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Filed Pursuant 424(b)(1)
Registration No. 333-10893
PROSPECTUS
743,125 SHARES
[HARBINGER LOGO]
COMMON STOCK
---------------
This Prospectus relates to up to 743,125 shares of common stock (the
"Shares") of Harbinger Corporation, a Georgia corporation (the "Company"),
which may be offered from time to time by the selling shareholders named herein
(the "Selling Shareholders"). See "Selling Shareholders." The Company will
not directly receive any of the proceeds from the sale of the Shares, but may
benefit indirectly from the sale of certain of the Shares. See "Risk Factors
- -- SSA Relationship."
The Shares being registered were issued in connection with the
acquisitions (the "Acquisitions") of substantially all of the assets of each of
INOVIS GmbH & Co. computergestutze Informationssysteme ("INOVIS") and NTEX
Holding B.V. ("NTEX") by the Company, the acquisition of certain minority
interests in Harbinger NV, and the acquisition of certain assets from System
Software Associates, Inc. ("SSA"). Pursuant to the terms of the Acquisitions,
the Company agreed to register the Shares received by each Selling Shareholder
in connection with the Acquisitions.
The Company has been advised by each Selling Shareholder that he
expects to offer his Shares through brokers or dealers to be selected by him
from time to time. The Shares may be offered for sale through the Nasdaq Stock
Market, in the over-the-counter market, in one or more private transactions, or
a combination of such methods of sale, at prices and on terms then prevailing,
at prices related to such prices, or at negotiated prices. Each Selling
Shareholder may pledge all or a portion of the Shares owned by him as
collateral in loan transactions. Upon default by such Selling Shareholder the
pledgee in such loan transaction would have the same rights of sale as such
Selling Shareholder under this Prospectus to the extent it remains part of an
effective registration statement. Each Selling Shareholder may also transfer
Shares owned by him by gift and upon any such transfer the donee would have the
same rights of sale as such Selling Shareholder under this Prospectus. In
addition, any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 of the Securities Act of 1933, as amended (the "1933
Act"), may be sold under Rule 144 rather than pursuant to this Prospectus.
Finally, each Selling Shareholder and any brokers and dealers through whom
sales of the Shares are made may be deemed to be "underwriters" within the
meaning of the 1933 Act, and the commissions or discounts and other
compensation paid to such persons may be regarded as underwriters'
compensation.
The Shares are traded on the Nasdaq Stock Market. The average of the
high and low prices of the Shares as reported on the Nasdaq Stock Market on
August 21, 1996, was $25.75 per share.
SEE "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A
DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE
PURCHASERS OF THE COMMON STOCK OFFERED HEREBY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
=======================================================================================================================
Price to Underwriting Discounts and Proceeds to Selling
Public Commissions (1) Shareholders (2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share. . . . $25.75 $.64 $25.11
Total . . . . . . $19,135,468.75 $478,386.72 $18,657,082.03
=======================================================================================================================
</TABLE>
(1) Estimated brokerage commissions to be paid by selling shareholders.
(2) Before deducting estimated expenses of the offering estimated at
$36,598.44, all of which will be paid by the Company.
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THE DATE OF THIS PROSPECTUS IS AUGUST 30, 1996.
<PAGE> 2
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and files reports and other information with
the Securities and Exchange Commission (the "Commission") in accordance
therewith. Such reports, proxy statements, and other information filed by the
Company are available for inspection and copying at the public reference
facilities of the Commission at Room 1024, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the Commission's Regional Offices
located at Room 1028, Jacob K. Javits Federal Building, 26 Federal Plaza, New
York, New York 10278 and Room 3190, Kluczynski Federal Building, 230 South
Dearborn Street, Chicago, Illinois 60604. Copies of such material may be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates. The Commission maintains a World Wide Web site on the Internet that
contains reports, proxy and information statements and other information
regarding registrants which file electronically with the Commission at
http:\\www.sec.gov. The Company's common stock is listed on the Nasdaq Stock
Market. In addition to the addresses listed above, reports, proxy statements,
and other information concerning the Company can be inspected at the offices of
the Nasdaq Stock Market.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission are
incorporated by reference in this Prospectus:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1995.
2. The Company's Proxy Statement dated May 8, 1996.
3. The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1996.
4. The Company's Quarterly Report on Form 10-Q for the quarter
ended June 30, 1996.
5. The description of the Common Stock of the Company which is
contained in the Company's Form 8-A/A Amendment No. 1 dated August 21, 1995, as
incorporated by reference therein from the Company's Pre-Effective Amendment
No. 4 to its Registration Statement on Form S-1 dated August 18, 1995.
