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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 12, 2001
REGISTRATION NO. 333-60884
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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DALEEN TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 65-0944514
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
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1750 CLINT MOORE ROAD,
BOCA RATON, FLORIDA 33487
(561) 999-8000
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
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JAMES DALEEN
C/O DALEEN TECHNOLOGIES, INC.
1750 CLINT MOORE ROAD,
BOCA RATON, FLORIDA 33487
TELEPHONE: (561) 999-8000
FACSIMILE: (561) 999-8080
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code of
Agent for Service)
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COPIES TO:
DAVID M. CALHOUN JAMES DALEEN
MORRIS, MANNING & MARTIN, LLP C/O DALEEN TECHNOLOGIES, INC.
1600 ATLANTA FINANCIAL CENTER 1750 CLINT MOORE ROAD
3343 PEACHTREE ROAD, N.E. BOCA RATON, FLORIDA 33487
ATLANTA, GEORGIA 30326 TELEPHONE: (561) 999-8000
TELEPHONE: (404) 233-7000 FACSIMILE: (561) 999-8080
FACSIMILE: (404) 365-9532
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as the selling
stockholders shall determine.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF SHARES AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE(1)
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Common Stock, $0.01 par value........... 55,442,841 shares(2) $0.98 $58,261,530 $14,566(3)
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Common Stock $.01 par value............. 750,000 $1.35 $1,012,500 $254(3)
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(1) Computed in accordance with Rule 457(c) under the Securities Act of 1933
solely for the purpose of calculating the registration fee, based upon the
average of the high and low prices reported on May 11, 2001 for the original
filing and June 8, 2001 for this filing, each as reported on The Nasdaq
National Market.
(2)The shares include the shares of common stock issuable upon conversion of the
registrant's Series F convertible preferred stock. The registrant has reduced
the aggregate number of shares of common stock included in this registration
statement to reflect the final reset of the conversion price of the Series F
convertible preferred stock.
(3) Previously paid.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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The information in this prospectus is not complete and may be changed. The
selling stockholders 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 , 2001
PROSPECTUS
(DALEEN TECHNOLOGIES LOGO)
DALEEN TECHNOLOGIES, INC.
56,192,841 SHARES
COMMON STOCK
This prospectus relates to the resale from time to time of 56,192,841
shares of common stock of Daleen Technologies, Inc. held or to be acquired by
the selling stockholders named in this prospectus. We will not receive any of
the proceeds from the sale of the shares. The offering is not being
underwritten.
The shares being offered by the selling stockholders include:
- 10,341,166 shares of our issued and outstanding common stock currently
held by the selling stockholders;
- 2,143,038 shares of common stock issuable upon exercise of outstanding
warrants to purchase common stock;
- 30,353,227 shares of common stock issuable upon the conversion of our
Series F convertible preferred stock; and
- 13,355,410 shares of common stock issuable upon the conversion of shares
of Series F convertible preferred stock issuable upon exercise of
warrants issued in connection with the private placement of our Series F
convertible preferred stock.
Our common stock is listed on The Nasdaq National Market under the symbol
"DALN." On September , 2001, the last reported sale price of our common stock
on The Nasdaq National Market was $0. per share.
Even though the shares may be offered for resale under this prospectus, the
selling stockholders are not obligated to sell any or all of the shares. The
selling stockholders may, from time to time, offer and sell the shares through
agents or broker-dealers on The Nasdaq National Market, in negotiated
transactions, or both. These sales may occur on prices and terms related to the
then-current market price or based upon privately negotiated terms.
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. YOU SHOULD CAREFULLY READ
AND CONSIDER THE "RISK FACTORS" BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this prospectus is , 2001.
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TABLE OF CONTENTS
PAGE
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Prospectus Summary.......................................... 1
Risk Factors................................................ 3
Forward-Looking Statements.................................. 14
Description of Private Placement............................ 14
Use of Proceeds............................................. 17
Selling Stockholders........................................ 18
Certain Transactions with the Selling Stockholders.......... 22
Plan of Distribution........................................ 25
Legal Matters............................................... 27
Experts..................................................... 28
Where You Can Find More Information......................... 28
Incorporation of Documents by Reference..................... 28
You should rely only on the information contained in this prospectus or on
information incorporated by reference herein. We have not authorized anyone to
provide you with information that is different. This prospectus may be used only
where it is legal to sell these securities. The information contained in this
prospectus is accurate only on the date of this prospectus.
No dealer, salesperson or other individual 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 us or the selling stockholders. This prospectus does not
constitute any offer to sell or a solicitation of an offer to buy any of the
securities offered hereby to any person or by anyone in any jurisdiction to
which it is unlawful to make such offer or solicitation. Neither the delivery of
this prospectus nor any sale made hereunder shall, under any circumstances,
create any implication that the information herein is correct as of any date
subsequent to the date hereof.
YOU SHOULD READ CAREFULLY THIS ENTIRE PROSPECTUS, AS WELL AS THE DOCUMENTS
INCORPORATED BY REFERENCE IN THIS PROSPECTUS, BEFORE MAKING AN INVESTMENT
DECISION. ALL REFERENCES TO "WE," "US," "OUR" OR "DALEEN" IN THIS PROSPECTUS
MEAN DALEEN TECHNOLOGIES, INC. AND ITS SUBSIDIARIES, EXCEPT WHERE IT IS MADE
CLEAR THAT THE TERM MEANS ONLY DALEEN TECHNOLOGIES, INC.
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PROSPECTUS SUMMARY
THE COMPANY
We are a provider of Internet software solutions that manage the revenue
chain for next-generation service providers. Our RevChain(TM) product family,
which we launched in the first quarter of 2001, enables service providers to
automate and manage their entire revenue chain including services, customers,
orders and fulfillment, and billing and settlement across the span of the
enterprise. Our RevChain product family represents the evolution of our former
customer management and billing products known as BillPlex(TM) and eCare. Our
RevChain solutions extend from the back office to interfacing with customers,
whether through the Internet or with customer service representatives, and
manage mutual service offerings across partner relationships. These modular
products integrate with third-party solutions and deliver scalability, making
the software adaptable. As a result, service providers are able to accelerate
time-to-revenue, rapidly adapt to new opportunities, and use the power of the
Internet, thereby providing a competitive advantage in their business.
The RevChain product family includes industry-focused software suites
composed of individual applications based on the Daleen Internet Integration
Architecture (IIA), our Internet computing architecture. The Daleen RevChain
software application products include the following:
- RevChain Commerce -- customer care and billing;
- RevChain Interact -- a standard browser interface for customer service
representatives;
- RevChain Order -- a secure storefront for Internet shopping and order
fulfillment;
- RevChain Care -- providing customer self-service over the Internet; and
- RevChain Partner -- an Internet-based partner chain management network.
Our products may be configured to address services and feature requirements
for each industry segment on which we focus. These configured application
products are offered as packaged industry suites.
In addition to our RevChain product family, we offer professional
consulting services, training, maintenance, support and third-party software
fulfillment related to the products we develop. Further, in July 2000, we formed
a subsidiary, PartnerCommunity, Inc. PartnerCommunity, Inc. provides an
Internet-based partner chain management services network for providers of data
content and communications services that enables members to form and manage
relationships with their vendors, service providers and customers to deliver
communications services. PartnerCommunity, Inc. also enables these service
providers to build their own private community to integrate business processes
with their partners and business customers.
In September 2000, we also formed a wholly-owned subsidiary, Daleen
Technologies Europe B.V., a corporation formed under the laws of the
Netherlands. From this subsidiary, we run our operations in Europe, the Middle
East and Africa.
We incurred net losses of approximately $40.3 million for the six months
ended June 30, 2001, and net losses of approximately $43.8 million for the year
ended December 31, 2000. As of June 30, 2001, we had an accumulated deficit of
approximately $148.1 million. As a result of our financial condition, the
independent auditors report covering our December 31, 2000 consolidated
financial statements and financial statement schedule contains an explanatory
paragraph that states that our recurring losses from operations and accumulated
deficit raised substantial doubt about our ability to continue as a going
concern. We initiated cost reduction measures in January and April 2001 in order
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to reduce our fixed operating expenses, including workforce reductions,
consolidation of facilities and departments, consolidation of research and
development and professional services resources, asset writedowns, and other
miscellaneous cost reductions. Additionally, in June 2001, we completed a
private placement of our Series F convertible preferred stock (the "Series F
preferred stock") and warrants to purchase Series F preferred stock (the "Series
F warrants). We received net proceeds of approximately $25.7 million from the
private placement. We believe that our current cash and cash equivalents,
including the net proceeds from the private placement, together with the January
and April 2001 cost reduction measures, will be sufficient to fund our
operations for the remainder of 2001.
We were originally incorporated in Illinois in 1990, were reincorporated in
Florida in 1996, and were reincorporated in Delaware on August 5, 1999. Our
executive offices are located at 1750 Clint Moore Road, Boca Raton, Florida
33487, and our telephone number is (561) 999-8000. Our Internet address is
www.daleen.com, although information contained on our website does not
constitute part of this prospectus.
Daleen(TM), Daleen Technologies(TM), RevChain(TM), BellPlex(TM), IIA(TM)
and the Daleen logo are our trademarks.
RECENT DEVELOPMENTS
Private Placement of Series F Convertible Preferred Stock. On March 30,
2001, we entered into definitive agreements (collectively, the "purchase
agreements") for the sale, in a private placement transaction, of $27.5 million
of Series F preferred stock and Series F warrants. Pursuant to the terms of the
purchase agreements, we consummated the private placement on June 7, 2001. The
consummation of the private placement was subject to the receipt of approval
from our stockholders, including approval of an amendment to our certificate of
incorporation to increase the number of authorized shares of common stock to 200
million shares and to create and designate the Series F preferred stock. Our
stockholders approved the private placement and the related amendments to our
certificate of incorporation at our annual meeting of stockholders held on June
7, 2001.
We filed this registration statement pursuant to the terms of the purchase
agreements which require that we file with the Securities and Exchange
Commission a registration statement to register the common stock issuable upon
conversion of the Series F preferred stock (including the shares of Series F
preferred stock issuable upon exercise of the Series F warrants). We previously
granted "piggyback" registration rights to a number of our other stockholders,
including our largest stockholders. Certain of these stockholders exercised
their registration rights and, as a result, their shares also are included in
this registration statement. Additionally, on June 8, 2001, we granted warrants
to purchase an aggregate of 750,000 shares of common stock to certain of the
selling stockholders. In connection with that transaction, we agreed to register
the shares of common stock issuable upon exercise of the warrants. Accordingly,
those shares are included in this registration statement.
Pursuant to this registration statement, we are registering for resale by
the selling stockholders an aggregate of 56,192,841 shares of common stock,
which represents 28.2% of the total authorized shares and 85.7% of the total
outstanding shares of our common stock as of August 23, 2001 calculated assuming
the conversion of all Series F preferred stock into common stock and the
exercise of all outstanding warrants of the Company held by the selling
stockholders.
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RISK FACTORS
Investing in our common stock involves many risks, some of which are
described below. You should carefully consider the following risk factors and
all other information contained or incorporated by reference in this prospectus
before purchasing our common stock. Any of the following material risks may harm
our business and operating results and may result in a loss of all or part of
your investment. Further, the potential for the occurrence of unforeseen risks
is inherent in an investment in our common stock.
RISKS RELATED TO OUR BUSINESS
OUR INDEPENDENT PUBLIC ACCOUNTANTS HAVE EXPRESSED DOUBTS OVER OUR ABILITY TO
CONTINUE AS A GOING CONCERN.
We incurred net losses of approximately $40.3 million for the six months
ended June 30, 2001 and net losses of $43.8 million for the year ended December
31, 2000. Our cash and cash equivalents at June 30, 2001 were $25.7 million.
