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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 11, 2000
REGISTRATION NO.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
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
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(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. [ ]
<TABLE>
CALCULATION OF REGISTRATION FEE (1)
<CAPTION>
---------------------- --------------- -------------------------- ---------------------- ---------------------
PROPOSED MAXIMUM
TITLE OF SECURITIES AMOUNT TO BE PROPOSED MAXIMUM AGGREGATE AMOUNT OF
TO BE REGISTERED REGISTERED (2) OFFERING PRICE PER SHARE OFFERING PRICE REGISTRATION FEE
---------------------- --------------- -------------------------- ---------------------- ---------------------
<S> <C> <C> <C> <C>
Common Stock,
$.0001 par value 700,000 $5.50(3) $3,850,000 $1,016.40
---------------------- --------------- -------------------------- ---------------------- ---------------------
</TABLE>
(1) Pursuant to Rule 429(a), the prospectus included in this
Registration Statement also relates to 25,000 shares of Common
Stock, $.0001 par value, registered on Form S-18, Registration No.
33-36125-D. A registration fee of $43.75 was paid for registration
of such shares.
(2) Pursuant to Rule 416, this Registration Statement also registers
such indeterminate number of shares as may be issuable in
connection with stock splits, stock dividends or similar
transactions.
(3) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) of the rules and
regulations under the Securities Act of 1933, as amended (the
"Securities Act"). The price per share and aggregate offering
price are based upon the average of the high and low prices of the
Registrant's common stock on August 4, 2000 as reported on the
American Stock Exchange. It is not known how many of such shares
of Common Stock will be purchased under this Registration
Statement or at what price such shares will be purchased.
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 AUGUST 11, 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 August 4, 2000, was $6.00 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.
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TABLE OF CONTENTS
Page
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Prospectus Summary 1
Risk Factors 3
Recent Developments 17
Use of Proceeds 19
Selling Stockholders 19
Plan of Distribution 20
Legal Matters 21
Experts 21
Disclosure Regarding Forward-Looking Statements 22
Where You Can Get More Information 22
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 a leading 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.
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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.
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 a nominal price 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.
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RISK FACTORS
An investment in our shares as offered in this prospectus involves a
high degree of risk. The SEC allows us to "incorporate by reference" information
that we file with it, which means that we can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will periodically update and supersede this information.
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. This prospectus also contains forward-looking statements which
involve risks and uncertainties. Our actual results could differ materially from
those discussed here or incorporated by reference. Factors that could cause or
contribute to differences in our actual results include those discussed in this
section, as well as those discussed elsewhere in this prospectus and in other
documents incorporated by reference into this prospectus.
RISKS RELATED TO OUR BUSINESS
WE INCURRED A LOSS IN FISCAL YEAR 2000 AND WE CANNOT ASSURE YOU THAT WE WILL
ACHIEVE PROFITABILITY IN FISCAL YEAR 2001. OUR PROFIT IN THE FIRST QUARTER OF
FISCAL YEAR 2001 WAS BELOW THE PROFIT IN THE COMPARABLE QUARTER OF FISCAL YEAR
2000.
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. 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. 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. We cannot
guarantee that we will generate sufficient additional revenues to achieve
profitability in future quarters.
WE DO NOT EXPECT TO MAINTAIN OUR HISTORICAL RATE OF GROWTH.
We have experienced very rapid growth and expansion. 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. The rapid growth and expansion
in the last fiscal year was primarily due to acquisitions. We do not believe
that 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 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 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. The rapid growth placed a significant strain on our management and
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operations. 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. It
will also depend on our ability to expand, train, motivate, manage and retain
our work force, in particular our direct sales force. We must also continue to
deal effectively with third-party systems integrators and consultants. Two of
our executives in charge of retail operations subsidiaries retired during the
fiscal year ended March 31, 2000. Their replacements have served in their
current capacities for only a short time. Our future growth and success depend
in large part upon the ability of our executive management team to effectively
manage expansion of our operations. We cannot guarantee that we will be able to
manage our recent or any future growth, and our failure to do so would
negatively affect our business, operating results and financial condition.
WE EXPECT OUR QUARTERLY RESULTS TO FLUCTUATE. IF WE FAIL TO MEET EARNINGS
ESTIMATES, OUR STOCK PRICE COULD DECLINE.