6. The Company's Current Report on Form 8-K/A Amendment No. 1
dated December 26, 1995, and filed January 24, 1996.
7. The Company's Current Report on Form 8-K dated January 2,
1996, and filed on January 3, 1996.
8. The Company's Current Report on Form 8-K dated April 4, 1996,
and filed on April 18, 1996, as amended by it's Current Report on Form 8-K/A
Amendment No. 1 dated April 4, 1996, and filed June 17, 1996.
9. The Company's Current Report on Form 8-K dated April 19, 1996,
and filed on May 2, 1996, as amended by it's Current Report on Form 8-K/A
Amendment No. 1 dated April 19, 1996, and filed July 1, 1996.
10. The Company's Current Report on Form 8-K dated April 20, 1996,
and filed on May 3, 1996, as amended by it's Current Report on Form 8-K/A
Amendment No. 1 dated April 20, 1996, and filed July 2, 1996.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Shares offered hereby shall be
deemed to be incorporated by reference into this Prospectus and to be a part
hereof.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus has been delivered, upon the written or oral request of
any such person, a copy of any and all of the foregoing documents incorporated
herein by reference (other than exhibits to such documents which are not
specifically incorporated by reference into the information that this
Prospectus incorporates). Written or telephone requests should be directed to
Investor Relations Department, Harbinger Corporation, 1055 Lenox Park
Boulevard, Atlanta, Georgia 30319, telephone number (404) 841-4334.
This Prospectus constitutes a part of a Registration Statement which
the Company has filed with the Commission under the 1933 Act, with respect to
the Shares. This Prospectus omits certain of the information contained in the
Registration Statement, and reference is hereby made to the Registration
Statement and related Exhibits thereto for further information with respect to
the Company and the securities offered hereby. Such additional information can
be obtained from the Commission's office in Washington, D.C. Any statements
contained herein concerning the provisions of any documents are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such
reference.
<PAGE> 3
THE COMPANY
Harbinger Corporation ("Harbinger" or the "Company") develops, markets
and supports software products worldwide and provides computer communications
network and consulting services which enable businesses to engage in electronic
commerce. Businesses exchange information and documents and complete business
transactions through electronic commerce, which includes electronic data
interchange (EDI), electronic mail (E-Mail), electronic funds transfer (EFT),
electronic forms, bulletin boards and electronic catalogue services. The
Company's objective is to be a leading worldwide provider of electronic
commerce products and services to businesses by offering comprehensive,
customizable, standards-based electronic commerce solutions. Harbinger offers
software products that operate on multiple computer platforms, a secure and
reliable computer network to facilitate the transmission of business
information and transactions, and value-added products and services to enable
businesses of all sizes to maximize the number and value of their electronic
trading relationships. The Company's products and services facilitate
electronic commerce by businesses and financial institutions by providing the
ability to electronically transmit and receive routine business information and
documents in a standard format. The Harbinger value-added network (VAN) serves
as an electronic communications link for computer systems by receiving, storing
and forwarding electronically transmitted business documents and data for
re-transmission in a form that can be received and interpreted by the computer
of another commercial business. Harbinger facilitates the electronic link to
its computer communications network through the sale of electronic commerce
software packages for use in a broad range of computing environments, including
DOS, Windows, Windows NT, UNIX, IBM AS/400 midrange and IBM MVS mainframe
platforms. The Company's principal executive offices are located at 1055 Lenox
Park Boulevard, Atlanta, Georgia 30319 and its telephone number is (404)
841-4334.
RISK FACTORS
Factors Affecting Operating Results; Potential Fluctuations in
Quarterly Results. The Company's quarterly operating results have in the past
and may in the future vary or decrease significantly depending on factors such
as revenue from software sales, the timing of new product and service
announcements, changes in pricing policies by the Company and its competitors,
market acceptance of new and enhanced versions of the Company's products, the
size and timing of significant orders, changes in operating expenses, changes
in Company strategy, personnel changes, the introduction of alternative
technologies, the effect of potential acquisitions and general economic
factors. The Company has limited or no control over many of these factors.
The Company has experienced losses in the past, and at June 30, 1996, had an
accumulated deficit of approximately $14.1 million. The Company operates with
virtually no network services or software product order backlog because its
network services are purchased on demand and its software products typically
are shipped shortly after orders are received. As a result, revenues in any
quarter are substantially dependent on the quantity of purchases of services
requested and product orders received in that quarter. Quarterly revenues also
are difficult to forecast because the market for electronic commerce and EDI
software products is rapidly evolving and the Company's revenues in any period
are significantly affected by the announcements and product offerings of the
Company's competitors as well as alternative technologies. The Company's
expense levels are based, in part, on its expectations as to future revenues.
