<PAGE> 1
As filed with the Securities and Exchange Commission on April 4, 1997
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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CAYENNE SOFTWARE, INC.
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<S> <C> <C>
MASSACHUSETTS 7399 04-2784044
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or Organization) Classification Code Number) Identification Number)
</TABLE>
8 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS 01803
(617) 273-9003
(Address, Including Zip Code, and Telephone Number, Including
Area Code, of Registrant's Principal Executive Offices)
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PETER J. BONI
PRESIDENT AND CHIEF EXECUTIVE OFFICER
CAYENNE SOFTWARE, INC.
8 NEW ENGLAND EXECUTIVE PARK
BURLINGTON, MASSACHUSETTS 01803
(617) 273-9003
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF AGENT FOR SERVICE)
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COPIES TO:
JOHN D. PATTERSON, JR., ESQ.
FOLEY, HOAG & ELIOT
ONE POST OFFICE SQUARE
BOSTON, MASSACHUSETTS 02109
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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 only in connection with dividend or interest
reinvestment plans, check the following box. [X]
<TABLE>
CALCULATION OF REGISTRATION FEE
========================================================================================================
<CAPTION>
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $0.01 1,889,195 $4.125 $7,792,929 $2,361.49
========================================================================================================
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) under the Securities Act of 1933
based upon the average of the high and low prices of the Common Stock on
March 31, 1997, as reported by NASDAQ.
</TABLE>
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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.
================================================================================
<PAGE> 2
CAYENNE SOFTWARE, INC.
FORM S-3
<TABLE>
REGISTRATION STATEMENT
CROSS-REFERENCE SHEET
<CAPTION>
Form S-3 Item Number and Caption Location in Prospectus
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<S> <C> <C>
1. Forepart of the Registration Statement
and Outside Front Cover Page of
Prospectus............................................ Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back
Cover Pages of Prospectus............................. Available Information; Information Incorporated
by Reference; Outside Back Cover Page of
Prospectus
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed Charges ............... The Company; Risk Factors
4. Use of Proceeds....................................... Use of Proceeds
5. Determination of Offering Price....................... *
6. Dilution.............................................. *
7. Selling Security-Holders.............................. Selling Stockholders
8. Plan of Distribution.................................. Plan of Distribution
9. Description of Securities to be Registered ........... *
10. Interests of Named Experts and Counsel ............... Experts; Legal Matters
11. Material Changes ..................................... *
12. Incorporation of Certain Information by
Reference............................................. Information Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities........................................... *
<FN>
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* Omitted since the answer is negative or the item is inapplicable.
</TABLE>
<PAGE> 3
CAYENNE SOFTWARE, INC.
1,889,195 SHARES OF COMMON STOCK
--------------------
The 1,889,195 shares (the "Shares") of common stock, par value $0.01 per
share (the "Common Stock"), of Cayenne Software, Inc. ("Cayenne" or the
"Company") covered by this Prospectus may be offered on a delayed or continuous
basis by certain stockholders of the Company or by pledgees, donees, transferees
or other successors in interest (the "Selling Stockholders") See "Selling
Stockholders."
The Company will not receive any proceeds from the offering. The Company
will bear the costs relating to the registration of the Shares offered hereby
(other than selling commissions).
The Selling Stockholders may offer the Shares, from time to time during the
effectiveness of this registration, for sale through the NASDAQ Stock Market, in
the over-the-counter market, in one or more negotiated transactions, or through
a combination of methods of sale, at prices and on terms then prevailing or at
negotiated prices. Sales may be effected to or through broker-dealers, who may
receive compensation in the form of discounts, concessions or commissions in
connection therewith. See "Plan of Distribution."
The Common Stock is traded on the NASDAQ Stock Market under the symbol
"CAYN". On March 24, 1997, the closing price for the Common Stock, as reported
on the NASDAQ Stock Market, was $4.1875 per share.
--------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS."
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
ALL SECURITIES TO BE REGISTERED HEREBY ARE TO BE OFFERED BY CERTAIN OF THE
COMPANY'S STOCKHOLDERS.
THE DATE OF THIS PROSPECTUS IS APRIL __, 1997.
<PAGE> 4
THE COMPANY
The Company was incorporated in Massachusetts in 1983 under the name
Bachman Information Systems, Inc. Its name was changed to Cayenne Software, Inc.
in July 1996. The Company supplies software analysis and design solutions for
commercial and technical applications and database development. The Company's
executive offices are located at 8 New England Executive Park, Burlington,
Massachusetts 01803. Its telephone number is (617) 273-9003.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and be
copied, at the prescribed rates, at the public reference facilities of the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the Commission's regional offices at 7 World Trade Center,
Suite 1300, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Chicago, Illinois 60661. The Company's Common Stock is traded on
the NASDAQ Stock Market. Reports and other information concerning the Company
may be inspected at the National Association of Securities Dealers, Inc., 1735 K
Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(the "Registration Statement") filed by the Company with the Commission under
the Securities Act of 1933, as amended (the "Securities Act"). This Prospectus
omits certain of the information contained in the Registration Statement and the
exhibits and schedules thereto, as certain items are omitted in accordance with
the rules and regulations of the Commission. For further information concerning
the Company and the Common Stock offered hereby, reference is hereby made to the
Registration Statement and the exhibits and schedules filed therewith, which may
be inspected without charge at the office of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549 and copies of which may be obtained from the
Commission at prescribed rates. Any statements contained herein concerning the
provisions of any document are not necessarily complete, and, in each instance,
reference is made to the copy of such documents filed as an exhibit to the
Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus.
