Filed Pursuant to Rule 424(b)(3)
Registration No. 333-64698
PROSPECTUS
ART TECHNOLOGY GROUP, INC.
18,745 SHARES OF COMMON STOCK
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This prospectus relates to resales of shares of common stock issued
that we issued to the former stockholders of The Toronto Technology Group Inc.
in connection with our acquisition of that company.
We will not receive any proceeds from the sale of the shares.
The selling stockholders identified in this prospectus, or their
pledgees, donees, transferees or other successors-in-interest, may offer the
shares from time to time through public or private transactions at prevailing
market prices, at prices related to prevailing market prices or at privately
negotiated prices.
Our common stock is traded on the Nasdaq National Market under the
symbol "ARTG." On July 5, 2001, the closing sale price of the common stock on
Nasdaq was $4.28 per share. You are urged to obtain current market quotations
for the common stock.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is July 27, 2001.
TABLE OF CONTENTS
PAGE
Prospectus Summary.......................................... 3
The Offering................................................ 3
Risk Factors................................................ 4
Special Note Regarding Forward-Looking Information.......... 11
Use Of Proceeds............................................. 12
Selling Stockholders........................................ 12
Plan Of Distribution........................................ 14
Legal Matters............................................... 15
Experts..................................................... 15
Where You Can Find More Information......................... 16
Incorporation Of Documents By Reference..................... 16
Unless the context otherwise requires references in this prospectus to
"ATG," "we," "us," and "our" refer to Art Technology Group, Inc. and its
subsidiaries.
ATG and Dynamo are our registered trademarks and Art Technology Group,
Dynamo Personalization Server, Dynamo Scenario Server and the ATG logo are our
trademarks. J2EE, Java and JavaBeans are trademarks of Sun Microsystems. This
prospectus also contains trademarks and tradenames of other companies.
We have not authorized anyone to provide you with information different
from that contained or incorporated by reference in this prospectus. The selling
stockholders are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are permitted.
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PROSPECTUS SUMMARY
THIS SUMMARY DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD
CONSIDER BEFORE INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE
PROSPECTUS CAREFULLY, INCLUDING THE RISKS OF INVESTING IN OUR COMMON STOCK
DISCUSSED UNDER "RISK FACTORS."
ART TECHNOLOGY GROUP, INC.
OUR BUSINESS: We offer an integrated suite of Internet customer relationship
management and e-commerce software applications, as well as related
application development, integration and support services. Our
solution enables businesses to understand, manage and build online
customer relationships and to market, sell and support products and
services over the Internet more effectively. Our Dynamo product
suite includes an application server that is specifically designed
to enable and support Web applications, as well as e-commerce and
Internet customer management applications. An application server is
a software program that facilitates the development, deployment and
management of other software programs. Our solution is designed to
provide businesses with the core application platform and software
tools required to develop and deploy personalized, reliable,
large-scale Web sites for conducting e-commerce.
OUR ADDRESS: Our executive offices are located at 25 First Street, Cambridge,
Massachusetts 02141. Our telephone number is (617) 386-1000. Our
Internet address is www.atg.com. The information on our website is
not incorporated by reference in this prospectus.
THE OFFERING
COMMON STOCK OFFERED: The 18,745 shares of common stock offered by this prospectus are
being sold by the selling stockholders. The selling stockholders
are the former stockholders of The Toronto Technology Group Inc.
who acquired the offered shares in connection with our acquisition
of The Toronto Technology Group Inc. in July 2000.
USE OF PROCEEDS: We will not receive any proceeds from the sale of shares in this
offering.
NASDAQ NATIONAL MARKET SYMBOL: ARTG
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RISK FACTORS
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. YOU
SHOULD CAREFULLY CONSIDER THE RISKS AND UNCERTAINTIES DESCRIBED BELOW BEFORE
PURCHASING OUR COMMON STOCK. THE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT
THE ONLY ONES FACING OUR COMPANY. ADDITIONAL RISKS AND UNCERTAINTIES MAY ALSO
IMPAIR OUR BUSINESS OPERATIONS. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR,
OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF OPERATIONS WOULD LIKELY SUFFER.
IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK COULD FALL, AND YOU MAY LOSE
ALL OR PART OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.
RISKS RELATED TO OUR BUSINESS
WE EXPECT OUR LOSSES TO CONTINUE AND WE DO NOT BELIEVE WE WILL BE ABLE TO
SUSTAIN OUR CURRENT REVENUE GROWTH RATE, AND WE CANNOT BE CERTAIN THAT WE WILL
BE ABLE TO ATTAIN, SUSTAIN OR INCREASE PROFITABILITY ON A QUARTERLY OR ANNUAL
BASIS.
We incurred a loss in the first quarter of 2001, and the second, third
and fourth quarters of 2000 were our first profitable quarters since inception.