Our quarterly operating results have varied significantly and are
expected to continue to fluctuate significantly in the future. Many factors may
cause these fluctuations, including:
o the size and timing of individual orders, particularly with respect to our
larger customers;
o changes in our strategies;
o general health of the retail industry and the overall economy;
o technological changes in platforms supporting our software products;
o lengthy sales and implementation cycles;
o changes in the mix of software products licensed;
o changes in the mix of software license revenues compared to consulting,
maintenance and other service revenues;
o non-recurring sales of assets and technologies;
o competition and pricing in the retail software industry;
o customer order deferrals in anticipation of new products;
o the timing of new software product introductions and enhancements to our
software products and those of our competitors;
o market acceptance of new software products;
o employee hiring and retention, particularly with respect to sales and
consulting personnel;
o changes in our operating expenses; and
o changes in the mix of domestic and international revenues and foreign
currency exchange rate fluctuations.
We usually ship our software products when contracts are signed.
Consequently, 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
shipped in that quarter, and this makes it difficult for us to predict revenues.
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DEMAND FOR OUR RETAIL SOFTWARE SYSTEMS DECLINED IN FISCAL YEAR 2000, AND WE
CANNOT GUARANTEE THAT THIS TREND WILL REVERSE.
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 at industry
trade shows in early calendar year 2000. This decline in demand continued to
negatively affect sales of software licenses in the quarters ended March 31,
2000 and June 30, 2000, as our sales cycles tend to range from four to twelve
months. We remain cautious about our expectations for sales of software licenses
in near term future periods due to the interruption in sales cycles during 1999.
We cannot assure you that the decline in demand was not due to other factors,
such as structural changes in the retail industry reducing overall demand for
retail software solutions, marketing issues, longer sales cycles, lack of
desired features or functionality of our products and/or perceived advantages of
the products of our competitors.
IMPLEMENTATION OF OUR PRODUCTS IS A LENGTHY PROCESS.
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. Consequently, implementation
of our software is a complex, lengthy process and the commitment of resources by
our customers is subject to a number of significant risks over which we have
little or no control. We believe the purchase of our products is often
discretionary and involves a significant commitment of capital and human
resources by our customers. Our sales cycles are generally lengthy, typically
ranging from four to twelve months. Consequently, it is difficult to predict and
budget for quarterly and annual revenue.
Our sales and implementation cycles vary substantially from customer to
customer. 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. If we receive any
significant cancellation or deferral of customer orders, or we are unable to
conclude negotiations by the end of the fiscal quarter, our operating results
may be lower than anticipated. In addition, any weakening or uncertainty in
international economies may make it more difficult for us to predict quarterly
results in the future, and could negatively impact our business, operating
results and financial condition for an indefinite period of time.
We base our expense levels in large part on expectations of future
revenues, and expenses are relatively fixed in the near term. Because of this,
our net income may be lower than expected if we experience an unanticipated
decline in revenue for a particular quarter. Moreover, the retail software
industry is generally dependent on system roll-outs with fixed time horizons.
Our operating results may vary significantly if we fail to obtain major
projects, if major projects are cancelled or delayed or if we fail to replace
projects that have been completed or are nearing completion. In addition, we may
also experience relatively weaker demand for our products from October through
December as a result of reduced sales activities during those months.
As a result of the above factors, revenues and earnings for any quarter
may vary significantly and we do not believe that period-to-period comparisons
of our financial performance are necessarily meaningful. You should not rely on
them as an indication of our future performance. Fluctuations in our operating
results may also result in volatility in the price of our common stock. 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,
the price of our common stock may decline.
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WE SOLD OUR IBIS SUBSIDIARY IN 1999 IN PART FOR A PROMISSORY NOTE, AND
COLLECTION OF THE BALANCE OF THE NOTE DEPENDS ON THE VALUE OF A THINLY TRADED
STOCK. DELAYS IN PAYMENT OF THIS NOTE HAVE FORCED US TO SEEK OTHER SOURCES OF
CAPITAL.
We sold our IBIS Systems Limited subsidiary effective January 1, 1999.
The purchaser was a company affiliated with IBIS's management team. The
purchaser paid $13.6 million of the purchase price in the form of a promissory
note originally due October 1, 1999. To secure the note, we obtained a security
interest in the stock of IBIS. The purchaser did not repay the 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 due date of the
note has been extended to November 15, 2000.
We permitted the purchaser to proceed with its reorganization with a
wholly-owned subsidiary of Integrity Software, Inc., a publicly traded company
with prices quoted on the National Quotation Bureau Pink Sheets under the symbol
"INTY". 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. We agreed to substitute our security
interest in the IBIS shares for a security interest in the purchaser's Integrity
shares. We also obtained the right to convert all or any portion of the unpaid
indebtedness under the 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. Integrity bid quotations have ranged from $7.00 to
$22.00 per share from January 10, 2000 to June 23, 2000, but the market for
Integrity shares has been limited. These quotations may not represent actual
transactions. Three of our directors, Barry M. Schechter, our Chairman and CEO,
Ivan M. Epstein and Donald S. Radcliffe now serve on Integrity's board.