(a) Annual Report on Form 10-K, as amended, for the transitional fiscal
year ended December 31, 1996, Commission File No. 0-19682.
(b) The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A dated November 26, 1991, Commission File No.
0-19682.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock
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<PAGE> 5
offered hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the respective dates of filing such
documents. Any statement or information contained in a document incorporated or
deemed to be incorporated by reference herein shall be deemed modified or
superseded for the purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is or is
deemed to be incorporated by reference modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom a Prospectus
is delivered, on written or oral request of such person, a copy of any or all of
the documents incorporated herein by reference (other than exhibits and
schedules to such documents). Requests should be directed to: Assistant
Treasurer, Cayenne Software, Inc., 8 New England Executive Park, Burlington,
Massachusetts 01803, (617) 273-9003.
FORWARD-LOOKING STATEMENTS
From time to time, information provided by the Company or statements made
by its employees may contain "forward-looking" information, as that term is
defined in the Private Securities Litigation Reform Act of 1995 (the "Act"). The
Company cautions investors that there can be no assurance that actual results or
business conditions will not differ materially from those projected or suggested
in such forward-looking statements as a result of various factors, including but
not limited to the matters discussed under "Risk Factors" below.
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<PAGE> 6
RISK FACTORS
In addition to the other information in this Prospectus, the following
should be considered carefully in evaluating the Company and its business before
purchasing the Common Stock offered by this Prospectus.
FINANCIAL CONDITION OF THE COMPANY
On November 6, 1996, the Company amended and restated its revolving credit
agreement with a bank to borrow up to $5 million, to extend its term to October
4, 1997, to revise the borrowing base and to amend certain of the financial and
operating covenants and other provisions thereunder. In connection with the
amendment, the Company issued to the Bank a three-year warrant to purchase
25,000 shares of the Company's Common Stock at an exercise price of $4.25 per
share. The loan is contingent upon meeting certain financial and operating
covenants at the time of any borrowing and over the life of the loan, including
profitability of $0.25 million during the quarter ended December 31, 1996 and
$1.0 million during the quarter ending June 30, 1997. The loan is secured by
all of the assets of the Company and any borrowing amounts are tied to a
percentage of qualified accounts receivable outstanding at the time of any
borrowing. The financial covenants include the attainment of certain specified
levels of consolidated net income (loss) at the end of each quarter, tangible
net worth at the end of each quarter and month, and liquidity at the end of
each month. The Company was in compliance with all covenants as amended at
December 31, 1996. At December 31, 1996, the borrowing base under the revolving
credit agreement was approximately $4.5 million. In January 1997, the Company
raised $3 million in equity capital through a private placement of Series B
Convertible Preferred Stock and Warrants to purchase Common Stock to some of
the Selling Stockholders described in this Prospectus.
RESULTS OF RECENT OPERATIONS
The Company's operating results for the three years ended June 30, 1996 and
the six months ended December 31, 1996 were significantly adversely affected by
several factors. In July 1996, the Company completed its merger with Cadre
Technologies, Inc., which resulted in a $6.3 million charge to operations for
the quarter ended September 30, 1996 to reflect costs associated with the
combining of the two companies, transaction fees, and other costs. In addition,
the Company has continued to invest heavily in its object-oriented and
client/server-based products. The company's operating results continue to be
affected by the market trends of the Company's customers moving from mainframe
development and structured analysis to client/server and object-oriented
solutions. The increased revenue growth of the Company's client/server and
object-oriented products has not been rapid enough to offset the revenue
decline of the Company's mainframe-based products.
As the Company continues its migration toward providing customers a more
open and flexible set of solutions, it faces many challenges. The Company has
addressed some of these challenges over the past several years by introducing
additional products through internal development and acquisitions targeted at
the client/server and object-oriented markets. The Company plans to continue to
enhance its product offerings through development efforts, strategic alliances
and acquisitions to improve its competitive position. The actions necessary to
execute this transition have had an adverse effect on the Company's operating
results during the transition period from July 1, 1996 through December 31,
1996 and prior fiscal years ended June 30, 1996, 1995 and 1994, respectively,
and may continue to adversely affect operating results in the future.
On July 18, 1996, the Company completed its acquisition of Cadre
Technologies Inc. ("Cadre") under an Agreement and Plan of Merger dated March
25, 1996, by and among the Company, Cadre and B.C. Acquisition Corp., whereby
the Company agreed to acquire all of the outstanding capital stock of Cadre in
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<PAGE> 7
exchange for 4,716,442 shares of Cayenne common stock (the "merger"). The
merger was accounted for as a pooling-of-interests during the trasition period
ended December 31, 1996. Effective upon the merger, the Company changed its
name to Cayenne Software, Inc. The Company acquired Cadre to expand its product
offerings to include structured analysis and design and object-oriented
technology and to expand its customer base. During the transition period ended
December 30, 1996, the Company incurred a charge of $6.3 million in conjunction
with the merger and to reflect costs associated with combining the operations
of the two companies, transaction fees, and other costs. Included in the charge
were $1.6 million of employee-related termination expenses for approximately 45
employees; $1.3 million of legal, accounting, investment banking, and other
professional fees; $1.4 million of facilities closure and consolidation
expenses; and $2 million of other expenses associated with the consolidation of
the two companies and the name change.