Cash used in operations for the three months ended June 30, 2001 was $20.0
million. As of June 30, 2001, we had an accumulated deficit of approximately
$148.1 million. As a result of our financial condition the independent auditors'
report covering our December 31, 2000 consolidated financial statements and
financial statement schedule contains an explanatory paragraph that states that
our recurring losses from operations and accumulated deficit raised substantial
doubt about our ability to continue as a going concern. We initiated cost
reduction measures in January and April 2001 in order to reduce our operating
expenses, including workforce reductions, reduction of office space,
consolidation of facilities and departments, asset write-downs and consolidation
of our North American research and development and professional services
resources.
In order to address our liquidity issue and to strengthen our balance
sheet, we sold Series F preferred stock in the private placement, which resulted
in net proceeds of $25.7 million. We believe that our current cash and cash
equivalents, including the net proceeds received by the Company from the private
placement, together with the January 2001 and April 2001 cost reduction
measures, will be sufficient to fund our operations for the remainder of 2001.
However, there is no assurance that we will be able to continue as a going
concern beyond 2001. We may be required to further reduce our operations and
seek additional financing. We may seek to raise additional funds through public
or private equity financings or from other sources. We may also consider
additional options, which include, but are not limited to, forming strategic
partnerships or alliances and/or considering other strategic alternatives,
including possible business combinations. We have not yet identified the source
of any additional financing, nor can be predict whether additional financing can
be obtained, or if obtained, the terms of such financing.
WE HAVE NOT ACHIEVED PROFITABILITY AND MAY CONTINUE TO INCUR NET LOSSES FOR AT
LEAST THE NEXT SEVERAL QUARTERS.
We incurred net losses of approximately $40.3 million for the six months
ended June 30, 2001, and net losses of approximately $43.8 million for the year
ended December 31, 2000. As of June 30, 2001, we had an accumulated deficit of
approximately $148.1 million. We have not realized any profit to date and do not
expect to achieve profitability until early in 2002, which may not occur. To
achieve this objective, we need to generate significant additional revenue from
licensing of our products and related services and support revenues. We expect
to reduce our fixed operating expenses through cost reduction measures
implemented in January and April
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2001, which included workforce reductions, consolidation of facilities and
departments, asset writedowns, and other miscellaneous cost reductions. We
consolidated our North American workforce into our Boca Raton, Florida facility
and we closed our Toronto, Ontario, Canada and Atlanta, Georgia offices. We also
consolidated our North American research and development and professional
services resources. There is no assurance we will achieve these objectives and
thus achieve profitability. We may be required to further reduce our operations
and seek additional financing. In addition, even if we do achieve profitability,
we may not be able to sustain or increase profitability on a quarterly or annual
basis in the future.
OUR REVENUE IS DIFFICULT TO PREDICT AND QUARTERLY OPERATING RESULTS MAY
FLUCTUATE IN FUTURE PERIODS, AS A RESULT OF WHICH WE MAY FAIL TO MEET
EXPECTATIONS WHICH MAY CAUSE OUR COMMON STOCK PRICE TO DECLINE.
Our revenue and operating results may vary significantly from quarter to
quarter due to a number of factors. This fluctuation may cause our operating
results to be below the expectations of public market analysts and investors,
and the price of our common stock may fall. Factors that could cause quarterly
fluctuations include:
- variations in demand for our products and services;
- competitive pressures;
- further decrease in corporate information technology spending and decline
in economic conditions and market;
- prospective customers delaying their decision to acquire licenses for our
products;
- our quarterly revenue and expense levels;
- our ability to develop and attain market acceptance of enhancements to
the RevChain product family and any new products and services;
- the pace of product implementation and the timing of customer acceptance;
- industry consolidation reducing the number of potential customers;
- changes in our pricing policies or the pricing policies of our
competitors; and
- the mix of sales channels through which our products and services are
sold.
The timing of revenue and revenue recognition is difficult to predict. In
any given quarter, most of our revenue has been attributable to a limited number
of relatively large contracts and we expect this to continue. Further, our
customer contract bookings and revenue recognized tends to occur predominantly
in the last two weeks of the quarter. As a result, our quarterly results of
operations are difficult to predict and the deferral of even a small number of
contract bookings or delays associated with delivery of products in a particular
quarter could significantly reduce our revenue and increase our net loss, which
would hurt our quarterly financial performance. In addition, a substantial
portion of our costs are relatively fixed and based upon anticipated revenue. A
failure to book an expected order in a given quarter would not be offset by a
corresponding reduction in costs and could adversely affect our operating
results.
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THE LOW PRICE OF OUR COMMON STOCK COULD RESULT IN THE DELISTING OF OUR COMMON
STOCK FROM THE NASDAQ NATIONAL MARKET WHICH COULD CAUSE OUR COMMON STOCK PRICE
TO DECLINE AND MAKE TRADING IN OUR COMMON STOCK MORE DIFFICULT TO INVESTORS.
Our common stock is currently quoted on The Nasdaq National Market. We must
satisfy Nasdaq's minimum listing maintenance requirements to maintain our
listing on The Nasdaq National Market. Nasdaq listing maintenance requirements
include a series of financial tests relating to net tangible assets, public
float, number of market makers and shareholders, market capitalization, and
maintaining a minimum closing bid price of $1.00 for shares of our common stock.
If the minimum closing bid price of our common stock were to be below $1.00 for
30 consecutive trading days, or if we are unable to meet Nasdaq's standards for
any other reason, our common stock could be delisted from The Nasdaq National
Market. As of August 23, 2001, our common stock had a closing bid price of less
than $1.00 for more than 30 consecutive trading days. On August 30, 2001, we
received a letter from Nasdaq notifying us that our common stock had failed to
maintain a minimum bid price of $1.00 over the previous 30 consecutive trading
days as required by the applicable Nasdaq Marketplace Rule. Nasdaq is providing
us 90 calendar days, or until November 28, 2001, to regain compliance with the
Marketplace Rule. Pursuant to Nasdaq's letter, if at anytime before November 28,
2001, the bid price of our common stock is at least $1.00 per share for a
minimum of 10 consecutive trading days, Nasdaq will make a determination of
whether we comply with the Marketplace Rule. Under certain circumstances, Nasdaq
may require that we maintain a closing bid price at or above $1.00 per share for
more than 10 consecutive trading days. If we are not able to demonstrate
compliance with the Marketplace Rule on or before November 28, 2001, Nasdaq will
provide us with written notification that our common stock will be delisted from
The Nasdaq National Market. At that time, we will have the opportunity to appeal
the decision to delist to a Nasdaq Listing Qualifications Panel. If our common
stock is delisted from The Nasdaq National Market, the common stock would trade
on either The Nasdaq SmallCap Market or on the OTC Bulletin Board, both of which
are viewed by most investors as less desirable and less liquid marketplaces.
Thus, delisting from The Nasdaq National Market could make trading our shares
more difficult for investors, leading to further declines in share price. It
would also make it more difficult for us to raise additional capital. In
addition, we would incur additional costs under state blue sky laws to sell
equity if our common stock is delisted from The Nasdaq National Market.
WE FACE SIGNIFICANT COMPETITION FROM COMPANIES THAT HAVE GREATER RESOURCES THAN
WE DO AND THE MARKETS IN WHICH WE COMPETE ARE RELATIVELY NEW, INTENSELY
COMPETITIVE, HIGHLY FRAGMENTED AND RAPIDLY CHANGING.
The markets in which we compete are relatively new, intensely competitive,
highly fragmented and rapidly changing. In some markets, limited capital
resources are causing reduced spending in information technology. We expect
competition to increase in the future, both from existing competitors as well as
new entrants in our current markets. Our principal competitors include other
internet enabled billing and customer care system providers, operation support
system providers, systems integrators and service bureaus, and the internal
information technology departments of larger communications companies, which may
elect to develop functionalities similar to those provided by our product
in-house rather than buying them from us. Many of our current and future
competitors may have advantages over us, including:
- longer operating histories;
- larger customer bases;
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- substantially greater financial, technical, research and development and
sales and marketing resources;
- a lead in expanding their business internationally;
- greater name recognition; and
- ability to more easily provide a comprehensive hardware and software
solution.
Our current and potential competitors have established, and may continue to
establish in the future, cooperative relationships among themselves or with
third parties, including telecom hardware vendors, that would increase their
ability to compete with us. In addition, competitors may be able to adapt more
quickly than we can to new or emerging technologies and changes in customer
needs, or to devote more resources to promoting and selling their products. If
we fail to adapt to market demands and to compete successfully with existing and
new competitors, our business and financial performance would suffer.
WE DEPEND ON STRATEGIC BUSINESS ALLIANCES WITH THIRD PARTIES, INCLUDING SOFTWARE
FIRMS, CONSULTING FIRMS AND SYSTEMS INTEGRATION FIRMS, TO SELL AND IMPLEMENT OUR
PRODUCTS, AND ANY FAILURE TO DEVELOP OR MAINTAIN THESE ALLIANCES COULD HURT OUR
FUTURE GROWTH IN REVENUE AND OUR GOALS FOR ACHIEVING PROFITABILITY.
Third parties such as operation support system providers, other software
firms, consulting firms and systems integration firms help us with marketing and
sales and implementation of our products. In order to address a broader market
and to satisfy customers' requirements associated with the use of independent
consulting and systems integration firms, we have increased our focus on
indirect sales through our strategic alliance partners, including operational
support system providers, other software application companies, consulting firms
and systems integration firms. To be successful, we must maintain our
relationships with these firms, develop additional similar relationships and
generate new business opportunities through joint marketing and sales efforts.
We may encounter difficulties in forging and maintaining long-term relationships
with these firms for a variety of reasons. These firms may discontinue their
relationships with us, fail to devote sufficient resources to market our
products or develop relationships with our competitors. Many of these firms also
work with competing software companies, and our success will depend on their
willingness and ability to devote sufficient resources and efforts to marketing
our products versus the products of others. In addition, these firms may delay
the product implementation or negatively affect our customer relationships. Our
agreements with these firms typically are in the form of a non-exclusive
referral fee or license and package discount arrangement that may be terminated
by either party without cause or penalty and with limited notice.
MANY OF OUR CUSTOMERS AND POTENTIAL CUSTOMERS ARE NEW ENTRANTS INTO THEIR
MARKETS AND LACK FINANCIAL RESOURCES, AS A RESULT OF WHICH IF THEY CANNOT SECURE
ADEQUATE FINANCING, WE MAY NOT MAINTAIN THEIR BUSINESS, WHICH WOULD NEGATIVELY
IMPACT OUR REVENUE AND RESULTS OF OPERATIONS.
Many of our customers and potential customers are new entrants into their
markets and lack significant financial resources as a result of which if they
cannot secure adequate financing, we may not maintain their business, which
would negatively impact our revenue and results of operations. These companies
rely to a large degree on access to the capital markets for growth that have cut
back over the past several months. Their failure to raise capital has hurt their
financial viability and their ability to purchase our products. The lack of
funding has caused potential customers to reduce information technology
spending. If our potential customers cannot
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obtain the resources to purchase our products, they may turn to other options
such as service bureaus, which would hurt our business. Also, because we do at
times provide financing arrangements to customers, their ability to make
payments to us may impact when we can recognize revenue.
The revenue growth and profitability of our business depends significantly
on the overall demand for software products and services that manage the revenue
chain, particularly in the product and service segments in which we compete.
Softening demand for these products and services caused by worsening economic
conditions may result in decreased revenues or earning levels or growth rates.
Recently, the U.S. economy has weakened. This has resulted in companies delaying
or reducing expenditures, including expenditures for information technology.
In addition, our current customers' ability to generate revenues or
otherwise obtain capital could adversely impact on their ability to purchase
additional products or renew maintenance and support agreements with us. If they
go out of business there will be no future licenses to support revenue.
The lack of funding available in our customers' markets, the recent
economic downturn in the technology market and customers shutting down
operations or declaring bankruptcy may cause our accounts receivable to continue
to increase. There is no assurance we will be able to collect all of these
outstanding receivables.
