<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 18, 1996.
REGISTRATION NO. 33-85230
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM SB-2
ON FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
TIMELINE, INC.
NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER
<TABLE>
<S> <C> <C>
STATE OF WASHINGTON 7372 91-1590734
STATE OR JURISDICTION OF PRIMARY STANDARD INDUSTRIAL I.R.S. EMPLOYER IDENTIFICATION
INCORPORATION OR ORGANIZATION CLASSIFICATION CODE NUMBER NUMBER
3055 - 112TH AVENUE N.E., SUITE 106 JOHN W. CALAHAN, PRESIDENT
BELLEVUE, WASHINGTON 98004 TIMELINE, INC.
206-822-3140 3055-112TH AVENUE N.E., SUITE 106
BELLEVUE, WASHINGTON 98004
206-822-3140
ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR
OFFICES SERVICE
-- AND --
ADDRESS OF PRINCIPAL PLACE OF BUSINESS
</TABLE>
------------------------
COPIES OF ALL COMMUNICATIONS TO THE FOREGOING TO BE SENT TO:
<TABLE>
<S> <C>
SCOTT T. BELL & WILLIAM A. CARLETON III LEONARD R. GLASS, SCOTT M. TAYNE & ELIZABETH PLASKON
CAIRNCROSS & HEMPELMANN, P.S. PERNA
701 FIFTH AVENUE, SUITE 7000 COLE, SCHOTZ, MEISEL, FORMAN & LEONARD, P.A.
SEATTLE, WASHINGTON 98104-7014 COURT PLAZA NORTH, 25 MAIN STREET, P.O. BOX 800
206-587-0700 HACKENSACK, NEW JERSEY 07602-0800
201-489-3000
</TABLE>
------------------------
PURPOSE OF AMENDMENT
THE PURPOSE OF THIS POST-EFFECTIVE AMENDMENT NO. 1 IS TO
(A) REMOVE FROM REGISTRATION:
(I) 50,000 UNITS (EACH CONSISTING OF ONE SHARE OF COMMON STOCK
["OVERALLOTMENT SHARE"] AND ONE WARRANT FOR PURCHASE OF ONE
ADDITIONAL SHARE ["OVERALLOTMENT WARRANT"]), REPRESENTING THE TOTAL
NUMBER OF UNITS UNDERLYING THE UNDERWRITERS' OVER-ALLOTMENT OPTION,
NO PORTION OF WHICH WAS EXERCISED;
(II) 150,000 OVERALLOTMENT SHARES AND 150,000 OVERALLOTMENT WARRANTS,
REPRESENTING ALL OF THE OVERALLOTMENT SHARES AND OVERALLOTMENT
WARRANTS UNDERLYING THE UNDERWRITERS' OVER-ALLOTMENT OPTION;
(III) 350,000 SHARES OF COMMON STOCK, REPRESENTING ALL OF THE SHARES OF
COMMON STOCK UNDERLYING THE REPRESENTATIVES' WARRANTS; AND
(B) TO AFFECT A SHELF REGISTRATION OF:
(I) 1,000,000 SHARES OF COMMON STOCK BEING OFFERED BY THE COMPANY
PURSUANT TO OUTSTANDING WARRANTS; AND
(II) 16,153 SHARES OF COMMON STOCK BEING OFFERED BY THE COMPANY UPON
EXERCISE OF AN OUTSTANDING TRANSFERABLE WARRANT (THE "MEYERS
WARRANT").
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------
<TABLE>
<S> <C>
If the only securities being registered on this Form are being offered pursuant to dividend or interest
reinvestment plans, 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]
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) 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 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, check the following box: ............ [ ]
</TABLE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TO BE OFFER PRICE AGGREGATE AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
- ----------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share
underlying the Meyers Warrant............. 16,153 $3.50(1) $56,535.50 $100(2)
- ----------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee; based
on the closing bid price of the Common Stock on the Nasdaq SmallCap Market
on November 12, 1996, pursuant to Rule 457(c).
(2) Does not include $5,375 submitted with the initial filing of this
Registration Statement on October 18, 1994 with respect to 1,250,000 shares
of Common Stock underlying Warrants.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
This filing consists of documents. Exhibits' Indices appears on page of
Document .
<PAGE> 2
PROSPECTUS
1,016,153 SHARES
[LOGO]
COMMON STOCK
This Prospectus relates to a shelf registration of an aggregate of
1,016,153 shares of Common Stock of Timeline, Inc. ("Timeline" or the
"Company"), being offered by the Company pursuant to outstanding warrants. No
assurance can be given that the warrants or any portion thereof will be
exercised. See "Plan of Distribution."
The 1,016,153 shares of Common Stock offered for sale by the Company
consist of (a) 1,000,000 shares of Common Stock issuable upon the exercise of
outstanding transferable warrants at any time on or prior to January 18, 2000 at
an exercise price of $6.25 per share (the "Public Warrants"), and (b) 16,153
shares of Common Stock issuable upon the exercise of an outstanding transferable
warrant at any time on or prior to May, 2001 at an exercise price of $5.88 per
share (the "Meyers Warrant"). All such Public Warrants and the Meyers Warrant
are currently exercisable provided that a current prospectus is in effect with
respect to such Public Warrants and Meyers Warrant and subject to applicable
state securities laws. The Public Warrants are subject to redemption by the
Company at a price of $.05 per Public Warrant on 30 days' prior notice, if the
closing bid price of the Common Stock, as reported on Nasdaq for 20 consecutive
trading days ending within 15 days of the notice of redemption, averages in
excess of 160% of the then current exercise price per Public Warrant (currently
$10.00). The Public Warrants and Meyers Warrant exercise price is subject to
adjustment under certain circumstances. The Public Warrants and Meyers Warrant
exercise price is currently greater than recent market prices for the Common
Stock. No assurance can be given that the Public Warrants or Meyers Warrant will
be exercised.
The Common Stock and Public Warrants are traded on the Nasdaq SmallCap
Market under the symbol "TMLN" and "TMLNW," respectively, and are listed on the
Boston Stock Exchange under the same symbols. On November 12, 1996, the last
sale price of the Common Stock, as reported on the Nasdaq SmallCap Market, was
$3.50 per share, and the last such price of the Warrants, as reported on the
Nasdaq SmallCap Market, was $0.625 per share.
