<PAGE> 1
As filed with the Securities and Exchange Commission on December 10, 1998
Registration No. 333-67213
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
METACREATIONS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 95-4102687
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6303 CARPINTERIA AVENUE
CARPINTERIA, CALIFORNIA 93013
(805) 566-6200
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
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TERANCE A. KINNINGER
SR. VICE PRESIDENT FINANCE AND OPERATIONS AND CHIEF FINANCIAL OFFICER
METACREATIONS CORPORATION
6303 CARPINTERIA AVENUE
CARPINTERIA, CA 93013
(805) 566-6200
FAX: (805) 566-6200
(Name, address, including zip code and telephone number,
including area code, of agent for service)
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Copies to:
JEFFREY D. SAPER, ESQ.
WILSON SONSINI GOODRICH & ROSATI
PROFESSIONAL CORPORATION
650 PAGE MILL ROAD
PALO ALTO, CA 94304
(650) 493-9300
FAX: (650) 493-6811
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Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS
REGISTRATION STATEMENT.
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 (the "Securities Act"), 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, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ______
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED SHARE(1) PRICE(1) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value
$0.001 per share ................. 12,903 shares $3.5625 $45,967.00 $13.00
================================================================================================================
</TABLE>
(1) The Price of $3.5625 per share, which was the average of the high and low
prices of the Registrant's Common Stock on the Nasdaq National Market on
November 9, 1998, is set further solely for the purposes of calculating
the registration fee in accordance with Rule 457(c) of the Securities Act
of 1933, as amended.
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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 or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to
Section 8(a), may determine.
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<PAGE> 2
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities Exchange Commission is effective. This prospectus is not any offer to
sell these securities and is not soliciting an offer to buy these securities in
any state where the offer or sale is not permitted.
PROSPECTUS
(Subject to completion, dated December ___, 1998)
12,903 SHARES
METACREATIONS CORPORATION
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COMMON STOCK
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This prospectus relates to the public offering, which is not being underwritten,
of up to 12,903 shares of our Common Stock which is held by some of our current
stockholders.
The prices at which such stockholders may sell the shares will be determined by
the prevailing market price for the shares or in negotiated transactions. We
will not receive any of the proceeds from the sale of the shares.
Our Common Stock is listed on the Nasdaq National Market under the symbol
"MCRE." On December 7, 1998, the average of the high and low price for the
Common Stock was $5.34375 per share.
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INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
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THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------------
The date of this prospectus is _______ , 1998.
<PAGE> 3
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection with
the offering made hereby, and if given or made, such information or
representations must not be relied upon as having been authorized by
MetaCreations Corporation (referred to in this Prospectus as "MetaCreations" or
the "Company"), any selling stockholder or by any other person. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to the date hereof. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any security other than the
securities covered by this Prospectus, nor does it constitute an offer to or
solicitation of any person in any jurisdiction in which such offer or
solicitation may not lawfully be made.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public conference rooms. Our SEC filings are also available
to the public from the SEC's web site at http://www.sec.gov.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings made with the SEC under Section
13a, 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until our
offering is completed.
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(1) MetaCreations' Annual Report on Form 10-K for the year ended
December 31, 1997;
(2) MetaCreations' Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998;
(3) MetaCreations' Quarterly Report on Form 10-Q for the quarter
ended June 30, 1998;
(4) MetaCreations' Quarterly Report on Form 10-Q for the quarter
ended September 30, 1998; and
(5) The description of MetaCreations' Common Stock contained in its
Registration Statement on Form 8-A, filed with the Commission on
October 25, 1995.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
Terance A. Kinninger
Senior Vice President and Chief Financial Officer
MetaCreations Corporation
6303 Carpinteria Avenue
Carpinteria, CA 93013
(805) 566-6200
You should rely only on the information incorporated by reference or provided in
this prospectus or the prospectus supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or the prospectus supplement is accurate
as of any date other than the date on the front of the document.
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THE COMPANY
MetaCreations designs and develops award-winning desktop software tools and
enabling technologies for creating and manipulating 2-D and 3-D digital images
and Web content. MetaCreations offers a complete product line of graphics
software for both professional users and consumers, and its products are
available in more than 70 countries.
