<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended:
March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NO. 0-23049
SVI HOLDINGS, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Nevada 84-1131608
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12707 High Bluff Drive, Suite 335
San Diego, CA 92130
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(Address of principal executive Zip Code
offices)
Registrant's telephone number including area code (858) 481-4404
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Securities registered under Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $0.0001 par value American Stock Exchange
------------------------------- -----------------------------------------
Securities registered under Section 12(g) of the Act:
Indicate by check mark whether the registrant (1) filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (ss.229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.____
The aggregate market value of the voting stock (Common Stock) held by
non-affiliates* as of June 12, 2000 was approximately $88.3 million, based on
the closing sale price on the American Stock Exchange on that date.
The number of shares outstanding of the registrant's Common Stock was 33,855,884
on June 30, 2000.
--------
* Excludes the Common Stock beneficially held by executive officers, directors
and stockholders whose beneficial ownership exceeds 10% of the Common Stock
outstanding at June 30, 2000.
<PAGE>
EXPLANATORY NOTES
This Amendment No. 1 on Form 10-K/A is being filed by SVI Holdings, Inc. (the
"Company") as an amendment to its Annual Report on Form 10-K for the fiscal year
ended March 31, 2000 to amend and restate in its entirety Part III.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company are as follows:
NAME AGE POSITION AND OFFICES
---- --- --------------------
Barry M. Schechter 46 Chairman of the Board, Chief Executive
Officer and Director
Arthur S. Klitofsky 46 Vice President and Director
David L. Reese 55 Chief Financial Officer, Secretary and
Director
Mark T. Wulff 39 Chief Executive Officer of SVI Retail, Inc.
Donald S. Radcliffe 55 Director
Ivan M. Epstein 39 Director
Gerald Rubenstein 66 Director
Ian Bonner 45 Director
Steven Cohen 38 Director
Barry M. Schechter has been Chairman of the Board and Chief Executive
Officer of the Company from February 1994 to the present. He has been Chief
Executive Officer of the Company's predecessor and wholly-owned subsidiary,
Sabica Ventures, Inc., since its inception in February 1990. He also serves as
Chairman of the Board of each of the Company's other subsidiaries. Mr. Schechter
is a director of Softline Limited ("Softline"), which beneficially owns 55.6% of
the outstanding common stock of the Company, and which is listed on the
Johannesburg Stock Exchange. Mr. Schechter is also a director of Integrity
Software, Inc., for which the Company has an indirect equity interest (see Item
13 - "Certain Relationships and Related Transactions").
Arthur S. Klitofsky has been Vice President and a director of the
Company from February 1994 to the present. He has been President of the
Company's SVI Training Products, Inc. subsidiary since 1991. From 1985 to 1991,
he was Managing Director of Punch Line Columbia Training Ltd., which became the
largest computer education company in South Africa. Mr. Klitofsky has a Bachelor
of Science Degree in Electrical Engineering from the University of
Witwatersrand, Johannesburg, South Africa and a Bachelor in Accounting Science
Degree from the University of South Africa.
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David L. Reese became a director of the Company in July 1998. He joined
the Company in November 1997 and became Chief Financial Officer and Secretary in
February 1998. Prior to joining the Company, Mr. Reese served as Chief Financial
Officer for Pygmalion Asset Management Company from 1993 to 1997. Mr. Reese has
served in various financial and accounting capacities for a number of public
companies over the past twenty years. Mr. Reese received a B.S. and an M.S. from
the University of Southern California. He is a certified public accountant.
Mark T. Wulff joined the Company as Chief Executive Officer of Island
Pacific Systems Corporation ("Island Pacific") in April 1999 upon the Company's
acquisition of Island Pacific. He became Chief Executive Officer of the
Company's retail division in January 2000. Mr. Wulff joined Island Pacific in
1986 and held various positions there prior to its acquisition by the Company,
including Vice President.
Donald S. Radcliffe became a director of the Company in May 1998. He
has been President of Radcliffe & Associates since 1990. Radcliffe & Associates
provides financial consulting services to public companies, and currently
provides financial advisory and public relations services to the Company. Since
1984 he has also been Executive Vice President and Chief Operating and Financial
Officer of World-Wide Business Centres, which is a privately held operator of
shared office space facilities. Mr. Radcliffe is a director of Complete Wellness
Centers, Inc. and Integrity Software, Inc. The Company has an indirect equity
interest in Integrity Software, Inc. (see Item 13 - "Certain Relationships and
Related Transactions"). Mr. Radcliffe received a B.S. from Lehigh University and
an M.B.A. from Dartmouth College. He is a certified public accountant.
