As filed with the Securities and Exchange Commission on April 17, 1997
Registration No. 333-___________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
-----------------------
AVERT, INC.
(Exact name of registrant as specified in charter)
Colorado 84-1028716
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
301 Remington
Fort Collins, Colorado 80524
(970) 484-7722
(Address, including zip code and telephone number, including area code, of
registrant's principal executive offices)
Dean A. Suposs
301 Remington
Fort Collins, Colorado 80524
(970) 484-7722
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Thomas H. Maxfield, Esq.
Baker & Hostetler LLP
303 East Seventeenth Avenue
Suite 1100
Denver, Colorado 80203
Approximate date of commencement of proposed sale to
the public: As soon as practicable 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, 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 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. [ ]
<PAGE>
<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
====================================================================================================================================
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 150,000 $5.9375 $890,625 $307.11
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c) under the Securities Act of 1933, as amended, on the basis of the
average of the high and low reported sale prices of the Registrant's Common
Stock on April 15, 1997, as reported on the Nasdaq National Market.
The Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
AVERT, INC.
CROSS-REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
<TABLE>
<CAPTION>
Form S-3 Item
Number and Caption Location in Prospectus
------------------ ----------------------
<S> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus................... Facing Page; Outside Front
Cover Page
2. Inside Front and Outside Back Cover Pages of
Prospectus....................................... Inside Front Cover Page of Prospectus; Incorporation
of Certain Documents by Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................ Risk Factors; The Company
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Not Applicable
6. Dilution............................................ Not Applicable
7. Selling Security Holders............................ Selling Stockholders
8. Plan of Distribution................................ Plan of Distribution
9. Dription of Securities to be Registered............. Description of Securities
10. Interests of Named Experts and Counsel.............. Not Applicable
11. Material Changes.................................... Not Applicable
12. Incorporation of Certain Information by Reference... Incorporation of Certain Documents by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities...... Not Applicable
</TABLE>
<PAGE>
PROSPECTUS
150,000 Shares
AVERT, INC.
Common Stock
Avert, Inc., a Colorado corporation ("Avert" or the "Company"), is
registering, for possible future resale from time to time by the holders thereof
(the "Selling Stockholders"), 150,000 shares (the "Shares") of the Company's
common stock, $.01 par value (the "Common Stock"). None of the Shares is
outstanding as of the date of this Prospectus. The Shares are issuable upon
exercise by the Selling Stockholders of warrants currently held directly and
indirectly by them. None of the Shares may be sold hereunder until the related
warrant is exercised and the exercise price is paid to the Company by the
Selling Stockholder. At the time of issuance of the warrants, the Company
granted registration rights with respect to the underlying Shares. Pursuant to
the terms of these registration rights, the Company is obligated to pay all fees
and expenses incurred by it incident to this offering (estimated to be
$-----------------). The Company intends to keep the Registration Statement, of
which this Prospectus is a part, effective for a period of no longer than twelve
months from the date of this Prospectus. The Company will not receive any
proceeds from the sale of the Shares. See "Selling Stockholders" and
"Description of Securities."
The Common Stock is traded on the Nasdaq National Market under the
symbol AVRT. On April ---, 1997, the closing sales price of the Common Stock was
$------------ per share.
--------------------------
Prospective purchasers of Common Stock should consider carefully
the matters set forth under "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 SATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
--------------------------
The Selling Stockholders may offer the Shares offered hereby from time to
time to purchasers directly or through agents, brokers or dealers. The Shares
may be sold at market prices prevailing at the time of sale or at negotiated
prices. The agents, brokers or dealers through whom sales are made may be deemed
to be "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act"), and any amounts received by them in exchange for
their services in connection with such sales may be deemed to be underwriting
commissions. See "Plan of Distribution."
April ------, 1997
<PAGE>
No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any securities offered hereby by anyone in
any jurisdiction in which such offer or solicitation is not authorized or in
which the person making such offer or solicitation is not qualified to do so or
to any person to whom it is unlawful to make such offer or solicitation. Neither
the delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to the date hereof.
