<TABLE>
As filed with the Securities and Exchange Commission on February 1, 1999
Registration No. 333 -
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NETSMART TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3680154
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
146 Nassau Avenue
Islip, New York 11751
(Address of Principal Executive Offices) (Zip Code)
1998 Long-Term Incentive Plan
(Full Title of Plan)
Asher S. Levitsky P.C.
Esanu Katsky Korins & Siger, LLP
605 Third Avenue
New York, New York 10158
(212) 953-6000
Fax: (212) 953-6899
(Name, address and telephone number, including area code, of agent for service)
Copies to:
Mr. James L. Conway, President and Chief Executive Officer
Netsmart Technologies, Inc.
146 Nassau Avenue
Islip, New York 11751
(516) 968-2000
Fax: (516) 968-2123
CALCULATION OF REGISTRATION FEE
<S> <C> <C> <C> <C>
Proposed Proposed
Title of securities maximum maximum
to be Amount to be offering price aggregate Amount of
registered registered per unit offering price registration fee
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Common Stock, par 280,000 $ (1) $445,782.50 $123.93
value $.01 per share
<FN>
(1) Based on the weighted average exercise price of the options granted
under the 1998 Long-Term Incentive Plan of $1.50 per share as to
outstanding options (255,000 shares) and $2.5313 per share, which was
the average of the high and low prices of the Common Stock on the
Nasdaq SmallCap Market on January 25, 1999, as to those shares not
subject to outstanding options (25,000 shares).
</FN>
This Registration Statement also serves as Post-Effective Amendment No. 1 to
Registration Statement on Form S-8, File No. 333-28287, which covered the
Registrant's 1993 Long-Term Incentive Plan.
</TABLE>
<PAGE>
PROSPECTUS
252,649 Shares
NETSMART TECHNOLOGIES, INC.
Common Stock, par value $.01 per share
Nasdaq SmallCap Market Trading Symbol: NTST
This Prospectus relates to 252,649 Shares of common stock of Netsmart
Technologies, Inc., a Delaware corporation which may be sold from time to time
by the Selling Stockholders named under the caption "Selling Stockholders."
The Shares are issuable upon the exercise of Options granted or to be
granted to the Selling Stockholders pursuant to our 1993 Long-Term Incentive
Plan and 1998 Long-Term Incentive Plan (collectively, the "Plans"). If the
Options are exercised, we will receive various amounts, ranging from $.70 to
$1.50 per share, based on the exercise price of outstanding Options. If the
Shares are sold, we will not receive any proceeds from the sale. We are paying
the cost of this registration statement, estimated at approximately $5,000; but
the Selling Stockholders will pay their own brokerage commissions and other
expenses of sale.
The Selling Stockholders may sell the Shares from time to time in
transactions (which may include block transactions) on the Nasdaq SmallCap
Market, ("Nasdaq"), in negotiated transactions or both. They may sell the Shares
at fixed prices which may be changed, at market prices or in negotiated
transactions, a combination of such methods of sale or otherwise. The Selling
Stockholders may also transfer Shares by gift. The Selling Stockholders may not
transfer their Options except in case of death.
The Selling Stockholders may sell the Shares directly to purchasers,
through broker-dealers acting as agents for the Selling Stockholders or to
broker-dealers who may purchase securities as principals for their own account.
The Selling Stockholders pay the broker-dealers a brokerage fee or a discount
from the sales price. The purchaser of the Shares may also pay a brokerage fee
or other charge. The compensation to a particular broker-dealer may exceed
customary commissions. We do not know of any arrangements by any Selling
Stockholder for the sale of any of the Shares.
Investing in the Shares involves a high degree of risk. You should purchase the
shares only if you can afford to lose your entire investment. See "Risk
Factors," which begins on page 3.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined whether
this Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is January 29, 1999
<PAGE>
AVAILABLE INFORMATION
We file annual, quarter and periodic reports, proxy statements and
other information with the Securities and Exchange Commission (the "Commission")
using the Commission's EDGAR system. You may inspect these documents and copy
information from them at the Commission's public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549 or at the regional offices of the
Commission at Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661 and Seven World Trade Center, Suite 1300, New York, New York
10048. Copies of such material can be obtained at prescribed rates from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549. The Commission maintains a Web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of such
site is http//www.sec.gov.
We have filed a registration statement with the Commission relating to
the offering of the Shares. The registration statement contains information
which is not included in this Prospectus. You may inspect or copy the
registration statement at the Commission's public reference facilities or its
Web site.
We furnish our stockholders with annual reports containing audited
financial statements and with such other periodic reports as we from time to
time deems appropriate or as may be required by law. We use the calendar year as
its fiscal year.
You should rely only on the information contained in this Prospectus
and the information that we have referred you to. We have not authorized any
person to provide you with any information that is different.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We have filed the following documents with the Commission. We are
incorporating these documents in this Prospectus, and they are a part of this
Prospectus.