OUR LENGTHY SALES CYCLE MAKES IT DIFFICULT TO PREDICT THE TIMING OF SALES AND
THE RESULTING REVENUE, AND REVENUE MAY VARY FROM PERIOD TO PERIOD, WHICH MAY
ADVERSELY AFFECT OUR COMMON STOCK PRICE.
The sales cycle associated with the purchase of our products is lengthy,
and the time between the initial proposal to a prospective customer and the
signing of a license agreement can be as long as one year. Our products involve
a commitment of capital which may be significant to the customer, with attendant
delays frequently associated with large capital expenditures and implementation
procedures within an organization. These delays may reduce our revenue in a
particular period without a corresponding reduction in our costs, which could
hurt our results of operations for that period.
THE PRICE OF OUR COMMON STOCK HAS BEEN AND WILL CONTINUE TO BE VOLATILE, WHICH
INCREASES THE RISK OF AN INVESTMENT IN OUR COMMON STOCK.
The trading price of our common stock has fluctuated in the past and will
fluctuate in the future. This future fluctuation could be a result of a number
of factors, many of which are outside our control. Some of these factors
include:
- quarter-to-quarter variations in our operating results;
- failure to meet the expectations of industry analysts;
- announcements and technological innovations or new products by us or our
competitors;
- increased price competition; and
- general conditions in the Internet and telecommunications industry.
The stock market has experienced extreme price and volume fluctuations,
which have particularly affected the market prices of many Internet and computer
software companies,
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including ours, and which we believe have often been unrelated to the operating
performance of these companies or our company.
OUR STRATEGY TO EXPAND INTO INTERNATIONAL MARKETS THROUGH DIRECT SALES EFFORTS
AND THROUGH STRATEGIC RELATIONSHIPS MAY NOT SUCCEED AS A RESULT OF LEGAL,
BUSINESS AND ECONOMIC RISKS SPECIFIC TO INTERNATIONAL OPERATIONS.
Our strategy includes expansion into international markets through a
combination of direct sales efforts and strategic relationships. In addition to
risks generally associated with international operations, our future
international operations might not succeed for a number of reasons, including:
- dependence on sales efforts of third party distributors and systems
integrators;
- difficulties in staffing and managing foreign operations;
- difficulties in localizing products and supporting customers in foreign
countries;
- reduced protection for intellectual property rights in some countries;
- greater difficulty in collecting accounts receivable; and
- uncertainties inherent in transnational operations such as export and
import regulations, taxation issues, tariffs and trade barriers.
To the extent that we are unable to successfully manage expansion of our
business into international markets due to any of the foregoing factors, our
business could be adversely affected.
WE RECENTLY INTRODUCED OUR REVCHAIN FAMILY OF INDUSTRY-FOCUSED SOFTWARE SUITES,
THE SUCCESS OF WHICH WILL BE DEPENDENT UPON MARKET ACCEPTANCE.
We introduced the RevChain product family in early 2001. This new product
family is an evolution of our former customer management and billing products
that were significantly enhanced and re-positioned to address the customer need
for managing the entire revenue chain. The RevChain product family consists of
several industry-focused suites, some of which are in the early stages of their
release, and are undergoing further development. As a result, the market's
acceptance of our new RevChain product family, and the maturity of some of the
industry-focused product suites, may have an affect on our business and
financial performance, including our revenues.
OUR FUTURE SUCCESS WILL DEPEND IN PART UPON OUR ABILITY TO CONTINUALLY ENHANCE
OUR PRODUCT OFFERING TO MEET THE CHANGING NEEDS OF SERVICE PROVIDERS, AND IF WE
ARE NOT ABLE TO DO SO WE WILL LOSE FUTURE BUSINESS TO OUR COMPETITORS.
We believe that our future success will depend to a significant extent upon
our ability to enhance our product offering and packaged industry suites and to
introduce new products and features to meet the requirements of our customers in
a rapidly developing and evolving market. We devote significant resources to
refining and expanding our software products, developing our pre-configured
industry suites and investigating complimentary products and technologies. The
requirements of our customers may change and our present or future products or
packaged industry suites may not satisfy the evolving needs of our targeted
markets. If we are unable to
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anticipate or respond adequately to customer needs, we will lose business and
our financial performance will suffer.
IF WE CANNOT CONTINUE TO OBTAIN OR IMPLEMENT THE THIRD-PARTY SOFTWARE THAT WE
INCORPORATE INTO OUR PRODUCT OFFERING, WE MAY HAVE TO DELAY OUR PRODUCT
DEVELOPMENT OR REDESIGN EFFORTS WHICH COULD HAVE AN ADVERSE EFFECT ON OUR
REVENUE AND RESULTS OF OPERATIONS.
Our product offering involves integration with products and systems
developed by third parties. If any of these third-party products should become
unavailable for any reason, fail under operation with our product offering or
fail to be supported by their vendors, it would be necessary for us to redesign
our product offering. We might encounter difficulties in accomplishing any
necessary redesign in a cost-effective or timely manner. We also could
experience difficulties integrating our product offering with other hardware and
software. Furthermore, if new releases of third-party products and systems occur
before we develop products compatible with these new releases, we could
experience a decline in demand for our product offering, which could cause our
business and financial performance to suffer.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, AND OUR COMPETITORS MAY
INFRINGE ON OUR TECHNOLOGY, EITHER OF WHICH COULD HARM THE VALUE OF OUR
PROPRIETARY TECHNOLOGY.
Any misappropriation of our technology or the development of competitive
technology could seriously harm our business. We regard a substantial portion of
our software product as proprietary and rely on a combination of patent,
copyright, trademark and trade secret laws, customer license agreements and
employee and third-party agreements to protect our proprietary rights. These
steps may not be adequate, and we do not know if they will prevent
misappropriation of our intellectual property, particularly in foreign countries
where the laws may not protect proprietary rights as fully as do the laws of the
United States. Other companies could independently develop similar or superior
technology without violating our proprietary rights. If we have to resort to
legal proceedings to enforce our intellectual property rights, the proceedings
could be burdensome and expensive and could involve a high degree of risk.
CLAIMS BY OTHERS THAT WE INFRINGE THEIR PROPRIETARY TECHNOLOGY COULD BE COSTLY
AND HARM OUR BUSINESS.
Third parties could claim that our current or future products or technology
infringe their proprietary rights. An infringement claim against us could be
costly even if the claim is invalid, and could distract our management from the
operation of our business. Furthermore, a judgment against us could require us
to pay substantial damages and could also include an injunction or other court
order that could prevent us from selling our product offering. If we faced a
claim relating to proprietary technology or information, we might seek to
license technology or information, or develop our own, but we might not be able
to do so. Our failure to obtain the necessary licenses or other rights or to
develop non-infringing technology could prevent us from selling our products and
could seriously harm our business.
LOSS OF OUR SENIOR MANAGEMENT PERSONNEL, PARTICULARLY JAMES DALEEN, WOULD LIKELY
HURT OUR BUSINESS.
Our future success depends to a significant extent on the continued
services of our senior management and other key personnel, particularly James
Daleen, our founder and chief executive officer. If we lost the services of Mr.
Daleen or other key employees it would likely hurt our business. We have
employment and non-compete agreements with some of our
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executive officers, including Mr. Daleen. However, these agreements do not
obligate them to continue working for us.
PRODUCT DEFECTS OR SOFTWARE ERRORS IN OUR PRODUCTS COULD ADVERSELY AFFECT OUR
BUSINESS DUE TO COSTLY REDESIGNS, PRODUCTION DELAYS AND CUSTOMER
DISSATISFACTION.
Design defects or software errors in our products may cause delays in
product introductions or damage customer satisfaction, either of which could
seriously harm our business. Our software products are highly complex and may,
from time to time, contain design defects or software errors that may be
difficult to detect and correct. Although we have license agreements with our
customers that contain provisions designed to limit our exposure to potential
claims and liabilities arising from customer problems, these provisions may not
effectively protect us against all claims. In addition, claims and liabilities
arising from customer problems could significantly damage our reputation and
hurt our business.
IN THE EVENT WE ACQUIRE THIRD PARTIES OR THIRD PARTY TECHNOLOGIES, SUCH
ACQUISITIONS COULD RESULT IN DISRUPTIONS TO OUR BUSINESS AND DIVERSION OF
MANAGEMENT, AND COULD REQUIRE THAT WE ENGAGE IN FINANCING TRANSACTIONS THAT
COULD HURT OUR FINANCIAL PERFORMANCE.
We may in the future make acquisitions of companies, products or
technologies, or enter into strategic relationship agreements that require
substantial up-front investments. We will be required to assimilate the acquired
businesses and may be unable to maintain uniform standards, controls, procedures
and policies if we fail to do so effectively. We may have to incur debt or issue
equity securities to pay for any future acquisitions. The issuance of equity
securities for any acquisition could be substantially dilutive to our
stockholders. In addition, our profitability may suffer because of
acquisition-related costs or amortization costs for acquired intangible assets.
OUR SUCCESS DEPENDS IN PART ON OUR ABILITY TO ATTRACT AND RETAIN SKILLED
EMPLOYEES, WHICH IS DIFFICULT AND EXPENSIVE IN TODAY'S TECHNOLOGY LABOR MARKET.
Our success depends in large part on our ability to attract, train,
motivate and retain highly skilled information technology professionals,
software programmers and sales and marketing professionals. Qualified personnel
in these fields are in great demand and are likely to remain a limited resource.
We may be unable to continue to retain the skilled employees we require. Any
inability to do so could prevent us from managing and competing for existing and
future projects or to compete for new customer contracts.
DELAWARE LAW, OUR CERTIFICATE OF INCORPORATION AND OUR BYLAWS CONTAIN
ANTI-TAKEOVER PROVISIONS THAT MAY DELAY, DEFER OR PREVENT A CHANGE OF CONTROL.
Certain provisions of Delaware law, our certificate of incorporation and
our bylaws contain provisions that could delay, deter or prevent a change in
control of Daleen. Our certificate of incorporation and bylaws, among other
things, provide for a classified board of directors, restrict the ability of
stockholders to call stockholders meetings by allowing only stockholders
holding, in the aggregate, not less than 10% of the capital stock entitled to
cast votes at these meetings to call a meeting, preclude stockholders from
raising new business for consideration at stockholder meetings unless the
proponent has provided us with timely advance notice of the new business, and
limit business that may be conducted at stockholder meetings to those matters
properly specified in notices delivered to us. Moreover, we have not opted out
of Section 203 of the Delaware General Corporation Law, which prohibits mergers,
sales of material assets and some types of self-dealing transactions between a
corporation and a holder of 15% or more of the
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corporation's outstanding voting stock for a period of three years following the
date the stockholder became a 15% holder, unless an applicable exemption from
the rule is available. These provisions do not apply to the purchasers of our
Series F preferred stock.
Additionally, the issuance of the Series F preferred stock may delay, deter
or prevent a change of control of Daleen, particularly if the holders of the
Series F preferred stock oppose the transaction.
RISKS RELATED TO THE SERIES F PREFERRED STOCK AND THIS OFFERING
THE HOLDERS OF THE SERIES F PREFERRED STOCK HAVE RIGHTS THAT ARE SENIOR TO THOSE
OF THE HOLDERS OF THE COMMON STOCK.
