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Filed Pursuant to Rule 424(b)(1)
Registration Statement No. 333-50427
PROSPECTUS
37,325 SHARES
CKS GROUP, INC.
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COMMON STOCK
($0.001 PAR VALUE)
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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. 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 24, 1998, the closing price of the
Company's Common Stock was $22 1/16 .
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 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.
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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.
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The date of this Prospectus is April 27, 1998.
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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. The Commission maintains a World Wide Web
site that contains reports, proxy and information statements and other
information filed with the Commission. The address of the Site is
http://www.sec.gov.
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.
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, 1997, filed pursuant to
Section 13 of the Exchange Act; (ii) the Company's Quarterly Report on Form 10-Q
for the quarter ended March 1, 1998, filed pursuant to Section 13 of the
Exchange Act; and (iii) the description of the Company's
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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") is an international
integrated marketing services and technology company headquartered in Cupertino,
California. The Company specializes in offering a wide range of integrated
marketing communication services and technology solutions that help companies
market their products, services and messages. The integrated marketing
communication services CKS provides include strategic corporate and product
positioning, corporate identity and product branding, new media, systems
integration, environmental design, packaging, electronic commerce, collateral
systems, advertising, direct marketing, consumer promotions, trade promotions
and media placement services. 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 and merged into CKS Partners, Inc. in 1998. 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;
CKS Holding Deutschland GmbH (formerly EPG Elektronische Publikationen GmbH)
("CKS GmbH") in March 1997; Gormley & Partners, Inc. ("Gormley & Partners") in
March 1997; and SiteSpecific, Inc. ("SiteSpecific") in June 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.
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 other information in this Prospectus and the
Company's 1997 Annual Report on Form 10-K and the other documents incorporated
herein by reference (the "Incorporated Documents"), the following factors should
be considered carefully in evaluating the Company and its business before
purchasing the shares of Common Stock offered by this Prospectus. Statements in
this "Risk Factors" section regarding expectations or future events and certain
sections of the Incorporated Documents (identified with more particularity in
such Incorporated Documents) may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Actual results could
differ materially from those projected in such forward-looking statements as a
result of the factors set forth below and elsewhere in this document and the
Incorporated Documents.
FACTORS AFFECTING OPERATING RESULTS AND MARKET PRICE OF STOCK
CKS operates in a rapidly changing environment that involves a number
of uncertainties, some of which are beyond the Company's control. In addition to
the uncertainties described elsewhere in this report, these uncertainties
include:
Dependence on Key Accounts. The Company's five largest clients
accounted for 37% and 39% of the Company's revenues for the fiscal years ended
November 30, 1997 and November 30, 1996, respectively, with fluctuations in the
amount of revenue contribution from each such client from quarter to quarter.
Audi of America, Inc. and Computer Associates International, Inc., the Company's
two largest clients during the fiscal year ended November 30, 1997, accounted
for approximately 15% and 7% of the Company's revenues, respectively, during the
period. Since many of 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, 1997, only two were in the
top five for the fiscal year ended November 30, 1996. To the extent that any of
the Company's major clients does not remain a significant source of revenues,
there could be a direct and immediate material adverse effect on the Company's
business, financial condition and operating results. For instance, one of the
Company's major clients, Barnett Bank, was acquired during the fourth quarter of
1997 and, as a result, substantially reduced its level of spending with the
Company. This reduction in spending contributed to a significant decline in the
Company's earnings during that quarter. Historically, the Company's typical
project has lasted only four to six weeks, and 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. Some of these
factors include 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. For instance, reductions in marketing
expenditures by several of the Company's largest clients resulted in a
significant decline in the Company's earnings for the fourth quarter of fiscal
1997, which in turn resulted in a 63% decline in the market price of the
Company's Common Stock in a single day. Operating results could also be
materially adversely affected by increased competition in the Company's markets.
The Company's
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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. During the fourth quarter of 1997, for example, the Company's
largest client, Audi of America, significantly reduced its marketing spending
after completing a major product launch. The Company's revenues for the first
fiscal quarter tend to be somewhat lower than for the preceding fourth quarter
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.
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 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
Company believes that its focus on and expertise in new media-based marketing
services has been an important factor in attracting new clients. To the extent
that the Company's leadership in providing new media solutions erodes as
established advertising agencies and other competitors expand their new media
capabilities, the Company's competitive position and operating results may be
materially adversely affected.
