<PAGE> 1
Filed Pursuant to Rule 424(b)(1)
Registration Statement No. 333-25447
PROSPECTUS
- ----------
41,259 SHARES
CKS GROUP, INC.
--------------------
COMMON STOCK
($0.001 PAR VALUE)
--------------------
This Prospectus relates to the public offering, which is not being
underwritten, of shares of the common stock ("Common Stock") of CKS Group, Inc.,
a Delaware corporation (together with its consolidated subsidiaries, "CKS" or
the "Company") offered from time to time by Donovan & Green, Inc., a New York
corporation (the "Selling Stockholder") for its own benefit. It is anticipated
that the Selling Stockholder will generally offer shares of Common Stock for
sale at prevailing prices in the over-the-counter market on the date of sale.
The Company will receive no part of the proceeds of sales made hereunder. The
Common Stock to which this Prospectus relates was received by the Selling
Stockholder pursuant to the acquisition (the "Acquisition") of all of the assets
of the Selling Stockholder, by DG Acquisition, Inc., a Delaware corporation and
wholly owned subsidiary of the Company ("Acquisition Sub"). The Common Stock
issued to the Selling Stockholder in the Acquisition was issued pursuant to an
exemption from the registration requirements of the Securities Act of 1933, as
amended (the "Securities Act"), provided by Section 4(2) thereof. All expenses
of registration incurred in connection with this offering are being borne by the
Company, but all selling and other expenses incurred by Selling Stockholder will
be borne by such Selling Stockholder. None of the shares offered pursuant to
this Prospectus have been registered prior to the filing of the Registration
Statement of which this Prospectus is a part.
The Common Stock of the Company is traded on the Nasdaq National Market
(Nasdaq Symbol: CKSG). On April 14, 1997, the closing price of the Company's
Common Stock was $25.25.
SEE "RISK FACTORS" COMMENCING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
The Selling Stockholder and any broker executing selling orders on behalf
of the Selling Stockholder may be deemed to be an "underwriter" within the
meaning of the Securities Act. Commissions received by any such broker may be
deemed to be underwriting commissions under the Securities Act.
-------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-------------------------------------------
The date of this Prospectus is April 23, 1997.
<PAGE> 2
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, IN CONNECTION
WITH THE OFFERING DESCRIBED HEREIN, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR THE SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES BY ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL FOR SUCH
PERSON TO MAKE SUCH OFFER, SOLICITATION OR SALE. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
AVAILABLE INFORMATION
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of any
such person, a copy of any and all of the information that has been or may be
incorporated by reference in this Prospectus, other than exhibits to such
documents (unless such exhibits are specifically incorporated by reference into
such documents). Requests for such copies should be directed to CKS Group, Inc.,
10441 Bandley Drive, Cupertino, CA 95014, Attn: Investor Relations (telephone
(408) 366-5100).
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information may be inspected and copied at the public
reference facilities of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at Seven World Trade Center,
13th Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. Copies of such material can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. The Common Stock of the Company is quoted on
the Nasdaq National Market. Reports, proxy and information statements and other
information concerning the Company may be inspected at The Nasdaq Stock Market
at 1735 K Street, N.W., Washington, D.C. 20006. Information, as of particular
dates, concerning directors and officers of the Company, their remuneration,
options granted to them, and the principal holders of securities of the Company
has been disclosed in the proxy statements distributed to shareholders of the
Company and filed with the Commission.
ADDITIONAL INFORMATION
This Prospectus constitutes a part of a Registration Statement on Form S-3
(herein, together with all amendments and exhibits, referred to as the
"Registration Statement") filed by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended (the "Securities Act").
This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information with
respect to the Company and the shares of Common Stock offered hereby, reference
is hereby made to the Registration Statement. Statements contained herein
concerning the provisions of any document are not necessarily complete, and each
such statement is qualified in its entirety by reference to the copy of such
document filed with the Commission.
