PROSPECTUS SUPPLEMENT Filed pursuant to Rule 424(b)(3)
To Prospectus dated July 10, 1996 Registration No. 333-6131
6,591,528 SHARES OF COMMON STOCK
COVER-ALL TECHNOLOGIES INC.
---------------------------------
This Prospectus Supplement relates to the resale by the
holders named herein (the "Selling Securityholders") of up to
3,003,458 shares of common stock, par value $0.01 per share (the
"Common Stock"), of Cover-All Technologies Inc., a Delaware
corporation (the "Company" or "Cover-All"). This Prospectus
Supplement supplements and amends information contained under the
captions "Selling Securityholders" and "Plan of Distribution" in
the Prospectus dated July 10, 1996, as supplemented and amended
to date (the "Prospectus").
From November 1997 through April 1998, Software Investments
Limited ("SIL"), one of the Selling Securityholders under this
Prospectus, sold 1,006,400 of the shares of Common Stock that
were included in the Selling Securityholders table of this
Prospectus. In addition, SIL reported in a Schedule 13D filing
with the Commission under the Securities Act of 1933, as amended
(the "Securities Act") that in May 1998, SIL transferred 330,000
of the shares of Common Stock that were included in the Selling
Securityholders table of this Prospectus to Lambert Company
Limited, a British Virgin Islands corporation, the owner of the
issued capital of SIL as trustee of the Mirror Trust, a Jersey
Discretionary Settlement. Lambert Company Limited transferred
the 330,000 shares to the beneficiary of the Mirror Trust,
Bradbury Corporation, a British Virgin Islands corporation, in
Bradbury Corporation's capacity as trustee of the Mirror Trust,
which thereafter transferred the 330,000 shares to Mark D.
Johnston, a director of the Company and a director of SIL, as a
trust beneficiary. Mr. Johnston then transferred the 330,000
shares to Woodcombe Limited, an Isle of Man company. SIL further
reported in a Schedule 13D filing with the Commission under the
Securities Act that, pursuant to a Mortgage of Shares made
September 23, 1998, Woodcombe Limited pledged such shares to
Australia and New Zealand Banking Group Limited, a company
incorporated in Victoria, Australia ("ANZ Bank"), to secure
payment by a third-party debtor pursuant to a Shortfall Indemnity
entered into between the debtor and ANZ Bank.
To reflect these transfers and to update the Prospectus, the
Prospectus Supplement amends and supplements (1) the Selling
Securityholders table under the caption "Selling Securityholders"
to reflect these transfers by deleting the entry for SIL and
replacing it with the new entries therein, and (2) the
information contained under the caption "Plan of Distribution" by
adding the information therein to the end of such section.
This Prospectus Supplement does not contain complete
information about the resale of the Common Stock by the Selling
Securityholders. Additional information is contained in the
Prospectus. Investors are urged to read both this Prospectus
Supplement and the Prospectus in full. Sales of the Common Stock
may not be consummated unless the investor has received both this
Prospectus Supplement and the Prospectus.
INVESTORS SHOULD CAREFULLY CONSIDER THE INFORMATION SET
FORTH UNDER THE CAPTION "RISK FACTORS," INCLUDING THE RISKS
RELATING TO HISTORICAL AND ANTICIPATED OPERATING LOSSES AND
NEGATIVE CASH FLOW, WHICH BEGINS ON PAGE 12 OF THE PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus Supplement is December 14, 1998
<PAGE>
SELLING SECURITYHOLDERS
COMMON COMMON
STOCK STOCK
OWNED OWNED
PRIOR TO SHARES AFTER
NAME OF SELLING SHAREHOLDER OFFERING OFFERED OFFERING
---------------------------- --------- ------- --------
Software Investments Limited
(1)(2)(3) 2,673,458 2,673,458 0
Woodcombe Limited (4) 330,000 330,000 0
-----------------------------------------
(1) In addition to Software Investments Limited, any of the
persons or entities listed in the "Plan of Distribution"
section may become selling shareholders upon the exercise of
their conversion right or stock option as described therein.
See "Plan of Distribution."
(2) The shares shown for Software Investments Limited include an
aggregate of 106,152 shares issuable upon exercise of the
Additional Warrants. See "Prospectus Summary-Recent
Developments."
(3) Effective as of September 30, 1998, SIL pledged to the
Company 1,192,308 shares of Common Stock as collateral
securing the repayment of a promissory note from Care
Corporation Limited ("Care") to the Company (the "Note").
Care has pledged to the Company 2,500,000 shares of Common
Stock as additional security for the Note repayment. None
of the pledged shares can be sold or transferred by SIL or
Care until released from the pledge, which may occur upon
either the Note principal being repaid or the return of
shares to Care and/or SIL as part of the adjustment made, as
of March 31 and September 30 of each year, to the amount of
pledged collateral in order for the value of the collateral
to be 150% of the outstanding principal balance on the Note.