We have incurred substantial costs to develop and enhance our technology and
products, to recruit and train a marketing and sales group, and to establish an
administrative organization. As of March 31, 2001, we had an accumulated deficit
of $27.3 million. We anticipate that our operating expenses will increase as we
continue to develop our technology, increase our sales and marketing activities,
create and expand our distribution channels, expand our services capabilities
and improve our operational and financial systems. Although our revenues have
grown significantly, they have grown from a relatively small base and, as a
result, we do not believe that we will be able to sustain the growth rates we
have achieved in recent quarters. In addition, we believe the current United
States economic downturn will have an adverse effect on demand for our products
and services, and therefore adversely affect our revenues as well. Because we
have a limited operating history, particularly as a company that sells software
products, we have difficulty predicting our future operating results and we
cannot be certain that our revenues will grow at a rate that will allow us to
achieve profitability. In addition, we cannot be certain that if we do achieve
profitability, that we will be able to sustain or increase profitability on a
quarterly or annual basis.
WE EXPECT OUR OPERATING RESULTS TO FLUCTUATE AND THE PRICE OF OUR COMMON STOCK
COULD FALL IF QUARTERLY RESULTS ARE LOWER THAN THE EXPECTATIONS OF SECURITIES
ANALYSTS.
Our revenues and operating results are likely to vary significantly
from quarter to quarter. If our quarterly results fall below the expectations of
securities analysts, the price of our common stock could fall. A number of
factors are likely to cause variations in our operating results, including:
o demand for our products and services;
o the timing of sales of our products and services;
o the timing of customer orders and product implementations;
o unexpected delays in introducing new products and services;
o increased expenses, whether related to sales and marketing,
product development or administration;
o changes in the rapidly evolving market for Internet customer
relationship management solutions;
o the mix of revenues derived from products and services;
o cost overruns related to fixed price services projects;
o the mix of domestic and international sales; and
o costs related to possible acquisitions of technologies or
businesses.
Accordingly, we believe that quarter-to-quarter comparisons of our
operating results are not necessarily meaningful. The results of one or a series
of quarters should not be relied upon as an indication of our future
performance.
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We plan to increase our operating expenses to expand our sales and
marketing operations, develop new distribution channels, fund greater levels of
research and development, broaden professional services and support and improve
our operational and financial systems. If our revenues do not increase as
quickly as these expenses, our operating results may suffer and our stock price
may decline.
OUR LENGTHY SALES CYCLE MAKES IT DIFFICULT TO PREDICT OUR QUARTERLY RESULTS.
Our long sales cycle, which can range from several weeks to several
months or more, makes it difficult to predict the quarter in which sales may
occur. We have a long sales cycle because we generally need to educate potential
customers regarding the use and benefits of our products and services. Our sales
cycle varies depending on the size and type of customer contemplating a purchase
and whether we have conducted business with a potential customer in the past. In
addition, we believe the current economic downturn in the United States has
increased the average length of our sales cycle as customers have deferred
implementing new e-commerce solutions. We may incur significant sales and
marketing expenses in anticipation of licensing our products, and if we do not
achieve the level of revenues we expected, our operating results will suffer and
our stock price may decline. These potential customers frequently need to obtain
approvals from multiple decision makers prior to making purchase decisions.
Delays in sales could cause significant variability in our revenues and
operating results for any particular period.
THE MARKET FOR INTERNET CUSTOMER RELATIONSHIP MANAGEMENT SOLUTIONS IS NEW AND
RAPIDLY EVOLVING AND WE CANNOT BE CERTAIN THAT A VIABLE MARKET FOR OUR PRODUCTS
WILL EMERGE OR BE SUBSTANTIAL.
The market for Internet customer relationship management solutions is
new and rapidly evolving. We expect that we will continue to need intensive
marketing and sales efforts to educate prospective customers and partners about
the uses and benefits of our products and services. Accordingly, we cannot be
certain that a viable market for our products is sustainable. Organizations that
have already invested substantial resources in other methods of conducting
business may be reluctant or slow to adopt a new approach that may replace,
limit or compete with their existing systems.
THE MARKET FOR INTERNET CUSTOMER RELATIONSHIP MANAGEMENT SOLUTIONS IS INTENSELY
COMPETITIVE AND WE EXPECT COMPETITION TO INTENSIFY IN THE FUTURE.
The market for Internet customer relationship management solutions is
intensely competitive and we expect competition to intensify in the future as
revenues generated from Internet commerce increase. This level of competition
could reduce our revenues and result in increased losses or reduced profits. Our
primary competition currently comes from in-house development efforts by
potential customers or partners, as well as from other vendors of Web-based
application software. We currently compete with Internet application software
vendors such as Blue Martini, BroadVision and Vignette. We also compete with
platform application server products and vendors such as BEA Systems, IBM's
Websphere products, Microsoft, Netscape and the Netscape/Sun Microsystems
Alliance, among others. Many of our competitors have longer operating histories
and significantly greater financial, technical, marketing and other resources
than we do, and may be able to respond more quickly to new or changing
opportunities, technologies and customer requirements. Also, many current and
potential competitors have greater name recognition and more extensive customer
bases that they can leverage to gain market share. These competitors may be able
to undertake more extensive promotional activities, adopt more aggressive
pricing policies and offer more attractive terms to purchasers than we can.
Moreover, our current and potential competitors, such as Microsoft and the
Netscape/Sun Microsystems Alliance, may bundle their products in a manner that
may discourage users from purchasing our products. In addition, current and
potential competitors have established or may establish cooperative
relationships among themselves or with third parties to enhance their products
and expand their markets. Accordingly, new competitors or alliances among
competitors may emerge and rapidly acquire significant market share.