MetaCreations was founded in March 1987 as Harvard Systems Corp., a California
corporation, and shortened its name to HSC Software Corp. in August 1993. The
Company changed its name to MetaTools, Inc. in September 1995 and reincorporated
into Delaware in December 1995. The Company changed its name to MetaCreations
Corporation in May 1997 following its merger with Fractal Design Corporation.
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FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated herein by reference contain
forward-looking statements within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act. Words such as "anticipates," "expects,"
"intends," "plans," "believes," "seeks," "estimates," variations of such words
and similar expressions are intended to identify such forward-looking
statements. These statements are not guarantees of future performance and are
subject to certain risks, uncertainties and assumptions that are difficult to
predict. Therefore, actual results could differ materially from those expressed
or forecasted in any such forward-looking statements as a result of certain
factors, including those set forth in "Risk Factors," as well as those noted in
the documents incorporated herein by reference. In connection with
forward-looking statements which appear in these disclosures, investors should
carefully review the factors set forth in this prospectus under "Risk Factors."
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RISK FACTORS
THE SHARES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A HIGH DEGREE OF
RISK. THE FOLLOWING RISK FACTORS SHOULD BE CONSIDERED CAREFULLY. THE RISKS
DESCRIBED BELOW ARE NOT THE ONLY ONES FACING METACREATIONS. MANY FACTORS COULD
CAUSE OUR RESULTS TO BE DIFFERENT, INCLUDING THE FOLLOWING RISK FACTORS AND
OTHER RISKS DESCRIBED IN THIS DOCUMENT OR IN THE DOCUMENTS INCORPORATED BY
REFERENCE IN THIS DOCUMENT. IF ANY OF THE FOLLOWING RISKS OCCUR, OUR BUSINESS
WOULD LIKELY BE ADVERSELY AFFECTED AND THE TRADING PRICE OF OUR COMMON STOCK
COULD DECLINE. THIS COULD RESULT IN A LOSS OF ALL OR PART OF YOUR INVESTMENT.
FLUCTUATIONS IN QUARTERLY RESULTS
Our quarterly operating results depend on a number of factors that are difficult
to forecast. If our future quarterly operating results fall below the
expectations of securities analysts or investors, the trading price of our
common stock will likely drop. Our quarterly operating results have fluctuated
significantly in the past and may continue to fluctuate in the future as a
result of many factors, including:
o Introduction or enhancement of new products by us or our competitors;
o Market acceptance of our products;
o Industry press reviews of our products;
o Changes in our prices or our competitors' prices;
o The mix of distribution channels for our products;
o The mix of products we sell;
o Distributors' returns of our products; and
o General economic conditions.
In addition, we ship our products as we receive orders. As a result, we have
little or no backlog. A large portion of our revenues occurs in the third month
of each quarter. In addition, demand for our products tends to increase at the
end of the calendar year due to year-end holiday buying trends. Revenues may
also be affected by the volume and timing of the orders we receive, our ability
to fulfill these orders, and our ability to close distribution and licensing
agreements during a particular quarter. Any delays in the receipt and shipment
of orders, the failure of our suppliers and manufacturers to produce and ship
products that we have requested or our inability to close distribution and
licensing agreements would adversely affect our revenues.
Our staffing and other operating expense are based in large part on anticipated
revenues. It would be difficult for us to adjust our spending to compensate for
any unexpected shortfall. If we are unable to reduce our spending following any
such shortfall, our results of operations would be adversely affected.
The Company has had operating losses the last three quarters. We have recently
restructured and have focused on reducing our operating expenses to levels more
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<PAGE> 8
consistent with expected revenues. We cannot guarantee that such reductions in
operating expenses will be enough to restore our profitability.
POSSIBLE VOLATILITY OF STOCK PRICE
The market price of our common stock has fluctuated significantly in the past.
The price at which our common stock will trade in the future will depend on a
number of factors including:
o Our historical and anticipated operating results;
o General market and economic conditions;
o Our announcement of new products or technologies;
o Actual or anticipated fluctuations in our operating results; and
o Developments regarding our products, or our competitors' products.
In addition, the stock market has experienced extreme price and volume
fluctuations in recent months. This volatility has had a substantial effect on
our stock price, as well as the stock prices of other software companies,
particularly graphics software companies. These broad market and industry
fluctuations may continue to adversely affect the market price of our common
stock. As a result, the market price of our common stock may continue to
fluctuate.
