As filed with the Securities and Exchange Commission on September 21, 2004
Registration No. 333-_____
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM F-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ATTUNITY LTD
(Exact name of Registrant as specified in its charter)
Israel Not Applicable
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Attunity Ltd
Einstein Building, Tirat Carmel, Haifa 39101, Israel
Tel. (972)(4) 855-9660
(Address and telephone number of Registrant's principal executive offices)
-------------------------
Attunity Inc.
Attn.: Ofer Segev, Chief Financial Officer
40 Audubon Road
Wakefield, Massachusetts 01880
Tel. (781) 213-5200
(Name, address and telephone number of agent for service)
-------------------------
Copies of all communications, including communications sent to agent for
service, should be sent to:
Ian Rostowsky, Adv. Steven J. Glusband, Esq.
Efrati, Galili & Co. Carter Ledyard & Milburn LLP
6 Wissotsky Street 2 Wall Street
Tel Aviv, Israel New York, NY 10005
Tel: (972)(3)545-2020 Tel: 212-238-8605
Fax: (972)(3)604-0111 Fax: 212-732-3232
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 436,
please check the following box. [ ]
---------------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================
Title of each class of Amount to be Proposed Proposed Amount of
securities registered(1) maximum maximum aggregate registration
to be registered aggregate price per offering price(2) fee (2)
share(2)
--------------------------------------------------------------------------------------------------------------------
Ordinary shares, par value NIS 7,179,226 $2.28 $16,368,635.28 $2,073.91
0.1 per share
====================================================================================================================
(1) The registration statement also includes an indeterminate number of the
Registrant's ordinary shares that may become offered, issuable or sold to
prevent dilution resulting from stock splits, stock dividends and similar
transactions, which are included pursuant to Rule 416 under the Securities Act
of 1933, as amended.
(2) Estimated solely for the purpose of computing the amount of the
registration fee in accordance with Rule 457(c) under the Securities Act of
1933, on the basis of the average of the high and the low prices ($2.36 and
$2.20, respectively) of the Registrant's ordinary shares as quoted on the NASDAQ
National Market on September 20, 2004.
---------------------
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.
---------------------
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
herein is being filed as a combined prospectus satisfying the requirements of
that Act and the rules and regulations thereunder for the registrant's offering
registered on its Registration Statement on Form F-3, Registration No.
333-14140. Accordingly, this Registration Statement being currently filed shall
act, upon effectiveness, as a post-effective amendment to the said earlier
Registration Statement.
================================================================================
ii
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED SEPTEMBER 21, 2004
PROSPECTUS
ATTUNITY LTD
8,083,071 Ordinary Shares
This prospectus relates to up to 8,083,071 ordinary shares that the
selling shareholders named in this prospectus or their transferees may offer
from time to time. Of the ordinary shares offered hereby, (i) 1,371,429 ordinary
shares are issuable upon conversion of $2 million of convertible promissory
notes and 480,000 ordinary shares are issuable upon exercise of warrants, that
were issued to certain of the selling shareholders pursuant to a Note and
Warrant Purchase Agreement dated March 22, 2004; (ii) 2,043,146 ordinary shares
were issued and 2,944,651 ordinary shares are issuable upon exercise of Series A
and Series B Warrants acquired by certain selling shareholders from the Special
Situations Funds; (iii) 673,845 ordinary shares are issuable upon exercise of
Series A and Series B Warrants held by the Special Situations Funds; (iv) 230,00
ordinary shares were issued to Dov Biran Holdings Ltd. in connection with an
agreement entered into in June 2001; (v) 40,000 ordinary shares are issuable
upon exercise of warrants issued in February 2004 to Gaus Investments Ltd and
R.4.B Ltd in consideration of their introducing certain investors to us; and
(vi) 300,000 ordinary shares are issuable upon exercise of warrants issued to
Plenus Technologies Ltd. in connection with a loan agreement we entered into
dated June 3, 2004. We are registering the ordinary shares for disposition by
the selling shareholders pursuant to commitments with the selling shareholders.
The registration of the ordinary shares does not necessarily mean that the
selling shareholders or their transferees will offer or sell their shares.
Attunity Ltd will not receive any additional proceeds from the sale by
the selling shareholders of the ordinary shares offered by this prospectus, and
will bear all expenses in connection with the preparation of this prospectus.
The ordinary shares of Attunity Ltd are traded on the NASDAQ National
Market under the symbol "ATTU." On September 20, 2004, the closing price of an
ordinary share of Attunity Ltd on the NASDAQ National Market was $2.36.
See "Risk Factors" beginning on page 5 to read about factors you should
consider before buying the ordinary shares of Attunity Ltd.
----------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
Prospectus dated , 2004
TABLE OF CONTENTS
-----------------
Page
----
NOTICE REGARDING FORWARD-LOOKING STATEMENTS..................................2
-------------------------------------------
PROSPECTUS SUMMARY...........................................................4
------------------
RISK FACTORS.................................................................5
------------
CAPITALIZATION AND INDEBTEDNESS.............................................15
-------------------------------
REASONS FOR THE OFFER AND USE OF PROCEEDS...................................15
-----------------------------------------
MARKET PRICE DATA...........................................................15
-----------------
SELLING SHAREHOLDERS........................................................16
--------------------
OFFER STATISTICS, EXPECTED TIME TABLE AND PLAN OF DISTRIBUTION..............20
--------------------------------------------------------------
EXPENSES ASSOCIATED WITH THE REGISTRATION...................................22
-----------------------------------------
FOREIGN EXCHANGE CONTROLS AND OTHER LIMITATIONS.............................22
-----------------------------------------------
EXPERTS.....................................................................22
-------
LEGAL MATTERS...............................................................23
-------------
MATERIAL CHANGES............................................................23
----------------
WHERE YOU CAN BEST FIND MORE INFORMATION; INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE............................................23
----------------------------------------------------------
ENFORCEABILITY OF CIVIL LIABILITIES.........................................24
-----------------------------------
In this prospectus, "we", "us", "our", the "Company" and "Attunity"
refer to Attunity Ltd, an Israeli company Attunity Ltd and its subsidiaries,
unless otherwise indicated.
We are a "foreign private issuer" as defined in Rule 3b-4 under the
Securities Exchange Act of 1934, or the Exchange Act. As a result, our proxy
solicitations are not subject to the disclosure and procedural requirements of
Regulation 14A under the Exchange Act and transactions in our equity securities
by our officers and directors are exempt from Section 16 of the Exchange Act. In
addition, we are not required under the Exchange Act to file periodic reports
and financial statements as frequently or as promptly as U.S. companies whose
securities are registered under the Exchange Act.
We publish annually an annual report on our website containing
financial statements that have been examined and reported on, with an opinion
expressed by, a qualified independent auditor or certified public accountant. We
prepare our financial statements in United States dollars and in accordance with
accounting principles generally accepted in the United States. All references to
"dollars" or "$" in this prospectus are to U.S. dollars, and all references to
"shekels" or "NIS" are to New Israeli Shekels.
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus and the documents incorporated in it by reference
contain forward-looking statements which involve known and unknown risks and
uncertainties. We include this notice for the express purpose of permitting us
to obtain the protections of the safe harbor provided by the Private Securities
Litigation Reform Act of 1995 with respect to all such forward-looking
statements. Examples of forward-looking statements include: projections of
capital expenditures, competitive pressures, revenues, growth prospects, product
development,
2
financial resources and other financial matters. You can identify these and
other forward-looking statements by the use of words such as "may," "will,"
"should," "plans," "anticipates," "believes," "estimates," "predicts,"
"intends," "potential" or the negative of such terms, or other comparable
terminology.