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 may be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the following
regional offices: 7 World Trade Center, Suite 1300, New York, New York 10048,
and Citicorp Center, Suite 1400, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such materials may be obtained at prescribed rates from
the Public Reference Section of the Commission at Judiciary Plaza, Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549. The Company's Common Stock is
traded on the Nasdaq National Market. The foregoing materials can also be
inspected at the National Association of Securities Dealers, Inc., 1735 K.
Street, N.W., Washington, D.C. 20006.
The Company has also filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act with respect to the Shares offered hereby.
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information pertaining
to the Company and the Shares, reference is made to the Registration Statement,
copies of which may be inspected without charge at the public reference
facilities maintained by the Commission at Judiciary Plaza, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and copies of which may be obtained from
the Commission upon payment of the prescribed fees. In addition, the Commission
maintains a web site that contains reports, proxy and information statements,
and other information regarding registrants that file electronically with the
Commission. The Company is such a filer. The Commission's web site address is
(http://www.sec.gov).
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are hereby incorporated by reference into this Prospectus:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996.
(b) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A dated June 22, 1994.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to
the termination of the offering hereunder shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the date of filing
of such documents. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide, without charge to each person to whom a copy of
this Prospectus is delivered, upon the written or oral request of any such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference in such documents). Written requests for such copies
should be directed to Jamie Burgat, Vice President of Operations, Avert, Inc.,
at the Company's principal executive offices located at 301 Remington, Fort
Collins, Colorado 80524. Telephone requests may be directed to Ms. Burgat at
(970) 484-7722.
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<PAGE>
THE COMPANY
Avert is an information service bureau engaged primarily in the business of
verifying job applicant background information for employers. The background
checks are made through the use of databases and a national network of couriers
(engaged on an independent contractor basis) developed by Avert since its
organization in June 1986. The background information products and services
currently provided by the Company consist of: criminal records, workers'
compensation histories, driving records, reference checks, credit histories,
social security number use, education validation and credential validation.
Avert has also developed employment application forms for sale to customers.
RISK FACTORS
In addition to the other information contained in this Prospectus,
prospective investors should carefully consider the following factors relating
to the Company and its business when evaluating an investment in the Shares
offered hereby.
Proposed Expansion of Company Operations; Associated Risks
The Company's sales have grown significantly since inception. Historically,
the Company has developed its products and services internally and, until
January 1995, when it expanded its sales force in four regions of the country,
conducted its operations from a single office in Colorado. As part of its
continuing growth strategy, the Company intends to accelerate market presence
throughout the United States, which includes, among other things, engagement of
independent commission-based sales representatives located in geographic regions
of the country, employment of sales representatives at the Company's
headquarters, and arrangements with resellers of the Company's products and may
include establishing relationships with certain strategic partners. Avert also
intends to use the net proceeds of its initial public offering completed in June
1994 ("IPO") to acquire other companies, assets and/or product lines that either
complement or expand its existing business. Implementation of these strategies
could involve a number of risks, including diversion of management time and
Company financial resources to increased marketing efforts, review of
acquisition candidates and assimilation of the acquired intangible assets. The
impact of these strategies on the Company's operations, both long-term and
short-term, remains unknown, but because of the foregoing factors, among others,
the Company's growth rate for at least the short term could be adversely
impacted. In addition, no portion of the net proceeds of the IPO has been
allocated for any specific acquisition, and, although the Company has identified
and has held, and will continue to hold, discussions from time-to-time with
potential acquisition candidates, no acquisition has been made and none is
considered probable as of the date of this Prospectus. Accordingly, no assurance
can be given that Avert will be successful in acquiring other companies, assets
or product lines.