We cannot guarantee the purchaser will pay the note when due, if at
all. To our knowledge, the purchaser's only asset is the Integrity shares it
holds. The purchaser's ability to pay is therefore entirely dependent on its
ability to sell the Integrity shares. The purchaser is an affiliate of
Integrity, and its ability to sell the Integrity shares will be limited by law
and by market conditions. A recent third-party valuation of the Integrity shares
securing the note supports the carrying value of the note receivable at June 30,
2000. However, we do not know when or if the purchaser of IBIS or we will be
able to realize liquidity from the Integrity shares, as the legal and practical
ability of both the purchaser and us to resell such shares is limited by
applicable securities laws and market conditions. We cannot guarantee that the
value of the Integrity shares will remain high enough to support the carrying
value of the note receivable, and we may be required to impair the value of the
note receivable should the value of the Integrity shares decline. Any such
impairment would adversely affect our results of operations during the period or
periods in which it or they occur.
We have reclassified this note receivable as a long-term asset due to
the uncertainty of the marketability of the Integrity shares and the dependence
on such marketability for collection. The amount of the receivable including
accrued interest was $14.4 million at June 30, 2000. We have also implemented
plans to meet our short-term liquidity needs without reliance on this note
receivable.
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WE HAVE SUBSTANTIAL DEBT OBLIGATIONS ASSOCIATED WITH OUR ACQUISITION OF ISLAND
PACIFIC. WE NEED ADDITIONAL CAPITAL AND WE HAVE NO COMMITMENTS FOR CAPITAL. WE
HAVE RELIED ON CAPITAL CONTRIBUTED BY RELATED PARTIES, AND SUCH CAPITAL MAY NOT
BE AVAILABLE IN THE FUTURE.
In connection with our acquisition of Island Pacific, we obtained two
bank loans totaling $18.5 million. The bank took a security interest in 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. One loan was in
the amount of $3.5 million and was fully amortizing over two years. The other
loan required interest-only payments until maturity at December 3, 1999. We
expected to retire the $15 million loan on or before maturity using proceeds
from the $13.6 million note receivable obtained in connection with the sale of
IBIS; however, our agreement with the bank permitted us to convert the $15
million loan to a two-year fully amortizing term loan subject to certain terms
and conditions. Because the $13.6 million note receivable was not paid on its
original due date, we were not able to retire the $15 million bank loan as
anticipated. Rather than convert the loan, we negotiated extensions of the due
date of the $15 million obligation while we searched for a replacement source of
capital to retire such loan. We made a $2 million principal payment on this loan
in May 2000 using proceeds from the sale of common stock in a private placement.
In May and June 2000, we agreed to consolidate the approximately $14.75 million
balance of the two loans into a single loan and to terminate the conversion
option. In July 2000, Softline Limited loaned us $10 million for the purpose of
making a $10 million principal payment on this loan.
In July 2000, we refinanced the $4.75 million balance due on the bank
loan. Under the amended loan agreement, we are required beginning August 1, 2000
to pay $200,000 per month toward reduction of principal plus interest on the
outstanding balance at the rate of 5% over the bank's prime rate, increasing to
6.25% over the bank's prime rate after December 31, 2000. We are also required
to pay to the bank as a reduction of principal one half of amounts received from
a certain $1.75 million contract receivable from a one-time sale, any amounts we
receive from the sale of the shares of common stock of Integrity Software, Inc.
which secure the related note receivable for $14.4 million, and any amounts we
receive from the issuance of debt or equity securities other than stock option
exercises. We also maintain a $3 million line of credit with this bank, and the
line is subject to the provisions and restrictions of the amended loan
agreement. The entire remaining balance of the consolidated bank loan and the
lines of credit, if any, will be due and payable April 1, 2001. If we make no
principal prepayments on the consolidated loan amount other than the required
monthly payments, the balance at the maturity date would be $3.15 million plus
the amount outstanding on our credit lines. The loans are subject to certain
financial covenants and contain limitations on acquisitions, investments and
other borrowings. We plan to obtain replacement financing for the entire amount
owing to the bank prior to the maturity date. However, there can be no guarantee
that replacement financing will be available on acceptable terms and conditions,
or at all.
The interest payments on the bank loans have adversely affected our
results of operations and will continue to do so until the indebtedness is
repaid.
