MILBERG WEISS BERSHAD HYNES & LERACH LLP
ATTORNEYS AT LAW
February 14, 1997
Richard K. Wulff, Esq.
Chief, Office of Small Business Policy
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Bell Technology Group Ltd. Amendment No. 1 to
Post Effective Amendment No. 1
on Form S-3 to Registration
Statement on Form SB-2 - File No. 333-98978
Dear Mr. Wulff:
On behalf of Bell Technology Group Ltd. (the "Company"),
attached for filing is the Company's Amendment No. 1 to Post Effective
Amendment No. 1 on Form S-3 to Registration Statement on Form SB-2
which has been marked to show changes from the Post Effective
Amendment No. 1 on Form S-3 to Registration Statement on Form SB-2
which was filed on January 30, 1997.
The changes consist of an increase in the number of shares
offered which corresponds to the underwriter's overallotment option
and a corresponding increase in the proceeds to the Company.
Very truly yours,
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
By /S/
Arnold N. Bressler
BELL TECHNOLOGY GROUP LTD.
As filed with the Securities and Exchange Commission on January 30
February 14, 1997
Registration No. _____________333-98978
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------
AMENDMENT NO. 1 TO
POST-EFFECTIVE AMENDMENT NO. 1
ON FORM S-3 TO
REGISTRATION STATEMENT
ON FORM SB-2
UNDER THE SECURITIES ACT OF 1933
--------------
BELL TECHNOLOGY GROUP LTD.
-----------------------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 7373 65-0328006
(State or Other Jurisdiction of) (Primary Standard Industrial(I.R.S. Employer)
incorporation or Organization) Classification Code Number) Identification No.)
295 Lafayette Street
Third Floor
New York, New York 10012
(212) 334-8500
----------------------------------------
(Address, Including Zip Code, and Telephone Number, Including Area Code, of
Registrant's Principal Executive Offices)
MARC H. BELL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
BELL TECHNOLOGY GROUP LTD.
295 Lafayette Street
Third Floor
New York, New York 10012
(212) 334-8500
----------------------------------------
(Name, Address, Including Zip Code, and Telephone Number,
including Area Code of Agent for Service)
Please send copies of all communications to:
ARNOLD BRESSLER, ESQ.
MILBERG WEISS BERSHAD HYNES & LERACH LLP
ONE PENNSYLVANIA PLAZA
NEW YORK, NEW YORK 10119-0165
(212) 594-5300
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time upon the exercise of Warrants after this
registration statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box.[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box.[X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
number of the earlier effective registration statement for the
same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, please check the following box
and list the Securities Act registration 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.[ ]
Pursuant to Rule 416, this Registration Statement also covers
such indeterminable number of additional shares of Common Stock
and Warrants, if any, which may become issuable by virtue of the
anti-dilution provisions of the Warrants.
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.
PROSPECTUS
BELL TECHNOLOGY GROUP LTD.
575,000 661,250 Shares of Common Stock
This Prospectus relates to the sale of up to 575,000 661,250
shares of Common Stock, par value $.01 per share (the "Common
Stock"), by Bell Technology Group Ltd, (the "Company"), a
Delaware corporation, upon the exercise of its presently
outstanding redeemable Common Stock purchase Warrants. On the
date of this Prospectus, there were (575,000) 661,250 outstanding
redeemable Common Stock purchase Warrants (the "Warrants"). On
the date of this Prospectus, each Warrant entitled its holder to
purchase one share of Common Stock at an exercise price of $7.70
per share and was exercisable until January 24, 2001.
Each Warrant entitles the registered holder thereof to
purchase one share of Common Stock at an exercise price of $7.70
per share, subject to adjustment in certain events, at any time
prior to January 24, 2001. The Warrants are subject to
redemption by the Company at $.10 per Warrant at any time
commencing January 24, 1997, on not less than 30 days' prior
written notice to the holders of the Warrants, provided the
average closing bid quotation of the Common stock as reported on
The Nasdaq Stock Market, if traded thereon, of or if not traded
thereon, the average closing sale price if listed on a national
securities exchange, has been at least 150% of the then current
exercise price of the Warrants (initially $11.55 per share), for
a period of 20 consecutive trading days ending on the third day
prior to the date on which the Company gives notice of
redemption. The Warrants will be exercisable until the closing
of business on the day immediately preceding the date fixed for
redemption. See "Description of Securities - Warrants."
This Prospectus also relates to the sale of up to 115,000
shares of Common Stock at a price of $11.55 per share, up to
57,500 Warrants at a price of $.165 per Warrant and the sale of
up to 57,500 shares of common stock at a price of $8.40 per share
upon the exercise of such Warrants to Rickel & Associates, Inc.
pursuant to the Underwriter's Warrant, for a period of four years
commencing January 24, 1997, and the resale of such securities.
The Company's Common Stock and Warrants are listed on The
Nasdaq SmallCap Market ("Nasdaq") under the symbols "BELT" and
"BELTW," respectively and on the Boston Stock Exchange under the
symbols "BTC" and "BTCW," respectively.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" ON PAGES 3 TO 12
------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Exercise Maximum Proceeds to
Price Solicitation Fee (1) Company (2)
Per Share........$ 7.70 $ .38 $ 7.31
Total........ $ 5,091,625.00 $ 258,581.25 $4,837,043.80
$4,427,500.00
$221,375.00
$4,206,125.00..