SIGNIFICANT RECENT LOSSES; SHORT PRIOR HISTORY OF PROFITABILITY
Cayenne received its first venture capital financing in the third quarter
of fiscal 1986, shipped its first software products in the fourth quarter of
fiscal 1988, and did not reach profitability until the first quarter of fiscal
1991. Cayenne incurred net losses of $13.2 million, $24.9 million, and $11.3
million in Fiscal 1994, Fiscal 1995, and Fiscal 1996, respectively, and a net
loss of $6.4 million for the six months ended December 31, 1996, which included
a $6.3 million charge for restructuring and other costs in September 1996. In
September 1994, the first quarter of fiscal 1995, the Company recorded a
restructuring charge of approximately $2 million resulting from reductions in
staff and related facilities expenses and the termination of certain contracts.
During the quarter ended June 30, 1995, the Company also incurred approximately
$1.8 million in restructuring costs, which included a $0.9 million write-off of
redundant capitalized software, $0.8 million of employee related costs, and
$0.1 million of other costs related to the restructuring. In the quarter ended
December 31, 1995, the Company incurred an additional $1.7 million in
restructuring charges. Future operating results will depend on many factors,
including demand for Cayenne's products, Cayenne's ability to obtain major
orders, the level of competition, Cayenne's ability to develop and market new
products, and the ability of its officers and key employees to manage Cayenne's
business and control costs. There can be no assurance that revenue growth or
profitable operations on a quarterly or annual basis will be achieved during
1997 or in any subsequent fiscal year.
CHANGING MARKETS; SHIFTING INDUSTRY DEMAND TOWARD CLIENT/SERVER AND
OBJECT-ORIENTED PRODUCTS
The Company develops products that enable organizations to create
applications that integrate diverse information sources into new computing
environments, to modify applications as business and technology change, and to
run those applications on a variety of platforms. In the past, most
information-intensive applications were built using large, centralized mainframe
computers. More recently, personal computer networks and related "client/server"
technology has made a variety of new computing configurations possible. In
response to this change in the market, the Company, like many others in its
industry, has experienced a decline in demand for its products tailored to the
large mainframe environment and has devoted much effort to change its product
mix to serve the rising demand for products suitable for the client/server
environment. The frequent and rapid changes in customer preferences and
technology that have affected Cayenne's mainframe-related products in the recent
past will continue in the future. As a result, Cayenne's future success will
depend upon its ability to enhance its current products and to develop and
introduce new products that accommodate advances in software and hardware
technology and changing customer requirements, particularly with respect to
client/server applications. Demand for IBM and other mainframe-based CASE
products has declined precipitously as the computer market has moved toward
client/server products. Cayenne has begun to develop products and services for
client/server application in recognition of the industry shift away from
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<PAGE> 8
mainframe applications. The industry is aggressively seeking to reduce the costs
of computing resources and is rapidly moving away from expensive mainframe-based
development toward less expensive newer technology on client/server and similar
computing platforms. This shift has had a material adverse effect on Cayenne's
results of operations.
With the acquisition of Cadre, the Company has entered into an additional
industry segment focused on the creation and maintenance of complex software
systems, the problem addressed by Computer Aided Software Engineering ("CASE")
products. During the 1970s, a number of "structured" techniques and methods were
invented to replace earlier ad-hoc approaches to software development. The
analysis and design (as opposed to implementation) techniques emphasize the
building of abstract models to assist in the understanding, planning, and
implementation of a system. The rationale for modeling is the same in software
as it is in any engineering discipline; money and effort are saved if problems
are identified and dealt with early in the engineering process.
STRUCTURED ANALYSIS AND STRUCTURED DESIGN. In the early eighties, networks
of computer workstations made it feasible to partially automate the capture,
traversal, and analysis of engineering models by work groups. This technology
was rapidly adopted in the civil, mechanical, and electrical engineering
domains. The CASE market expanded quickly in the mid-to late-eighties, as did
the number of companies formed to service it. The high end of the market, with
its multi-user networked UNIX engineering workstation solution, found a home in
technically-oriented organizations, such as those in telecommunications,
aerospace and defense. The other end of the market focused on single-user,
personal computer ("PC") based products. These found early success in corporate
IS organizations, where PCs were widely used.
The IS CASE market declined in the early nineties for a number of reasons.
While the IS software development market is large, commitment to structured
methods (and the attendant engineering discipline) was weak. Some CASE companies
made claims which the products were unable to deliver and soured the market.
Others were slow to respond to technology changes such as the shift to
client-server application development and object orientation (discussed further
below). The decline resulted in a number of market leaders closing or being
acquired. The technical market, where Cadre derived the majority of its
business, was affected by the contraction and consolidation in the defense
industry. Consequently, Cadre diversified its product line into the software
development process, including debugging, measurement and verification tools.
OBJECT ORIENTED TECHNOLOGY. In the meantime, the software development
community began to experiment with "object-oriented" technology, and in
particular, OO analysis, design and implementation techniques. The structured
techniques mentioned previously generally partition a system purely along
functional lines, i.e. in terms of what the system does. The OO approach
partitions a system into "objects", where each object encapsulates information
and those functions that operate on that information. The benefit of the OO
approach is that systems partitioned this way are more robust, more amenable to
change, and the objects are easier to reuse in other systems.
