<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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FORTEL INC.
(Exact name of Registrant as specified in its charter)
(formerly Zitel Corporation)
<TABLE>
<S> <C> <C>
CALIFORNIA 7372 94-2566313
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer Identification
incorporation or organization) Classification Code Number) Number)
</TABLE>
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46832 LAKEVIEW BLVD., FREMONT, CALIFORNIA 94538
(510) 440-9600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
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ANNA M. MCCANN, CHIEF FINANCIAL OFFICER
46832 LAKEVIEW BLVD., FREMONT, CALIFORNIA 94538
(510) 440-9600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
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COPIES TO:
JOHN L. CARDOZA, ESQ., COOLEY GODWARD LLP
ONE MARITIME PLAZA #2000, SAN FRANCISCO, CALIFORNIA 94111
(415) 693-2000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement
becomes effective.
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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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is filed in a post-effective amendment filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement of the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
---------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================== ================ ============================ ============================= ================
TITLE OF EACH CLASS OF AMOUNT TO BE PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
------------------------------------- ---------------- ---------------------------- ----------------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock (2) 387,500 $2-3/32 $811,328 $215
TOTAL
===================================== ================ ============================ ============================= ================
</TABLE>
(1) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of
the high and low prices of the Company's Common Stock as reported on
the Nasdaq SmallCap Market System on June 27, 2000.
(2) In addition to the shares set forth in the table, the amount to be
registered includes an indeterminate number of shares issuable with
respect thereto, as such number may be adjusted as a result of stock
splits and stock dividends in accordance with Rule 416.
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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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
================================================================================
<PAGE>
PROSPECTUS
387,500 SHARES
FORTEL INC.
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COMMON STOCK
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The Selling Securityholders identified in this Prospectus are selling
up to 387,500 shares of our common stock acquired by them in connection with
settlement of a legal action. These shares may be offered from time to time by
the Selling Securityholders through public or private transactions, on or off
The Nasdaq SmallCap Market, at prevailing market prices or at privately
negotiated prices. The Selling Securityholders will receive all of the proceeds
from the sale of the shares and will pay all underwriting discounts and selling
commissions, if any, applicable to the sale of the shares. We will pay the
expenses of registration of the sale of the shares.
Our common stock is currently traded on The Nasdaq SmallCap Market
under the symbol "FRTL." On June __, 2000, the last reported sales price of a
share of FORTEL common stock on The Nasdaq SmallCap Market was $______ per
share.
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INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGE 2 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is June __, 2000.
<PAGE>
THIS PROSPECTUS IS A PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SEC. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE DOCUMENT.
WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy the documents we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. You can request copies of these documents by writing to the
SEC and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330
for further information on the public reference rooms. Our SEC filings are also
available to the public at no cost from the SEC's Website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information that we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information. 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 and Exchange Act of 1934:
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by FORTEL Inc. with the SEC pursuant to
the Securities Exchange Act of 1934 are by this reference incorporated in and
made a part of this Prospectus:
(1) The Proxy Statement filed on January 28, 2000, including all matters
incorporated by reference therein;
(2) The Amendment to the Annual Report on Form 10-K for the fiscal year
ended September 30, 1999, filed December 30, 1999 on Form 10-K/A.
(3) The Quarterly Reports on Form 10-Q filed February 11, 2000 and April
25, 2000.
(4) Current Report on Form 8-K filed June 29, 2000.
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1.
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THE COMPANY
FORTEL Inc. (formerly Zitel Corporation) was incorporated in California
in 1979. Our executive offices are located at 46832 Lakeview Blvd., Fremont,
California 94538, and our telephone number is (510) 440-9600.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares by the
Selling Securityholders.
DIVIDEND POLICY
We have never paid cash dividends. The Company's Board of Directors
currently intends to retain any earnings for use in our business and does not
anticipate paying any cash dividends in the foreseeable future.
AN INVESTMENT IN FORTEL INVOLVES A HIGH DEGREE OF RISK. THE RISK
FACTORS SET FORTH BELOW SHOULD BE CONSIDERED CAREFULLY BEFORE PURCHASING THE
COMMON STOCK OFFERED HEREBY.
RISK FACTORS
RECENT LEVELS OF NET SALES HAVE BEEN INSUFFICIENT TO PRODUCE OPERATING PROFITS
In recent years, we have not generated net sales sufficient to produce
an operating profit and have relied on a stream of royalty payments under an
agreement with IBM and significant financings to support our activities. In
April 1998, we entered into an agreement with IBM whereby IBM stopped paying
royalties to us in exchange for a lump sum payment amounting to $740,000. We
sustained substantial operating losses and net losses in fiscal 1997, fiscal
1998, fiscal 1999 and the first half of fiscal 2000. We must generate
substantial additional net sales and gross margins on our products and services
and must continue to successfully implement programs to manage cost and expense
levels in order to remain a viable operating entity. There can be no assurance
that we can achieve these objectives.
