<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 2000
REGISTRATION NO. 333-43626
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3/A
AMENDMENT NO. 1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SVI HOLDINGS, INC.
(Exact name of Registrant as specified in its charter)
Nevada 84-1131608
--------------------------------- ---------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification Number)
of incorporation or organization)
12707 High Bluff Drive, Suite 335
San Diego, California 92130
(858) 481-4404
-------------------------------------------------------------
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
----------
Barry M. Schechter
Chairman, President and Chief Executive Officer
SVI HOLDINGS, INC.
12707 High Bluff Drive, Suite 335
San Diego, California 92130
(858) 481-4404
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------
Copies to:
Norman L. Smith, Esq.
Harry J. Proctor, Esq.
Solomon Ward Seidenwurm & Smith, LLP
401 B Street, Suite 1200
San Diego, CA 92101
(619) 231-0303
<PAGE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
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 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 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 for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
THE PROSPECTUS IN THIS REGISTRATION STATEMENT ALSO RELATES TO THE
REGISTRATION STATEMENT ON FORM S-18, REGISTRATION NO. 33-36125-D.
<PAGE>
PROSPECTUS
THE INFORMATION CONTAINED IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THESE SECURITIES MAY NOT BE SOLD TO YOU UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING AN OFFER TO BUY
THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED SEPTEMBER 26, 2000
SVI HOLDINGS, INC.
725,000 SHARES
COMMON STOCK
We are offering 25,000 shares that we may issue on the exercise of
outstanding warrants. We previously registered these shares with the SEC in
1990. If the warrants are exercised we will receive $7.00 per share, or up to a
total of $175,000. We will not pay any discounts or commissions on the shares to
be sold by us on exercise of the warrants. We are also registering up to 700,000
shares of our common stock for resale by the selling stockholders identified in
this prospectus. We will not receive any of the proceeds from the sale of shares
by the selling stockholders. Our common stock is listed on the American Stock
Exchange under the symbol "SVI." The closing sale price of our common stock, as
reported on the American Stock Exchange on September 22, 2000, was $5.00 per
share.
The selling stockholders may sell the shares of common stock described
in this prospectus in public or private transactions, on or off the American
Stock Exchange, at prevailing market prices, or at privately negotiated prices.
The selling stockholders may sell shares directly to purchasers or through
brokers or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholders.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 3.
NEITHER THE SECURITIES 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 date of this prospectus is ____________, 2000.
<PAGE>
TABLE OF CONTENTS
Page
----
Prospectus Summary 1
Risk Factors 3
Forward-Looking Statements 16
Recent Developments 16
Use of Proceeds 17
Selling Stockholders 18
Plan of Distribution 19
Legal Matters 20
Experts 20
Where You Can Get More Information 20
YOU SHOULD RELY ON THE INFORMATION INCORPORATED BY REFERENCE OR PROVIDED IN THIS
PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU WITH DIFFERENT
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER OF THESE SECURITIES IN ANY
JURISDICTION WHERE AN OFFER AND SALE 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 COVER PAGE OF THIS PROSPECTUS.
<PAGE>
PROSPECTUS SUMMARY
SVI HOLDINGS, INC.
We are an independent provider of system software for enterprise retail
chains. Our products represent a full suite of products providing retailers with
a complete end-to-end business solution that we call "The Total Point of
Business."
Our solutions consist of the following components:
E-HOST electronic commerce products. Our electronic commerce products
are integrated with our Total Point of Business solution. The products
include:
o E-STORE electronic commerce store front;
o E-CRM customer relationship management; and
o SVI-DIRECT integrated fulfillment.
SVI-POST store systems. SVI-POST is a full business to consumer (B2C)
software infrastructure encompassing a range of integrated store system
products. The SVI-POST system controls all point-of-sale (POS) and in
store systems for traditional "brick and mortar" retailers. Its major
features include:
o operation of a network consisting of the POS
terminals and the corporate head office;
o ability to function on and interconnect with a wide
variety of hardware and software platforms and
generations; and
o user-customizable to the retailer's method of doing
business.
The solution can incorporate a retail customer relationship management
system and a complete performance measurement system with loss
prevention features.
SVI-HOST retail enterprise management solutions. SVI-HOST integrates
the retail head office function by providing a retailing methodology
for retail chains which integrates:
o management planning and forecasting;
o financial functions;
o purchasing;
o warehousing;
o distribution;
o planning;
o ticketing;
o sales auditing and evaluation; and
o multi-channel integrated fulfillment.
Our SVI-HOST solution includes comprehensive business-to-business (B2B)
functions.
PROFESSIONAL SERVICES, including retail business consulting, project
management, application training, technical services and documentation
services.
We sell our solutions through an experienced professional direct sales
force with offices in the United States, United Kingdom and Australia. We
believe our knowledge of the complete needs of multi-store retailers enables us
to help our customers identify the optimal systems for their particular
businesses. The customer relationships we develop build recurring help desk,
maintenance and field service revenues and position us to recommend changes and
upgrades to systems.
1
<PAGE>
We also develop and distribute retail system training products and
general computer courseware and computer skills testing products.
Our executive offices are located at 12707 High Bluff Drive, Suite 335,
San Diego, California 92130, telephone number (858) 481-4404.
THE OFFERING
We recently completed a common stock financing from which we received
gross proceeds of $3 million. We are obligated to register the common stock we
sold so that it can be resold in the public market. We are also registering
additional shares that we may be obligated to issue under a repricing right we
granted in the financing. We will not receive any of the proceeds from the sale
of common stock by the selling stockholders.
We are also offering up to 25,000 shares of common stock issuable upon
exercise of warrants originally issued in an initial public offering in 1990
when we were named Wilson Capital, Inc. These warrants become exercisable for
$7.00 per share upon the effectiveness of a post-effective amendment to the
original registration statement, and remain exercisable for two years following
that date. Under SEC rules, this prospectus relates to the prior registration
statement and fulfills the undertaking to file a post-effective amendment to
that registration statement reflecting material changes when we offer and sell
securities registered on that statement. The warrants permit us to redeem them
for $.01 per warrant three months after the date of this prospectus. We must
give the warrant holders 30 days notice before we redeem the warrants. The
warrant holders may exercise their warrants after receiving the notice and
before the date of the redemption. We intend to redeem the warrants as soon as
we are permitted to do so.
2
<PAGE>
RISK FACTORS
An investment in our shares as offered in this prospectus involves a
high degree of risk. In deciding whether to purchase shares of our common stock,
you should carefully consider the following risk factors, in addition to other
information contained in this prospectus as well as any other documents
incorporated by reference into this prospectus.
RISKS RELATED TO OUR BUSINESS
WE INCURRED A LOSS IN FISCAL YEAR 2000 AND WE MAY NOT BE PROFITABLE IN FISCAL
YEAR 2001. WE NEED TO GENERATE ADDITIONAL REVENUE TO BE PROFITABLE.
We incurred a loss of $4.1 million in the fiscal year ended March 31,
2000. We earned profits in each of our prior four fiscal years ending March 31,
1999, March 31, 1998 (six months), September 30, 1997 and September 30, 1996 of
$5.6 million, $5.8 million, $4.8 million and $0.1 million, respectively. We
earned a profit of $0.5 million in the first quarter of fiscal 2001 compared to
a profit of $1.4 million in the comparable quarter of the prior fiscal year. The
loss in fiscal 2000 was due principally to increased depreciation, amortization
and interest expenses associated with the acquisition of Island Pacific Systems
Corporation effective April 1, 1999, and product development expenses incurred
to integrate our existing products, redevelop our existing products in other
programming languages and develop new products. The increases in our net sales
were not sufficient to offset these increased expenses. We do not expect these
expenses to decrease significantly in the foreseeable future, so we will need to
generate substantial additional revenue to achieve profitability in future
periods.
WE DO NOT EXPECT TO MAINTAIN OUR HISTORICAL RATE OF GROWTH.
Most of our growth has been due to acquisitions. We do not believe our
net sales from continuing operations will continue to grow at the rate at which
they have grown in the past unless we engage in further significant
acquisitions. Our net sales from continuing operations increased 106% in the
fiscal year ended March 31, 2000 compared to the fiscal year ended March 31,
1999. Our net sales decreased 7% in the quarter ended June 30, 2000 compared to
the quarter ended June 30, 1999.
OUR BUSINESS WILL NOT OPERATE EFFICIENTLY AND OUR RESULTS OF OPERATIONS WILL BE
NEGATIVELY AFFECTED IF WE ARE UNABLE TO MANAGE OUR GROWTH EFFECTIVELY.
Our recent growth placed a significant strain on our management and
operations. The rapid growth resulted in substantial expansion in our number of
employees, the scope of our operating systems and the geographic distribution of
our operations and customers during the fiscal years ended March 31, 2000 and
1999. Our ability to compete effectively and to manage future growth, if any,
will depend on our ability to continue to implement and improve operational,
financial and management information systems on a timely basis.