WE DEPEND ON OUR RELATIONSHIPS WITH SYSTEMS INTEGRATORS.
Since our potential customers often rely on third-party systems
integrators to develop, deploy and manage Web sites for conducting commerce on
the Internet, we cultivate relationships with systems integrators in order to
encourage them to support our products. If we do not adequately train a
sufficient number of systems integrators or
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if systems integrators were to devote their efforts to integrating or co-selling
different products, our revenues could be reduced and our operating results
could be harmed.
WE WILL NEED TO IMPLEMENT AND IMPROVE OUR OPERATIONAL SYSTEMS AND HIRE
ADDITIONAL SERVICE PROFESSIONALS ON A TIMELY BASIS IN ORDER TO MANAGE GROWTH.
We have expanded our operations rapidly in recent years. We intend to
continue to expand in the foreseeable future to pursue existing and potential
market opportunities and to support our growing customer base. Rapid growth
places a significant demand on our management and operational resources. In
order to manage growth effectively, we must implement and improve our
operational systems, procedures and controls on a timely basis. We plan in
particular to expand our professional services capabilities to support increased
product license sales. However, we cannot be certain that we will be able to
attract a sufficient number of highly qualified service personnel. In addition,
new service personnel will require training and it will take time for them to
become productive. If we fail to improve operational systems or to expand our
professional service capabilities in a timely manner, we could experience
customer dissatisfaction, cost inefficiencies and lost revenue opportunities,
which could harm our operating results.
COMPETITION WITH OUR RESELLER PARTNERS COULD LIMIT OUR SALES OPPORTUNITIES AND
JEOPARDIZE THESE RELATIONSHIPS.
We sell products through resellers and original equipment
manufacturers. In some instances, we target our direct selling efforts toward
markets that are also served by some of these partners. This competition may
limit our ability to sell our products and services directly in these markets
and may jeopardize, or result in the termination of, these relationships.
OUR BUSINESS MAY BE HARMED IF WE LOSE THE SERVICES OF EITHER JEET SINGH OR
JOSEPH CHUNG, OUR CO-FOUNDERS, OR IF WE ARE UNABLE TO ATTRACT AND RETAIN OTHER
KEY PERSONNEL.
Our success depends largely on the skills, experience and performance
of some key members of our management, particularly our co-founders Jeet Singh
and Joseph Chung. If we lose one or more of our key employees, our business
could be harmed. We have purchased, and are the beneficiaries of, insurance
policies on the lives of Mr. Singh and Mr. Chung, each in the amount of
$1,000,000. Proceeds under this insurance may not cover our losses. In addition,
our future success will depend in large part on our ability to continue
attracting and retaining highly skilled personnel. Like other software
companies, we face intense competition for qualified personnel. We may not be
successful in attracting, assimilating and retaining qualified personnel in the
future.
WE NEED TO EXPAND OUR SALES AND DISTRIBUTION CAPABILITIES IN ORDER TO INCREASE
MARKET AWARENESS OF OUR PRODUCTS AND INCREASE OUR REVENUES.
We must expand our direct and indirect sales operations to increase
market awareness of our products and generate increased revenues. We may not be
successful in these efforts. We have recently expanded our direct sales force
and plan to hire additional sales personnel. Our products and services require a
sophisticated sales effort targeted at the senior management of our prospective
customers. Newly-hired employees will require training and it will take time for
them to achieve full productivity. We may be unable to hire enough qualified
individuals in the future, and newly hired employees may not achieve necessary
levels of productivity.
WE COULD INCUR SUBSTANTIAL COSTS DEFENDING OUR INTELLECTUAL PROPERTY FROM
INFRINGEMENT OR A CLAIM OF INFRINGEMENT.
Our Innovation Solutions services often involve the development of
custom software applications for specific customers. In some cases, customers
retain ownership or impose restrictions on our ability to use the technologies
developed from these projects. Issues relating to the ownership of software can
be complicated, and disputes could arise that affect our ability to resell or
reuse applications we develop for customers.
We seek to protect the source code for our proprietary software both as
a trade secret and as a copyrighted work. However, because we make the source
code available to some customers, third parties may be more likely to
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misappropriate it. Our policy is to enter into confidentiality agreements with
our employees, consultants, vendors and customers and to control access to our
software, documentation and other proprietary information. Despite these
precautions, it may be possible for someone to copy our software or other
proprietary information without authorization or to develop similar software
independently.
In recent years, there has been significant litigation in the United
States involving patents and other intellectual property rights. We could incur
substantial costs to prosecute or defend any intellectual property litigation.
If we sue to enforce our rights, the litigation would be expensive, would divert
management resources and may not prevent the other parties from using our
intellectual property without permission. In February 2000, we settled a lawsuit
filed by BroadVision, which alleged that we were infringing on a patent for a
method of conducting e-commerce. As part of the settlement, we agreed to pay
BroadVision a total of $15.0 million in license fees over a three-year period,
of which $11.8 million had been paid as of March 31, 2001.