Ivan M. Epstein became a director of the Company in May 1998. He is the
Chief Executive Officer and a director of Softline, which he co-founded in 1988.
Softline is listed in the Information Technology sector of the Johannesburg
Stock Exchange and is one of the largest accounting software vendors in the
world. Softline operates in 37 countries with products available in eight
languages, and targets mainly small to medium size enterprises. Softline
beneficially owns 55.6% of the outstanding common stock of the Company. Mr.
Eptstein is also a director of Integrity Software, Inc., for which the Company
has an indirect equity interest (see Item 13 - "Certain Relationships and
Related Transactions").
Gerald Rubenstein became a director of the Company in May 1998. He is
an attorney in South Africa and is currently a consultant to the law firm of
Fluxman Rabinowitz - Raphaely Weiner. He specializes in corporate finance and
mergers and acquisitions. He is also the Chairman of Protea Furnishers Limited
and Vestacor Limited. He currently serves as a director of seven public
companies in South Africa, including Softline, which beneficially owns 55.6% of
the outstanding common stock of the Company.
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Ian Bonner became a director of the Company in May 1998. Since 1993 he
has held various positions with IBM Corporation, and he currently serves as Vice
President of Partner Marketing and Programs for the IBM/Lotus/Tivoli Software
Group. His responsibilities include the development and implementation of
marketing campaigns and programs designed to serve the business partners of IBM,
Lotus and Tivoli, including major accounts, independent software vendors and
global systems integrators. He also oversees the IBM BESTeam and the Lotus
Business Partner programs which are designed to provide enhanced opportunities,
including education, marketing and training support, to qualified providers of
IBM's and Lotus's portfolio of network solutions. Mr. Bonner received a Bachelor
of Commerce from the University of the Witwatersrand in 1976 and a graduate
degree in Marketing Management and Market Research and Advertising from the
University of South Africa in 1978.
Steven Cohen became a director of the Company in June 2000. He is the
Chief Operating Officer and a director of Softline, which he joined in 1989 as
financial director. Mr. Cohen played a key role in the development of Softline's
"Brilliant Accounting" software package, and he was an active participant in the
growth of Softline to its current position as one of the largest international
providers of midrange accounting software. Softline beneficially owns 55.6% of
the outstanding common stock of the Company.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires the Company's officers, directors and persons who own more than
10% of a class of the Company's securities registered under Section 12 of the
Exchange Act to file reports of ownership and changes in ownership with the
Securities and Exchange Commission ("SEC"). Officers, directors and greater than
10% stockholders are required by SEC regulations to furnish the Company with
copies of all Section 16(a) forms they file.
Based solely on a review of copies of such reports furnished to the
Company and written representations that no other reports were required during
the fiscal year ended March 31, 2000, the Company believes that all persons
subject to the reporting requirements pursuant to Section 16(a) filed the
required reports on a timely basis with the SEC, except Softline Limited (4
reports, 4 transactions), the Ivanhoe Irrevocable Trust (1 report, 1
transaction), Mark T. Wulff (1 report, no transactions), David L. Reese (1
report, 1 transaction) and Donald S. Radcliffe (6 reports, 14 transactions). In
addition, Barry M. Schechter disclosed on his Form 5 for the fiscal year ending
March 31, 2000 holdings of his spouse which should have been previously reported
as indirect holdings, and Softline Limited filed an amended report subsequent to
March 31, 2000 describing one transaction effective in the fiscal year ended
March 31, 1999 not previously reported.
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ITEM 11. EXECUTIVE COMPENSATION.