OUR OPERATING RESULTS HAVE FLUCTUATED SIGNIFICANTLY IN THE PAST, AND THEY MAY
CONTINUE TO DO SO IN THE FUTURE, WHICH COULD ADVERSELY AFFECT OUR STOCK PRICE.
Our quarterly operating results have fluctuated significantly in the
past and may fluctuate in the future as a result of several factors, many of
which are outside of our control. If revenue declines in a quarter, our
operating results will be adversely affected because many of our expenses are
relatively fixed. In particular, sales and marketing, product development and
general and administrative expenses do not change significantly with variations
in revenue in a quarter. It is likely that in some future quarter our net sales
or operating results will be below the expectations of public market analysts or
investors. If that happens, our stock price will likely decline.
OUR REVENUE MAY VARY FROM PERIOD TO PERIOD, WHICH MAKES IT DIFFICULT TO PREDICT
FUTURE RESULTS.
Factors outside our control that could cause our revenue to fluctuate
from period to period include:
o the size and timing of individual orders,
particularly with respect to our larger customers;
o general health of the retail industry and the overall
economy;
o technological changes in platforms supporting our
software products;
o customer order deferrals in anticipation of our and
our competitors' new products; and
o market acceptance of new software products.
3
<PAGE>
Factors within our control that could cause revenue to fluctuate from
period to period include:
o changes in our strategies;
o the timing and payments associated with possible
acquisitions; and
o non-recurring sales of assets and technologies.
In particular, we usually ship our software products when contracts are
signed, so order backlog at the beginning of any quarter usually represents only
a small portion of that quarter's expected revenues. As a result, software
license revenues in any quarter are substantially dependent on orders booked and
delivered in that quarter, and this makes it difficult for us to predict
revenues. We have experienced, and we expect to continue to experience, quarters
or periods where individual software license or service orders are significantly
larger than our typical software license or service orders. Because of the
nature of our products, we may get one or more large orders in one quarter from
a customer and then no orders the next quarter. As a result, our revenue may
vary significantly from quarter to quarter.
OUR EXPENSES MAY VARY FROM PERIOD TO PERIOD, WHICH COULD AFFECT QUARTERLY
RESULTS AND OUR STOCK PRICE.
Many of our expenses do not vary with our revenue. Factors that could
cause our expenses to fluctuate from period to period include:
o the extent of marketing and sales efforts necessary
to promote and sell our products;
o the timing and extent of our product development
efforts; and
o the timing of personnel hiring.
If we incur such additional expenses in a quarter in which we do not
experience increased revenue, our results of operations would be adversely
affected and we may incur losses for that quarter.
IT IS DIFFICULT TO EVALUATE OUR PERFORMANCE BASED ON PERIOD TO PERIOD
COMPARISONS OF OUR RESULTS.
The many factors which can cause revenues and expenses to vary make
meaningful period to period comparisons of our results difficult. Also, we have
engaged in a number of significant acquisitions and dispositions of businesses,
so some prior period results do not include the same operations as current
comparable periods. We do not believe period to period comparisons of our
financial performance are necessarily meaningful, and you cannot rely on them as
an indication of our future performance.
OUR SALES CYCLES ARE LENGTHY, WHICH MAKES IT DIFFICULT FOR US TO PREDICT
REVENUES AND BUDGET EXPENSES.
Our sales cycles vary substantially from customer to customer, but
typically range from four to twelve months. Our software products are complex
and perform or directly affect mission-critical functions across many different
functional and geographic areas of the retail enterprise. In many cases, our
customers must change established business practices when they install our
software. Our sales staff must dedicate significant time consulting with a
potential customer concerning the substantial technical and business concerns
associated with implementing our products. The purchase of our products is often
discretionary, so lengthy sales efforts may not result in a sale. Moreover, it
is difficult to predict when a sale will occur.
WE MAY EXPERIENCE SEASONAL DECLINES IN SALES, WHICH COULD CAUSE OUR OPERATING
RESULTS TO FALL SHORT OF EXPECTATIONS IN SOME QUARTERS.
We may experience slower sales of our software products from October
through December of each year as a result of retailers' focus on the holiday
retail shopping season. This can negatively affect revenues in our third fiscal
quarter and in other quarters, depending on our sales cycles.
4
<PAGE>
DEMAND FOR OUR RETAIL SOFTWARE SYSTEMS DECLINED IN FISCAL YEAR 2000, AND THIS
TREND MAY NOT HAVE REVERSED.
During the last six months of calendar year 1999 we experienced a
decline in overall demand for our retail software systems. We believe this
decline in demand was due to deferred purchasing decisions related to the
millennium change and anticipation of new products to be announced in early
calendar year 2000. Fewer sales cycles commenced during that time, so the
decline in demand continued to negatively affect sales in the quarters ended
March 31, 2000 and June 30, 2000. We believe the decline in demand reversed in
early calendar year 2000 after concerns over the millennium change subsided and
after new products from us and our competitors were announced in early 2000.
Nonetheless, our typically long sales cycles make it difficult to evaluate
whether and when sales will improve, or whether the decline in demand was due to
other factors which might continue to negatively affect sales.
COLLECTION OF A LARGE NOTE RECEIVABLE ASSET DEPENDS ON THE VALUE OF A THINLY
TRADED STOCK. IF THE STOCK DECLINES IN VALUE, WE MAY HAVE SEVERE LIQUIDITY
PROBLEMS AND WE MAY INCUR SUBSTANTIAL LOSSES.
Our June 30, 2000 balance sheet includes a $14.4 million note
receivable which we may not collect. This note is secured by approximately 11%
of the outstanding common stock of Integrity Software, Inc. We do not believe
the obligor under the note has any assets other than the Integrity shares
securing the note. The obligor is an affiliate of Integrity, and its ability to
sell the Integrity shares to repay the note is limited by law and by market
conditions. Our ability to sell the Integrity shares upon foreclosure of the
note will be similarly limited.
We may have to impair or write off the note receivable asset if the
value of the Integrity shares declines before repayment of the note. Integrity's
shares are quoted on the National Quotation Bureau Pink Sheets, but the trading
volume is extremely limited. The quoted price of Integrity from July 1, 2000 to
September 15, 2000 ranged from low of $5.50 to high of $8.00, which represents a
market capitalization of between $76.8 million and $111.7 million. Because of
the limited trading volume and because these quotations may not represent actual
transactions, we do not believe the prices quoted on the Pink Sheets represent
the fair value of the Integrity shares securing our note. We engaged Business
Valuation Services, Inc. to perform a valuation of the Integrity shares securing
the note at June 30, 2000. That valuation supported the $14.4 million carrying
value of the note on our June 30, 2000 balance sheet.
If experience impairment in the value of the note, our assets will
decline and we will incur a charge in the quarter in which the impairment occurs
equal to the amount of the impairment. This will adversely affect our results
for that quarter, and may cause our stock price to decline.
If we cannot collect the note, we may experience severe liquidity
problems as other fixed obligations come due.
WE HAVE SUBSTANTIAL DEBT WHICH WE MAY NOT BE ABLE TO SERVICE AND WHICH MAY
RESULT IN A LENDER CONTROLLING OUR ASSETS IN AN EVENT OF DEFAULT.
We have a substantial amount of both short-term and long-term debt.
Most of this debt related to our acquisition of Island Pacific. At August 31,
2000 we owed (a) $4.55 million to Union Bank of California, N.A. under a term
loan due April 1, 2001; (b) up to $3 million under a revolving line of credit
with Union Bank due April 1, 2001; (c) $10 million to Softline Limited, our
majority stockholder, with a due date of August 1, 2001; and (d) $1.4 million to
three entities (including a major stockholder) with no stated maturity dates.
The Union Bank loans are secured by all of our stock in and all of the assets of
our U.S. retail software subsidiaries, and 65% of our stock in our Australian
retail software subsidiary. See "Management's Discussion and Analysis of
Financial Condition" in our March 31, 2000 Form 10-K for further discussion of
the terms of these loans.
The substantial amount of our debt impacts us in a number of ways:
o We have to dedicate a substantial portion of cash
flow from operations to monthly principal and
interest payments on the debt, which reduces funds
available for other purposes.
o We may not have sufficient funds to pay monthly
principal and interest payments.
o The existing debt may make it more difficult or
impossible for us to obtain additional financing if
needed for working capital or other purposes.
5
<PAGE>
Any or all of these factors could cause our stock price to decline.
If we do not reduce the principal of our Union Bank term loan beyond
required monthly payments, we will owe $3.15 million plus the outstanding
balance on our line of credit (up to $3 million) to Union Bank on April 1, 2001.
