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FILED PURSUANT TO RULE 424(B)(3)
REGISTRATION NO. 333-27007
PROSPECTUS
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125,000 Shares
DATAWARE TECHNOLOGIES, INC.
Common Stock
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Dataware common stock trades on the Nasdaq National Market under the symbol
DWTI. On January 3, 2000, the last reported price per share of Dataware common
stock on the Nasdaq National Market was $14.50 per share.
The selling stockholders listed on page 7 of this prospectus are offering the
shares of common stock described in this prospectus and will receive all the
proceeds from any sales of these shares. The selling stockholders will obtain
the shares of common stock offered in this prospectus upon exercise of warrants
held by them.
The selling stockholders will pay all brokerage fees and commissions and
similar sale-related expenses. Dataware Technologies is paying all expenses
relating to the registration of the shares with the Securities and Exchange
Commission.
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AN INVESTMENT IN SHARES OF DATAWARE COMMON STOCK INVOLVES CERTAIN RISKS. YOU
SHOULD CAREFULLY READ AND CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 4 OF
THIS PROSPECTUS.
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THE DATE OF THIS PROSPECTUS IS JANUARY 4, 2000.
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<TABLE>
<S> <C>
ABOUT DATAWARE TECHNOLOGIES, INC..... 3
RISK FACTORS......................... 3
USE OF PROCEEDS...................... 7
SELLING STOCKHOLDERS................. 7
PLAN OF DISTRIBUTION................. 7
LEGAL MATTERS........................ 8
EXPERTS.............................. 9
FORWARD-LOOKING STATEMENTS........... 9
WHERE YOU CAN FIND MORE INFORMATION.. 9
</TABLE>
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ABOUT DATAWARE TECHNOLOGIES, INC.
Dataware is in transition to becoming an e-business solutions provider.
Historically, we have been a provider of software for enterprise information
access or "knowledge management" and professional electronic publishing
applications, as well as multimedia services for CD-ROM and Web-based
publishing. Our more intensive focus on solutions will involve helping
organizations leverage the Web to maximize the value of their knowledge,
expertise, and content.
Our customers range from corporations and commercial publishers to
government agencies and educational institutions. We have historically derived
recurring revenues from software licenses and software maintenance and service
revenues from updating existing customers' applications. We have been in
business since 1988.
RISK FACTORS
Before you buy our common stock, you should be aware that there are various
risks involved in making this investment. You should carefully consider the
following risk factors and other information in this prospectus, as well as
information found in our SEC filings, before investing in our common stock.
WE MAY HAVE DIFFICULTY TRANSITIONING TO AN E-BUSINESS SOLUTIONS MODEL, WHICH
COULD AFFECT OUR ABILITY TO MEET OUR LONG TERM GOALS.
During 1999, we began to transition our business and our corporate organization
to an e-business solutions model. This involves an extensive personnel
reorganization, as well as new sales and marketing strategies. Some of the
risks associated with our revised approach include:
. we may not effectively complete the necessary personnel reorganization;
. an excessive level of high-cost customized services may be required to
provide solutions meeting individual customers' needs; and
. sales of our older product lines may decline more rapidly than they can be
replaced by revenues from newer offerings.
These and other factors may adversely affect our operating results.
IF WE ARE UNABLE TO KEEP PACE WITH RAPID TECHNOLOGICAL CHANGES IN THE MARKET FOR
OUR PRODUCTS AND SERVICES, WE MAY MISS CERTAIN MARKET OPPORTUNITIES, WHICH COULD
LOWER SALES.
The market for information management and distribution products and services
continues to change rapidly. We must keep up with changing technology and
customer demands, including technologies and features introduced by competitors,
or we will not be successful.
As with any new product, our most innovative offerings may be subject to delays
in production and will require periods of adjustment to ensure that they are
meeting customer requirements These may cause us to miss market opportunities
and future sales.