...
(1) The Company will pay a warrant solicitation fee equal to
five percent (5%) of the exercise price received for each
Warrant exercised under certain circumstances. See "Plan of
Distribution."
(2) Before deducting expenses which are estimated to be $_______
$30,000.
---------------------
The date of this Prospectus is January ,1997 February 14, 1997
AVAILABLE INFORMATION
The Company is subject to the informational 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 maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Atlanta
Regional Office of the Commission at 3475 Lenox Road, N.E., Suite
1000, Atlanta, Georgia 30326-7232. Copies of such materials may
also be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. The Commission maintains a World Wide Web site
(C://www.sec.gov) that contains reports, proxy and information
statements and other information regarding registrants that file
such information electronically. The Common Stock of the Company
is quoted on The Nasdaq SmallCap Market. Reports, proxy
statements and other information concerning the Company may be
inspected at the offices of NASDAQ, 1735 K. Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a registration
statement under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the Common Stock offered
hereby. This Prospectus, which is a part of the registration
statement, does not contain all the information set forth in, or
annexed as exhibits to, such registration statement, certain
portions of which have been omitted pursuant to rules and
regulations of the Commission. For further information with
respect to the Company and the Common Stock, reference is made to
such registration statement, including the exhibits thereto,
copies of which may be inspected and copied at the aforementioned
facilities of the Commission. Copies of such registration
statement, including the exhibits, may be obtained from the
Public Reference Section of the Commission at the aforementioned
address upon payment of the fee prescribed by the Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents which have been filed by the
Company with the Commission pursuant to the Exchange Act or the
Securities Act are incorporated by reference in this Prospectus:
- The Company's Annual Report on Form 10-KSB for the
year ended September 30, 1996.
- The description of the Company's Common Stock
contained in the Company's Registration Statement on Form SB-2, declared
effective by the Commission on January 24, 1996 File No. 33-98978.
In addition, all documents filed by the Company pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Common Stock
offered hereby shall be deemed to be incorporated herein by reference and
to be a part hereof from the date of filing of such documents.
The Company hereby undertakes to provide without charge to each
person, including any beneficial owner, to whom a copy of this Prospectus
is delivered, upon the written or oral request of any such person, a copy of
any and all of the above documents (not including exhibits to any of such
documents unless such exhibits are specifically incorporated by reference
into such documents). Such requests should be addressed to the Secretary,
Bell Technology Group Ltd., 295 Lafayette Street, New York, New York 10012.
PROSPECTUS SUMMARY
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE CERTAIN RISKS.
EACH PROSPECTIVE INVESTOR SHOULD CAREFULLY CONSIDER, ALONG WITH
OTHER MATTERS REFERRED TO HEREIN, THE FOLLOWING FACTORS IN
EVALUATING AN INVESTMENT IN THE SECURITIES OFFERED HEREBY:
1. Limited Operating History; Operating Losses;
Limited Profits. The Company's consulting services business has
been in operation for approximately six years, and the Company's
VAR business has been in operation for approximately four years.
However, the Company's Internet and on-line service businesses
have been in operation only since early 1995 and the Company's
Graphic design and Website design business has been in operation
for approximately six months, and have not yet produced
significant operating revenues. In addition, as a group, the
Company's officers have relatively limited operating experience
in the Internet services industry.
The Company incurred a net loss for the fiscal year
ended September 30, 1996 in the amount of $1,893,480, and expects
a loss in the first quarter of the current fiscal year. This
trend is expected to continue. There can be no assurance that
the Company will be profitable in future operating periods or
that it will have sufficient cash available to meet continuing
losses.
Moreover, the Company has entered into employment
agreements with its three executive officers which provide for
aggregate annual base salaries of approximately $389,000 per year
and the Company has hired additional full-time employees, the
cost of which, at least initially, for the sales staff,
engineering and technicians is greater than the revenue which
they will generate.
2. Pressure on Profit Margins of Value-Added
Resellers. As a reseller of computer and peripheral equipment to
corporations and other organizations, the Company faces intense
competition and the use of mass marketing channels in which
price-cutting is the dominant form of competition. Over the past
decade, technological improvements in computer and peripheral
products, and increased competition, have been accompanied by a
consistent decline in their prices. This decline in prices has
resulted in decreasing profit margins for computer resellers,
including the Company. The industry trend is for users to hire
on-staff MIS personnel or independent MIS consultants which
enables the user to purchase equipment from catalogs rather than
engage the services of a reseller such as the Company to design
and/or install a computer system.
3. Dependence upon Suppliers; Sole and Limited
Sources of Supply. The Company relies on other companies to
supply certain components of its computer inventory, service and
diagnostic equipment, as well as its network infrastructure
(including telecommunications services and networking equipment)
which, in the quantities and quality required by the Company, are
available only from sole or limited sources. The Company has in
the past, and may from time to time, experience delays in
receiving telecommunications services and shipments of
merchandise purchased for resale. There can be no assurance that
the Company will be able to obtain such telecommunication
services and shipments of merchandise on the scale and at the
times required by the Company at an affordable cost. There can
be no assurance that the Company's suppliers, including Apple,
will not enter into exclusive arrangements with the Company's
competitors or stop selling their products or components to the
Company at commercially reasonable prices, or at all.
