SCHEDULE 14C
Information Required in Information Statement
SCHEDULE 14C INFORMATION
Proxy Statement Pursuant to Section 14(c) of the Securities
Exchange Act of 1934
(Amendment No. 1)
Check the appropriate box:
[ ] Preliminary Information Statement
[ ] Confidential, for Use of the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ X ] Definitive Information Statement
Heartsoft, Inc.
------------------------------------------------
(Name of Registrant as specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14c-5(g) and 0-11.
1) Title of each class of securities to which transaction
applies:
__________________________________________________________
2) Aggregate number of securities to which transaction
applies:
__________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (Set forth the
amount on which the filing fee is calculated and state how
it was determined):
__________________________________________________________
4) Proposed maximum aggregate value of transaction:
__________________________________________________________
5) Total fee paid:
__________________________________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided
by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1) Amount Previously Paid:
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2) Form, Schedule or Registration Statement No.:
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3) Filing party:
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4) Date Filed:
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<PAGE 2>
HEARTSOFT, INC.
NOTICE OF ACTION TAKEN
BY WRITTEN CONSENT OF MAJORITY STOCKHOLDERS
Holders of a majority of the issued and outstanding stock
entitled to vote of Heartsoft, Inc. (the "Company"), holding
2,702,807 votes out of a total of 5,394,824 votes, or 51%, have
submitted to the Company written consents of stockholders
consenting to the sale by the Company of an undivided 15%
interest in its Heartsoft K-8 Library (the "Software Library"),
following which sale the Company will have effectively disposed
of a total undivided 45% interest in the Software Library (by
means of the previous two sales of an 15% interest each, on
essentially identical terms to those approved by the stockholder
consent).
This Information Statement is being sent to all stockholders of
the Company to inform you that the above action will be taken by
the Company as soon as possible, but no earlier than October 26,
1997.
By Order of the Board of Directors
/s/ Jimmy L. Butler
------------------------
Jimmy L. Butler
Secretary
Broken Arrow, Oklahoma
October 6, 1997
<PAGE 3>
HEARTSOFT, INC.
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is furnished to the stockholders
of Heartsoft, Inc. (the "Company") to advise them of certain
corporate actions described herein, which have been authorized by
the written consent of stockholders owning a majority of the
shares of common stock, $.0005 par value ("Common Stock") of the
Company entitled to vote thereon, pursuant to the requirements of
the General Corporation Law of Delaware and the Securities
Exchange Act of 1934, as amended ("Exchange Act") and the
regulations promulgated thereunder.
As described herein, by unanimous written consent dated
September 19, 1997, the Board of Directors of the Company
authorized the sale of an undivided 15% interest of the Company's
Heartsoft K-8 Library (the "Software Library"). The Board of
Directors fixed September 1, 1997 as the record date for the
determination of stockholders entitled to vote with respect to
the stockholder authorization of the sale. Thereafter, on
September 22, 1997, seven stockholders ("Majority Stockholders")
who are owners of record of 2,702,807 (51%) of the Common Stock,
the Company's only class of voting stock outstanding, executed
and delivered to the Company their written consents to authorize
the sale. Accordingly, all corporate actions necessary to
authorize the sale have been taken.
Pursuant to the regulations promulgated under the Exchange
Act, the authorization of the sale by the Board of Directors and
Majority Stockholders shall not become effective until twenty
days after the Company has mailed this Information Statement to
the stockholders of the Company. Promptly following the
expiration of such twenty day period, the Company intends to
consummate the sale.
This Information Statement is first being sent to
stockholders on or about October 6, 1997.
<PAGE 4>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
As of September 1, 1997 (the record date), the Company had
issued a total of 5,394,824 shares of $.0005 par value Common
Stock. Each share of Common Stock is entitled to one vote on all
matters submitted to a vote by stockholders. While the Company
also had issued and outstanding as of the record date 1,058,500
shares of 12% Convertible Preferred Stock, $.01 par value, none
of such shares are entitled to vote. The consent of the holders
of a majority of all of the outstanding shares of Common Stock
was sought to authorize the sale.
The following table sets forth, as of September 1, 1997, the
aggregate number of shares of Common Stock of the Company owned
of record or beneficially by the only persons who owned of
record, or are known by the Company to own beneficially, more
than 5% of the Company's Common Stock, each officer whose 1996
salary and bonus exceeded $100,000 ("Executive Officers"), and
the name and share ownership of each other director and such
officers and all directors as a group:
Name and address of the 5%
stockholders and each
Executive Officer Number of shares of Percent
and names of other directors owned (1) class
- -----------------------------------------------------------------
Benjamin P. Shell (2) 954,462 17.7
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
Jimmy L. Butler (2) 930,674 17.3
3101 Hemlock Circle
Broken Arrow, Oklahoma 74012
Executive Officers and all directors
as a group (2 persons) 1,885,136 (4) 35.0 (4)
- -------------------------------------
(1) All shares are held beneficially and of record and the owner
has sole voting and investment power with respect thereto,
except as otherwise noted.