Government Regulation
The Company is a "consumer reporting agency" within the meaning of the term
as used in the Fair Credit Reporting Act, as amended ("FCRA"), and, therefore,
must comply with the various consumer credit disclosure requirements of the
FCRA. Willful or negligent noncompliance would result in civil liability to the
subjects of reports. Also, the Americans with Disabilities Act of 1990 ("ADA")
contains pre-employment inquiry and confidentiality restrictions designed to
prevent discrimination against individuals with disabilities in the hiring
process. Although the Company's business is not directly regulated by the ADA,
the use by its customers of certain information sold to them is regulated, both
in respect to the type of information and the timing of its use. State laws also
impact the Company's business. There are a number of states which have laws
similar to the FCRA, and some states which have human rights laws more strict
than the ADA. In addition, to the Company's knowledge, at least four states
require companies engaged in the type of business conducted by the Company to be
licensed in order to conduct business within those states. The Company has
obtained the necessary license in each of those four states. In addition,
several other states may require licensing of the Company's business. See "Risk
Factors--Licensing Requirements." A large number of states also regulate the
type of information which can be made available to the public and/or impose
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<PAGE>
conditions to the release of the information. For example, some state laws
prohibit access to certain types of information, such as workers' compensation
histories or criminal histories, while others restrict access without a signed
release from the subject of the report. In addition, many privacy and consumer
advocates and federal regulators have become increasingly concerned with the use
of personal information, particularly credit reports. Attempts have been made
and will continue to be made by these groups to adopt new or additional federal
and state legislation to regulate the use of personal information. Federal
and/or state laws relating to access and use of personal information, in
particular, and privacy and civil rights, in general, amended or enacted in the
future could materially adversely impact Avert's operations.
Licensing Requirements
To the Company's knowledge, at least four states of the 49 states in which
the Company sold its products and services during 1996 require consumer
reporting agencies, such as the Company, to obtain a license to conduct business
within those states. The Company has obtained the necessary licenses in each of
those states. Several other states may require licensing of the Company's
business. Although the Company believes that it will be able to obtain the
licenses from these other states, if required, the inability to do so could have
an adverse impact on the Company's operations. Operation of an unlicensed
business is a misdemeanor under the laws of many states generally punishable by
fines and/or imprisonment and could be grounds for denial of a license, if
required.
Legal Considerations
Under general legal concepts and, in some instances, by specific state and
federal statute, the Company could be held liable to customers and/or to the
subjects of background checking reports prepared by the Company for inaccurate
information or misuse of the information. The Company maintains internal
policies designed to help ensure that background information retrieved by it is
accurate and that it otherwise complies with the provisions of the FCRA. Avert,
however, does not currently maintain liability insurance to cover claims by
customers or the subjects of reports. The Company has explored the possibility
and feasibility of liability insurance for this purpose. However, because of the
nature of the Company's business, claims at least from subjects of reports
prepared by the Company would be based at least in part on discrimination. Based
on the Company's research, losses from such claims are either uninsurable or the
insurance that is available is so limited in coverage that it is not
economically practicable. The Company intends to continue its efforts to obtain
insurance coverage for such claims. To date, the Company has been named as a
co-defendant in three lawsuits alleging violations of the FCRA. All three
lawsuits have been dismissed by the court. No assurance can be given that claims
made against the Company in the future can be successfully defended. Uninsured
losses from claims could adversely impact the operations and financial condition
of the Company.
Reliance on Key Personnel
The success of the Company continues to be dependent upon the efforts of
the key personnel of Avert, particularly Dean A. Suposs, its President. The loss
of Mr. Suposs' services could have a detrimental effect on the Company. The
Company maintains for Avert's benefit a $1 million key man life insurance policy
on Mr. Suposs.