Our ability to predict the results of our operations or the effects of
various events on our operating results is inherently uncertain. Therefore, we
caution you to consider carefully the matters described under the caption "Risk
Factors" and certain other matters discussed in this prospectus, the documents
incorporated by reference in this prospectus, and other publicly available
sources. Such factors and many other factors beyond the control of our
management could cause our actual results, performance or achievements to be
materially different from any future results, performance or achievements that
may be expressed or implied by the forward-looking statements.
3
PROSPECTUS SUMMARY
You should read the following summary together with the more detailed
information about us, the ordinary shares that may be sold from time to time,
and our financial statements and the notes to them, all of which appear
elsewhere in this prospectus or in the documents incorporated by reference in
this prospectus.
ATTUNITY LTD
We were incorporated under the laws of the State of Israel in 1988. We
develop, market and support standards-based integration middleware for accessing
mainframe, enterprise data sources and legacy applications.
Our principal executive offices are located at Einstein Building, Tirat
Carmel, Haifa 39101, Israel, and our telephone number is (+972) 4-855-9666. Our
address on the Internet is http://www.attunity.com.
The Offering
Ordinary shares offered............. 8,083,071 shares (including 4,438,496
shares issuable upon exercise of warrants
and 1,371,429 shares issuable upon
conversion of $2 million of convertible
promissory notes)
NASDAQ National Market symbol....... "ATTU"
Use of proceeds..................... We will not receive any proceeds from the
sale of the ordinary shares offered
hereby. We will, however, receive the
proceeds from the exercise of the
warrants if and when they are exercised.
Ordinary shares outstanding......... 15,315,073 shares
Risk Factors........................ Prospective investors should
carefully consider the "Risk Factors"
beginning on page 5 before buying the
ordinary shares offered hereby.
4
RISK FACTORS
You should carefully consider the risks and uncertainties described
below before investing in our ordinary shares. Our business, prospects,
financial condition and results of operations could be adversely affected due to
any of the following risks. In that case, the value of our ordinary shares could
decline, and you could lose all or part of your investment.
Risk Factors Relating to Our Company
We have a history of operating losses and may not achieve or sustain
profitability in the future.
We incurred an operating loss in the fiscal year ended December 31,
2003 and in three of the four preceding years, although we recorded an operating
profit in the fiscal year ended December 31, 2002. We can not assure you that we
will be able to achieve or sustain profitable operations in the future.
Our operating results fluctuate significantly.
Our quarterly results have fluctuated significantly in the past and are
likely to fluctuate significantly in the future. Our future operating results
will depend on many factors, including, but not limited to, the following:
o the size and timing of significant orders and their fulfillment;
o demand for our products;
o changes in our pricing policies or those of our competitors;
o the number, timing and significance of product enhancements;
o new product announcements by us and our competitors;
o our ability to successfully market newly acquired products and
technologies;
o our ability to develop, introduce and market new and enhanced
products on a timely basis;
o changes in the level of our operating expenses;
o budgeting cycles of our customers;
o customer order deferrals in anticipation of enhancements or new
products that we or our competitors offer;
5
o product life cycles;
o software bugs and other product quality problems;
o personnel changes;
o changes in our strategy;
o seasonal trends and general domestic and international economic
and political conditions, among others;
o currency exchange rate fluctuations and economic conditions in
the geographic areas where we operate; and
o the assurance of success in marketing new products or
technologies.
Due to the foregoing factors, quarterly revenues and operating results
are difficult to forecast, and it is likely that our future operating results
will be adversely affected by these or other factors.
Revenues are also difficult to forecast because our sales cycle, from
initial evaluation to purchase, is lengthy and varies substantially from
customer to customer. We typically ship product orders shortly after receipt
and, consequently, order backlog at the beginning of any quarter has in the past
represented only a small portion of that quarter's revenues. As a result,
license revenues in any quarter depend substantially on orders booked and
shipped in that quarter.
Due to all of the foregoing, we cannot predict revenues for any future
quarter with any significant degree of accuracy. Accordingly, we believe that
period-to-period comparisons of our operating results are not necessarily
meaningful and you should not rely upon them as indications of future
performance. Although we have experienced revenue growth in the past, we may not
be able to sustain this growth rate, and you should not consider such past
growth indicative of future revenue growth, or of future operating results.
We may need to raise additional capital in the future, which may not be
available to us.
Our working capital requirements and the cash flow provided by our
operating activities are likely to vary greatly from quarter to quarter,
depending on the timing of orders and deliveries, and the payment terms offered
to our customers. We anticipate that our existing capital resources will be
adequate to satisfy our working capital and capital expenditure requirements
until at least December 31, 2005, but we may need to raise additional funds in
the future for a number of uses, including:
o implementing marketing and sales activities for our products and
services;
o expanding research and development programs;
6
o expanding investment in fixed assets; and
o hiring additional qualified personnel.
We may not be able to obtain additional funds on acceptable terms or at
all. If we cannot raise needed funds on acceptable terms, we may be required to
delay, scale back or eliminate some aspects of our operations and we may not be
able to:
o develop new products;
o enhance our existing products;
o remain current with evolving industry standards;
o take advantage of future opportunities; or
o respond to competitive pressures or unanticipated requirements.
Any equity or debt financings, if available at all, may cause dilution
to our then-existing shareholders. If additional funds are raised through the
issuance of equity securities, the net tangible book value per share of our
ordinary shares would decrease and the percentage ownership of then current
shareholders would be diluted.
Our operating results vary quarterly and seasonally.
We have often recognized a substantial portion of our revenues in the
last quarter of the year and in the last month, or even weeks or days, of a
quarter. Our expense levels are substantially based on our expectations for
future revenues and are therefore relatively fixed in the short term. If revenue
levels fall below expectations, our quarterly results are likely to be
disproportionately adversely affected because a proportionately smaller amount
of our expenses varies with our revenues.
Our operating results reflect seasonal trends and we expect to continue
to be affected by such trends in the future. We expect to continue to experience
relatively higher sales in the first and second quarters of the year and
relatively lower sales in the third quarter ending September 30, as a result of
reduced sales activity in Europe during the summer months. Due to the foregoing
factors, in some future quarter our operating results may be below the
expectations of public market analysts and investors. In such event, it is
likely that the price of our ordinary shares would be materially adversely
affected.
We are subject to risks associated with international operations.
We are based in Israel and generate a large percentage of our sales
outside the United States. Our sales in the United States accounted for 45.0%,
40.2 % and 39.3% of our total revenues for the years ended December 31, 2001,
2002 and 2003, respectively. Although we continue to expand our international
operations and commit significant management time and
7
financial resources to developing direct and indirect international sales and
support channels, we cannot be certain that we will be able to maintain or
increase international market demand for our products. To the extent that we
cannot do so in a timely manner, our business, operating results and financial
condition will be adversely affected.
International operations are subject to inherent risks, including the
following:
o the impact of possible recessionary environments in multiple
foreign markets;
o longer receivables collection periods and greater difficulty in
accounts receivable collection;
o unexpected changes in regulatory requirements;
o difficulties and costs of staffing and managing foreign
operations;
o reduced protection for intellectual property rights in some
countries;
o potentially adverse tax consequences; and
o political and economic instability.
We cannot be certain that we, our distributors or our resellers will be
able to sustain or increase revenues from international operations or that the
foregoing factors will not have a material adverse effect on our future revenues
and, as a result, our business, operating results and financial condition.