Cadre started selling its first OO analysis and design products (based on
the method of developing software created by Shlaer-Mellor) in 1989. When market
momentum began to build around a related method called the Object Modeling
Technique ("OMT"), Cadre initially entered the market by reselling an OMT
product in 1993. This was replaced by the OMT tool developed by Westmount
Technology B.V., acquired by Cadre in 1995. As the structured tools market
matures, the Company expects a transition to the OMT tool and related products.
These products run on both UNIX-based platforms and Windows 95 and NT-based
platforms.
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FLUCTUATIONS IN QUARTERLY PERFORMANCE; SIGNIFICANT CUSTOMER
Throughout its history, Cayenne's revenue has varied from quarter to
quarter, with the largest portion of revenue recognized in the second and
fourth quarters of each fiscal year. In the normal course of events, Cayenne
may realize lower revenue in the first quarter than in the preceding fourth
quarter and also may realize lower revenue in the third quarter than in the
preceding second quarter. Cayenne has also frequently recognized more revenue
in the last month of each quarter than in either of the preceding two months.
Cayenne believes that these quarterly and monthly patterns are partly
attributable to Cayenne's sales commission policies, which compensate sales
personnel for meeting or exceeding annual quotas, and to the budgeting and
purchasing cycles of customers. In addition, Cayenne's revenue and earnings
have fluctuated historically, and may fluctuate in the future, due to the
timing of large individual orders. There were no large orders ($1,000,000 or
more) during the six months ended December 31, 1996. Cayenne usually has no
significant backlog, and substantially all of its product revenue in any
quarter results from sales made in that quarter. If sales do not close in a
quarter as expected, Cayenne's results of operations for that quarter would be
adversely affected. Net income may be disproportionately affected by a
reduction in revenues because only a small portion of Cayenne's expenses vary
with revenues.
Historically, Cayenne relied significantly on its relationship with
International Business Machines Corporation ("IBM") for development and
marketing of Cayenne's products. IBM was Cayenne's single largest customer in
each of fiscal 1994, 1995, and 1996 and in the six months ended December 31,
1996 when revenue from IBM (including license and maintenance fees paid by IBM
in connection with its own use of Cayenne products, as well as amounts paid by
IBM as a distributor and systems integrator) accounted for 6%, 9%, 15%, and 16%
of Cayenne's total revenue, respectively. In January 1993, Cayenne discontinued
its membership in the IBM International Alliances for AD/Cycle, System View, and
Information Warehouse. Cayenne and IBM entered into a settlement and release
agreement dated June 30, 1993 pursuant to which Cayenne and IBM severed certain
of their remaining relationships. Each party released and discharged the other
party from all known and unknown claims occurring on or prior to June 30, 1993.
HIGHLY COMPETITIVE INDUSTRY; INCREASING COMPETITION; DEPENDENCE ON KEY PERSONNEL
The market for Cayenne's software products is highly competitive, and
Cayenne expects competition to increase. Companies competing in related markets,
including hardware manufacturers, could seek to enter this market with software
products which offer functionality similar to that offered by Cayenne's
products. The computer aided software engineering ("CASE") market generally has
been adversely affected by competition from other programming support
environments. In addition, Cayenne expects to encounter additional competitors
as it seeks to expand its product line beyond the mainframe and structured
analysis and design markets into the client/server and object-oriented markets.
Many of Cayenne's existing and potential competitors have greater financial,
technical and other resources than Cayenne. In addition, mergers or other
business combinations among competitors could strengthen them and create larger
companies with broader product offerings, more extensive market influence and
greater resources. Maintaining and improving Cayenne's competitive position will
require continued investment by Cayenne in research and development, sales, and
marketing, particularly as Cayenne endeavors to expand its product line beyond
the mainframe and structured analysis and design markets. There can be no
assurance that Cayenne will have sufficient resources to make that investment.
Competitive pressures could result in loss of market share, price reductions and
increases in expenses that could adversely affect Cayenne's business.
Cayenne has experienced turnover in its personnel in the past including
certain executives and key management and technical employees. Cayenne's future
success will depend in large part upon its ability to attract and retain skilled
executives and management and technical personnel. Competition for such
personnel
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<PAGE> 10
in the software industry continues to be intense. There can be no assurance that
Cayenne will be successful in attracting and retaining the personnel it requires
for its operations.
VOLATILITY OF SHARE PRICE
Since the completion of Cayenne's initial public offering in November 1991,
the closing price of Cayenne Common Stock, as reported by the Nasdaq Stock
Market, has ranged from $1 3/4 to $37 3/4. The highest closing price of the
Common Stock as reported on the NASDAQ Stock Market during the Company's last
two completed fiscal years was $11.875 per share. See "Price Range of Common
Stock and Dividends." Announcements of technological innovations or new products
by Cayenne or its competitors, quarterly variations in Cayenne's operating
results, general factors affecting the computer software industry, and other
factors may cause the market price of Cayenne Common Stock to fluctuate
significantly in the future. In addition, in recent years the stock market has
experienced large price and volume fluctuations, which often have been unrelated
to the operating performance of specific companies or market sectors.
RISKS OF INTERNATIONAL OPERATIONS; RELIANCE ON DISTRIBUTORS
Approximately 48%, 50%, 52%, and 51% of Cayenne's revenues in fiscal 1994,
1995, and 1996 and the six months ended December 31, 1996, respectively, were
attributable to international sales.