Similarly, if we do not prepay our loan from Softline, we will owe $10 million
to Softline on August 1, 2001. Our current operations are unlikely to generate
sufficient cash to make these principal payments. We will therefore have to
refinance one or both loans or raise other debt or equity capital. We currently
have no commitments for such financings, and funds may not be available on
acceptable terms and conditions, or at all.
If we cannot refinance the Union Bank loans or raise capital before
April 1, 2001, Union Bank may take control of the substantial majority of our
assets. This would very substantially reduce the value of your stock.
FLUCTUATIONS IN INTEREST RATES COULD INCREASE OUR INTEREST EXPENSE AND REDUCE
CASH AVAILABLE FOR OTHER PURPOSES.
Our indebtedness with Union Bank and other indebtedness requires us to
pay interest based on a rate which floats with market interest rates. If market
interest rates increase, our interest expense will increase, which will reduce
our earnings and reduce cash available for other purposes. At September 15,
2000, our total borrowings subject to variable interest rates was $5.7 million.
Based on this balance, a one percent increase in interest rates would cause a
change in interest expense of approximately $57,000 on an annual basis.
OBTAINING ADDITIONAL CAPITAL TO REPAY DEBT, FUND OUR OPERATIONS AND FINANCE OUR
GROWTH COULD IMPAIR THE VALUE OF YOUR INVESTMENT.
In addition to the need to raise capital to repay debt, we may need to
raise further capital to:
o support unanticipated capital requirements;
o take advantage of acquisition or expansion
opportunities;
o continue our current product development efforts;
o develop new products or services; or
o address working capital needs.
We may raise this capital through public or private equity offerings or
debt financings. Our future capital requirements depend on many factors
including our research, development, sales and marketing activities. We do not
know whether additional financing will be available when needed, or available on
terms acceptable to us. If we cannot raise needed funds for the above purposes
on acceptable terms, we may be forced to curtail some or all of the above
activities and we may not be able to grow our business or respond to competitive
pressures or unanticipated developments.
To the extent we raise additional capital by issuing equity securities,
our stockholders may experience substantial dilution and the new equity
securities may have greater rights, preferences or privileges than our existing
common stock.
WE HAVE RELIED ON CAPITAL CONTRIBUTED BY RELATED PARTIES, AND SUCH CAPITAL MAY
NOT BE AVAILABLE IN THE FUTURE.
Our cash from operations has not been sufficient to meet our capital
needs, and we have relied on capital from related parties. Softline loaned us
$10 million to make a required principal payment on our Union Bank term loan in
July 2000. Also, during our last fiscal year, Softline exercised options to
purchase shares of SVI common stock for net proceeds of $4.8 million. We used
these proceeds to finance a portion of our operations, including interest
payments on debt. In June 1999 we borrowed $2.3 million from three of our
stockholders to pay a portion of the purchase price for Island Pacific.
6
<PAGE>
We may not be able to obtain capital from related parties in the
future. Neither Softline nor any other stockholders or related parties are under
any obligation to continue to provide cash to meet our future liquidity needs.
Moreover, Softline's ability to continue to finance our liquidity needs is
limited by Softline's cash resources and by South African currency exchange
laws.
INTANGIBLE ASSETS REPRESENT 65% OF OUR TOTAL ASSETS AND MORE THAN OUR
STOCKHOLDERS' EQUITY. WE MAY HAVE TO IMPAIR OR WRITE-OFF THESE ASSETS, WHICH
WILL CAUSE A CHARGE TO EARNINGS AND COULD MAKE IT MORE DIFFICULT TO OBTAIN
FINANCING.
The large percentage of our assets and stockholders' equity represented
by goodwill, capitalized software and other intangible assets makes us
susceptible to very large impairments and one-time write-offs. Consistent with
generally accepted accounting principals, we evaluate our long-lived assets,
including our intangible assets, for impairment whenever events or changes in
circumstances indicate that the carrying amount of the asset may not be
recoverable. If we determine an asset is impaired, we will write-off the
difference between the carrying value and the fair value of the asset. At each
balance sheet date, we also evaluate on a product-by-product basis the
unamortized capital cost of computer software compared to the net realizable
value of that product. We will write-off any excess in unamortized capital costs
of a computer software product over the product's net realizable value.
Any impairment of an asset will be a charge against earnings for the
quarter in which it occurs. These impairments can cause very large one-time
losses, which could cause our stock price to decline. Such impairments will also
reduce our assets, as well as the ratio of our assets to our liabilities. These
balance sheet effects could make it more difficult for us to obtain capital, and
could make the terms of capital we do obtain more unfavorable to our existing
stockholders.
ACQUISITIONS MAY ADVERSELY AFFECT OUR BUSINESS.
We regularly review acquisition prospects that would complement our
existing product offerings, augment our market coverage, secure supplies of
critical materials or enhance our technological capabilities. Acquisitions or
investments could result in a number of financial consequences, including:
o potentially dilutive issuances of equity securities;
o large one-time write-offs;
o reduced cash balances and related interest income;
o higher fixed expenses which require a higher level of
revenues to maintain gross margins;
o the incurrence of debt and contingent liabilities;
and
o amortization expenses related to goodwill and other
intangible assets.
Furthermore, acquisitions involve numerous operational risks,
including:
o difficulties in the integration of operations,
personnel, technologies, products and the information
systems of the acquired companies;
o diversion of management's attention from other
business concerns;
o diversion of resources from our existing businesses,
products or technologies;
o risks of entering geographic and business markets in
which we have no or limited prior experience; and
o potential loss of key employees of acquired
organizations.
Our inability to overcome problems encountered in connection with such
acquisitions could divert the attention of management, utilize scarce corporate
resources and harm our business. In addition, we are unable to predict whether
or when any prospective acquisition candidate will become available or the
likelihood that any acquisition will be consummated.
7
<PAGE>
WE ARE IN DISCUSSIONS WITH OUR MAJORITY STOCKHOLDER CONCERNING A POTENTIAL
BUSINESS COMBINATION WHICH COULD SUBSTANTIALLY ALTER OUR BUSINESS AND OUR
MANAGEMENT AND DILUTE YOUR STOCK. WE MAY NOT MANAGE THE CONFLICTS OF INTEREST TO
THE BENEFIT OF OUR MINORITY STOCKHOLDERS.
We are currently engaged in preliminary discussions with Softline
concerning a business combination. Any business combination between SVI and
Softline will have a material impact on our operations and future prospects. Any
business combination would likely cause significant dilution of your percentage
in the combined enterprise. The transaction, if consummated, will be subject to
all of the risks inherent in any business combination. The transaction would
significantly increase our international operations and thereby increase the
risks associated with such operations. The transaction, if consummated, will
introduce to our business all of the risks associated with Softline's business.
We have not yet evaluated all of these potential risk factors. In addition, a
transaction with Softline could result in a change in management structure or
personnel, which could in turn adversely affect future operations.
Because Softline controls us, any business combination between SVI and
Softline will involve inherent conflicts of interest. We have not yet determined
how we will address and manage these conflicts of interest. Our procedures for
addressing and managing the conflicts of interest may not give you the same
protections you would have in an arms' length business combination. The rules of
the American Stock Exchange will likely require us to obtain the approval of our
stockholders for a business combination with Softline, but Softline would
control the outcome of that vote. We have not yet determined whether we will
seek the approval of a majority of our disinterested stockholders, and if so,
which stockholders other than Softline might be considered interested.
The discussions are in a preliminary stage and no terms for the
transaction have been determined. Any transaction would be subject to regulatory
approvals in the United States and South Africa. See "Risks Relating to our
Relationship with Softline" and "Recent Developments" below.
FOREIGN CURRENCY FLUCTUATIONS MAY IMPAIR OUR COMPETITIVE POSITION AND AFFECT OUR
OPERATING RESULTS.
Fluctuations in currency exchange rates affect the prices of our
products, our expenses and our earnings. Approximately 37% of our net sales were
outside North America, principally in Australia and the United Kingdom, in the
year ended March 31, 2000. Most of our international sales are denominated in
the local currency rather than U.S. dollars. In particular, sales denominated in
Australian dollars accounted for 23% of our net sales in fiscal 2000.
If there is a significant devaluation of the currency of Australia or
another specific country, the prices of our products will increase relative to
that country's currency and our products may be less competitive in that
country. While some of our expenses associated with international product sales
are also denominated in the local currency, many of our expenses, such as
corporate level administrative overhead and product development, are denominated
in U.S. dollars. When accounts receivable and accounts payable arising from
international sales and services are converted to U.S. dollars, the resulting
gain or loss contributes to fluctuations in our operating results. Foreign
currency losses will therefore negatively affect profitability or increase
losses. We do not hedge against foreign currency exchange rate risks.
IN WE CANNOT MANAGE ADDITIONAL CHALLENGES PRESENTED BY OUR INTERNATIONAL
OPERATIONS, OUR REVENUES AND PROFITABILITY MAY SUFFER.
