048 Chicago, Illinois 60661
--------------------------------------------------------------------------------
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Securities and Exchange
Commission filings are also available to the public on the Securities and
Exchange Commission 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 Securities and Exchange Commission 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
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information that we incorporate by reference is considered to be part of this
prospectus, and later information that we file with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings made
with the Securities and Exchange Commission under Sections 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934:
1. Our annual report on Form 10-K for the year ended June 30, 2000.
2. The description of our common shares contained in our registration
statement on Form 8-A filed with the Securities and Exchange
Commission on July 28, 1999 under Section 12(g) of then Securities
Exchange Act of 1934, including any amendment or report filed for the
purpose of updating such description.
This prospectus is part of a registration statement we filed with the Securities
and Exchange Commission (Registration No. 333-______). You may request a free
copy of any of the above filings by writing or calling:
Andre Beaulieu
General Counsel
Pivotal Corporation
300 - 224 West Esplanade
North Vancouver, British Columbia
Canada V7M 3M6
Telephone: (604) 988-9982
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 shareholders
should not make an offer of the common 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.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table itemizes the expenses incurred by the Registrant in
connection with the common shares being registered. All of the amounts shown are
estimates except the Securities and Exchange Commission registration fee.
Item Amount
---- ------
Securities and Exchange Commission Registration Fee................ $31,557
Blue Sky Fees and Expenses......................................... -
Accounting Fees and Expenses....................................... $30,000
Legal Fees and Expenses............................................ $25,000
Miscellaneous...................................................... -
Total.............................................................. $86,557
----------------------
The selling shareholders will pay no portion of the foregoing expenses.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Under the British Columbia Company Act, the Registrant may, if it obtains court
approval, indemnify its directors and officers and former directors and officers
and current and former directors and officers of its subsidiaries against costs
and expenses, including amounts paid to settle an action or satisfy a judgment
in a civil, criminal or administrative action or proceeding to which they are
made parties because they have been directors or officers, including an action
brought by the Registrant. Indemnification of a director or officer under the
British Columbia Company Act is possible only if it is shown that the director
or officer acted honestly and in good faith with a view to the Registrant's best
interests, and in the case of a criminal or administrative action or proceeding
the director or officer had reasonable grounds for believing that his conduct
was lawful.
The Registrant's articles require it, if it obtains court approval, to indemnify
its current and former directors. Under the Registrant's articles it may, if it
obtains court approval, indemnify its subsidiaries' current and former directors
and its and its subsidiaries' current and former officers, employees and agents.
The Registrant's articles also provide that, to the fullest extent permitted by
the British Columbia Company Act:
o the rights conferred in the articles are not exclusive; and
o the Registrant is authorized to purchase and maintain insurance on
behalf of its and its subsidiaries' current and past directors,
officers, employees and agents against any liability incurred by them
in their duties.
The Registrant has entered into indemnity agreements with each of its directors
and officers and the directors and officers of its subsidiaries. The indemnity
agreements call for the Registrant to indemnify the director or officer against
all liabilities in connection with any claim arising out of the individual's
status or service as a director or officer of the Registrant, or its
subsidiaries, other than liabilities arising from gross negligence or willful
misconduct. These agreements also call for the Registrant to advance expenses
incurred by the individual in connection with any action with respect to which
the individual may be entitled to indemnification by the Registrant.
The British Columbia Company Act currently requires the Registrant to obtain the
approval of a court before it indemnifies directors or officers. The British
Columbia legislature has passed legislation to remove this requirement. The
exact timing of the enactment of this legislation is unknown, but it is
anticipated that it will not be enacted until some time in 2001.
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<PAGE>
Currently, there is no pending litigation or proceeding involving a current or
past director, officer or employee regarding which indemnification is sought,
nor is the Registrant aware of any threatened litigation that may result in
claims for indemnification.
The Registrant maintains directors and officers liability insurance with an
annual aggregate coverage limit of Cdn.$5 million.
Insofar as indemnification for liabilities arising under the U.S. Securities Act
of 1933 may be permitted for directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act of
1933 and is therefore unenforceable.