The future contribution of sales from Cayenne's international subsidiaries
to its results of operations depends on Cayenne's success in maintaining
cost-effective direct marketing operations through Cayenne's wholly owned
subsidiaries in Australia, France, Germany, Italy, the Netherlands, Singapore,
Spain, and the United Kingdom. In September 1994, as part of a restructuring,
Cayenne reorganized the operation of its German subsidiary. Sales in countries
in which Cayenne continues to use independent distributors will remain subject
to the distributors' financial condition and success, which cannot be controlled
by Cayenne. Other risks inherent in Cayenne's international business generally
include exposure to currency fluctuations, longer payment cycles, greater
difficulties in accounts receivable collection and the requirement of complying
with a wide variety of foreign laws. While Cayenne has not experienced any
material delays, expenditures or other adverse consequences in complying with
foreign laws to date, it has been necessary for Cayenne to take steps to protect
its proprietary rights and license its products under local laws from country to
country.
DEPENDENCE ON PROPRIETARY TECHNOLOGY
Cayenne's success is heavily dependent upon its proprietary software
technology. Cayenne relies principally on a combination of copyrights, trade
secrets and contractual rights to protect its proprietary technology. In
addition, Cayenne holds ten United States patents and currently has various
patent applications pending abroad. There can be no assurance that any patents
will be issued in respect of those applications, or that the steps taken by
Cayenne to protect its proprietary rights will be adequate to prevent
misappropriation of its technology or independent development by others of
similar technology. Although Cayenne believes that its products and technology
do not infringe on any existing proprietary rights of others, the use of patents
to protect software has increased, and there can be no assurance that third
parties will not assert infringement claims in the future. If any such claim
were to be asserted, it might involve costly and protracted litigation. No
assurance can be given that Cayenne would be successful in any such litigation
or that, if it were not successful, it would be able to license the disputed
proprietary rights on commercially reasonable terms.
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ANTI-TAKEOVER EFFECT OF CERTAIN PROVISIONS OF CHARTER AND BY-LAWS, MASSACHUSETTS
LAW AND EMPLOYMENT AGREEMENTS
The Cayenne Board has the authority to issue up to 1,600,000 shares of
preferred stock (including the 150,000 shares of Series B Convertible Preferred
Stock issued in January 1997) and to determine the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
any further vote or action by the stockholders. The rights of the holders of
Cayenne Common Stock will be subject to, and may be adversely affected by, the
rights of the holders of any Cayenne preferred stock that may be issued in the
future. The issuance of Cayenne preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of making it more difficult for a third party to
acquire a majority of the outstanding voting stock of Cayenne. Cayenne has no
present plans to issue additional shares of its preferred stock. In addition,
the classification of the Cayenne Board and certain other provisions of
Cayenne's Restated Articles of Organization (the "Cayenne Articles"), its
Amended and Restated By-Laws (the "Cayenne By-Laws") and Massachusetts law could
delay or frustrate the removal of incumbent directors and could make more
difficult a merger, tender offer or proxy contest involving Cayenne. Further,
Cayenne and certain of its current executive officers have entered into
employment agreements that become effective only upon the occurrence of certain
"changes in control." Other officers of the Company also have arrangements
providing them with severance payments and other benefits if their employment is
terminated without cause or, in some cases, in connection with a change in
control of the Company. While these agreements were intended by Cayenne to
limit further departures by executive officers, the agreements also could have
the effect of making a merger, tender offer or proxy contest more difficult.
SHARES OF COMMON STOCK ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Cayenne Common Stock in the
public market could adversely affect the market price for the Cayenne Common
Stock. Sales of substantial amounts of Cayenne Common Stock by existing holders
may impair Cayenne's ability to raise capital in the future through the sale of
Cayenne Common Stock or other equity securities.
Cayenne has registered 9,699,945 shares of Cayenne Common Stock issuable
under its stock option and stock purchase plans, of which approximately 3.2
million shares were subject to outstanding options at December 31, 1996. Shares
issued upon the exercise of options and shares issued under Cayenne's stock
purchase plan generally will be eligible for sale in the public market.
The holders of 2,901,945 shares (excluding the shares registered below and
registered hereunder) of Cayenne Common Stock have certain rights to
registration of their shares under the Securities Act. Those shares include all
of the shares of Cayenne Common Stock previously owned by IBM.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common Stock
offered hereby by the Selling Stockholders.
-9-
<PAGE> 12
PRICE RANGE OF COMMON STOCK AND DIVIDENDS
<TABLE>
The following table sets forth, for the periods indicated, the range of
high and low sales prices for the Company's common stock, as reported by the
NASDAQ Stock Market. The Company's Common Stock is traded under the NASDAQ
symbol "CAYN" (formerly "BACH") since the Company's initial public offering on
November 26, 1991. These prices reflect interdealer prices, without retail
mark-ups, mark-downs or commissions, and do not necessarily represent actual
transactions.