4. Competition With Suppliers. The Company is
dependent upon continued service from an internet access provider
("IAP") that may, for competitive reasons, discontinue service to
the Company at any time. Although there are other IAPs from whom
the Company could obtain a comparable level of service, a change
in access providers would likely involve significant costs and
result in delays in the Company's service to its customers. In
addition, these other access providers are, by definition,
competitors of the Company, and may also discontinue service to
the Company.
In order to provide Internet access and other on-line
services to its customers, the Company leases long distance fiber
optic telecommunications lines from more than one national
telecommunications services provider. The Company is dependent
upon these providers of data communications facilities.
Certain of the Company's suppliers, including the
regional bell operating companies ("RBOCs") and local exchange
carriers ("LECs") currently are subject to various price
constraints, including tariff controls, which in the future may
change. In addition, regulatory proposals are pending that may
affect the prices charged by the RBOCs and LECs to the Company.
Such regulatory changes could result in increased prices of
products and services, which could have a material adverse effect
on the Company's business, financial condition and results of
operations.
5. Internet Related Risk Factors.
Difficulty in Establishing Internet Access Business.
The Company's success in establishing an Internet access business
will depend upon its ability to develop a reputation for
reliability over the long term and the security of its current
and future Internet connections. The Company must continue to
expand and adapt its network infrastructure as the number of
users and the amount of information they wish to transfer
increases, and as the requirements of its customers changes. The
expansion of the Company's Internet network infrastructure will
require substantial capital expenditures to purchase network-
related hardware and telecommunications lines. The Company may
experience insufficient revenue growth to achieve and maintain
profitability if it is unable to obtain and expand an ongoing
client base. If the Internet access market fails to grow, grows
more slowly than anticipated, or becomes saturated with
competitors, the Company's business, financial condition and
results of operations would be materially adversely affected.
Physical Risks Associated with Internet Access
Business. The Company's Internet operations are dependent upon
the protection of its network infrastructure against damage from
acts of nature, power failures, telecommunications failures and
similar events. Physical protection of the Company's network
infrastructure will be the primary responsibility of the Company.
However, because it leases its lines from long-distance
telecommunications companies, RBOCs and LECs, the Company is
dependent upon these companies for physical repair and
maintenance of the leased lines. Despite precautions taken by
the Company, the occurrence of a natural disaster or other
unanticipated problems at the Company's headquarters and network
operations center in New York City, may cause interruptions in
the services provided by the Company. In addition, failure of
the Company's telecommunications providers to provide the data
communications capacity required by the Company as a result of a
natural disaster, operational disruption or for any other reason
could cause interruptions in the services provided by the
Company.
Security Risks Associated with Internet Access Business. Despite the
implementation of security measures, the core of the Company's network
infrastructure is vulnerable to computer viruses and disruptive problems.
The Company and other IAPs may in the future experience interruptions in
service as a result of the accidental or intentional actions of Internet
users, current and former employees or others. Unauthorized use could
also potentially jeopardize the security of confidential information stored
in the computer systems of the Company and its customers, which may result in
liability of the Company to its customers and deter potential subscribers.
Although the Company intends to continue to implement industry-standard
security measures, such measures have been circumvented in the past, and
there can be no assurance that measures implemented by the Company will not
be circumvented in the future. Eliminating computer viruses and alleviating
other security problems may cause interruptions, delays or cessation of service
to the Company's customers. The Company does not carry any insurance
against these risks due to the inavailability of such insurance
at a reasonable cost.
6. Competition. The Company engages in an array of
technology and computer-related businesses, each of which carries
its own particular commercial and financial risks. There are no
substantial barriers to entry into any of the Company's lines of
business, and the Company encounters significant competition in
each of them. The Company's competitors include (i) value-added
resellers of computer, network and peripheral equipment, (ii)
computer repair services and training providers, (iii) network
consultants, (iv) IAPs, and (v) graphic design and consulting
firms. Many of the Company's current and potential competitors
have substantially greater financial, technical, marketing and
other resources and larger installed customer bases than the
Company. The Company expects that competition will intensify in
each of its lines of business, particularly in the area of
Internet services, as more competitors enter the marketplace.
There can be no assurance that the Company will have the
financial resources, technical expertise or marketing and support
capabilities to successfully meet its competition.
7. Risks of Technological Change; Defects. The markets
for the Company's products and services are generally
characterized by rapidly changing technology, evolving industry
standards, emerging competition and frequent new product and
service introductions. There can be no assurance that the
Company can successfully identify new product opportunities and
develop and bring new products and services to market in a timely
manner. The Company's pursuit of necessary technological
advances will require substantial time and expense, and there can
be no assurance that the Company will succeed in adapting its
computer distribution and Internet services businesses to
changing technology standards and customer requirements.
8. Technical Obsolescence. The introduction of new
products and services could render the Company's existing
products and services obsolete and unmarketable. This risk is
present in each of the Company"s product lines, but particularly
in its Internet services business, which relies on the continued
widespread commercial use of Transmission Control Protocol /
Internetwork Protocol ("TCP/IP"). Alternative open protocol and
proprietary protocol standards have been or are being developed.