The holders of the Series F preferred stock will have a claim against our
assets senior to the claim of the holders of our common stock in the event of
our liquidation, dissolution or winding up. The aggregate amount of that senior
claim will be at least $27.5 million. The holders of the Series F preferred
stock also have voting rights entitling them to vote together with the holders
of our common stock as a single class and on the basis of 100 votes per share of
Series F preferred stock, subject to adjustment for any stock split, stock
dividend, reverse stock split, reclassification or consolidation of or on our
common stock. As of August 23, 2001, the voting rights of the holders of Series
F preferred stock, excluding shares of common stock owned by the holders of the
Series F preferred stock, would constitute 53.1% of the entire voting class of
common stock, or 62.0%, if the purchasers and the placement agent exercise the
Series F warrants. On August 23, 2001, we had 21,864,201 shares of common stock
issued and outstanding and 247,882 shares of Series F preferred stock issued and
outstanding. Additionally, we had outstanding Series F warrants for the purchase
of an aggregate of 109,068 shares of Series F preferred stock. Following the
conversion of the Series F preferred stock, the holders will be entitled to vote
the number of shares of common stock issued upon conversion. As a result, the
holders of Series F preferred stock have a significant ability to determine the
outcome of matters submitted to our stockholders for a vote. Additionally, the
holders of the Series F preferred stock are entitled to vote as a separate class
on certain matters, including:
- the authorization or issuance of any other class or series of preferred
stock ranking senior to or equal with the Series F preferred stock as to
payment of amounts distributable upon dissolution, liquidation or winding
up of Daleen;
- the issuance of any additional shares of Series F preferred stock;
- the reclassification of any capital stock into shares having preferences
or priorities senior to or equal with the Series F preferred stock;
- the amendment, alteration, or repeal of any rights of the Series F
preferred stock; and
- the payment of dividends on any other class or series of capital stock of
Daleen, including the payment of dividends on the common stock.
As a result of these preferences and senior rights, the holders of the
Series F preferred stock have rights that are senior to the common stock in
numerous respects.
The holders of the Series F preferred stock have other rights and
preferences, including the right to convert the Series F preferred stock into an
increased number of shares of common stock as a result of anti-dilution
adjustments.
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THE PRIVATE PLACEMENT PROVIDED THE HOLDERS OF THE SERIES F PREFERRED STOCK WITH
SUBSTANTIAL EQUITY OWNERSHIP IN DALEEN AND HAD A SIGNIFICANT DILUTIVE EFFECT ON
EXISTING STOCKHOLDERS.
The Series F preferred stock is convertible at any time into a substantial
percentage of the outstanding shares of our common stock. The issuance of the
Series F preferred stock has resulted in substantial dilution to the interests
of the holders of our common stock. The exercise of the Series F warrants will
result in further dilution. The number of shares of our common stock issuable
upon conversion of the Series F preferred stock, and the extent of dilution to
existing stockholders, depends on a number of factors, including events that may
cause an adjustment to the conversion price.
Due to the reset provisions of the Series F preferred stock, the conversion
price is $0.9060. Assuming that the holders of the Series F preferred stock and
the Series F warrants exercise the Series F warrants in full and convert all of
their shares of Series F preferred stock into shares of common stock, we would
issue an aggregate of approximately 43,708,637 shares of common stock. Based on
the number of shares of our common stock outstanding on August 23, 2001, this
would represent 66.7% of our outstanding common stock.
OUR SERIES F PREFERRED STOCK PROVIDES FOR ANTI-DILUTION ADJUSTMENTS TO THE
SERIES F PREFERRED STOCK CONVERSION PRICE, WHICH COULD RESULT IN A REDUCTION OF
THE CONVERSION PRICE.
Subject to certain exceptions, the conversion price of the Series F
preferred stock will be reduced each time, if any, that we issue common stock,
options, warrants or other rights to acquire common stock at a price per share
of common stock that is less than the conversion price of the Series F preferred
stock then in effect. A reduction in the conversion price of the Series F
preferred stock will increase the number of shares of common stock issuable upon
conversion of the Series F preferred stock.
THE SERIES F PREFERRED STOCK IS AUTOMATICALLY CONVERTIBLE ONLY IN LIMITED
CIRCUMSTANCES AND, AS A RESULT COULD BE OUTSTANDING INDEFINITELY.
The Series F preferred stock will convert automatically into common stock
only if, after March 30, 2002, the closing price of our common stock on The
Nasdaq National Market or a national securities exchange is at least $3.3282 per
share for ten out of any 20 trading day period. Otherwise, the shares of Series
F preferred stock are convertible only at the option of the holder. Further, the
Series F preferred stock is not subject to automatic conversion if our common
stock is not then listed for trading on The Nasdaq National Market or a national
securities exchange. Each Series F warrant is exercisable for Series F preferred
stock in whole or in part at any time during a five-year exercise period at the
sole discretion of the Series F warrant holder and will not be convertible or
callable at the election of Daleen. As a result of these provisions, the Series
F preferred stock may remain outstanding indefinitely.
THE HOLDERS OF SERIES F PREFERRED STOCK HAVE VOTING POWER OF OUR CAPITAL STOCK
SUFFICIENT TO ENABLE THE INVESTORS TO CONTROL OR SIGNIFICANTLY INFLUENCE ALL
MAJOR CORPORATE DECISIONS.
The holders of the Series F preferred stock and Series F warrants acquired
a percentage of the voting power of our capital stock that will enable such
holders to elect directors and to control to a significant extent major
corporate decisions involving Daleen and its assets that are subject to a vote
of our stockholders. The voting rights of the holders of the Series F preferred
stock, when combined with the common stock owned by their affiliates, currently
represents approximately 68.7% of the voting power of Daleen, and would
represent approximately 74.5% if
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the purchasers exercise the Series F warrants and other outstanding warrants to
purchase common stock held by an affiliate of one of the purchasers.
Following is information on HarbourVest Partners VI-Direct Fund L.P., one
of the purchasers in the private placement as of August 23, 2001:
- HarbourVest Partners VI-Direct Fund L.P. is managed by HarbourVest
Partners, LLC, which also manages HarbourVest Partners V-Direct Fund L.P.
- HarbourVest Partners V-Direct Fund L.P. beneficially owned approximately
21.9% of our common stock (including a warrant to purchase 1,250,000
shares of our common stock).
- HarbourVest Partners, LLC, through funds it manages, beneficially owns
approximately 35.5% of our common stock, based on a Series F preferred
stock conversion price of $0.9060 and assuming conversion of all of the
outstanding shares of Series F preferred stock and exercise of all of the
HarbourVest funds' Series F warrants and outstanding warrants to purchase
our common stock.
- Prior to the conversion of the Series F preferred stock, but assuming
exercise of the HarbourVest funds' Series F warrants and their other
warrants, HarbourVest Partners, LLC would control approximately 34.3% of
the voting power of Daleen, or 27.5% prior to exercising the HarbourVest
funds' Series F warrants and other warrants, based on the voting rights
of the Series F preferred stock.
Following is information on SAIC Venture Capital Corporation, one of the
purchasers in the private placement, as of August 23, 2001:
- SAIC Venture Capital Corporation holds 2,246,615 shares of our common
stock, 67,604 shares of Series F preferred stock and Series F warrants to
purchase an additional 27,042 shares of Series F preferred stock.
- As a result, SAIC Venture Capital Corporation beneficially owns
approximately 24.9% of our outstanding common stock, based on a Series F
preferred stock conversion price of $0.9060 and assuming conversion of
all of the outstanding shares of Series F preferred stock and exercise of
SAIC Venture Capital Corporation's Series F warrants.
- Prior to the conversion of the Series F preferred stock, but assuming
exercise of its Series F warrants, SAIC Venture Capital Corporation would
control approximately 23.7% of the voting power of Daleen, or 19.3% prior
to the exercise of its Series F warrants, based on the voting rights of
the Series F preferred stock.
SALES OF A SUBSTANTIAL NUMBER OF SHARES OF COMMON STOCK IN THE PUBLIC MARKET,
INCLUDING THE SHARES OFFERED HEREBY, COULD LOWER OUR STOCK PRICE AND IMPAIR OUR
ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.
Future sales of a substantial number of shares of our common stock in the
public market, including the shares offered hereby, or the perception that such
sales could occur, including any perceptions that may be created upon the actual
conversion of Series F preferred stock, could adversely affect the prevailing
market price of our common stock. Additionally, a decrease in the market price
of our common stock could make it more difficult for us to raise additional
capital through the sale of equity securities. We filed this registration
statement pursuant to a registration rights agreement with the purchasers of the
Series F preferred stock and Series F warrants. We are required under the
registration rights agreement to maintain one or more effective shelf
registration statements, including this registration statement, that will permit
the
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holders of the Series F preferred stock and Series F warrants to sell the shares
of our common stock issuable upon conversion of the Series F preferred stock in
the public market from time to time until all of the shares are sold or the
shares otherwise may be transferred without restriction under the securities
laws.
FORWARD-LOOKING STATEMENTS
THIS REGISTRATION STATEMENT, AS WELL AS THE INFORMATION INCORPORATED HEREIN
BY REFERENCE, CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED BY
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THESE FORWARD-LOOKING
STATEMENTS ARE NOT HISTORICAL FACTS BUT RATHER ARE BASED ON CURRENT
EXPECTATIONS, ESTIMATES AND PROJECTIONS ABOUT OUR BUSINESS AND INDUSTRY, OUR
BELIEFS AND ASSUMPTIONS. WORDS SUCH AS "ANTICIPATES", "EXPECTS", "INTENDS",
"PLANS", "BELIEVES", "SEEKS", "ESTIMATES" AND VARIATIONS OF THESE WORDS AND
STATEMENTS AND SIMILAR EXPRESSIONS ARE NOT GUARANTEES OF FUTURE PERFORMANCE AND
ARE SUBJECT TO KNOWN AND UNKNOWN RISKS, UNCERTAINTIES, AND OTHER FACTORS, SOME
OF WHICH ARE BEYOND OUR CONTROL, ARE DIFFICULT TO PREDICT AND COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR FORECASTED IN THE FORWARD-
LOOKING STATEMENTS. THESE RISKS AND UNCERTAINTIES INCLUDE THOSE DESCRIBED IN
"RISK FACTORS" AND ELSEWHERE IN THIS REGISTRATION STATEMENT, AND THOSE DESCRIBED
IN "RISKS ASSOCIATED WITH DALEEN'S BUSINESS AND FUTURE OPERATING RESULTS",
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" AND ELSEWHERE IN OUR ANNUAL REPORT ON FORM 10-K AND THE OTHER
REPORTS INCORPORATED BY REFERENCE HEREIN. FORWARD-LOOKING STATEMENTS THAT WERE
TRUE AT THE TIME MADE MAY ULTIMATELY PROVE TO BE INCORRECT OR FALSE. READERS ARE
CAUTIONED TO NOT PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS, WHICH
REFLECT OUR MANAGEMENT'S VIEW ONLY AS OF THE DATE OF THIS REPORT. WE UNDERTAKE
NO OBLIGATION TO UPDATE OR REVISE FORWARD-LOOKING STATEMENTS TO REFLECT CHANGED
ASSUMPTIONS, THE OCCURRENCE OF UNANTICIPATED EVENTS OR CHANGES TO FUTURE
OPERATING RESULTS.
DESCRIPTION OF PRIVATE PLACEMENT
GENERAL
On March 30, 2001, we entered into the purchase agreements for the private
placement of $27.5 million of our Series F preferred stock and Series F
warrants. Pursuant to the terms of the purchase agreements, we consummated the
private placement on June 7, 2001. The consummation of the private placement was
subject to the receipt of approval from our stockholders, including approval of
an amendment to our certificate of incorporation to increase the number of
authorized shares of common stock and to create and designate the Series F
preferred stock.
Our stockholders approved the private placement, including the amendment to
our certificate of incorporation, at our annual meeting of stockholders held on
June 7, 2001. Pursuant to the purchase agreements, on June 7, 2001, the escrow
agent released the escrowed funds to us and we issued the Series F preferred
stock and Series F warrants to the purchasers.
The offering and sale of the Series F preferred stock and Series F warrants
was exempt from registration under the Securities Act of 1933, as amended, by
virtue of Rule 506 of Regulation D promulgated thereunder. The Series F
preferred stock is a new series of our preferred stock.