WE ARE DEPENDENT ON KEY PERSONNEL, WHOSE LOSS COULD DELAY OUR PRODUCT
DEVELOPMENT INITIATIVES.
Our success depends on our ability to attract and retain highly skilled
technical, management, sales and marketing personnel.
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Competition for personnel in the computer software and services industry is
intense, and we are always at risk of losing key personnel to our competitors.
We may not be able to retain and attract additional qualified employees and this
could have a material adverse effect on the development and introduction of
competitive products.
Our ability to provide competitive equity compensation to key employees plays a
significant role in personnel retention. At present, we expect to ask our
shareholders at the 2000 Annual Meeting to authorize additional shares to grant
to employees. If they do not, we may not be successful in attracting and
retaining qualified personnel.
WE FACE INTENSE COMPETITION AND MAY NOT BE ABLE TO DEVELOP NEW, IMPROVED OR MORE
COST EFFECTIVE PRODUCTS AS QUICKLY AS OUR COMPETITORS.
The markets in which we compete are intensely competitive. Increased
competition may result in price reductions, reduced gross margins and loss of
market share, any of which could have a material adverse effect on our business,
operating results and financial condition.
Our competition varies by:
. geography (North America, Europe, Asia);
. type of customer (commercial, corporate, government agency);
. market segment (financial services, high technology, etc); and
. application category (from high-end, complete software and service
solutions to pure software sales).
Our competitors include traditional information retrieval competitors, as well
as very significant companies in various areas of the e-business solutions
market. It is likely that new competitors will enter these markets as they
continue to grow. Furthermore, as the markets grow, a number of companies could
attempt to increase their presence in our markets by acquiring or forming
strategic alliances with our competitors or by introducing products or services
specifically designed for these markets. Compared to us, many of our current
and future competitors have longer operating histories and significantly greater
financial, technical, sales, marketing and other resources.
ANY DISRUPTION OF A KEY DISTRIBUTION AGREEMENT COULD HURT OUR RESULTS.
In September 1997, we sold a portion of our data services business to IHS and
entered into a distribution agreement with IHS, under which IHS took over the
software distribution activities previously performed by five foreign
subsidiaries. IHS is now our biggest customer, accounting for 21% of total
revenues in the third quarter of 1999. Our plan is that, as revenues from the
existing IHS arrangements continue to diminish due to the winding down of the
current agreements, they will be replaced by revenues from sales of our newer
offerings through IHS and other channels. However, the current IHS relationship
will remain important for the near term and any unexpected disruption would
likely have a material adverse effect on the Company.
WE RELY ON THIRD-PARTY DISTRIBUTORS WHO MAY NOT SELL ENOUGH OF OUR PRODUCTS TO
MAKE OUR BUSINESS PROFITABLE.
Historically, we distributed our products and services largely through direct
channels. We are increasing our reliance on indirect distribution channels,
such as value-added resellers. If we cannot develop and effectively manage
these relationships, it could have a material adverse effect on our business.
OUR OPERATING RESULTS FLUCTUATE FROM QUARTER TO QUARTER MAKING OUR FUTURE
OPERATING RESULTS DIFFICULT TO PREDICT.
We have experienced, and may continue to experience, significant quarterly
fluctuations
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in our operating results. Our revenue from software license fees are
substantially dependent on factors including the following:
. the timing of product shipments and receipt of license reports for sales
that are often difficult to forecast;
. our ability to close significant sales in any quarter;
. external market conditions; and
. competition.
Changes in these factors may result in a material variation between forecasted
quarterly results and actual results. Also, a disproportionately large
percentage of quarterly sales occur in the closing weeks of each quarter, making
any prediction of quarterly results before the end of a quarter potentially
unreliable. Given these variations, we cannot assure you that we will be
consistently profitable during any particular period.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL TO FUND OUR OPERATIONS.