ITEM 16. EXHIBITS.
Exhibit
Number Description
------ -----------
5.1* Opinion of Borden Ladner Gervais LLP
23.1* Consent of Borden Ladner Gervais LLP
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
23.3* Consent of KPMG LLP
23.4* Consent of Kost, Forer & Gabbay
24.1 Power of Attorney (Included on the signature pages to the
registration statement)
---------------
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
(a) Rule 415 Offering.
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 this 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 this
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 and of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Securities and
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent (20%) change
in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or any
material change to such information in this registration statement;
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<PAGE>
provided, however, that the undertakings set forth in paragraphs (a)(1)(i) and
(a)(1)(ii) above do not apply if this registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be included in a post-
effective amendment by those paragraphs is contained in periodic reports filed
by the Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this 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 as that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Rule 3-19 of Regulation S-X under
the Securities Act of 1933 at the start of any delayed offering or throughout a
continuous offering. Financial statements and information otherwise required by
Section 10(a)(3) of the Securities Act of 1933 need not be furnished, provided
that the Registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph (a)(4) and
other information necessary to ensure that all other information in the
prospectus is at least as current as the date of those financial statements.
Notwithstanding the foregoing, with respect to registration statements on Form
F-3, a post-effective amendment need not be filed to include financial
statements and information required by Section 10(a)(3) of the Securities Act of
1933 or Rule 3-19 of Regulation S-X under the Securities Act of 1933 if such
financial statements and information are contained in periodic reports filed
with or furnished to the Securities and Exchange Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the Form F-3.
(b) Filings Incorporating Subsequent Exchange Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for the 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 of 1934) 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.
(h) Indemnification for Liabilities.
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 provisions described in Item 15 above, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expense incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
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<PAGE>
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 the
requirements for filing on Form F-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Vancouver, British Columbia, Canada, on September 29, 2000.
PIVOTAL CORPORATION
(Registrant)
BY: /s/ Norman B. Francis
------------------------------------
Norman B. Francis
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Norman
B. Francis and Vincent D. Mifsud, or either of them, his attorney-in-fact, with
the power of substitution, for them in any and all capacities, to sign any
amendments to this registration statement, and to file the same, with exhibits
thereto and other documents in connection therewith, with the Securities and
Exchange Commission, hereby ratifying and confirming all that said
attorneys-in-fact, or their substitute or substitutes, may do or cause to be
done by virtue hereof.
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.
Signature Title Date
--------- ----- ----
/s/ Norman B. Francis
-------------------------- President, Chief Executive September 29, 2000
Norman B. Francis Officer and Director
/s/ Vincent D. Mifsud
-------------------------- Chief Financial Officer and September 29, 2000
Vincent D. Mifsud Executive Vice President
/s/ Keith R. Wales
-------------------------- Chief Technical Officer September 29, 2000
Keith R. Wales and Director
-------------------------- Director September 29, 2000
Jeremy A. Jaech
/s/ Douglas J. Mackenzie
-------------------------- Director September 29, 2000
Douglas J. Mackenzie
/s/ Robert J. Louis
-------------------------- Director September 29, 2000
Robert J. Louis
/s/ Donald A. Mattrick
-------------------------- Director September 29, 2000
Donald A. Mattrick
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<PAGE>
AUTHORIZED REPRESENTATIVE
Pursuant to the requirements of Section 6(a) of the Securities Act of 1933,
as amended, the undersigned has signed this registration statement solely in the
capacity of the duly authorized representative of Pivotal Corporation in the
United States, on September 29, 2000.
PIVOTAL CORPORATION
BY: /s/ Norman B. Francis
------------------------------------
Norman B. Francis
President and Chief Executive Officer
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<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
------ -----------
5.1* Opinion of Borden Ladner Gervais LLP
23.1* Consent of Borden Ladner Gervais LLP
23.2 Consent of Deloitte & Touche LLP, Independent Auditors
23.3* Consent of KPMG LLP
23.4* Consent of Kost, Forer & Gabbay
24.1 Power of Attorney (Included on the signature pages to the
registration statement)
---------------
* To be filed by amendment.