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We filed this registration statement pursuant to the terms of the purchase
agreements which require that we file with the Securities and Exchange
Commission a registration statement to register the common stock issuable upon
conversion of the Series F preferred stock (including the shares of Series F
preferred stock issuable upon exercise of the Series F warrants). We previously
granted "piggyback" registration rights to a number of our other stockholders,
including our largest stockholders. Certain of these stockholders exercised
their registration rights and, as a result, their shares also are included in
this registration statement. Additionally, on June 8, 2001, we granted warrants
to purchase 750,000 shares of common stock to certain of the selling
stockholders. In connection with that transaction, we agreed to register the
shares of common stock issuable upon exercise of the warrants. Accordingly,
those shares are included in this registration statement.
CERTAIN TERMS OF THE SERIES F PREFERRED STOCK
General. Pursuant to the terms of the purchase agreements, on June 7,
2001, we issued and sold (i) an aggregate of 247,882 shares Series F preferred
stock and (ii) Series F warrants to purchase an aggregate of 109,068 shares of
Series F preferred stock, including a Series F warrant that we issued to
Robertson Stephens, Inc., which acted as our placement agent in the private
placement. The purchase price per share of the Series F preferred stock (without
giving effect to the allocation of any part of the purchase price to the Series
F warrants) was $110.94 per share, which is equal to (i) $1.1094, the average
closing price per share of our common stock during the ten trading days ending
on March 30, 2001, the date of the purchase agreements, multiplied by (ii) 100,
the number of shares of common stock initially issuable upon conversion of a
share of Series F preferred stock.
Conversion. Each share of Series F preferred stock is convertible at any
time at the option of the holder into shares of our common stock. The number of
shares of common stock issuable upon conversion of a single share of Series F
preferred stock is determined by dividing the original price per share of the
Series F preferred stock, which is $110.94, by the conversion price in effect on
the date of conversion. The initial conversion price was $1.1094. The conversion
price was subject to a one-time adjustment, or reset, as follows:
- in the event the average market price (based on the closing price per
share as reported by The Nasdaq Stock Market) per share of our common
stock for the ten consecutive trading days following the date on which we
issued an "earnings release" (as defined below) for the quarter ended
June 30, 2001 (the "Reset Price") was less than the conversion price
(initially, $1.1094), the conversion price would be adjusted
automatically to the higher of (A) the Reset Price or (B) $0.8321 (75% of
the initial conversion price);
- if we issued more than one earnings release with respect to the quarter
ended June 30, 2001, a Reset Price would be calculated for the ten
trading days following each earnings release, and the lowest Reset Price
would be used for the purpose of determining the adjusted conversion
price;
- the effective date for the reset would follow our final earnings release
for the June 30, 2001 quarter; and
- the term "earnings release" means (A) a press release issued by us after
March 30, 2001, providing any material financial metrics regarding
revenue or estimated revenue or earnings or estimated earnings for the
quarter ended June 30, 2001, including announcements regarding
consolidation and expense reduction plans implemented or to be
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implemented by us, or (B) a press release issued by us announcing our
actual total revenue for the quarter ended June 30, 2001.
On April 10, 2001, we issued an earnings release, which would have resulted
in a Reset Price of $0.9060 as of June 30, 2001. On July 26, 2001, we issued our
final earnings release. The reset Average Market Price following the final
earnings release was $0.9060, which was the lowest reset Average Market Price
following our earnings releases. As a result, effective August 9, 2001, the
conversion price of the Series F preferred stock was reset to $0.9060. Based on
the reset conversion price established by the July 26, 2001 final earnings
release and pursuant to the terms of the purchases agreements, each share of
Series F preferred stock is convertible into 122.4503 shares of common stock, or
an aggregate of approximately 43,708,637 shares of common stock.
In addition to the reset, in the event we issue common stock or securities
convertible into common stock at a price per share less than the conversion
price of the Series F preferred stock, the conversion price will be reduced to
be equal to the price per share of the securities sold by us. This adjustment
provision is subject to a number of exceptions, including the issuance of stock
or options to employees and the issuance of stock or options in connection with
acquisitions. The conversion price also will be subject to adjustment as a
result of stock splits, stock dividends and the like on the common stock. These
provisions will apply to any of the foregoing actions that occur after March 30,
2001.
The Series F preferred stock will automatically convert into common stock
at any time after March 30, 2002, if our common stock trades on The Nasdaq
National Market or a national securities exchange at a price per share of at
least $3.3282 (three times the initial conversion price) for ten trading days
within any twenty trading day period. The Series F preferred stock is not
subject to automatic conversion if our common stock is not then listed for
trading on The Nasdaq National Market or a national securities exchange.
Voting Rights. The holders of the Series F preferred stock have voting
rights entitling them to vote together with the holders of our common stock as a
single class on all matters presented for a vote to the common stockholders.
Each holder of Series F preferred stock is entitled to cast 100 votes for each
share of Series F preferred stock held by such holder, subject to adjustment for
any stock split, stock dividend, reverse stock split, reclassification or
consolidation of or on our common stock. Additionally, so long as 50% of the
Series F preferred stock is still outstanding, holders of the Series F preferred
stock are entitled to have a class vote on certain matters, including the
following:
- the authorization or issuance of any other class or series of preferred
stock ranking senior to or equal with the Series F preferred stock as to
payment of amounts distributable upon dissolution, liquidation or winding
up of Daleen;
- the issuance of any additional shares of Series F preferred stock;
- the reclassification of any capital stock into shares having preferences
or priorities senior to or equal with the Series F preferred stock;
- the amendment, alteration or repeal of any rights of the Series F
preferred stock; and
- the payment of dividends on any other class or series of capital stock of
the Company, including the payment of dividends on the common stock.
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TERMS OF THE SERIES F WARRANTS
Simultaneous with the issuance of the Series F preferred stock, we issued
to the purchasers of Series F preferred stock, as well as Robertson Stephens,
Inc., which acted as our placement agent in the private placement, Series F
warrants to purchase an aggregate of 109,068 additional shares of Series F
preferred stock. The Series F warrants have an exercise price of $166.41 per
share of Series F preferred stock and are exercisable at any time on or before
June 7, 2006. The exercise price per share is equal to 150% of the original
price per share of the Series F preferred stock.
OWNERSHIP OF CERTAIN SERIES F PURCHASERS
The purchasers of shares of Series F preferred stock and Series F warrants,
all of whom are selling stockholders, include HarbourVest Partners VI -- Direct
Fund L.P., SAIC Venture Capital Corporation and St. Paul Venture Capital VI,
LLC, which are current stockholders or affiliates of current stockholders of
Daleen. As a result of the private placement, as of August 23, 2001, SAIC
Venture Capital Corporation beneficially owned approximately 24.9% of our common
stock (assuming exercise of its Series F warrants), HarbourVest Partners, LLC,
through the funds that it manages, beneficially owned approximately 35.5% of our
common stock (assuming exercise of its Series F warrants and other warrants),
and St. Paul Venture Capital VI, LLC and its affiliates beneficially owned
approximately 7.4% of our common stock (assuming exercise of its Series F
warrants) in each case treating all of the 247,882 shares of Series F preferred
stock to be sold to the purchasers on an as-if-converted basis but assuming the
exercise of only the Series F warrants held by the respective stockholder.
William A. Roper, Jr. is the Chairman of the Board of SAIC Venture Capital
Corporation and Ofer Nemirovsky is a managing director of HarbourVest Partners,
LLC. Mr. Roper and Mr. Nemirovsky are directors of Daleen.
USE OF PROCEEDS
The shares are being sold for the account of the selling stockholders, and
the selling stockholders will receive all of the net proceeds from the sale of
the shares. We will not receive any proceeds from the sale of the shares in this
offering.
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SELLING STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of our common stock as of August 23, 2001. The last column indicates
the number of shares each selling stockholder will beneficially own assuming the
sale of all of the shares offered hereby. The selling stockholders are not under
any obligation to sell their shares of common stock. Additionally, the Series F
preferred stock conversion price and, as a result, the number of shares of
common stock issuable upon conversion of the Series F preferred stock, is
subject to adjustment as discussed under "Description of Private Placement."
SHARES BENEFICIALLY
OWNED AFTER THE
SHARES BENEFICIALLY NUMBER OF SHARES OFFERING(1)
OWNED PRIOR TO BEING OFFERED ----------------------------
NAME OFFERING(1) HEREBY(1) SHARES PERCENT
---- ------------------- ---------------- ------------- ------------
HarbourVest Partners V
-- Direct Fund L.P.(2)....................... 5,068,063(3) 5,068,063(3) -- *
HarbourVest Partners VI
-- Direct Fund L.P.(2)....................... 15,452,616(4) 15,452,616(4) -- *
SAIC Venture Capital Corporation(5)............ 13,836,046(6) 13,836,046(6) -- *
St. Paul Venture Capital IV, L.L.C.(7)......... 795,566 795,566 -- *
St. Paul Venture Capital
Affiliates Fund I, L.L.C.(7)................. 22,497 22,497 -- *
St. Paul Venture Capital VI, LLC(7)............ 3,090,523(8) 3,090,523(8) -- *
ABX Fund, L.P.(9).............................. 694,896(10) 564,006(10) 130,890 *
ABS Ventures IV, L.P.(9)....................... 3,050,078(11) 2,526,518(11) 523,561 *
Halifax Fund, L.P.(12)......................... 2,317,862(13) 2,317,862(13) -- *
Baystar Capital, L.P.(14)...................... 2,317,862(15) 2,317,862(15) -- *
Baystar International Ltd.(14)................. 772,662(16) 772,662(16) -- *
Royal Wulff Ventures, LLC(17).................. 1,545,323(18) 1,545,323(18) -- *
Special Situations
Private Equity Fund, L.P.(19)................ 1,158,870(20) 1,158,870(20) -- *
Special Situations
Cayman Fund, L.P.(19)........................ 1,158,870(21) 1,158,870(21) -- *
Robertson Stephens, Inc........................ 1,214,095(22) 1,214,095(22) -- *
Mohammad Aamir................................. 1,310,730(23) 1,310,730(23) -- *
Bell Canada.................................... 654,450 654,450 -- *
ABN AMRO Capital (U.S.A.), Inc.(24)............ 620,669 620,669 -- *
The VenGrowth Investment Fund Inc.(25)......... 805,454(26) 805,454(26) -- *
1303949 Ontario Inc.(27)....................... 404,871(28) 404,871(28) -- *
I Eagle Trust(24).............................. 224,614 224,614 -- *
South Ferry Building Company(29)............... 66,970(30) 66,970(30) -- *
Carl Scase..................................... 57,434 57,434 -- *
Corneliu Ionescu............................... 53,331 53,331 -- *
Burnham Capital, LLC(24)....................... 41,394 41,394 -- *
David Portnoy.................................. 28,412(31) 25,712(31) 2,700 *
James J. Cahill................................ 25,000(32) 25,000(32) -- *
North American Trust Co, as trustee FBO
Pillsbury, Madison & Sutru, LLP/Gary H.
Anderson(33)................................. 22,661(34) 3,396 19,265 *
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SHARES BENEFICIALLY
OWNED AFTER THE
SHARES BENEFICIALLY NUMBER OF SHARES OFFERING(1)
OWNED PRIOR TO BEING OFFERED ----------------------------
NAME OFFERING(1) HEREBY(1) SHARES PERCENT
---- ------------------- ---------------- ------------- ------------
The Focus Fund #1, L.P.(35).................... 16,390(36) 15,390(36) 1,000 *
Charles Barton................................. 16,041 16,041 -- *
Stephen Smith.................................. 16,041 16,041 -- *
E. L. Associates Profit Sharing Plan(37)....... 71,055(38) 9,966(38) -- *
-------------------------
* Less than 1% of our outstanding common stock.