RISKS ASSOCIATED WITH PRODUCT TRANSITIONS AND PRODUCT RETURNS
We may announce new products, product versions or technologies that may replace
or shorten the life cycles of our existing products. Our competitors may also
make similar announcements about their products which may replace or shorten the
life cycles of our products.
During the three months ended June 30, 1998, we increased our reserves for
returns because of lower than expected revenues in our domestic retail channels
and decreased demand in Japan. Although we provide allowances for anticipated
returns, actual product returns may exceed these allowances. This would
adversely affect our business.
In certain cases we sell our new products and product versions at a discounted
price to achieve market acceptance. These price discounts could adversely affect
our revenues. In addition, when we announce plans for new products or new
releases, or when our competitors make similar announcements, customers may
delay purchasing our current products. This would also adversely affect our
business.
DEPENDENCE ON DISTRIBUTORS AND ON OTHER THIRD PARTIES
Although we make some direct sales to customers, we generate most of our
revenues from sales through third party distributors. We use many different
distribution channels to sell our products worldwide. Examples of distribution
channels include international distributors, educational distributors,
resellers, hardware superstores, retail dealers, direct marketers, and hardware
and software original equipment manufacturers ("OEMs"). Our future financial
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results depend in large part on our relationship with third party distributors
and their continued financial stability. Any termination or significant
disruption of our relationship with any major distributor or retailer, or any
significant reduction in sales volume attributable to a major distributor or
retailer, would adversely affect our business.
The distribution channels are subject to rapid change, significant margin
pressures, consolidation and other financial difficulties. For example, if one
of our distributors experienced financial difficulties such as a bankruptcy, we
might not be able to collect on accounts receivable from that distributor. It is
also possible that new channels of distribution will develop which compete with
existing channels. For example, the internet is currently evolving as a new
distribution channel for computer software. If we are unable to adapt our
products for distribution through the internet, to the extent they need
adapting, our business could be adversely affected.
We depend in part on our third party distributors to promote our products to
retailers. These retailers typically have a limited amount of shelf space
subject to high demand. We cannot be sure that our distributors and retailers
will continue to purchase our products or provide our products with adequate
shelf space and promotional support. Their failure to continue to do so would
adversely affect our business.
An important part of our strategy is to enhance and diversify our domestic and
international distribution channels. We are currently restructuring our domestic
and international sales and marketing force. We are also continuing to develop
relationships with new third-party distributors and resellers. Our ability to
increase our sales and market share will depend in large part on our success in
recruiting and training sales personnel, distributors and resellers.
NEED TO EXPAND INTERNATIONAL OPERATIONS
We sell a large percentage of our products outside of the United States.
International sales accounted for approximately 25% of our net revenues for the
three months ended September 30, 1998 and approximately 35% of our net revenues
for the three months ended September 30, 1997. The decrease in international
sales resulted primarily from a decrease in international OEM and licenses
revenues and the economic weakness in Japan.
An important element of our business strategy is to continue to expand our sales
in international markets, primarily Japan, Western Europe and Asia Pacific. Our
ability to expand our international presence depends on our success in retaining
effective international distributors and our ability to hire and retain
qualified employees abroad.
There are risks inherent in expanding and doing business internationally such
as:
o Difficulties in staffing and managing foreign operations;
o Problems and delays in collecting accounts receivable;
o Fluctuations in currency exchange rates;
o Unexpected changes in regulatory requirements;
o Tariffs and other trade barriers;
o Political instability; and
o Potentially adverse tax consequences.
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Currently we sell our products in U.S. dollars. Any increase in the value of the
U.S. dollar as compared to currencies in our principal overseas markets would
increase the cost of our products in these markets. This may adversely affect
our sales in those markets. To date, we have not engaged in currency hedging
transactions to reduce the effect of fluctuations in currency exchange rates.
In addition, effective copyright and trade secret protection may be limited or
unavailable under the laws of certain foreign jurisdictions. The occurrence of
any of these risks would adversely affect the success of our international
operations and our business.
A significant portion of our net revenues stem from the Asia Pacific region,
primarily Japan. Japan has recently experienced weaknesses in their currency,
banking and equity markets. We cannot guarantee that the financial condition in
Japan and in the Asia Pacific region will improve in the near future. If the
current financial crisis in the Asia Pacific region continues or worsens, our
business will be adversely affected. For example, during 1998, our net revenues
from the Asia Pacific region decreased as a result of depressed demand for our
products due to the current Asian financial crisis.