In recent years we have had significant operating losses. Our liquid assets and
anticipated cash from operations may be insufficient to meet our liquidity needs
for the near future, and we may need to raise additional capital during 2000 to
meet our working capital and other capital requirements. In general, factors
such as the following may cause liquidity problems in the future:
. unanticipated changes in business conditions or delays in market acceptance
of new products;
. expansion of operations or research and development activities;
. development of new distribution channels;
. competitive and technological developments; and
. future acquisitions of businesses and/or product rights.
MARKET FACTORS THAT AFFECT CERTAIN CLASSES OF CUSTOMERS MAY HURT OUR RESULTS.
Our revenues depend on distributors maintaining relationships with certain
classes of customers, including:
. government agencies in the United States, Canada, Germany and the United
Kingdom;
. corporate and commercial publishers, and law firms (for certain on-line
products);
. financial printers, issuers of securities; and
. financial services and health care organizations.
Factors that affect any of these customer groups may have a substantial adverse
effect on our earnings. For example, political pressures may cause governmental
customers to reduce spending on our products and services. A reduction in the
amount of orders received from any customer class could have a material adverse
effect on our earnings and may cause actual results to vary materially from
quarter to quarter.
WE MAY NOT BE ABLE TO OBTAIN COPYRIGHT OR TRADEMARK PROTECTION FOR OUR PRODUCTS
WHICH COULD LIMIT OUR ABILITY TO PREVENT COMPETITORS FROM USING OUR TECHNOLOGY.
Our success also depends on protecting our proprietary intellectual property
rights. We rely primarily on a combination of copyright, trademark and trade
secret laws, license agreements, employee and third party non-disclosure
agreements and other methods to protect our software. We rely to a limited
extent on patent protection for our software products and existing copyright
laws afford only limited protection.
Other factors also create risks in this area. For example, it may be difficult
to protect
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proprietary rights in certain international markets where the laws do not offer
the same intellectual property protection as U.S. law. Third parties may claim
we are infringing their rights. If these claims are made, they may result in
costly litigation or require us to license intellectual property rights of
others, which may not be possible on reasonable terms or at all. Any such
claims, with or without merit, can be time consuming and expensive to defend,
which can adversely affect our financial condition.
SINCE A LARGE PORTION OF OUR REVENUES ARE GENERATED OUTSIDE THE UNITED STATES,
CHANGES IN INTERNATIONAL MARKETS COULD AFFECT OUR OVERALL SALES.
We generate a significant portion of our revenues from international sales.
Currently, we have direct sales organizations in the United Kingdom, Denmark and
Singapore and have distribution agreements covering other European countries,
the Pacific Rim, and South America. Our performance could be adversely affected
by changes in the world economies. Risks of doing business abroad include:
. regional economic trends such as the turmoil in the economies of Asia
beginning in 1997 and Brazil in 1998;
. changes in the value of major foreign currencies in which we conduct
business;
. unanticipated changes in regulatory requirements, tariffs and other
barriers;
. political instability; and
. difficulties in managing foreign operations.
These or other factors may have a material adverse effect on
. our international sales;
. our ability to collect international receivables; or
. the value of our assets denominated in foreign currencies;
any of which would impact our operating results.
WE MAY HAVE DIFFICULTY INTEGRATING ACQUISITIONS INTO OUR BUSINESS WHICH COULD
INCREASE THE COSTS AND LENGTH OF TIME FOR INTEGRATION.
Over the last several years, we have expanded our product range and customer
base through a number of selective acquisitions. We may acquire additional
businesses or assets in the future. The success of an acquisition is dependent
upon our ability to integrate the acquired business or assets into our
organization. For example, we may have difficulty integrating acquired
technology into our products, or we may not be able to retain, motivate or
manage key employees of the acquired company. Our inability to integrate an
acquired business, or an increase in the cost of integration, could materially
and adversely affect our business, operating results and financial condition.
YEAR 2000 PROBLEMS MAY BE EXPENSIVE TO FIX.