A substantial portion of our net sales are outside the United States
and part of our growth strategy depends on increasing international sales. If we
cannot increase our international sales, we may not be able to achieve our
business objectives. We have already devoted significant resources to, and
expect to continue to devote resources to, our expansion into foreign countries,
particularly to expand our sales force. To increase international sales in the
future, we must establish additional foreign operations, hire additional
personnel and further exploit strategic relationships. The countries in which we
operate may not have a sufficient pool of qualified personnel from which to
hire, and we may not be successful at hiring, training or retraining personnel.
8
<PAGE>
There are many risks inherent in our international business activities.
For example:
o we are subject to many foreign regulatory
requirements which may change without notice;
o our expenses related to sales and marketing and
product development may increase;
o localizing products for foreign countries involves
costs and risks of non-acceptance;
o we are subject to various export restrictions, and
export licenses may not always be available;
o we are subject to foreign tariffs and other trade
barriers;
o we may become subject to higher tax rates or taxation
in more than one jurisdiction;
o some of the foreign countries that we deal with
suffer from political and economic instability;
o we may have less protection for our intellectual
property rights;
o consulting, maintenance and service revenues may have
lower margins in foreign countries;
o we may not be able to move earnings back to the
United States;
o it can be more difficult to staff and manage our
foreign operations; and
o we may have difficulty collecting accounts
receivable.
Any of these factors could negatively affect our financial performance
and results of operations and cause our stock price to decline.
OUR CUSTOMERS ARE CONCENTRATED, SO THE LOSS OF ONE OR MORE KEY CUSTOMERS COULD
SIGNIFICANTLY REDUCE OUR REVENUES AND PROFITS.
We have derived, and believe that we will continue to derive, a
significant portion of our revenues from a limited number of large customers.
During the fiscal year ended March 31, 2000, Toys "R" Us accounted for 15% of
our net sales. We continue to provide services and support to Toys "R" Us. Our
customers, including Toys "R" Us, may buy less of our products or services
depending on their own technological developments and internal budget cycles. A
major customer in one year may not purchase any of our products or services in
another year, which may negatively affect our financial performance.
IF WE LOSE THE SERVICES OF ANY MEMBER OF OUR SENIOR MANAGEMENT OR KEY TECHNICAL
AND SALES PERSONNEL, OR IF WE ARE UNABLE TO RETAIN OR ATTRACT ADDITIONAL
TECHNICAL PERSONNEL, OUR ABILITY TO CONDUCT AND EXPAND OUR BUSINESS WILL BE
IMPAIRED.
We are heavily dependent on Barry M. Schechter, our Chairman and CEO,
and on other key management personnel. We also believe our future success will
depend largely upon our ability to attract and retain highly-skilled software
programmers, managers, and sales and marketing personnel. Competition for
personnel is intense, particularly in international markets. The software
industry is characterized by a high level of employee mobility and aggressive
recruiting of skilled personnel. We compete against numerous companies,
including larger, more established companies, for our personnel. We may not be
successful in attracting or retaining skilled technical and managerial
personnel. The loss of key employees or our inability to attract and retain
other qualified employees could negatively affect our financial performance and
cause our stock price to decline.
TWO OF OUR EXECUTIVES IN CHARGE OF RETAIL OPERATIONS SUBSIDIARIES RECENTLY
RETIRED AND THEIR REPLACEMENTS HAVE SERVED IN THEIR CURRENT CAPACITIES FOR ONLY
A SHORT TIME.
Mark Wulff, CEO of our SVI Retail division, and Colin Chapman, Managing
Director of our SVI Retail (Australia) division, have served in their current
roles for only a short time. Although each worked for the associated business
for many years prior to assuming his current role, one or both may not have the
experience or skill to manage these business units. Our future revenues and
earnings will significantly depend on the performance of Mr. Wulff in
particular.
WE ARE DEPENDENT ON THE RETAIL INDUSTRY, AND IF ECONOMIC CONDITIONS IN THE
RETAIL INDUSTRY DECLINE, OUR REVENUES MAY DECLINE.
Our future growth is critically dependent on increased sales to the
retail industry. As a result of our acquisitions of Applied Retail Solutions and
Island Pacific and our sale of IBIS Systems Limited, we now derive the
substantial majority of our revenues from the licensing of software products and
the performance of related services to the retail industry.
9
<PAGE>
The success of our customers is directly linked to economic conditions in the
retail industry, which in turn are subject to intense competitive pressures and
are affected by overall economic conditions. The retail industry may be
consolidating, and it is uncertain how consolidation will affect the industry.
The traditional "brick and mortar" retailers that we have historically served
now face substantial competition from Internet-based retailers which may
negatively impact their ability to purchase our products and services.
Demand for our products and services could decline in the event of
consolidation, instability or downturns in the retail industry. This decline
would likely cause reduced sales and could impair our ability to collect
accounts receivable. The result would be reduced earnings and weakened financial
condition, each or both of which would likely cause our stock price to decline.
OUR GROWTH WILL SUFFER IF WE DO NOT EXPAND OUR PRODUCT BASE AND MARKET
PENETRATION TO THE INTERNET.
Our growth depends on market acceptance of our e-commerce products and
our ability to develop new products which meet market acceptance. The Internet
is dramatically impacting the retail industry, and the market for these
e-commerce products is new and quickly evolving. Our competitors are
aggressively pursing this sector. We expect significant growth in e-commerce
over the Internet; however, we are unable to predict the full impact this
emerging form of commerce will have on the traditional "brick and mortar" retail
operations we have historically served. If the market for our web-enabled
products fails to develop, develops more slowly than expected or becomes
saturated with competitors, or if our e-commerce products are not accepted in
the marketplace, our business, operating results and financial condition could
be negatively impacted and our stock price could decline.
OUR GROWTH IS DEPENDENT ON DEVELOPING OUR DIRECT SALES OR EXPANDING INTO OTHER
DISTRIBUTION CHANNELS. OTHER DISTRIBUTION CHANNELS CREATES RISKS THAT WE MAY NOT
MANAGE SUCCESSFULLY.
In order to grow, we may find it necessary to expand our distribution
channels beyond direct sales, which constitute the majority of our sales. If we
begin to use resellers, they may compete with our direct sales. We may not be
able to attract resellers that will be able to market our products effectively
and that will be qualified to provide timely and cost-effective customer support
and service. Conflicts among resellers may adversely affect sales. Even if we
are able to attract resellers, most reseller agreements can be terminated by
either party without cause. If we cannot expand our direct sales, develop
additional distribution channels, or manage any potential channel conflicts, we
may not be able to grow or our growth may slow.
WE RELY ON THIRD-PARTY SUPPLIERS, AND A DISRUPTION IN SUPPLY WOULD NEGATIVELY
IMPACT OUR ABILITY TO MEET CUSTOMER DEMANDS.
We rely on technology licensed from third parties, including Microsoft
for the Windows operating system, IBM for the OS/400 operating system and the
Websphere Commerce Suite, and Lansa Inc. for integrated AS/400 software
development tools. Any termination of, or significant disruption in, our ability
to license these products would adversely affect our business and revenues. Our
licenses from each of these providers are non-exclusive. In addition, any
technical problems or errors with current or future versions of these licensed
products could cause errors or technical problems in our products, which could
result in loss of sales, delays in or elimination of market acceptance, damage
to our brand or to our reputation, product returns, increased costs, and
diversion of development resources, product redesigns and increased warranty and
servicing costs.
IF WE CANNOT EXPAND INTO CERTAIN MARKET SECTORS, WE MAY NOT BE ABLE TO GROW OUR
BUSINESS.
In order to grow our business, we need to expand our customer base and
the types of retailers we serve. We currently serve only the specialty goods,
mass merchants and department store markets. Our products and services may not
gain acceptance in or meet the expectations and needs of other sectors.
10
<PAGE>
WE MAY NOT BE ABLE TO MAINTAIN OR IMPROVE OUR COMPETITIVE POSITION BECAUSE OF
THE INTENSE COMPETITION IN THE RETAIL SOFTWARE INDUSTRY.
We conduct business in an industry characterized by intense
competition. Most of our competitors are very large companies with an
international presence. We must also compete with smaller companies which have
been able to develop strong local or regional customer bases. Many of our
competitors and potential competitors are more established, benefit from greater
name recognition and have significantly greater resources than us. Our
competitors may also have lower cost structures and better access to the capital
markets than us. As a result, our competitors may be able to respond more
quickly than we can to new or emerging technologies and changes in customer
requirements. Our competitors may:
o introduce new technologies that render our existing
or future products obsolete, unmarketable or less
competitive;
o make strategic acquisitions or establish cooperative
relationships among themselves or with other solution
providers, which would increase the ability of their
products to address the needs of our customers; and
o establish or strengthen cooperative relationships
with our current or future strategic partners, which
would limit our ability to sell products through
these channels.