------------------------
THE SECURITIES OFFERED HEREBY INVOLVE 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.
THE DATE OF THIS PROSPECTUS IS , 1996.
<PAGE> 3
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 can be inspected and copied, at prescribed
rates, at the public reference facilities maintained by the Commission at Room
1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a Web site that contains reports, proxy and
information statements and other information regarding issuers that file
electronically. The address of that site is http://www.sec.gov. The Company's
Common Stock is traded on the Nasdaq SmallCap Market and the Boston Stock
Exchange, and such reports and other information can also be inspected at the
office of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006 and at
the office of the Boston Stock Exchange, One Boston Place, Boston, MA 02108.
The Company has filed with the Commission a registration statement under
the Securities Act with respect to the securities offered hereby. This
Prospectus does not contain all the information set forth in the registration
statement and the exhibits thereto, to which reference is hereby made.
Statements made in this Prospectus as to the contents of any contract, agreement
or other document are not necessarily complete. With respect to each such
contract, agreement or other document filed as an exhibit to the registration
statement, reference is made to the exhibit for a more complete description of
the matter involved, and each such statement is qualified in its entirety by
such reference. Any interested parties may inspect the registration statement,
without charge, at the public reference facilities of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549, and any interested parties may obtain
copies of all or any part of the registration statement from the Commission at
prescribed rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents or portions of documents filed by the Company with
the Commission are incorporated by reference into this Prospectus:
1. The Company's Annual Report on Form 10-KSB for the year ended March
31, 1996.
2. The Company's Quarterly Report on Form 10-QSB for the quarter
ending June 30, 1996.
3. The Company's Quarterly Report on Form 10-QSB for the quarter
ending September 30, 1996.
4. The description of the Company's Common Stock contained in its
Registration Statement pursuant to Section 12 of the Exchange Act,
as amended from time to time.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering made hereby shall be deemed to be incorporated by
reference into this Prospectus and made a part hereof from the date of filing of
such documents.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon written or oral request, a copy of any and
all documents incorporated by reference in this Prospectus, other than exhibits
to such documents, unless such exhibits are specifically incorporated by
reference in such documents. Requests should be directed to Ms. Paula McGee,
Investor Relations, at Timeline, Inc., 3055 - 112th Avenue NE, Suite 106,
Bellevue, WA 98004, or by telephone at (206) 822-3140.
THE COMPANY
The Company develops, markets and supports enterprise-wide financial
management and reporting software. Timeline's software products automatically
access and distribute business information with full accounting control.
Although the Company has products which permit the processing of transactions,
Timeline's marketing and development strategy is focused on products which
report accounting data in meaningful and flexible formats. The Company believes
that these reporting products allow end users to
2
<PAGE> 4
gather and disseminate business information throughout the enterprise while the
enterprise maintains maximum flexibility in determining the types of transaction
processing systems it will use.
In May 1994, following 17 years of marketing products designed solely for
use in the Digital Equipment Corporation ("Digital") mainframe and minicomputer
environment, the Company introduced its first client/server product, OPEN
GENERAL LEDGER(@) ("OGL(@)"). OGL(@) incorporates technology designed to gather
data from multiple operating systems and hardware platforms, old and new, for
translation into a Microsoft Corporation ("Microsoft") client/server
environment, and to process transactions within the Microsoft operating system.
Refinements to this technology have resulted in the Company's new MV
ANALYST-TM/MV SERVER-TM product line, which emphasizes financial reporting and
management functions, rather than transaction processing.
Timeline's primary product family, MV ANALYST-TM and MV SERVER-TM, consists
of client/ server software applications based on Microsoft Windows/Windows
NT(TM) and Microsoft Office operating systems and products from Microsoft
Corporation. Timeline's MV ANALYST-TM/MV SERVER-TM products allow end users to
effect enterprise-wide reporting in the user-friendly Microsoft desktop
environment, which is currently utilized by many enterprises. The relational
accounting architecture embodied in MV ANALYST-TM and MV SERVER-TM adapts to
existing accounting systems and other enterprise data that may or may not reside
in a Microsoft environment.
In addition to client/server products, the Company develops, markets and
supports a fully integrated line of host-based accounting applications that
operate on VAX(@) and AXP(@) computer systems from Digital Equipment
Corporation. This product line represents a continuation of Timeline's
historical core business and provides ongoing maintenance, license and
consulting revenue. Products in this market include General Ledger, Accounts
Payable, Accounts Receivable, Digibase, Digicalc II(@), Fixed Assets, Inventory,
Purchase Order and Association Management.
The Company's principal executive offices are located at 3055 - 112th
Avenue NE, Suite 106, Bellevue, Washington 98004, and its telephone number is
(206) 822-3140.
3
<PAGE> 5
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN AND INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS, PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
THE FOLLOWING RISK FACTORS IN EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED
HEREBY.
ACCUMULATED DEFICIT; RECENT OPERATING RESULTS
The Company has demonstrated an historical inability to operate profitably.
As of September 30, 1996, the Company had an accumulated deficit of
approximately $6,871,774. For the fiscal year ended March 31, 1996, the Company
experienced a net loss of $1,422,830. For the six month period ended September
30, 1996, the Company experienced a net loss of $1,782,621. In order to achieve
stable profitability, the Company must increase sales of its existing
client/server products, develop new products, and control its expenses. There
can be no assurance the Company will meet any of these objectives or ever
achieve sustained profitability.
LIMITED PRODUCT LINE; UNCERTAINTY OF MARKET ACCEPTANCE
Until recently, the Company derived substantially all of its net revenues
from sales of host-based accounting applications operating on Digital systems.
In May 1994 and April 1995, respectively, the Company introduced its first two
client/server products for general market release. In June 1996, in connection
with an agreement between the Company and Microsoft Corporation, the Company
released MICROSOFT(@) SMALL BUSINESS FINANCIAL MANAGER, a financial reporting
system for use in the "small-office, home-office" (or "SOHO") market. Although
the Company intends to continue to support customers on Digital systems, the
Company's future will depend upon the successful development, marketing and
sales of OPEN GENERAL LEDGER(@), MV ANALYST(TM), MV SERVER(TM), MICROSOFT(@)
SMALL BUSINESS FINANCIAL MANAGER, and other new products that operate on a
client/server platform.