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning the
compensation for services in all capacities to the Company for the full fiscal
years ended March 31, 2000 and 1999, the transitional six month fiscal year
ended March 31, 1998 and the fiscal year ended September 30, 1997, received by
the Company's Chief Executive Officer and the four other most highly compensated
executive officers of the Company during the last completed fiscal year (the
"Named Executive Officers")
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
------------ ------------
Securities
Underlying
Name and Principal Position Fiscal Year Salary ($) Options (#)
--------------------------- ----------- ---------- -----------
Barry M. Schechter 2000 270,000 24,750
Chairman of the Board and 1999 198,000 110,675
Chief Executive Officer 1998(1) 86,000 50,000
1997(2) 156,000 --
Mark T. Wulff 2000 280,769 --
Chief Executive Officer of
SVI Retail, Inc.
Arthur S. Klitofsky 2000 140,400 12,700
Vice President 1999 134,100 35,000
1998(1) 66,000 2,000
1997(2) 127,000 57,000
David L. Reese 2000 116,667 59,000
Chief Financial Officer 1999 90,248 51,000
1998(1) 32,378 10,000
Shaun Rosen 2000(3) 112,500 120,000
Former Chief Executive Officer, 1999 165,000 80,000
Retail Operations 1998(1) 82,500 --
1997(2) 165,000 --
(1) Six month transitional fiscal year ended March 31, 1998.
(2) Twelve month fiscal year ended September 30, 1997.
(3) Mr. Rosen terminated his employment on December 31, 1999 and became a
consultant to the Company.
The Company also provides certain compensatory benefits and other
non-cash compensation to the Named Executive Officers. The incremental cost to
the Company of all such benefits and other compensation paid in the years
indicated to each such person was less than 10% of his reported compensation and
also less than $50,000.
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The following table sets forth the information concerning individual
grants of stock options during the last fiscal year to the Named Executive
Officers. Except as otherwise indicated, the options are fully vested.
<TABLE>
OPTION GRANTS IN LAST FISCAL YEAR
<CAPTION>
Potential Realizable
Value at Assumed Annual
Rates of Stock Price
Appreciation for
Individual Grants Option Term
----------------- -----------
Percent of
Total
Options
Granted to Exercise or
Employees in Base Price Expiration
Name Fiscal Year ($/Sh) Date 5% 10%
---- ----------- ------ ---- -- ---
<S> <C> <C> <C> <C> <C> <C>
Barry M. Schechter 24,750 3.4% $7.8125 10/11/2004 $ 53,423 $118,045
Arthur S. Klitofsky 12,700(1) 1.7% $7.8125 10/11/2009 $ 62,401 $158,134
David L. Reese 9,000 1.2% $7.8125 10/11/2004 $ 19,427 $ 42,926
50,000 6.8% $7.7500 10/20/2009 $243,700 $617,600
Shaun Rosen 20,000(1) 2.7% $7.8125 10/11/2009 $ 98,270 $249,030
100,000(1) 13.7% $7.7500 10/20/2009 $487,400 $1,235,200
</TABLE>
(1) Options vest 20% per year over five years beginning on the first anniversary
of the grant, subject to continuing service to the Company.
The potential realizable value is calculated based on the term of the
option at its time of grant. It is calculated based on assumed annualized rates
of total price appreciation from the exercise price at the date of grant of 5%
and 10% (compounded annually) over the full term of the grant with appreciation
determined as of the expiration date. The 5% and 10% assumed rates of
appreciation are mandated by SEC rules and do not represent the Company's
estimate or projections of future common stock prices. Actual gains, if any, on
stock option exercises are dependent on the future performance of the common
stock and overall stock market conditions. The amounts reflected in the table
may not be achieved.
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The following table sets forth the information concerning each exercise
of stock options during the last fiscal year by each of the Named Executive
Officers and the fiscal year end value of unexercised options.
<TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
<CAPTION>
Number of
Securities Underlying
Unexercised Options Value of Unexercised
at FY-End (#) At FY-End($)
Shares Acquired on Value Realized Exercisable/ Exercisable/
Name Exercise (#) ($)(1) Unexercisable Unexercisable (2)
---- ------------ ------ ------------- -----------------
<S> <C> <C> <C> <C>
Barry M. Schechter 0 0 185,425/0 $894,363/$0
Mark T. Wulff 0 0 0/0 $0/$0
Arthur S. Klitofsky 0 0 112,000/12,700 $830,625/$26,187
David L. Reese 3,000 $16,875 77,000/0 $192,308/$0
Shaun Rosen 0 0 80,000/120,000 $550,000/$253,750
</TABLE>
(1) Based upon the market price of the purchased shares, determined on the
basis of the closing sale price per share of the Company's common stock
on the American Stock Exchange on the exercise date less the option
exercise price paid for the shares.