In addition, we have agreed to indemnify customers against claims that
our products infringe the intellectual property rights of third parties. The
results of any intellectual property litigation to which we might become a party
may force us to do one or more of the following:
o cease selling or using products or services that incorporate
the challenged intellectual property;
o obtain a license, which may not be available on reasonable
terms, to sell or use the relevant technology; or
o redesign those products or services to avoid infringement.
IF WE FAIL TO ADAPT TO RAPID CHANGES IN THE INTERNET CUSTOMER RELATIONSHIP
MANAGEMENT SOFTWARE MARKET, OUR EXISTING PRODUCTS COULD BECOME OBSOLETE.
The market for our products is marked by rapid technological change,
frequent new product introductions and Internet-related technology enhancements,
uncertain product life cycles, changes in customer demands and evolving industry
standards. We may not be able to develop and market new products or product
enhancements that comply with present or emerging Internet technology standards.
New products based on new technologies or new industry standards could render
our existing products obsolete and unmarketable. To succeed, we will need to
enhance our current products and develop new products on a timely basis to keep
pace with developments related to Internet technology and to satisfy the
increasingly sophisticated requirements of customers. E-commerce technology is
complex and new products and product enhancements can require long development
and testing periods. Any delays in developing and releasing enhanced or new
products could cause us to lose revenue opportunities and customers.
OUR BUSINESS MAY SUFFER IF WE FAIL TO ADDRESS THE CHALLENGES ASSOCIATED WITH
INTERNATIONAL OPERATIONS.
We have recently begun to invest significant financial and managerial
resources to expand our sales and marketing operations in international markets.
We currently maintain offices in Australia, Canada, England, France, Germany,
Hong Kong, Japan, the Netherlands, Singapore and Sweden. We derived 33% of our
total revenues from customers outside the United States for the three months
ended March 31, 2001. We anticipate that revenues from customers outside the
United States will account for an increased portion of our total revenues for
the foreseeable future. To date, however, we have limited experience in
international operations and may not be able to compete successfully in
international markets. Our operations outside North America are subject to
additional risks, including:
o unexpected changes in regulatory requirements, exchange rates,
tariffs and other barriers;
o longer payment cycles and problems in collecting accounts
receivable;
o political and economic instability;
o difficulties in managing system integrators and technology
partners;
o difficulties in staffing and managing foreign subsidiary
operations;
o differing technology standards;
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o difficulties and delays in translating products and product
documentation into foreign languages;
o reduced protection for intellectual property rights in some of
the countries in which we operate or plan to operate;
o problems associated with the conversion of various European
currencies into a single currency, the Euro; and
o potentially adverse tax consequences.
The impact of future exchange rate fluctuations on our operating
results cannot be accurately predicted. We may increase the extent to which we
denominate arrangements with international customers in the currencies of the
countries in which the software or services are provided. From time to time we
may engage in hedges of a significant portion of contracts denominated in
foreign currencies. Any hedging policies implemented by us may not be
successful, and the cost of these hedging techniques may have a significant
negative impact on our operating results.
WE RELY ON JAVA AS THE PROGRAMMING LANGUAGE IN WHICH WE DEVELOP OUR PRODUCTS AND
OUR BUSINESS COULD BE HARMED IF JAVA LOSES MARKET ACCEPTANCE OR IF WE ARE NOT
ABLE TO CONTINUE USING JAVA OR JAVA RELATED TECHNOLOGIES.
We write our software in the Java computer programming language
developed by Sun Microsystems. While a number of companies have introduced Web
applications based on Java, Java could fall out of favor, and support by Sun
Microsystems or other companies could decline. Moreover, our new Dynamo 5
e-Business Platform is designed to support Sun's Java 2 Platform, Enterprise
Edition, or J2EE, standards for developing modular Java programs that can be
accessed over a network. We have licensed the J2EE brand and certification tests
from Sun. There can be no assurance that these standards will be widely adopted,
that we can continue to support J2EE standards established by Sun from time to
time or that the J2EE brand will continue to be made available to us on
commercially reasonable terms. If Java or J2EE support decreased or we could not
continue to use Java or related Java technologies or to support J2EE, we might
have to rewrite the source code for our entire product line to enable our
products to run on other computer platforms. Also, changes to Java or J2EE
standards or the loss of our license to the J2EE brand could require us to
change our products and adversely affect the perception of our products by our
customers. If we were unable to develop or implement appropriate modifications
to our products on a timely basis, we could lose revenue opportunities and our
business could be harmed.
OUR SOFTWARE PRODUCTS MAY CONTAIN ERRORS OR DEFECTS THAT COULD RESULT IN LOST
REVENUES, DELAYED OR LIMITED MARKET ACCEPTANCE, OR PRODUCT LIABILITY CLAIMS WITH
SUBSTANTIAL LITIGATION COSTS.
Complex software products such as ours often contain errors or defects,
particularly when first introduced or when new versions or enhancements are
released. We began shipping our new application suite, Dynamo 5 e-business
Platform, in September 2000. Despite internal testing and testing by customers,
our current and future products may contain serious defects. Serious defects or
errors could result in lost revenues or a delay in market acceptance.