Competition
Avert faces both direct and indirect competition for its products and
services. Direct competitors are other background checking companies. Indirect
competitors are companies engaged in, among others, drug, aptitude and attitude
testing, handwriting analysis, and on-the-job trial employment (employee
leasing). The Company believes that there are a large number of direct
competitors. A significant number of these competitors are small companies
operating on a local or regional basis, while some are large companies operating
on a national scale. The Company also believes that there are a number of
indirect competitors, with most of them operating on a national basis. Many of
the Company's competitors have financial and personnel resources substantially
greater than those of the Company. Avert believes that it has a competitive
advantage over many of its direct competitors because it has a wider variety of
products and services to offer to customers. In addition, Avert believes that it
5
<PAGE>
has a price advantage over many of its direct competitors because, unlike these
competitors, Avert obtains substantially all of its background information
directly from the source rather than through the purchase of information from
other companies for resale to its customers. Currently, the information for only
two of the Company's eight existing products is purchased from other companies.
As more companies enter the market, and if larger, direct competitors place more
emphasis on the employment background segment of their operations and/or
indirect competitors expand their businesses to include background checking
products and services, the competition within the industry could become more
intense. Accordingly, no assurance can be given that the Company will be able to
continue to compete favorably in this industry.
Dividends
The Company paid dividends totalling $0.075 per share on its Common Stock
during each of the years in the two-year period ended December 31, 1993. Avert
does not intend any further dividends in the foreseeable future.
Superior Rights of Preferred Stock
The Company has a class of authorized Preferred Stock. The Board of
Directors, without shareholder approval, may issue shares of the Preferred Stock
with rights and preferences adverse to the voting power or other rights of the
holders of the Common Stock. No Preferred Stock has been issued.
Shares Eligible for Future Sales; Registration Rights
Future sales of Common Stock by existing shareholders under Rule 144 of the
Securities Act or otherwise could have an adverse effect on the market price of
the Common Stock. A total of 3,400,000 shares (the "Outstanding Shares") of the
Company's Common Stock is currently outstanding. Of these Outstanding Shares,
957,750 shares are, and any shares issued upon exercise of the Redeemable
Warrants will be, freely tradeable without restriction or further registration
under the Securities Act, except for any shares held by "Affiliates" of the
Company within the meaning of the Securities Act, which shares will be subject
to the resale limitations of Rule 144. The remaining 2,442,250 Outstanding
Shares are "restricted securities" as that term is defined under Rule 144 (the
"Restricted Shares"). Sales of Restricted Shares in the public market, or the
availability of such shares for sale, could adversely affect the market price of
the Common Stock. Of the 2,442,250 Restricted Shares, (i) 1,472,556 shares are
eligible for sale in the public market in reliance on Rule 144(k), and (ii)
969,694 shares are eligible for sale in the public market, subject to compliance
with Rule 144 or Rule 144(k).
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares.
DIVIDEND POLICY
The Company paid dividends totalling $0.075 per share on its Common Stock
during each of the years in the two-year period ended December 31, 1993. No
other cash dividends have been paid, and Avert does not intend to pay any
further dividends in the foreseeable future. The Company instead intends to
retain its earnings to support the operations and growth of its businesses. Any
future cash dividends would depend on future earnings, capital requirements, the
Company's financial condition and other factors deemed relevant by the Board of
Directors.
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SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
Selling Stockholders and the beneficial ownership of Common Stock by them before
and after the offering being made hereby. Such information was provided to the
Company by the Selling Stockholders for inclusion in this Prospectus. Additional
information concerning the Selling Stockholders and the Shares is set forth in
the notes to the table.