(2) Messrs. Shell and Butler are also directors.
TERMS OF THE SALE
The Company will sell an undivided 15% interest in the
Software Library pursuant to the terms of a Software Agreement
("Software Agreement") to be entered into between the Company and
Heartsoft III 1997 Limited Partnership, an Ontario limited
partnership (the "Partnership"). The Partnership's address is
225 Richmond Street West, Suite 400, Toronto, Canada M5V 1W2, and
its general partner is CVILP Management, Inc.
The Software Agreement is virtually identical to two
previous software agreements pursuant to which the Company
conveyed an aggregate undivided 30% interest in the Software
Library previously (to the Heartsoft 1997 Limited Partnership, in
May of 1997, and the Heartsoft II 1997 Limited Partnership in
August of 1997). Pursuant to the terms of the Software
Agreement, the Company will sell the interest in the Software
Library for a maximum of $1,750,000 (Canadian) (currently,
$1,268,750 U.S.), less related expenses, which is payable $262,500
(currently, $190,313 U.S.) at closing, $262,500 ($190,313 U.S.) on
May 31, 1998, with the balance of $1,225,000 (currently, $888,125
U.S.) evidenced by a promissory note (the "Acquisition Note") ,
which is payable from funds generated by the Partnership through
a joint venture with the Company (evidenced by a Joint Venture
Agreement, the terms of which are more completely described
below). A copy of the form of the Software Agreement is included
as Exhibit "A", a copy of the form of the Acquisition Note is
included as Exhibit "B", and a copy of the form of Joint Venture
Agreement is included as Exhibit "C".
<PAGE 5>
The Company has no involvement or association with the
Partnership other than through the Joint Venture Agreement. The
Partnership is being formed by its general partner to acquire the
investment in the Software Library and to take advantage of
certain Canadian tax laws. The general partner of the
Partnership is responsible for its formation and operation. In
the event the funds raised by Partnership are less than the
maximum sought by the general partner, the purchase price to be
paid to the Company will be proportionately reduced.
Pursuant to the Joint Venture Agreement between the Company
and the Partnership, Heartsoft and the Partnership jointly share
in the revenues attributable to the future sales of product
utilizing the Software Library. The Partnership is entitled to
100% of all "gross sales" each year until all interest owed to
the Company under the Acquisition Note is paid in full. After
all interest has been paid, and until all principal and interest
has been paid, the Partnership and the Company each are entitled
to 50% of the "gross margin" from sales attributable to the
interest in the Software Library. The "gross margin" is all
gross revenues generated from the interest in the Software
Library, less returns, discounts and cost of goods sold. After
the Acquisition Note has been paid in full (including all accrued
interest), the Company is entitled to 75% of the Gross Margin,
and the Partnership the remaining 25%.
In addition (and assuming the maximum contributions are
received by the Partnership in its formation), the Company has
the obligation to contribute to the Partnership $166,250
(currently, $120,531 U.S.) upon formation of the Joint Venture,
and an additional $201,250 (currently, $145,906 U.S.) on May 31,
1998, to fund certain expenses of the Joint Venture. Also, after
January 1, 1999, the Company has the option of terminating the
Joint Venture and reacquire the interest in the Software Library
at a price to be negotiated in good faith.
EFFECT OF SALE
The Company made a similar sale of an undivided 15% interest
in the Software Library in May, 1997, and again in August, 1997.
While each transaction was an independent transaction, and at no
time was the Company obligated to sell any additional interest in
the Software Library by reason of these earlier transactions,
because following the proposed transaction the Company will have
conveyed an aggregate 45% interest in the Software Library, the
Company's Board of Directors sought the approval for this sale
from the holders of a majority of the Common Stock, and decided
to provide notice to all other stockholders through this
Information Statement of not only this sale but of the two prior
sales.
<PAGE 6>
While the undivided 15% interest in the Software Library
constitutes only 3.2% of the assets of the Company (based on the
maximum value which could be received by the Company in exchange
pursuant to the Software Agreement), management believes that the
majority of the Company's revenues during the past twelve months
have been derived from its retail sales of products utilizing the
Software Library. As a result of the structure of the sale and
Heartsoft's continued participation in revenues attributable to
sales of the Software Library, until the acquisition notes have
been paid in full from all three sales, the Company's share of
revenue from the Software Library will be reduced from 100% to
approximately 87.4% (55% from the Software Library continued to
be owned outright, and approximately 50% of the 45% interest
shared through the three joint ventures, less payments on the
Acquisition Note following the Partnership's distributions to its
partners). Such calculation does not take into account the
contributions to the three joint ventures which the Company is
obligated to make, but also does not take into account that the
revenue stream to which it is entitled through these joint
ventures is based on a percentage of gross margin (i.e., each of
the three partnerships shares its proportionate part of the
Company's cost of goods sold attributable to the applicable
interest in the Software Library).
By Order of the Board of Directors
/s/ Benjamin P. Shell
--------------------------
Benjamin P. Shell
Chairman of the Board
October 6, 1997