We may be adversely affected by fluctuations in currency exchange
rates. While our revenues are generally denominated in United States dollars,
the Euro and British Pound, a significant portion of our expenses are incurred
in NIS. If we were to determine that it was in our best interests to enter into
any hedging transactions in the future, there can be no assurance that we will
be able to so do or that such transactions, if entered into, will materially
reduce the effect of fluctuations in foreign currency exchange rates on our
results of operations. In addition, if for any reason exchange or price controls
or other restrictions on the conversion of foreign currencies into NIS were
imposed, our business could be adversely affected. Although exposure to currency
fluctuations to date has not had a material adverse effect on our business there
can be no assurance such fluctuations in the future will not have a material
adverse effect on revenues from international sales and, consequently our
business, operating results and financial condition.
We are subject to risks relating to proprietary rights and risks of
infringement.
We are dependent upon our proprietary software technology and we rely
primarily on a combination of copyright and trademark laws, trade secrets,
confidentiality procedures and contractual provisions to protect our proprietary
rights. Except for our trademark registrations for Attunity(R), Attunity B2B(R)
and Attunity Connect(R) in the United States, we do not have any trademark,
patent or copyright registrations. To protect our software, documentation and
other
8
written materials, we rely on trade secret and copyright laws, which afford only
limited protection. It is possible that others will develop technologies that
are similar or superior to our technology. Despite our efforts to protect our
proprietary rights, unauthorized parties may attempt to copy aspects of our
products or to obtain and use information that we regard as proprietary. It is
difficult to police the unauthorized use of products in our field, and we expect
software piracy to be a persistent problem, although we are unable to determine
the extent to which piracy of our software products exists. In addition, the
laws of some foreign countries do not protect our proprietary rights as fully as
do the laws of the United States. We cannot be certain that our means of
protecting our proprietary rights in the United States or abroad will be
adequate or that our competition will not independently develop similar
technology.
We are not aware that we have infringed any proprietary rights of third
parties. It is possible, however, that third parties will claim that we have
infringed upon their intellectual property rights. We believe that software
product developers will increasingly be subject to infringement claims as the
number of products and competitors in our industry segment grows and the
functionality of products in different industry segments overlaps. It would be
time consuming for us to defend any such claims, with or without merit, and any
such claims could:
o result in costly litigation;
o divert management's attention and resources;
o cause product shipment delays; or
o require us to enter into royalty or licensing agreements. Such
royalty or licensing agreements, if required, may not be
available on terms acceptable to us, if at all.
If there is a successful claim of infringement against us and we are
not able to license the infringed or similar technology or other intellectual
property, our business, operating results and financial condition would be
materially adversely affected.
A significant portion of our revenues are dependent on maintenance payments from
customers using legacy CorVision and Mancal 2000 software.
A significant portion of our revenues derives from annual maintenance
payments made by customers who use CorVision and Mancal 2000, which are both
legacy software products. In 2001, 2002 and 2003, these revenues on a
consolidated basis totaled $3.0 million, $2.6 million and $2.5 million,
respectively. Some of these customers may replace these legacy products with
more state-of-the-art products from other vendors and, as a result, discontinue
use of these products. This would result in a reduction in our maintenance
revenues and adversely affect our operating results.
Our products have a lengthy sales cycle.
Our customers typically use our products to deploy applications that
are critical to their business. As a result, the licensing and implementation of
our products generally involves a
9
significant commitment of attention and resources by prospective customers.
Because of the long approval process that typically accompanies strategic
initiatives or capital expenditures by companies, our sales process is often
delayed, with little or no control over any delays encountered by us. Our sales
cycle can be further extended for sales made through third party distributors.
Delay in the sales cycle of our products could result in significant
fluctuations in our quarterly operating results.
Rapid technological change may adversely affect the market acceptance of our
products and services.
We compete in a market that is characterized by rapid technological
change. The introduction of new technologies could render existing products and
services obsolete and unmarketable and could exert price pressures on our
products and services. Any future success will depend upon our ability to
address the increasingly sophisticated needs of our customers by:
o supporting existing and emerging hardware, software, databases
and networking platforms; and
o developing and introducing new and enhanced applications that
keep pace with such technological developments, emerging new
markets and changing customer requirements.
Our products may contain defects that may be costly to correct, delay market
acceptance of our products and expose us to litigation.
Despite testing by us, errors may be found in our software products. If
defects are discovered, we may not be able to successfully correct them in a
timely manner or at all. Defects and failures in our products could result in a
loss of, or delay in, market acceptance of our products and could damage our
reputation. Although our standard license agreement with our customers contains
provisions designed to limit our exposure to potential product liability claims,
it is possible that these provisions may not be effective or enforceable under
the laws of some jurisdictions, and we could fail to realize revenues and suffer
damage to our reputation as a result of, or in defense of, a substantial claim.
We currently do not carry product liability insurance for our products.
We are dependent on our senior management. Any loss of the services of our
senior management would negatively affect our business.
Our future success depends to a large extent on the continued services
of our senior management and key personnel. Any loss of the services of members
of our senior management or other key personnel would negatively affect our
business.
10
Our results may be adversely affected by competition.
The market for our software products is fragmented and is intensely
competitive. Competition in the industry is generally based on product
performance, depth of product line, technical support and price. We compete both
with international and local software providers, many of whom have significantly
greater financial, technical and marketing resources than us. We anticipate
continued growth and competition in the software products market and,
consequently, the entrance of new competitors into the market. Our existing and
potential competitors may be able to develop software products and services that
are as effective as, or more effective or easier to use than those offered by
us. Such existing and potential competitors may also enjoy substantial
advantages over us in terms of research and development expertise, manufacturing
efficiency, name recognition, sales and marketing expertise and distribution
channels. There can be no assurance that we will be able to compete successfully
against current or future competitors or that competition will not have a
material adverse effect on our future revenues and, consequently, on our
business, operating results and financial condition.
We do not intend to pay cash dividends.
Our policy is to retain earnings for use in our business and, for this
reason, we do not intend to pay cash dividends on the ordinary shares in the
foreseeable future.
Risk Factors Relating to Our Ordinary Shares
Our share price has been volatile in the past and may decline in the future.
Our ordinary shares have experienced significant market price and
volume fluctuations in the past and may experience significant market price and
volume fluctuations in the future in response to factors such as the following,
some of which are beyond our control:
o quarterly variations in our operating results;
o operating results that vary from the expectations of securities
analysts and investors;
o changes in expectations as to our future financial performance,
including financial estimates by securities analysts and
investors;
o announcements of technological innovations or new products by us
or our competitors;
o announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
o changes in the status of our intellectual property rights;
11
o announcements by third parties of significant claims or
proceedings against us;
o additions or departures of key personnel;
o future sales of our ordinary shares; and
o stock market price and volume fluctuations.
Domestic and international stock markets often experience extreme price
and volume fluctuations. Market fluctuations, as well as general political and
economic conditions, such as a recession or interest rate or currency rate
fluctuations or political events or hostilities in or surrounding Israel, could
adversely affect the market price of our ordinary shares.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation could result in substantial costs and divert management's attention
and resources.
Risk Factors Relating to Our Operations in Israel
Conducting business in Israel entails special risks.
We are incorporated under the laws of, and our executive offices and
research and development facilities are located in, the State of Israel.
Although most of our sales are made to customers outside Israel, we are directly
influenced by the political, economic and military conditions affecting Israel.
Specifically, we could be adversely affected by any major hostilities involving
Israel, a full or partial mobilization of the reserve forces of the Israeli
army, the interruption or curtailment of trade between Israel and its present
trading partners, or a significant downturn in the economic or financial
condition of Israel.