<TABLE>
<CAPTION>
Shares Owned Shares Being Shares Owned
Before Offering(1) Offered(2) After Offering(2)
-------------------- ------------ ---------------------
Name Number Percent Number Percent
---- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Charles C. Bruner................................... 30,792 (3) 30,792 -0- -0-
Ronald S. Mallett................................... 1,650 (3) 1,650 -0- -0-
J. Henry Morgan..................................... 20,178 (3) 20,178 -0- -0-
Eugene L. Neidiger.................................. 35,250 1.03% 35,250 -0- -0-
Regina L. Neidiger.................................. 3,000 (3) 3,000 -0- -0-
Robert L. Parrish................................... 21,380 (3) 19,380 2,000 (3)
Anthony B. Petrelli................................. 37,500 1.09% 36,000 1,500 (3)
John J. Turk, Jr.................................... 3,750 (3) 3,750 -0- -0-
</TABLE>
- ----------------------
(1) Includes, or consists of, Shares issuable upon exercise of (i) warrants
initially issued to the representative (the "Representative") of the
underwriters of the Company's IPO completed in June 1994 (the
"Representative's Warrants"), and (ii) Redeemable Warrants purchasable upon
exercise of the Representative's Warrants. The Representative's Warrants,
which contain certain registration rights, were transferred by the
Representative to the persons named in the table in June 1994. Each of such
persons was an officer or otherwise affiliated with the Representative at
the time of the IPO. Pursuant to the terms of the Representative's Warrants,
the Company is obligated to pay the fees and expenses incurred by it
incident to the offering of the Shares. None of the Shares stated in the
table as Shares Being Offered will be sold in this offering unless the
Representative's Warrants and/or the underlying Redeemable Warrants are
first exercised and the related exercise price is paid to the Company.
(2) Assumes all Shares offered hereby are sold.
(3) Represents less than 1% of the outstanding shares of Common Stock.
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DESCRIPTION OF SECURITIES
The Company is authorized to issue (i) 9,000,000 shares of Common Stock, No
Par Value, of which 3,400,000 shares are issued and outstanding and (ii)
1,000,000 shares of Preferred Stock, No Par Value, of which no shares have been
issued. In addition to the Common Stock, a total of 1,000,000 Redeemable
Warrants of the Company is currently outstanding.
Common Stock
Holders of Common Stock are entitled to one vote for each share of Common
Stock held of record on all matters submitted to a vote of shareholders. Holders
of a majority of the shares of Common Stock outstanding may authorize a merger,
consolidation, dissolution of the Company, the sale of all or substantially all
of the Company's assets if not made in the usual or ordinary course of the
Company's business, or an amendment of the Company's Articles of Incorporation.
In the event of liquidation, holders of Common Stock are entitled to share pro
rata in any distribution of the Company's assets to holders of Common Stock
after payment of liabilities and liquidation preferences, if any, granted to
holders of Preferred Stock. There are no preemptive, subscription, conversion or
redemption rights regarding the Common Stock. Holders of Common Stock are
entitled to receive such dividends as may be declared on the Common Stock by the
Board of Directors in its discretion out of funds legally available for that
purpose.
Preferred Stock
The Board of Directors has the authority to issue the Preferred Stock in
one or more series and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, dividend rates, conversion
rights, voting rights, terms of redemption, redemption prices, liquidation
preferences and the number of shares constituting any series and the designation
of such series, without further vote or action by the shareholders. The issuance
of Preferred Stock may have the effect of delaying, deferring or preventing a
change in control of the Company without further action by the shareholders and
may adversely affect the voting power and other rights of the holders of Common
Stock, including the loss of voting control to others.
Redeemable Warrants
The Company's Redeemable Warrants were issued by the Company as a part of
its IPO pursuant to an agreement, dated June 22, 1994 (the "Warrant Agreement"),
between the Company and American Securities Transfer, Inc. and are evidenced by
warrant certificates in registered form. The terms of the Redeemable Warrants
issuable upon exercise of the Representative's Warrants are identical to the
Redeemable Warrants issued in the IPO.
Two Redeemable Warrants represent the right of the registered holder to
purchase one share of Common Stock at an exercise price of $6.50 per share at
any time ending 5:00 p.m. (Denver time) on April 30, 1997 (the "Expiration
Date"), subject to adjustment (the "Purchase Price"). The Redeemable Warrants
will be entitled to the benefit of adjustments in the Purchase Price and in the
number of shares of Common Stock and/or other securities deliverable upon
exercise thereof in the event of a stock dividend, stock split,
reclassification, reorganization, consolidation or merger. In addition, the
Company has the right to reduce the Purchase Price for a period of not less than
30 days upon not less than 30 days' prior written notice to holders of the
Redeemable Warrants. Each Redeemable Warrant expires on the Expiration Date,
subject to extension. The Company may at any time extend the Expiration Date of
all outstanding Redeemable Warrants for such increased period of time as it may
determine.