The $10 million loan from Softline is due August 1, 2001. The loan is
subordinated to the bank obligations and bears interest at 10% per annum payable
monthly. We intend to use proceeds we might receive from payment of the $14.4
million note receivable or from sale of the shares of the common stock of
Integrity Software, Inc. (into which such note is convertible and which secure
such note) to repay the loan from Softline. We cannot guarantee that we will be
able to resell sufficient Integrity shares to repay this loan. We may have to
use any proceeds from the sale of these shares first to satisfy the remaining
bank obligation. If we are not able to repay some or all of the Softline loan
through these means, we will likely be required to seek outside debt or equity
financing. We currently have no commitments for such financing, and we cannot
guarantee that such financing will be available on acceptable terms and
conditions, or at all.
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In connection with our acquisition of Island Pacific, we also borrowed
$2.3 million with no stated maturity date from three entities. $1.5 million of
such amount was borrowed from a major stockholder. The balance due on these
loans at June 30, 2000 was $1.6 million. The loans bear interest at the prime
rate.
During the year ended March 31, 2000, Softline exercised options to
purchase shares of SVI common stock for net proceeds of $4.8 million. Softline's
ability to continue to finance our liquidity needs is limited by Softline's cash
resources and by South African currency exchange laws. We cannot assure you that
Softline or other stockholders or related parties will be willing or able to
continue to provide cash to meet our future liquidity needs.
WE HAVE IN THE PAST AND MAY IN THE FUTURE MAKE ACQUISITIONS WHICH WILL INVOLVE
NUMEROUS RISKS. THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO ADDRESS THESE
RISKS SUCCESSFULLY WITHOUT SUBSTANTIAL EXPENSE, DELAY OR OTHER OPERATIONAL OR
FINANCIAL PROBLEMS.
We have previously acquired a number of companies, including Divergent
Technologies Pty. Ltd., Chapman Computers Pty. Ltd., Applied Retail Solutions,
Inc., Island Pacific Systems Corporation and MarketPlace Systems Corporation. We
also acquired and then disposed of a number of companies, including IBIS Systems
Limited and Triple-S Computers. Acquisitions involve numerous risks. For
example:
o It is often difficult to assimilate the operations and personnel of an
acquired business into our own business, particularly if they are
geographically diverse.
o Management information and accounting systems of an acquired business must
be integrated into our current systems.
o Our management personnel must devote its attention to assimilating the
acquired business, which diverts their attention from our other business
concerns.
o We might enter markets in which we have limited prior experience.
o We might lose key employees of an acquired business.
The companies we acquired have self-contained management information
and accounting systems, and we have not yet created an information management
and accounting system which integrates them into our overall enterprise.
Further, some of the companies we acquired operate in markets where we had no
direct prior experience. We have devoted substantial time and resources to
integrate these recently acquired businesses, and we will be required to devote
substantial time and resources to integrate any other business we may acquire in
the future. Achieving the benefits of an acquisition will depend, in part, upon
whether integration occurs in a timely and efficient manner.
We intend to continue to evaluate potential acquisitions of companies
which we believe will complement or enhance our existing business. If we acquire
other companies in the future, it may result in the issuance of equity
securities that could dilute your stock ownership. We may also incur additional
debt and amortize expenses related to goodwill and other intangible assets if we
acquire another company, and this could negatively impact our results of
operations. We cannot guarantee that we will be able to identify or complete any
acquisition in the future.
WE ARE IN DISCUSSIONS WITH OUR MAJORITY STOCKHOLDER CONCERNING A POTENTIAL
ACQUISITION WHICH COULD SUBSTANTIALLY ALTER OUR BUSINESS AND OUR MANAGEMENT AND
DILUTE YOUR STOCK.
We are currently engaged in preliminary discussions with Softline
Limited, which owns approximately 56% of our outstanding common stock,
concerning a business combination. Softline is a South Africa based company
traded on the Johannesburg Stock Exchange under the symbol "SFT". Softline 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. The discussions are in a preliminary stage.
Any transaction to which SVI and Softline might agree will be subject to
governmental approvals under United States and South African law. There can be
no guarantee that we will obtain all required approvals. Also, SVI and Softline
may not reach agreement on the terms of a business combination. SVI or Softline
may not obtain stockholder approvals required or sought voluntarily. The parties
could also abandon the transaction before or after stockholder approvals upon
mutual agreement or upon failure of terms and conditions contained in the
operative documents.
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It is likely that 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 owns a majority of our outstanding common stock and
four of our eight directors are also directors of Softline, 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. There can be no guarantee that our procedures for
addressing and managing the conflicts of interest will 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. Based on its current
holdings of our common stock, Softline would control the outcome of that vote,
so you may not have a meaningful right to vote on a proposed business
combination. 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.
IF WE CANNOT MANAGE THE ADDITIONAL CHALLENGES PRESENTED BY OUR INTERNATIONAL
OPERATIONS, OUR REVENUES AND PROFITABILITY MAY SUFFER.