-2-
<PAGE> 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are hereby
incorporated by reference in this Prospectus: (i) the Company's Annual Report on
Form 10-K for the year ended November 30, 1996, filed pursuant to Section 13 of
the Exchange Act; (ii) the Company's quarterly report on Form 10-Q for the
quarter ended March 2, 1997 filed pursuant to Section 13 of the Exchange Act;
(iii) the Company's current report on Form 8-K dated as of December 18, 1996, as
amended by Registrant's report on Form 8-K/A filed on January 17, 1997, filed
pursuant to Section 13 of the Exchange Act; (iv) the Company's current report on
Form 8-K dated January 3, 1997 filed pursuant to Section 13 of the Exchange Act;
(v) the Company's Current Report on Form 8-K dated January 31, 1997 filed
pursuant to Section 13 of the Exchange Act, as amended by Registrant's report on
Form 8-K/A filed on March 5, 1997; (vi) the Company's Current Report on Form 8-K
dated February 27, 1997 filed pursuant to Section 13 of the Exchange Act; (vii)
the Company's Current Report on Form 8-K dated March 10, 1997, filed pursuant to
Section 13 of the Exchange Act; (viii) the Company's Annual Report on Form 8-K
dated March 24, 1997, filed pursuant to Section 13 of the Exchange Act; (ix) the
Company's Proxy Statement for the 1997 Annual Meeting of Stockholders, filed
pursuant to Section 14 of the Exchange Act; and (x) the description of the
Company's Common Stock contained in its Registration Statement on Form 8-A as
filed with the Commission on November 30, 1995.
All reports and other documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference herein and to be a part hereof from the date of filing of such
reports and documents. Any statement incorporated herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY
CKS Group, Inc. ("CKS" or the "Company") specializes in offering a wide
range of integrated marketing communication services that help companies market
their products, services and messages. The integrated marketing communication
services CKS Group provides include strategic corporate and product positioning,
corporate identity and product branding, new media, systems integration,
environmental design, packaging, collateral systems, advertising, direct mail,
consumer promotions, trade promotions and media placement. Depending on the
scope of the assignment, the Company's services to its clients range from
execution of a discrete marketing project, such as designing product packaging,
to taking responsibility for the overall marketing message through various
methods. When the Company assumes responsibility for the overall marketing
message, the Company works with the client to analyze the client's products or
services, and the market for those services, and to evaluate the appropriate
media to reach the desired market efficiently.
The Company is a provider of integrated marketing programs that utilize
advanced technology solutions and new media -- which the Company defines as
media that deliver content to end users in digital form, including the World
Wide Web, the Internet, proprietary online services, CD-ROMs, laptop PC
presentations and interactive kiosks.
The Company was incorporated in California in 1994 and is the successor to
three predecessor corporations, CKS Partners, Inc., CKS Pictures, Inc. and CKS
Interactive, Inc., which are now wholly owned subsidiaries of the Company. CKS
Partners, Inc. originally began business in 1987 with two employees as Cleary
Communications. CKS Pictures, Inc. and CKS Interactive, Inc. were incorporated
in 1994. The Company was reincorporated in Delaware in December 1995. The
Company acquired Schell/Mullaney, Inc. ("Schell/Mullaney") in August 1996;
Donovan & Green in January 1997; McKinney & Silver ("M&S") in January 1997, EPG
Elektronische Publikationen GmbH ("EPG") in March 1997 and Gormley & Partners,
Inc. ("Gormley & Partners") in March 1997. The Company's executive offices are
located at 10441 Bandley Drive, Cupertino, California 95014. Its telephone
number at that address is (408) 366-5100. The Company's Internet address is:
http://www.cks.com. Information contained on the Company's Internet site shall
not be deemed a part of this Prospectus.
References made in this Prospectus to "CKS," the "Company" or the
"Registrant" refer to CKS Group, Inc. and its wholly owned subsidiaries.
CKS|Group(TM), CKS|Interactive(TM), CKS|Onsite(TM), CKS|Partners(TM) and
CKS|Pictures(TM) are the trademarks of CKS Group, Inc., which may be registered
in some jurisdictions. All other trademarks used are owned by their respective
owners.
-3-
<PAGE> 4
RISK FACTORS
In addition to reviewing the Company's Annual Report on Form 10-K for the
fiscal year ended November 30, 1996, the other documents incorporated herein by
reference and the other information in this Prospectus, the following factors
should be considered carefully in evaluating an investment in the securities
offered hereby.