Under the provisions of the Warrant Agreement, the Company has the right to
redeem the Redeemable Warrants at any time in whole for cancellation at a price
of $.05 each, by written notice mailed at least 30 days prior to the redemption
date to each Redeemable Warrant holder at his or her address as it appears on
the books of the Warrant Agent. If the Redeemable Warrants are called for
redemption and cancellation, they must be exercised prior to the close of
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business on the date of any such redemption and cancellation or the right to
purchase the applicable shares of Common Stock is forfeited. No holder, as such,
of any Redeemable Warrant shall be entitled to vote or receive dividends or be
deemed the holder of Common Stock for any purpose whatsoever until such
Redeemable Warrant has been exercised and the Purchase Price has been paid.
The Redeemable Warrants may be exercised upon surrender of the Redeemable
Warrant certificate on or prior to the Expiration Date (or earlier redemption
date) at the offices of the Warrant Agent, with the Subscription Form on the
reverse of the Redeemable Warrant certificate completed and executed as
indicated, accompanied by payment of the full exercise price (by certified check
payable to the order of the Warrant Agent for the account of the Company) for
the number of Redeemable Warrants being exercised. No holder, as such, of any
Redeemable Warrant shall be entitled to vote or receive dividends or be deemed
the holder of Common Stock for any purpose whatsoever until such Redeemable
Warrant has been duly exercised and the Purchase Price has been paid.
PLAN OF DISTRIBUTION
The distribution of the Shares by the Selling Stockholders may be effected
from time to time in one or more transactions (which may involve block
transactions) on the Nasdaq National Market or otherwise, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. The Selling Stockholders may effect such
transactions by selling the Shares to or through broker dealers (which may
include the Representative), and such broker-dealers may receive compensation in
the form of underwriting discounts, concessions or commissions from the Selling
Stockholders or purchasers of Shares for whom they may act as agent (which
compensation may be in excess of customary commissions). Such brokers or dealers
may be deemed to be "underwriters' within the meaning of the Securities Act in
connection with such sales and any commissions received by them may be deemed to
be underwriting compensation.
In accordance with applicable rules and regulations promulgated under the
Exchange Act, any person engaged in the distribution of any of the Shares may
not simultaneously engage in market activities with respect to any of the Common
Stock for a period of nine business days prior to the commencement of such
distribution. In addition and without limiting the foregoing, the Selling
Stockholders may be subject to applicable provisions of the Exchange Act and the
rules and regulations promulgated thereunder, including, without limitation,
Rules 10b-2, 10b-6 and 10b-7, which provisions may limit the timing of purchases
and sales of Shares by the Selling Stockholders.
The Company and the Selling Stockholders have agreed to indemnify each
other against certain liabilities, including liabilities, under the Securities
Act.
LEGAL MATTERS
The validity of the Shares offered hereby will be passed upon for the
Company by Baker & Hostetler LLP, Denver, Colorado.
EXPERTS
The financial statements as of December 31, 1996 and for the years ended
December 31, 1995 and 1996, which are included in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1996, have been audited by HEIN +
ASSOCIATES LLP, independent certified public accountants, to the extent and for
the periods indicated in their report, and are incorporated herein by reference
upon the authority of that firm as experts in accounting and auditing.
9
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Capitalized terms used but not defined in Part II have the meanings
ascribed to them in the Prospectus included as part of this Registration
Statement.