We could be forced to reduce prices and suffer reduced margins and
market share due to increased competition from providers of products similar to,
or competitive with, our products, or from service providers that provide
services similar to our services. Competition could also render our technology
obsolete. For a further discussion of competitive factors in our industry, see
"Competition" in our March 31, 2000 Form 10-K.
OUR MARKETS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE, SO OUR SUCCESS DEPENDS
HEAVILY ON OUR ABILITY TO DEVELOP AND INTRODUCE NEW PRODUCTS.
The retail software industry is characterized by rapid technological
change, evolving standards and wide fluctuations in product supply and demand.
We must cost-effectively develop and introduce new products that keep pace with
technological developments to compete. If we do not gain market acceptance for
our existing or new products or if we fail to introduce progressive new products
in a timely or cost-effective manner, our financial performance will suffer.
The success of product enhancements and new products depends on a
variety of factors, including product selection and specification, timely and
efficient completion of product design, and effective sales and marketing
efforts. In developing new products and services, we may:
o fail to respond to technological changes in a timely
or cost-effective manner;
o encounter products, capabilities or technologies
developed by others that render our products and
services obsolete or non-competitive or that shorten
the life cycles of our existing products and
services;
o experience difficulties that could delay or prevent
the successful development, introduction and
marketing of these new products and services; or
o fail to achieve market acceptance of our products and
services.
The life cycles of our products are difficult to estimate, particularly
in the emerging electronic commerce market. As a result, new products and
enhancements, even if successful, may become obsolete before we recoup our
investment.
OUR PROPRIETARY RIGHTS OFFER ONLY LIMITED PROTECTION AND OUR COMPETITORS MAY
DEVELOP PRODUCTS SUBSTANTIALLY SIMILAR TO OUR PRODUCTS AND USE SIMILAR
TECHNOLOGIES WHICH MAY RESULT IN THE LOSS OF CUSTOMERS. WE MAY HAVE TO BRING
COSTLY LITIGATION TO PROTECT OUR PROPRIETARY RIGHTS.
Our success and competitive position is dependent in part upon our
ability to develop and maintain the proprietary aspects of our intellectual
property. Our intellectual property includes our trademarks, trade secrets,
copyrights and other proprietary information. Our efforts to protect our
intellectual property may not be successful. Effective copyright and trade
secret protection may be unavailable or limited in some foreign countries. We
hold no patents. Consequently, others may develop, market and sell products
substantially equivalent to our products, or utilize technologies similar to
those used by us, so long as they do not directly copy our products or otherwise
infringe our intellectual property rights.
11
<PAGE>
We may find it necessary to bring claims or litigation against third
parties for infringement of our proprietary rights or to protect our trade
secrets. These actions would likely be costly and divert management resources.
These actions could also result in counterclaims challenging the validity of our
proprietary rights or alleging infringement on our part. The ultimate outcome of
any litigation will be difficult to predict.
OUR PRODUCTS MAY INFRINGE ON THE PROPRIETARY RIGHTS OF THIRD PARTIES, WHICH MAY
EXPOSE US TO LITIGATION.
We cannot be certain that we will not become involved in litigation
involving patents or proprietary rights. Patent and proprietary rights
litigation entails substantial legal and other costs, and we do not know if we
will have the necessary financial resources to defend or prosecute our rights in
connection with any such litigation. Responding to and defending claims related
to our intellectual property rights, even ones without merit, can be time
consuming and expensive and can divert management's attention from other
business matters. In addition, these actions could cause product shipment delays
or require us to enter into royalty or license agreements. Royalty or license
agreements, if required, may not be available on terms acceptable to us, if they
are available at all. Any or all of these outcomes could have a material adverse
effect on our business, operating results and financial condition.
IF OUR PRODUCTS ARE NOT COMPATIBLE WITH HARDWARE OR SOFTWARE, OUR SALES COULD
SUFFER.
As in other sectors of the computer industry, software sales can often
be driven by advances in hardware or operating system technology. Accordingly,
if providers do not, or are unable to, continue to provide state-of-the-art POS
and head office hardware which runs our software, our financial performance may
suffer. We do not develop hardware or operating systems, so we are dependent
upon third-party providers to develop the hardware platforms and operating
systems that run our software.
DEVELOPMENT AND MARKETING OF OUR PRODUCTS DEPENDS ON STRATEGIC RELATIONSHIPS
WITH OTHER COMPANIES. OUR EXISTING STRATEGIC RELATIONSHIPS MAY NOT ENDURE AND
MAY NOT DELIVER THE INTENDED BENEFITS, AND WE MAY NOT BE ABLE TO ENTER INTO
FUTURE STRATEGIC RELATIONSHIPS.
Since we do not possess all of the technical and marketing resources
necessary to develop and market our products to their target markets, our
business strategy substantially depends on our strategic relationships. While
some of these relationships are governed by contracts, most are non-exclusive
and all may be terminated on short notice by either party. If these
relationships terminate or fail to deliver the intended benefits, our product
development and marketing efforts will be impaired and our revenues may decline.
We may not be able to enter into new strategic relationships which could put us
at a disadvantage to those of our competitors which do successfully exploit
strategic relationships.
OUR PRIMARY COMPUTER AND TELECOMMUNICATIONS SYSTEMS ARE IN A LIMITED NUMBER OF
GEOGRAPHIC LOCATIONS, WHICH MAKES THEM MORE VULNERABLE TO DAMAGE OR
INTERRUPTION. THIS DAMAGE OR INTERRUPTION COULD HARM OUR BUSINESS.
Substantially all of our primary computer and telecommunications
systems are located in two geographic areas. These systems are vulnerable to
damage or interruption from fire, earthquake, water damage, sabotage, flood,
power loss, technical or telecommunications failure or break-ins. While we have
business interruption insurance, this coverage may not adequately compensate us
for our lost business and will not compensate us for any liability we incur due
to our inability to provide services to our customers. Although we have
implemented network security measures, our systems are vulnerable to computer
viruses, physical or electronic break-ins and similar disruptions. These
disruptions could lead to interruptions, delays, loss of data or the inability
to service our customers. Any of these occurrences could impair our ability to
serve our customers and harm our business.
12
<PAGE>
IF PRODUCT LIABILITY LAWSUITS ARE SUCCESSFULLY BROUGHT AGAINST US, WE MAY INCUR
SUBSTANTIAL LIABILITIES AND MAY BE REQUIRED TO LIMIT COMMERCIALIZATION OF OUR
PRODUCTS.
Our business exposes us to product liability risks. Our software
products are highly complex and sophisticated and they may occasionally contain
design defects or software errors that could be difficult to detect and correct.
In addition, implementation of our products may involve customer-specific
customization by us or third parties, and may involve integration with systems
developed by third parties. These aspects of our business create additional
opportunities for errors and defects in our products and services. Problems in
the initial release may be discovered only after the product has been
implemented and used over time with different computer systems and in a variety
of applications and environments. Our products have in the past contained errors
that were discovered after they were sold. Our customers have also occasionally
experienced difficulties integrating our products with other hardware or
software in their enterprise.
We are not currently aware of any defects in our products that might
give rise to future lawsuits. However, errors or integration problems may be
discovered in the future. Such defects, errors or difficulties could result in
loss of sales, delays in or elimination of market acceptance, damage to our
brand or to our reputation, product returns, increased costs and diversion of
development resources, product redesigns and increased warranty and servicing
costs. In addition, third-party products, upon which our products are dependent,
may contain defects which could reduce or undermine entirely the performance of
our products.
Our customers typically use our products to perform mission-critical
functions. As a result, the defects and problems discussed above could result in
significant financial or other damage to our customers. Although our sales
agreements with our customers typically contain provisions designed to limit our
exposure to potential product liability claims, we do not know if these
limitations of liability are enforceable or would otherwise protect us from
liability for damages to a customer resulting from a defect in one of our
products or the performance of our services. Our product liability insurance may
not cover all claims brought against us. Any product liability or other claims
brought against us, if successful and of sufficient magnitude, could negatively
affect our financial performance and cause our stock price to decline.
RISKS RELATING TO OUR RELATIONSHIP WITH SOFTLINE
SOFTLINE LIMITED OWNS A MAJORITY OF OUR COMMON STOCK, SO WE ARE CONTROLLED BY
SOFTLINE AND OUR OTHER STOCKHOLDERS ARE UNABLE TO AFFECT THE OUTCOME OF
STOCKHOLDER VOTING.
Softline Limited owns approximately 56% of our outstanding common
stock. Softline has nine directors, only four of which are on our board of
directors. Only one of our executive officers is on Softline's board. We
therefore do not control Softline. You will not be able to affect the outcome of
any stockholder vote so long as Softline owns a majority of our common stock. As
a result, Softline will control all matters affecting us, including:
o the election of all of our directors;
o the allocation of business opportunities that may be
suitable for Softline and us;
o any determinations with respect to mergers or other
business combinations involving us;
o the acquisition or disposition of assets or
businesses by us;
o debt and equity financing, including future issuance
of our common stock or other securities;
o amendments to our charter documents;
o the payment of dividends on our common stock; and
o determinations with respect to our tax returns.