(1) Our Annual Report on Form 10-K for the year ended December 31, 1997,
which we amended by an amendment on Form 10-K/A;
(2) Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
(3) Our Proxy Statement for its 1998 Annual Meeting of Stockholders;
(4) Our Current Report on Form 8-K, dated June 30, 1998, which we filed
with the Commission on July 17, 1998, and amended by a Form 8-K/A
which we filed with the Commission on July 28, 1998; and
(5) The Company's Registration Statement on Form 8-A, which became
effective on August 13, 1996.
We are also incorporating by reference in this Prospectus all
documents which we file pursuant to Section 13(a), 13(c), 14 or 15 of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") after the date
of this Prospectus. Such documents are incorporated by reference in this
Prospectus and are a part this Prospectus from the date we file the documents
with the Commission.
If we file with the Commission any document that contains information
which is different from the information contained in this Prospectus, you may
rely only on the most recent information which we have filed with the
Commission.
We will provide a copy of the documents referred to above without
charge if you request the information from us. However, we may charge you for
the cost of providing any exhibits to any of these documents unless we
specifically incorporate the exhibits in this Prospectus. You should contact Mr.
Anthony F. Grisanti, Chief Financial Officer, Netsmart Technologies, Inc., 146
Nassau Avenue, Islip, New York 11751, telephone (516) 968-2000, if you wish to
receive any of such material.
<PAGE>
RISK FACTORS
The statements in this Prospectus that are not descriptions of
historical facts may be forward looking statements that are subject to risks and
uncertainties. In particular, statements in this Prospectus, including any
material incorporated by reference in this Prospectus, that state our
intentions, beliefs, expectations, strategies, predictions or any other
statements relating to our future activities or other future events or
conditions are "forward-looking statements." Forward-looking statements are
subject to risks, uncertainties and other factors, including, but not limited
to, those identified under "Risk Factors," those described in Management's
Discussion and Analysis of Financial Conditions and Results of Operations in our
Form 10-K for the year ended December 31, 1997, the Form 10-Q for the quarter
ended September 30, 1998 and in any other filings which are incorporated by
reference in this Prospectus, as well as general economic conditions, any one or
more of which could cause actual results to differ materially from those stated
in such statements.
RISK FACTORS
An investment in our Common Stock involves a high degree of risk. You
should consider carefully, along with other factors, the following risks and
should consult with your own legal, tax and financial advisors.
1. We have a working capital deficiency and need significant
additional funds. We had a working capital deficit of $526,000 at September 30,
1998, as compared to a working capital deficit of $537,000 at December 31, 1997,
and our cash position decreased from $855,000 at December 31, 1997 to $28,000 at
September 30, 1998. As a result of both our low cash position and our working
capital deficit, we require immediate and significant additional funds for our
operations.
During 1998, our principal source of funds, other than revenue, was an
accounts receivable financing agreement with our asset based lender pursuant to
which we may borrow up to 80% of eligible accounts receivable up to a maximum of
$2.0 million. At September 30, 1998, the outstanding borrowings under this
facility was $1,064,000. With the consent of the asset-based lender, we have,
from time to time, exceeded the maximum borrowing level.
We believe that we need significant working capital to develop our
business and to increase our marketing, sales and services efforts. We do not
have any source of such funding, and, if we fail to raise money when we need it,
our business could suffer significantly.
2. We have a history of losses. We have had significant losses since
our organization. For the nine months ended September 30, 1998, we had a net
loss of $234,000, or $.08 per share, which reflects income from continuing
operations of $147,000, or $.06 per share, and a loss from discontinued
operations of $381,000, or $.14 per share. For the years ended December 31, 1997
and 1996, we had net losses of $3.5 million, or $.48 per share, and $6.6
million, or $1.28 per share.
Our health information systems and related services, which is our only
ongoing business, represented our principal source of revenue through September
30, 1998. Although this business generated income for the nine months ended
September 30, 1998, we may not be profitable in the future.
3. We discontinued our CarteSmart division. During 1998, we
discontinued our CarteSmart division. On June 30, 1998, we sold this division to
a corporation formed by the former management of such division.
4. Our business is subject to the effect of technological advances and
possible product obsolescence. Our customers require software which enables them
to store, retrieve and process very large quantities of data and to provide them
with instantaneous communications among the various data bases. Our business is
designed to take advantage of recent advances in software, computer and
communications technology. Such technology has been developing at rapid rates in
recent years, and our future may be dependent upon our ability to use and
develop or obtain rights to products utilizing such technology. New technology
may develop in a manner which may make our software obsolete. If we cannot use
such new technology, it would have a significant adverse effect upon our
business.
5. We are dependent upon government contracts. We market our health
information systems principally to specialized care facilities, many of which
are operated by government entities and include entitlement programs. During the
nine months ended September 30, 1998 and the years ended December 31, 1997 and
1996, approximately 48%, 34%, and 31%, respectively, of our revenue was
generated from contracts with government agencies. Government agencies generally
have the right to cancel contracts at their convenience.