(2) Based upon the market price of $9.875 per share, determined on the
basis of the closing sale price per share of the Company's common stock
on the American Stock Exchange on the last day of the 2000 fiscal year,
less the option exercise price payable per share.
STOCK INCENTIVE PLANS
The Company has two stock incentive plans. The Incentive Stock Option
Plan (the "1989 Plan") terminated in October 1999. It provided for issuance of
incentive stock options to purchase up to 1,500,000 shares of the Company's
common stock to employees of the Company. 740,535 of such shares remain subject
to option as of June 30, 2000. The 1989 Plan was administered by the Board of
Directors, which established the terms and conditions of each option grant.
The 1998 Incentive Stock Plan (the "1998 Plan") reserves 3,500,000
shares of common stock for issuance pursuant to incentive stock options,
non-statutory options, stock bonuses, stock appreciation rights and stock
purchase agreements. The exercise price of options is determined by the Board of
Directors, but the exercise price may not be less than 100% of the fair market
value on the date of the grant, in the case of incentive stock options, or 85%
of the fair market value on the date of the grant, in the case of non-statutory
stock options. Options under the 1998 Plan must vest over a period not to exceed
five years.
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LONG-TERM INCENTIVE PLANS
The Company does not have any stock appreciation rights plans in effect
and has no long-term incentive plans, as those terms are defined in SEC
regulations. During the fiscal year ended March 31, 2000, the Company did not
adjust or amend the exercise price of stock options awarded to the Named
Executive Officers. The Company has no defined benefit or actuarial plans
covering any Named Executive Officer.
EMPLOYMENT AGREEMENTS
The Company entered into an employment agreement with Barry M.
Schechter effective October 1, 1997. This agreement will continue until
September 30, 2000 unless earlier terminated for cause. Under the agreement Mr.
Schechter has the right to annual compensation of $180,000 for the first year of
the agreement, $240,000 for the second year of the agreement and $300,000 for
the third year of the agreement. In addition, Mr. Schechter is entitled to
receive options on each anniversary of the agreement to purchase the number of
shares equal to 150% of his annual compensation for the prior year divided by
the average price per share for the 30 day period preceding such anniversary.
This average price per share will also be the exercise price of the options. The
agreement states that options will be fully vested when issued, assignable, and
exercisable for five years after the date of the grant. Mr. Schechter agreed to
receive non-assignable options so that these options could be issued under the
1989 Plan.
Shaun Rosen entered into an employment agreement with the Company's SVI
Retail Pty. Ltd. (Australia) subsidiary ("SVI Australia") dated November 5,
1996. The agreement was to continue in effect until November 4, 2001, unless
earlier terminated by SVI Australia or Mr. Rosen. Mr. Rosen's employment
terminated by mutual agreement on December 31, 1999, and Mr. Rosen became a
consultant for SVI Australia. Mr. Rosen's employment agreement provided for an
initial annual salary of $147,500. The salary was subject to annual increases to
reflect inflation and discretionary annual increases. The employment agreement
further provides that Mr. Rosen will not compete with SVI Australia for three
years after the termination of the agreement, which was deemed to occur on
December 31, 1999.
Island Pacific, which merged into the Company's wholly-owned SVI
Retail, Inc. subsidiary ("SVI Retail") on April 1, 2000, entered into a
three-year employment agreement with Mark T. Wulff effective June 3, 1999
whereby he is employed as Island Pacific's Chief Executive Officer. The
agreement provides that Mr. Wulff cannot compete with Island Pacific's business
in the U.S. during the term of the agreement and for three years after
termination of the agreement unless SVI Retail terminates the agreement without
cause or Mr. Wulff terminates the agreement due to a relocation out of Orange
County, California. Mr. Wulff's annual compensation under the agreement is
$300,000. The agreement may be terminated at will by either party upon six
months prior written notice. SVI Retail may also terminate the agreement for
cause on three days' written notice.
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors formed a Compensation Committee in April 1998.