HIGHLY COMPETITIVE GRAPHICS SOFTWARE MARKETS
We face intense competition in the market for graphics software products. The
market for our products can change rapidly, and customers constantly demand new
product features, accelerated releases of new products, product enhancements and
lower price points.
Our products compete directly or indirectly with products offered by many other
large companies, including:
o Adobe Systems Incorporated;
o Autodesk, Inc.;
o Corel Corporation;
o Macromedia, Inc.;
o Microsoft Corporation; and
o The Learning Company.
Many of our competitors or potential competitors are larger than we are and have
significantly greater financial, managerial, technical and marketing resources
than we have. Our business would be adversely affected if any of our competitors
cut prices, increased promotions of their products, announced or accelerated
introduction of new products or enhanced product features or acquired additional
applications or technologies from third parties.
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Our present or future competitors may be able to develop products comparable or
superior to ours or may be able to develop new products faster than we can. We
also face competition from developers of personal computer operating systems,
such as Microsoft and Apple Computer. These companies may incorporate functions
into their operating systems which could be superior to or incompatible with our
products. Such competition would also adversely affect our business.
We are currently developing additional product enhancements that we believe will
address customer requirements. However, we cannot be sure that we will complete
our development and introduction of these products on a timely basis. In
addition, we cannot be sure that these product enhancements will achieve market
acceptance. If we are unable to compete effectively in our markets, or if
competition becomes increasingly intense, our business would be adversely
affected.
DEPENDENCE ON KEY PERSONNEL
We depend on the continued employment of our senior executive officers and other
key management personnel. If any of our senior officers or other key employees
leave our company and are not adequately replaced, our business would be
adversely affected.
During February 1998, our previous Chief Executive Officer, John Wilczak,
resigned. Gary Lauer, who had most recently served as President of Silicon
Graphics, Inc.'s ("SGI") World Trade Group and Executive Vice President of SGI's
Worldwide Field Operations, succeeded Mr. Wilczak as our Chief Executive
Officer. In addition, in connection with our recent restructuring, our Senior
Vice President, Sales and Marketing; Vice President, Marketing; and Vice
President, Product Management and Design left our company. We have hired a Vice
President, European Sales and Marketing, and a Vice President and General
Manager, Professional Products Group. We are also seeking to hire at least one
additional Vice President, Sales and Marketing. If we do not succeed in
attracting new officers, our business would be adversely affected.
DIFFICULTY OF IDENTIFYING AND HIRING CERTAIN PERSONNEL
Our future success depends on our continuing ability to identify, hire, train
and retain other highly qualified technical and managerial employees. The
competition for such employees is intense, and we have experienced difficulty in
identifying and hiring qualified engineering personnel. If we do not succeed in
attracting and retaining necessary technical and managerial employees in the
future, our business would be adversely affected.
RAPID TECHNOLOGICAL CHANGE AND DEPENDENCE ON NEW PRODUCTS AND PRODUCT VERSIONS
The market for graphics software products is characterized by rapidly changing
technology. Product life cycles are short and downward pricing pressures are
strong. As a result, our success depends substantially upon our ability to
continue to enhance our products and to develop new products that meet
customers' increasing expectations and that incorporate the latest technology.
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We may not be successful in developing and marketing enhancements to our
existing products or introducing new products on a timely basis. Our new or
enhanced products may not succeed in the marketplace. If our new products or
product versions receive bad reviews in industry publications, this would likely
decrease their potential market acceptance, and our business would be adversely
affected.
We expect our research and development expenditures to increase in the future.
If our increased research and development spending is not accompanied by
increased revenues, our business would be adversely affected. We have
supplemented our research and development efforts by exclusively licensing
products developed by or co-developed with third parties. We may not be able to
continue to obtain such outside product development capabilities on terms
favorable to us or at all. If we cannot maintain existing development
arrangements or fail to attract new product development partners, then we would
have to further increase our research and development spending. This would
adversely affect our business.
POTENTIAL DELAYS IN PRODUCT RELEASES
We also depend upon internal efforts for the development of new products and
product enhancements. In the past, we have had delays in the development of new
products and product versions. We may experience similar delays in the future.