WE HAVE REPORTED SIGNIFICANT LOSSES
For the first half of fiscal 2000 we reported a net loss of $3,988,000.
During our 1999 fiscal year, we reported a net loss of $13,103,000. We reported
a net loss of $43,205,000 in fiscal 1998. We reported a net loss of $17,501,000
in fiscal 1997.
While we have taken a number of steps to attempt to return to
profitability, there is no assurance that we will be successful. A significant
portion of the recent losses were caused by the operations of our former storage
systems business unit and the writeoff of our investment in and advances to
MatriDigm Corporation. In July 1998, we sold the storage systems business unit.
At September 30, 1999, we had written off all of our investments in and advances
to MatriDigm Corporation, which filed for Chapter Seven bankruptcy in October,
1999. We were successful in subleasing our Fremont headquarters and, in April,
2000, moved to smaller less costly premises. We are also taking other actions to
reduce our costs in an effort to bring costs into line with anticipated
revenues. There can be no assurance that we will be successful in this effort
and remain a viable operating entity.
WE HAVE EXPERIENCED FLUCTUATIONS IN QUARTERLY RESULTS
Our quarterly operating results have in the past varied and may in the
future vary significantly depending on a number of factors, including:
- The level of competition, size, timing, cancellation or
rescheduling of significant orders;
- Market acceptance of new products and product enhancements;
- New product announcements or introductions by our competitors;
- Deferrals of customer orders in anticipation of new products
or product enhancements;
2.
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- Changes in pricing by us or our competitors;
- Our ability to develop, introduce and market new products and
product enhancements on a timely basis;
- Our success in expanding our sales and marketing programs;
- Technological changes in the market for our products;
- Product mix and the mix of sales among our sales channels;
- Levels of expenditures on research and development;
- Changes in our strategy and personnel changes;
- General economic trends and other factors.
Due to all of the foregoing factors, we believe that period-to-period
comparisons of our results of operations are not necessarily meaningful and
should not be relied upon as an indicator of future performance. It is possible
that in some future quarter our operating results may be below the expectations
of public market analysts and investors.
OUR STOCK PRICE HAS BEEN VOLATILE
The price of our common stock during fiscal year 1999 ranged from the
low closing bid price of 1-7/32 to the high closing bid price of 6 15/32. During
the period October 1, 1999, and June 20, 2000, the closing bid prices ranged
between a low of 2 1/32 and a high of 6 5/8.
THE MARKET FOR SYSTEMS MANAGEMENT TOOLS IS INTENSELY COMPETITIVE
The market for system management tools in which we compete is intensely
competitive. Many of the companies with which we compete, such as TeamQuest
Corporation, Computer Associates International, Inc., Hewlett-Packard Company
and BMC Software, Inc., have sold systems to many more customers and have
greater financial resources than we do. There can be no assurance that our
competitors will not develop products comparable or superior to those developed
by us or adapt more quickly than we do to new technologies, evolving industry
standards, new product introductions, or changing customer requirements.
RAPID TECHNOLOGICAL CHANGE COULD RENDER OUR EXISTING PRODUCTS AND SERVICES
OBSOLETE
The markets in which we operate are characterized by rapid
technological change, changing customer needs, frequent new product
introductions and evolving industry standards. The introduction of products
embodying new technologies and/or the emergence of new industry standards could
render our existing products and services obsolete and unmarketable. Our future
success will depend upon our ability to develop and introduce new products and
services on a timely basis that keep pace with technological developments and
emerging industry standards and address the increasingly sophisticated needs of
our customers. There can be no assurance that we will be successful in
developing and marketing products or services that respond to technological
changes or evolving industry standards, that we will not experience difficulties
that could delay or prevent the successful development, introduction and
marketing of new products or services, or that our new products or services will
adequately meet the requirements of the marketplace and achieve market
acceptance. If we are unable, for technological or other reasons, to develop and
introduce new products or services in a timely manner in response to changing
market conditions or customer requirements, our business, operating results and
financial condition will be harmed.
PRODUCT LIABILITY COULD HURT US IF LIABILITY LIMITATIONS ARE NOT EFFECTIVE
Our agreements with our customers typically contain provisions intended
to limit our exposure to potential product liability claims. It is possible that
the limitation of liability provisions contained in our agreements may not be
effective. Although we have not received any product liability claims to date,
the sale and support of products and the incorporation of products from other
companies may entail the risk of such claims. A successful product liability
claim against us could harm our business.