If any of these alternative protocols become widely adopted,
there may be a reduction in the use of TCP/IP. There can be no
assurance that the announcement or introduction of new products
or services by the Company or its competitors or any change in
industry standards will not cause customers to defer or cancel
purchases of existing products or services, which could have a
material adverse effect on the Company's business, financial
condition and results of operations.
Products and services as complex as those offered by
the Company may contain undetected errors or defects when first
introduced or as new versions are released. The failure by the
Company's suppliers to introduce a new product, service or
product enhancement on a timely basis could also delay or hinder
market acceptance. There can be no assurance that, despite
testing by the Company or its customers, errors will not be found
in new products after commencement of commercial deployment,
resulting in product redevelopment costs and loss of, or delay
in, market acceptance, delays in collecting accounts receivable
and additional service costs.
9. Dependence upon Chief Executive Officer; Need to
Manage Growth and Expansion. The Company's success will depend
upon the continued service of its President and CEO, Marc H.
Bell. Mr. Bell has entered into an employment agreement with the
Company pursuant to which Mr. Bell will be employed by the
Company through September 30, 2000. In addition, the Company has
obtained a key person life insurance policy on Mr. Bell in the
amount of $1,000,000. The Company is the beneficiary of such
policy.
The Company's success also depends upon its ability to
attract and retain additional highly qualified management,
technical and sales and marketing personnel. Competition for
qualified employees is intense. In addition, the process of
locating such personnel with the combination of skills and
attributes required to carry out the Company's strategy is often
lengthy.
As of November, 1996, the Company had approximately 81
full-time employees and 5 part-time employees. To manage its
growth, the Company must hire and train additional qualified
personnel; and must continue to expand and upgrade its sales
capacity and build its network infrastructure. Failure to manage
its growth effectively could have a material adverse effect on
the Company's business, financial condition and results of
operations.
10. Geographic Concentration; Industry Concentration.
Almost all of the Company's current revenues are generated within
the New York City metropolitan area. In addition, approximately
50% of the Company's sales are currently made to organizations
engaged in the advertising and publishing industries. As a
result, the Company is susceptible to fluctuations in its
business caused by economic conditions in the New York City
metropolitan area and/or in those industries.
11. Government Regulation. The Internet access
operations of the Company are not currently subject to direct
regulation by the Federal Communications Commission or any other
agency, other than regulations applicable to businesses
generally. Changes in the regulatory environment relating to the
Internet access industry, including regulatory changes which
directly or indirectly affect telecommunication costs or increase
the likelihood or scope of competition from regional telephone
companies or others, could have an adverse effect on the
Company's business. The Company cannot predict the impact, if
any, that future regulation or regulatory changes may have on its
business.
12. Substantial Control by Principal Stockholders.
Marc H. Bell and Harpoon Holdings, Ltd. (together, the "Principal
Stockholders") beneficially own or control approximately 55% of
the outstanding shares of Common Stock. Harpoon has entered into
a ten year Irrevocable Proxy Agreement with Marc H. Bell (the
("Irrevocable Proxy"), pursuant to which Marc H. Bell has the
power to vote all shares owned by Harpoon (the "Harpoon Shares")
in the election of the Company's directors. The Irrevocable Proxy
is intended to enable Mr. Bell to maintain control over the
Company. Thus, as a practical matter, Marc Bell will be able to
control election of the Company's Board of Directors. The
Irrevocable Proxy could have the effect of depressing the market
price of the Company's securities since it adversely affects the
ability of other stockholders to effect changes in management of
the Company.
13. Possible Adverse Effect of Issuance of Preferred
Stock. The Company's Certificate of Incorporation authorizes the
issuance of 500,000 shares of "blank check" Preferred Stock, with
designations, rights and preferences that may be determined from
time to time by the Board of Directors. At this time, none of
the shares of Preferred Stock are issued or outstanding.
However, the Board of Directors is empowered, without further
stockholder approval, to issue Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could
adversely affect the voting power or other rights of the holders
of the Common Stock. In addition, such charter provisions could
limit the price that certain investors might be willing to pay in
the future for shares of the Company's Common Stock and may have
the effect of delaying or preventing a change in control of the
Company. The issuance of Preferred Stock also could decrease the
amount of earnings and assets available for distribution to the
holders of Common Stock. There can be no assurance that the
Company will not issue Preferred Stock at some time in the
future.
14. Relationship of Underwriter to Trading; Possible
Limitations on Market Making Activities. The Underwriter may act
in a brokerage capacity with respect to the purchase or sale of
the Common Stock and the Warrants in the over-the-counter market
where each trades. Unless granted an exemption by the Commission
from Rule 10b-6 under the Exchange Act, the Underwriter and any
other soliciting broker/dealers will be prohibited from engaging
in any market making activities or solicited brokerage activities
with regard to the Company's securities during the periods
prescribed by exemption (xi) to Rule 10b-6 before the
solicitation of the exercise of any Warrant until the later of
the termination of such solicitation activity or the termination
of any right the Underwriter may have to receive a fee for the
solicitation of the Warrants. As a result, the Underwriter and
soliciting broker/dealers may be unable to continue to make a
market for the Company's securities during certain periods while
the Warrants are exercisable. Such a limitation, while in
effect, could impair the liquidity and market price of the
Company's securities.