Since the establishment of the State of Israel in 1948, a number of
armed conflicts have taken place between Israel and its Arab neighbors, and a
state of hostility, varying from time to time in intensity and degree, has led
to security and economic problems for Israel. Since September 2000, there has
been a marked increase in violence, civil unrest and hostility, including armed
clashes, between the State of Israel and the Palestinians, and acts of terror
have been committed inside Israel and against Israeli targets in the West Bank
and Gaza. There is no indication as to how long the current hostilities will
last or whether there will be any further escalation. Any further escalation in
these hostilities or any future armed conflict, political instability or
violence in the region may have a negative effect on our business condition,
harm our results of operations and adversely affect our share price.
Furthermore, there are a number of countries that restrict business with Israel
or Israeli companies. Restrictive laws or policies of those countries directed
towards Israel or Israeli businesses may have an adverse impact on our
operations, our financial results or the expansion of our business.
12
Our results of operations may be negatively affected by the obligation of our
personnel to perform military service.
Many of our executive officers and employees in Israel are obligated to
perform up to 36 days, depending on rank and position, of military reserve duty
annually and are subject to being called for active duty under emergency
circumstances. If a military conflict or war arises, these individuals could be
required to serve in the military for extended periods of time. Our operations
could be disrupted by the absence for a significant period of one or more of our
executive officers or key employees or a significant number of other employees
due to military service. Any disruption in our operations could adversely affect
our business.
Economic conditions in Israel.
In recent years Israel has been going through a period of recession in
economic activity, resulting in low growth rates and growing unemployment. Our
operations could be adversely affected if the economic conditions in Israel
continue to deteriorate. In addition, due to significant economic measures
proposed by the Israeli Government, there have been strikes and work stoppages
in 2003 and 2004, affecting banks, airports and ports. These strikes have had an
adverse effect on the Israeli economy and on business, including our ability to
deliver products to our customers. Following the passage by the Israeli
Parliament of laws to implement the economic measures, the Israeli trade unions
have threatened further strikes or work-stoppages, and these may have a material
adverse effect on the Israeli economy and on us.
Our financial results may be adversely affected by inflation and currency
fluctuations.
Since we report our financial results in dollars, fluctuations in rates
of exchange between the dollar and non-dollar currencies may have a material
adverse affect on our results of operations. A portion of our expenses are paid
in NIS (primarily salaries) and are influenced by the timing of, and the extent
to which, any increase in the rate of inflation in Israel over the rate of
inflation in the United States is not offset by the devaluation of the NIS in
relation to the dollar. We believe that the rate of inflation in Israel has not
had a material adverse effect on our business to date However, our dollar costs
in Israel will increase if inflation in Israel exceeds the devaluation of the
NIS against the dollar or if the timing of such devaluation lags behind
inflation in Israel. Over time, the NIS has been devalued against the dollar,
generally reflecting inflation rate differentials. Likewise, our operations
could be adversely affected if we are unable to guard against currency
fluctuations in the future. We do not currently engage in any currency hedging
transactions intended to reduce the effect of fluctuations in foreign currency
exchange rates on our results of operations. We cannot guarantee that we will
enter into such transactions in the future or that such measures will adequately
protect us from serious harm due to the impact of inflation in Israel.
We cannot guarantee continuation of government programs and tax benefits.
We have in the past received certain Israeli government grants and
currently enjoy certain tax benefits in Israel. To remain eligible for these
grants and tax benefits, we must continue to
13
meet certain conditions, including making some specified investments in fixed
assets. If we fail to comply with these conditions in the future, the benefits
we receive could be canceled and we may have to refund payments previously
received under these programs (with interest and linkage differentials) or pay
certain taxes. We cannot guarantee that these programs and tax benefits will be
continued in the future, at their current levels or at all. If these programs
and tax benefits are ended, our business, financial condition and results of
operations could be negatively affected.
Service and enforcement of legal process on us and our directors and officers
may be difficult to obtain.
Service of process upon our directors and officers and the Israeli
experts named herein, many of whom reside outside the United States, may be
difficult to obtain within the United States. Furthermore, since a substantial
portion of our assets, almost all of our directors, some of the officers and the
Israeli experts named in this annual report are located outside the United
States, any judgment obtained in the United States against us or these
individuals or entities may not be collectible within the United States.
There is doubt as to the enforceability of civil liabilities under the
Securities Act and the Securities Exchange Act in original actions instituted in
Israel. However, subject to certain time limitations and other conditions,
Israeli courts may enforce final judgments of U.S. courts for liquidated amounts
in civil matters, including judgments based upon the civil liability provisions
of those Acts.
Provisions of Israeli law may delay, prevent or make difficult an acquisition of
us, which could prevent a change of control and therefore depress the price of
our shares.
Provisions of Israeli corporate and tax law may have the effect of
delaying, preventing or making more difficult a merger with, or other
acquisition of, us. This could cause our ordinary shares to trade at prices
below the price for which third parties might be willing to pay to gain control
of us. Third parties who are otherwise willing to pay a premium over prevailing
market prices to gain control of us may be unable or unwilling to do so because
of these provisions of Israeli law.
Your rights and responsibilities as a shareholder will be governed by Israeli
law and differ in some respects from the rights and responsibilities of
shareholders under U.S. law.
We are incorporated under Israeli law. The rights and responsibilities
of holders of our ordinary shares are governed by our memorandum of association,
our articles of association and by Israeli law. These rights and
responsibilities differ in some respects from the rights and responsibilities of
shareholders in typical U.S. corporations. In particular, a shareholder of an
Israeli company has a duty to act in good faith toward the company and other
shareholders and to refrain from abusing his power in the company, including,
among other things, in voting at the general meeting of shareholders on certain
matters.
14
CAPITALIZATION AND INDEBTEDNESS
The table below sets forth the capitalization of our company as of June
30, 2004, and as adjusted to give effect to the issuance of the convertible
promissory notes to certain of the selling shareholders.
June 30, 2004
-----------------------------------------
Actual As Adjusted
-------------------- -----------------
(in thousands)
Short-term bank credit............. $ ----- $ ----
Long-term debt..................... 200 200
Total shareholders' equity......... $ 13,123 $ 13,123
-------------------- -----------------
REASONS FOR THE OFFER AND USE OF PROCEEDS
This prospectus relates to the disposition of up to 8,083,071 of our
ordinary shares, of which 2,273,146 ordinary shares were issued, 4,438,496
ordinary shares are issuable upon exercise of certain warrants and 1,371,429
ordinary shares are issuable upon conversion of certain convertible promissory
notes. We will not receive any of the proceeds from the sale by the selling
shareholders of our ordinary shares. We will, however, receive the proceeds from
the exercise of the warrants if and when they are exercised.
MARKET PRICE DATA
Our ordinary shares have traded on the NASDAQ National Market since our
initial public offering on December 17, 1992.
Quarterly Stock Information
The following table sets forth, for each of the full financial quarters
in the years indicated, the high ask and low bid prices of our ordinary shares,
as quoted on the NASDAQ National Market.
High Low
-------------- --------------
2002:
-----
First Quarter $1.55 $0.72
Second Quarter................... $1.94 $0.90
Third Quarter.................... $2.12 $0.90
Fourth Quarter................... $1.34 $0.50
2003:
-----
First Quarter $1.05 $0.80
Second Quarter................... $1.59 $0.90
Third Quarter.................... $1.48 $1.00
Fourth Quarter................... $2.22 $1.05
15
2004:
-----
First Quarter.................... $3.62 $2.08
Second Quarter .................. $3.36 $2.30
Monthly Stock Information
The following table sets forth, for each of the most recent six months,
the high ask and low bid prices of our ordinary shares, as quoted on the NASDAQ
National Market.