(1) For purposes of determining beneficial ownership, the number of shares of
common stock includes shares issuable upon conversion of Series F preferred
stock, including the shares of Series F preferred stock issuable upon
exercise of Series F warrants, and shares of common stock issuable pursuant
to options, warrants and other rights to acquire our common stock held by
the respective selling stockholder that may be exercised or converted
within 60 days following August 23, 2001. The number of shares of common
stock issuable upon conversion of Series F preferred stock, including the
shares of Series F preferred stock issuable upon exercise of Series F
warrants, have been approximated for purposes of this table. Due to
rounding upon conversion, the number of shares of common stock each holder
receives upon conversion of its Series F preferred stock may actually be
less than the amount presented in the table. For purposes of determining
the percentage of shares owned, the shares of common stock issuable upon
conversion of the outstanding shares of Series F preferred stock are deemed
to be outstanding. However, the shares of common stock issuable in
connection with the Series F warrants as well as other options, warrants
and other securities are considered to be outstanding and beneficially
owned by the selling stockholder holding such Series F warrants, options,
warrants or other securities for the purpose of computing the percentage
ownership of such selling stockholder after the offering but are not
treated as outstanding for the purpose of computing the percentage
ownership of any other selling stockholder.
(2) HarbourVest Partners, LLC is the managing member of the general partner of
HarbourVest Partners V -- Direct Fund L.P. and HarbourVest Partners
VI -- Direct Fund L.P. D. Brooks Zug and Edward W. Kane share the
investment and voting power of HarbourVest Partners, LLC. Ofer Nemirovsky,
a director of Daleen, is a managing director of HarbourVest Partners, LLC
and a member of the general partner of HarbourVest Partners V -- Direct
Fund L.P. and HarbourVest Partners VI -- Direct Fund L.P. and therefore may
be considered to share beneficial ownership of the shares held by
HarbourVest Partners V -- Direct Fund L.P. and HarbourVest Partners
VI -- Direct Fund L.P. Mr. Nemirovsky disclaims beneficial ownership of
these shares.
(3) The shares include 1,250,000 shares of our common stock issuable upon
exercise of a warrant held by HarbourVest Partners V -- Direct Fund L.P.
(4) The shares include (i) 11,037,548 shares of our common stock issuable upon
conversion of 90,139 shares of Series F preferred stock and (ii) 4,415,068
shares of our common stock issuable upon conversion of 36,056 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
HarbourVest Partners VI -- Direct Fund L.P. in the private placement.
(5) SAIC Venture Capital Corporation is a wholly-owned subsidiary of Science
Applications International Corporation, which controls the investment and
voting power of SAIC Venture Capital Corporation.
(6) The shares include (i) 8,278,130 shares of our common stock issuable upon
conversion of 67,604 shares of Series F preferred stock and (ii) 3,311,301
shares of our common stock issuable upon conversion of 27,042 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
SAIC Venture Capital Corporation in the private placement. William A.
Roper, Jr., a director of Daleen, is the Chairman of the Board of SAIC
Venture Capital Corporation and a corporate executive vice president of
Science Applications International Corporation, the sole stockholder of
SAIC Venture Capital Corporation.
(7) St. Paul Fire and Marine Insurance Company ("SPFM") owns 99% of St. Paul
Venture Capital IV, LLC ("SPVC IV") and St. Paul Venture Capital VI, LLC
("SPVC VI"). SPFM is a wholly-owned subsidiary of The St. Paul Companies,
Inc. ("The St. Paul"). The St. Paul owns 79% of St. Paul Venture Capital,
Inc., the manager of St. Paul Venture Capital Affiliates Fund I, LLC
("Affiliate"). Therefore, The St. Paul may be deemed to beneficially own
the shares held by SPVC IV, SPVC VI and Affiliate and SPFM may be deemed to
beneficially own the shares held by SPVC IV and SPVC VI.
(8) The shares include (i) 2,207,534 shares of our common stock issuable upon
conversion of 18,028 shares of Series F preferred stock and (ii) 882,989
shares of our common stock issuable upon conversion of 7,211 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
St. Paul Venture Capital VI, LLC in the private placement.
(9) ABS Ventures IV, L.P. ("ABS") and ABX Fund, L.P. ("ABX") may be deemed to
be under common control. Bruns Grayson and Philip Black are the managing
members of the respective general partner to each of ABS and ABX and
control the investment and voting power of each of ABS and ABX.
(10) The shares include (i) 402,861 shares of our common stock issuable upon
conversion of 3,290 shares of Series F preferred stock and (ii) 161,145
shares of our common stock issuable upon conversion of 1,316 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
ABX in the private placement.
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(11) The shares include (i) 1,804,673 shares of our common stock issuable upon
conversion of 14,738 shares of Series F preferred stock and (ii) 721,845
shares of our common stock issuable upon conversion of 5,895 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
ABS in the private placement.
(12) Jeffrey Devers, the managing member of the investment advisor and the
managing member of the general partner of Halifax Fund, L.P., controls the
investment and voting power of Halifax Fund, L.P.
(13) The shares include (i) 1,655,651 shares of our common stock issuable upon
conversion of 13,521 shares of Series F preferred stock and (ii) 662,211
shares of our common stock issuable upon conversion of 5,408 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
Halifax Fund, L.P. in the private placement.
(14) The sole general partner of BayStar Capital, L.P., a Delaware limited
partnership, is BayStar Management, LLC. The Investment Manager of BayStar
International, Ltd., a British Virgin Islands corporation, is BayStar
International Management, LLC. Both BayStar Management, LLC and BayStar
International Management, LLC are owned equally by NorthBay Partners,
L.L.C., a Wisconsin limited liability company, and MarinView Capital, LLC,
a Delaware limited liability company. Michael Roth and Brian Stark share
the investment and voting power of BayStar Capital, L.P. and BayStar
International, Ltd.
(15) The shares include (i) 1,655,651 shares of our common stock issuable upon
conversion of 13,521 shares of Series F preferred stock and (ii) 662,211
shares of our common stock issuable upon conversion of 5,408 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
Baystar Capital, L.P. in the private placement.
(16) The shares include (i) 551,884 shares of our common stock issuable upon
conversion of 4,507 shares of Series F preferred stock and (ii) 220,778
shares of our common stock issuable upon conversion of 1,803 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
Baystar International Ltd. in the private placement.
(17) Robert E. Cook and Paula J. Brooks share the investment and voting power of
Royal Wulff Ventures, LLC
(18) The shares include (i) 1,103,767 shares of our common stock issuable upon
conversion of 9,014 shares of Series F preferred stock and (ii) 441,556
shares of our common stock issuable upon conversion of 3,606 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
Royal Wulff Ventures, LLC in the private placement.
(19) Austin W. Marxe and David M. Greenhouse are the principal owners, and
control the investment and voting power, of the respective general partners
of Special Situations Private Equity Fund, L.P. and Special Situations
Cayman Fund, L.P.
(20) The shares include (i) 827,764 shares of our common stock issuable upon
conversion of 6,760 shares of Series F preferred stock and (ii) 331,106
shares of our common stock issuable upon conversion of 2,704 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
Special Situations Private Equity Fund, L.P. in the private placement.
(21) The shares include (i) 827,764 shares of our common stock issuable upon
conversion of 6,760 shares of Series F preferred stock and (ii) 331,106
shares of our common stock issuable upon conversion of 2,704 shares of
Series F preferred stock that may be acquired upon exercise of Series F
warrants. We issued the Series F preferred stock and Series F warrants to
Special Situations Cayman Fund, L.P. in the private placement.
(22) The shares include 1,214,095 shares of our common stock issuable upon
conversion of 9,915 shares of Series F preferred stock that Robertson
Stephens, Inc. may acquire upon exercise of Series F warrants. We issued
the Series F warrants to Robertson Stephens, Inc. as a portion of its fee
for acting as our placement agent in the private placement.
(23) The shares include 358,950 shares of our common stock issuable to Mr. Aamir
upon exercise of a warrant.
(24) Daniel J. Foreman, a director of Daleen, is a managing director of ABN
AMRO, Inc. ABN AMRO, Inc. is an affiliate of ABN AMRO Capital (U.S.A.)
Inc., I Eagle Trust and Burnham Capital, LLC. Burnham Capital, LLC received
its shares by a transfer from ABN AMRO, Inc. Daniel J. Foreman, David
Bogetz and Keith Walz, as a group and not individually, control the voting
and investment power of each of ABN AMRO Capital (USA), Inc., I Eagle Trust
and Burnham Capital, LLC.
(25) The Board of Directors of The VenGrowth Investment Fund, Inc. controls the
investment and voting power of The VenGrowth Investment Fund Inc. The Board
of Directors consists of Michael Cohen, Allen Luprypa, Earl Storie, David
Ferguson, Catherine Wade, Merdon Hosking, Ross Christian, Eugene Szabo, and
Brian King.
(26) The shares include 220,575 shares of our common stock issuable to The
Vengrowth Investment Fund Inc. upon exercise of a warrant.
(27) Imran Bashir controls the investment and voting power of 1303949 Ontario
Inc.
(28) The shares include 170,475 shares of our common stock issuable to 1303949
Ontario Inc. upon exercise of a warrant.
(29) Zev Wolfson and Abraham Wolfson share the investment and voting power of
South Ferry Building Company.
(30) The shares include 66,970 shares of our common stock issuable to South
Ferry Building Company upon exercise of a warrant.
(31) The shares include 25,712 shares of our common stock issuable upon exercise
of a warrant held by Mr. Portnoy. Mr. Portnoy is the general partner of The
Focus Fund #1, L.P. and may be deemed to beneficially own the 16,390
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shares held by The Focus Fund #1, L.P., including 15,390 shares issuable
upon exercise of a warrant held by The Focus Fund #1, L.P.
(32) The shares include 25,000 shares of our common stock issuable upon exercise
of a warrant held by James J. Cahill.
(33) Gary H. Anderson controls the investment and voting power of North American
Trust Co. as trustee FBO Pillsbury, Madison & Sutru, LLP/Gary H. Anderson.
(34) The shares include 3,396 shares of our common stock issuable upon exercise
of a warrant held by North American Trust Co, a trustee for the benefit of
Pillsbury, Madison & Sutro LLP/Gary H. Anderson.
(35) David Portnoy controls the investment and voting power of the Focus Fund
#1, L.P.
(36) The shares include 15,390 shares of our common stock issuable upon exercise
of a warrant held by The Focus Fund #1, L.P.
(37) Elliot Levine controls the investment and voting power of E.L. Associates
Profit Sharing Plan.
(38) The shares include 9,966 shares of our common stock issuable upon exercise
of a warrant held by E. L. Associates Profit Sharing Plan
We are registering the common shares for resale by the selling stockholders
in accordance with registration rights we have granted to the selling
stockholders. We will pay the registration and filing fees, printing expenses,
listing fees, blue sky fees, if any, and fees and disbursements of our counsel
and counsel for certain of the selling stockholders in connection with this
offering, but the selling stockholders will pay any underwriting discounts,
selling commissions and similar expenses relating to the sale of the shares. In
addition, we have agreed to indemnify certain of the selling stockholders, and
certain affiliated parties against certain liabilities, including liabilities
under the Securities Act of 1933, in connection with this offering. Certain of
the selling stockholders have agreed to indemnify us and our directors and
officers, as well as any person that controls us, against certain liabilities,
including certain liabilities under the Securities Act. The position of the
Securities and Exchange Commission is that indemnification of our directors or
officers, or persons that control us for liabilities under the Securities Act is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
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CERTAIN TRANSACTIONS WITH THE SELLING STOCKHOLDERS
SERIES A PREFERRED STOCK AND WARRANTS FOR SERIES B PREFERRED STOCK
In September 1997, we issued and sold 3,000,000 shares of Series A
preferred stock and warrants to purchase up to 1,250,000 shares of Series B
preferred stock to HarbourVest Partners V -- Direct Fund L.P., which is a
selling stockholder. The aggregate purchase price was $7.5 million, of which
$7.4 million was allocated to the Series A preferred stock and $100,000 was
allocated to the warrants. Immediately prior to the closing of our initial
public offering in October 1999, each share of Series A preferred stock was
automatically converted into one share of our common stock and the warrants were
converted into warrants to purchase an aggregate of 1,250,000 shares of common
stock. The warrants have an exercise price of $3.056 per share. Ofer Nemirovsky,
one of our directors, is a managing director of HarbourVest Partners, LLC, the
managing member of the general partner of HarbourVest Partners V -- Direct Fund
L.P.