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses expected to be incurred in
connection with the issuance and distribution of Common Stock registered hereby,
all of which expenses, except for the Commission registration fee, are
estimates:
Description Amount
----------- -----
Securities and Exchange Commission registration fee.................... $ 307
Accounting fees and expenses........................................... *
Legal fees and expenses................................................ *
Blue Sky fees and expenses............................................. *
Miscellaneous expenses................................................. *
-----
Total.................................................................. $
=====
- -------------------
* To be completed by amendment.
Item 15. Indemnification of Directors and Officers.
Under provisions of the Bylaws of the Company and the Securities Act, each
person who is or was a director or officer of the Company will be indemnified by
the Company as a matter of right to the extent permitted or authorized by law.
The effects of the Bylaws and the Securities Act may be summarized as follows:
1. Under Colorado law, a person who is wholly successful on the merits in
defense of a suit or proceeding brought against him by reason of the fact that
he is a director or officer of the Company shall be indemnified against
reasonable expenses (including attorneys' fees) incurred in connection with such
suit or proceeding;
2. Except as provided in subparagraph (3) below, a director may be
indemnified under such law against both (1) reasonable expenses (including
attorneys' fees), and (2) judgments, penalties, fines and amounts paid in
settlement, if he acted in good faith and reasonably believed, in the case of
conduct in his official capacity as a director, that his conduct was in the
Company's best interests, or in all other cases that his conduct was not opposed
to the best interests of the Company, and with respect to any criminal action,
he had no reasonable cause to believe his conduct was unlawful, but the Company
may not indemnify the director if the director is found liable to the Company or
is found liable on the basis that personal benefit was improperly received by
the director in connection with any suit or proceeding charging improper
personal benefit to the director;
3. In connection with a suit or proceeding by or in the right of the
Company, indemnification is limited to reasonable expenses incurred in
connection with the suit or proceeding, but the Company may not indemnify the
director if the director was found liable to the Company; and
4. Officers of the Company will be indemnified to the same extent as
directors as described in (1), (2) and (3) above, and officers who are not also
directors may be indemnified to such further extent, consistent with law, as
II-1
<PAGE>
provided by the Articles of Incorporation, Bylaws, resolution of the
shareholders or the Board of Directors, or in a contract.
Item 16. Exhibits.
The following exhibits are filed herewith or incorporated by reference
herein:
Exhibit Item 601 Cross
Number Reference Document as Form S-3 Exhibit
- ------- -------------- ----------------------------
4.1 4 Excerpt from Articles of Incorporation of the
Registrant Regarding Common Stock and Preferred
Stock(1)
5.1 5 Opinion of Baker & Hostetler LLP re legality of
the securities to be offered
23.1 23 Consent of HEIN + ASSOCIATES LLP
23.2 23 Consent of Baker & Hostetler LLP (included in
Exhibit 5.1)
24.1 24 Powers of Attorney (included on the signature page
hereto)
- -----------------
(1) Filed as an Exhibit to Amendment No. 1 to the Registration Statement (File
No. 33-76726-D) filed with the Securities and Exchange Commission on April
26, 1994.
Item 17. Undertakings.
1. The Company hereby undertakes:
(a) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, unless the information required to
be included in such post-effective amendment is contained in a
periodic report filed by the Company pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 and
incorporated herein by reference;
(ii) to reflect in the Prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement,
unless the information required to be included in such
post-effective amendment is contained in a periodic report filed
by the Company pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by
reference;
(iii) 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;
Provided, however, that paragraphs (1)(a)(i) and
(1)(a)(ii) do not apply if the information required to be
included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the Company pursuant to
Section 13 of Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this Registration
Statement.
(b) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
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<PAGE>
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(d) That, for purposes of determining any liability under the
Securities Act of 1933, each filing of the Company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange
Act of 1934 that is incorporated by reference in this 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.
2. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities Act") may be permitted to directors,
officers and controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, 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. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Company of expenses incurred or paid by a director, officer
or controlling person of the Company 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 Company 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
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 Fort Collins, State of Colorado on the 17th day of
April, 1997.
AVERT, INC.
