<PAGE> 1
As Filed with the Securities and Exchange Commission on March 17, 1997
Registration No. 333-22953
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_____________________________________________
Amendment No. 1
to
Form S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CKS GROUP, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 7389 77-0385435
-------------------- ------------------------ ----------------------
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification Number)
incorporation Code Number)
organization)
10441 Bandley Drive
Cupertino, California 95014
(408) 366-5100
(Address, including zip code and telephone number,
including area code, of Registrant's principal executive offices)
_____________________________________________
MARK D. KVAMME
Chief Executive Officer
CKS GROUP, INC.
10441 Bandley Drive
Cupertino, California 95014
(408) 366-5100
(Name, address, including zip code and telephone number,
including area code, of agent for service)
_____________________________________________
Copy to:
BARRY E. TAYLOR, ESQ.
DANIEL R. MITZ, ESQ.
CHRISTOPHER SADEGHIAN, ESQ.
WILSON SONSINI GOODRICH & ROSATI
Professional Corporation
650 Page Mill Road
Palo Alto, California 94304-1050
_____________________________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
200,000 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 the Selling Stockholders
named herein (the "Selling Stockholders") for their own benefit. It is
anticipated that the Selling Stockholders 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 Stockholders pursuant to the acquisition of all of the partnership
interests of the Selling Stockholders by Raleigh Acquisition, Inc., a Delaware
corporation and wholly owned subsidiary of the Company (the "Acquisition").
The Common Stock issued to the Selling Stockholders 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 Stockholders will be borne by such Selling Stockholders.
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 March 13, 1997, the closing price of the
Company's Common Stock was $28.875.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK
OFFERED HEREBY.
The Selling Stockholders and any broker executing selling orders on
behalf of the Selling Stockholders 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 March 17, 1997.
<PAGE> 3
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 STOCKHOLDERS. 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.
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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 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;
(iii) the Company's current report on Form 8-K dated January 3, 1997 filed
pursuant to Section 13 of the Exchange Act; (iv) the Company's current report on
Form 8-K dated as of January 31, 1997, as amended by Registrant's report on Form
8-K/A filed on March 5, 1997, filed pursuant to Section 13 of the Exchange Act;
(v) the Company's Current Report on Form 8-K dated February 27, 1997 filed
pursuant to Section 13 of the Exchange Act; (vi) the Company's Proxy Statement
for the 1997 Annual Meeting of Stockholders, filed pursuant to Section 14 of the
Exchange Act; and (vii) 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, Inc. ("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.
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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 42% and 29% 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. MCI and Microsoft,
the Company's two largest clients during the fiscal year ended November 30,
1996, accounted for approximately 14% and 4% of the Company's revenues,
respectively, during the period. Since the Company's clients generally retain
the Company on a project by project basis, 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 two 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. 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
three years, the Company has opened offices in Portland (Oregon), New York and
Washington, D.C. 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
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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 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. 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
other things, 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 McKinney & Silver 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 acquired EPG for 6.5 million in cash and Common Stock of the Company,
and the contingent right for future payments of up to $10 million in cash and
stock if certain financal 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. There can be no
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assurance that the acquisition of EPG or any other potential acquisition will be
consummated. 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
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 generates 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
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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 18% held by The Interpublic Group of Companies, Inc.
("IPG"). 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.
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, Gormley & Partners 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 could be subject to wide fluctuations in response to quarterly
variations in operating results, announcements of new services or business
acquisitions by the Company or its competitors, the gain or loss of client
accounts, changes in estimates of revenues or earnings by securities analysts,
changes in the mix of revenues derived by the Company from new media projects
as compared to other projects and other events or factors. 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.
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SELLING STOCKHOLDERS
The shares of Common Stock to be sold by the Selling Stockholders
pursuant to this Prospectus represent shares issued to the Selling Shareholders
by the Company in connection with the Acquisition (the "Acquisition Shares").