Since our customers use our products for critical business applications
such as e-commerce, errors, defects or other performance problems could result
in damage to our customers. They could seek significant compensation from us for
the losses they suffer. Although our license agreements typically contain
provisions designed to limit our exposure to product liability claims, existing
or future laws or unfavorable judicial decisions could negate these limitations.
Even if not successful, a product liability claim brought against us would
likely be time-consuming and costly.
IF WE ACQUIRE OTHER COMPANIES OR BUSINESSES, WE WILL BE SUBJECT TO RISKS THAT
COULD HURT OUR BUSINESS.
We acquired Petronio Technology Group in May 2000 for consideration of
$1.2 million and the Toronto Technology Group in July 2000 for consideration of
$12.0 million. In the future, we may pursue additional acquisitions to obtain
complementary businesses, products, services or technologies. An acquisition may
not produce the revenues, earnings or business synergies that we anticipated,
and an acquired business, product, service
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or technology might not perform as we expected. If we pursue an acquisition, our
management could spend a significant amount of time and effort in identifying
and completing the acquisition. If we complete an acquisition, we may encounter
significant difficulties and incur substantial expense in integrating the
operations and personnel of the acquired company into our operation while
preserving the goodwill of the acquired company. In particular, we may lose the
services of key employees of the acquired company and we may make changes in
management that impair the acquired company's relationships with employees and
customers.
Any of these outcomes could prevent us from realizing the anticipated
benefits of our acquisitions. To pay for an acquisition, we might use stock or
cash. Alternatively, we might borrow money from a bank or other lender. If we
use our stock, our stockholders would experience dilution of their ownership
interests. If we use cash or debt financing, our financial liquidity would be
reduced. Finally, if we are unable to account for our acquisitions under the
"pooling-of-interests" method of accounting, which may be eliminated, we may be
required to capitalize a significant amount of intangibles, including goodwill,
which may lead to significant amortization charges. In addition, we may incur
significant, one-time write-offs and amortization charges. These amortization
charges and write-offs could decrease our future earnings or increase our future
losses.
RISKS RELATED TO THE INTERNET INDUSTRY
OUR PERFORMANCE WILL DEPEND ON THE GROWTH OF E-COMMERCE.
Our success will depend heavily on the acceptance and wide use of the
Internet for e-commerce. The current United States economic downturn will reduce
demand for our products if customers and potential customers delay or cancel the
implementation of customer relationship management solutions. Consumers and
businesses may reject the Internet as a viable commercial medium for a number of
reasons, including potentially inadequate network infrastructure, slow
development of enabling technologies, insufficient commercial support or privacy
concerns. The Internet infrastructure may not be able to support the demands
placed on it by increased usage. In addition, delays in the development or
adoption of new standards and protocols required to handle increased levels of
Internet activity, or increased government regulation could cause the Internet
to lose its viability as a commercial medium. Even if the required
infrastructure, standards, protocols and complementary products, services or
facilities are developed, we may incur substantial expenses adapting our
solutions to changing or emerging technologies.
REGULATIONS COULD BE ENACTED THAT EITHER DIRECTLY RESTRICT OUR BUSINESS OR
INDIRECTLY IMPACT OUR BUSINESS BY LIMITING THE GROWTH OF E-COMMERCE.
As e-commerce evolves, federal, state and foreign agencies could adopt
regulations covering issues such as user privacy, content and taxation of
products and services. If enacted, government regulations could limit the market
for our products and services or could impose burdensome requirements that
render our business unprofitable. Although many regulations might not apply to
our business directly, we expect that laws regulating the solicitation,
collection or processing of personal and consumer information could indirectly
affect our business. The Telecommunications Act of 1996 prohibits certain types
of information and content from being transmitted over the Internet. The
prohibition's scope and the liability associated with a violation are currently
unsettled. In addition, although substantial portions of the Communications
Decency Act were held to be unconstitutional, we cannot be certain that similar
legislation will not be enacted and upheld in the future. It is possible that
legislation could expose companies involved in e-commerce to liability, which
could limit the growth of e-commerce generally. Legislation like the
Telecommunications Act and the Communications Decency Act could dampen the
growth in Web usage and decrease its acceptance as a medium of communications
and commerce.
THE INTERNET IS GENERATING PRIVACY CONCERNS THAT COULD RESULT IN LEGISLATION OR
MARKET PERCEPTIONS THAT COULD HARM OUR BUSINESS OR RESULT IN REDUCED SALES OF
OUR PRODUCTS, OR BOTH.
Businesses use our Dynamo Personalization Server product to develop and
maintain profiles to tailor the content to be provided to Web site visitors.
When a visitor first arrives at a Web site, our software creates a profile for
that visitor. If the visitor registers or logs in, the visitor's identity is
added to the profile, preserving any profile information that was gathered up to
that point. Dynamo Personalization Server tracks both explicit user profile data
supplied by the user as well as implicit profile attributes derived from the
user's behavior on the Web site. Privacy concerns may cause visitors to resist
providing the personal data or avoid Web sites tracking the Web behavioral
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information necessary to support this profiling capability. More importantly,
even the perception of security and privacy concerns, whether or not valid, may
indirectly inhibit market acceptance of our products. In addition, legislative
or regulatory requirements may heighten these concerns if businesses must notify
Web site users that the data captured after visiting Web sites may be used to
direct product promotion and advertising to that user. Other countries and
political entities, such as the European Economic Community, have adopted such
legislation or regulatory requirements. The United States may adopt similar
legislation or regulatory requirements. If privacy legislation is enacted or
consumer privacy concerns are not adequately addressed, our business, financial
condition and operating results could be harmed.