Risks Associated with Expansion. The Company's business has grown
rapidly in recent periods through expansion of its existing operations and
through acquisition of other marketing communication services providers. The
Company may continue to expand its business and customer base by acquiring
complementary businesses, opening new offices or expanding its offerings of
marketing communications products or services. There can be no assurance that
the Company will be able to operate profitably in any new geographic location,
that it will be successful in identifying new services or products that will be
attractive to clients or that it will ultimately generate revenues in excess of
costs of implementing them. Expansion of the Company's operations would result
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. No assurance can be
given that existing and new members of the Company's management will succeed in
their roles, or that the Company can efficiently allocate management
responsibilities and cause its officers and senior managers to operate
effectively as a group. 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.
Risks Associated with Acquisitions. As part of its business strategy,
the Company has made and expects to make acquisitions of, or significant
investments in, businesses that offer complementary marketing communication
services, products and technologies. During fiscal 1997, the Company completed
acquisitions of five businesses. The Company's past and any future acquisitions
or investments are and will be accompanied by
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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. The future
performance of businesses acquired by the Company and which may be acquired by
the Company in the future is often highly dependent on the continued employment
and the performance of one or more key officers or employees of such businesses.
To the extent that such key officers or employees terminate their employment
with the Company, or fail to operate effectively, either independently or
together with other officers and personnel of the Company, the Company's
business, financial condition and operating results may be materially adversely
affected.
The Company regularly engages in discussions relating to potential
acquisitions. 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. The number of shares which may be issued in future acquisitions will
depend on the market price of the Company's Common Stock and a variety of other
factors and, as a result, future acquisitions may have a significant dilutive
impact on the Company's existing stockholders. Any acquisitions accounted for as
purchase business combinations may increase the amount of goodwill recorded as
an asset on the Company's balance sheet and accordingly may increase the amount
of goodwill that must be amortized against operating results in the future. In
addition, the Company periodically reviews the goodwill related to its
acquisitions. If the Company were to determine that the goodwill associated with
one or more of its acquisitions were to become impaired, the Company would be
required to record the extent of such impairment as an expense in its statement
of operations for the period in which such impairment occurred. No assurance can
be given that any potential acquisition will be consummated. There can also 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.
Competition. The markets for the Company's services are highly
competitive and are characterized by pressures to reduce prices, incorporate new
capabilities and accelerate job completion schedules. The Company faces
competition from a number of sources. These sources include national and
regional advertising agencies as well as specialized and integrated marketing
communication firms. In addition, with respect to new media, many national
advertising agencies have internally developed or acquired new media
capabilities. New competitors that either provide integrated or specialized
services (e.g., corporate identity and packaging, advertising services or World
Wide Web site design) or are technologically proficient, especially in the new
media arena, have emerged and are competing with the Company. Many of the
Company's competitors or potential competitors have longer operating histories,
longer client relationships and significantly greater financial, management,
technology, development, sales, marketing and other resources than the Company.
In addition, the Company's ability to maintain its existing client relationships
and generate new clients depends, to a significant degree, on the quality of its
services and its reputation among its clients and potential clients, compared
with the quality of services provided by, and the reputations of, the Company's
competitors. To the extent the Company loses clients to the Company's
competitors because of dissatisfaction with the Company's services or the
Company's reputation is adversely impacted for any other reason, the Company's
business, financial condition and operating results could be materially
adversely affected.
There are relatively low barriers to entry into the Company's
business. The Company has no significant proprietary technology that would
preclude or inhibit competitors from entering the integrated marketing
communication solutions market. The Company expects that it will face additional
competition from new entrants into the market in the future. There can be no
assurance that existing or future competitors will not develop or offer
marketing communication services and products that provide significant
performance, price, creative or other advantages over those offered by the
Company, which could have a material adverse effect on the Company's
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business, financial condition and operating results.
Project Profit Exposures. The Company generates a significant portion
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
the Company to incur a loss. Although many of the Company's projects 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, a material adverse effect on the Company's
business, financial condition and operating results could result.
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 likely 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 are subject to fluctuations based upon 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, likely will
substantially and immediately reduce their advertising and marketing budgets.
Because certain of the Company's largest clients have substantial overseas
operations, their advertising and marketing budgets may also be adversely
affected by economic conditions in overseas markets, including the recent
volatility in Asian currency markets. In the event of such an economic downturn,
there can be no assurance that the Company's business, financial condition and
operating results would not be materially and adversely affected.