Month High Low
----- -------------------- --------------------
March 2004........................ $3.44 $2.60
April 2004........................ $3.36 $2.62
May 2004.......................... $2.88 $2.33
June 2004......................... $2.84 $2.30
July 2004......................... $2.90 $2.32
August 2004....................... $2.60 $1.96
SELLING SHAREHOLDERS
The registration statement of which this prospectus forms a part covers
up to 8,083,071 ordinary shares. Of such shares, 1,371,429 ordinary shares are
issuable upon conversion of $2 million of convertible promissory notes and
480,000 ordinary shares are issuable upon exercise of warrants, such promissory
notes and warrants which were issued to certain of the selling shareholders
pursuant to a Note and Warrant Purchase Agreement dated March 22, 2004. An
additional 4,987,797 ordinary shares may be sold by certain selling shareholders
who acquired 2,043,146 ordinary shares and warrants to purchase an additional
2,944,651 ordinary shares from the Special Situations Funds in December 2003.
Such warrants have exercise prices of $1.75 and $2.00 per share, subject to
anti-dilution adjustments, and are exercisable until October 24, 2006 (as
extended by one year under the Note and Warrant Purchase Agreement). A further
673,845 ordinary shares are issuable upon exercise of warrants held by the
Special Situations Funds. These warrants have an exercise price of $1.75 per
share. An additional 230,000 ordinary shares may be sold by Dov Biran Holdings
Ltd., a former shareholder of Bridges For Islands Ltd., which shares were issued
in connection with an agreement we entered into in June 2001 with former
shareholders of Bridges For Islands Ltd. An additional 40,000 ordinary shares
are issuable pursuant to warrants issued to Gaus Investments Ltd. and R.4.B Ltd.
in consideration of their introducing certain investors to us. These warrants
have an exercise price of $1.92 per share and are exercisable until February 4,
2007. An additional 300,000 ordinary shares are issuable pursuant to warrants
issued to Plenus Technologies Ltd. in connection with a loan agreement we
entered into in June 2004. These warrants have an exercise price of $3.00 per
share, subject to anti-dilution adjustments and are exercisable until June 2,
2009. We are registering the ordinary shares in order to permit the selling
shareholders to dispose of the shares from time to time.
The table below lists the selling shareholders and other information
regarding the beneficial ownership of the ordinary shares by each of the selling
shareholders. The second and third columns list the number and percentage of
ordinary shares beneficially owned by each
16
selling shareholder, based on each selling shareholder's ownership of ordinary
shares, the promissory notes and warrants as of September 19, 2004, assuming
full conversion of the promissory notes and full exercise of the warrants held
by each selling shareholder on that date, without regard to any limitations on
exercise.
The fourth column lists the number of ordinary shares being offered by
this prospectus by each of the selling shareholders.
In accordance with the terms of registration rights agreements with
certain of the selling shareholders, this prospectus generally covers ordinary
shares in an amount at least equal to (i) 120% of the maximum number of ordinary
shares issuable to certain of the selling shareholders upon conversion of the
promissory notes issued to them pursuant to the Note and Warrant Purchase
Agreement, (ii) the number of ordinary shares issuable to certain of the selling
shareholders upon exercise of the warrants to purchase 480,000 of our ordinary
shares that were sold to them pursuant to the Note and Warrant Purchase
Agreement, (iii) 2,043,146 ordinary shares and the number of ordinary shares
issuable to certain of the selling shareholders upon exercise of the Series A
and Series B Warrants to purchase 2,944,651 of our ordinary shares, such shares
and warrants that were purchased by them from the Special Situations Funds, (iv)
673,845 ordinary shares issuable upon exercise of the Series A and Series B
Warrants held by the Special Situations Funds, (v) 230,000 ordinary shares that
were issued to Dov Biran Holdings Ltd., a former shareholder of Bridges For
Islands Ltd., in connection with an agreement entered into in June 2001; (vi)
40,000 ordinary shares are issuable upon exercise of warrants held by Gaus
Investments Ltd and R.4.B Ltd issued in consideration for the contribution of
such parties in introducing investors to us, and (viii) up to 300,000 ordinary
shares are issuable upon exercise of warrants issued to Plenus Technologies Ltd.
in connection with a Loan Agreement dated June 3, 2004; determined as if the
outstanding promissory notes and warrants were converted or exercised in full as
of the trading day immediately preceding the date this registration statement
was initially filed with the Securities and Exchange Commission and to provide
for additional amounts due under the Purchase Agreement. Depending on the actual
date that the promissory notes will be converted, and because the exercise price
of the warrants may be adjusted, the number of ordinary shares that will
actually be issued may be more or less than the number of ordinary shares being
offered by this prospectus.
The fifth and sixth columns of the following table assume the sale of
all of the ordinary shares offered by the selling shareholders pursuant to this
prospectus. The selling shareholders may sell all, some or none of their
ordinary shares in this offering.
Percentage of
Percentage of Number of Ordinary
Number of Ordinary Ordinary Shares Maximum Number of Ordinary Shares Shares
Shares Beneficially Ordinary Shares Beneficially Beneficially
Name of Selling Beneficially Owned Owned Prior to Offered Pursuant Owned After Owned After
Shareholder Prior to Offering Offering to this Prospectus Offering Offering
-------------------------------------------------------------------------------------------------------------------------
Shimon Alon 1,320,098 (1) 8.12% 1,320,098 0 0%
Ron Zuckerman 1,270,098 (2) 7.84% 1,270,098 0 0%
Aki Ratner 708,740 (3) 4.47% 708,740 0 0%
GF Capital Management
& Advisors, LLC 702,057 (4) 4.45% 702,057 0 0%
17
Peter Luggen 468,040 (5) 2.99% 468,040 0 0%
Sharon Kotlicki-Pery 585,049 (6) 3.72% 585,049 0 0%
Genia Kotlicki 292,523 (7) 1.89% 292,523 0 0%
Avishai Kotlicki 292,523 (8) 1.89% 292,523 0 0%
Barrossa Finance Ltd. 1,170,098 (9) 7.26% 1,170,098 0 0%
Yossi Milstein 15,000 (10) 0.10% 15,000 0 0%
Dov Biran Holdings
Ltd. (11) 863,705 5.64% 230,000 633,705 4.14%
Dov Biran 15,015 (12) 0.10% 15,000 15 0.00%
Special Situations
Fund III, L.P.(*) 419,293 (13) 2.66% 419,293 0 0%
Special Situations
Private Equity Fund,
L.P.(*) 123,480 (14) 0.80% 123,480 0 0%
Special Situations
Technology Fund,
L.P.(*) 8,029 (15) 0.05% 8,029 0 0%
Special Situations
Cayman Fund, L.P.(*) 80,121 (16) 0.52% 80,121 0 0%
Special Situations
Technology Fund II,
L.P.(*) 42,922 (17) 0.28% 42,922 0 0%
Gaus Investments Ltd 131,000 (18) 0.85% 20,000 111,000 0.72%
R.4.B Ltd. 20,000 (19) 0.13% 20,000 0 0%
Plenus Technologies Ltd 300,000 (20) 1.92% 300,000 0 0%
--------------
(1) Includes 252,343 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 150,000 ordinary shares issuable
upon the exercise of currently exercisable warrants and 406,362 ordinary
shares issuable upon exercise of currently exercisable Series A Warrants
and 135,454 ordinary shares issuable upon currently exercisable of Series B
Warrants.