Approximately 37% of our net sales were outside North America,
principally in Australia and the United Kingdom, in the year ended March 31,
2000. 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 currently have sales or support staff located in
Australia and the United Kingdom. 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. We cannot
guarantee that the countries in which we operate will have a sufficient pool of
qualified personnel from which to hire or that we will be successful at hiring,
training or retraining personnel. 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 some of the foreign currencies that we deal with fluctuate significantly;
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.
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Any of these factors could negatively affect our financial performance
and results of operations. In addition, some of our customer purchase agreements
are governed by foreign laws, which may differ significantly from U.S. laws.
Therefore, we may be limited in our ability to enforce our rights under such
agreements and to collect amounts owed to us should any foreign customer refuse
to pay us. We are also subject to the Foreign Corrupt Practices Act, which may
place us at a competitive disadvantage to foreign companies that are not subject
to that law.
In addition, we cannot guarantee that we will be able to maintain or
increase international market demand for our products or services. Almost all of
our international sales are denominated in local currencies. When accounts
receivable and accounts payable arising from international sales and services
are converted to U.S. dollars, the resulting gain or loss could contribute to
fluctuations in our operating results. We do not currently utilize foreign
currency hedging instruments, and we cannot assure you that fluctuations in
foreign currency rates will not impact our financial performance in the future.
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 may continue to derive, a
significant portion of our revenues from a limited number of large customers.
During the fiscal year ended March 31, 2000, one customer accounted for 15% of
net sales. Our customers 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.
OUR FUTURE SUCCESS DEPENDS IN PART ON THE CONTINUED SERVICE OF OUR KEY EXECUTIVE
PERSONNEL, SOFTWARE ENGINEERS, SALES AND MARKETING PERSONNEL AND OUR ABILITY TO
IDENTIFY, HIRE AND RETAIN ADDITIONAL PERSONNEL.
Our success is dependent, in part, upon certain key executive officers
remaining employed with us, including Barry M. Schechter, our Chairman and CEO.
Our current employment agreement with Mr. Schechter expires September 30, 2000.
We carry key man life insurance on Mr. Schechter. Two of our executives in
charge of retail operations subsidiaries retired during the fiscal year ended
March 31, 2000. Their replacements have served in their current capacities for
only a short time. 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 do not know if we will be
successful in attracting or retaining skilled technical and managerial
personnel. Further, the loss of certain key employees or our inability to
attract and retain other qualified employees could negatively affect our
financial performance.
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WE ARE DEPENDENT ON THE RETAIL INDUSTRY, AND IF ECONOMIC CONDITIONS IN THE
RETAIL INDUSTRY DECLINE, OUR REVENUES MAY DECLINE.
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. Our future growth is
critically dependent on increased sales to the retail industry. 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. In addition, the licensing of our software products
generally involves a large capital expenditure, which is often accompanied by
large-scale hardware purchases or commitments. As a result, demand for our
products and services could decline in the event of instability or downturns in
the retail industry. Such downturns may cause customers to exit the industry or
delay, cancel or reduce any planned expenditure for information management
systems and software products.
The retail industry may be consolidating. The industry is from time to
time subject to increased competition and weakening economic conditions which
could negatively impact the industry, or our customers' ability to pay for our
products and services. These issues have in the past, and could in the future,
lead to an increased number of bankruptcy filings. Consolidation and weakening
economic conditions would likely reduce our revenues, reduce the demand for our
products and negatively impact our business, operating results and financial
condition.
INTERNET RETAILING AND SUPPLY CHAIN MANAGEMENT IS HAVING A MAJOR IMPACT ON THE
RETAIL INDUSTRY, AND WE MUST EXPAND OUR PRODUCT BASE AND MARKET PENETRATION TO
THE INTERNET IN ORDER TO GROW.
E-commerce on the Internet is dramatically impacting the retail
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.
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.
OUR GROWTH IS DEPENDENT ON DEVELOPING OUR DIRECT SALES OR EXPANDING INTO OTHER
DISTRIBUTION CHANNELS.
We presently market our retail software products exclusively through
direct sales to end users. As we develop our product base and begin to market
some of our specialty modules to non-core customers, we may need to rely on
other distribution channels such as resellers. If we begin to use resellers,
they may compete to a certain extent with our direct sales. We cannot guarantee
you that we will 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. We also cannot assure you that we
will be able to manage conflicts among resellers. Even if we are able to attract
resellers, most reseller agreements can be terminated by either party without
cause. If we cannot expand our distribution channels, develop our international
distribution channels, or manage any potential channel conflicts, our growth may
be adversely affected.
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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. Our licenses from each of these providers are non-exclusive.