Our products use "cookies" to track demographic information and user
preferences. A "cookie" is information keyed to a specific user that is stored
on a computer's hard drive, typically without the user's knowledge. Cookies are
generally removable by the user, although removal could affect the content
available on a particular site. Germany has imposed laws limiting the use of
cookies, and a number of Internet commentators and governmental bodies in the
United States and other countries have urged passage of laws limiting or
abolishing the use of cookies. If such laws are passed or if users begin to
delete or refuse cookies as a common practice, demand for our personalization
products could be reduced.
PROJECTIONS INCORPORATED IN THIS PROSPECTUS RELATING TO THE GROWTH OF E-COMMERCE
AND THE INTERNET ARE BASED ON ASSUMPTIONS THAT COULD TURN OUT TO BE INCORRECT
AND ACTUAL RESULTS COULD BE MATERIALLY DIFFERENT FROM THE PROJECTIONS.
The documents incorporated by reference in this prospectus contain
various data and projections related to revenues generated by electronic
commerce and the size of the worldwide Internet commerce application software
market. These data and projections are inherently imprecise, and investors are
cautioned not to place undue reliance on them. These data and projections have
been included in studies prepared by International Data Corporation, an
independent market research firm, and the projections are based on surveys,
financial reports and models used by IDC to measure license revenues and
associated maintenance fees derived from sales to e-commerce sites. These
projections include assumptions regarding business and home use of the Internet,
including assumptions as to growth in the percentage of Web users making online
purchases, increases in the amount of time people spend using the Web, changing
attitudes toward Web usage and purchasing, levels of business saturation for Web
use and increases in the level of software spending by businesses, as well as
various assumptions regarding the rate of growth of Web use in countries outside
the United States. Actual results or circumstances may be materially different
from the projections.
RISKS RELATED TO THE SECURITIES MARKET
OUR STOCK PRICE MAY BE VOLATILE.
The market price of our common stock has fluctuated in the past and is
likely to continue to be highly volatile. For example, the market price of our
common stock has ranged from $4.05 per share to $126.88 per share since our
initial public offering in July 1999. Fluctuations in market price and volume
are particularly common among securities of Internet and software companies. The
market price of our common stock may fluctuate significantly in response to the
following factors, some of which are beyond our control:
o variations in our quarterly operating results;
o changes in market valuations of Internet and software
companies;
o our announcements of significant contracts, acquisitions,
strategic partnerships, joint ventures or capital commitments;
o our failure to complete significant sales;
o additions or departures of our key personnel;
o future sales of our common stock; or
o changes in financial estimates by securities analysts.
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WE MAY INCUR SIGNIFICANT COSTS FROM CLASS ACTION LITIGATION.
In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
stock. We may be the target of similar litigation in the future. Securities
litigation could result in substantial costs and divert management's attention
and resources.
OUR EXISTING STOCKHOLDERS WILL BE ABLE TO INFLUENCE ALL MATTERS REQUIRING
STOCKHOLDER APPROVAL AND COULD DELAY OR PREVENT SOMEONE FROM ACQUIRING OR
MERGING WITH US ON TERMS FAVORED BY A MAJORITY OF OUR INDEPENDENT STOCKHOLDERS.
Our executive officers and directors beneficially owned approximately
20% of our common stock as of April 30, 2001. As a result, these stockholders
may be able to influence matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. This
could delay or prevent someone from acquiring or merging with us.
ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND DELAWARE LAW COULD PREVENT
OR DELAY A CHANGE IN CONTROL OF OUR COMPANY.
Certain provisions of our certificate of incorporation and by-laws may
discourage, delay or prevent a merger or acquisition that a stockholder may
consider favorable, which could reduce the market price of our common stock.
These provisions include:
o authorizing the issuance of "blank check" preferred stock;
o providing for a classified board of directors with staggered,
three-year terms;
o providing that directors may only be removed for cause by a
two-thirds vote of stockholders;
o limiting the persons who may call special meetings of
stockholders prohibiting stockholder action by written
consent; and
o establishing advance notice requirements for nominations for
election to the board of directors or for proposing matters
that can be acted on by stockholders at stockholder meetings.
Delaware law may also discourage, delay or prevent someone from
acquiring or merging with us.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
This prospectus includes and incorporates forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Exchange Act of 1934. All statements, other than statements of
historical facts, included or incorporated in this prospectus regarding our
strategy, future operations, financial position, future revenues, projected
costs, prospects, plans and objectives of management are forward-looking
statements. The words "anticipates," "believes," "estimates," "expects,"
"intends," "may," "plans," "projects," "will," "would" and similar expressions
are intended to identify forward-looking statements, although not all
forward-looking statements contain these identifying words. We cannot guarantee
that we actually will achieve the plans, intentions or expectations disclosed in
our forward-looking statements and you should not place undue reliance on our
forward-looking statements. Actual results or events could differ materially
from the plans, intentions and expectations disclosed in the forward-looking
statements we make. We have included important factors in the cautionary
statements included or incorporated in this prospectus, particularly under the
heading "Risk Factors", that we believe could cause actual results or events to
differ materially from the forward-looking statements that we make. Our
forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or investments we may make.