Prior to such date, the Board of Directors as a whole performed the role of a
compensation committee. Ian Bonner and Donald S. Radcliffe currently serve as
the members of the Compensation Committee. No current member of the Company's
Compensation Committee has ever been an officer of the Company or any of its
subsidiaries. No executive officer of the Company serves as a member of a
compensation committee or board of directors of any entity that has one or more
if its executive officers serving as a member of the Company's Compensation
Committee.
DIRECTOR COMPENSATION
No direct or indirect remuneration has been paid or is payable by the
Company to the directors in their capacity as directors during the fiscal year
ended March 31, 2000. The Company does not anticipate paying during the fiscal
year ending March 31, 2001 any direct or indirect remuneration to any directors
of the Company in their capacity as directors other than reimbursement of
expenses for attending directors' or committee meetings and discretionary stock
option grants under the 1998 Plan. During the fiscal year ended March 31, 2000,
Ivan M. Epstein received an option to purchase 100,000 shares of the common
stock of the Company at an exercise price of $7.75. The option expires on
October 20, 2009 and is fully vested.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table shows beneficial ownership of shares of the
Company's outstanding common stock as of June 30, 2000 (i) by all persons known
by the Company to own more than 5% of such stock and (ii) by each director, each
of the Named Executive Officers, and all directors and executive officers as a
group. Except as otherwise specified, the address for each person is 12707 High
Bluff Drive, Suite 335, San Diego, California 92130. As of June 30, 2000, there
were 33,855,884 shares of common stock outstanding. Each of the named persons
has sole voting and investment power with respect to the shares shown (subject
to community property laws), except as stated below.
Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership (1) Of Class
------------------- ------------------- -------
Softline Limited 19,100,527(2) 55.6%
16 Commerce Crescent
Eastgate Extension 13
Sandton 2148
South Africa
Claudav Holdings Ltd. B.V. 5,511,925(3) 16.0%
9 Rue Charles Humbert
1205 Geneva
Switzerland
The Ivanhoe Irrevocable Trust 5,511,925(3) 16.0%
Barry M. Schechter 5,511,925(3) 16.0%
David L. Reese 77,000(4) < 1%
Arthur S. Klitofsky 387,600(5) 1.1%
Donald S. Radcliffe 662,300(6) 1.9%
575 Madison Avenue
New York, NY 10022
Ivan M. Epstein 105,000(7) < 1%
2 Victoria
Eastgate Extension 13
Sandton 2148
South Africa
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Name and Address of Amount and Nature Percent
Beneficial Owner of Beneficial Ownership (1) Of Class
------------------- ------------------- -------
Gerald Rubenstein 5,000(8) < 1%
16 Commerce Crescent
Eastgate Extension 13
Sandton 2148
South Africa
Ian Bonner 20,000(9) < 1%
5527 Inverrary Court
Dallas, Texas 75287
Steven Cohen 0 0%
16 Commerce Crescent
Eastgate Extension 13
Sandton 2148
South Africa
Mark T. Wulff 0 0%
All directors and executive 6,751,125(10) 19.5%
officers as a group (9 persons)
(1) This table is based on information supplied by officers, directors and
principal stockholders. The inclusion in this table of such shares does
not constitute an admission that the named stockholder is a direct or
indirect beneficial owner of, or receives the economic benefit of, such
shares.
(2) Includes 71,812 shares pursuant to outstanding options exercisable
within 60 days of June 30, 2000. Barry M. Schechter, Ivan M. Epstein,
Gerald Rubenstein and Steven Cohen, each a director of Softline
Limited, disclaim beneficial ownership of the shares and options held
by Softline Limited.
(3) Claudav Holdings Ltd. B.V. ("Claudav"), the Ivanhoe Irrevocable Trust
("Ivanhoe") and Barry M. Schechter may be deemed a group pursuant to
Rule 13d-5 promulgated under the Exchange Act. Claudav holds 2,224,500
shares, for which it shares voting power with Mr. Schechter pursuant to
a proxy. Ivanhoe holds 3,100,000 shares for which it shares voting and
dispositive power with Mr. Schechter pursuant to Mr. Schechter's
position as a trustee. Includes 2,000 shares held by Mr. Schechter's
minor children and 185,425 shares pursuant to options of Mr. Schechter
exercisable within 60 days of June 30, 2000. Excludes 10,000 shares
held by Mr. Schechter's spouse, for which Mr. Schechter disclaims
beneficial ownership.