DEPENDENCE ON KEY ACCOUNTS.
The Company's five largest clients accounted for 48% and 40% of the
Company's revenues for the fiscal years ended November 30, 1995 and November 30,
1996, respectively, with fluctuations in the amount of revenue contribution from
each such client from quarter to quarter. Audi and MCI, the Company's two
largest clients during the fiscal year ended November 30, 1996, accounted for
approximately 14% and 9% of the Company's revenues, respectively, during the
period. Although the Company has recently acquired several continuing
relationships with significant clients through business acquisitions, many of
the Company's clients generally retain the Company on a project by project
basis. Accordingly, a client from whom the Company generates substantial
revenue in one period may not be a substantial source of revenue in a subsequent
period. For example, of the five largest clients (in terms of fees paid to the
Company) during the fiscal year ended November 30, 1996, only three were in the
top five for the fiscal year ended November 30, 1995. To the extent that the
Company's major clients do not remain a significant source of revenues, and the
Company is unable to replace these clients, there could be a direct and
immediate material adverse effect on the Company's business, financial condition
and operating results. The Company's typical project lasts four to six weeks.
Once a project is completed there can be no assurance that a client will engage
the Company for further services. In addition, the Company's clients may
unilaterally reduce their use of the Company's services or terminate existing
projects without penalty. The termination of the Company's business relationship
with any of its significant clients or a material reduction in the use of the
Company's services by a significant client would have a material adverse effect
on the Company's business, financial condition and operating results.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS AND MARGINS; SEASONALITY OF
BUSINESS.
The Company's operating results have fluctuated in the past and may
fluctuate in the future as a result of a variety of factors, including timing of
the completion, material reduction or cancellation of major projects or the loss
of a major client, timing of the receipt of new business, timing of the hiring
or loss of personnel, timing of the opening or closing of an office, the
relative mix of high margin creative projects as compared to lower margin
production projects, changes in the pricing strategies and business model of the
Company or its competitors, capital expenditures and other costs relating to the
expansion of operations, and other factors that are outside of the Company's
control. Operating results could also be materially adversely affected by
increased competition in the Company's markets. The Company's operating margins
may fluctuate from quarter to quarter depending on the relative mix of lower
cost full time employees versus higher cost independent contractors. The Company
experiences some seasonality in its business which results from timing of
product introductions and business cycles of the Company's clients. The
Company's revenues tend to be somewhat higher during the third and fourth
quarters of the Company's fiscal year as the Company's clients prepare marketing
campaigns for products launched in anticipation of fall trade shows and the
holiday season. The Company's revenues for the first fiscal quarter tend to be
somewhat lower because many clients have expended most of their marketing
budgets prior to the end of the calendar year and do not release funds from the
next calendar year's marketing budget until mid to late January. The Company
expects this seasonality to continue in the future. As a result of the foregoing
and other factors, the Company anticipates that it may experience material and
adverse fluctuations in future operating results on a quarterly or annual basis.
Therefore, the Company believes that period to period comparisons of its
revenues and operating results are not necessarily meaningful and that such
comparisons cannot be relied upon as indicators of future performance.
MANAGEMENT OF GROWTH; RISKS ASSOCIATED WITH EXPANSION.
The Company's business has grown rapidly in recent periods through
expansion of existing operations and through acquisition of other marketing
communication service providers. The growth of the Company's business and
expansion of its customer base have placed a significant strain on the Company's
management and operations. In the last several years, the Company has opened
offices in Portland (Oregon), New York and Washington, D.C. In addition, the
Company has acquired offices in Raleigh, North Carolina; Hamburg, Germany;
Vienna, Austria; and Greenwich, Connecticut through various business
combinations. The Company's expansion has resulted, and is expected in the
future to result, in substantial growth in the number of its employees and in
increased responsibility for both existing and new management personnel and
strain on the Company's existing operational, financial and management
information systems. The Company's success depends to a significant extent on
the ability of its executive officers and other members of senior management to
operate effectively, both independently and as a group.