We do not assume any obligation to update any forward-looking statements.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of shares by the selling
stockholders.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by the selling stockholders for brokerage,
accounting, tax or legal services or any other expenses incurred by the selling
stockholders in disposing of the shares. We will bear all other costs, fees and
expenses incurred in effecting the registration of the shares covered by this
prospectus, including all registration and filing fees and expenses of our
counsel and accountants.
SELLING STOCKHOLDERS
We are obligated to issue the shares of common stock covered by this
prospectus as the result of agreements entered into in connection with our
acquisition of The Toronto Technology Group Inc. in July 2000. The following
table sets forth, to our knowledge, information about the selling stockholders
as of June 29, 2001.
Beneficial ownership is determined in accordance with the rules of the
SEC, and includes voting or investment power with respect to shares. Unless
otherwise indicated below, to our knowledge, all persons named in the table have
sole voting and investment power with respect to their shares of common stock,
except to the extent authority is shared by spouses under applicable law.
SHARES OF COMMON STOCK NUMBER OF SHARES SHARES OF COMMON STOCK TO BE
BENEFICIALLY OWNED PRIOR TO OF COMMON STOCK BENEFICIALLY OWNED AFTER
NAME OF SELLING STOCKHOLDER OFFERING BEING OFFERED OFFERING
----------------------------- --------------------------- ---------------- ----------------------------
NUMBER PERCENTAGE NUMBER PERCENTAGE
------ ---------- ------ ----------
Henry Edwin Van Beilen 23,073 * 5,881 17,192 *
Glenn James 5,263 * 1,102 4,161 *
Gerard W. H. van Leeuwen 22,981 * 5,881 17,100 *
Timothy F. Moody 23,091 * 5,881 17,210 *
--------------------------
* Less than one percent.
The shares of common stock owned by the selling stockholders but not
offered by this prospectus include exchangeable shares of Art Technology
Group (Canada) Inc. that can, at the election of the selling stockholders, be
redeemed for shares of our common stock. The selling stockholders are not
entitled to transfer 18,746 exchangeable shares of Art Technology Group
(Canada) Inc., or the shares of our common stock for which those exchangeable
shares can be redeemed, until July 17, 2002, and are not entitled to transfer
an additional 18,746 exchangeable shares of Art Technology Group (Canada)
Inc., or the shares of our common stock for which those exchangeable shares
can be redeemed, until July 17, 2003.
The following table sets forth, to our knowledge, the composition of
each selling stockholder's common stock beneficially owned prior to the
offering, as shown in the table above:
EXCHANGEABLE SHARES SHARES OF COMMON STOCK
REDEEMABLE ON ISSUABLE UPON EXERCISE OF
NAME OF SELLING JULY 17, 2002 OR OPTIONS EXERCISABLE WITHIN SHARES OF
STOCKHOLDER JULY 17, 2003 60 DAYS OF JUNE 29, 2001 COMMON STOCK
----------------------- ------------------- -------------------------- ------------------
Henry Edwin Van Beilen 11,762 5,370 5,941
Glenn James 2,206 1,955 1,102
Gerard W. H. van Leeuwen 11,762 5,338 5,881
Timothy F. Moody 11,762 5,448 5,881
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We do not know when or in what amounts a selling stockholder may offer
shares for sale. The selling stockholders may not sell any or all of the shares
offered by this prospectus. Because the selling stockholders may offer all or
some of the shares pursuant to this offering, and because there are currently no
agreements, arrangements or understandings with respect to the sale of any of
the shares, we cannot estimate the number of the shares that will be held by the
selling stockholders after completion of the offering. For purposes of the above
table, we have assumed that, after completion of the offering, none of the
shares covered by this prospectus will be held by the selling stockholders.
Each of the selling stockholders has been an employee or director of
The Toronto Technology Group Inc. or Art Technology Group (Canada) Inc. for
the past three years, except that Mr. van Leeuwen's employment with us ended
in July 2001. Other than those positions, none of the selling stockholders
has held any position or office with, or has otherwise had a material
relationship with, us or any of our subsidiaries within the past three years.
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PLAN OF DISTRIBUTION
The shares covered by this prospectus may be offered and sold from time
to time by the selling stockholders. The term "selling stockholders" includes
donees, pledgees, transferees or other successors-in-interest selling shares
received after the date of this prospectus from a selling stockholder as a gift,
pledge, partnership distribution or other non-sale related transfer. The selling
stockholders will act independently of us in making decisions with respect to
the timing, manner and size of each sale. Such sales may be made on one or more
exchanges or in the over-the-counter market or otherwise, at prices and under
terms then prevailing or at prices related to the then current market price or
in negotiated transactions. The selling stockholders may sell their shares by
one or more of, or a combination of, the following methods:
o purchases by a broker-dealer as principal and resale by such
broker-dealer for its own account pursuant to this prospectus;
o ordinary brokerage transactions and transactions in which the
broker solicits purchasers;
o block trades 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;
o an over-the-counter distribution in accordance with the rules
of the Nasdaq National Market;
o in privately negotiated transactions; and
o in options transactions.