There can be no assurance the Company will achieve or sustain significant
sales growth for its actual, scheduled or anticipated client/server products,
that enhancements to such products and other applications for the client/server
environment can be successfully developed, that demand for client/server
products will continue to grow or be sustained, or that the Company's
client/server products will successfully compete with the products of others. To
the extent demand for the Company's client/server products does not develop due
to competition, product performance, customer assessment of the Company's
financial resources and expertise, technological change or other factors, the
Company's operations will be adversely affected.
RELIANCE ON MICROSOFT
In furtherance of its long-term client/server product strategy, the Company
has developed all of its client/server products to function in the Microsoft
Windows and/or Windows NT environments, and anticipates future products will
also be designed for use in these Microsoft environments. In light of this
product strategy, and because the Company expects that its client/server product
line and related enhancements will account for substantially all new license
revenues for the foreseeable future, sales of the Company's new products would
be materially and adversely affected by market developments adverse to Microsoft
Windows and/or Windows NT. The success of the Company's strategy of developing
products using the Microsoft Windows and/or Windows NT environments is
substantially dependent on its ability to gain timely access to, and to develop
expertise in, current and future developments by Microsoft, of which there can
be no assurance. Moreover, the abandonment by Microsoft of its current operating
system product line or strategy would materially and adversely affect the
Company.
FLUCTUATIONS IN PERFORMANCE
The Company's results of operations have historically varied substantially
from period to period (quarterly or otherwise), and the Company expects they
will continue to do so. The timing and amount of the Company's net revenues are
dependent upon a number of factors, such as the size and timing of customer
orders or license agreements, the timing of the introduction and customer
acceptance of new products or
4
<PAGE> 6
product enhancements by the Company or its competitors, changes in pricing
policies by the Company or its competitors, and changes in general economic
conditions.
Recently, the Company's operating and other expenses have increased
significantly. Since its initial public offering in January 1995, the Company
has made significant expenditures to enhance its sales and marketing and
research and development activities, and general and administrative expenses
have increased. The Company may be unable to reduce these expenses quickly if
revenues are less than expected. As a result, variations in timing of revenues
can cause significant variations in periodic results of operations. The Company
does not take any measures specifically designed to limit fluctuations in the
Company's periodic results of operations. There can be no assurance the Company
will be profitable on a quarter-to-quarter or any other basis in the future.
FUTURE CAPITAL NEEDS
The Company's net working capital (excluding deferred revenue) at March
31, 1996 was approximately $975,000, a reduction of approximately $1,756,000
from March 31, 1995. The Company's net working capital (excluding deferred
revenue) at September 30, 1996 was approximately $1,299,000, an increase of
approximately $324,000 from March 31, 1996. The Company's net working capital
position is directly attributable to the receipt of approximately $2,352,000,
net of issuance costs, upon closing of a private placement of Common Stock in
May of 1996 (the "Private Placement"), offset by losses of $1,782,621 incurred
during the six months ended September 30, 1996. For the year ended March 31,
1996, operating activities generated a cash flow deficiency of approximately
$1,553,000, while investing and financing activities generated positive cash
flow of approximately $1,454,000. For the six month period ended September 30,
1996, operating activities generated a cash flow deficiency of approximately
$1,950,000 while investing and financing activities generated positive cash
flow of approximately $2,018,000 due primarily to receipt of funds from the
Company's private placement of an aggregate of 521,530 shares of Common Stock
in May, 1996. The Company has not realized any proceeds for the exercise of
Warrants. Moreover, there can be no assurance that the Warrants will be
exercised and that the Company will realize any proceeds from such exercise.
The Company's capital needs in the future will depend upon factors such as the
market acceptance of its existing client/server products and any other new
products developed by the Company, the cost of increasing the Company's sales
and marketing activities and the progress of the Company's research and
development activities, none of which can be predicted with certainty. There
can be no assurance the Company will not require substantial additional
financing in the future. The Company has no commitments or arrangements for
such financing, and there can be no assurance any additional financing, if
required, will be available to the Company on acceptable terms, if at all. The
inability to obtain required financing could have a material adverse effect on
the Company's results of operations, and could cause the Company to
significantly reduce or suspend its operations, seek a merger partner or sell
additional securities on terms which are highly dilutive to existing investors.
TECHNOLOGICAL CHANGE AND UNCERTAINTY
The market for the Company's products is characterized by rapidly changing
technology, evolving industry standards, changes in customer needs and frequent
new product introductions. The Company's future success will depend on its
ability to enhance its current products and develop new products on a timely and
cost-effective basis, to meet changing customer needs and to respond to emerging
industry standards and other technological changes. In particular, the Company's
products must maintain compatibility with existing and future Microsoft Windows
and Windows NT operating environments, local area network operating systems, and
other industry-standard database systems, and accepted personal computer,
peripheral, communications interface and other hardware standards. Any failure
by the Company to anticipate or to respond promptly and adequately to changes in
technology and customer preferences, or any significant delays in product
development or introduction, would have a material adverse effect on the
Company's results of operations. There can be no assurance the Company will be
successful in developing new products or enhancing its existing products on a
timely basis, or that such new products or product enhancements will achieve
market acceptance.
5
<PAGE> 7
Software products as complex as those offered by the Company may contain
undetected errors or failures when first introduced or as new versions are
released. There can be no assurance that, despite significant testing by the
Company and by current and potential customers, errors will not be found in new
products after commencement of commercial shipments, resulting in loss of or
delay in market acceptance. Furthermore, from time to time the Company and
others may announce new products, capabilities or technologies which have the
potential to replace or shorten life cycles of the Company's existing products.
There can be no assurance that announcements of currently planned or other new
products will not cause customers to defer purchasing existing Company products.
Delays or difficulties associated with new product introductions or product
enhancements could have a material adverse effect on the Company's results of
operations.