No Selling Stockholder beneficially owns any shares of Common Stock other than
Acquisition Shares. The following tables set forth the aggregate number of
Acquisition Shares issued to each Selling Stockholder and offered by each
Selling Stockholder hereunder.
<TABLE>
<CAPTION>
Number of
Shares Beneficially Shares Being Shares Beneficially
Name of Selling Stockholder Owned Prior to Offering Offered Owned After Offering
---------------------------------------- ----------------------- --------------- --------------------------
Number Percent Number Percent
--------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Larry L. Bennett . . . . . . . . . . . 35,671 * 8,480 27,191 *
Stephen E. Boase . . . . . . . . . . . 7,151 * 1,700 5,451 *
Joan C. Brown . . . . . . . . . . . . . 14,218 * 3,380 10,838 *
Patrick H. Burnham . . . . . . . . . . 35,671 * 8,480 27,191 *
J. Stephen Davis III . . . . . . . . . 14,218 * 3,380 10,838 *
Robert C. Doherty . . . . . . . . . . . 164,051 * 39,000 125,051 *
Janice C. Hunter . . . . . . . . . . . 42,738 * 10,160 32,578 *
L. Lloyd Jacobs . . . . . . . . . . . . 164,051 * 39,000 125,051 *
David B. Johnson . . . . . . . . . . . 35,671 * 8,480 27,191 *
Don S. Maurer . . . . . . . . . . . . . 17,836 * 4,241 13,596 *
Emry L. McKinney . . . . . . . . . . . 14,218 * 3,380 10,838 *
Richard Myracle . . . . . . . . . . . . 42,738 * 10,160 32,578 *
Mark W. Schofield . . . . . . . . . . . 42,738 * 10,160 32,578 *
Charles C. McKinney . . . . . . . . . . 210,321 1.48% 49,999 160,321 1.13%
TOTAL . . . . . . . . . . . . . . 841,291 5.95% 200,000 641,291 4.53%
- -----------------------
</TABLE>
(*) Less than 1%.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they or
their 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 Stockholders 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 Stockholders 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 Stockholders. Broker-dealers may agree with the Selling
Stockholders to sell a specified number of shares at a stipulated price per
share, and, to the extent such a broker-dealer is unable to do so acting as
agent for the Selling Stockholders, to purchase as principal any unsold shares
at the price required to fulfill the broker-dealer commitment to the Selling
Stockholders. Broker- dealers who acquire shares as 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
-8-
<PAGE> 10
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 Stockholders that the
anti-manipulative rules of Regulation M under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), may apply to their sales in the market,
has furnished the Selling Stockholders with a copy of these rules and has
informed it of the need for delivery of copies of this Prospectus. The Selling
Stockholders 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
Stockholders against certain liabilities, including liabilities under the
Securities Act.
Upon notification by the Selling Stockholders to the Company that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a cross or block trade, a supplemental prospectus will be filed
under Rule 424(c) under the Securities Act setting forth the name of the
participating broker-dealer(s), the number of shares involved, the price at
which such shares were sold by the Selling Stockholders, the commissions paid
or discounts or concessions allowed by the Selling Stockholders to such
broker-dealer(s), and where applicable, that such broker-dealer(s) did not
conduct any investigation to verify the information set out in this Prospectus.
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 Stockholders 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 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.
-9-
<PAGE> 11
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 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 supplemental
consolidated financial statements 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, Inc. 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
three-year period ended December 31, 1996, incorporated by reference herein and
in the Registration Statement from the Company's Current Report on Form 8K,
dated January 31, 1997 as amended on March 6, 1997 have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
-10-
<PAGE> 12
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Selling Stockholders . . . . . . . . . . . . . . . . . . . . . . . 9
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 9
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Legal Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
</TABLE>
===============================================================================
200,000 Shares
CKS GROUP, INC.
______________________________________
Common Stock
PROSPECTUS
March 17, 1997
===============================================================================
-11-
<PAGE> 13
CKS GROUP, INC.