3.
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OUR SUCCESS DEPENDS ON PROPRIETARY TECHNOLOGY
Our success depends significantly upon our proprietary technology. We
currently rely on a combination of patent, copyright and trademark laws, trade
secrets, confidentiality agreements and contractual provisions to protect our
proprietary rights. We seek to protect our software, documentation and other
written materials under trade secret and copyright laws, which afford only
limited protection. We are registering our FORTEL and Sightline trademarks and
will continue to evaluate the registration of additional trademarks as
appropriate. We generally enter into confidentiality agreements with our
employees and with key vendors and suppliers. We currently hold a United States
patent on one of our software technologies. There can be no assurance that this
patent will provide us with any competitive advantages or will not be challenged
by third parties, or that the patents of others will not impair our ability to
do business. We believe that the rapidly changing technology in the computer
industry makes our success depend more on the technical competence and creative
skills of our personnel than on patents.
There has also been substantial litigation in the computer industry
regarding intellectual property rights, and litigation may be necessary to
protect our proprietary technology. We have not received significant claims that
we are infringing third parties' intellectual property rights, but there can be
no assurance that third parties will not in the future claim infringement by us
with respect to current or future products, trademarks or other proprietary
rights.
We expect that companies in our markets will increasingly be subject to
infringement claims as the number of products and competitors in our target
markets grows. Any such claims or litigation may be time-consuming and costly,
cause product shipment delays, require us to redesign our products or require us
to enter into royalty or licensing agreements, any of which could have a harm on
our business. Despite our efforts to protect its proprietary rights,
unauthorized parties may attempt to copy aspects of our products or to obtain
and use information that we regard as proprietary. There can be no assurance
that our means of protecting our proprietary rights will be adequate or that our
competitors will not independently develop similar technology, duplicate our
products or design around patents issued to us or our other intellectual
property rights.
INTERNATIONAL SALES AND OPERATIONS INVOLVE RISKS NOT EXPERIENCED IN DOMESTIC
OPERATIONS
Sales to customers outside the United States have accounted for
significant portions of our net sales, and we expect that the acquisition of
companies headquartered and operating in the United Kingdom, The Netherlands,
Germany and Switzerland respectively, will result in international sales
representing an increasingly significant portion of our net sales. International
sales pose certain risks not faced by companies that limit themselves to
domestic sales. Fluctuations in the value of foreign currencies relative to the
U.S. dollar, for example, could make our products less price competitive. If in
the future we denominate any of our sales in foreign currencies, this could
result in losses from foreign currency transactions. International sales also
could be harmed by factors beyond our control, including the imposition of
government controls, export license requirements, restrictions on technology
exports, changes in tariffs and taxes and general economic and political
conditions. The laws of some countries do not protect our intellectual property
rights to the same extent as the laws of the United States. We do not believe
these additional risks are significant in the United Kingdom, The Netherlands,
Germany or Switzerland.
LOSS OF KEY PERSONNEL COULD HARM OUR BUSINESS
Our future performance depends in significant part upon the continued
service of our key technical and senior management personnel. We provide
incentives such as salary, benefits and option grants (which are typically
subject to vesting over four years) to attract and retain qualified employees.
The loss of the services of one or more of our officers or other key employees
could harm our business. Our future success also depends on our continuing
ability to attract and retain highly qualified technical and management
personnel. Competition for such personnel is intense, and there can be no
assurance that we can retain our key technical and management employees or that
we can attract, assimilate and retain other highly qualified technical and
management personnel in the future.
We believe there is significant competition for the few software
development professionals with the advanced technological skills necessary to
perform the services offered by our business. Our ability to maintain or renew
existing relationships and obtain new business depends, in large part, on our
ability to hire and retain technical personnel. An inability to hire such
additional qualified personnel could impair our ability to manage and complete
our existing projects and to bid for and obtain new projects.
4.
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ANTI-TAKEOVER PROVISIONS COULD DISCOURAGE TENDER OFFER OR TAKEOVER ATTEMPTS,
INCLUDING THOSE THAT MIGHT RESULT IN A PREMIUM OVER MARKET PRICE
Certain provisions of our Articles of Incorporation, as amended and
restated, and Bylaws, as amended, California law and our indemnification
agreements with our officers and directors may be deemed to have an
anti-takeover effect. Such provisions may delay, defer or prevent a tender offer
or takeover attempt that a stockholder might consider to be in that
stockholder's best interests, including attempts that might result in a premium
over the market price for the shares held by stockholders.