(4) Consists of outstanding options exercisable within 60 days of June 30,
2000.
(5) Includes 112,000 shares pursuant to outstanding options exercisable
within 60 days of June 30, 2000.
(6) Includes 311,000 shares pursuant to outstanding options exercisable
within 60 days of June 30, 2000. Also includes 11,500 shares held by an
entity for which Mr. Radcliffe has sole voting and dispositive power.
Also includes an aggregate of 80,100 shares and 11,000 options held by
three entities for which Mr. Radcliffe has shared voting and
dispositive power. Excludes 119,500 shares held by Mr. Radcliffe's
spouse, for which Mr. Radcliffe disclaims beneficial ownership.
(7) Consists of outstanding options exercisable within 60 days of June 30,
2000.
(8) Consists of outstanding options exercisable within 60 days of June 30,
2000.
(9) Consists of outstanding options exercisable within 60 days of June 30,
2000.
(10) Includes 810,425 shares pursuant to outstanding options exercisable
within 60 days of June 30, 2000.
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Set forth below is a description of transactions entered into between
the Company and certain of its executive officers, directors and stockholders
holding more than 5% of the outstanding common stock during the fiscal year.
Certain of these transactions will continue in effect and may result in
conflicts of interest between the Company and such individuals. Although these
persons may owe fiduciary duties to the Company and its stockholders, there is a
risk that such conflicts of interest may not be resolved in favor of the
Company.
TRANSACTIONS WITH SOFTLINE LIMITED
Softline Limited ("Softline") beneficially owns approximately 55.6% of
the outstanding common stock of the Company, and is therefore a parent
corporation to the Company. Softline is a South African company listed on the
Johannesburg Stock Exchange. Barry M. Schechter, Ivan M. Epstein, Gerald
Rubenstein and Steven Cohen are each directors of Softline. Mr. Epstein is Chief
Executive Officer and Mr. Cohen is Chief Operating Officer of Softline.
During the fiscal year ended March 31, 2000, Softline exercised
outstanding options to purchase 2,376,188 shares of common stock of the Company
at $2.00 per share.
In June 1999, the Company granted Softline an option to purchase 10,000
shares of common stock of the Company at an exercise price of $11.75 per share,
exercisable for four years, as consideration for services performed by Softline
personnel on behalf of the Company.
In October 1999, the Company sold its South African retail software
subsidiary doing business under the name Triple-S Computers ("Triple-S") to
Softline. The purchase price was the Company's historical book basis in Triple-S
of $665,000. This amount was paid through Softline's surrender of 78,241 shares
of Company common stock valued at the $8.50 per share closing price of such
shares on the American Stock Exchange on October 1, 1999. Softline entered into
an acquisition agreement as of April 1, 1998 (the "Acquisition Agreement") to
acquire Triple-S and designated a subsidiary of the Company as nominee purchaser
to complete the acquisition. The Company in turn agreed to reimburse Softline
for all of its costs associated with the acquisition of Triple-S. On May 27,
1998, Softline agreed to accept shares of the Company's common stock valued at
the $4.5625 market price on that date for reimbursement of such costs.
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Softline's initial acquisition costs totaled $760,000, and the Company
issued a total of 166,643 shares to Softline pursuant to such agreement. A
dispute subsequently arose between the seller of Triple-S on the one hand and
the Company and Softline on the other hand concerning an earn-out provision in
the acquisition agreement. This dispute was settled during the quarter ended
June 30, 1999, through payment by Softline of $113,000 to such seller. That
amount was credited against the exercise price of 56,718 outstanding options to
purchase common stock of the Company exercised by Softline in March 2000.
In May 2000, the Company announced that it is in discussions with
Softline concerning a possible business combination between the Company and
Softline. The Company and Softline have no binding agreement and have not yet
established terms of a potential transaction. Any such transaction will be
subject to approvals by United States and South African governmental
authorities. Any transaction may also be subject to approval of the stockholders
of the Company and/or Softline.
In July 2000, Softline loaned the Company $10,000,000 pursuant to a
promissory note bearing interest at 10% per annum and due August 1, 2001. The
proceeds from this loan were used for a required principal payment on bank
indebtedness of the Company bearing interest at a higher rate. The note is
subordinated to the remaining bank indebtedness of the Company.