COMPETITION
The business information software market is highly competitive. Management
believes the primary products in competition with OPEN GENERAL LEDGER are
products provided by IMRS, Inc. and Comshare, Inc., and the primary products in
competition with various products of the MV ANALYST-TM/MV SERVER-TM family are
client/server products from FRX and financial reporting modules from various
accounting software vendors such as Platinum Software Corporation, Computron
Technologies Corp., and various IBM(TM) or UNIX-based vendors. The Company also
expects to face competition with respect to those products it is developing and
has scheduled for release. In addition, because OPEN GENERAL LEDGER is a
complete general ledger product, it competes in large, complex general ledger
environments with products provided by PeopleSoft Inc., SAP America Inc., Dun &
Bradstreet Software, Inc., and Oracle Corporation, among others, and in the
mid-range client/server general ledger market with products provided by
Platinum, Computron, and various IBM- or UNIX-based vendors. In the host-based
financial and managerial accounting markets, the Company's various products
designed for use on Digital operating systems compete with Digital-based
products from Ross Systems Inc., Dun & Bradstreet Software, Inc., and Oracle
Corporation, among others. Competition for the Company's products that operate
on host-based systems also includes a number of vendors with products that run
on UNIX or IBM, rather than Digital, operating systems.
Most of the Company's competitors have significantly greater financial,
technical, sales, marketing and other resources, as well as greater name
recognition and larger installed bases, than the Company. Because there are
minimal barriers to entry into the software market, the Company believes sources
of competition will continue to proliferate. The market for the Company's
products is characterized by significant price competition, and the Company
expects it will face increasing pricing pressures. There can be no assurance the
Company will be able to maintain its historic pricing structure, and an
inability to do so would adversely affect the Company's results of operations.
RELIANCE ON DISTRIBUTORS
The Company expects to rely increasingly on distributors for sales of its
products. The Company's agreements with its distributors are not exclusive, may
be terminated by either party without cause, and generally do not impose minimum
purchase requirements. Some of the Company's distributors carry competing
product lines. The effectiveness of distributors depends in part on their
continued viability and financial stability, which, in turn, depends in part on
the economic health of the software industry. There can be no assurance
distributors will be able to market the Company's products effectively, or that
any existing distributor will continue to represent the Company's products. The
inability to recruit, or the loss of, important distributors could adversely
affect the Company's results of operations.
The Company also expects to rely increasingly on distributors to support
its products. There can be no assurance, however, that the Company will be able
to attract distributors qualified to provide timely and cost-effective customer
support or service. Any deficiencies in the service or support provided by such
entities could have a material adverse effect on the Company's results of
operations.
6
<PAGE> 8
DEPENDENCE ON KEY PERSONNEL; MANAGEMENT OF GROWTH
The Company's success depends to a significant extent on the continued
contributions of several management personnel, in particular John Calahan, the
Company's Chief Executive Officer, and Charles Osenbaugh, the Company's
Executive Vice President and Chief Financial Officer. The loss of the services
of these key persons would have a material adverse effect on the Company. The
Company currently maintains $1 million of key man insurance on the life of Mr.
Calahan. The Company has also entered into an employment agreement with Mr.
Calahan.
The Company's success also depends in part on its ability to attract and
retain qualified professional, technical, managerial and marketing personnel.
Competition for such personnel in the software industry is intense, and there
can be no assurance the Company will be successful in attracting and retaining
the personnel it requires to conduct its operations successfully. The Company's
results of operations could be adversely affected if the Company were unable to
attract, hire, train and manage these personnel, or if revenues failed to
increase at a rate sufficient to absorb the resulting increase in expenses.
The Company anticipates that planned growth could place a significant
strain on the Company's management and other resources. The ability of the
Company to manage and sustain growth will depend in part on the ability of its
officers and key personnel to manage growth successfully through the
implementation of appropriate management, operational and financial systems and
controls.
INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS
The Company relies on a combination of copyright, trademark and trade
secret laws, patents, confidentiality procedures and contractual provisions to
protect its proprietary rights. The Company seeks to protect its software,
documentation and other written materials under trade secret and copyright laws,
which afford only limited protection. The Company has received Notice of
Issuance by the U.S. Patent Office of one patent, and one other patent
application is pending. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy aspects of the Company's
products or to obtain and use information the Company regards as proprietary.
Policing unauthorized use of the Company's products is difficult, and although
the Company is unable to determine the extent, if any, to which piracy of its
software products currently exists, it can be expected to occur in the future.
In addition, the laws of some foreign countries do not protect proprietary
rights to the same extent as do the laws of the U.S. There can be no assurance
proprietary protections will be adequate or that the Company's competitors will
not independently develop similar technology. The Company has not obtained an
opinion of counsel as to the validity of its proprietary rights.
No claims have been made against the Company for infringement of
proprietary rights of third parties. There can be no assurance, however, that
third parties will not assert infringement claims against the Company in the
future. As the number of software products in the industry increases and the
functionality of these products further overlaps, the Company believes software
programs will increasingly become subject to infringement claims. The cost of
responding to any such claim may be substantial, whether or not the assertion is
valid.
INTERNATIONAL OPERATIONS
Historical net revenues attributable to licenses made outside the U.S. have
been relatively insignificant. The Company anticipates, however, international
licenses will account for a significant portion of its net revenues in the
future. The Company's international licenses are currently denominated in U.S.
currency. An increase in the value of the U.S. dollar relative to foreign
currencies could make the Company's products less competitive in those markets.
The Company does not currently engage in foreign currency hedging transactions,
although it may implement such transactions in the future. In addition, foreign
countries may impose limitations on the amount of currency which may be
withdrawn from such countries, thereby adversely affecting the Company's
liquidity and geographic market scope.
7
<PAGE> 9
CONTROL BY MANAGEMENT
As of November 1, 1996, the directors and officers of the Company owned
approximately 41% of the outstanding Common Stock outstanding. As a result,
these shareholders, acting together, are and will continue to be able to
exercise significant influence over all matters requiring shareholder approval,
including the election of directors and the approval of significant corporate
transactions.