We have completed testing of our current, updated product offerings (including
third party software incorporated in the products) and believe that they are all
Year 2000 compliant. We have also reviewed the computer systems through which
we provide certain services to customers and believe that they also are Year
2000 compliant.
To date, no material problems related to the Year 2000 issue have surfaced. It
is possible, however, that such problems exist but either have not yet
manifested themselves or have not yet been detected and these Year 2000 problems
may have a material adverse effect on our operating results.
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USE OF PROCEEDS
All net proceeds from the sale of the Dataware common stock offered in this
prospectus will go to the selling stockholders.
SELLING STOCKHOLDERS
We issued warrants, which are convertible into the shares of common stock
offered in this prospectus, to the selling stockholders in connection with
investment banking services they provided to us.
The following table sets forth the number of shares of common stock owned
by the selling stockholders, all of which are being offered by this prospectus,
and the percentage of the outstanding shares of common stock beneficially owned
by the selling stockholders before and after this offering. As of January 3,
2000 there were 9,896,633 shares of our common stock outstanding. The shares
offered by this prospectus may be offered from time to time, in whole or in
part, by the selling stockholders or their transferees.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED
SHARES BENEFICIALLY OWNED OR ISSUABLE AFTER
BEFORE OFFERING (1) SHARES OFFERED THIS OFFERING (1)(2)
------------------------------- PURSUANT TO THIS --------------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT PROSPECTUS NUMBER PERCENT
- ------------------------------------ ------------------------------- --------------- --------------------------
<S> <C> <C> <C> <C> <C>
Wharton Capital Partners Ltd. 75,000(3) 0.75% 75,000 0 0
545 Madison Avenue
New York, NY 10022
Advest, Inc. 50,000(3) 0.50% 50,000 0 0
90 State House Square
Hartford, CT 06103
</TABLE>
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(1) The selling stockholder listed in the table has sole voting and investment
power with respect to the shares beneficially owned by it.
(2) Assumes that all of the shares offered by the selling stockholder will be
sold in this offering.
(3) Represents shares of our common stock issuable upon exercise of one or more
common stock purchase warrants.
PLAN OF DISTRIBUTION
We are registering the shares of Dataware common stock offered in this
prospectus on behalf of the selling stockholders. As used in this prospectus,
"selling stockholders" includes pledgees, donees, transferees or other
successors-in-interest selling shares received from the selling stockholders as
a gift, partnership or liquidating distribution or other non-sale related
transfer after the date of this prospectus. We will pay all expenses of
registration of the shares offered, except for taxes or underwriting fees,
discounts, and selling commissions. The selling stockholders will pay any
brokerage commissions and similar selling expenses attributable to the
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sale of the shares. We will not receive any of the proceeds from the sale of the
shares by the selling stockholders.
The selling stockholders may sell the shares from time to time in one or
more types of transactions (which may include block transactions) on one or more
exchanges, in the over-the-counter market, in negotiated transactions, through
put or call options transactions relating to the shares, through short sales of
the shares, or a combination of these methods of sale. The selling stockholders
may sell their shares at market prices prevailing at the time of sale, or at
negotiated prices.
The selling stockholders may sell their shares directly to purchasers or to
or through broker-dealers, who may act as agents or principals. These broker-
dealers may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders and/or the purchasers of shares for
whom broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary commissions).
The selling stockholders and any broker-dealers that act in connection with
the sale of the shares might be deemed to be "underwriters" as the term is
defined in Section 2(11) of the Securities Act of 1933. Consequently, any
commissions received by these broker-dealers and any profit on the resale of the
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act of 1933.
Because the selling stockholders may be deemed to be "underwriters" as
defined in Section 2(11) of the Securities Act of 1933, the selling stockholders
will be subject to the prospectus delivery requirements of the Securities Act of
1933.
The selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conforms to the requirements of
that Rule.