Our Board of Directors may issue additional shares of common stock or
establish one or more classes or series of Preferred Stock, having the number of
shares, designations, relative voting rights, dividend rates, liquidation and
other rights, preferences and limitations as determined by the Board of
Directors without stockholder approval.
Our Board of Directors has approved the adoption of a Preferred Share
Purchase Rights Plan (the "Rights Plan"). Terms of the Rights Plan provide for a
dividend distribution of one preferred share purchase right for each outstanding
share of our common stock. Each purchase right entitles the registered holder to
purchase one one-hundredth of a share of Series A Junior Participating Preferred
Stock at an exercise price of $69.50 per one one-hundredth of a preferred share,
subject to adjustment, and a redemption price of $.01 per purchase right. Each
one one-hundredth of a share of preferred stock has designations and the powers,
preferences and rights, and the qualifications, limitations and restrictions
which make its value approximately equal to the value of a common share.
The purchase rights are not exercisable until the earlier to occur of
(i) 10 days following a public announcement that a person, entity or group of
affiliated or associated persons have acquired beneficial ownership of 15% or
more of the outstanding common stock or (ii) 10 business days (or such later
date as may be determined by action of the Board of Directors prior to such time
as any person or entity acquires 15% or more of our outstanding common stock)
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 15% or more of such outstanding common stock.
The purchase rights have certain anti-takeover effects, as they would
cause substantial dilution to a person or group that attempted to acquire us on
terms not approved by our Board of Directors. The purchase rights should not
interfere with any merger or other business combination approved by the Board of
Directors, since the purchase rights may be redeemed at $.01 per purchase right
prior to the earliest of (i) the twentieth day following the time that a person
or group has acquired beneficial ownership of 15% or more of our outstanding
common stock (unless extended for one or more 10 day periods by the Board of
Directors), (ii) a change of control, or (iii) the final expiration date of the
purchase rights.
5.
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SETTLEMENT OF LEGAL ACTION
On May 31, 2000, we settled a legal action and pursuant to that
settlement have issued 387,500 shares of our common stock to Lynx Venture
Partners I, LLC which distributed the shares to its members, who are the selling
securityholders named in this prospectus.
BUSINESS
We are an information technology company specializing in real-time analysis and
correlation of heterogeneous information for end-to-end eBusiness service level
assurance. We employ our core competencies as a software products and services
business.. The software aggregates information from the end-to-end components of
an eBusiness application including networks, web servers, data bases,
applications, transaction systems and other business process flows, even data
feeds from third party tools or external eBusiness partners. The software
enables a user to treat the information as a single critical path, enabling the
management and control of all the components as a single business process and
viewing the information end-to-end, discovering the true-cause of any service
level trend, whether it is within the users domain of control or not.
We were organized in 1979 to develop, market and sell semiconductor memory
systems. We subsequently developed memory algorithms, which we incorporated in
high performance data storage systems developed, marketed and sold by our data
storage business. With the acquisition, in June 1997, of the business of
Datametrics Systems Corporation, we commenced the transition to an information
technology company. This transition was completed in July 1998, when we sold our
data storage business.
GENERAL
We develop, market and support a wide range of eBusiness management software in
a form used for real-time analysis and correlations of heterogeneous information
for end-to-end eBusiness service level assurance. We market a family of
Sightline software products utilized for service level assurance that
automatically alerts, analyzes, correlates, investigates and reports on the
critical paths of an eBusiness' applications. The software aggregates
information from the end-to-end components of an eBusiness application including
networks, web servers, data bases, applications, transaction systems and other
business process flows, even data feeds from third party tools or external
eBusiness partners. In addition, our business includes a group of service level
assurance professionals to implement the software to maximize the service level
assurance capability of the software and a training business to assist customers
with their software training needs. Products are sold through a direct sales
force in the United States and Europe, and through value added resellers,
distributors and original equipment manufacturers worldwide. We provide both
direct and indirect customer maintenance and support for our software products.
PRODUCTS AND SERVICES
SOFTWARE PRODUCTS
Our flagship product family is SightLine. SightLine was developed to deal with
the complexities inherent in assuring a smooth and trouble-free eBusiness
operations across heterogeneous multi-tiered applications. Through powerful,
end-to-end, analysis and correlation capabilities, SightLine identifies
information flows and critical paths, helping managers predict and address
trouble spots before problems turn into crises. The Sightline family of software
products aggregate information from the end-to-end components of an eBusiness
application including networks, web servers, data bases, applications,
transaction systems and other business process flows, even data feeds from third
party tools or external eBusiness partners. SightLine product family is based on
analysis and correlation software that has been applied and tuned for more than
ten years in the systems management performance arena. Sightline operates in
systems running Compaq, OpenVMS, Unisys 2200, Unisys A Series, Windows NT and
many UNIX platforms including Sun, HP, IBM, Siemans, and Sequent. It also
gathers information from routers, storage devices and operates in SAN
environments. The primary components of the SightLine family are as follows:
SIGHTLINE EXPERT ADVISOR analyzes and correlates large amounts of heterogeneous
information in real-time. Advisor's progressive analysis and correlation
capabilities highlight critical relationships among IT components, and identify
previously unknown indicators that can impact an eBusiness environment.