(2) Includes 252,343 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 100,000 ordinary shares issuable
upon the exercise of currently exercisable warrants and 406,363 ordinary
shares issuable upon exercise of currently exercisable Series A Warrants
and 135,454 ordinary shares issuable upon currently exercisable of Series B
Warrants.
(3) Includes 109,716 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 200,000 ordinary shares issuable
upon the exercise of currently exercisable warrants and 176,679 ordinary
shares issuable upon exercise of currently exercisable Series A Warrants
and 58,893 ordinary shares issuable upon currently exercisable of Series B
Warrants.
18
(4) Includes 151,405 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 243,817 ordinary shares issuable
upon exercise of currently exercisable Series A Warrants and 81,272
ordinary shares issuable upon currently exercisable of Series B Warrants.
(5) Includes 100,937 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 162,545 ordinary shares issuable
upon exercise of currently exercisable Series A Warrants and 54,182
ordinary shares issuable upon currently exercisable of Series B Warrants.
(6) Includes 126,172 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 203,181 ordinary shares issuable
upon exercise of currently exercisable Series A Warrants and 67,727
ordinary shares issuable upon currently exercisable of Series B Warrants.
(7) Includes 63,085 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 101,590 ordinary shares issuable
upon exercise of currently exercisable Series A Warrants and 33,863
ordinary shares issuable upon currently exercisable of Series B Warrants.
(8) Includes 63,085 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 101,590 ordinary shares issuable
upon exercise of currently exercisable Series A Warrants and 33,863
ordinary shares issuable upon currently exercisable of Series B Warrants.
(9) Includes 252,343 ordinary shares issuable upon the conversion of a
currently convertible promissory note and 406,362 ordinary shares issuable
upon exercise of currently exercisable Series A Warrants and 135,454
ordinary shares issuable upon currently exercisable of Series B Warrants.
(10) Includes 15,000 ordinary shares issuable upon the exercise of currently
exercisable warrants.
(11) Dov Biran Holdings Ltd. is a corporation, whose outstanding shares are 50%
owned by Dr. Dov Biran, a director of our company, and 50% owned by his
wife, Mrs. Penina Biran.
(12) Includes 15,000 ordinary shares issuable upon the exercise of currently
exercisable warrants.
(13) Includes 281,524 ordinary shares issuable upon exercise of currently
exercisable Series A Warrants and 137,769 ordinary shares issuable upon
currently exercisable of Series B Warrants.
(14) Includes 78,923 ordinary shares issuable upon exercise of currently
exercisable Series A Warrants and 44,557 ordinary shares issuable upon
currently exercisable of Series B Warrants.
(15) Includes 4,823 ordinary shares issuable upon exercise of currently
exercisable Series A Warrants and 3,206 ordinary shares issuable upon
currently exercisable of Series B Warrants.
(16) Includes 55,483 ordinary shares issuable upon exercise of currently
exercisable Series A Warrants and 24,638 ordinary shares issuable upon
currently exercisable of Series B Warrants.
(17) Includes 27,715 ordinary shares issuable upon exercise of currently
exercisable Series A Warrants and 15,207 ordinary shares issuable upon
currently exercisable of Series B Warrants.
(18) Includes 20,000 ordinary shares issuable upon the exercise of currently
exercisable warrants at $1.92 per share.
(19) Includes 20,000 ordinary shares issuable upon the exercise of currently
exercisable warrants at $1.92 per share.
(20) Issuable upon exercise of warrants currently exercisable at $3.00 per
share.
(*) MGP Advisors Limited is the general partner of Special Situations Fund III,
L.P. AWM Investment Company, Inc. is the general partner of MGP Advisors
Limited and the general partner
of and investment adviser to Special Situations Cayman Fund, L.P. SST
Advisers, L.L.C. is the general partner of and investment adviser to
Special Situations Technology Fund, L.P. MG Advisers, L.L.C. is the general
partner of and investment adviser to Special Situations Private Equity
Fund, L.P. Austin W. Marxe and David M. Greenhouse are the principal owners
of MGP Advisers Limited, AWM Investment Company, Inc., SST Advisers, L.L.C.
and MG Advisers, L.L.C. and are principally responsible for the selection,
acquisition and disposition of the portfolio securities by each investment
adviser on behalf of its fund.
OFFER STATISTICS, EXPECTED TIME TABLE AND PLAN OF DISTRIBUTION
We are registering the ordinary shares offered hereby on behalf of the
selling shareholders. As used herein, "selling shareholders" includes donees,
pledgees, transferees or other successors-in-interest selling shares received
after the date of this prospectus from a named selling shareholder as a gift,
pledge, partnership distribution or other transfer. All costs, expenses and fees
in connection with the registration of the shares offered by this prospectus
will be borne by our company, other than brokerage commissions and similar
selling expenses, if any, attributable to the sale of shares offered hereby
which will be borne by the selling shareholders. Sales of the shares offered
hereby may be effected by selling shareholders from time to time in one or more
types of transactions (which may include block transactions) on the NASDAQ
National Market at prevailing market prices, in the over-the-counter market, in
negotiated transactions, through publicly or privately negotiated put or call
options transactions relating to the shares offered hereby, through short sales
of the shares offered hereby (including the closing of any open short position),
or a combination of such methods of sale, at market prices prevailing at the
time of sale, or at negotiated prices. Such transactions may or may not involve
brokers or dealers. The selling shareholders have advised us that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there an underwriter or coordinating broker acting in connection with the
proposed sale of the shares offered hereby by the selling shareholders.
The selling shareholders may enter into hedging transactions with
regard to the shares offered hereby. In connection with such transactions the
counterparties to such transactions may engage in short sales of the shares
offered hereby or of securities convertible into or exchangeable for such shares
in the course of hedging positions they assume with selling shareholders. The
selling shareholders may also enter into other transactions which require the
delivery of the shares offered by this prospectus, which shares such
counterparties may resell pursuant to this prospectus (as amended or
supplemented, if necessary, to reflect such transaction).
The selling shareholders may effect these transactions by selling the
shares offered hereby directly to purchasers or to or through broker-dealers,
which may act as agents or principals. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling shareholders and/or the purchasers of the shares offered hereby for whom
such broker-dealers may act as agents or to whom they sell as principal, or both
(which compensation as to a particular broker-dealer might be in excess of
customary brokerage commissions).
20
The selling shareholders and any broker-dealers that act in connection
with the sale of the shares offered hereby might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by such broker-dealers and any profit on the disposition of the shares
offered hereby sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. We have agreed
to indemnify each selling shareholder against certain liabilities, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares offered hereby against certain
liabilities, including liabilities arising under the Securities Act.
Because selling shareholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
We have informed the selling shareholders that the anti-manipulative provisions
of Regulation M promulgated under the Exchange Act may apply to their sales in
the market.
Selling shareholders also may resell all or a portion of the shares
offered hereby in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of Rule 144 or another exemption under the Securities Act.
Upon our being notified by a selling shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
offered hereby through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the
Securities Act, disclosing:
o the name of each such selling shareholder and of the
participating broker-dealer(s);
o the number of shares involved;
o the initial price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable;
o that such broker-dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in
this prospectus; and
o other facts material to the transaction.
In addition, upon our being notified by a selling shareholder that a
donee, pledgee, transferee or other successor-in-interest intends to sell more
than 500 shares, a supplement to this prospectus will be filed.