If revenue levels are below expectations, the Company may be unable or
unwilling to reduce expenses proportionately and operating results are likely
to be adversely affected. As a result, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as indications of future performance.
Due to all of the foregoing factors, it is likely that in some future quarter
the Company's operating results will be below the expectations of public market
analysts and investors. In such event, the price of the Company's Common Stock
will likely be adversely affected.
The Company recognizes revenues for its software products at the time
of installation in the case of PC-based EDI software and upon the later of
shipment or fulfillment of all significant post-contract vendor obligations in
the case of other software products. Customers using the Company's PC products
are permitted to return products after delivery for a specified period,
generally 60 days. The Company generally has experienced returns of
approximately 20% of the PC product sales, and the Company records revenues
after a deduction for estimated returns. Any material increase in the
Company's return experience could have an adverse effect on its operating
results.
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Investment in Harbinger NET Services. The Company has invested $8.4
million to date in Harbinger NET Services, LLC ("HNS"). HNS was established in
1995, has had no substantial revenues, and has incurred and is expected to
continue producing substantial losses in its initial years of operations. It
is expected that into 1997 the Company will report its interest in the income
or losses of HNS by the equity method of accounting and will provide any
summarized financial information concerning HNS and separate audited financial
statements of HNS as may be required by applicable accounting rules and
regulations. The Company's interest in HNS's losses have and will continue to
reduce the Company's operating and net income and may cause the Company to
report losses in future periods. Depending on operating results in the next
year, it is anticipated that HNS will require additional financing in future
periods. There can be no assurance that this additional financing will be
available or that this financing will not dilute or otherwise affect the
Company's interest in HNS.
HNS was organized to develop software products and provide related
services for conducting electronic commerce over the Internet. There can be no
assurance that HNS will overcome the substantial technological issues that will
be faced in developing acceptable technologies for conducting electronic
commerce over the Internet. These technological issues include the ability to
provide secure communication of commercial data over the Internet by encryption
or other means, and the ability to assure the integrity, accuracy and
reliability of data sent and received over the Internet. HNS will face other
significant risks inherent in a start-up enterprise, including the likelihood
of significant operating losses, risk of product development and market
acceptance, intense competition, risk of the effect of technological change on
the introduction of new products and technologies, and the likelihood of the
need for substantial equity capital in addition to the capital already invested
by the Company. The Company's investment in HNS involves considerable risk and
the Company may lose its entire investment in HNS.
The Company has several agreements with HNS governing certain
transactions between them, including the use of personnel, the management and
operation of HNS, the use by HNS of the Company's products and services, the
Company's right to license and distribute HNS products, if any, derived from
the Company's products and the payment by HNS and the Company of royalties and
other amounts. There is no assurance that the Company will receive ongoing
royalties or other fees from HNS, that the Company will be able to license and
distribute the products developed by HNS, or that the agreements with HNS will
continue in effect. The Company's revenues and business could be adversely
affected by the development of the electronic commerce business over the
Internet by HNS. There is no assurance that the Company's contractual
relationships with HNS or ownership interest in HNS will compensate for any
such adverse effect.
The Operating Agreement among the Company, HNS and its shareholders
grants certain designated shareholders, presently including the Company and
BellSouth Corporation ("BellSouth"), the right after December 1, 1996 to
initiate a buy-sell procedure with respect to the shares owned by such
designated shareholders. Under this buy-sell arrangement, any such designated
shareholder may offer to buy or sell the HNS shares held by the other
designated shareholders at a specified price, in which case the other
designated shareholders will be required either to buy or sell their shares.
Under this arrangement, the Company could be required to make a decision
whether to sell its HNS shares or to purchase the HNS shares held by other
designated shareholders at a point in time when the Company has insufficient
funds to purchase such HNS shares. Upon such occurrence, and if the Company
desires to purchase HNS shares from the designated shareholders, there is no
assurance the Company will be able to obtain financing on acceptable terms and,
in such case, the Company could be required to sell its HNS shares on terms
which would otherwise be unacceptable to the Company. The Company is
restricted in its ability to transfer its HNS shares outside of this buy-sell
arrangement, and may not transfer its HNS common shares without the approval of
all of the members of the Board of Managers of HNS and the approval of the
holders of at least 50% of the outstanding HNS common shares, excluding the
shares proposed to be transferred.
Although the Company owns approximately 70% of the equity of HNS
(assuming conversion of the BellSouth Debenture and the exercise of outstanding
HNS options), the Company does not control the business and operations of HNS.
Until January 1, 1997, the Company has the right to appoint only a minority of
the members of the Board of Managers of HNS, and the Board of Managers has
broad rights regarding the operation and direction of the business of HNS.