Upon being notified by the selling stockholders that they have entered into
any material arrangement with a broker-dealer for the sale of the shares through
a block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to Rule 424(b) under the Securities Act of
1933, regarding the plan of distribution.
We have agreed to indemnify the selling stockholders against certain
liabilities, including liabilities arising under the Securities Act of 1933, or
to contribute to payments that the selling stockholders may be required to make
in respect hereof. The selling stockholders have agreed to indemnify us against
certain liabilities, including liabilities arising under the Securities Act of
1933.
LEGAL MATTERS
Palmer & Dodge LLP, Boston, Massachusetts, our legal counsel, is giving an
opinion on the validity of the shares of common stock offered in this
prospectus. Matthew C. Dallett, a partner of Palmer & Dodge LLP, is an
Assistant Secretary of Dataware.
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EXPERTS
The consolidated financial statements of Dataware Technologies, Inc.
incorporated by reference in this prospectus and elsewhere in this registration
statement, have been audited by PricewaterhouseCoopers LLP, independent public
accountants, as set forth in their report included therein. The consolidated
financial statements referred to above have been incorporated herein in reliance
upon the authority of such firm as experts in accounting and auditing.
FORWARD-LOOKING STATEMENTS
It is especially important to keep the risk factors described on pages 3 to 6
in mind when you read "forward-looking statements" in our SEC filings or other
public announcements. These are statements that relate to the future and
include statements about our:
. projected financial performance;
. market opportunities;
. product development;
. commercialization of new products; and
. future operations.
These statements can be identified by the use of words such as "may,"
"will," "expect," "anticipate," "estimate," "continue" or other similar words.
These statements are necessarily based on management's knowledge at the time and
are subject to known and unknown risks and uncertainties and other factors that
could cause our actual results to differ materially from those contemplated by
the statements. Although we believe that the assumptions and expectations
reflected in these "forward-looking statements" are reasonable, you should not
view them as guarantees of future performance. There are important factors that
could cause future results to differ materially from those projected in the
forward-looking statements.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549
and at the SEC's public reference rooms in New York, New York and Chicago,
Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference rooms. Our SEC filings are also available on the SEC's Website
at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information in this prospectus by referring 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 automatically update and
supersede the information in this prospectus. We incorporate by reference the
documents listed below and any future filings we make with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 before
the sale of all the shares covered by this prospectus:
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. Annual Report on Form 10-K for the year ended December 31, 1998, as filed
with the SEC on March 17, 1999;
. Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, as
filed with the SEC on May 14, 1999;
. Quarterly Report on Form 10-Q for the quarter ended June 30, 1999, as filed
with the SEC on August 14, 1999, as amended on Form 10-Q/A on August 16,
1999;
. Quarterly Report on Form 10-Q for the quarter ended September 30, 1999, as
filed with the SEC on November 12, 1999;
. Current Report on Form 8-K filed with the SEC on January 14, 1999, as
amended by Amendment No. 1 and Amendment No. 2 to Form 8-K filed with the
SEC on March 16, 1999 and March 17, 1999, respectively; and
. The description of the common stock contained in our Registration Statement
on Form 8-A, declared effective by the SEC on July 19, 1993, including any
amendment or reports filed to update the description.
You may request a copy of these filings, at no cost, by writing or
telephoning Susan Weiner, Controller at our principal executive offices, which
are located at One Canal Park, Cambridge, Massachusetts 02141; Telephone:
(617) 621-0820, or by sending an e-mail to: [email protected]. Additional
information about Dataware is available in our Website at
http://www.dataware.com.
We have not authorized anyone else to give any information or to represent
anything not contained in this prospectus. We have not authorized anyone else
to provide you with different information. This prospectus does not offer to
sell or buy any shares in any jurisdiction where that would be unlawful. You
should not assume that the information in this prospectus or any supplement is
accurate as of any date later than the date on this prospectus.
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