15. Shares Available for Future Sale. Future sales of
shares of Common Stock by Principal Stockholders under Rule 144
of the Securities Act or the issuance of shares of Common Stock
upon the exercise of options or warrants could materially and
adversely affect the market price of the Common Stock and could
materially impair the Company's future ability to raise capital
through an offering of equity securities. A substantial number
of shares of Common Stock will become available for sale in the
public market at various times. No predictions can be made as to
the effect, if any, that market sales of such shares or the
availability of such shares for future sale will have on the
market price of the Securities prevailing from time to time. The
Principal Stockholders have entered into agreements with the
Underwriter (the "Lock-Up Agreements") providing that they will
not offer, sell, contract to sell or grant any option to purchase
or otherwise dispose of the shares of Common Stock of the Company
or any securities exercisable for or convertible into the
Company's Common Stock owned by them until February 24, 1997.
16. Broad Discretion in Application of Proceeds. The
net proceeds, if any, received upon the exercise of the Warrants
will be applied to working capital and general corporate
purposes. Accordingly, the Company will have broad discretion as
to the application of such proceeds without prior stockholder
approval. In addition, the management of the Company has broad
discretion to adjust the application and allocation of the net
proceeds upon exercise of the Warrants, in order to address
changed circumstances and business opportunities. As a result of
the foregoing, the success of the Company will be substantially
dependent upon the discretion and judgment of the management of
the Company.
17. Absence of Dividends. The Company has not paid
any cash dividends on the Common Stock since July 1994, when NAFT
and Stellar Graphics, both Subchapter S Corporations under the
Internal Revenue Code, were acquired by PFMT, the Company's
immediate corporate predecessor. As Subchapter S Corporations,
NAFT and Stellar Graphics made several distributions to their
sole shareholder, Marc H. Bell. The Company does not anticipate
paying any cash dividends on the Common Stock in the foreseeable
future.
18. Possible Delisting and Risk of Low-Priced
Securities. The Company is listed on the NASDAQ Small Cap Market
and on the Boston Stock Exchange. There can be no assurance that
the Company will continue to be able to satisfy certain specified
financial tests and market related criteria required for
continued listing on the NASDAQ Small Cap Market and the Boston
Stock Exchange. If the Company is unable to satisfy such
maintenance criteria in the future, the Securities may be
delisted from trading on the NASDAQ Small Cap Market or the
Boston Stock Exchange, as the case may be. If the Securities
were to be delisted from trading on each of the NASDAQ Small Cap
Market or the Boston Stock Exchange, trading, if any, would
thereafter be conducted in the over-the-counter market so-called
"pink sheets" or the "Electronic Bulletin Board" of the National
Association of Securities Dealers, Inc., and consequently an
investor could find it more difficult to dispose of, or to obtain
accurate quotations as to the price of, the Company's securities.
The Securities Enforcement and Penny Stock Reform Act
of 1990 requires additional disclosure relating to the market for
penny stocks in connection with trades in any stock defined as a
penny stock. Commission regulations generally define a penny
stock to be an equity security that has a market price listed of
less than $5.00 per share, subject to certain exceptions. Such
exceptions include any equity security listed on NASDAQ or a
national securities exchange (such as the Boston Stock Exchange)
and any equity security issued by an issuer that has (i) net
tangible assets of at least $2,000,000, if such issuer has been
in continuous operation for three years, (ii) net tangible assets
of at least $5,000,000, if such issuer has been in continuous
operation for less than three years, or (iii) average annual
revenue of at least $6,000,000, if such issuer has been in
continuous operation for less than three years. Unless an
exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks
associated therewith.
In addition, if the Company's securities are not quoted
on the NASDAQ Small Cap Market or the Boston Stock Exchange, or
the Company does not meet the other exceptions to the penny stock
regulations cited above, trading in the Company's securities
would be covered by Rule 15g-9 promulgated under the Exchange Act
for non-NASDAQ and non-exchange listed securities. Under such
rule, broker/dealers who recommend such Securities to persons
other than established customers and accredited investors must
make a special written suitability determination for the
purchaser and receive the purchaser's written agreement to a
transaction prior to sale. Securities, in general, also are
exempt from this rule if the market price is at least $5.00 per
share.
If the Company's securities become subject to the
regulations applicable to penny stocks, the market liquidity for
the Company's securities could be adversely affected. In such an
event, the regulations on penny stocks could limit the ability of
broker'/dealers to sell the Company's securities and thus the
ability of purchasers of the Company's securities to sell their
securities in the secondary market.
19. Limited Liability and Indemnification Matters. As
permitted by the Delaware Law, the Company has included in its
Certificate of Incorporation a provision to eliminate the
personal liability of its directors for monetary damages for
breach or alleged breach of their fiduciary duties as directors,
subject to certain exceptions. In addition, the By-laws of the
Company provide that the Company is required to indemnify its
officers and directors under certain circumstances, including
those circumstances in which indemnification would otherwise be
discretionary, and the Company is required to advance expenses to
its officers and directors as incurred in connection with
proceedings against them for which they may be indemnified. At
present, the Company is not aware of any pending or threatened
litigation or proceeding involving a director, officer, employee
or agent of the Company in which indemnification would be
required or permitted.