SERIES D AND D-1 PREFERRED STOCK
From June 1998 to August 1998, we issued and sold 4,221,846 shares of
Series D preferred stock to certain investors, including the selling
stockholders named below and 686,533 shares of Series D-1 preferred stock to ABN
AMRO for aggregate net proceeds of $15.0 million, or approximately $3.06 per
share. Immediately prior to the closing of our initial public offering, each
outstanding share of Series D and Series D-1 preferred stock automatically
converted into one share of our common stock. Following is information with
respect to each selling stockholder that purchased shares of Series D and/or D-1
preferred stock.
NAME NO. OF SHARES PURCHASE PRICE
---- ------------- --------------
I Eagle Trust............................................. 248,459 $ 759,291
ABN AMRO, Inc.(1)......................................... 46,685 142,669
ABS Ventures IV, L.P...................................... 523,561 1,600,002
ABX Fund, L.P............................................. 130,890 400,000
St. Paul Venture Capital IV, L.L.C........................ 795,566 2,431,250
St. Paul Venture Capital Affiliates Fund I, L.L.C......... 22,497 68,751
HarbourVest Partners V -- Direct Fund L.P................. 818,063 2,500,001
BCE Capital, Inc.......................................... 654,450 1,999,999
ABN AMRO Capital (U.S.A.), Inc............................ 686,533 2,098,045
-------------------------
(1) ABN AMRO, Inc. subsequently transferred its shares to its affiliate, Burnham
Capital, Inc.
Ofer Nemirovsky is a managing director of HarbourVest Partners, LLC, the
managing member of the general partner of HarbourVest Partners V -- Direct Fund
L.P. Daniel J. Foreman is a managing director of ABN AMRO, Inc. and is an
affiliate of I Eagle Trust and ABN AMRO Capital (U.S.A.), Inc. Mr. Nemirovsky
and Mr. Foreman are directors of Daleen.
SERIES E PREFERRED STOCK
In June 1999, we issued and sold 1,496,615 shares of Series E preferred
stock to Science Applications International Corporation for an aggregate
purchase price of $13.5 million, or $9.00 per share. Subsequently, Science
Applications International Corporation transferred the shares to its
wholly-owned subsidiary, SAIC Venture Capital Corporation, which is a selling
stockholder. Immediately prior to the closing of our initial public offering,
each outstanding share of Series E preferred stock automatically converted into
one share of our common stock. William A. Roper,
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Jr., a member of our Board of Directors, is a corporate executive vice president
of Science Applications International Corporation and chairman of the board of
SAIC Venture Capital Corporation.
SERIES F PREFERRED STOCK
On March 30, 2001, we entered into the purchase agreements with respect to
the issuance and sale in the private placement of an aggregate of 247,882 shares
of Series F preferred stock and Series F warrants to purchase an aggregate of
109,068 shares of Series F Preferred Stock. The terms of the private placement,
including the conditions to closing the private placement, are discussed in
"Prospectus Summary -- Recent Developments" above. Set forth below is
information with respect to each selling stockholder that purchased Series F
preferred stock and Series F warrants in the private placement, including the
number of shares of Series F preferred stock purchased, the number of shares of
Series F preferred stock issuable upon exercise of Series F warrants issued to
the selling stockholder and the aggregate purchase price paid by the selling
stockholder.
NUMBER OF SHARES OF
SERIES F PREFERRED
STOCK TO BE WARRANT PURCHASE
NAME PURCHASED SHARES PRICE
---- ------------------- ------- -----------
HarbourVest Partners VI -- Direct Fund
L.P...................................... 90,139 36,056 $10,000,000
SAIC Venture Capital Corporation........... 67,604 27,042 7,500,000
Royal Wulff Ventures, LLC.................. 9,014 3,606 1,000,000
St. Paul Venture Capital VI, LLC........... 18,028 7,211 2,000,000
ABX Fund, L.P.............................. 3,290 1,316 365,000
ABS Ventures IV, L.P....................... 14,738 5,895 1,635,000
Halifax Fund, L.P.......................... 13,521 5,408 1,500,000
Baystar Capital, L.P....................... 13,521 5,408 1,500,000
Baystar International Ltd.................. 4,507 1,803 500,000
Special Situations Private Equity Fund,
L.P...................................... 6,760 2,704 750,000
Special Situations Cayman Fund, L.P........ 6,760 2,704 750,000
Additionally, Robertson Stephens, Inc. acted as our placement agent in the
private placement. Upon the closing of the private placement, we issued to
Robertson Stephens, Inc. Series F warrants to purchase 9,915 shares of Series F
preferred stock as a portion of its compensation for acting as placement agent.
OTHER TRANSACTIONS WITH SAIC VENTURE CAPITAL CORPORATION AND TO ASSOCIATED
COMPANIES
SAIC Venture Capital Corporation is a wholly-owned subsidiary of Science
Applications International Corporation. In fiscal 2000, we derived $391,464 in
revenue from Science Applications International Corporation pursuant to a
license agreement entered into between Science Applications International
Corporation and the Company in June 2000. In addition, Science Applications
International Corporation owns approximately 43% of all voting stock of Danet,
Inc. and 100% of the voting stock of Telcordia. Danet has certain license rights
to our products as well as being a strategic partner/systems integrator of, and
providing certain development services to, Daleen. Sales to Danet for the years
ended December 31, 1998, 1999 and 2000 amounted to $334,794, $1,031,350, and $0,
respectively. We paid Danet, in its capacity as a subcontractor for assistance
with product development services products, $2.2 million, $99,468 and $144,862
for the years ended December 31, 1998, 1999 and 2000, respectively. In
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27
September 2000, we entered into a development services agreement with Danet
pursuant to which Danet agreed to perform work on behalf of Daleen. It is
anticipated that during 2001 we will pay to Danet $240,000 for its development
services under this agreement. We have a strategic alliance relationship with
Telcordia. We did not receive any revenue from, or make any payments to,
Telcordia in connection with this relationship during 1998, 1999 or 2000.
Prior to our receipt of the net proceeds from the private placement, we
obtained a bridge loan from SAIC Venture Capital Corporation in the aggregate
principal amount of $1 million. We paid to SAIC Venture Capital Corporation an
origination fee of $15,000 and interest at the rate of 18% per annum in
connection with the bridge loan. On June 7, 2001, we used a portion of the
proceeds from the private placement to repay in full all outstanding principal
and interest under the bridge loan.
TRANSACTIONS WITH ROBERTSON STEPHENS, INC.
Robertson Stephens, Inc., a selling stockholder, acted as managing
underwriter in our initial public offering of common stock in October 1999. In
connection with our initial public offering, Robertson Stephens, Inc. purchased
from us an aggregate of 4,531,400 shares of common stock, including shares
purchased upon exercise of the underwriters' over-allotment option. The
underwriting discounts and commissions were $0.84 per share. As a result,
Robertson Stephens, Inc. received underwriting discounts and commissions of
$3,806,376 from the sale of the shares of common stock offered and sold by us in
our initial public offering. We also reimbursed Robertson Stephens, Inc. for its
expenses incurred in connection with the offering.
Robertson Stephens, Inc. acted as advisor to us in connection with our
acquisition of Inlogic Software Inc. in December 1999. We paid Robertson
Stephens, Inc. a fee of $1.1 million for its services in connection with the
transaction. We also reimbursed Robertson Stephens, Inc. for its expenses
incurred in connection with the transaction.
Additionally, Robertson Stephens, Inc. acted as our placement agent in the
private placement of our Series F preferred stock and Series F warrants. We paid
Robertson Stephens, Inc. a cash fee of $1.2 million and a Series F warrant to
purchase 9,915 shares of Series F preferred stock on the same terms and
conditions as the Series F warrants issued to the purchasers of the Series F
preferred stock. We also reimbursed Robertson Stephens, Inc. for its expenses
incurred in connection with the private placement.
ISSUANCE OF COMMON STOCK IN ACQUISITION OF INLOGIC SOFTWARE INC.
Effective December 16, 1999, we acquired all of the issued and outstanding
capital shares of Inlogic Software Inc. We acquired the capital shares of
Inlogic Software Inc. in exchange for an aggregate of 2,160,239 exchangeable
shares and 57,435 shares of our common stock. The exchangeable shares were
issued by our wholly-owned subsidiary, Daleen Canada Corporation, but were
exchangeable at any time into shares of our common stock on a one-for-one basis.
All of the exchangeable shares were converted into shares of our common stock
during 2000. We also issued options to acquire an aggregate of 167,326 shares of
our common stock in exchange for all of the outstanding options to acquire
capital shares of Inlogic Software Inc. The terms of the transaction are set
forth in a share purchase agreement as well as certain other transaction
documents which are filed as exhibits to our Current Report on Form 8-K filed on
December 30, 1999. The following selling stockholders were stockholders of
Inlogic and received shares of our common stock pursuant to the Share Purchase
Agreement: Mohammad Aamir, Charles Barton, Corneliu Ionescu, Carl Scase, Stephen
Smith, The VenGrowth Investment Fund, Inc. and 1303949 Ontario Inc. Mohammad
Aamir, who was a principal stockholder and
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chief executive officer of Inlogic Software Inc., joined Daleen as an executive
vice president in December 1999 and a director in January 2000 following our
acquisition of Inlogic Software Inc. Mr. Aamir resigned as a director of Daleen
and as an employee in June 2000. Additionally, Charles Barton, Carl Scase,
Stephen Smith, and Corneliu Ionescu became non-executive employees of Daleen
following our acquisition of Inlogic Software Inc. None of the selling
stockholders except Mr. Ionescu are current employees of Daleen.
On May 11, 2001, we commenced a lawsuit against Mohammad Aamir, 1303949
Ontario Inc. and The Vengrowth Investment Fund Inc. (collectively, the
"defendants"). The case was filed in the Ontario Superior Court of Justice
(Court File No. 01-CV-210809) and is styled Daleen Technologies, Inc. and Daleen
Canada Corporation v. Mohammad Aamir, 1303949 Ontario Inc., and The Vengrowth
Investment Fund Inc. All defendants are former stockholders of Inlogic Software
Inc., a Nova Scotia unlimited liability company that we acquired in December
1999. Additionally, Mr. Aamir was the president and chief executive officer of
Inlogic Software Inc. and is a former director and executive officer of Daleen.
All of the defendants are selling stockholders.
On June 6, 2001, we settled the lawsuit against the defendants. In
connection with the settlement, on June 8, 2001, we granted to the defendants
warrants to purchase an aggregate of 750,000 shares of our common stock with an
exercise price of $1.134 per share. The warrants are for two years and are
immediately exercisable. We also agreed to negotiate in good faith to license
our ecare product as part of the settlement. The terms of the license are not
yet finalized. The defendants agreed to release us from any claims they may have
had against the Company.
PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time to
time by the selling stockholders. As used in this prospectus, the term "selling
stockholders" includes donees, pledgees, transferees or other
successors-in-interest selling shares received from a named selling stockholder
as a gift, partnership distribution, or other non-sale-related transfer after
the date of this prospectus. The selling stockholders will act independently of
us in making decisions with respect to the timing, manner and size of each sale.
Sales of the shares may be effected by or for the account of the selling
stockholders in transactions on The Nasdaq National Market, the over-the-counter
market, or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices,
or in negotiated transactions. The shares may be sold by means of one or more of
the following methods:
- a block trade in which the broker-dealer so engaged will attempt to sell
the shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by that
broker-dealer for its account pursuant to this prospectus;
- ordinary brokerage transactions in which the broker solicits purchasers;
- in connection with short sales in which the shares are redelivered to
close out short positions;
- in connection with the loan or pledge of shares covered by this
prospectus to a broker-dealer, and the sale of the shares so loaned or
the sale of the shares so pledged upon a default;
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- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions in
standardized or over-the-counter options;
- in transactions effected pursuant to one or more plans or agreements
contemplated by Rule 10b5-1 adopted by the Securities and Exchange
Commission;
- privately negotiated transactions; or
- in a combination of any of the above methods.