In addition, the Company plans to expand its offerings of integrated
marketing communication services and products. There can be no assurance that
the Company will be successful in identifying new services or products that will
be attractive to
-4-
<PAGE> 5
clients or that such services or products will ultimately generate revenues in
excess of costs to implement them. Difficulties in recruiting and assimilating
new personnel, enhancing the Company's financial and operational controls and
expanding the Company's marketing and customer support capabilities may impede
the Company's ability to pursue its growth strategy. In general, there can be no
assurance that the Company will be able to manage its recent or any future
expansions effectively, and any inability to do so would have a material adverse
effect on the Company's business, financial condition and operating results.
There also can be no assurance that the Company will be able to sustain the
rates of growth that it has experienced in the past.
DEVELOPING MARKET FOR NEW MEDIA; NEW ENTRANTS; UNPROVEN ACCEPTANCE OF THE
COMPANY'S NEW MEDIA SOLUTIONS.
The Company's future growth is dependent to a significant extent upon its
ability to increase the amount of revenue it derives from providing marketing
and advertising solutions to its customers through new media, which the Company
defines as media that delivers content to end users in digital form, including
the World Wide Web, the Internet, proprietary online services, CD-ROMs, laptop
PC presentations and interactive kiosks. The market for marketing and
advertising through new media has only recently begun to develop, is rapidly
evolving and is characterized by an increasing number of market entrants who
have introduced or developed products and services for communication and
commerce through new media. Demand and market acceptance for recently introduced
products and services are subject to a high level of uncertainty. There can be
no assurance that commerce and communication through new media will continue to
grow. Revenues from new media projects represented approximately 25% of revenues
for the quarter ended March 2, 1997 compared to 20% of the first quarter of
1996. The use of new media in marketing and advertising, particularly by those
individuals and enterprises that have historically relied upon traditional means
of marketing and advertising, generally requires the acceptance of a new way of
conducting business and exchanging information. In particular, enterprises that
have already invested substantial resources in other means of conducting
commerce and exchanging information may be particularly reluctant or slow to
adopt a new strategy that may make their existing resources and infrastructure
less useful.
In connection with the Company's new media services, the Company is
exploring new methods to derive revenue, so that a larger percentage of its
revenues is recurring. These methods include long-term service contracts,
ongoing content development contracts and technology consulting and maintenance
services. There is no assurance that the Company will be able to negotiate such
arrangements with clients.
RISKS ASSOCIATED WITH ACQUISITIONS.
As part of its business strategy, the Company expects to make acquisitions
of, or significant investments in, businesses that offer complementary marketing
communication services, products and technologies. Any such future acquisitions
or investments would be accompanied by the risks commonly encountered in
acquisitions of businesses. Such risks include, among others, the difficulty of
assimilating the operations and personnel of the acquired businesses, the
potential disruption of the Company's ongoing business, the inability of
management to maximize the financial and strategic position of the Company
through the successful incorporation of acquired personnel and clients, the
maintenance of uniform standards, controls, procedures and policies and the
impairment of relationships with employees and clients as a result of any
integration of new management personnel. In August 1996, the Company acquired
Schell/Mullaney for consideration consisting of an initial payment, in Common
Stock of the Company, of $5 million and additional future consideration of up to
$9 million in Common Stock of the Company if certain operating results are
achieved in 1997 and 1998. In January 1997, the Company acquired the assets of
Donovan & Green for consideration consisting of an initial cash payment of $5.15
million and the right to receive $4.83 million in cash and Common Stock of the
Company over the next three fiscal years and up to an additional $6.67 million
cash and Common Stock of the Company over the next four fiscal years contingent
on attainment of certain financial goals. Also in January 1997, the Company
acquired M&S for consideration consisting of 841,291 shares of Common Stock
which as of the closing of the acquisition had an approximate value of $24.0
million. In March 1997, the Company completed the acquisition of EPG for $6.5
million in cash and Common Stock of the Company, and the contingent right to
future payments of up to $10 million in cash and stock if certain financial
performance goals are met, and certain additional payment if such goals are
exceeded. The Company also acquired Gormley & Partners for cash and stock in
March 1997 and is also negotiating with other potential acquisition targets. The
Company expects that future acquisitions, if any, could provide for
consideration to be paid in cash, stock or a combination of cash and stock.