<CAPTION>
Fiscal Year Fiscal Year Fiscal Year Fiscal Year
1996t 1996 1995 1994
---------------- -------------- --------------- ----------------
High Low High Low High Low High Low
---- --- ---- --- ---- --- ---- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C>
First Quarter $7.13 $4.00 $7.875 $5.75 $2.75 $1.75 $4.50 $2.63
Second Quarter 5.69 3.813 10.25 4.625 4.188 2.00 3.875 2.375
Third Quarter n/a n/a 11.875 8.25 5.375 3.50 3.75 2.50
Fourth Quarter n/a n/a 10.00 6.50 7.875 4.50 3.00 2.00
</TABLE>
The Company has not declared or paid cash dividends on its common stock and
does not plan to pay cash dividends to its stockholders in the near future. The
Company presently intends to retain any earnings to finance further growth of
its business. At March 26, 1997, there were 622 stockholders of record of the
Company's common stock.
NOTE: In October 1996, the Company changed its fiscal year-end from June 30 to
December 31, and accordingly experienced a transitional fiscal year from July 1
through December 31, 1996. That transitional year is referred to as "Fiscal
Year 1996t" in the table above.
-10-
<PAGE> 13
BUSINESS
CAYENNE SOFTWARE, INC., organized as a Massachusetts corporation in 1983
under the name BACHMAN Information Systems, Inc., develops, markets and supports
a comprehensive suite of workgroup-to-enterprise analysis and design solutions
for the real-world challenges that software developers face every day. Fortune
1000 companies and government agencies around the world use Cayenne products
as they develop, implement, and maintain enterprise-wide, business-critical
information systems. Cayenne's products are designed around an innovative open
architecture that enables organizations to create applications that integrate
diverse information sources into new high-performance computing environments,
to modify applications as business and technology change, and to run those
applications on a variety of platforms. Cayenne's approach to reusability and
its open architecture directly support computer-aided software engineering and
structured modeling and database design and object-oriented modeling and
facilitates technology partnerships with other leading software vendors.
Cayenne targets its products to Fortune 1000 companies, government
agencies, and organizations of similar size throughout the world that use
workstations, mid-range and mainframe computers and relational database
management systems for data-intensive applications.
In July, 1996, the Company acquired Cadre Technologies Inc. ("Cadre")
thereby expanding its product offerings and customer base. Cadre develops,
markets and supports software tools for the creation of complex computer
software. Most of the products sold by Cadre help to automate the process of
requirements analysis and software design by groups of software engineers.
Customers use the tools to capture, traverse, and analyze abstract models of the
system to be built. These models assist users, and sometimes their customers, in
understanding a software system, planning its implementation and making
engineering trade-offs. Additional Cadre products address document generation,
model configuration management, software construction, and the "reverse
engineering" (understanding) of existing software.
Cadre's customers are generally developers of complex software systems, in
both the information system ("IS") and the "technical" sectors. While most of
Cadre's current customers consider themselves in the technical sector, the
Company expects a shift toward IS customers as it concentrates on
"object-oriented" ("OO") technology. The Company's strategy is to maintain
Cadre's position as a leading provider of tools to the technical market, while
introducing new products and enhancements for Cadre's OO product line.
As the Company continues to make the transition from providing tools
focused solely on mainframe application development to supporting customers'
needs for a more open and flexible set of solutions aimed at the growing
client/server market, it faces many challenges. Since fiscal 1993, the Company
has sought to address some of these challenges; during fiscal 1995 and 1996, the
Company introduced additional products targeted at the client/server market. The
Company's plan is to enhance its product offerings through development efforts,
strategic alliances and acquisitions to improve its competitive position. These
actions have had an adverse effect on the Company's operating results during
fiscal 1994, 1995, and 1996 and the six months ended December 31, 1996 and may
continue to affect operating results. The Company anticipates that it will be
able to satisfy its cash requirements and other cash needs through December
1997. The Company's cash requirements thereafter will depend on the results of
future operations, which cannot be foreseen.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock owned
by each of the Selling Stockholders as of March 31, 1997. Except as indicated,
none of the Selling Stockholders has had a material relationship with the
Company within the past three years other than as a result of the ownership of
the Shares or other securities of the Company. Because the Selling Stockholders
may offer all or some of the Shares which they hold pursuant to the offering
contemplated by this Prospectus, and because there are currently no
-11-
<PAGE> 14
<TABLE>
agreements, arrangements or understandings with respect to the sale of any of
the Shares, no estimate can be given as to the amount of Shares that will be
held by the Selling Stockholders after completion of this offering. The Shares
offered by this Prospectus may be offered from time to time by the Selling
Stockholders named below:
<CAPTION>
Shares
Beneficially
Owned Before Shares Registered
the Offering for Sale Hereby1
------------------------------------
<S> <C> <C>
Southbrook International 918,640 918,640
Investments, Ltd.2
Brown Simpson LLC 2 87,500 87,500
Silicon Valley Bank 3 25,000 25,000
------------------------------------
Total 1,031,140 1,031,140
====================================
</TABLE>
(1) This Registration Statement shall also cover any additional shares of
Common Stock which become issuable in connection with the shares registered
for sale hereby by reason of any stock dividend, stock split,
recapitalization or other similar transaction effected without the receipt
of consideration which results in an increase in the number of the
Registrant's outstanding shares of Common Stock.