Even if the Company ultimately controls the Board of Managers, the Board of
Managers will have an obligation to act in the best interest of HNS.
Consequently, it is possible that HNS will make business
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decisions that may be adverse to the interests of the Company. Several
executive officers of the Company also are executive officers of HNS, have a
direct equity investment in HNS, and devote a substantial portion of their time
to the business and affairs of HNS. These relationships divert their time and
attention from the Company's affairs and could give rise to potential
conflicting interests.
Because the Company owns approximately a 70% of the equity interest in
HNS (assuming conversion of the BellSouth Debenture and the exercise of
outstanding HNS options), the Company and its shareholders will only realize
benefits from the Company's investment in HNS proportionate with its equity
interest. Additional funding which may be required in the future to support
HNS could dilute or otherwise affect the Company's equity interest in HNS.
Accordingly, shareholders in the Company should recognize that they will not
directly share in 100% of any profits or increase in the value of the Company's
equity interest in HNS, and a portion of any such profit and increase in value
will be realized by the other investors in HNS, including certain officers,
directors and existing shareholders of the Company.
Integration of Recent Acquisitions; Risks of Potential Future
Acquisitions. There can be no assurance that the Company can successfully
assimilate its operations and integrate its software products with the
operations, software products and technologies recently acquired in the NTEX,
INOVIS and Harbinger NV acquisitions. Any delay in such integration could
result in loss of product revenues and have a material adverse effect on the
Company. Similar operations and software integration problems may arise if the
Company undertakes future acquisitions.
The Company may in the future pursue additional acquisitions of
complementary products, technologies or businesses. Future acquisitions may
result in potentially dilutive issuances of equity securities, the incurrence
of additional debt, the write-off of in-process product development and
capitalized product costs, and the amortization of expenses related to goodwill
and other intangible assets, all of which could have a material adverse effect
on the Company. Future acquisitions will involve numerous additional risks,
including difficulties in the assimilation of the operations, products and
personnel of the acquired company, the diversion of management's attention from
other business concerns, risks of entering markets in which the Company has
little or no direct prior experience, and the potential loss of key employees
of the acquired company.
Investment in Harbinger NV, NTEX and INOVIS. The Company believes
that its continued growth and profitability will require expansion of its
international revenues. This expansion will require financial resources and
significant management attention, particularly by certain members of the
management of the Company who are officers of or provide assistance to
Harbinger NV, NTEX and INOVIS (the "International Subsidiaries"). The Company
may need to make additional loans to or investments in the International
Subsidiaries for working capital purposes or to fund acquisitions of
complementary products, technologies or businesses. Each of the International
Subsidiaries has experienced significant operating losses to date. To the
extent that the International Subsidiaries are unable to penetrate
international markets in a timely and profitable manner, the Company's growth,
if any, in international sales will be limited, and the Company could be
materially adversely affected. In addition, there can be no assurance that the
Company will be able to maintain or increase international market demand for
the Company's products.
SSA Relationship. Under its Alliance Agreement with System Software
Associates, Inc. ("SSA"), the Company granted licenses to SSA to use and sell
certain software products of the Company in return for royalty payments. The
SSA Alliance Agreement establishes minimum royalty payments which must be made
by SSA. In connection with the inclusion of the Shares being offered by SSA in
this offering, SSA has agreed to apply the proceeds of the sale of up to
275,000 of such Shares to the payment of the minimum royalties as due under the
Alliance Agreement. Nevertheless, there is no assurance that the proceeds from
the sale of the Shares being offered by SSA in this offering will be sufficient
to satisfy the minimum royalties or that any royalties in excess of the minimum
will ever be paid.
The Internet. The Internet, which is an interconnected global network
of computer networks linked together through a common protocol, provides a
potential alternative means of providing electronic commerce to business
trading partners. The market for Internet software and services is both
emerging and highly competitive,
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ranging from small companies with limited resources such as HNS to large
companies with substantially greater financial, technical and marketing
resources than the Company and HNS. The Company believes that existing
competitors are likely to expand the range of their electronic commerce
services to include Internet services. Moreover, new competitors, which may
include telephone companies and media companies, are likely to increase the
provision of business-to-business data transmission services using the
Internet. Use of the Internet for business-to-business electronic commerce
services raises numerous issues that, to the knowledge of the Company, have yet
to be satisfactorily resolved. Such issues include reliability, data security
and data integrity. If the Internet becomes an accepted method of electronic
commerce, the Company could lose network customers which would reduce recurring
revenue from network services and have a material adverse effect on the
Company. There can be no assurance that the Company's interest in or
contractual relationships with HNS will compensate for any adverse effect
resulting from the adoption of the Internet as an accepted alternative for
electronic commerce transmissions.