Progressive correlation features also provide true cause and impact analysis,
recommend and/or take corrective actions and alert to critical service level
trends, before impacts are felt. Progressive discovery can be applied to any set
of indicators for more in-depth analysis and trending. Advisor's analysis can be
applied to real-time as well as historical information for strategic planning
and forecasting.
6.
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SIGHTLINE VISION provides diverse views of eBusiness service levels, based on
the specific needs of the user. eBusiness summary views, showing simple service
level status, are available for eBusiness management. More in-depth views are
provided for IT executives, who may desire to monitor individual tier or
component status. In-depth views for individual components and services are
offered for technical level management. All views are easily customizable and
are provided via web-based interfaces and management consoles.
SIGHTLINE AGENTS monitor the critical service level indicators of a specific
eBusiness component. Three types of agents are provided to meet different needs.
Power Agents provide in-depth monitoring of a wide range of indicators and are
designed for situations where in-depth analysis or historical trending may be
required. Summary Agents provide monitoring of critical indicators, and are
designed for use where snapshot "health" analysis is desired. Interface Agents
integrate with 3rd party monitoring tools or applications, protecting current IT
investment by collecting information from current tools and consolidating it
with SightLine-gathered information. 3rd party information is analyzed and
correlated transparently through the SightLine Expert Advisor.
SIGHTLINE SDK enables organizations to create Interface Agents quickly for
proprietary applications or management tools.
We have created a number of SightLine solution packages, designed for specific
eBusiness environments. Enterprise packages are focused on larger, more complex
eBusiness deployments. Quickstart packages provide the ability to quickly
leverage SightLine for service level assurance in small, highly-defined
applications. All of the solution packages can be easily extended and
customized.
ENTERPRISE PACKAGES
SIGHTLINE ENTERPRISE CP (Critical Path) is a bundled software and services
solution designed to assure service levels of a multi-tier enterprise eBusiness
application. With Enterprise CP, eBusiness managers will benefit from the
immediate identification of eBusiness critical paths and service flows, and the
deployment of an ongoing service level assurance plan. The package includes a
suite of SightLine components, Expert Advisors, Visions, Power, Interface and
Summary Agents, configured for an enterprise class eBusiness application. Also
included are Assurance Expert services for initial service level assurance
deployment and planning, and quarterly expert consultations to ensure continuing
benefits.
SIGHTLINE ENTERPRISE WEBNET is a bundled software and services solution designed
to assure service levels of a large web server and services deployment. WebNet
is an ideal solution for Internet Service Providers and Application Service
Providers. WebNet provides the service level assurance to optimize web and
network services including mail, file transfer, web server performance and
network performance, while correlating service level relationships between
various web services offerings within the server farm. The package includes a
suite of SightLine components, Expert Advisor, Vision, Web and network Summary
Agents, configured for commercial web service providers. Also included are
Assurance Expert services for initial deployment and tuning, and quarterly
expert consultations to ensure continuing benefits.
QUICKSTART PACKAGES
The Quickstart packages provide real-time measurement of eBusiness service
levels, while identifying the true cause of current or potential service level
degradation. Unlike traditional systems management products, which may take
months to deploy, SightLine Quickstart packages make it possible for eBusinesses
to quickly and inexpensively assure the end-to-end service levels of their
offerings.
SIGHTLINE WEBHOST is designed for web hosting services. It provides an immediate
integrated view of the service levels being delivered by the web hosting and
network environment. Key service level indicators are pre-configured within the
package, for automated correlation and true cause/discovery. Automated
corrective actions and rules for service level assurance within hosting
environments are also included.
SIGHTLINE STOREFRONT is designed for in-house and hosted storefront
environments. It snapshots a typical commerce period, and immediately creates an
edge-to-edge view of the critical flows comprising storefront delivery. Service
levels across the distributed environment, including network, web servers and
product information repositories are analyzed and recommendations created for
optimization of the storefront infrastructure. Key service level indicators are
pre-configured and monitored for automated correlation and service level
analysis.