(2) Southbrook International Investments, Ltd. holds 150,000 shares of the
company's Series B Convertible Preferred Stock, which may be converted to
shares of Common Stock from time to time at a rate determined by the lower
of the average quoted market price of the Common Stock for either (i) the
ten trading days preceding the date of issuance or (ii) any five trading
days during the period of thirty days before the conversion. The amount of
Common Stock shown in the table reflects the amount into which the full
150,000 shares of Preferred Stock might have been converted on January 31,
1997 in accordance with the market-price formula. Because the number of
shares of Common Stock that will be ultimately issued to Southbrook upon
conversion of the preferred stock is dependent upon the conversion formula
described above, that amount (and therefore the amount of Common Stock
offered hereby) cannot be determined at this time. Southbrook and Brown
Simpson LLC also hold warrants to purchase an aggregate of 350,000 shares
of Common Stock. The amount of Common Stock shown in the table reflects the
amount that the Southbrook and Brown Simpson would be entitled to purchase
upon exercise of the warrants in full.
(3) Silicon Valley Bank holds warrants to purchase 25,000 shares of Common
Stock of the Company, issued in connection with the lending relationship
described above under "Risk Factors-Financial Condition of the Company".
The amount of Common Stock shown in the table reflects the amount that the
Bank would be entitled to purchase upon exercise of the warrants in full.
PLAN OF DISTRIBUTION
The Common Stock may be sold from time to time by the Selling Stockholders,
or by pledgees, donees, transferees or other successors in interest thereof.
They may sell from time to time on one or more exchanges, in the
over-the-counter market, or otherwise, at prices and at terms then prevailing or
at prices related to the then current market price or in negotiated
transactions. The shares may be sold by one or more of the following methods,
without limitation: (a) a block trade in which the broker or dealer so engaged
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction, (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to the Prospectus, as supplemented, (c) an exchange
distribution in accordance with the rules of such exchange, (d) ordinary
brokerage transactions and transactions in which the broker solicits purchasers,
(e) privately negotiated transactions; if short sales; and (g) a combination of
any such methods of sale. In addition, any securities covered by the Prospectus
which qualify for sale pursuant to Rule 144 may be sold under Rule 144 rather
than pursuant to the Prospectus, as supplemented. From time to time the Selling
Stockholders may engage in short sales, short sales against the box, puts and
calls and other transactions in securities of the Company or derivatives
thereof, and may sell and deliver the shares in connection therewith.
-12-
<PAGE> 15
From time to time Selling Stockholders may pledge their shares pursuant to
the margin provisions of their respective customer agreements with their
respective brokers. Upon a default by a Selling Stockholder, the broker may
offer and sell the pledged shares of Common Stock from time to time.
To the extent required by applicable law, the specific Shares to be sold,
the names of the Selling Shareholders, the respective purchase prices and public
offering prices, the names of any such agent, broker-dealer or underwriter, and
any applicable commissions or discounts with respect to a particular offer will
be set forth in an accompanying Prospectus Supplement. Resales or reoffers of
the Shares by the Selling Shareholders must be accompanied by a copy of this
Prospectus.
The Selling Shareholders and any agents, broker-dealers or underwriters
that participate in the distribution of the Shares may be deemed to be
underwriters, and any profit on the sale of the Shares by them, and any
discounts, commissions or concessions received by them, may be deemed to be
underwriting commissions or discounts under the Securities Act.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Foley, Hoag & Eliot LLP, Boston, Massachusetts.
EXPERTS
The consolidated balance sheets as of December 31, 1996 and June 30, 1996
and 1995 and the consolidated statements of operations, stockholders' equity
(deficit), and cash flows for the six month period ended December 31, 1996 and
for each of the three years in the period ended June 30, 1996 of the Company
incorporated by reference in this Prospectus, have been incorporated by
reference herein in reliance on the report of Coopers & Lybrand L.L.P.,
independent accountants, given on the authority of that firm as experts in
accounting and auditing.
The consolidated financial statements of Cadre Technologies, Inc. and its
subsidiaries as of December 31, 1995 and for each of the two years in the
period then ended, incorporated in this prospectus by reference from the
Cayenne Software, Inc. Annual Report on Form 10-k for the year ended December
31, 1996 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report which is incorporated by herein by reference (which
report expresses an unqualified opinion and includes an explanatory paragraph
relating to substantial doubt about Cadre Technologies Inc.'s ability to
continue as a going concern), and have been so incorporated in reliance upon
the report of such firm given upon their authority as experts in accounting and
auditing.
-13-
<PAGE> 16
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company or any Selling Shareholder. This Prospectus does not
constitute an offer to sell or the solicitation of an offer to buy any
securities other than the securities to which it relates or an offer to sell or
the solicitation of an offer to buy such securities in any circumstances in
which such offer or solicitation is unlawful. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the affairs of the Company
since the date hereof or the information contained herein is correct as of any
time subsequent to its date.
-----------------
TABLE OF CONTENTS
Page
The Company...................................................... 2
Available Information............................................ 2
Information Incorporated
by Reference................................................... 2
Forward-looking Statements....................................... 3
Risk Factors..................................................... 4
Use of Proceeds.................................................. 9
Price Range of Common Stock
and Dividends.................................................. 10
Business......................................................... 11
Selling Stockholders............................................. 11
Plan of Distribution............................................. 12
Legal Matters.................................................... 13
Experts.......................................................... 13
1,889,195 Shares
CAYENNE SOFTWARE, INC.
Common Stock
(par value $.01 per share)
-----------------------
PROSPECTUS
-----------------------
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits:
*3.1 Statement of rights and Preferences of Series B Convertible
Preferred Stock
*4.1 Specimen Certificate representing Common Stock of the Company
(filed as Exhibit 4.1 to the Company's Registration Statement on
Form S-1, File No. 33-43401, and incorporated herein by
reference)
*4.2 Convertible Preferred Stock Purchase Agreement dated as of
January 2, 1997 between the Company and Southbrook International
Investments, Ltd.