Intense Competition. The electronic commerce, EDI and network
services and products businesses are intensely competitive and the Company has
many competitors with substantially greater financial, marketing, personnel and
technological resources than the Company. Other companies offer products and
services that may be considered by customers to be acceptable alternatives to
the Company's products and services. Certain companies also operate private
computer networks for transacting business with their trading partners. It is
expected that other companies may develop and implement similar
computer-to-computer networks, some of which may be "public" networks such as
the Company's and others may be "private," providing services only to a
specific group of trading partners, thereby reducing the Company's ability to
increase sales of its network services. In addition, several companies offer
PC-based, UNIX, midrange and mainframe computer software products which compete
with the Company's software products. Advanced operating systems, such as
Microsoft's Windows 95, also may offer electronic commerce functions that limit
the Company's ability to sell its software products. The Company believes that
the continuing acceptance of electronic commerce and EDI will attract new
competitors, including software applications and operating systems companies
that may bundle electronic commerce solutions with their programs, and
alternative technologies that may be more sophisticated and cost effective than
the Company's products and services. Competitive companies may offer certain
electronic commerce products or services, such as communications software or
network transactional services, at no charge or a deeply discounted charge, in
order to obtain the sale of other products or services. Since the Company's
agreements with its network subscribers are terminable upon 30 days' notice,
the Company does not have the contractual right to prevent its customers from
changing to a competing network.
Technological Change; Dependence on New Products. The electronic
commerce and EDI software markets are characterized by rapid technological
change, frequent new product introductions and evolving industry standards.
The Company's future success will depend in significant part on its ability to
anticipate industry standards, continue to apply advances in network and
product technologies, enhance its current products and network services, and
develop and introduce new products on a timely basis that keep pace with
technological developments. There can be no assurance that the Company will be
successful in developing and marketing product enhancements or new products or
network services that respond to technological change or evolving industry
standards, that the Company will not experience difficulties that could delay
or prevent the successful development, introduction and marketing of these
products or services, or that its new products and services, and the
enhancements thereto, will adequately meet the requirements of the marketplace
and achieve market acceptance. In the past, the Company has experienced delays
in the commencement of commercial shipments of new products and enhancements,
resulting in delays or loss of product revenues. Such delays may result in
additional and unexpected expenses to fund product development or to add
programming personnel to complete a development project, and will reduce
revenue because of the inability to sell the new product on a timely basis and
the adverse impact that such delay may have on the demand for existing
products. Any delay in the introduction of new products, or the failure of
such products or services to achieve market acceptance, will have a material
adverse effect on the Company.
Dependence on Key Management and Personnel. The Company's success is
largely dependent upon its executive officers, the loss of one or more of whom
could have a material adverse effect on the Company. The future success of the
Company will depend in large part upon its ability to attract and retain
talented and qualified personnel. In particular, the Company believes that it
will be important for the Company to hire experienced
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product development personnel. Competition in the recruitment of
highly-qualified personnel in the computer software and electronic commerce
industries is intense. The inability of the Company to locate and retain such
personnel may have a material adverse effect on the Company. No assurance can
be given that the Company can retain its key employees or that it can attract
qualified personnel in the future. The Company currently carries key-person
life insurance policies on the lives of Messrs. Howle and Leach, and one other
officer of the Company.
Management of the Company, including Messrs. Howle, Leach, Davis, Katz
and Meeker, are also involved in the management of HNS, thereby reducing the
amount of time that these persons expend directly on behalf of the Company.
Risks of Product Development. Software products as complex as those
offered by the Company may contain undetected errors or failures when first
introduced or when new versions are released. If software errors are
discovered after introduction, the Company could experience delays or lost
revenues during the period required to correct these errors. There can be no
assurance that, despite testing by the Company and by current and potential
customers, errors will not be found in new products or releases after
commencement of commercial shipments, resulting in loss of or delay in market
acceptance, additional and unexpected expenses to fund further product
development or to add programming personnel to complete a development project,
and loss of revenue because of the inability to sell the new product on a
timely basis, any one or more of which could have a material adverse effect on
the Company.
Limited Protection of Proprietary Technology; Risks of Infringement.