Moreover, even if Softline's ownership of our common stock declines
below a majority, current management controls or has the right to acquire
approximately 20% of our common stock. It is therefore unlikely that you will
have any effective voting control over actions which are approved by both
Softline and current management.
13
<PAGE>
OUR BUSINESS MAY BE DISADVANTAGED OR HARMED IF SOFTLINE'S INTERESTS RECEIVE
PRIORITY OVER OUR INTERESTS.
Conflicts of interest have and will continue to arise between Softline
and us in a number of areas relating to our past and ongoing relationships.
Conflicts may not be resolved in a manner that is favorable to us, and such
conflicts may result in harmful consequences to our business or prospects.
SOME OF OUR DIRECTORS AND EXECUTIVE OFFICERS ARE ALSO DIRECTORS OR EXECUTIVE
OFFICERS OF SOFTLINE, WHICH COULD CAUSE SOFTLINE'S INTERESTS TO RECEIVE PRIORITY
OVER OUR INTERESTS.
Ivan M. Epstein, Steven Cohen and Gerald Rubenstein, each of whom is
one of our directors, and Barry M. Schechter, who is our Chairman and CEO and a
director, are also directors or executive officers of Softline. Because our
financial results are included in Softline's consolidated financial statements,
these directors and executive officers may consider not only the short-term and
long-term impact of financial and operating decisions on us, but also the impact
of these decisions on Softline's consolidated financial results and its
stockholders. In some instances, the impact of these decisions could be
disadvantageous to us while advantageous to Softline.
SOFTLINE'S CONTROL OF OUR COMPANY COULD MAKE IT DIFFICULT FOR ANOTHER COMPANY TO
ACQUIRE US, WHICH COULD DEPRESS OUR STOCK PRICE.
Softline's control over our management and affairs, and over potential
business combinations, could discourage others from initiating any potential
merger, takeover or other change of control transaction that may otherwise be
beneficial to our business or our stockholders. As a result, Softline's control
could reduce the price that investors are willing to pay in the future for
shares of our stock.
WE MAY BE UNABLE TO RAISE CAPITAL OR ISSUE COMMON STOCK IN CONNECTION WITH
ACQUISITIONS IN THE FUTURE BECAUSE OF OUR RELATIONSHIP WITH SOFTLINE.
Because Softline may seek to maintain its beneficial ownership
percentage of our common stock for tax, accounting or other purposes, or
otherwise and may not want us to issue additional shares of common stock in
connection with future financing transactions, we may be constrained in our
ability to raise equity capital in the future or to issue common stock or other
equity securities in connection with future acquisitions.
OUR BUSINESS MAY SUFFER BECAUSE WE ENTERED INTO AGREEMENTS WITH SOFTLINE THAT
ARE NOT BASED ON ARM'S LENGTH NEGOTIATIONS.
We have in the past entered into various agreements with Softline, and
we may do so in the future. We currently owe $10 million to Softline under a
promissory note due August 1, 2001. None of these agreements resulted from arm's
length negotiations. These agreements may include terms and conditions that may
be more or less favorable to us than terms contained in similar agreements
negotiated with third parties.
RISKS RELATED TO THIS OFFERING
OUR STOCK PRICE HAS BEEN HIGHLY VOLATILE. WE ARE AT RISK OF SECURITIES CLASS
ACTION LITIGATION DUE TO OUR STOCK PRICE VOLATILITY.
The market price of our common stock has been, and is likely to
continue to be, volatile. When we or our competitors announce new customer
orders or services, change pricing policies, experience quarterly fluctuations
in operating results, announce strategic relationships or acquisitions, change
earnings estimates, experience government regulatory actions or suffer from
generally adverse economic conditions, our stock price could be affected. Some
of the volatility in our stock price appears unrelated to our performance.
Recently, companies similar to ours have experienced extreme price fluctuations,
often for reasons unrelated to their performance.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. This litigation has been especially prevalent with respect to
technology companies. We may therefore become the target of securities class
action litigation. Such litigation would likely result in substantial costs,
harm our financial condition and divert management's attention and resources.
14
<PAGE>
WE HAVE NEVER PAID A DIVIDEND ON OUR COMMON STOCK AND WE DO NOT INTEND TO PAY
DIVIDENDS IN THE FORESEEABLE FUTURE.
We have not previously paid any cash or other dividend on our common
stock. We anticipate that we will use our earnings and cash flow for repayment
of indebtedness and future growth, and we do not have any plans to pay dividends
in the foreseeable future. Future equity financings may restrict our ability to
pay dividends.
WE MAY ISSUE PREFERRED STOCK IN THE FUTURE, AND THE TERMS OF THE PREFERRED STOCK
MAY REDUCE THE VALUE OF YOUR COMMON STOCK.
We are authorized to issue up to 5,000,000 shares of preferred stock.
We may issue the preferred stock in one or more series. We are actively seeking
capital, and some of the arrangements we are considering involve the issuance of
preferred stock. Our board of directors may determine the terms of preferred
stock without further action by our stockholders. These terms may include voting
rights, preferences as to dividends and liquidation, conversion and redemption
rights, and sinking fund provisions. If we do issue preferred stock, it could
affect your rights or reduce the value of your common stock. In particular,
specific rights granted to future holders of preferred stock could be used to
restrict our ability to merge with or sell our assets to a third party.
OUR STOCKHOLDERS WILL BE ASKED TO APPROVE OUR REINCORPORATION IN DELAWARE, AND
SOME PROVISIONS OF OUR NEW CHARTER OR BYLAWS MAY AFFECT YOUR STOCK PRICE.
APPROVAL OF THESE MATTERS IS ASSURED.
Our stockholders will be asked at our next annual meeting scheduled for
November 16, 2000, to approve a change in the state of our incorporation from
Nevada to Delaware. Our stockholders will also be asked to approve in connection
with the reincorporation an increase in the number of authorized shares of
common stock from 50,000,000 to 100,000,000 and a reduction of the required
quorum at meetings of stockholders from a majority of the outstanding shares to
one-third of the outstanding shares. Approval of these measures is assured given
Softline's majority control of our stock.
The increase in the number of authorized shares will allow us to issue
additional shares of common stock without further stockholder approval, which
could substantially dilute your interest and reduce the value of your common
stock. The reduction in the quorum requirement will allow us to obtain
stockholder approval for matters with a minority of the shares present at the
meeting. This will make it more likely that a minority of the outstanding voting
power could adopt resolutions which would affect all of our stockholders. These
resolutions could adversely affect the value of your common stock.
NEVADA AND DELAWARE LAW AND SOME PROVISIONS OF OUR CHARTER AND BYLAWS MAY AFFECT
THE PRICE OF YOUR STOCK.
Special meetings of our stockholders may be called only by the Chairman
of the Board, the Chief Executive Officer or the Board of Directors.
Stockholders have no right to call a meeting and may not act by written consent.
Stockholders must also comply with advance notice provisions in our bylaws in
order to nominate directors or propose matters for stockholder action. These
provisions of our charter documents, as well as certain provisions of Nevada
law, could delay or make more difficult certain types of transactions involving
a change in control of the company or our management. The same charter
provisions will apply after the reincorporation to Delaware, and Delaware law
also contains provisions that could delay or make more difficult change in
control transactions. As a result, the price of our common stock may be
adversely affected.
SHARES ISSUED UPON THE EXERCISE OF OPTIONS AND WARRANTS COULD DILUTE YOUR STOCK
HOLDINGS AND ADVERSELY AFFECT OUR STOCK PRICE.
We have issued options and warrants to acquire common stock to our
employees and certain other persons at various prices, some of which are or may
in the future be below the market price of our stock. If exercised in the money,
these options and warrants will cause immediate and possibly substantial
dilution to our stockholders.
15
<PAGE>
We currently have options for 2,347,997 shares outstanding which have exercise
prices below the recent market price of our stock of $5.00 per share. We have
options and warrants for 1,227,475 shares outstanding at prices above the
current $5.00 market price, and if the current market price increases, these
options and warrants could have a dilutive effect on stockholders if exercised.
Our existing stock option plan currently has 2,565,500 shares available for
issuance, and we are asking our stockholders to approve an increase of 500,000
shares under the plan, and further automatic annual increases. Future options
issued under the plan may have further dilutive effects.
Sales of shares pursuant to exercisable options and warrants could lead
to subsequent sales of the shares in the public market, and could depress the
market price of our stock by creating an excess in supply of shares for sale.
Issuance of these shares and sale of these shares in the public market could
also impair our ability to raise capital by selling equity securities.