The selling stockholders and any underwriter, dealer or agent who
participate in the distribution of such shares may be deemed to be
"underwriters" under the Securities Act, and any discount, commission or
concession received by such persons might be deemed to be an underwriting
discount or commission under the Securities Act. Because selling stockholders
may be deemed to be "underwriters" within the meaning of Section 2(11) of the
Securities Act, the selling stockholders will be subject to the prospectus
delivery requirements of the Securities Act.
Any broker-dealer participating in such transactions as agent may receive
commissions from the selling stockholders (and, if acting as agent for the
purchaser of such shares, from such purchaser). Usual and customary brokerage
fees will be paid by the selling stockholders. Broker-dealers may agree with the
selling stockholders to sell a specified number of shares at a stipulated price
per share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the selling stockholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the selling
stockholders. Broker-dealers who acquire shares as principals may thereafter
resell such shares from time to time in transactions (which may involve crosses
and block transactions and which may involve sales to and through other
broker-dealers, including transactions of the nature described above) in the
over-the-counter market, in negotiated transactions or by a combination of such
methods of sale or otherwise at market prices prevailing at the time of sale or
at negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as described above.
HarbourVest Partners V -- Direct Fund L.P., HarbourVest Partners
VI -- Direct Fund L.P., St. Paul Venture Capital IV, L.L.C., St. Paul Venture
Capital VI, L.L.C., St. Paul Venture Capital Affiliates Fund I, L.L.C., ABN AMRO
Capital (U.S.A.), Inc., I Eagle Trust, Burnham Capital, LLC and Halifax Fund,
L.P. are affiliates of registered broker-dealers. Robertson Stephens, Inc. is a
registered broker-dealer. Each of these selling stockholders acquired their
shares of common stock, Series F preferred stock and/or warrants in the ordinary
course of its respective business. Each selling stockholder acquired the Series
F preferred stock or common stock, as the case may be, for its own account for
investment only and not with a view towards, or for resale in connection with,
the public sale or distribution thereof. At the time the selling stockholders
acquired the securities they did not have any agreements or understandings,
direct or indirect, to distribute any of the securities.
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We have advised the selling stockholders that the anti-manipulation rules
under the Securities Exchange Act of 1934 may apply to sales of their shares in
the market and to the activities of the selling stockholders and their
affiliates. The selling stockholders have advised us that during such time as
the selling stockholders may be engaged in the attempt to sell shares registered
hereunder, they will:
- not engage in any stabilization activity in connection with any of our
securities;
- not bid for or purchase any of our securities or any rights to acquire
the our securities, or attempt to induce any person to purchase any of
our securities or rights to acquire our securities other than as
permitted under the Securities Exchange Act of 1934;
- not effect any sale or distribution of their shares until after the
prospectus shall have been appropriately amended or supplemented, if
required, to set forth the terms thereof; and
- effect all sales of shares in broker's transactions through
broker-dealers acting as agents, in transactions directly with market
makers, or in privately negotiated transaction where no broker or other
third party (other than the purchaser) is involved.
The selling stockholders may indemnify any broker-dealer that participates
in transactions involving the sale of their shares against certain liabilities,
including liabilities arising under the Securities Act. Any commissions paid or
any discounts or concessions allowed to any such broker-dealers, and any profits
received on the resale of such shares, may be deemed to be underwriting
discounts and commissions under the Securities Act if any such broker-dealers
purchase shares as principal.
We have agreed to indemnify certain of the selling stockholders against
liability in connection with this offering under their respective agreements
granting registration rights.
In order to comply with the securities laws of certain states, if
applicable, the common stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
common stock may not be sold unless such shares have been registered or
qualified for sale in the applicable state or an exemption from the registration
or qualification requirement is available and is complied with.
We have advised the selling stockholders that during such time as they may
be engaged in a distribution of the shares they are required to comply with
Regulation M promulgated under the Securities Exchange Act of 1934. With certain
exceptions, Regulation M precludes any selling stockholder, any affiliated
purchasers and any broker-dealer or other person who participates in a
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase any security that is the subject of the distribution
until the entire distribution is complete. Regulation M also prohibits any bids
or purchases made in order to stabilize the price of a security in connection
with the distribution of that security. All of the foregoing may affect the
marketability of the common stock. In addition, any securities covered by this
prospectus that qualify for re-sale under Rule 144 promulgated under the
Securities Act may be sold under Rule 144 rather then under this prospectus.
LEGAL MATTERS
The validity of the common stock offered hereby and the issuance thereof
has been passed upon for us by Morris, Manning & Martin, LLP.
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EXPERTS
Our consolidated financial statements and financial statement schedule as
of December 31, 1999 and 2000, and for each of the years in the three-year
period ended December 31, 2000, have been incorporated by reference herein and
in the registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing. The
report of KPMG LLP covering our December 31, 2000 consolidated financial
statements and financial statement schedule contains an explanatory paragraph
that states that our recurring losses from operations and accumulated deficit
raise substantial doubt about our ability to continue as a going concern. Our
consolidated financial statements and financial statement schedule do not
include any adjustments that might result from the outcome of that uncertainty.
The consolidated financial statements of Inlogic Software Inc. and
subsidiary as of December 31, 1997 and 1998 and the consolidated statements of
operations, stockholders' equity (deficiency) and cash flows for the period from
inception on February 20, 1997 to December 31, 1997, and the year ended December
31, 1998, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent chartered
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any reports, statements or other information we have filed with the Commission
at the Commission's public reference room at 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the Commission's public reference rooms in New York, New York
and Chicago, Illinois. Please call the Commission at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. Our public filings
are also available to the public from commercial document retrieval services and
at the website maintained by the Commission at http://www.sec.gov.
INCORPORATION OF DOCUMENTS BY REFERENCE
This prospectus incorporates by reference documents that we have filed, and
will in the future file, with the Securities and Exchange Commission. This means
that we disclose important information to you by referring you to another
document filed separately with the Securities and Exchange Commission. These
documents contain important business information about us, our business and our
financial condition, results of operations and cash flows. Except as described
below, the information incorporated by reference is deemed to be a part of this
prospectus, and later information that we file with the Securities and Exchange
Commission will automatically update and supercede this information.
This prospectus is a part of a registration statement that we filed with
the Securities and Exchange Commission. The registration statement contains more
information than this prospectus, including certain exhibits. You can get a copy
of the registration statement from the Securities and Exchange Commission at the
address or website listed above.
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The following documents that we have previously filed with the Securities
and Exchange Commission are incorporated by reference in this prospectus:
- Our Annual Report on Form 10-K for the fiscal year ended December 31,
2000, as amended by Form 10-K/A;
- Our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31,
2001, as amended by Form 10-Q/A;
- Our Quarterly Report on Form 10-Q for the fiscal quarter ended June 30,
2001, as amended by Form 10-Q/A;
- Our Current Report on Form 8-K filed on June 15, 2001;
- Our Current Report on Form 8-K filed on December 30, 1999 and as amended
by our Current Report on Form 8-K/A filed on February 29, 2000; and
- The description of our common stock contained in the registration
statement on Form 8-A filed on September 30, 1999.
In addition, all documents filed by us with the Securities and Exchange
Commission pursuant to Sections 13(a), 13(c), 14, and 15(d) of the Securities
Exchange Act of 1934, as amended, after the date hereof and prior to the date on
which this offering is completed or terminated are incorporated by reference
into this prospectus.
Upon written or oral request, we will provide, at no cost to you, a copy of
any of these documents. You may request a copy of these filings, by writing or
telephoning us at the following address: Daleen Technologies, Inc., 1750 Clint
Moore Road, Boca Raton, Florida 33487, Attention: Jeanne Prayther, telephone
(561) 999-8000. Our Internet address is www.daleen.com.
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DALEEN TECHNOLOGIES, INC.
(DALEEN TECHNOLOGIES LOGO)
56,192,841 SHARES
COMMON STOCK, PAR VALUE $0.01
PROSPECTUS
34
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 16. EXHIBITS.
The following exhibits are included or incorporated herein by reference:
EXHIBIT
NO. DESCRIPTION
------- -----------
3.1(a) Certificate of incorporation (Incorporated by reference to
Exhibit 3.1 to the registrant's Registration Statement on
Form S-1/A (File No. 333-82487) filed on August 18, 1999)
3.1(b) Certificate of Amendment to certificate of incorporation
(Incorporated by reference to Exhibit 10.2 to the
registrant's Current Report on Form 8-K filed on June 15,
2001)
3.2 Bylaws (Incorporated by reference to Exhibit 3.2 to the
registrant's Registration Statement on Form S-1/A (File
No. 333-82487) filed on August 18, 1999)
4.1 Form of Common Stock Certificate (Incorporated by reference
to Exhibit 4.2 to the registrant's Registration Statement
on Form S-1/A (File No. 333-82487) filed on August 18,
1999)
5.1* Opinion of Morris, Manning & Martin, LLP
23.1 Consent of KPMG LLP
23.2 Consent of KPMG LLP
23.3 Consent of Morris, Manning & Martin, LLP (included in
Exhibit 5.1)
24.1* Power of Attorney (included on signature page)
-------------------------
* Previously filed.
II-1
35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Boca Raton, State of Florida on September 12, 2001.
Daleen Technologies, Inc.
By: /s/ JAMES DALEEN
-----------------------------------
James Daleen
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities indicated on the date indicated:
SIGNATURE TITLE DATE
--------- ----- ----
/s/ JAMES DALEEN Chairman of the Board September 12, 2001
--------------------------------------------- and Chief Executive
James Daleen Officer
/s/ DAVID B. COREY President and Chief September 12, 2001
--------------------------------------------- Operating Officer and a
David B. Corey Director
/s/ JEANNE PRAYTHER Acting Chief Financial September 12, 2001
--------------------------------------------- Officer, Secretary and
Jeanne Prayther Treasurer (Principal
Financial and
Accounting Officer)
OFER NEMIROVSKY* Director September , 2001
---------------------------------------------
Ofer Nemirovsky
WILLIAM A. ROPER, JR.* Director September , 2001
---------------------------------------------
William A. Roper, Jr.
STEPHEN J. GETSY* Director September , 2001
---------------------------------------------
Stephen J. Getsy
II-2
36
SIGNATURE TITLE DATE
--------- ----- ----
DANIEL J. FOREMAN* Director September , 2001
---------------------------------------------
Daniel J. Foreman
PAUL G. CATAFORD* Director September , 2001
---------------------------------------------
Paul G. Cataford
P.J. HILBERT* Director September , 2001
---------------------------------------------
P.J. Hilbert
*By: /s/ JAMES DALEEN
--------------------------------------------
James Daleen,
As Attorney-in-Fact
II-3
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.1(a) Certificate of incorporation (Incorporated by reference to
Exhibit 3.1 to the registrant's Registration Statement on
Form S-1/A (File No. 333-82487) filed on August 18, 1999)
3.1(b) Certificate of Amendment to certificate of incorporation
(Incorporated by reference to Exhibit 10.2 to the
registrant's Current Report on Form 8-K filed on June 15,
2001)
3.2 Bylaws (Incorporated by reference to Exhibit 3.2 to the
registrant's Registration Statement on Form S-1/A (File
No. 333-82487) filed on August 18, 1999)
4.1 Form of Common Stock Certificate (Incorporated by reference
to Exhibit 4.2 to the registrant's Registration Statement
on Form S-1/A (File No. 333-82487) filed on August 18,
1999)
5.1* Opinion of Morris, Manning & Martin, LLP
23.1 Consent of KPMG LLP
23.2 Consent of KPMG LLP
23.3 Consent of Morris, Manning & Martin, LLP (included in
Exhibit 5.1)
24.1* Power of Attorney (included on signature page)
-------------------------
* Previously filed.