See "Plan of Distribution."
(4) In addition to Woodcombe Limited, Australia and New Zealand
Banking Group Limited may become a selling shareholder upon
a foreclosure of the stock pledge described in this section.
The Mirror Trust, a Jersey Discretionary Settlement, owns a
majority interest in the issued capital of both SIL and Care.
The ultimate beneficiaries of the Mirror Trust are the Johnston
family interests, one of whom, Mark D. Johnston, is a director of
the Company. Mr. Johnston is an executive director of Care and
SIL. In March 1997, Mark D. Johnston was appointed Chief
Financial Officer of the Company on an interim basis and served
in such a capacity until January 22, 1998.
Mr. Ian J. Meredith, a director of the Company, is also a
director of Care and of Care Systems Corporation, a Delaware
corporation and an affiliate of Care, specializing in software
and services to the workers' compensation industry in the United
States. In 1992, Mr. Meredith, as CEO and Chairman, founded Care
Systems Corporation to develop proprietary software for the
insurance and employer markets. A company owned by a trust for
the benefit of Mr. Meredith's children owns a minority interest
in the issued capital of Care. Mr. Meredith has no ownership in
and exercises no control with respect to such company.
Mr. Earl Gallegos, a director of the Company, is also a
principal shareholder of Earl Gallegos Management, LLC, which
provides management consulting services to businesses. Earl
Gallegos Management, LLC has been a consultant for Care Systems
Corporation, a Delaware corporation and an affiliate of Care, for
the last two years with regard to project management in
connection with the Care Systems' contract for technology
services to the Bureau of Workers' Compensation for the State of
Ohio. Additionally, effective August 1, 1998, Earl Gallegos
Management, LLC was requested to provide consulting services for
the overall management of CARE Information Services, a division
of Care.
-2-
<PAGE>
PLAN OF DISTRIBUTION
On September 30, 1998, Care borrowed a total of $560,000
from the persons and entities listed below. Pursuant to the
Convertible Promissory Note issued by Care to each of these
persons and entities, the holder of the note has the right to
convert the principal and accrued and unpaid interest thereunder
into shares of Common Stock, which would be transferred by Care
or an affiliate of Care to the holder and could consist, in whole
or in part, of the 3,003,458 shares of Common Stock offered by
SIL and Woodcombe Limited under this Prospectus. The right to
convert may be exercised any time beginning December 14, 1998,
and continuing through September 30, 2000. The notes each bear
interest at 9% per year, require quarterly payments of accrued
and unpaid interest, and require payment of the principal balance
on September 30, 2000, if not earlier converted.
In connection with this financing, Care also granted each of
these persons and entities an option to acquire additional shares
of Common Stock, which would be transferred by Care or an
affiliate of Care to the holder and could consist, in whole or in
part, of the 3,003,458 shares of Common Stock offered by SIL and
Woodcombe Limited under this Prospectus.
We are not a party to the notes or the stock options. The
obligations under the notes and the stock options to transfer
shares of common stock are solely Care's obligations.
Of the shares of Common Stock offered under this Prospectus
by SIL and Woodcombe Limited, 1,192,308 are currently pledged by
SIL to the Company as collateral on the Note, and 330,000 are
currently pledged by Woodcombe Limited to ANZ Bank as collateral
on a third-party obligation. None of the pledged shares can be
transferred by SIL or Woodcombe Limited or resold pursuant to
this Prospectus until released from these pledges.
If any of these persons and entities exercise the conversion
right or the stock option, and Care fulfills its obligations with
shares of Common Stock that are part of the 3,003,458 shares
offered by SIL and Woodcombe Limited under this Prospectus, these
persons and entities would also be selling shareholders under
this prospectus as transferees of SIL or Woodcombe Limited. None
of these persons and entities are otherwise affiliated with Care,
SIL or Woodcombe Limited and are not affiliated with the Company.
The following table lists each of these persons and entities and
the number of shares of common stock offered under this
prospectus each would own if (1) each person and entity exercises
the conversion right in full as to the original principal amount
of its note and exercises the stock option in full and (2) Care
transfers shares of common stock constituting part of the
3,003,458 shares offered by SIL and Woodcombe Limited under this
Prospectus. Each person and entity could own additional shares
of Common Stock offered under this Prospectus if it (1) elects to
convert accrued and unpaid interest under the notes or (2) the
market price of the common stock is lower than $1.29 per share at
the time of any note conversion.
COMMON STOCK
POTENTIALLY TO
BE OWNED
AND SALEABLE IN
NAME OFFERING
---- ---------------
Joseph A. Rosin 194,609
Paradigm Group, L.L.C. 207,895
Randall S. Goulding 9,287
Pochter Family Limited 30,184
Partnership
Rodney Zech 2,321
Jerome P. Seiden 46,438
Marshall Katzman 13,931
Horberg Trust 46,438
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TOTAL 551,103