Any termination of, or significant disruption in, our ability to license these
products would adversely affect our business and revenues. 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 need to expand our product line and our
sales efforts to retailers selling all or a substantial amount of their products
online. We currently serve only the specialty goods, mass merchants and
department store markets. In order to increase revenues, we may need to expand
to other retail sectors. We cannot guarantee that our products and services will
gain acceptance in or meet these sectors' expectations and needs.
THE MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE AND SUBJECT TO RAPID
TECHNOLOGICAL CHANGE AND PRICE EROSION.
The market for our software products and support services is highly
competitive. It is also subject to rapid change and sensitive to new product
introductions or enhancements and marketing efforts by industry participants. We
expect to continue to experience significant and increasing levels of
competition in the future. The principal elements of competition related to our
products include:
o brand awareness and reputation;
o product features and performance;
o price
o e-commerce compatibility, both in the business-to-consumer (B2C) and
business-to-business (B2B) sectors;
o compatibility with open systems;
o retail system expertise;
o quality and reliability;
o timely introduction of new products;
o effective distribution networks;
o customer service; and
o quality of graphical interface.
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. We cannot assure
you that we will be able to compete effectively with these competitors or that
our existing competitors, or new competitors, will not develop competitive
products and services at lower prices or more attractive terms than we offer.
In order to effectively compete, we need to continue to grow our
business and increase our revenues so that we have the resources to timely
develop new products and services in response to evolving technology and
customer demands and to sell products and services through broad distribution
channels. Our competitors may be able to respond more quickly than we can to new
or emerging technologies and changes in customer requirements. We cannot assure
you that we will be able to grow sufficiently to compete effectively in this
marketplace.
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Our current and potential 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.
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 evolving technology
and industry standards. 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 be negatively affected. The life cycles of our
products are difficult to estimate. This is particularly true in the electronic
commerce market because that market is new and emerging and is characterized by
rapid technological change and changing customer needs. We cannot guarantee you
that our new products, even if successfully developed, will ever achieve market
acceptance. Moreover, if our competitors introduce new technology or new
industry standards emerge, our existing products could be rendered obsolete and
unmarketable.
To develop and manufacture new competitive products and enhance our
existing products, we must continue to make significant investments in product
development. 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.
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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.
Our success and competitive position is dependent in part upon our
ability to develop and maintain the proprietary aspects of our technology. We
rely on a combination of trademark, trade secret, copyright law and contractual
restrictions to protect the proprietary aspects of our technology. We seek to
protect the source code to our software, documentation and other written
materials under trade secret and copyright laws. Effective copyright and trade
secret protection may be unavailable or limited in some foreign countries. We
license our software products under license agreements which impose restrictions
on the customer's ability to utilize the software.
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.
Intellectual property rights are often the subject of large-scale
litigation in the software and Internet industries. 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. We cannot guarantee the success of any litigation we
might bring to protect our proprietary rights.
OUR PRODUCTS AND OTHER PROPRIETARY RIGHTS MAY INFRINGE ON THE PROPRIETARY RIGHTS
OF THIRD PARTIES, WHICH MAY EXPOSE US TO LITIGATION.
Although we believe that our products do not infringe on any third
party's patents, 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, defending or
bringing claims related to our intellectual property rights may require our
management to redirect our human and monetary resources to address these claims.
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.
We produce open system software for the retail industry, but we do not
develop hardware or operating systems. Consequently, we are dependent upon
third-party providers to develop the hardware platforms and operating systems
that run our software. 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 are currently engaged in a major
development effort to redevelop certain systems to the Java platform which can
run in most hardware and operating system environments. If we do not timely
complete this redevelopment, or if Java ceases to be an industry standard, our
sales could be materially adversely affected.
We cannot guarantee that our software will be compatible with all
available hardware or operating systems. Further, we cannot assure you that we
will have the technical personnel necessary to evaluate and fix any software
compatibility problems that may exist in the future. If we do not have technical
personnel available to address and fix compatibility problems, our sales could
decline.
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OUR STRATEGIC RELATIONSHIPS MAY NOT ENDURE AND MAY NOT DELIVER THE INTENDED
BENEFITS.
We have from time to time established, or attempted to establish,
formal and informal relationships with other companies, including IBM, NCR, ICL
Fujitsu and Retail Expert, Inc., to collaborate in areas such as product
development, marketing and distribution. The maintenance of these relationships
and the development of other similar relationships is a meaningful part of our
business strategy. While some of these relationships are governed by contracts,
most are non-exclusive and all may be terminated on short notice by either
party. We cannot assure you that our current strategic relationships will be
beneficial to us, that such relationships can be maintained, or that we will be
able to enter into successful new strategic relationships in the future.