The Company relies primarily on a combination of copyright, patent and
trademark laws, trade secrets, confidentiality procedures and contractual
provisions to protect its proprietary rights. The Company seeks to protect its
software, documentation and other written materials principally under trade
secret and copyright laws, which afford only limited protection. The Company
presently has one patent for an electronic document interchange test facility
and patent applications pending for an EDI communication system. Despite the
Company's efforts to protect its proprietary rights, unauthorized parties may
attempt to copy aspects of the Company's products or to obtain and use
information that the Company regards as proprietary. There can be no assurance
that the Company's means of protecting its proprietary rights will be adequate
or that the Company's competitors will not independently develop similar
technology. In distributing its products, the Company relies primarily on
"shrink wrap" licenses that are not signed by licensees and, therefore, may
be unenforceable under the laws of certain jurisdictions. In addition, the
laws of some foreign countries do not protect the Company's proprietary rights
to as great an extent as the laws of the United States. The Company does not
believe that any of its products infringe the proprietary rights of third
parties. There can be no assurance, however, that third parties will not claim
infringement by the Company with respect to current or future products. The
Company expects that software product developers will increasingly be subject
to infringement claims as the number of products and competitors in electronic
commerce grows and the functionality of products in different industry segments
overlaps. Any such claims, with or without merit, could be time-consuming,
result in costly litigation, cause product shipment delays or require the
Company to enter into royalty or licensing agreements. Such royalty or
licensing agreements, if required, may not be available on terms acceptable to
the Company or at all, which could have a material adverse effect on the
Company.
Potential Conflicts of Interests. Certain officers and directors of
the Company also are officers and directors of HNS. The Company is likely to
engage in ongoing transactions with HNS, and conflicts of interest could arise
between the Company and HNS. No formal procedures have been adopted for
dealing with these conflicts of interest, although the Company intends that
material transactions between the Company and HNS will be structured to be on
terms no less favorable to the Company than terms which would be offered to an
unaffiliated third party, and that any such transactions will be subject to
approval by members of the Company's Board of Directors who are not officers or
directors of HNS. There can be no assurance, however, that these conflicts of
interest will not have an adverse effect on the Company.
Dependence on Data Centers. The Company's network service operations
are dependent upon its ability to protect its computer equipment and the
information stored in its data centers against damage that may be caused by
fire, power loss, telecommunication failures, unauthorized intrusion, computer
viruses and disabling devices and other similar events. The Company is party
to a disaster recovery agreement that provides an alternative off-site
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computer system for use in such disastrous events, and the Company has taken
precautions to protect itself and its customers from events that could
interrupt delivery of the Company's network services. These precautions
include off-location storage of computer software backup data, fire protection
and physical security systems, and an early warning detection and fire
extinguishing system. Notwithstanding such precautions, there can be no
assurance that a fire or other natural disaster, including national, regional
or local telecommunications outages, would not result in a prolonged outage of
the Company's network services. Although the Company maintains business
interruption insurance and has contractual access to an alternative off-site
computer system, in the event of a disaster, and depending on the nature of the
disaster, it may take from several hours to several days before the Company's
off-site computer system can become operational for all of the Company's
customers and use of the alternative off-site computer would result in
substantial additional cost to the Company. In the event that an outage of the
Company's network extends for more than several hours, the Company will
experience a reduction in revenues by reason of such outage. In the event that
such outage extends for one or more days, the Company could potentially lose
many of its customers which may have a material adverse effect on the Company.
Government Regulatory and Industrial Policy Risks. The Company's
network services are transmitted to its customers over dedicated and public
telephone lines. These transmissions are governed by regulatory policies
establishing charges and terms for communications. Changes in the legislative
and regulatory environment relating to online services, EDI or the Internet
access industry, including regulatory or legislative changes which directly or
indirectly affect telecommunication costs or increase the likelihood of
competition from regional telephone companies or others, could have an adverse
effect on the Company's business. Congress has enacted, and President Clinton
signed, the Telecommunications Act of 1996 ("Act") to amend the federal
telecommunications laws to lift restrictions on regional telephone companies
and others competing with the Company and to impose certain restrictions
regarding obscene and indecent content communicated to minors over the Internet
or through interactive computer services. The Act immediately lifts
restrictions on regional telephone companies providing transport between
defined geographic boundaries associated with the provision of its own
information services. This will enable regional telephone companies to more
readily compete with the Company by packaging information service offerings
with other services. Additionally, the Act imposes fines and other criminal
liability on any entity that knowingly uses a telecommunications device or
interactive computer service to send obscene or indecent material to minors or
permits any telecommunications facility under such entity's control to be used
for such a purpose. The Act provides a defense for persons providing access or
a connection so long as the access or connection provider is not involved in
the creation of content. Litigation has been filed in federal court
challenging the constitutionality of those provisions of the Act. A temporary
restraining order has been issued by a federal court enjoining the U.S.