Acquisitions accounted for as a purchase increase the amount of goodwill
recorded as an asset on the Company's financial statements and generally
increase the amount of such goodwill that must be amortized against the
operating statement in the future. There can be no assurance that the Company's
prior acquisitions or any other potential acquisitions will not have a material
adverse effect on the Company's business, financial condition and operating
results.
UNCERTAIN ADOPTION OF INTERNET AS A MEDIUM OF COMMERCE AND COMMUNICATIONS;
DEPENDENCE ON THE INTERNET.
The Company's ability to derive revenues from new media solutions will
depend in part upon a robust industry and the infrastructure for providing
Internet access and carrying Internet traffic. The Internet may not prove to be
a viable commercial marketplace because of inadequate development of the
necessary infrastructure, such as a reliable network backbone or timely
-5-
<PAGE> 6
development of complementary products, such as high speed modems. Because global
commerce and online exchange of information on the Internet and other similar
open wide area networks are new and evolving, it is difficult to predict with
any assurance whether the Internet will prove to be and remain a viable
commercial marketplace. Moreover, critical issues concerning the commercial use
of the Internet (including security, reliability, cost, ease of use and access,
and quality of service) remain unresolved and may impact the growth of Internet
use. There can be no assurance that the Internet will become a viable commercial
marketplace. If the necessary infrastructure or complementary products are not
developed, or if the Internet does not become a viable commercial marketplace,
the Company's business, operating results and financial condition could be
materially adversely affected.
PROJECT PROFIT EXPOSURES.
The Company has historically generated the substantial majority of its
revenues through project fees on a fixed fee for service basis. The Company
assumes greater financial risk on fixed-price type contracts than on either
time-and-material or cost-reimbursable contracts. Failure to anticipate
technical problems, estimate costs accurately or control costs during
performance of a fixed-price contract may reduce the Company's profit or cause a
loss. Although the majority of the Company's projects typically last four to six
weeks and therefore each individual short-term project creates less exposure
than a long-term fixed-price contract, in the event the Company does not
accurately anticipate the progress of a number of significant revenue-generating
projects it could have a material adverse effect on the Company's business,
operating results and financial condition.
CONFLICTS OF INTEREST.
Conflicts of interest are inherent in certain segments of the marketing
communications industry, particularly in advertising. The Company has in the
past and will in the future be unable to pursue potential advertising and other
opportunities because such opportunities will require the Company to provide
services to direct competitors of existing Company clients. In addition, the
Company risks alienating or straining relationships with existing clients each
time the Company agrees to provide services to even indirect competitors of
existing Company clients. Conflicts of interest may jeopardize the stability of
revenues generated from existing clients and preclude access to business
prospects, either of which developments could have a material adverse effect on
the Company's business, financial condition and operating results.
MARKET ACCEPTANCE OF THE COMPANY'S APPROACH; SERVICE DEVELOPMENT; RAPID
TECHNOLOGICAL CHANGE.
The Company provides an integrated approach to meet the marketing
communications needs of its clients. To compete successfully against specialized
service providers, the Company believes that its products and services in each
marketing communication discipline will need to be competitive with the services
offered by the firms that specialize in each discipline. There can be no
assurance that the Company will be successful in providing competitive solutions
to clients in each of its integrated marketing communication services and
products. Failure to do so could result in the loss of existing customers or the
inability to attract and retain new customers, either of which developments
could have a material adverse effect on the Company's business, financial
condition and operating results.
SUSCEPTIBILITY TO GENERAL ECONOMIC CONDITIONS.
The Company's revenues and results of operations will be subject to
fluctuations based upon the general economic conditions. If there were to be a
general economic downturn or a recession in the United States, then the Company
expects that business enterprises, including its clients and potential clients,
will substantially and immediately reduce their advertising and marketing
budgets. In the event of such an economic downturn, there can be no assurance
that the Company's business, operating results and financial condition would not
be materially and adversely affected.
CONTROL BY EXISTING STOCKHOLDERS; ANTI-TAKEOVER EFFECTS OF CERTIFICATE OF
INCORPORATION AND DELAWARE LAW
Executive officers, directors, holders of five percent or more of the
Company's Common Stock and companies associated with such persons will
collectively own approximately 66% of the Company's outstanding Common Stock,
including approximately 17.5% held by The Interpublic Group of Companies, Inc.