RISK OF UNDETECTED ERRORS
We offer complex software products which may contain undetected errors. In the
past, we discovered software errors in certain new products and enhancements
after these products were introduced to the marketplace. If errors are found in
our products after we have commercially shipped them, we would likely experience
bad product reviews and a loss or delay of market acceptance. This would
adversely affect our business.
EVOLVING MARKETS FOR OUR COMPUTER GRAPHIC IMAGING AND
INTERNET/ONLINE DESIGN TOOLS
The markets for computer graphic imaging and Internet/online design tools are
still emerging. Digital graphic and Internet/online content developers may not
adopt our products. We also may not have sufficient distribution resources to
market our products successfully or these products may not achieve market
acceptance.
The demand for computer graphic imaging and Internet/online design tools depends
on many factors including:
o Installed base of digital graphic and multimedia capable personal computers;
o Widespread availability of digital media; and
o Number and expertise of skilled content producers.
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If the markets for these tools fail to grow or grow more slowly than we
currently anticipate, then our business would be adversely affected.
RISKS OF INFRINGEMENT AND PROPRIETARY RIGHTS
We rely on a combination of copyright, trademark, patent, trade secret laws,
employee and third-party nondisclosure agreements and exclusive contracts to
protect our intellectual and proprietary rights and products. We distribute our
software under shrinkwrap license agreements. We generally do not obtain signed
license agreements from the end users of our software.
As is typical in the software industry, we do not copy-protect our software. As
a result, unauthorized third parties may be able to copy or reverse engineer our
products. We may not be able to police unauthorized uses of our products, and we
expect that software piracy could be a chronic problem. We also distribute or
plan to distribute our products in other countries which do not protect the
intellectual property of our products to the same extent as laws in the United
States.
We also believe that the growing number of software products available and the
increasing overlap of products may lead to a greater number of infringement
claims. Our products may be the subject of infringement claims in the future.
This could result in costly litigation and could require us to obtain a license
to the intellectual property of third parties. We may be unable to obtain
licenses from these third parties on favorable terms, if at all. Even if a
license is available, we may have to pay substantial royalties to obtain it. If
we cannot obtain necessary licenses on reasonable terms, our business would be
adversely affected.
YEAR 2000 RISKS
Many currently installed computer systems and software products are coded to
accept only two digit entries in the date code field. Beginning in the year
2000, these date code fields will need to accept four digit entries to
distinguish 21st century dates from 20th century dates. As a result, in less
than two years, computer systems and software used by many companies may need to
be upgraded to comply with such "Year 2000" requirements. The Year 2000 problem
could affect computers, software and other equipment used, operated, or
maintained by us, our business partners, our suppliers and our customers.
We have initiated an assessment project that addresses our significant systems
that may have Year 2000 compliance issues. During 1997, we completed
implementation of a Year 2000 compliant enterprise-wide information system.
Currently, we are in the process of inventorying and analyzing our remaining
centralized computer and embedded systems to identify any potential Year 2000
issues. We currently expect assessment, remediation and validation of our
internal systems, in addition to the development of applicable contingency
plans, to be completed by the middle of 1999. We do not expect the cost of
remediation to be material to our business.
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Additionally, we presently believe that with the implementation of our new
information system and modification to existing software, Year 2000 compliance
will not adversely affect our business. However, there can be no assurance that
our internal software will contain all date code changes necessary to prevent
processing errors potentially arising from calculations using the Year 2000
date. Any disruptions in our operations as a result of Year 2000 noncompliance
could adversely affect our business.
There can be no assurance that third parties utilized by us are or will be Year
2000 compliant. Specifically, we contract with third parties for the manufacture
and distribution of our products. Should any of our key suppliers or
distributors not achieve Year 2000 readiness, we may be unable to manufacture
our products or effectively distribute our products to our customers. As a
result, we have initiated communications with our key suppliers and distributors
and plan to monitor the status of their Year 2000 readiness.
We expect to complete the readiness assessment of our key suppliers and
distributors by March 31, 1999. If any of our principal suppliers and
distributors fail to demonstrate Year 2000 readiness, then we will evaluate
alternatives that could include the identification of alternate suppliers or
distributors which have demonstrated Year 2000 readiness and/or the accumulation
of inventory to assure production capability where feasible or warranted. These
activities are intended to provide a means of managing our risk, but cannot
eliminate the potential for disruption due to third party failure to achieve
Year 2000 compliance. The failure of any of our principal suppliers or
distributors to achieve Year 2000 compliance could adversely affect our
business.