EXERCISE OF WARRANTS AND OPTIONS
As of November 1, 1996, options and warrants to purchase an aggregate of
1,570,216 shares of Common Stock were outstanding, including 382,938 shares
issuable upon the exercise of options and warrants granted to officers,
directors and employees of the Company, and also including an additional (a)
71,125 shares issuable upon exercise of an outstanding warrant (the "Unit
Warrant") held by H.J. Meyers & Co., Inc. and/or certain of its affiliates
("Meyers"), (b) 71,125 shares issuable upon exercise of 71,125 Public Warrants
underlying the Unit Warrant (the "Underlying Warrants"), (c) 28,875 share
issuable upon exercise of another outstanding warrant held by Meyers (the "IPO
Warrant"), (d) 1,000,000 shares issuable upon exercise of the Public Warrants
covered by the registration statement of which this Prospectus forms a part, and
(e) 16,153 shares issuable upon exercise of the Meyers Warrant covered by the
registration statement of which this Prospectus forms a part.
The Unit Warrant and the IPO Warrant were issued in January 1995 to Meyers'
predecessor in connection with its participation, as the representative of the
underwriters, in the Company's initial public offering. The Public Warrants were
issued to the public in connection with such offering. The Meyers Warrant was
issued to Meyers in connection with its participation in the Company's private
placement of an aggregate of 521,530 shares of Common Stock in May, 1996 (the
"Private Placement"). The Unit Warrant, the IPO Warrant, the Meyers Warrant and
the Public Warrants are all currently exercisable, provided that a current
prospectus is in effect, subject to compliance with applicable state securities
laws. The Underlying Warrants, when issued upon exercise of the Unit Warrant,
will be substantively identical to the Public Warrants and similarly
exercisable. Shares of Common Stock and Underlying Warrants constituting Units
will be immediately detachable and separately transferable upon exercise of the
Unit Warrant. Shares of Common Stock and/or Underlying Warrants issued upon the
exercise of the Unit Warrant, Underlying Warrants, IPO Warrant and Public
Warrants will be freely tradable by persons other than affiliates of the
Company.
The Unit Warrant entitles the registered holder thereof to purchase, at any
time or from time to time on or before January 17, 2000, up to 71,125 Units at a
price of $6.00 per Unit, each Unit consisting of one share of Common Stock and
one Redeemable Common Stock Purchase Warrant. The IPO Warrant entitles the
registered holder thereof to purchase, at any time or from time to time on or
before January 17, 2000, up to 28,875 shares of Common Stock at a price of $6.00
per share. The Meyers Warrant entitles the registered holder thereof to
purchase, at any time or from time to time on or before May, 2001, up to 16,153
shares of Common Stock at a price of $5.88 per share. Each Public Warrant
entitles and, when issued, each Underlying Warrant will entitle the registered
holder thereof to purchase, at any time on or before January 17, 2000, one share
of Common Stock at a price of $6.25. The Public Warrants are and, when issued,
the Underlying Warrants will be subject to redemption by the Company at a price
of $.05 per Warrant or Underlying Warrant, on 30 days' prior written notice, if
the closing bid price of the Common Stock, as reported on Nasdaq for 20
consecutive trading days ending within 15 days of the notice of redemption,
averages in excess of 160% of the then current exercise price per Warrant or
Underlying Warrant. The exercise price of, and the number of securities subject
to the Unit Warrant, Underlying Warrants, IPO Warrant, Public Warrants and
Meyers Warrant are subject to adjustment under certain circumstances.
Holders of options and warrants have the opportunity to profit from a rise
in the market price of the Company's Common Stock, if any, without assuming the
risk of ownership. The existence of such options and warrants may adversely
affect the terms under which the Company could obtain additional equity capital.
The exercise of these warrants and options likely will affect the market price
of the Common Stock. In addition, the Company has agreed it will register under
federal and state securities laws the Unit Warrant and the IPO Warrant, and the
securities issuable under such warrants, under certain circumstances. Exercise
of these
8
<PAGE> 10
registration rights could involve substantial expense to the Company at a time
when it could not afford such expenditures.
SHARES ELIGIBLE FOR FUTURE SALE; OUTSTANDING REGISTRATION RIGHTS
Sales of a substantial number of shares of the Company's Common Stock in
the public market could adversely affect the market price for the Common Stock.
The shares of Common Stock issued upon exercise of the Unit Warrant, Underlying
Warrants, IPO Warrant and Public Warrants will be eligible for sale in the
public market without restriction under the Securities Act, except for those
shares owned by "affiliates" (as defined in Rule 144 promulgated under the
Securities Act), whose rights to sell will be subject to certain limitations
under Rule 144. Of the approximate 3.0 million shares of Common Stock
outstanding as of the date of this Prospectus, approximately 1.9 million shares
are currently eligible for sale in the public market without restriction, and
substantially all of the remaining shares are eligible for sale in the public
market subject to compliance with Rule 144 or Rule 701 promulgated under
Securities Act.
Notwithstanding these rights to resell, holders of certain shares of Common
Stock currently outstanding and outstanding warrants and options to purchase
shares of Common Stock are subject to lock-up agreements pursuant to which they
have agreed not to sell or otherwise dispose of any outstanding shares, or
shares subject to outstanding options or warrants, without the prior written
consent of Meyers. With respect to approximately 1.1 million issued and
outstanding shares, and approximately 370,000 shares subject to options and
warrants, held by such persons, the lock-up period expires on January 18, 1997.
After expiration of the relevant lock-up period, the affected shares will be
eligible for sale, in most cases subject to the requirements of Rule 144 or Rule
701.
The Company registered, on May 1, 1996, approximately 368,000 shares of
Common Stock issuable pursuant to the exercise of outstanding options and
options to be granted under the Company's stock option plans in the future.
Registered shares underlying such options and warrants were eligible for sale in
the public market commencing 20 days from the date the Company registered such
shares.
The Company registered, on October 7, 1996, 557,530 shares of Common Stock,
521,530 shares of which are being offered for sale by certain of the Company's
shareholders (the "Selling Shareholders") purchased by the Selling Shareholders
in the Private Placement and 36,000 shares of which may be issued by the Company
upon exercise of an outstanding transferable warrant at an exercise price of
$5.88 per share issued to Pacific Crest Securities in connection with the
Private Placement.
In addition, holders of an aggregate of approximately 569,000 shares of
Common Stock currently outstanding have certain demand or "piggyback" rights to
register their shares under the Securities Act. To the extent such demand
registration rights are exercised, Meyers has indicated to the Company that it
will waive the lock-up periods applicable to holders exercising such rights.