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.
Though we do have back-up systems, 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, like all 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.
WE ARE SUBJECT TO RISKS RELATED TO PRODUCT DEFECTS.
Our software products are highly complex and sophisticated. As a
result, 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. Problems in our
systems are more common upon first release. 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. Despite product testing prior to sale, 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. Errors or integration problems
may also 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
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. Although we maintain product liability insurance
covering certain damages arising from implementation and use of our products, we
do not know if this insurance would cover any claims brought against us. Any
product liability or other claims brought against us, if successful and of
sufficient magnitude, could negatively impact our financial performance.
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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.
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. Four of our eight directors are also directors of 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.
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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. NEVADA LAW AND SOME PROVISIONS OF
OUR CHARTER AND BYLAWS MAY AFFECT THE PRICE OF YOUR 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. Our Board of Directors
may determine the terms of the 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 even 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. Further, 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. 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. As
a result, the price of our common stock may be adversely affected.
WE MAY REINCORPORATE IN DELAWARE AT ANY TIME, AND SOME PROVISIONS OF OUR NEW
CHARTER OR BYLAWS MAY AFFECT YOUR STOCK PRICE.
Our stockholders approved a change in the state of our incorporation
from Nevada to Delaware at our last annual meeting. We have not yet completed
the reincorporation, but we may do so at any time. Our stockholders also
approved in connection with the reincorporation an increase in the number of
authorized shares of common stock from 50,000,000 to 100,000,000. Finally, our
stockholders approved a reduction of the required quorum at meetings of
stockholders from a majority of the outstanding shares to one-third of the
outstanding shares. We have not yet implemented these changes to our charter
documents, but we may do so at any time. 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.
RECENT DEVELOPMENTS
In January 2000, we appointed Mark Wulff as CEO of our retail division.
Mr. Wulff succeeded Shaun Rosen, who retired from such position in December 1999
but continues to serve as a consultant to our SVI Retail Pty. Ltd. (Australia)
subsidiary.
In March 2000, we acquired the assets of MarketPlace Systems
Corporation of Austin, Texas for $750,000 in cash and 93,023 shares of common
stock valued at $1 million. MarketPlace Systems was formerly privately held, and
developed software and performed consulting services. MarketPlace Systems offers
three comprehensive software packages: MarketPlace DIRECT, a direct marketing
management system for catalog and mail order marketers, MarketPlace MERCHANT, a
merchandising system for chain or department store retailers and MarketPlace Web
Direct, an Internet shopping application. We have incorporated the MarketPlace
software packages into our Total Point of Business solution to provide
integrated multi-channel, multi-format retail fulfillment to our customers.
MarketPlace's technical staff also complements our technical resources.
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In March 2000, Union Bank of California, N.A. agreed to extend the
maturity date of our $15 million term loan from March 3, 2000 to June 1, 2000.
We requested the extension because we had not yet received payment on a the note
receivable obtained in connection with our sale of IBIS Systems Limited
effective January 1999. We intended to use the proceeds from this note
receivable to repay the loan from Union Bank. We obtained the $15 million loan
from Union Bank to pay a portion of the purchase price for Island Pacific
Corporation, which we acquired effective April 1999.
In March 2000, we sold 344,948 shares of common stock to a single
investor for gross proceeds of $3 million and agreed to register those shares,
and additional shares issuable upon a repricing right, for resale pursuant to
this prospectus.
In April 2000, we reorganized our U.S.-based, wholly-owned, retail
software subsidiaries under a single wholly-owned subsidiary, SVI Retail, Inc.
In May 2000, we announced that we are in discussions with Softline
Limited concerning a possible business combination between Softline and SVI.
Softline currently beneficially owns approximately 56% of our common shares.
Softline 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's common shares
trade over the Johannesburg Stock Exchange under the symbol "SFT". SVI 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 SVI and/or Softline.
In May and June 2000, we agreed to consolidate the approximately $14.75
million balance of our two term loans from Union Bank into a single loan. The
consolidated loan bore interest at 6.25% over Union Bank's prime rate and was
due August 1, 2000, subject to an earlier principal repayment of $10 million to
be funded by a loan from Softline to us. We also agreed to terminate the option
to convert the $15 million term loan to a two-year fully amortizing term loan
and to consolidate our $3.25 million line of credit with Union Bank into the
credit agreement applicable to the consolidated term loan.
In June 2000, Marcel Golding resigned from our Board of Directors. We
appointed Steven Cohen, Chief Operating Officer of Softline, to fill the
vacancy.
In July 2000, Softline loaned us $10 million for the purpose of making
the $10 million principal payment on the $14.75 million consolidated Union Bank
term loan. This loan from Softline is due August 1, 2001, bears interest at 10%
per annum payable monthly, and is subordinated to the Union Bank loans.