THE COMPANY
Bell Technology Group Ltd., together with its wholly-
owned subsidiaries (the "Company") provides dedicated Internet
access, web hosting services and customized Internet application
development, provides web design and Internet commerce solutions,
consults with clients relative to the design of computer operating
systems primarily in the publishing, advertising and graphics arts
industries, sells computer hardware and software and installs operating
systems, provides 3-D animation and CD-ROM services and provides
training for employees of various types of institutions and corporations
in the use of computer programs and commercial Internet access.
Internet Services
The Company's state-of-the-art Network Operations
Center provides sophisticated Internet connectivity available for
direct, high-speed Internet connections and World Wide Web hosting
facilities. The Company also offers a complete range of Internet
consulting services.
During the past fiscal year, the Company has increased
its focus on its Internet operations. The Company has created an
intranet to connect both itself and its clients to each other and
to the world-wide Internet through the use of technology such as
fiber optic connectivity, routers, dedicated data service
connections, servers, and other Internet related computer
equipment. The Company will continue to develop, upgrade,
monitor and maintain its intent as additional clients (users) are
added to the system and technology improves. During the fiscal
year ended September 30, 1996, the Company hired approximately 9
graduate engineers and technicians.
The Company has developed multiple platform world wide
web hosting and developing capabilities. The Company is able to
create multi-media web sites and provide high speed access to the
Internet for the client/user. The Company designs the web, and
hosts the site by providing the appropriate hardware, network and
maintenance services. Among the proprietary solutions developed
by the Company are an Internet based Commerce Solution, which
includes secure credit card transaction processing, a shopping
cart for browsing merchandise on-line, and a video-streaming
technology that allows for pay-per-view programming.
During the past fiscal year, the Company has spent over
$1 million building a state-of-the-art network operations center
(NOC) at it's new location. The 2,000 square foot NOC offers
customers the ultimate in network connectivity. Connected to
three Tier I Internet carriers via redundant fiber optics, and
providing connectivity to leased line clients via an OC-48 on the
NYNEX SONET ring, PFM is poised to service the most demanding
companies in New York City. Additionally, the PFM NOC offers
lockable cabinet co-location services for those clients focused
on Internet publishing on the World Wide Web.
The Company also offers a wide range of services to
it's customers such as dial-up, ISDN, leased line, web hosting,
programming, consulting, firewall, network security and design
services. Because of the sales and service operation the Company
is able to offer customers support and services on all major
operating systems including UNIX, IRIX, Windows NT and Mac OS.
The Company also provides consulting services in the
areas of inter - networking, computer and network security,
network design and network operation.
Product Sales
The Company has been shifting its emphasis from the
sale of low margin products with intense price competition to
higher-end, higher margin hardware products such as Silicon
Graphics, Integraph, Sun Microsystems, Cisco, Compaq servers, and
software products such as SoftImage, Alias/Wavefront, and Avid.
These products are generally not purchased through mail order (as
are Compaq and Apple products, for example) and require a higher
level of sales effort and after-market support such as training.
The Company has continued its original program of moving away
from the more competitive computer sales market into the area of
Internet focused computer solutions.
The great majority of the Company's customers are
Fortune 1000 companies which maintain an ongoing relationship
with the Company. The goal of the Company is to convert its
product customers to users of the various Internet and training
programs run by the Company.
Service and Training
The Company services the products which it sells by
providing warranty repair services, as well as contract support
of system software and hardware. Hardware contracts are issued
for a fixed price and for a fixed term. Contracts for software
support and maintenance are issued on the basis of prepaid hours
where a customer prepays for a block of hours which may be used
at any time. Payments for service contracts are accounted for
ratably over the period of the contract. Payments for prepaid
hours are accounted for as the hours are used.
The Company maintains several training rooms at its
headquarters facility which it rents out to corporations for the
training of their professional staff. The Company provides a
variety of modern operating equipment and current programs,
together with instructors to teach how to use such equipment and
programs. Some instructors are on staff and others are hired on
a freelance basis as needs dictate. The Company typically
charges a fixed price depending upon the size of the class, the
complexity of the group and the equipment required.
In September, 1996, the Company began an aggressive
program to market its in-house training facilities. The Company
provides training services for the more sophisticated computer
software programs which it sells. Training is marketed to large
advertising and publishing firms, banks, large financial
institutions, clothing manufacturers, and the like, which send
their personnel to the Company's facility to attend one to five
day programs. The Company's modern classrooms at its corporate
headquarters can accomodate groups of up to 150. Training rooms
are equipped with modern hardware, computer desks and other
appropriate classroom equipment and various programs are loaded
into equipment as required by the users. The Company intends to
expand this operation into a major source of revenue and include
training at the customer's own site.
The Company provides training only to its corporate clients and does not
run any public seminars.
Multimedia and Graphic Arts
The Company's graphic arts capabilities include
creating and assembling world-wide web sites, and developing
promotional brochures, interactive applications such as training
CDs and promotional CDs, and broadcast quality 2-D and 3-D
animation. It works with content providers such as marketing
firms to provide the technical and design aspects of a project
for large scale multimedia projects including sites to be used on
the Internet.
The Company designs internal communications products
used by businesses for computer based in-house training and
intranet development. In addition the Company provides front-end
graphics for data base driven web sites.