Attorney General from enforcing the Act's "indecency" prohibition. This case
is currently on appeal. The ability of state regulators and/or the FCC to
impose regulations on the Internet is unclear. At present the Internet is
treated by the FCC as an unregulated enhanced service. The FCC is currently
considering a petition seeking to regulate voice communications over the
Internet. In addition there are a number of bills currently being considered
at the federal and state levels involving encryption and digital signatures
that may impact the Company. The Company cannot predict the impact, if any,
that the Act and future court opinions, legislation, regulations or regulatory
changes may have on its business. Management believes that the Company is in
compliance with all material applicable regulations.
Ability to Manage Growth. The Company has experienced significant
revenue growth in the last five years as it has added subscribers to the
Harbinger network. Maintaining profitability during a period of expansion will
depend, among other things, on the Company's ability to successfully expand its
products, services and markets and to manage its operations effectively.
Difficulties in managing continued growth, including difficulties in obtaining
and retaining talented management and product development personnel, could have
a material adverse effect on the Company.
Anti-Takeover Provisions. The Board of Directors has authority to
issue up to 20,000,000 shares of preferred stock and to fix the rights,
preferences, privileges and restrictions, including voting rights, of the
preferred stock without further vote or action by the Company's shareholders.
The rights of the holders of Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future. While the Company has no present intention to
issue additional shares of preferred stock, such issuance, while providing
desired flexibility in connection with possible acquisitions and other
corporate purposes,
8
<PAGE> 9
could have the effect of making it more difficult for a third party to acquire
a majority of the outstanding voting stock of the Company. In addition, the
Company's Amended and Restated Articles of Incorporation and Bylaws contain
provisions that may discourage proposals or bids to acquire the Company. This
could limit the price that certain investors might be willing to pay in the
future for shares of Common Stock. The Company's Amended and Restated Articles
of Incorporation provide for a classified Board of Directors with three-year,
staggered terms for its members. The classification of the Board of Directors
could have the effect of making it more difficult for a third party to acquire
control of the Company.
SELLING SHAREHOLDERS
The following table sets forth certain information regarding
beneficial ownership of the Company's Shares by the Selling Shareholders at
July 31, 1996.
<TABLE>
<CAPTION>
Harbinger
Shares Beneficially Number of Shares Beneficially
Owned Prior to Offering(2) Shares Owned After Offering(2)
Name of Selling --------------------------- ------ -------------------------
Shareholders(1) Number Percent Offered Number Percent
--------------- ------ ------- ------- ------ -------
<S> <C> <C> <C> <C> <C>
INOVIS:
------
Dr. Jacob Karszt+ 53,277 * 44,687 8,590 *
Eugen Volbers 19,819 * 16,478 3,341 *
Helmut Grimm+ 20,719 * 17,378 3,341 *
Hans Arthur Rauh+ 14,799 * 12,413 2,386 *
Jorg Blum+ 12,431 * 10,427 2,004 *
Ulrich Rehn+ 5,919 * 4,965 954 *
Prof. Dr. Wolffried Stucky 5,444 * 4,203 1,241 *
Jurgen Matthias Diet 3,888 * 3,002 886 *
Dr. Niklai Preiss 3,888 * 3,002 886 *
------- ------- ------
INOVIS Total 140,184 1.30% 116,555 23,629 *
NTEX :
----
F.J. Nederlof B.V. + 35,133 * 35,133 -- *
Ir A.G. Nederlof B.V. + 35,133 * 35,133 -- *
H.W. I. Bol+ 2,972 * 2,972 -- *
------- -------
NTEX Total 73,238 * 73,238 -- *
A. J. van Diepen 666 * 666 -- *
Henk P.M. Kivits 2,666 * 2,666 -- *
SSA 550,000 5.11% 550,000 -- *
------- ------- -------
TOTAL SELLING SHAREHOLDERS 766,754 7.12% 743,125 23,629 *
- -----------------
</TABLE>
(1) Certain of the Selling Shareholders, indicated with a "+", have recently
become employees of the Company. Mr. Kivits is a director of the Company,
and Roger E. Covey, a director of the Company, is an officer and director
of SSA. Otherwise, the Selling Shareholders have no material relationship
with the Company.
(2) Based on 10,772,125 shares of Common Stock outstanding as of July 31, 1996.
In accordance with Rule 13d-3 under the Exchange Act, a person is deemed to
be the beneficial owner, for purposes of this table, of any shares of
Common Stock if such person has or shares voting power or investment power
with respect to such security, or has the right to acquire beneficial
ownership at any time within 60 days from July 31, 1996. As used herein,
"voting power" is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the disposition of
shares. An asterisk (*) indicates less than 1% of the issued and
outstanding shares of the Common Stock.