In addition, any shares that qualify for sale pursuant to Rule 144 may
be sold under Rule 144 rather than pursuant to this prospectus.
To the extent required, this prospectus may be amended or supplemented
from time to time to describe a specific plan of distribution. In connection
with distributions of the shares or otherwise, the selling stockholders may
enter into hedging transactions with broker-dealers or other financial
institutions. In connection with such transactions, broker-dealers or other
financial institutions may engage in short sales of the common stock in the
course of hedging the positions they assume with selling stockholders. The
selling stockholders may also sell the common stock short and redeliver the
shares to close out such short positions. The selling stockholders may also
enter into option or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealer or other financial
institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction). The selling
stockholders may also pledge shares to a broker-dealer or other financial
institution, and, upon a default, such broker-dealer or other financial
institution, may effect sales of the pledged shares pursuant to this prospectus
(as supplemented or amended to reflect such transaction).
In effecting sales, broker-dealers or agents engaged by the selling
stockholders may arrange for other broker-dealers to participate. Broker-dealers
or agents may receive commissions, discounts or concessions from the selling
stockholders in amounts to be negotiated immediately prior to the sale.
In offering the shares covered by this prospectus, the selling
stockholders and any broker-dealers who execute sales for the selling
stockholders may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales. Any profits realized by the
selling stockholders and the compensation of any broker-dealer may be deemed to
be underwriting discounts and commissions.
In order to comply with the securities laws of certain states, if
applicable, the shares must be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with.
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, we will make copies of this prospectus available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any
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broker-dealer that participates in transactions involving the sale of the shares
against certain liabilities, including liabilities arising under the Securities
Act.
At the time a particular offer of shares is made, if required, a
prospectus supplement will be distributed that will set forth the number of
shares being offered and the terms of the offering, including the name of any
underwriter, dealer or agent, the purchase price paid by any underwriter, any
discount, commission and other item constituting compensation, any discount,
commission or concession allowed or reallowed or paid to any dealer, and the
proposed selling price to the public.
We have agreed to indemnify the selling stockholders against certain
liabilities, including certain liabilities under the Securities Act.
We have agreed with the selling stockholders to keep the Registration
Statement of which this prospectus constitutes a part effective until the
earlier of (i) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the Registration Statement
or (ii) ten days from the effective date of the Registration Statement, subject
to extension in specified circumstances. We may elect, in our discretion, to
keep the Registration Statement effective beyond the ten-day period if some of
the requested shares have not been sold by that time.
LEGAL MATTERS
The validity of the shares offered by this prospectus has been passed
upon by Hale and Dorr LLP.
EXPERTS
The consolidated balance sheets of Art Technology Group, Inc. as of
December 31, 1999 and 2000 and the related consolidated statements of
operations, stockholders' equity (deficit) and cash flows for each of the years
in the three year period ended December 31, 2000, incorporated by reference into
this Registration Statement have been audited by Arthur Andersen LLP,
independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
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WHERE YOU CAN FIND MORE INFORMATION
We file reports, proxy statements and other documents with the SEC. You
may read and copy any document we file at the SEC's public reference room at
Judiciary Plaza Building, 450 Fifth Street, N.W., Room 1024, Washington, D.C.
20549. You should call 1-800-SEC-0330 for more information on the public
reference room. Our SEC filings are also available to you on the SEC's website
at http://www.sec.gov.
This prospectus is part of a registration statement that we filed with
the SEC. The registration statement contains more information than this
prospectus regarding us and our common stock, including certain exhibits and
schedules. You can obtain a copy of the registration statement from the SEC at
the address listed above or from the SEC's website.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC requires us to "incorporate" into this prospectus information
that we file with the SEC in other documents. This means that we can disclose
important information to you by referring to other documents that contain that
information. The information incorporated by reference is considered to be part
of this prospectus. Information contained in this prospectus and information
that we file with the SEC in the future and incorporate by reference in this
prospectus automatically updates and supersedes previously filed information. We
incorporate by reference the documents listed below and any future filings we
make with the SEC under Section 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, prior to the sale of all the shares covered by this
prospectus.
(1) our Annual Report on Form 10-K for the year ended December 31,
2000;
(2) our Quarterly Report on Form 10-Q for the quarter ended March
31, 2001;
(3) our Current Report on Form 8-K as filed with the SEC on
July 5, 2001;
(4) all of our filings pursuant to the Exchange Act after the date
of filing the initial registration statement and prior to
effectiveness of the registration statement; and
(5) the description of our common stock contained in our
Registration Statement on Form 8-A dated July 12, 1999.
You may request a copy of these documents, which will be provided to
you at no cost, by writing or telephoning us using the following contact
information:
Art Technology Group, Inc.
25 First Street
Cambridge, Massachusetts 02141
Attention: General Counsel
Telephone: (617) 386-1000
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