The Company offers a service to its 3-D animation clients in the form of
motion capture studios.
The Company has three main areas of digital design
development: animation, Authorware & web production. The
animation department is fully staffed with creative directors who
specialize in Alias & SoftImage (the two animation packages with
the greatest market share) and render their work on a state-of-
the-art render farm from Silicon Graphics. The Silicon Graphics
hardware farm is such an investment & such an asset to an
animator that major national broadcast companies rent time on the
farm when the Company isn't using it. The Company's Authorware
division is responsible for creating computer based training and
computer based sales tools for companies such as BMW, Prudential
and others. And the Company's Web Design department is fully
staffed with HTML editors, programmers and producers who have
already produced Internet sites for a variety of companies in
several industries. Most recently, the Company has leveraged
it's Internet knowledge and expertise to develop Intranets for
companies such as Simon & Schuster.
USE OF PROCEEDS
The net proceeds to the Company if all outstanding
Warrants are exercised is estimated to be approximately
$4,170,125 $4,807,043.80 assuming payment of the warrant
solicitation fee described below. There can be no assurance that
the Company will receive any proceeds from the exercise of the
Warrants. The original exercise prices of the Warrants were
determined by the Company in conjunction with the underwriters of
its initial public offering.
The net proceeds may be used by the Company for general
corporate purposes, to finance capital expenditures for the
Company's existing businesses and/or finance future acquisitions.
PLAN OF DISTRIBUTION
The Company is offering for issuance from time to time
to holders of its Warrants up to 575,000 661,250 shares of Common
Stock at an exercise price of $7.70 per share. The Warrants may
be exercised at any time prior to January 24, 2001.
The Company under certain circumstances may pay to
Rickel & Associates, Inc. ("Rickel") pursuant to the Underwriting
Agreement a warrant solicitation fee of five percent (5%) of the
aggregate exercise price of each Warrant exercised if (i) the
market price of the Common Stock on the date the Warrant is
exercised is greater than the exercise price of the Warrant, (ii)
the exercise of the Warrant was solicited by an NASD member,
(iii) the Warrant is not held in a discretionary account (iv) the
disclosure of compensation arrangements is made at the time of
the exercise of the Warrant, and (v) the solicitation is not in
violation of Rule 10b-6 under the Exchange Act.
This Prospectus also relates to the sale by Rickel &
Associates, Inc. of up to 115,000 shares of the Company's Common
Stock, 57,500 Warrants (and the 57,500 shares of Common Stock
which may be issued upon exercise of the Warrants) upon exercise
of the Underwriter's Warrant and the resale by Rickel of such
securities. Assuming all such securities are sold, Rickel would
have no beneficial ownership in the Company other than as market-
maker for the securities.
LEGAL MATTERS
The validity of the issuance of the Common Stock
offered hereby has been passed upon for the Company by Milberg
Weiss Bershad Hynes & Lerach LLP, One Pennsylvania Plaza, New
York, New York 10119.
EXPERTS
The financial statements included in this Prospectus
and elsewhere in the Registration Statement and the Form 10-KSB
have been audited by Arthur Andersen LLP, independent public
accounts, as indicated in their reports with respect thereto, and
are included herein in reliance upon the authority of said firm
as experts in giving said reports.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses, excluding Warrant solicitation
fees, in connection with this offering are as follows:
Amount
Printing $ 1,000
Legal Fees and Expenses 25,000
Accounting Fees and Expenses 1,500
Miscellaneous 3,000
Total $30,000
The Company's Certificate of Incorporation limits the
liability of Directors to the maximum extent permitted by
Delaware General Corporation Law. Delaware law provides that the
directors of a corporation will not be personally liable to such
corporation or its stockholders for monetary damages for breach
of their fiduciary duties as directors, except for liability (i)
for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of
law; (iii) for unlawful payments of dividends or unlawful stock
repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law; or (iv) for any transaction
from which the director derives an improper personal benefit.
The Company's By-laws provide that the Company shall indemnify
its directors and officers under certain circumstances, including
those circumstances in which indemnification would otherwise be
discretionary, and the Company is required to advance expenses to
its officers and directors as incurred in connection with
proceedings against them for which they may be indemnified.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
1. Form of Underwriting Agreement between the Company
and Rickel & Associates, Inc. ("Rickel") dated as of January 24,
1996.**
4(a). Specimen Stock Certificate***
4(b). Form Warrant Agreement among the Company, Rickel
and Continental Stock Transfer & Trust Company, dated as of
January 24, 1996.***
4(c). Form of Underwriter's Warrant***
4(d). Specimen Warrant Certificate***
5. Opinion of Milberg Weiss Bershad Hynes & Lerach LLP
23(a). Consent of Milberg Weiss Bershad Hynes & Lerach LLP
(included in Exhibit 5.1)
23(b). Consent of Arthur Andersen LLP
_______________
** Incorporated by reference to the same exhibit number filed
as part of Amendment No. 1 to Registration Statement on Form SB-2
(File No. 33-98978) filed December 20, 1995.
*** Incorporated by reference to the same exhibit number filed
as part of Amendment No. 2 to Registration Statement filed
January 23, 1996.
ITEM 17. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes that
it will:
(1) File, during any period in which it offer
or sells securities, a post-effective amendment to this registration
statement to include any additional or changed material
information on the plan of distribution.