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item
Number
Item 14 Other Expenses of Issuance and Distribution.*
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except Securities
and Exchange Commission and Nasdaq Stock Market Listing fees are estimates.
<TABLE>
<S> <C>
Registration Statement--Securities and Exchange Commission . . . . . . . . $ 7,061.00
Nasdaq Stock Market Listing Fee . . . . . . . . . . . . . . . . . . . . . . $ 16,826.00*
Accounting fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,500.00
Legal fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 7,500.00
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,000.00**
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 34,887.00
- ------------------
</TABLE>
* Represents filing fee for an aggregate of 841,291 shares of Common
Stock issued to the Selling Stockholders in the Acquisition, of which
only 200,000 shares are being registered hereby.
** Represents expenses relating to the distribution by the Selling
Stockholders pursuant to the Prospectus prepared in accordance with
the requirements of Form S-3. These expenses will be borne by the
Company on behalf of the Selling Stockholders.
Item 15 Indemnification of Directors and Officers.
See "Indemnification of Directors and Officers."
Item 16 Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
2.1 Acquisition Agreement, dated as of January 31, 1997, by and
among Registrant, the current and former partners of McKinney &
Silver, a North Carolina general partnership, Raleigh
Acquisition Inc., a Delaware corporation, Robert C. Doherty and
Donald S. Maurer, as Partner Representatives, and Chemical Trust
Company of California as Escrow Agent.*
4.1 Registration Rights Agreement among CKS, Raleigh Acquisition,
Inc. and the current and former partners of McKinney &Silver
dated January 31, 1997. *
5.1 Opinion of Wilson Sonsini Goodrich & Rosati. **
23.1 Consent of KPMG Peat Marwick, LLP, independent auditors. **
23.2 Consent of Robbins, Spielman, Koenigsberg & Parker, LLP,
independent auditors. **
23.3 Consent of Ernst & Young, LLP, independent auditors. **
23.4 Consent of Wilson Sonsini Goodrich & Rosati (Included in Exhibit
5.1)
24.1 Power of Attorney. **
</TABLE>
- -----------------------
* Incorporated by reference from exhibit to Registrant's current report on
Form 8-K dated as of March 11, 1997 filed with the Commission.
** Filed as exhibit to Registration Statement on Form S-3 filed with the
Commission (file no. 333-22953).
II-1
<PAGE> 14
Item 17 Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities as that time shall be deemed to be the initial bona
fide offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
II-2
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, CKS Group, Inc., a corporation organized and existing under the laws
of the State of Delaware, certifies that it has reasonable cause to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
amendment to Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Cupertino, State of
California, on the 17th day of March, 1997.
CKS GROUP, INC.
By: /s/ CARLTON H. BAAB
-----------------------------------
Carlton H. Baab, Executive
Vice President and Chief
Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------------------------------- ---------------------------------------------------- -------------------------
<S> <C> <C>
/s/ MARK D. KVAMME* President, Chief Executive Officer (Principal March 17, 1997
- --------------------------------- Executive Officer) and Chairman of the Board of
(Mark D. Kvamme) Directors
/s/ CARLTON H. BAAB Executive Vice President and Chief Financial March 17, 1997
- --------------------------------- Officer (Principal Financial and Accounting
(Carlton H. Baab) Officer)
/s/ ALEXANDRE BALKANSKI* Director March 17, 1997
-------------------------------
(Alexandre Balkanski)
/s/ PIERRE R. LAMOND* Director March 17, 1997
- ---------------------------------
(Pierre R. Lamond)
/s/ BARRY R. LINSKY* Director March 17, 1997
- ---------------------------------
(Barry R. Linsky)
/s/ MICHAEL B. SLADE* Director March 17, 1997
- ---------------------------------
(Michael B. Slade)
/s/ THOMAS K. SUITER* Director March 17, 1997
- ---------------------------------
(Thomas K. Suiter)
*By /s/ CARLTON H. BAAB
- ---------------------------------
(Carlton H. Baab)
(Attorney-in-fact)
</TABLE>
II-3