SIGHTLINE B-TO-B is designed for business-to-business ecommerce environments. It
provides the ability to assure service levels of an eBusiness comprised of "back
office" components, as well as external information feeds. SightLine B-to-B
consolidates the service
7.
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levels delivered by both internal and external application components,
highlighting relationships and potential service level impacts created by
external dependencies. Key relationships and external indicators are analyzed
and information provided for external vendor and partner management.
-----------------------------
We also market some software products over the Web. Two such products,
VisualRoute and VisualRoute Server are Java based tools providing the
functionality of the common Internet tools, "ping", "whois" and "traceroute" in
an integrated fashion. VisualRoute provides a simple, graphical tool to
determine precisely where and how the traffic is flowing between a server and
the client trying to access it, providing a geographical map of the route and
the performance of each portion of the route. VisualRoute can be installed on a
client PC to determine connectivity and connection performance between that PC
and any server on the Internet. VisualRoute Server, the enterprise version of
VisualRoute, enables Web Master and ISP's to provide this capability to any
client that has a Java-enabled Web browser. VisualPulse, another software
product marketed over the Web, enables monitoring of specific websites, servers,
and network nodes anywhere over the Internet, across a corporate Intranet or
Extranet or any combination of these, visually providing realtime and historical
reports on network latency and packet loss. VisualPulse is a server-based ping
engine and reporting tool designed for network administrators, web-hosting
companies, Applications Service Providers (ASPs), and Internet Service Providers
(ISPs) who need a fast, visual way to see how their service offering is running,
and where problems occur. VisualPulse can be integrated with the VisualRoute
Server product, instantly providing visual traceroute information to the servers
or sites being monitored.
We also have a cadre of service level assurance professionals who assist in the
installation of Sightline products. More specifically they perform impact
analysis studies, capacity planning analysis, service level planning and tuning,
remote expert services, education services, integration services and provide
service level assurance for our clients on an out sourced basis. Our
professionals work with clients to provide the skills and knowledge for
deployment and maintenance of SightLine products throughout their enterprise.
We have begun the "end of life" phase for our ViewPoint product family and will
cease to actively sell the products after September, 2000. We will support the
ViewPoint products until May, 2002. The ViewPoint family of products are
multi-platform performance management and analysis products for the entire
enterprise that automatically monitors, analyses and correlates thousands of
performance metrics simultaneously and at a very high speed. ViewPoint also
provides trend analysis, simulation analysis and "what if" analysis for capacity
planning.
MARKETING
We sell our software products through a direct sales force in the United States
and Europe and through value added resellers, distributors and original
equipment manufacturers worldwide. We provide direct and indirect customer
maintenance and support for our software products.
EMPLOYEES
At March 31, 2000, we employed 136 persons on a full-time basis: 29 in research
and development, 19 in professional services, 17 in operations, 43 in sales and
marketing, and 28 in general management and administration.
We believe that our further success will depend, in part, on our ability to
attract and retain qualified employees, who are in great demand. None of our
employees are represented by a labor union and we believe that our employee
relations are good.
8.
<PAGE>
SELLING SECURITYHOLDERS
The following table sets forth the names of the selling
securityholders, the number of shares of common stock owned by each selling
securityholder prior to this offering, the number of shares of common stock
being offered for the account of each selling securityholder and the number of
shares of common stock to be owned by each selling securityholder after
completion of this offering. This information is based upon information provided
by the selling securityholders if all of the shares are sold and no other shares
are acquired. Because the selling securityholders may offer all, some or none of
their common stock, no definitive estimate as to the number of shares that will
be held by the selling securityholders after such offering can be provided.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BEING SHARES BENEFICIALLY
SELLING SECURITYHOLDER(1) OWNED PRIOR TO OFFERING OFFERED OWNED AFTER OFFERING (2)
---------------------- ----------------------- -------- ---------------------
<S> <C> <C> <C>
Delaware Charter Guarantee Trust Co. FBO 3,875 3,875 0
John A. Zimmerman
Meadowicks, Inc. 19,375 19,375 0
Craig Gitlitz 93,000 93,000 0
Delaware Charter Guarantee Trust Co. FBO 3,875 3,875 0
Jay Newman
Stevens A. Carey 3,875 3,875 0
Chico News Agency PSP 9,688 9,688 0
Robert M. Sylvester, Trustee
Anna Mae Sylvester, Trustee
Richard A. Sylvester, Trustee
Delaware Charter Guarantee Trust Co. FBO 3,875 3,875 0
Gary R. Bean
Delaware Charter Guarantee Trust Co. FBO 5,813 5,813 0
Gayle Ensign, IRA
Delaware Charter Guarantee Trust Co. FBO 7,750 7,750 0
Michael Ashker
Michael Ashker 11,625 11,625 0
Delaware Charter Guarantee Trust Co. FBO 3,875 3,875 0
Teresa A. Thomas
Delaware Charter Guarantee Trust Co. FBO 7,750 7,750 0
Joyce I. Blakeway
TransPacific Venture 5,038 5,038 0
Delaware Charter Guarantee Trust Co. FBO 4,844 4,844 0
James D. Burke Sr.