Other than with respect to approximately 48,000 shares with demand registration
rights, the Company knows of no plan, arrangement, agreement or intention on the
part of any holder of the Company's capital stock (whether currently outstanding
or subject to outstanding options and warrants) to seek Meyers' consent to
release lock-up agreements. Meyers has informed the Company that its general
policy with respect to granting such consent is to consider, at the time of
request of such consent, the current and future business prospects of the
particular company to which the request relates, and the market for such
company's securities, all on a case-by-case basis.
POSSIBLE LIMITATIONS ON TAX NET OPERATING LOSS CARRYFORWARDS
Prior to its initial public offering in January 1995, the Company had
accumulated tax net operating loss carryforwards of approximately $1,700,000 and
tax credit carryforwards of approximately $185,000. Due to the change in
ownership experienced by the Company as a consequence of such offering, the
amount of net operating loss carryforward available to be used in any given year
may be limited under Section 382 of the Internal Revenue Code of 1986, as
amended. The effect of this limitation, under certain circumstances, may result
in a partial delay over five years in the Company realizing the benefit of the
entire tax loss carryforward. The annual limitation is currently estimated to be
$375,000 per year.
9
<PAGE> 11
POSSIBLE ILLIQUIDITY OF TRADING MARKETS
The Common Stock and Public Warrants are listed for trading on the Nasdaq
SmallCap Market. If the Company should experience significant or prolonged
losses from operations, it may be unable to maintain the standards for continued
quotation on the Nasdaq SmallCap Market. These standards require the Company to
maintain total assets of at least $2 million and capital and surplus of at least
$1 million ($2 million should the minimum bid price of the Common Stock fall
below $1.00 per share, in which event the market value of the public float would
have to equal or exceed $1 million). In addition, the Company's Common Stock
must be publicly held by at least 300 shareholders owning at least 100,000
shares with a minimum market value of $200,000. If these standards are not
maintained, the Common Stock and Public Warrants could be subject to removal
from the Nasdaq SmallCap Market. Trading, if any, in the securities would
thereafter be conducted in the over-the-counter market on an electronic bulletin
board established for securities that do not meet the Nasdaq SmallCap Market
listing requirements or in what are commonly referred to as the "pink sheets."
As a result, an investor would find it more difficult to dispose of, or to
obtain accurate quotations as to the price of, the Company's securities.
The Commission has adopted regulations which generally define a "penny
stock" to be any equity security that is not quoted on Nasdaq and that has a
price (as therein defined) less than $5.00 per share, subject to certain
exceptions. If any of the Company's securities were removed from the Nasdaq
system, such securities may be deemed "penny stock." Various rules promulgated
under the Exchange Act impose certain "sales practice requirements" on
broker-dealers who sell such securities in nonexempt transactions, i.e., to
persons other than established customers and institutional "accredited
investors." In particular, a broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to a nonexempt sale.
In addition, prior to any nonexempt transaction by a broker-dealer
involving a penny stock, the rules require delivery of a risk disclosure
document relating to the penny stock market. Disclosure is also required to be
made about compensation payable to both the broker-dealer and the registered
representative and current quotations for the securities. Monthly statements are
required to be sent disclosing recent price information for the penny stock held
in the account and information on the limited market in penny stocks. Other
restrictions may also apply.
The foregoing required penny stock restrictions will not apply to the
Company's securities for so long as such securities are listed on Nasdaq or meet
certain other restrictive criteria. There can be no assurance that the Company's
securities will qualify for exemption from the penny stock restrictions. If any
of the Company's securities were subject to the rules on penny stocks, the
market liquidity for such securities could be materially and adversely affected.
The Common Stock and Public Warrants are also listed for trading on the
Boston Stock Exchange. If the Company were to experience significant or
prolonged losses, however, it may be unable to maintain the standards for
continued listing on the Boston Stock Exchange. As a result, an investor would
find it more difficult to dispose of, or to obtain accurate quotations for, the
Company's securities.
REGULATORY CONDITIONS TO EXERCISE OF PUBLIC WARRANTS
The Public Warrants are not exercisable unless, at the time of exercise,
the Company has a current prospectus covering the shares of Common Stock
issuable upon exercise of the Public Warrants and such shares have been
registered, qualified or deemed to be exempt under the securities or "blue sky"
laws of the state of residence of the exercising holder. Although the Company
has undertaken to use reasonable efforts to maintain a current prospectus
relating thereto until the expiration of the Public Warrants, there is no
assurance that it will be able to do so.
Although the Company did not knowingly sell Public Warrants to purchasers
in jurisdictions in which the Public Warrants and the shares of Common Stock
underlying such Public Warrants were not registered or otherwise qualified for
sale, investors who reside in jurisdictions in which the shares underlying the
Public Warrants are not qualified for sale may purchase Public Warrants in the
after-market, or investors who
10
<PAGE> 12
purchase Public Warrants in jurisdictions in which such underlying shares are
qualified for sale may change their residence to a jurisdiction in which such
shares are not qualified for sale. Under these circumstances, the Company would
be unable to issue shares to such investors upon the purported exercise of their
Public Warrants. Such investors would have no choice but to attempt to sell
their Public Warrants to persons who reside in jurisdictions in which such
underlying shares are qualified for sale, or to allow their Public Warrants to
expire unexercised.
REDEMPTION OF PUBLIC WARRANTS
The Public Warrants are subject to redemption by the Company at a price of
$.05 per Public Warrant, on 30 days' prior written notice, if the average
closing bid price of the Common Stock, as reported on the Nasdaq system for 20
consecutive trading days ending within 15 days of the notice of redemption,
exceeds 160% of the current Public Warrant exercise price. In the event the
Company elects to redeem Public Warrants by delivery of notice, the Public
Warrants would remain exercisable until the close of business on the date fixed
for redemption in such notice. If any Public Warrant called for redemption is
not exercised by such date, it will cease to be exercisable and the holder will
be entitled only to the redemption price. See "Description of
Securities -- Warrants."
EFFECT OF ANTITAKEOVER PROVISIONS
Certain provisions of Washington law and the Company's Articles of
Incorporation and Bylaws could have the effect of making it more difficult for a
third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. Such provisions could limit the price that
certain investors might be willing to pay in the future for securities of the
Company. Certain of such provisions allow the Company to issue Preferred Stock,
without shareholder approval, with rights senior to those of the Common Stock
and to impose various procedural and other requirements which could make it more
difficult for shareholders to effect certain corporation actions.