In July 2000, we refinanced the $4.75 million remaining balance due on
the Union Bank consolidated loan. Under the amended loan agreement, we are
required beginning August 1, 2000 to pay $200,000 per month toward reduction of
principal plus interest on the outstanding balance at the rate of 5% over Union
Bank's prime rate, increasing to 6.25% over the bank's prime rate after December
31, 2000. We are also required to pay to Union Bank as a reduction of principal
one half of amounts received from a certain $1.75 million contract receivable
from a one-time sale, any amounts we receive from the sale of the shares of
common stock of Integrity Software, Inc. which secure our related note
receivable for $14.1 million obtained in connection with our sale of IBIS, and
any amounts we receive from the issuance of debt or equity securities other than
stock option exercises. Our line of credit with Union Bank, now representing a
$3 million commitment, is also subject to the amended loan agreement and bears
interest at the same rates as the term loan. The entire remaining balance of the
consolidated bank loan and the lines of credit, if any, will be due and payable
April 1, 2001. The loans are subject to certain financial covenants and contain
limitations on acquisitions, investments and other borrowings.
18
<PAGE>
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 a nominal price 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 $2.4
million as of July 21, 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.
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.
The number of shares which may be issued pursuant to this formula may
exceed the 355,052 additional shares registered, in which case we have agreed to
file 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.
19
<PAGE>
The following table sets forth certain information as of August 9, 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.
<TABLE>
<CAPTION>
SHARES OF
COMMON SHARES OF
STOCK COMMON
BENEFICIALLY STOCK
OWNED MAXIMUM BENEFICIALLY
BEFORE NUMBER OF OWNED AFTER
OFFERING SHARES OFFERING
(1) OFFERED (2)
NAME NUMBER % HEREBY NUMBER %
---- ------------ ----- --------- ------------- ---
<S> <C> <C> <C> <C> <C>
Amro International, S.A. 700,000 2.1% 700,000 -0- 0%
</TABLE>
(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.
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].
20
<PAGE>
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.
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 as of March 31, 2000 and 1999 incorporated in
this prospectus by reference from our 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
our 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 such firm given upon their authority as experts in
accounting and auditing.
21
<PAGE>
DISCLOSURE REGARDING 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 of 1933, as amended (the "Securities Act") and Section 21E
of the Securities Exchange Act of 1934, as amended (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 like "anticipate," "estimate," "plans," "projects,"
"continuing," "ongoing," "expects," "management believes," "the Company
believes," "the Company intends," "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 herein
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 us,
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.
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."
22
<PAGE>
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;
o Definitive Proxy Statement filed July 29, 1999, as amended;
o Quarterly Report on Form 10-Q for the quarter ended June 30, 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
23
<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..................... $ 20,000
Accounting fees and expenses................ $ 10,000
Printing & Engraving........................ $ 500
--------
Total....................................... $ 31,516
========
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.
II-1
<PAGE>
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.
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.
24.1 Power of Attorney. Reference is made to Page II-5.
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.
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, a post-effective
amendment to this registration statement to include any material
information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to
such information in the registration statement;
(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.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on August 10, 2000.
SVI HOLDINGS, INC.
By: /s/ Barry M. Schechter
-------------------------------
Barry M. Schechter
Chairman and Chief Executive Officer
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Barry M. Schechter and David L. Reese and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and agent, or any of
them, or his substitutes or substitute, may lawfully do or cause to be done by
virtue hereof.
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.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Barry M. Schechter Chairman, Chief Executive Officer August 10, 2000
------------------------ (Principal Executive Officer),
Barry M Schechter and Director
/s/ David L. Reese Chief Accounting Officer, Treasurer August 10, 2000
------------------------ and Secretary (Principal Financial
David L. Reese and Accounting Officer)
/s/ Arthur S. Klitofsky Vice-President and Director August 10, 2000
-----------------------
Arthur S. Klitofsky
/s/ Donald S. Radcliffe Director August 10, 2000
-----------------------
Donald S. Radcliffe
/s/ Ivan M. Epstein Director August 10, 2000
-------------------------
Ivan M. Epstein
/s/ Gerald Rubenstein Director August 10, 2000
-----------------------
Gerald Rubenstein
/s/ Ian Bonner Director August 10, 2000
----------------------------
Ian Bonner
/s/ Steven Cohen Director August 10, 2000
-------------------------
Steven Cohen
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Specimen Stock Certificate, incorporated by reference to exhibit 4.1 to
our Form-10K 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.
24.1 Power of Attorney. Reference is made to Page II-5.
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.