Delaware Charter Guarantee Trust Co. FBO 7,750 7,750 0
Kenneth W. Snyder
Delaware Charter Guarantee Trust Co. FBO 7,750 7,750 0
Richard A. Sylvester IRA
Richard Sylvester 7,750 7,750 0
James D. Burke 4,844 4,844 0
Philip A. Miles & Anna K. Miles 15,500 15,500 0
William P. Thomas & Teresa A. Thomas 7,750 7,750 0
Edward W. LeBaron 1,937 1,937 0
9.
<PAGE>
Delaware Charter Guarantee Trust Co. FBO 1,938 1,938 0
Edward LeBaron
Jeffrey O. Putterman & Nellie L. Cole 3,875 3,875 0
C. Park Corporation 40,687 40,687 0
Harry Yee 3,875 3,875 0
Edna Yee, Trustees
Yee Family Trust
Shula Enterprises 7,750 7,750 0
Mass Investments, LP 7,750 7,750 0
Delaware Charter Guarantee Trust Co. FBO 9,687 9,687 0
Grant V. Cook
Greer Craig 3,875 3,875 0
Lynx Technology Fund, LP 23,250 23,250 0
Lynx Capital Group, LLC 775 775 0
Bruce Yee Ong 9,687 9,687 0
Stephen Savas 7,750 7,750 0
Reid Drescher 5,812 5,812 0
Steven M. Kaplan 23,250 23,250 0
-------- -------- -
Total 387,500 387,500 0
</TABLE>
(1) None of the selling securityholders has, or within the past three years
has had, any position, office, or other material relationship with
FORTEL or any of its predecessors and affiliates.
(2) Assumes the sale of all shares offered hereby. We have agreed to pay
all reasonable fees and expenses incident to the filing of this
offering.
10.
<PAGE>
PLAN OF DISTRIBUTION
The common stock covered by this prospectus may be sold from time to
time by the selling securityholders in one or more transactions at fixed prices,
at market prices at the time of sale, at varying prices determined at the time
of sale or at negotiated prices. As used herein, selling securityholders include
parties receiving shares from named selling securityholders after the date of
this prospectus. The selling securityholders may offer their common stock in one
or more of the following transactions directly or through underwriters, broker
dealers or agents:
- On any national securities exchange or quotation service on
which our common stock may be listed or quoted at the time of
sale, including the Nasdaq SmallCap Market;
- In the over-the-counter market;
- In private transactions;
- Through options;
- Through short sales;
- By pledge to secure debts or other obligations; or
- A combination of any of the above transactions.
The selling securityholders may effect these transactions by selling to
or through one or more underwriters, broker-dealers or agents, and such
underwriters, broker-dealers or agents may receive compensation in the form of
underwriting discounts, concessions or commissions from the selling
securityholders. The selling securityholders and any other persons that
participate in the distribution may at times, be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and any commissions received
by such broker-dealers and any profits realized on any resale of the common
stock by them might be deemed to be underwriting discounts and commissions under
the Securities Act.
Under applicable rules and regulations under the Securities Exchange
Act, any person engaged in the distribution of the common stock may not
simultaneously engage in market making activities with respect to our common
stock for a period of two business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the selling
securityholders and any other person participating in a distribution will be
subject to application provisions of the Securities Exchange Act and the rules
and regulations thereunder, including without limitation, Regulation M under the
Securities Exchange Act, which may limit the timing of purchases and sales of
shares of our common stock by the selling securityholders or any such other
person.
We will make copies of this prospectus available to the selling
securityholders and have informed the selling securityholders of the need for
delivery of a copy of this prospectus to each purchaser prior to or at the time
of any sale of the common stock.
The selling securityholders will pay all underwriting discounts,
commissions, transfer taxes and other expenses associated with the sale of the
common stock by them. We will pay all costs and expenses associated with the
registration of the common stock. We estimate that our expenses in connection
with this offering will be approximately $19,000.
11.
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
us by Cooley Godward LLP, San Francisco, California.
EXPERTS
The financial statements incorporated in this Prospectus by reference
to the Annual Report on Form 10-K/A for the year ended September 30, 1999 have
been so incorporated herein in reliance on the report by PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
auditing and accounting.