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. Any statements about
our expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
such as "anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "we believe," "we intend" and similar words or
phrases. Accordingly, these statements involve estimates, assumptions and
uncertainties which could cause actual results to differ materially from those
expressed in them. Any forward-looking statements are qualified in their
entirety by reference to the factors discussed in this prospectus or
incorporated by reference.
Because the factors discussed in this prospectus or incorporated by
reference could cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements made by us or on behalf of the
company, you should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of the date on
which it is made, and we undertake no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to
predict which will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
RECENT DEVELOPMENTS
In June 2000, Marcel Golding resigned from our Board of Directors. We
appointed Steven Cohen, Chief Operating Officer of Softline Limited, to fill the
vacancy.
In May 2000, we announced that we are in discussions with Softline
concerning a possible business combination between Softline and SVI. Softline
has submitted an application to the Reserve Bank of South Africa for a required
preliminary approval of a business combination, but the Reserve Bank has not yet
acted on the application. If the Reserve Bank gives preliminary approval and the
parties decide to proceed, the terms that we ultimately negotiate will be
subject to further approval of the Minister of Finance of South Africa. Any
proposed transaction will also be subject to approval under United States
anti-trust laws, and most likely the approval of the stockholders of both
companies.
The matters to be voted upon at the meeting will include:
[] The approval of a plan of merger by which we will
change our state of incorporation from Nevada to
Delaware;
[] A change in the corporate name to "SVI Solutions,
Inc.";
[] An increase in the number of shares of common stock
authorized from 50,000,000 to 100,000,000;
16
<PAGE>
[] A reduction of the required quorum at meetings of
stockholders from a majority of the outstanding
shares to one-third of the outstanding shares; and
[] Amendments to our 1998 Incentive Stock Plan to: (i)
increase the aggregate number of shares of common
stock authorized for issuance under the plan to
4,000,000 shares; (ii) authorize an automatic annual
increase in the shares reserved for issuance under
the plan by an amount equal to the lesser of 2% of
the total number of shares outstanding on the last
trading day of the fiscal year or 600,000 shares (or
a lesser amount as determined by our board); and
(iii) prohibit the granting of stock awards under the
plan to any one participant in excess of 500,000
shares in any calendar year.
Softline has indicated its intention to vote for each of the above
matters, so stockholder approval is essentially assured.
The primary reason we are recommending reincorporation in Delaware is
that Delaware law and the court decisions construing it are widely regarded as
the most extensive and well-defined body of corporate law in the United States.
Delaware's courts have developed considerable expertise in dealing with
corporate issues and a substantial body of case law has developed construing
Delaware law and establishing public policies with respect to corporate legal
issues.
The primary reason we are recommending authorization of 50,000,000
additional shares of common stock is to give us additional flexibility to raise
capital in public or private transactions through the issuance of common stock,
and to issue common stock in acquisitions of businesses or assets, without the
time and expense needed to obtain further stockholder approval.
The primary reason we are recommending reducing the required presence
for a quorum at stockholder meetings from a majority to one-third of outstanding
shares is to make it easier for us to obtain the necessary approval for
important corporate actions which require stockholder approval without the
delays and costs associated with hiring proxy solicitors.
Because of the preliminary stage of discussions on a business
combination with Softline, we do not know whether the proposed changes to our
domicile and governing documents will affect the transaction. We anticipate that
any such business combination will require subsequent approval of our
stockholders under the rules of the American Stock Exchange regardless of the
provisions of Nevada or Delaware law. Based on current holdings, Softline would
control the outcome of that vote under either Nevada or Delaware law. We have
not yet determined the structure of a transaction or what other stockholder
voting procedures we might follow, so we are unable to predict whether Delaware
law will facilitate structuring of a transaction. We hope that the large body of
case law interpreting Delaware corporate law will provide more legal certainty
in connection a potential transaction structure and voting procedure than would
be the case under Nevada law.
USE OF PROCEEDS
We will receive up to $175,000 if all of the warrants which are the
subject of this offering are exercised. The warrants become exercisable on the
date of this prospectus and expire two years after that date. The warrants
permit us to redeem them for $.01 per warrant three months after the date of
this prospectus. We must give the warrant holders 30 days notice before we
redeem the warrants. The warrant holders may exercise their warrants after
receiving the notice and before the date of the redemption. We intend to redeem
the warrants as soon as we are permitted to do so.
We will use any proceeds we receive from the exercise of the warrants
to repay a portion of the principal of outstanding bank debt under our existing
credit agreement with Union Bank of California, N.A. This debt consists of a
$4.75 million term loan due April 1, 2001 and a $3.0 million revolving line of
credit also due April 1, 2001, under which we have drawn approximately $2.8
million as of September 15, 2000. Both loans bear interest at Union Bank's prime
rate established from time to time plus 5% (currently, 14.75%). The term loan
originally consisted of two term loans in the total principal amount of $18.5
million obtained to pay a portion of the $35 million purchase price for Island
Pacific Systems Corporation, which we acquired effective April 1, 1999.
17
<PAGE>
We will not receive any proceeds from the sale of the shares of common
stock offered by the selling stockholders.
SELLING STOCKHOLDERS
We are registering up to 700,000 shares of our common stock for resale
by the selling stockholder named below. The term "selling stockholder" includes
the stockholder named below and its transferees, pledgees, donees or other
successors. The registered shares include 344,948 shares of common stock
currently owned by the selling stockholder and up to 355,052 shares of common
stock that may be issued after the date of this prospectus pursuant to our
agreement with the selling stockholder. Under the terms of this agreement, the
selling stockholder may receive additional shares of our common stock if the
average of the closing price of our stock on the American Stock Exchange for the
five days preceding the date of this prospectus is less than $10.34. The number
of additional shares to be issued will be determined based on the following
formula:
Number of Additional Shares = (($8.89-P) x 337,448)/P, where P = .86 x
the average of the closing price of our stock on the American Stock Exchange for
the five days preceding the date of this prospectus.
We have agreed to pay to the selling stockholder a penalty associated with
delayed effectiveness of registration of approximately $185,000.
The number of shares which may be issued pursuant to the above
repricing formula may exceed the 355,052 additional shares registered, in which
case we have agreed to file a post-effective amendment or an additional
registration statement for the additional shares.
The number of shares we are registering for the selling stockholder
does not include an indeterminate number of additional shares that may be
registered and issued in accordance with Rule 416 under the Securities Act to
prevent dilution of the common stock resulting from stock splits, stock
dividends or other events.
The following table sets forth certain information as of September 15,
2000 with respect to the selling stockholder. This information is based on
information provided by selling stockholder, and assumes the sale of all of the
resale shares by the selling stockholder. The applicable percentages of
ownership are based on an aggregate of 33,897,884 shares of common stock
outstanding as of July 31, 2000.
SHARES OF
COMMON SHARES OF
STOCK COMMON
BENEFICIALLY STOCK
OWNED BENEFICIALLY
BEFORE OWNED AFTER
OFFERING MAXIMUM OFFERING
-------- NUMBER OF --------
(1) SHARES (2)
--- OFFERED ---
NAME NUMBER % HEREBY NUMBER %
---- ------ -- ------ ------ --
Amro International, S.A. 700,000 2.1% 700,000 -0- 0%
(1) Includes 344,948 shares owned by the selling stockholder and up to 355,052
shares which may be issued pursuant to our agreement with the selling
stockholder.
(2) Assumes sale of all of the shares registered for the account of the selling
stockholder.
18
<PAGE>
PLAN OF DISTRIBUTION
The shares offered by us through this prospectus will be issued upon
surrender of the associated warrant certificate, completion of the Form of
Election to Purchase and payment of the exercise price of $7.00 per share in
cash, to our warrant agent, Corporate Stock Transfer, Inc., 370 17th Street,
Suite 2350, Denver, Colorado 80202. We will issue the shares so purchased in the
name of the person as directed by the warrant holder. The warrant holder may
exercise all or any portion of the warrant beginning after the date of this
prospectus and ending on the second anniversary of the date of this prospectus.
We may call the warrants for redemption any time after __________, 2000 [three
months after the effective date of this prospectus], for an amount equal to $.01
per warrant, by giving at least 30 days advanced written notice to the warrant
holders. The warrant holders will have the opportunity to exercise the warrants
during the 30-day notice period. If any warrant holders do not exercise their
warrants, they will be entitled to the redemption price of $.01 per warrant by
surrendering their warrant certificate(s) to Corporate Stock Transfer. No
warrant holder will be entitled to exercise its warrant, or to receive the
redemption price, after the expiration date of the warrants, which is
__________, 2002 [two years after the date of the prospectus].
The shares of common stock offered for resale may be sold from time to
time by the selling stockholders 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. The selling stockholders may offer their shares of
common stock in one or more of the following transactions:
o on any national securities exchange or quotation
service at which the common stock may be listed or
quoted at the time of sale, including the American
Stock Exchange;
o in private transactions;
o through options;
o by pledge to secure debts and other obligations; or
o a combination of any of the above methods.