*4.3 Registration Rights Agreement dated as of January 2, 1997
*4.4 Form of Warrant Agreement dated as of January 2, 1997
*4.5 Warrant Agreement dated as of December __, 1996 between the
Company and Silicon Valley Bank
5.1 Opinion of Foley, Hoag & Eliot LLP
23.1 Consent of Coopers & Lybrand L.L.P.
23.2 Consent of Deloitte & Touche
23.3 Consent of Foley, Hoag & Eliot (included on Exhibit 5.1)
24.1 Power of Attorney (contained on the signature page)
--------
* Incorporated by reference to the Company's Annual Report on Form 10-K
for the transitional period ended December 31, 1996, Commission File No.
0-19682.
II-1
<PAGE> 18
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 Amendment to the
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Burlington, Massachusetts, on January 31, 1997.
CAYENNE SOFTWARE, INC.
By: /s/ Frederick H. Phillips
------------------------------------------
Frederick H. Phillips
Vice President, Finance and Administration
KNOW ALL MEN BY THESE PRESENTS that each individual whose signature appears
below constitutes and appoints Frederick H. Phillips and Eugene J. DiDonato, and
each of them, his true and lawful attorneys-in-fact and agents with full power
of substitution, 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 all 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 he may
deem necessary or advisable to be done in connection with this Registration
Statement, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, 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/ Peter J. Boni President and January 31, 1997
-------------------------- Chief Executive Officer,
Peter J. Boni Director
/s/ Frederick H. Phillips Vice President, Finance and Administration, January 31, 1997
-------------------------- Treasurer and Chief Financial Officer
Frederick H. Phillips (Principal Financial and Accounting Officer)
/s/ Charles W. Bachman Chairman of the Board January 31, 1997
-------------------------- of Directors
Charles W. Bachman
/s/ John J. Alexander Director January 31, 1997
--------------------------
John J. Alexander
/s/ R. John Fletcher Director January 31, 1997
--------------------------
R. John Fletcher
/s/ Roland Pampel Director January 31, 1997
--------------------------
Roland Pampel
/s/ Allyn C. Woodward, Jr. Director January 31, 1997
--------------------------
Allyn C. Woodward, Jr.
Director
--------------------------
William H. D. Goddard
</TABLE>
II-2
<PAGE> 1
EXHIBIT 5.1
FOLEY, HOAG & ELIOT LLP
One Post Office Square
Boston, Massachusetts 02109
April 4, 1997
Cayenne Software, Inc.
8 New England Executive Park
Burlington, MA 01803
Ladies and Gentlemen:
We are familiar with the Registration Statement on Form S-3 transmitted
for filing by the Company today (the "S-8 Registration Statement") relating to
1,889,195 shares (the "Shares") of the Company's Common Stock to be offered and
sold by certain holders of Series B Convertible Preferred Stock (the "Preferred
Stock") and Warrants of the Company (the "Selling Stockholders").
We are familiar with the Company's Articles of Organization and all
amendments thereto, its By-Laws and all amendments thereto, the records of all
meetings and consents of its Board of Directors and of its stockholders, and its
stock records. We have examined such other records and documents as we deemed
necessary or appropriate for purposes of rendering this opinion.
Based upon the foregoing, we are of the opinion that (a) the Company
has corporate power adequate for the issuance of the Shares in the manner set
forth in the S-3 Registration Statement; (b) the Company has taken all necessary
corporate action required to authorize the issuance and sale of the Shares to
the Selling Stockholders upon conversion of Preferred Stock or exercise of
Warrants; and (c) upon issuance in accordance with the aplicable provisions of
the Preferred Stock or the Warrants, the Shares will be legally issued, fully
paid and non-assessable.
We consent to the filing of this opinion as an exhibit to the S-3
Registration Statement.
Very truly yours,
FOLEY, HOAG & ELIOT
By: /s/ David W. Walker
a Partner
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
of Cayenne Software, Inc.
We consent to the incorporation by reference in this Registration
Statement of Cayenne Software, Inc. (formerly Bachman Information Systems, Inc.)
on Form S-3 of our report, which included an explanatory paragraph about the
merger of Cayenne Software, Inc. and Cadre Technologies Inc. which has been
accounted for as a pooling of interests, dated February 25, 1997, on our audits
of the consolidated financial statements of Cayenne Software, Inc. as of
December 31, 1996 and June 30, 1996, and for the six month period ended
December 31, 1996 and the year ended June 30, 1996, which report is included
in the Annual Report on Form 10-K of Cayenne Software, Inc. for the transition
period ended December 31, 1996. We also consent to the reference to our firm
under the caption "Experts".
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 4, 1997
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Cayenne Software, Inc. on Form S-3 of our report dated February 2, 1996
(relating to the consolidated financial statements of Cadre Technologies Inc.
and its subsidiaries, which expresses an unqualified opinion and includes an
explanatory paragraph relating to substantial doubt about Cadre Technologies
Inc.'s ability to continue as a going concern) appearing in the Annual Report on
Form 10-K of Cayenne Software, Inc. for the transition period ended December 31,
1996 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
Deloitte & Touche LLP
Boston, MA
March 28, 1997