(2) For determining liability under the
Securities Act of 1933, treat each post-effective amendment as a
new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove
from registration any of the securities that remain unsold at the
end of the offering.
(b) 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of
1933, as amended, the Registrant certifies that it has reasonable
ground to believe that it meets all the requirements for filing
on Form S-3 and has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Dated: February 14, 1997
BELL TECHNOLOGY GROUP LTD.
By: /S/
Marc H. Bell
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange
Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Date: February 14, 1997 /S/
Marc H. Bell
Chief Executive Officer
and Director
Date: February 14, 1997 /S/
Robert B. Bell
Executive Vice President,
Chief Financial Officer
and Director
Date: February , 1997 _________________________
Martin Fox
Director
Date: February , 1997 ________________________
Tsuyoshi Shiraishi
Director
Date: February 14, 1997 /S/
Richard Videbeck
Director
MILBERG WEISS BERSHAD HYNES & LERACH LLP
ATTORNEYS AT LAW
(January 30,) February 14, 1997
Bell Technology Group Ltd.
295 Lafayette Street.
New York, New York 10012
Re: Bell Technology Group Ltd.
Post Effective Amendment No. 1 on Form S-3 to
Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel for Bell Technology Group
Ltd., a Delaware corporation (the "Company"), in connection with
the preparation and filing by the Company of Amendment No. 1 to
Post Effective Amendment No. 1 on Form S-3 to Registration
Statement on Form SB-2 (the "S-3") under the Securities Act of
1933, relating to the 575,000 661,250 shares of the Company's
Common Stock, par value $.01 per share (the "Common Stock") which
may be issued upon the exercise of the redeemable common stock
purchase warrants (the "Warrants"). The S-3 also relates to (i)
115,000 shares of Common Stock, (ii) 57,500 Warrants and (iii)
57,500 shares of Common Stock which may be issued upon the
exercise of the Warrants constituting a part of the Underwriter's
Warrant, which may be issued to Rickel & Associates, Inc., (the
"Underwriter") pursuant to the terms of a warrant (the
"Underwriter's Warrant") entitling the Underwriter to purchase
such securities.
We have examined the Certificate of Incorporation and
the By-Laws of the Company, the Underwriting Agreement relating
to the offering of the Common Stock and the Warrants, the Warrant
Agent Agreement with respect to the Warrants and the
Underwriter's Warrant, forms of certificates evidencing the
Common Stock and the Warrants, originals or copies of such
records of the Company, agreements, certificates of public
officials, certificates of officers and representatives of the
Company and others, and such other documents, certificates,
records, authorizations, proceedings, statutes and judicial
decisions as we have deemed necessary to form the basis of the
opinion expressed below. In such examination, we have assumed
the genuineness of all signatures, the authenticity of all
documents submitted to us as originals and the conformity to
originals of all documents submitted to us as copies thereof.
As to various questions of fact material to this
opinion, we have relied upon statements and certificates of
officers and representatives of the Company and others.
Based on the foregoing, we are of the opinion that:
1. The 575,000 661,250 shares of Common Stock
issuable upon exercise (assuming payment of the exercise price)
of such Warrants to which the S-3 relates will, upon issuance and
sale thereof in the manner contemplated by the S-3, be legally
issued, fully paid and nonassessable.
2. The shares of Common Stock and the Warrants
issuable upon exercise of the Underwriter's Warrant will, when
issued and delivered upon exercise of the Underwriter's Warrant
and payment of the exercise price in the manner contemplated by
the S-3, be legally issued, fully paid and non-assessable.
3. The shares of Common Stock issuable upon exercise
of the Warrants constituting a part of the Underwriter's Warrant
will, when issued and delivered upon exercise of such Warrants in
the manner contemplated by the S-3, be legally issued, fully paid
and non-assessable.
We hereby consent to be named in the S-3 and the
Prospectus as attorneys who have passed upon legal matters in
connection with the offering of the securities offered thereby
under the caption "Legal Matters."
We further consent to your filing a copy of this
opinion as an Exhibit to the S-3.
Very truly yours,
MILBERG WEISS BERSHAD
HYNES & LERACH LLP
By: /s/
___________________________
Arnold N. Bressler
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
incorporation by reference in this registration statement of our
report dated December 23, 1996 included in Bell Technology Group
Ltd.'s Form 10-KSB for the year ended September 30, 1996 and to
all references to our Firm included in this registration
statement.
Arthur Andersen LLP
New York, New York
(January 30,) February 14, 1997
BELL TECHNOLOGY GROUP LTD.
295 Lafayette Street
New York, New York 10012
February 14, 1997
Richard K. Wulff, Esq.
Chief, Office of Small Business Policy
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Bell Technology Group Ltd.
Amendment No. 1 to Post Effective
Amendment No. 1 on Form S-3 to
Registration Statement on
Form SB-2 File No. 333-98978
Dear Mr. Wulff:
Bell Technology Group Ltd. hereby requests that the effective
date of the above-captioned Registration Statement be accelerated
so that it will become effective at 9:00 a.m. New York City time
on February 19, 1997, or as soon as practicable thereafter.
Very truly yours,
BELL TECHNOLOGY GROUP LTD.
By: /S/
Marc H. Bell
President