OTHER TRANSACTIONS
In May 1999, the Company closed the sale of its IBIS Systems Limited
subsidiary ("IBIS") to a company affiliated with Peter Nagle and other members
of IBIS management with effect from January 1999. The sale price for IBIS was
(a) $2,250,000 cash, (b) 141,000 shares of Company common stock, (c) the
surrender by Mr. Nagle of the net shares issuable upon exercise of an option to
purchase 50,000 shares of Company common stock at $3.00 per share; and (d) a
promissory note (the "IBIS Note") in the stated principal amount of $18,108,000,
due October 1, 1999, bearing interest from May 1, 1999 at 2% over the base prime
rate for U.S. dollar deposits quoted by HSBC Plc. The promissory note was
secured by a pledge in favor of the Company of all of the common stock of IBIS.
As part of the transaction, the Company agreed to pay to an entity affiliated
with Mr. Nagle the $4,500,000 which is last payable under the IBIS Note, in
settlement of certain obligations assumed by the Company from Softline in
connection with the acquisition of IBIS. For this reason, the Company recorded a
net receivable on the IBIS Note of $13,608,000.
The purchaser did not repay the IBIS Note on the original due date
because it had not yet completed a reorganization that was intended to serve as
the source of funds to repay the note. The Company agreed to extend the due date
of the IBIS Note to November 15, 2000. The Company also agreed to permit the
purchaser to proceed with its reorganization with a wholly-owned subsidiary of
Integrity Software, Inc. ("Integrity"), a publicly traded company with prices
quoted on the National Quotation Bureau Pink Sheets. The purchaser exchanged all
of the outstanding IBIS stock for 1,536,000 common shares of Integrity,
representing approximately 11% of Integrity's outstanding shares at March 20,
2000. The Company agreed to substitute its security interest in the IBIS shares
for a security interest in the purchaser's Integrity shares. The Company also
obtained the right to convert all or any portion of the unpaid indebtedness
under the IBIS Note to Integrity shares valued at $12.50 per share and limited
rights to require Integrity to register such shares for resale under the
Securities Act of 1933. Three of our directors, Barry M. Schechter, Ivan M.
Epstein and Donald S. Radcliffe now serve on Integrity's board. The amount of
the receivable on the IBIS Note including accrued interest was $14,092,000 at
March 31, 2000.
Page 12
<PAGE>
In June 1999, Claudav Holdings Ltd. B.V., which may be deemed the
beneficial owner of 16% of the Company's outstanding common stock, loaned the
Company $1,500,000. The Company used the proceeds of this loan to pay a portion
of the purchase price for Island Pacific. The loan bears interest at the prime
rate with no stated maturity. The balance outstanding on this loan at June 30,
2000 was $756,000.
The office space for the Company's Sydney, Australia office is leased
from a company affiliated with Shaun Rosen, a former executive officer of the
Company. During the year ended March 31, 2000, the Company paid $163,000 in rent
for this office.
Page 13
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SVI HOLDINGS, INC., A NEVADA CORPORATION
By: /s/ Barry M. Schechter
-------------------------------------
Barry M. Schechter, Chairman of the
Board and Chief Executive Officer
(Principal Executive Officer)
Date: July 31, 2000
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the registrant and in the capacities and
on the dates indicated.
Signatures Capacity Date
---------- -------- ----
/s/ Barry M. Schechter Chairman of the Board, July 31,2000
-------------------------- Chief Executive Officer
Barry M. Schechter and Director
/s/ David L. Reese Chief Financial Officer, July 31, 2000
-------------------------- Secretary and Director
David L. Reese
/s/ Arthur S. Klitofsky Vice President and Director July 31, 2000
--------------------------
Arthur S. Klitofsky
/s/ Donald S. Radcliffe Director July 31, 2000
--------------------------
Donald S. Radcliffe
/s/ Ivan M. Epstein Director July 31, 2000
--------------------------
Ivan M. Epstein
/s/ Gerald Rubenstein Director July 31, 2000
--------------------------
Gerald Rubenstein
/s/ Ian Bonner Director July 31, 2000
--------------------------
Ian Bonner
/s/ Steven Cohen Director July 31, 2000
--------------------------
Steven Cohen