21
EXPENSES ASSOCIATED WITH THE REGISTRATION
We have agreed to bear all expenses relating to the registration of the
ordinary shares registered pursuant to the registration statement of which this
prospectus is a part. We estimate these expenses to be approximately $33,600,
which include the following categories of expenses:
SEC registration fee............................. $ 2,073.91
Printing and photocopying fees................... 1,000
Legal fees and expenses ......................... 20,000
Accounting fees and expenses..................... 10,000
Transfer agent and registrar fees and expenses... 500
Miscellaneous expenses .......................... 26.09
------------------
Total Expenses.......................... $ 33,600.00
------------------
FOREIGN EXCHANGE CONTROLS AND OTHER LIMITATIONS
Israeli law and regulations do not impose any material foreign exchange
restrictions on non-Israeli holders of our ordinary shares. In May 1998, a new
"general permit" was issued under the Israeli Currency Control Law, 1978, which
removed most of the restrictions that previously existed under such law, and
enabled Israeli citizens to freely invest outside of Israel and freely convert
Israeli currency into non-Israeli currencies.
Non-residents of Israel who purchase our ordinary shares will be able
to convert dividends, if any, thereon, and any amounts payable upon our
dissolution, liquidation or winding up, as well as the proceeds of any sale in
Israel of our ordinary shares to an Israeli resident, into freely repatriable
dollars, at the exchange rate prevailing at the time of conversion, provided
that the Israeli income tax has been withheld (or paid) with respect to such
amounts or an exemption has been obtained.
EXPERTS
Our consolidated financial statements included in our Form 20-F for the
year ended December 31, 2003 have been audited by Kost Forer Gabbay & Kasierer,
a Member of Ernst & Young Global, independent registered public accounting firm,
as set forth in their report thereon and incorporated in this prospectus by
reference. Such consolidated financial statements are incorporated by reference
in reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
22
LEGAL MATTERS
Certain legal matters in connection with the registration of the
ordinary shares hereunder with respect to Israeli law will be passed upon for us
by Efrati, Galili & Co., Tel-Aviv, Israel, our Israeli counsel.
MATERIAL CHANGES
Except as otherwise described our Annual Report on Form 20-F for the
fiscal year ended December 31, 2003 and in our Reports on Form 6-K filed under
the Exchange Act and incorporated by reference herein, no reportable material
changes have occurred since December 31, 2003.
WHERE YOU CAN BEST FIND MORE INFORMATION; INCORPORATION OF
CERTAIN INFORMATION BY REFERENCE
This prospectus is a part of two registration statements on Form F-3,
Registration Nos. 333-14140 and 333- , which we filed with the Securities and
Exchange Commission, or SEC, under the Securities Act of 1933. As permitted by
the rules and regulations of the SEC, this prospectus does not contain all of
the information contained in the registration statements and the exhibits and
schedules thereto. As such we make reference in this prospectus to the
registration statements and to the exhibits and schedules thereto. For further
information about us and about the securities we hereby offer, you should
consult the registration statements and the exhibits and schedules thereto. You
should be aware that statements contained in this prospectus concerning the
provisions of any documents filed as an exhibit to the registration statements
or otherwise filed with the SEC are not necessarily complete, and in each
instance reference is made to the copy of such document so filed. Each such
statement is qualified in its entirety by such reference.
We file annual and special reports and other information with the SEC
(Commission File Number 000-20892). These filings contain important information
which does not appear in this prospectus. For further information about us, you
may read and copy these filings at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the public reference room by calling the SEC at 1-800-SEC-0330, and
may obtain copies of our filings from the public reference room by calling (202)
942-8090.
The SEC allows us to "incorporate by reference" information into this
prospectus, which means that we can disclose important information to you by
referring you to other documents which we have filed or will file with the SEC.
We are incorporating by reference in this prospectus the documents listed below
and all amendments or supplements we may file to such documents, as well as any
future filings we may make with the SEC on Form 20-F under the Exchange Act
before the time that all of the securities offered by this prospectus have been
sold or de-registered.
o Our Annual Report on Form 20-F for the fiscal year ended December
31, 2003; and
23
o Our Reports on Form 6-K submitted to the SEC on January 23, 2004,
January 29, 2004, February 5, 2004, March 3, 2004, March 9, 2004,
March 11, 2004, March 25, 2004, March 31, 2004, May 11, 2004,
July 30, 2004, August 10, 2004, August 16, August 17, 2004,
August 23, 2004, August 31, 2004 and September 10, 2004.
The description of our ordinary shares contained in Item 1 of our
registration statement on Form 8-A filed with the SEC on December 17, 1991 under
the Exchange Act and any amendment or report filed for the purpose of updating
that description.
In addition, we may incorporate by reference into this prospectus our
reports on Form 6-K filed after the date of this prospectus (and before the time
that all of the securities offered by this prospectus have been sold or
de-registered) if we identify in the report that it is being incorporated by
reference in this prospectus.
Certain statements in and portions of this prospectus update and
replace information in the above listed documents incorporated by reference.
Likewise, statements in or portions of a future document incorporated by
reference in this prospectus may update and replace statements in and portions
of this prospectus or the above listed documents.
We shall provide you without charge, upon your written or oral request,
a copy of any of the documents incorporated by reference in this prospectus,
other than exhibits to such documents which are not specifically incorporated by
reference into such documents. Please direct your written or telephone requests
to Attunity Ltd., Einstein Building, Tirat Carmel 39101, Haifa, Israel, Attn.:
Company Secretary, telephone number +972-4-855-9666. You may also obtain
information about us by visiting our website at http://www.attunity.com.
Information contained in our website is not part of this prospectus.
We are an Israeli company and are a "foreign private issuer" as defined
in Rule 3b-4 under the Securities Exchange Act of 1934. As a result, (1) our
proxy solicitations are not subject to the disclosure and procedural
requirements of Regulation 14A under the Exchange Act, (2) transactions in our
equity securities by our officers and directors are exempt from Section 16 of
the Exchange Act, and (3) until November 4, 2002, we were not required to make,
and did not make, our SEC filings electronically, so that those filings are not
available on the SEC's website. However, since that date, we have been making
all required filings with the SEC electronically, and these filings are
available over the Internet at the SEC's website at http://www.sec.gov.
ENFORCEABILITY OF CIVIL LIABILITIES
Service of process upon us and our directors and officers and the
Israeli experts named in this prospectus, many of whom reside outside the United
States, may be difficult to obtain within the United States. Furthermore, since
a substantial portion of our assets, almost all of our directors, some of the
officers and the Israeli experts are located outside the United States, any
judgment obtained in the United States against us or these individuals or
entities may not be collectible within the United States.
24
There is doubt as to the enforceability of civil liabilities under the
Securities Act and the Securities Exchange Act in original actions instituted in
Israel. However, subject to certain time limitations and other conditions,
Israeli courts may enforce final judgments of U.S. courts for liquidated amounts
in civil matters, including judgments based upon the civil liability provisions
of those Acts.
We have irrevocably appointed our subsidiary, Attunity Inc. as our
agent to receive service of process in any action against us in the state and
federal courts sitting in the City of New York, Borough of Manhattan arising out
of this offering or any purchase or sale of securities in connection therewith.
We have not given consent for this agent to accept service of process in
connection with any other claim.
25
ATTUNITY LTD
8,083,071 Ordinary Shares
----------------------------
PROSPECTUS
----------------------------
You should rely only on the information
incorporated by reference or provided in this
prospectus. We have not authorized anyone to
provide you with different information. We
are not making any offer to sell or buy any
of the securities in any state where the
offer is not permitted. You should not assume
that the information in this prospectus is
accurate as of any date other than the date
that appears below.