We believe that the current versions of our products are Year 2000 compliant.
However, there can be no assurance that our current products do not contain
undetected errors or defects associated with Year 2000 that may result in costs
which adversely affect our business.
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USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the Shares.
All proceeds from the sale of the Shares will be for the account of the Selling
Stockholders, as described below. See "Selling Stockholders" and "Plan of
Distribution."
SELLING STOCKHOLDERS
The following table sets forth as of the date of this prospectus, the name of
each of the Selling Stockholders, the number of shares of Common Stock that each
such Selling Stockholder owns as of such date, the number of shares of Common
Stock owned by each Selling Stockholder that may be offered for sale from time
to time by this prospectus, and the number of shares of Common Stock to be held
by each such Selling Stockholder assuming the sale of all the Common Stock
offered hereby.
The Selling Stockholders are former or current employees of the Company. The
Company may amend or supplement this prospectus from time to time to update the
disclosure set forth herein.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY
PRIOR TO OFFERING SHARES OWNED AFTER OFFERING
------------------------- --------------------
NAME OF SELLING STOCKHOLDER NUMBER PERCENT BEING OFFERED NUMBER PERCENT
--------------------------- ------ ------- ------------- ------ -------
<S> <C> <C> <C> <C> <C>
Katherine Becke 560 * 560 * *
Pierre Berkaloff (1) 2,238 * 2,238 * *
Todd Bogdon 1,522 * 1,522 * *
Teresa Bridwell 535 * 535 * *
Betty Franklin 1,376 * 1,376 * *
John Hartnett 2,872 * 2,872 * *
Jay Jennings 415 * 415 * *
Ken Musgrave 230 * 230 * *
Ben Weiss 3,044 * 3,044 * *
Kari Zeni 111 * 111 * *
Total 12,903 12,903
</TABLE>
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(1) Mr. Berkaloff has served as Vice President of Engineering of the Company
since May 1997.
*Less than 1%.
PLAN OF DISTRIBUTION
The Shares covered by this prospectus may be offered and sold from time to time
by the Selling Stockholders. The Selling Stockholders will act independently of
the Company in making decisions with respect to the timing, manner and size of
each sale. The Selling Stockholders may sell the Shares being offered hereby on
the Nasdaq National Market, or otherwise, at prices and under terms then
prevailing or at prices related to the then current market price, at varying
prices or at negotiated prices. The Shares may be sold, without limitation, by
one or more of the following means of distribution: (a) a block trade in which
the broker-dealer so engaged will attempt to sell Shares as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus; (c) an
over-the-counter distribution in accordance with the rules of the Nasdaq
National Market; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (e) in privately negotiated transactions. To
the extent required, this prospectus may be amended and supplemented from time
to time to describe a specific plan of distribution.
In connection with distributions of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of the Company's Common
Stock in the course of hedging the positions they assume
-14-
<PAGE> 16
with Selling Stockholders. The Selling Stockholders may also sell the Company's
Common Stock short and deliver the Shares offered hereby to close out such short
positions. The Selling Stockholders may also enter into option or other
transactions with broker-dealers or other financial institutions which require
the delivery to such broker-dealer or other financial institution of Shares
offered hereby, which Shares such broker-dealer or other financial institution
may resell pursuant to this prospectus (as supplemented or amended to reflect
such transaction). The Selling Stockholders may also pledge Shares to a
broker-dealer or other financial institution, and, upon a default, such
broker-dealer or other financial institution, may effect sales of the pledged
Shares pursuant to this prospectus (as supplemented or amended to reflect such
transaction). In addition, any Shares that qualify for sale pursuant to Rule 144
may, at the option of the holder thereof, be sold under Rule 144 rather than
pursuant to this prospectus.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholder and/or purchasers of the shares offered
hereby (and, if it acts as agent for the purchaser of such shares, from such
purchaser). Usual and customary brokerage fees will be paid by the Selling
Stockholder. Broker-dealers may agree with the Selling Stockholder to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the Selling
Stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the Selling Stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross and block transactions and which
may involve sales to and through other broker-dealers, including transactions of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as described above.
To comply with the securities laws of certain states, if applicable, the Shares
will be sold in such jurisdictions only through registered or licensed brokers
or dealers. In addition, in certain states the Shares may not be sold unless
they have been registered or qualified for sale in the applicable state or an
exemption from the registration or qualification requirement is available and is
complied with.