Year 2000 Compliance. Many currently installed computer systems and
software products are coded to accept only two-digit entries in the date code
field. Beginning in the year 2000, these date code fields will need to accept
four-digit entries to distinguish 21st century dates from 20th century dates. As
a result, in approximately two years, computer systems and/or software used by
many companies may need to be upgraded to comply with such "Year 2000"
requirements. Significant uncertainty exists concerning the potential effects
associated with compliance. Although the Company believes that it will be Year
2000 compliant, there can be no assurance that coding errors or other defects
will not be discovered in the future. Any Year 2000 compliance problem of the
Company, its customers or the internet infrastructure could result in a material
adverse effect on the Company's business, financial conditions and operating
results.
Volatility of Stock Price. The trading price of the Company's Common
Stock has been and in the future is expected to be subject to extreme
fluctuations in response to both business-related issues, such as
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quarterly variations in operating results, the timing of commencement or
completion of client projects, reductions or increases in client spending on
marketing communications services, 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 estimates of
securities analysts, 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 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. The following table reflects the high and low per
share sale prices for the Company's Common Stock for the five fiscal quarters
ended March 1, 1998:
<TABLE>
<CAPTION>
HIGH LOW
<S> <C> <C>
First Quarter, Fiscal 1997 $36.25 $20.63
Second Quarter, Fiscal 1997 $34.25 $20.25
Third Quarter, Fiscal 1997 $44.75 $29.00
Fourth Quarter, Fiscal 1997 $46.25 $11.38
First Quarter, Fiscal 1998 $19.00 $12.38
</TABLE>
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 collectively own approximately 35% of the Company's
outstanding Common Stock, including approximately 13% 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. 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.
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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 Stockholders
by the Company in connection with the acquisitions of Donovan & Green and
Gormley & Partners (the "Acquisitions"). The following tables set forth the
aggregate number of shares of Common Stock held by each Selling Stockholder and
the aggregate number of shares of Common Stock offered by each Selling
Stockholder hereunder. No Selling Stockholder holds more than 1% of the
Company's outstanding Common Stock.
<TABLE>
<CAPTION>
SHARES SHARES
BENEFICIALLY OWNED NUMBER OF SHARES BENEFICIALLY OWNED
NAME OF SELLING STOCKHOLDER PRIOR TO OFFERING BEING OFFERED AFTER OFFERING
- ---------------------------------------------------------------------------------------------------------------------
NUMBER PERCENT NUMBER PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Q5, Inc. ..................... 14,874 * 14,874 -- --
Frances P. Gormley ........... 15,042 * 15,042** -- --
Richard Villante ............. 20,811 * 7,409** 13,402 --
TOTAL ........................ 50,727 * 37,325 13,402 --
</TABLE>
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* Less than 1%
** The shares registered hereunder were issued to ALI Consulting, Inc. in
partial consideration for the purchase of certain of the assets of Gormley &
Partners by the Company and were dividended to the Selling Stockholders. All
of such shares of Common Stock held by Selling Stockholders may be sold
pursuant to this Prospectus.
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 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 Regulation M
promulgated under the Exchange Act may apply to its sales in the market, has
furnished the Selling Stockholders with a copy of this regulation and has
informed them 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
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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.
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.
LEGAL MATTERS
The validity of the CKS Common Stock issuable pursuant to the
Acquisitions and certain other legal matters related to the Acquisitions were
passed upon for CKS by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, Palo Alto, California.
EXPERTS
The consolidated balance sheets of the Company as of November 30,
1997 and 1996, and the related consolidated statements of income, stockholders'
equity and cash flows for each of the years in the three-year period ended
November 30, 1997, 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 McKinney & Silver, a general partnership,
as of December 31, 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 given on their
authority of such firm as experts in accounting and auditing.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 2
Additional Information..................................................... 2
Incorporation of Certain Documents by Reference............................ 2
The Company................................................................ 3
Risk Factors............................................................... 4
Selling Stockholders....................................................... 9
Plan of Distribution....................................................... 9
Legal Matters............................................................. 10
Experts................................................................... 10
</TABLE>
37,325 SHARES
CKS GROUP, INC.
---------------
COMMON STOCK
PROSPECTUS
April 27, 1998
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