By: /s/ Dean A. Suposs
--------------------------------
Dean A. Suposs, President
Each of the undersigned officers and directors of Avert, Inc. hereby
appoints Dean A. Suposs, as attorney and agent for the undersigned, with full
power of substitution, for and in the name, place and stead of the undersigned,
to sign and file with the Securities and Exchange Commission under the
Securities Act of 1933 any and all amendments (including post-effective
amendments) and exhibits to this Registration Statement and any and all
applications, instruments or documents to be filed with the Securities and
Exchange Commission pertaining to the registration of the securities covered
hereby, with full power and authority to do and perform any and all acts and
things whatsoever requisite and necessary or desirable.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed as of April 17, 1997, by the following
persons in the capacities indicated:
/s/ Dean A. Suposs Chairman of the Board; President
- ----------------------------------------
Dean A. Suposs
Principal Executive Officer
- ---------------------------------------- Director; Secretary
Michael D. DeWitt
/s/ D. Michael Vaughan Director
- ----------------------------------------
D. Michael Vaughan
/s/ Stephen C. Fienhold Director
- ----------------------------------------
Stephen C. Fienhold
/s/ Stephen D. Joyce Director
- ----------------------------------------
Stephen D. Joyce
/s/ Jamie M. Burgat Vice President of Operations;
- ---------------------------------------- Treasurer
Jamie M. Burgat
(Principal Financial and Accounting Officer)
II-4
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page No.
- ------- ----------- --------
4.1 Excerpt from Articles of Incorporation of the Registrant N/A
Regarding Common Stock and Preferred Stock(1)
5.1 Opinion of Baker & Hostetler LLP re legality of securities
to be offered
23.1 Consent of HEIN + ASSOCIATES LLP
23.2 Consent of Baker & Hostetler LLP (included in Exhibit 5.1) N/A
24.1 Powers of Attorney (included in the signature page to the N/A
Registration Statement
- ------------------
(1) Filed as an Exhibit to Amendment No. 1 to the Registration Statement (File
No. 33-76726-D) filed with the Securities and Exchange Commission on April
26, 1994
Exhibit 5.1
[BAKER & HOSTETLER LLP LETTERHEAD]
April 17, 1997
Avert, Inc.
301 Remington
Fort Collins, Colorado 80524
Gentlemen:
We have acted as counsel for Avert, Inc. (the "Company") in connection with
the registration under the Securities Act of 1933 (the "Act") on Form S-3 of a
total of 150,000 shares (the "Shares") of the Company's Common Stock, $.01 par
value, consisting of (i) 100,000 shares issuable upon exercise of warrants
issued to the representative (the "Representative") of the underwriters of the
Company's initial public offering completed in June 1994 (the "Representative's
Warrants"), and (ii) 50,000 shares issuable upon exercise of the Redeemable
Warrants underlying the Representative's Warrants. The Registration Statement on
Form S-3 and exhibits thereto filed with the Securities and Exchange Commission
under the Act are referred to herein as the "Registration Statement."
In connection with this opinion, we have examined the Articles of
Incorporation of the Company. In addition, we have examined and have relied as
to matters of fact upon such other documents, corporate records and other
instruments, and have made such other and further investigations, as we have
deemed relevant and necessary as a basis for the opinion hereinafter set forth.
Based on the foregoing and having regard for such legal considerations as
we deem relevant, we are of the opinion that the Shares when issued pursuant to
exercise of the Representative's Warrants and the Redeemable Warrants will be
validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as part of the Registration
Statement.
Very truly yours,
/s/ Baker & Hostetler LLP
BAKER & HOSTETLER LLP
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our reported dated February 21,
1997, accompanying the financial statements of Avert, Inc. to Form S-3
Registration Statement of Avert, Inc. and to the use of our name and the
statements with respect to us, as appearing under the heading "Experts" in the
Registration Statement.
/s/ HEIN + ASSOCIATES LLP
HEIN + ASSOCIATES LLP
Denver, Colorado
April 17, 1997