The Company has advised the Selling Stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of Shares in the
market and to the activities of the Selling Stockholders and their affiliates.
In addition, the Company will make copies of this prospectus available to the
Selling Stockholders and has informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of the Shares
offered hereby. The Selling Stockholders may indemnify any broker-dealer that
participates in transactions involving the sale of the shares against certain
liabilities, including liabilities arising under the Securities Act.
At the time a particular offer of Shares is made, if required, a prospectus
Supplement will be distributed that will set forth the number of Shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of directors for
monetary damages to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors and
executive officers and may indemnify its other officers, employees and agents to
the fullest extent permitted by law. The Company's Bylaws also permit the
Company to secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the Bylaws would permit indemnification.
-15-
<PAGE> 17
The Company has entered into agreements to indemnify its directors and officers,
in addition to indemnification provided for in the Company's Bylaws. These
agreements, among other things, indemnify the Company's directors and officers
for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of the Company, arising out of such
person's services as a director or officer of the Company, any subsidiary of the
Company or any other company or enterprise to which the person provides services
at the request of the Company.
The Company also maintains an insurance policy insuring its directors and
officers against liability for certain acts and omissions while acting in their
official capacities.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers or persons controlling the
Registrant pursuant to the foregoing provisions, the Registrant has been
informed 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.
LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered hereby
will be passed upon for the Company by Wilson Sonsini Goodrich & Rosati,
Professional Corporation, Palo Alto, California ("WSGR"). Certain members of
WSGR beneficially own an aggregate of approximately 25,000 shares of the
Company's Common Stock.
EXPERTS
The audited consolidated financial statements and financial statement schedule
as of December 31, 1997 and 1996 and for each of the three years ended December
31, 1997, 1996 and 1995 incorporated by reference in this prospectus have been
incorporated by reference in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, which report is given upon the authority of said
firm as experts in accounting and auditing.
-16-
<PAGE> 18
================================================================================
PROSPECTIVE INVESTORS MAY RELY ONLY ON THE INFORMATION CONTAINED IN THIS
PROSPECTUS. NEITHER METACREATIONS NOR ANY SELLING STOCKHOLDER HAS AUTHORIZED
ANYONE TO PROVIDE PROSPECTIVE INVESTORS WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS. THIS PROSPECTUS IS NOT AN OFFER TO SELL NOR IS IT
SEEKING AN OFFER TO BUY THE SHARES IN ANY JURISDICTION WHERE THE OFFER OR SALE
IS NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT ONLY
AS OF THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE TIME OF THE DELIVERY OF
THIS PROSPECTUS OR ANY SALE OF THE SHARES.
----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information ..................................... 2
The Company ............................................................. 4
Forward-Looking Statements .............................................. 5
Risk Factors ............................................................ 6
Use of Proceeds ......................................................... 14
Selling Stockholders .................................................... 14
Plan of Distribution .................................................... 14
Indemnification of Directors and Officers ............................... 15
Legal Matters ........................................................... 16
Experts ................................................................. 16
</TABLE>
----------------------
12,903 Shares
METACREATIONS
CORPORATION
----------------------
Common Stock
----------------------
PROSPECTUS
, 1998
================================================================================
<PAGE> 19
METACREATIONS CORPORATION
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The Company will pay all expenses incident to the offering and sale to the
public of the shares being registered other than any commissions and discounts
of underwriters, dealers or agents and any transfer taxes. Such expenses are set
forth in the following table. All of the amounts shown are estimates except for
the Securities and Exchange Commission ("SEC") registration fee and the Nasdaq
Stock Market listing fee.
<TABLE>
<S> <C>
SEC Registration Fee ..................................... $ 13.00
Accounting fees and expenses ............................. $ 1,000.00
Nasdaq Stock Market listing fee .......................... $ 2,000.00
Miscellaneous ............................................ $ 1,987.00
------------
Total .................................................... $ 5,000.00
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits the liability of directors for
monetary damages to the maximum extent permitted by Delaware law. Delaware law
provides that directors of a corporation will not be personally liable for
monetary damages for breach of their fiduciary duties as directors, except for
liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derived an improper personal benefit.