Accordingly, such persons will have the effective power to influence
significantly the outcome of matters submitted for the vote of stockholders,
including the election of members of the Board of Directors and the approval of
significant change in control transactions. Their combined equity interest in
the Company accordingly may have the effect of making certain transactions more
difficult in the absence of the support of management of the Company and may
have the effect of delaying, deferring or preventing a change in control of the
Company.
-6-
<PAGE> 7
In addition, the Board of Directors has the authority to issue up to
5,000,000 shares of Preferred Stock and to determine the price, rights,
preferences, privileges and restrictions, including voting rights, of such stock
without further stockholder approval. The rights of the holders of Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. Issuance of Preferred
Stock could have the effect of delaying, deferring or preventing a change in
control of the Company. Furthermore, certain provisions of the Company's
Certificate of Incorporation and of Delaware law could have the effect of
delaying, deferring or preventing a change in control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE AS A RESULT OF ACQUISITIONS
The Company has agreed to register shares or expects that freely saleable
shares of the Company's Common Stock will be available for immediate resale as a
result of the Company's acquisitions of Schell/Mullaney, Donovan & Green, M&S,
EPG as well as a result of any future acquisitions. Certain of the Company's
acquisitions have been structured such that in the event that earnings targets
are realized, additional shares of the Company's Common Stock will be issued. As
a result of additional issuances in connection with these and future
acquisitions or the future registration of shares of the Company's Common Stock
that have been issued in connection with completed acquisitions, the trading
price of the Company's shares could be materially adversely affected. The
Company expects that the recipients of its Common Stock in completed or future
acquisitions will sell all or a portion of their shares of the Company's Common
Stock upon receipt or soon thereafter.
VOLATILITY OF SHARE PRICE
The trading price of the Company's Common Stock has been and in the future
is expected to continue to be subject to extreme fluctuations in response both
to business-related issues, such as quarterly variations in operating results,
announcements of new services or business acquisitions by the Company or its
competitors, and the gain or loss of client accounts, and stock market-related
influences, such as changes in analysts' estimates, the presence or absence of
short-selling of the Company's stock and events affecting other companies that
the market deems to be comparable to the Company. In addition, the stock market
has from time to time experienced extreme price and volume fluctuations that
have particularly affected the market price of many technology-oriented
companies and that often have been unrelated or disproportionate to the
operating performance of these companies. These broad market fluctuations may
adversely affect the market price of the Company's Common Stock. The trading
prices of many high technology and Internet-related companies' stocks, including
the Common Stock of the Company, are at or near their historical highs and
reflect price/earning ratios substantially above historical norms. There can be
no assurance that the trading price of the Company's Common Stock will remain at
or near its current level.
-7-
<PAGE> 8
SELLING STOCKHOLDER
The Selling Stockholder received the shares offered by this prospectus
pursuant to the Acquisition in partial consideration for the purchase of all of
its assets by Acquisition Sub. All of the shares of Common Stock held by the
Selling Stockholder may be sold pursuant to this Prospectus. The Selling
Stockholder holds no shares of Common Stock of the Company other than those
offered pursuant to this Prospectus, which constitute less than 1% of the
outstanding Common Stock of the Company.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholder that it or its
pledgees, donees, transferees or other successors in interest intend to sell all
or a portion of the shares offered hereby from time to time in the
over-the-counter market and that sales will be made at prices prevailing at the
times of such sales. Such persons may also make private sales directly or
through a broker or brokers, who may act as agent or as principal. In connection
with any sales, the Selling Stockholder and any brokers or dealers participating
in such sales may be deemed to be underwriters within the meaning of the
Securities Act. The Company will receive no part of the proceeds of sales made
hereunder.
Any broker-dealer participating in such transactions as agent may receive
commissions from the Selling Stockholder and/or purchasers of the shares offered
hereby (and, if it acts as agent for the purchaser of such shares, from such
purchaser). Usual and customary brokerage fees will be paid by the Selling
Stockholder. Broker-dealers may agree with the Selling Stockholder 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
Stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the Selling Stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross 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 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.