2004
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 8. Indemnification of Directors and Officers
The Israeli Companies Law provides that an Israeli company cannot
exculpate an office holder from liability with respect to a breach of his duty
of loyalty, but may, if permitted by its articles of association, exculpate in
advance an office holder from his liability to the company, in whole or in part,
with respect to a breach of his duty of care. Our articles of association permit
us to exculpate an officer to the maximum extent permitted by the Israeli
Companies Law.
The Israeli Companies Law provides that a company may, if permitted by
its articles of association, enter into a contract for the insurance of the
liability of any of its office holders with respect to an act performed by him
in his capacity as an office holder, for:
o breach of his duty of care to us or to another person;
o breach of his duty of loyalty to us, provided that the office
holder acted in good faith and had reasonable cause to assume
that his act would not prejudice our interests; or
o a financial liability imposed upon him in favor of another
person.
Our articles of association provide that we may enter into a contract
for the insurance of the liability, in whole in part, of any of our office
holders, to the maximum extent permitted by the Israeli Companies Law.
In addition, our articles of association provide that we may, with
respect to an act performed by an office holder in such capacity, (i) undertake
in advance to indemnify an office holder, provided that the undertaking shall be
restricted to foreseeable events and up to a feasible amount, as determined by
our board of directors; and (ii) indemnify an office holder retroactively;
against:
o a financial liability imposed on him in favor of another person
by any judgment, including a settlement or an arbitrator's award
approved by a court; and
o reasonable litigation expenses, including attorneys' fees,
expended by such office holder or charged to him by a court, in a
proceeding we instituted against him or instituted on our behalf
or by another person, or in a criminal charge from which he was
acquitted or in which he was convicted of an offense that does
not require proof of criminal intent.
These provisions are specifically limited in their scope by the Israeli
Companies Law, which provides that a company may not indemnify an office holder,
nor exculpate an office holder, nor enter into an insurance contract which would
provide coverage for any monetary liability incurred as a result of certain
improper actions.
II-1
Pursuant to the Israeli Companies Law, exculpation of, procurement of
insurance coverage for, and an undertaking to indemnify or indemnification of,
our office holders must be approved by our audit committee and our board of
directors and, if such office holder is a director, also by our shareholders.
We have undertaken to indemnify our office holders to the fullest
extent permitted by law. We currently maintain directors and officers liability
insurance with a per claim and aggregate coverage limit of $10 million including
legal costs incurred in Israel.
Item 9. Exhibits
Exhibit No. Description of Exhibit
----------- ----------------------
4.1 Memorandum of Association of the Registrant (1)
4.2 Articles of Association of the Registrant, as amended (2)
4.3 Specimen of Ordinary Share Certificate (1)
4.4 Note and Warrant Purchase Agreement dated March 22, 2004, among the Registrant and the
purchasers signatory thereto (3)
4.5 Registration Rights Agreement dated May 4, 2004, among the Registrant and the purchasers
signatory thereto (4)
4.6 Form of Convertible Promissory Note (5)
4.7 Form of Warrant (6)
4.8 Form of Series A Warrant (7)
4.9 Form of Series B Warrant (7)
4.10 Form of October 2001 Placement Agent's Warrant (7)
4.11 Form of Warrant issued to Gaus Investments Ltd. and R.4.B Ltd. (8)
4.12 Loan Agreement dated June 3, 2004 among the Registrant and Plenus Technologies, Ltd. (8)
4.13 Form of Warrant issued to Plenus Technologies Ltd. (8)
4.14 Amendment to Share Purchase Agreement by and between Attunity Ltd, Bridges For Islands
Ltd., Dov Biran, Dr. Dov Biran Holdings Ltd. and Poalim Capital Markets and Investments
Ltd. (2)
5.1 Opinion of Efrati, Galili & Co. regarding legality of the securities being registered
23.1 Consent of Kost Forer Gabbay & Kasierer, a member of Ernst and Young Global
23.2 Consent of Efrati, Galili & Co. (contained in Exhibit 5.1)
24.1 Power of Attorney (included in the signature page of the Registration Statement)
-------------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form F-1,
registration number 33-54020, and incorporated herein by reference.
(2) Filed as an exhibit to the Registrant's annual report on Form 20-F for the
year ended December 31, 2000, and incorporated herein by reference.
(3) Incorporated by reference to Item 3 of the Registrant's Report on Form 6-K
for the month of March, 2004 (SEC File No. 000-20892).
(4) Incorporated by reference to Item 6 of the Registrant's Report on Form 6-K
for the month of April, 2004 (SEC File No. 000-20892).
II-2
(5) Incorporated by reference to Item 5 of the Registrant's Report on Form 6-K
for the month of April, 2004 (SEC File No. 000-20892).
(6) Incorporated by reference to Item 4 of the Registrant's Report on Form 6-K
for the month of April, 2004 (SEC File No. 000-20892).
(7) Filed as an exhibit to the Registrant's Registration Statement on Form F-3,
as amended, registration number 333-14140, and incorporated herein by
reference.
(8) Filed as an exhibit to the Registrant's annual report on Form 20-F for the
year ended December 31, 2003, and incorporated herein by reference.
Item 10. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement; and
(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)(i) and (1)(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 with or
furnished to the Commission by the Registrant pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining 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 bone fide offering thereof.
II-3
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the
termination of the offering.
(4) To file a post-effective amendment to the registration statement to
include any financial statements required by Item 8.A. of Form 20-F at
the start of any delayed offering or throughout a continuous offering.
Financial statements and information otherwise required by Section
10(a)(3) of the Act need not be furnished, provided that the
Registrant includes in the prospectus, by means of a post-effective
amendment, financial statements required pursuant to this paragraph
and other information necessary to ensure that all other information
in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need
not be filed to include financial statements and information required
by Section 10(a)(3) of the Act or Rule 3-19 of Regulation S-K if such
financial statements and information are contained in periodic reports
filed with or furnished to the Commission by the Registrant pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
(5) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to
Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and,
where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and
controlling persons of the Registrant, pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it complies with all of
the requirements for filing on Form F-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Haifa, Israel, on September 21, 2004.
By: /s/Shimon Alon
--------------
Shimon Alon
Chairman of the Board
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, each director and officer whose
signature appears below constitutes and appoints Shimon Alon and Ofer Segev, or
either of them, his true and lawful attorney-in-fact and agent, with full power
of substitution and re-substitution, to sign in any and all capacities any and
all amendments or post-effective amendments to this registration statement on
Form F-3 and to file the same with all exhibits thereto and other documents in
connection therewith with the Securities and Exchange Commission, granting such
attorneys-in-fact and agents, and each of them, full power and authority to do
all such other acts and execute all such other documents as they, or any of
them, may deem necessary or desirable in connection with the foregoing, as fully
as the undersigned might or could do in person, hereby ratifying and confirming
all that such attorneys-in-fact and agents, or any of them, may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities indicated on September 21, 2004.
Signature Title
--------- -----
/s/Shimon Alon Chairman of the Board of Directors
--------------
Shimon Alon
/s/Itzhak (Aki) Ratner Chief Executive Officer and Director
----------------------
Itzhak (Aki) Ratner
/s/Ofer Segev Chief Financial Officer
-------------
Ofer Segev
______________________ Director
Dov Biran
/s/Dan Falk Director
-----------
Dan Falk
______________________ Director
Roni Ferber
______________________ Director
Anat Segal
II-5
/s/Ron Zuckerman Director
----------------
Ron Zuckerman
Attunity Inc. Authorized Representative in the
United States
By: /s/Ofer Segev
-------------
Name: Ofer Segev
Title: Chief Financial Officer
II-6