The Company's Bylaws provide that the Company shall indemnify its directors and
executive officers and may indemnify its other officers, employees and agents to
the fullest extent permitted by law. The Company's Bylaws also permit the
Company to secure insurance on behalf of any officer, director, employee or
other agent for any liability arising out of his or her actions in such
capacity, regardless of whether the Bylaws would permit indemnification.
The Company has entered into agreements to indemnify its directors and officers,
in addition to indemnification provided for in the Company's Bylaws. These
agreements, among other things, indemnify the Company's directors and officers
for certain expenses (including attorneys' fees), judgments, fines and
settlement amounts incurred by any such person in any action or proceeding,
including any action by or in the right of the Company, arising out of such
person's services as a director or officer of the Company, any subsidiary of the
Company or any other company or enterprise to which the person provides services
at the request of the Company.
The Company also maintains an insurance policy insuring its directors and
officers against liability for certain acts and omissions while acting in their
official capacities.
II-1
<PAGE> 20
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- ---------
<S> <C>
4.1 1995 Employee Stock Purchase Plan, as amended.(1)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional
Corporation.(2)
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney (contained on Page II-3).
</TABLE>
- -------------
(1) Previously filed as Exhibit 10.6 to the Company's Form 10-Q filed on May
14, 1998.
(2) Previously filed.
ITEM 17. UNDERTAKINGS
A. The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this
Registration Statement to include any material information
with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material
change to such information in the Registration Statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment
shall be deemed to be a new registration statement
relating to the securities offered therein, and the
offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of this offering.
B. Undertaking Regarding Filings Incorporating Subsequent Exchange
Act Documents by Reference.
The undersigned Registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of the Registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
C. Undertaking in Respect of Indemnification.
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 SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the
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 Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable cause 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 Carpinteria, State of California, on December 10,
1998.
METACREATIONS CORPORATION
By: /s/ Terance A. Kinninger
----------------------------------------------
Terance A. Kinninger,
Sr. Vice President and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons on behalf of the
Registrant on December 10, 1998.
<TABLE>
<CAPTION>
SIGNATURE TITLE
----------- ---------------
<S> <C>
President, Chief Executive Officer (Principal Executive
/s/ Gary L. Lauer* Officer) and Director
- ---------------------------------
Gary L. Lauer
/s/ Terance A. Kinninger Sr. Vice President and Chief Financial Officer (Principal
- --------------------------------- Financial and Accounting Officer)
Terance A. Kinninger
Director and Chief Design Officer
- ---------------------------------
Kai Krause
/s/ Samuel H. Jones, Jr.* Director
- ---------------------------------
Samuel H. Jones, Jr.
Director
- ---------------------------------
Bert Kolde
/s/ William H. Lane III* Director
- ---------------------------------
William H. Lane III
/s/ Howard L. Morgan* Chairman of the Board
- ---------------------------------
Howard L. Morgan
/s/ Mark Zimmer* Director
- ---------------------------------
Mark Zimmer
*/s/ Terance A. Kinninger
- ---------------------------------
Terance A. Kinninger, as attorney-in-fact
</TABLE>
II-3
<PAGE> 22
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
==========================================================
EXHIBITS
==========================================================
REGISTRATION STATEMENT ON FORM S-3
METACREATIONS CORPORATION
DECEMBER 10, 1998
<PAGE> 23
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
- ---------
<S> <C>
4.1 1995 Employee Stock Purchase Plan, as amended.(1)
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation.(2)
23.1 Consent of PricewaterhouseCoopers LLP, independent accountants.
23.2 Consent of Wilson Sonsini Goodrich & Rosati, Professional Corporation
(included in Exhibit 5.1).
24.1 Power of Attorney (contained on Page II-3).
</TABLE>
- -------------
(1) Previously filed as Exhibit 10.6 to the Company's Form 10-Q filed on May
14, 1998.
(2) Previously filed.
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
MetaCreations Corporation
We consent to the incorporation by reference in the Registration
Statement of MetaCreations Corporation on Form S-3 of our report dated January
26, 1998 on our audits of the consolidated financial statements and financial
statement schedule of MetaCreations Corporation as of December 31, 1997 and 1996
and for each of the three years in the period ended December 31, 1997. We also
consent to the reference to our firm under the caption "Experts."
PricewaterhouseCoopers LLP
Woodland Hills, California
December 7, 1998