12.
<PAGE>
================================================================================
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY FORTEL. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
-----------
<TABLE>
<CAPTION>
PAGE
<S> <C>
Where You Can Find More Information ...........................................1
Incorporation of Certain Documents by Reference ...............................1
The Company ...................................................................2
Use of Proceeds ...............................................................2
Dividend Policy ...............................................................2
Risk Factors ..................................................................2
Settlement of Legal Action.....................................................6
Business ......................................................................6
Selling Securityholders .......................................................9
Plan of Distribution .........................................................11
Legal Matters ................................................................12
Experts ......................................................................12
</TABLE>
387,500 SHARES
FORTEL INC.
COMMON STOCK
----------------
PROSPECTUS
----------------
JUNE __, 2000
================================================================================
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Company in
connection with the sale, issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts are
estimates except the SEC registration fee. None of these expenses will be paid
by the Selling Securityholders.
<TABLE>
<S> <C>
SEC Registration Fee.............................. $ 215
Printing and Engraving Expenses................... 5,000
Legal Fees and Expenses........................... 8,500
Accounting Fees and Expenses...................... 3,500
Blue Sky Fees and Expenses........................ 1,785
Total............................................. $19,000
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Amended and Restated Articles of Incorporation and
Bylaws include provisions to (i) eliminate the personal liability of its
directors for monetary damages resulting from breaches of their fiduciary duty
to the extent permitted by California law and (ii) require the Registrant to
indemnify its directors and officers to the fullest extent permitted by
California law, including circumstances in which indemnification is otherwise
discretionary. Pursuant to California law, a corporation generally has the power
to indemnify its present and former directors, officers, employees and agents
against expenses incurred by them in connection with any suit to which they are,
or are threatened to be made, a party by reason of their serving in such
positions so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interests of a corporation, and,
with respect to any criminal action, they had no reasonable cause to believe
their conduct was unlawful. The Registrant believes that these provisions are
necessary to attract and retain qualified persons as directors and officers.
These provisions do not eliminate liability for breach of the director's duty of
loyalty to the Registrant or its stockholders, for acts or omissions not in good
faith or involving intentional misconduct or knowing violations of law, for any
transaction from which the director derived an improper personal benefit or for
any willful or negligent payment of any unlawful dividend or any unlawful stock
purchase agreement or redemption.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION
5.1 Opinion of Cooley Godward LLP.
23.1 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
23.2 Consent of Cooley Godward LLP. Reference is made to 5.1.
24.1 Power of Attorney (included on signature page II-3).
* Incorporated by reference to the indicated exhibit to the
Company's report on 10-K for the fiscal year ended September
30, 1999.
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 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. PROVIDED,
II-1.
<PAGE>
HOWEVER, the foregoing undertaking shall not apply if the information
required to be included in a post-effective amendment by the foregoing
paragraphs is contained in periodic reports filed with or furnished to
the 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 registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering. 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 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. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the registrant pursuant to provisions described in Item 15,
or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the
final adjudication of such issue.
II-2.
<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 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 Fremont, State of California, on June 29, 2000.
FORTEL INC.
By /s/ Asa W. Lanum
----------------------------------------------
Asa W. Lanum
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Asa W. Lanum and Anna M. McCann, or either of them, his
attorneys-in-fact, and agents each with the power of substitution, for him in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement (or any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933), and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in and about the
premises, as full to all intents and purposes as he might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents or
any of them or their or his substitutes may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, 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>
/s/ ASA W. LANUM President, Chief Executive June 29, 2000
--------------------------- Officer and Director
Asa W. Lanum (PRINCIPAL EXECUTIVE OFFICER)
/s/ ANNA M. MCCANN Vice President, Finance and Administration, June 29, 2000
--------------------------- Secretary and Chief Financial Officer
Anna M. McCann (PRINCIPAL ACCOUNTING OFFICER)
/s/ WILLIAM R. LONERGAN Chairman of the Board of Directors June 29, 2000
---------------------------
William R. Lonergan
/s/ TSVI GAL Director June 29, 2000
---------------------------
Tsvi Gal
/s/ RAMAN KHANNA Director June 29, 2000
---------------------------
Raman Khanna
/s/ JACK H. KING Director June 29, 2000
---------------------------
Jack H. King
/s/ PHILIP J. KOEN Director June 29, 2000
---------------------------
Philip J. Koen
Director June __, 2000
---------------------------
William M. Regitz
Director June __, 2000
---------------------------
Edward F. Thompson
</TABLE>
II-3.