USE OF PROCEEDS
The net proceeds to the Company from the issuance of Common Stock upon the
exercise of the Public Warrants and the Meyers Warrant are estimated to be
approximately $6,015,000 (after deducting estimated offering expenses and
solicitation fees payable by the Company to Meyers in connection with
solicitation of Warrant exercises). The Company expects to use such proceeds for
general working capital. The exercise price of the Public Warrants and Meyers
Warrant is greater than record market prices of Common Stock, and there is no
assurance that any of the Public Warrants or Meyers Warrant will be exercised.
The Company will not receive any proceeds for sales of the shares of Common
Stock issued upon exercise of the Public Warrants or Meyers Warrant. The Company
will bear responsibility for expenses incurred in connection with the
registration of all shares of Common Stock offered hereby. See "Plan of
Distribution."
PLAN OF DISTRIBUTION
The 1,016,153 shares of Common Stock covered by this Prospectus are being
offered by the Company and consist of (a) 1,000,000 shares issuable at an
exercise price of $6.25 per share upon the exercise of Public Warrants issued by
the Company in connection with its initial public offering in January, 1995, and
(b) 16,153 shares issuable at an exercise price of $5.88 per share upon the
exercise of the Meyers Warrant issued by the Company to Meyers in connection
with a private placement of the Company's securities in May, 1996. The exercise
price of, and the number of shares subject to, the Public Warrants and Meyers
Warrant are subject to adjustment in certain circumstances, such as, for
example, a stock split, stock dividend or reclassification of the Company's
Common Stock.
11
<PAGE> 13
INDEMNIFICATION
The Company's Articles of Incorporation and Bylaws contain provisions
limiting the personal liability of directors and indemnifying directors,
officers, employees and agents for actions, in their capacity as such, to the
fullest extent permitted by law. The Company has also entered into
indemnification agreements with its directors and executive officers. Each of
the foregoing may include indemnification for liabilities under the Securities
Act. Insofar as indemnification for liabilities under the Securities Act may be
permitted to directors, officers and controlling persons of the Company, the
Company has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
Certain legal matters with respect to the registration of the shares of
Common Stock offered hereby are being passed upon for the Company by Cairncross
& Hempelmann, Seattle, Washington. Cairncross & Hempelmann has not represented
any of the Selling Shareholders in connection with such registration.
EXPERTS
The financial statements of the Company incorporated by reference from the
Company's Annual Report (Form 10-KSB) for the year ended March 31, 1996 have
been audited by Arthur Andersen LLP, independent public accountants, as
indicated in their report thereon included therein and incorporated herein by
reference. Such financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.
12
<PAGE> 14
- ------------------------------------------------------
- ------------------------------------------------------
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED HEREIN, AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER
OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION. THE DELIVERY OF THIS PROSPECTUS, UNDER ANY
CIRCUMSTANCES, AT ANY TIME, DOES NOT IMPLY THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................
Incorporation of Certain Documents by
Reference...........................
The Company...........................
Risk Factors..........................
Use of Proceeds.......................
Plan of Distribution..................
Indemnification.......................
Legal Matters.........................
Experts...............................
</TABLE>
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
- ------------------------------------------------------
1,016,153 SHARES
[LOGO]
COMMON STOCK
------------------------
PROSPECTUS
------------------------
, 1996
------------------------------------------------------
------------------------------------------------------
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following is an itemized statement of the estimated expenses payable by
Registrant in connection with this Post-Effective Amendment on Form S-3 to Form
SB-2.
<TABLE>
<S> <C>
SEC filing fee............................................................. $ 100
Printing and engraving expenses............................................ $ 3,000
Accounting fees and expenses............................................... $ 2,000
Legal fees and expenses.................................................... $ 5,000
Blue Sky filing fees and expenses.......................................... $ 5,000
Miscellaneous expenses..................................................... $ 2,700
-------
TOTAL............................................................ $17,800
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 23B.08.320 of the Washington Business Corporation Act (the "WBCA")
authorizes a corporation to limit a director's liability to the corporation or
its shareholders for monetary damages for acts or omissions as a director,
except in certain circumstances involving intentional misconduct, self dealing
or illegal corporate loans or distributions, or any transaction from which the
director personally receives a benefit in money, property or services to which
the director is not legally entitled. Article 8 of Registrant's Articles of
Incorporation, as amended ("Registrant's Articles") contains provisions
implementing, to the fullest extent permitted by Washington law, such
limitations on a director's liability to Registrant and its shareholders. Any
amendment or repeal of such provisions may not adversely affect any right or
protection of a director of Registrant for or with respect to any acts or
omissions of such director occurring prior to such amendment or repeal.
Sections 23B.08.500 through 23B.08.600 of the WBCA authorize a court to
award, or a corporation's board of directors to grant, indemnification to
directors and officers on terms sufficiently broad to permit indemnification
under certain circumstances for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act"). Under the WBCA, a corporation has the
power to indemnify a director or officer made a party to a proceeding, or
advance or reimburse expenses incurred in a proceeding, under any circumstances,
except that no such indemnification shall be allowed on account of: (i) acts or
omissions of a director or officer finally adjudged to be intentional misconduct
or a knowing violation of the law; (ii) conduct of a director or officer finally
adjudged to be an unlawful distribution; or (iii) any transaction with respect
to which it was finally adjudged that such director or officer personally
received a benefit in money, property or services to which the director or
officer was not legally entitled. Article 9 of Registrant's Articles provides
for indemnification of Registrant's directors and officers, including those who
serve at the request of Registrant as trustees with respect to employee benefit
plans, to the maximum extent permitted by Washington law.
Registrant has entered or may enter into separate indemnification
agreements with its directors and officers, including those who serve at the
request of Registrant as trustees or administrators with respect to benefit
plans, containing provisions that are in some respects broader than the specific
indemnification provisions contained in the WBCA. These agreements require or
may require Registrant, among other things, to indemnify such directors,
officers and plan trustees and administrators against certain liabilities that
may arise by reason of their status or service as directors, officers or plan
trustees or administrators, and to advance their expenses incurred as a result
of any proceeding against them as to which they could be indemnified.