LEGAL MATTERS
The validity of the shares of the Common Stock offered hereby will be
passed upon for the Company by Morris, Manning & Martin, L.L.P., Atlanta,
Georgia.
9
<PAGE> 10
EXPERTS
The financial statements and schedule of the Company as of December
31, 1995, and for the year then ended, have been incorporated by reference
herein and in the registration statement from the Company's Annual Report on
Form 10-K in reliance upon the reports of KPMG Peat Marwick LLP, independent
certified public accountants, incorporated by reference herein and in the
registration statement and upon the authority of said firm as experts in
accounting and auditing.
The financial statements and schedule of the Company as of December
31, 1994 and for each of the two years in the period then ended, which have
been incorporated by reference herein and in the registration statement from
the Company's Annual Report on Form 10-K, have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto, and are incorporated by reference herein and in the registration
statement in reliance upon the authority of said firm as experts in accounting
and auditing in giving said reports.
The consolidated financial statements for NTEX for December 31, 1995,
incorporated by reference in this Prospectus from the Company's Current Report
on Form 8-K/A Amendment No. 1 dated April 4, 1996, and filed June 17, 1996,
have been audited by Moret Ernst & Young Accountants, independent public
accountants, as stated in their report which is incorporated herein by
reference, and have been so incorporated in reliance upon such report given
upon the authority of said firm as experts in accounting and auditing.
The financial statements of INOVIS as of December 31, 1995, and for
the year then ended have been incorporated by reference herein and in the
registration statement from the Company's Current Report of Form 8-K/A
Amendment No. 1 dated April 19, 1996, and filed July 1, 1996, in reliance upon
the report of KPMG Deutsche Truehand-Gesellschaft, independent certified public
accountants, incorporated by reference herein and in the registration statement
and upon the authority of said firm as experts in accounting and auditing.
The consolidated financial statements of Harbinger N.V. and
subsidiaries as of December 31, 1995, 1994, and 1993, and for the two years
ended December 31, 1995, and 1994, and the one month ended December 31, 1993,
have been incorporated by reference herein and in the registration statement
from the Company's Current Report on Form 8-K/A Amendment No. 1 dated April 20,
1996, and filed July 2, 1996, in reliance upon the report of KPMG Accountants
N.V., independent certified public accountants, incorporated by reference
herein and in the registration statement and upon the authority of said firm as
experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's Amended and Restated Articles of Incorporation
authorizes the Company to indemnify any present or former director, officer,
employee, or agent of the Company, or a person serving in a similar post in
another organization at the request of the Company, against expenses,
judgments, fines, and amounts paid in settlement incurred by him in connection
with any threatened, pending, or completed action, suit, or proceeding, whether
civil, criminal, administrative, or investigative, to the fullest extent not
prohibited by the Georgia Business Corporation Code, public policy or other
applicable law. The Georgia Business Corporation Code authorizes a corporation
to indemnify its directors, officers, employees, or agents in terms
sufficiently broad to permit such indemnification under certain circumstances
for liabilities (including provisions permitting advances for expenses
incurred) arising under the 1933 Act.
Insofar as indemnification for liabilities arising under the 1933 Act
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 1933 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
10
<PAGE> 11
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the questions whether such indemnification by it is
against public policy as expressed in the 1933 Act and will be governed by the
final adjudication of such issue.
11
<PAGE> 12
========================================== =============================
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH
THE OFFERING MADE HEREBY TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN SO AUTHORIZED BY THE COMPANY, 743,125 SHARES
ANY SELLING SHAREHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE ANY OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE [HARBINGER LOGO]
SECURITIES OFFERED HEREBY TO ANY PERSON OR BY
ANYONE IN ANY JURISDICTION TO WHICH IT IS UNLAWFUL COMMON STOCK
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THE INFORMATION HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE
HEREOF.
-------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information . . . . . . . . 2
Incorporation of Certain Information
by Reference . . . . . . . . . . . . 2
The Company . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . 3
Selling Shareholders . . . . . . . . . 9 ----------------
Legal Matters. . . . . . . . . . . . . 9 PROSPECTUS
Experts. . . . . . . . . . . . . . . . 10 ----------------
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities . . . . . . . . . . . . 10
</TABLE>
------------------
UNTIL OCTOBER 9, 1996, ALL DEALERS
EFFECTING TRANSACTIONS IN THE COMMON STOCK
OFFERED HEREBY, WHETHER OR NOT PARTICIPATING
IN THE DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A PROSPECTUS. THIS IS IN ADDITION August 30, 1996
TO THE OBLIGATION OF DEALERS TO DELIVER A
PROSPECTUS WHEN ACTING AS UNDERWRITERS AND
WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
========================================== =============================