If required, we will distribute a supplement to this prospectus to
describe material changes in the terms of the offering.
The shares of common stock described in this prospectus may be sold
from time to time directly by the selling stockholders. Alternatively, the
selling stockholders may from time to time offer shares of common stock to or
through underwriters, broker/dealers or agents. The selling stockholders and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933. Any profits on the resale of shares of common
stock and any compensation received by any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act of 1933 may be sold under Rule 144 rather
than pursuant to this prospectus. The selling stockholders may not sell all of
the shares we are registering. The selling stockholders may transfer, devise or
gift such shares by other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the shares may not be offered or
sold unless they have been registered or qualified for sale or an exemption is
available and the selling stockholder complies with the exemption.
Under the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock may not simultaneously engage in market-making
activities with respect to the common stock for nine business days prior to the
start of the distribution. In addition, each selling stockholder and any other
person participating in a distribution will be subject to the Securities
Exchange Act of 1934 which may limit the timing of purchases and sales of common
stock by the selling stockholders or any such other person. These factors may
affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
19
<PAGE>
We will pay all expenses of this registration. These expenses include
the SEC's filing fees and fees under state securities or "blue sky" laws. The
selling stockholders may pay selling commissions or brokerage fees with respect
to the sale of the resale shares by them.
LEGAL MATTERS
Solomon Ward Seidenwurm & Smith, LLP will pass upon the validity of the
common stock offered by this prospectus. As of the date of this prospectus,
partners and employees of Solomon Ward Seidenwurm & Smith, LLP beneficially
owned an aggregate of 61,839 shares of the our common stock.
EXPERTS
The financial statements incorporated in this prospectus by reference
from the Company's Annual Report on Form 10-K for the year ended March 31, 2000
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
The financial statements as of March 31, 1998 and September 30, 1997
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended March 31, 2000 have been audited by Singer Lewak
Greenbaum & Goldstein LLP, independent auditors, as stated in their report,
which is incorporated herein by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy these reports, proxy statements and other information at the SEC's public
reference rooms in Washington, D.C., New York, NY and Chicago, IL. 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 more information about
the operation of the public reference rooms. Our SEC filings are also available
at 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
an important 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 Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934:
o Annual Report on Form 10-K for the year ended March
31, 2000, as amended;
o Quarterly Report on Form 10-Q for the quarter ended
June 30, 2000;
o Current Report on Form 8-K dated September 19, 2000;
o Registration Statement on Form 8-A, which includes a
description of our common stock; and
o Any filings we make with the SEC under Section 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of
1934 after the initial filing but before
effectiveness of the registration statement in which
this prospectus is included.
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address or telephone number:
SVI Holdings, Inc.
12707 High Bluff Drive, Suite 335
San Diego, CA 92130
Attn: Secretary
(858) 481-4404
20
<PAGE>
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS OR
ANY PROSPECTUS SUPPLEMENT. YOU MUST NOT RELY ON ANY UNAUTHORIZED INFORMATION.
THIS PROSPECTUS IS NOT AN OFFER OF THESE SECURITIES IN ANY STATE WHERE AN OFFER
IS NOT PERMITTED. THE INFORMATION IN THIS PROSPECTUS IS CURRENT AS OF
___________, 2000. YOU SHOULD NOT ASSUME THAT THIS PROSPECTUS IS ACCURATE AS OF
ANY OTHER DATE.
SVI HOLDINGS, INC.
725,000 SHARES
COMMON STOCK
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee are estimated):
SEC Registration Fee........................ $ 1,016
---------
Legal fees and expenses..................... $ 25,000
---------
Accounting fees and expenses................ $ 10,000
---------
Printing & Engraving........................ $ 500
---------
Total....................................... $ 36,516
=========
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
We have broad powers to indemnify our directors and officers against
liabilities they may incur in such capacities, including liabilities under the
Securities Act of 1933, as amended (the "Securities Act"). Our bylaws require us
to indemnify our directors and officers to fullest extent permitted by Nevada
Revised Statutes Section 78.7502, including situations where indemnification is
otherwise discretionary. Pursuant to Section 78.7502, 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 interest of the
corporation and with respect to any criminal action, they had no reasonable
cause to believe their conduct was unlawful.
Our Articles of Incorporation include a provision to eliminate the
personal liability of our directors for monetary damages resulting from breaches
of their fiduciary duty to the extent permitted by Nevada law. We believe this
provision is necessary to attract and retain qualified persons as directors and
officers. The provision does not eliminate the directors' duty of care, and, in
appropriate circumstances, equitable remedies such as injunctive or other forms
of non-monetary relief will remain available under Nevada law. In addition, each
director will continue to be liable for acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law and for improper
distributions to stockholders. The provision does not affect a directors
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
At present, there is no pending litigation or proceeding involving our
directors or officers as to which indemnification is being sought nor are we
aware of any threatened litigation that may result in claims for indemnification
by any officer or director.
We have an insurance policy covering our officers and directors with
respect to certain liabilities, including liabilities arising under the
Securities Act or otherwise.
ITEM 16. EXHIBITS.
Exhibit No. Description
----------- -----------
4.1 Specimen Stock Certificate, incorporated by reference to
exhibit 4.1 to our Form 10-K for the fiscal year ended March
31, 2000.
5.1** Opinion of Solomon Ward Seidenwurm & Smith, LLP.
23.1 Consent of Deloitte & Touche LLP, independent certified public
accountants.
II-1
<PAGE>
23.2 Consent of Singer Lewak Greenbaum & Goldstein LLP, independent
certified public accountants.
23.3 Consent of Solomon Ward Seidenwurm & Smith, LLP. Reference is
made to Exhibit 5.1.
23.4 Consent of Business Valuation Services, Inc.
24.1** Power of Attorney.
99.1 Common Stock Purchase Agreement, incorporated by reference to
exhibit 10.28 to our Form 10-K for the fiscal year ended March
31, 2000.
99.2 Registration Rights Agreement, incorporated by reference to
exhibit 10.29 to our Form 10-K for the fiscal year ended March
31, 2000.
** Previously filed.
ITEM 17. UNDERTAKINGS.
We hereby undertake:
(1) To file, during any period in which offers or sales are being made
pursuant 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
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase of decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this registration statement as effective;
and
(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;
PROVIDED, HOWEVER, that paragraphs (i) and (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
with or furnished to the Commission by us 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 of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof; 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.
II-2
<PAGE>
We hereby undertake 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 by us for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the provisions referenced above or otherwise, we
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us 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 hereunder, we 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, as amended, and will be
governed by the final adjudication of such issue.
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 San Diego, State of California, on September 26,
2000.
SVI HOLDINGS, INC.
By: /s/ Barry M. Schechter
----------------------
Barry M. Schechter
Chairman and Chief Executive Officer
POWER OF ATTORNEY
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/ Barry M. Schechter Chairman, Chief Executive September 26, 2000
----------------------- Officer (Principal Executive
Barry M Schechter Officer), and Director
/s/ David L. Reese Chief Accounting Officer, September 26, 2000
----------------------- Treasurer and Secretary
David L. Reese (Principal Financial
and Accounting Officer)
/s/ Arthur S. Klitofsky Vice-President and Director September 26, 2000
-----------------------
Arthur S. Klitofsky
/s/ Donald S. Radcliffe Director September 26, 2000
-----------------------
Donald S. Radcliffe
/s/ Ivan M. Epstein Director September 26, 2000
----------------------
Ivan M. Epstein
II-3
<PAGE>
/s/ Gerald Rubenstein Director September 26, 2000
----------------------
Gerald Rubenstein
/s/ Ian Bonner Director September 26, 2000
----------------------
Ian Bonner
/s/ Steven Cohen Director September 26, 2000
----------------------
Steven Cohen
*By: /s/ Barry M. Schechter
----------------------
Attorney in fact
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
-----------
4.1 Specimen Stock Certificate, incorporated by reference to
exhibit 4.1 to our Form 10-K for the fiscal year ended March
31, 2000.
5.1** Opinion of Solomon Ward Seidenwurm & Smith, LLP.
23.1 Consent of Deloitte & Touche LLP, independent certified public
accountants.
23.2 Consent of Singer Lewak Greenbaum & Goldstein LLP, independent
certified public accountants.
23.3 Consent of Solomon Ward Seidenwurm & Smith, LLP. Reference is
made to Exhibit 5.1.
23.4 Consent of Business Valuation Services, Inc.
24.1** Power of Attorney.
99.1 Common Stock Purchase Agreement, incorporated by reference to
exhibit 10.28 to our Form 10-K for the fiscal year ended March
31, 2000.
99.2 Registration Rights Agreement, incorporated by reference to
exhibit 10.29 to our Form 10-K for the fiscal year ended March
31, 2000.
** Previously filed.