Directors and officers of Registrant are covered by insurance (with certain
exceptions and limitations) which indemnifies them against losses and
liabilities arising from certain alleged "wrongful acts," including alleged
errors or misstatements or misleading statements, or certain other alleged
wrongful acts or omissions constituting neglect or breach of duty.
II-1
<PAGE> 16
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ ---------------------------------------------------------------------------
<C> <S>
*4.1 Specimen Common Stock Certificate
*5.1 Opinion of Cairncross & Hempelmann, P.S.
5.2 Opinion of Cairncross & Hempelmann, P.S.
23.1 Consent of Arthur Andersen, LLP
23.2 Consent of Cairncross & Hempelmann, P.S. (included in opinion filed as
Exhibits 5.1 and 5.2)
24.1 Powers of Attorney (see Signature Page)
</TABLE>
- ---------------
* Included in Registrant's Form SB-2 filed initially on October 6, 1994, as
amended and declared effective January 18, 1995 (No. 33-85230), relating to
Registrant's initial public offering of securities.
ITEM 17. UNDERTAKINGS
Registrant hereby undertakes: (1) to file, during any period in which it
offers or sells securities, a post-effective amendment to this registration
statement to (i) include any prospectus required by section 10(a)(3) of the
Securities Act, (ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement, and (iii) include any additional or changes material
information on the plan of distribution; (2) for determining liability under the
Securities Act, to treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at that
time to be the initial bona fide offering thereof; and (3) to file a
post-effective amendment to remove from registration any of the securities that
remain unsold at the end of the offering.
For determining any liability under the Securities Act, the Registrant
hereby undertakes: (1) to treat the information omitted from the form of
prospectus filed as part of this Registration Statement in reliance upon Rule
430A and contained in a form of prospectus filed by the Registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this
Registration Statement as of the time the Commission declared it effective; and
(2) to treat each post-effective amendment that contains a form of prospectus as
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time as the initial bona fide offering of
the securities.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by Registrant 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, the Registrant 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 Act and will be governed by the final adjudication of
such issue.
II-2
<PAGE> 17
SIGNATURES
In accordance with 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 Bellevue, State of Washington, on November 15, 1996.
TIMELINE, INC.
By /s/ John W. Calahan
--------------------------------------
John W. Calahan
President
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John W. Calahan and Charles R. Osenbaugh,
or either of them, his or her attorneys-in-fact, with the power of substitution,
for him or her in any and all capacities, to sign any amendments to this
Registration Statement, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
hereby ratifying and confirming all that said attorneys-in-fact, or their
substitute or substitutes, may do or cause to be done by virtue hereof.
In accordance with 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>
SIGNATURES CAPACITIES DATE
- ------------------------------------------ ------------------------------ ------------------
<S> <C> <C>
/s/ John W. Calahan Director November 15, 1996
- ------------------------------------------ President
John W. Calahan Chief Executive Officer
/s/ Donald K. Babcock Director November 15, 1996
- ------------------------------------------ Chief Technologist
Donald K. Babcock
/s/ Charles R. Osenbaugh Director, Executive Vice November 15, 1996
- ------------------------------------------ President, Chief Financial
Charles R. Osenbaugh Officer,
Secretary and Treasurer
(principal financial and
accounting officer)
Director November , 1996
- ------------------------------------------
Michael R. Hallman
Director November , 1996
- ------------------------------------------
Kent L. Johnson
</TABLE>
II-3
<PAGE> 18
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 18, 1996.
REGISTRATION NO. 33-85230
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
EXHIBITS
TO
POST-EFFECTIVE AMENDMENT NO. 1 TO FORM SB-2
ON
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
------------------------
TIMELINE, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 19
INDEX TO EXHIBITS
TO
FORM S-3
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- --------
<C> <S> <C>
5.2 Opinion of Cairncross & Hempelmann, P.S....................................
23.1 Consent of Arthur Andersen LLP.............................................
</TABLE>
<PAGE> 1
EXHIBIT 5.2
OPINION OF CAIRNCROSS & HEMPELMANN, P.S.
<PAGE> 2
November 18, 1996
Timeline, Inc.
3055 - 112th Avenue N.E., Suite 106
Bellevue, Washington 98004
Re: Post-Effective Amendment No. 1 to Form SB-2 on Form S-3
To Whom It May Concern:
We have acted as counsel to Timeline, Inc. (the "Company") in connection
with the preparation of a Post-Effective Amendment No. 1 to Form SB-2 on Form
S-3 (the "Registration Statement") under the Securities Act of 1933, as amended
(the "Act"), which the Company is filing with the Securities and Exchange
Commission with respect to an aggregate of 1,016,153 shares of the Company's
Common Stock (the "Shares"), 1,000,000 shares of which may be issued by the
Company upon exercise of outstanding warrants originally issued in January, 1995
(the "Public Warrants"), and 16,153 Shares which may be issued by the Company
upon exercise of an outstanding transferable warrant originally issued in June,
1996 to H. J. Meyers & Co., Inc. (the "Meyers Warrant"). We have examined
documents as we have deemed necessary for the purpose of this opinion.
Based upon and subject to the foregoing, we are of the opinion that the
shares of the Company's Common Stock that may be issued pursuant to the Meyers
Warrant have been duly authorized and that, upon the issuance and sale thereof
by the Company in accordance with the terms of the Meyers Warrant, and the
receipt of the consideration therefor in accordance with the terms therein,
such shares will be validly issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and further consent to the use of our name wherever
appearing in the Registration Statement, including any Prospectus constituting a
part thereof, and any amendments thereto. In giving such consents, we do not
admit that we are in the category of persons whose consent is required under
Section 7 of the Act.
Very truly yours,
/s/ SCOTT T. BELL
--------------------------------------
Scott T. Bell
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ARTHUR ANDERSEN LLP
<PAGE> 2
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated May 22, 1996
included in the Timeline, Inc. Form 10-KSB for the year ended March 31, 1996 and
to all references to our Firm included in this registration statement.
/s/ ARTHUR ANDERSEN LLP
--------------------------------------
Seattle, Washington
November 14, 1996