The Company has advised the Selling Stockholder that Regulation M
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), may apply to its sales in the market, has furnished the Selling
Stockholder with a copy of this regulation and has informed it of the need for
delivery of copies of this Prospectus. The Selling Stockholder may indemnify any
broker-dealer that participates in transactions involving the sale of the 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. The Company has agreed to
indemnify the Selling Stockholder against certain liabilities, including
liabilities under the Securities Act.
Any securities covered by this Prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act may be sold under that Rule rather than
pursuant to this Prospectus.
There can be no assurance that the Selling Stockholder will sell any or all
of the shares of Common Stock offered by it hereunder.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Certificate of Incorporation limits, to the maximum extent
permitted by Delaware law, the personal liability of directors for monetary
damages for breach of their fiduciary duties as a director. The Company's Bylaws
provide that the Company shall indemnify its officers and directors and may
indemnify its employees and other agents to the fullest extent permitted by
Delaware law. The Company has entered into indemnification agreements with its
officers and directors containing provisions which are in some respects broader
than the specific indemnification provisions contained in the Delaware General
Corporation Law. The indemnification agreements require the Company, among other
things to indemnify such officers and directors against certain liabilities that
may arise by reason of their status or service as directors or officers (other
than liabilities arising from willful misconduct of a culpable nature), to
advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified, and to obtain directors' and officers'
insurance, if available on reasonable terms. The
-8-
<PAGE> 9
Company believes that these agreements are necessary to attract and retain
qualified persons as directors and officers.
Section 145 of the Delaware General Corporation Law provides that a
corporation may indemnify a director, officer, employee or agent made a party to
an action by reason of that fact that he or she was a director, officer,
employee or agent of the corporation or was serving at the request of the
corporation against expenses actually and reasonably incurred by him or her in
connection with such action if he or she acted in good faith and in a manner he
or she reasonably believed to be in, or not opposed to, the best interests of
the corporation and with respect to any criminal action, had no reasonable cause
to believe his or her conduct was unlawful.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Registrant
pursuant to the foregoing provisions, the Registrant has been informed that in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
LEGAL MATTERS
The validity of the CKS Common Stock issuable pursuant to the Acquisition
and certain other legal matters related to the Acquisition will be passed upon
for CKS by Wilson Sonsini Goodrich & Rosati, Professional Corporation ("WSGR"),
Palo Alto, California. An investment partnership of WSGR owns 5,400 shares of
Common Stock of the Company.
EXPERTS
The supplemental consolidated financial statements, consolidated financial
statements and schedule of the Company as of November 30, 1995 and 1996, and for
each of the years in the three-year period ended November 30, 1996, have been
incorporated by reference herein and in the Registration Statement in reliance
upon the reports of KPMG Peat Marwick LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing. The financial statements of Schell/Mullaney, Inc. as of December
31, 1994 and 1995, and for each of the years in the three-year period ended
December 31, 1995, have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of KPMG Peat Marwick LLP,
independent auditors, incorporated by reference herein, and upon the authority
of said firm as experts in accounting and auditing. The financial statements of
Donovan & Green as of December 31, 1994 and 1995, and for each of the years in
the two-year period ended December 31, 1995, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report by Robbins,
Spielman, Koenigsberg & Parker, LLP, independent auditors, incorporated by
reference herein, and upon the authority of said firm as expert in accounting
and auditing. The financial statements of McKinney & Silver, a general
partnership, as of December 31, 1995 and 1996, and for each of the years in the
two-year period ended December 31, 1996, have been incorporated by reference
herein and in the Registration Statement in reliance upon the report by Ernst &
Young, LLP, independent auditors, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
-9-
<PAGE> 10
<TABLE>
========================================= ====================================================
<S> <C>
TABLE OF CONTENTS 41,259 SHARES
Page CKS GROUP, INC.
----
Available Information............... 2
Incorporation of Certain Documents
by Reference..................... 3 --------------
The Company......................... 3
Risk Factors........................ 4
Selling Stockholders................ 8
Plan of Distribution................ 8
Indemnification..................... 8 COMMON STOCK
Legal Matters....................... 9
Experts............................. 9
PROSPECTUS
APRIL 23, 1997
========================================= ====================================================
</TABLE>
-10-