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<PAGE>
6. Our industry is highly competitive. Our customers in the human
services market include entitlement programs, managed care organizations,
specialty care facilities and other major information technology users which
have a need for access to information over a distributed data network. The
software industry in general, and the health information software business in
particular, are highly competitive. Although we believe that we provide our
clients with software to enable them to perform their services more effectively,
other companies have the staff and resources to develop competitive systems. We
may not be able to compete successfully with such competitors.
The health information systems business is served by a number of major
companies and a larger number of smaller companies, many of which are better
capitalized, better known and have better marketing staffs than we have, and we
may not be able to compete effectively with such companies. Major vendors of
health information systems include Shared Medical Systems Corp. and HBO &
Company, although we believes that such companies market their products to
segments of the heath care field other than the behavioral field, which is our
principal market. We believe that price competition is a significant factor in
our ability to market our health information systems and services.
7. We depend on our management. Our business is largely dependent upon
our senior executive officers, Messrs. James L. Conway, president and chief
executive officer, John F. Philips, vice president -- marketing, and Gerald O.
Koop, chief executive officer of our operating subsidiary, Creative Socio-Medics
Corporation ("CSM"). We have employment agreements with Messrs. Conway,
Phillips, Koop and Anthony F. Grisanti. Mr. Grisanti is our chief financial
officer. Pursuant to these employment agreements, we pay our officers annual
salary of approximately $560,000, in the aggregate, in addition to
performance-based bonuses. Our business may be adversely affected if any of our
key management personnel or other key employees left our employ. Furthermore,
since the market for qualified personnel is highly competitive, we will compete
with some of the major computer, communications and software companies as well
as major corporations hiring in-house staff in seeking to hire employees, and we
may not be able to hire qualified employees when we need them. We anticipate
that we will continue to be largely dependent upon the services of our senior
executive officers.
8. We lack patent protection. We have no patent protection for our
proprietary software. Although we require our employees and others to whom we
disclose proprietary information to sign a non-disclosure agreement, such
protection may not be sufficient. Our business will be adversely affected if
anyone improperly uses or discloses our proprietary software and other
proprietary information.
9. We are subject to the effect of government regulations of health
care industry. Substantially all of our revenue has been derived from our health
information systems and services. The Federal and state governments have adopted
numerous regulations relating to the health care industry, including regulations
relating to the payments to health care providers for various services. The
adoption of new regulations can have a significant effect upon the operations of
health care providers and insurance companies. We cannot predict the effect on
our business of future regulations by governments and payment practices by
government agencies or health insurers. Furthermore, changes in state
regulations in the health care field may force us to modify our health
information systems to meet any new record-keeping or other requirements. If
that happens, we may not be able to generate revenues sufficient to cover the
costs of developing the modifications. In addition, we may lose business if
government agencies reduce funding for entitlement programs.
10. Our principal stockholder and certain directors may have conflicts
of interest. SIS Capital Corp. ("SISC"), a wholly-owned subsidiary of
Consolidated Technology Group Ltd. ("Consolidated"), a public company, is our
largest stockholder, holding approximately 35.6% of the outstanding Common Stock
as of December 31, 1998. Mr. Edward D. Bright, chairman of the board and a
director of the Company, is also chairman, secretary, treasurer and a director
of Consolidated, and Mr. Seymour Richter, a director of the Company, is
president, chief executive officer and a director of Consolidated. Accordingly,
Messrs. Bright and Richter may have a conflict of interest with respect to their
positions with us and with Consolidated.
SISC owns 1,210 shares of our Series D Preferred Stock, which is
redeemable at our option of the Company for $1,000 per share, or an aggregate of
approximately $1.2 million. Dividends on the Series D Preferred Stock are
payable at the annual rate of $72,600 in equal semi-annual installments on April
1 and October 1 of each year commencing October 1, 1996. Dividends on the Series
D Preferred Stock may be paid either in cash or in shares of Common Stock. No
dividends have been paid since April 1997.
11. We may be subject to control by SISC. Mr. Seymour Richter, as the
chief executive officer of Consolidated and SISC, has the right to vote the
shares owned by SISC. Accordingly, SISC and Mr. Richter, who is the chief
executive officer of SISC, may be able to elect all of the directors and would
thus be able to control the Company.
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<PAGE>
12. We face the possibility of delisting from The Nasdaq System. Our
Common Stock is presently listed on The Nasdaq SmallCap Market. The Nasdaq
SmallCap Market requires us to either maintain net tangible assets (i.e., total
assets less liabilities and goodwill) of $2 million, or a market capitalization
of $35 million or net income of $500,000 for two of the last three years in
order to maintain our listing. We are also required to meet certain corporate
governance requirements. If we are unable to satisfy Nasdaq's requirements for
continued listing, our stock may be delisted from The Nasdaq SmallCap Market. In
such event, trading, if any, in our Common Stock would thereafter be conducted
in the over-the-counter market in the so-called "pink sheets" or the Nasdaq's
"Electronic Bulletin Board." If the Common Stock is delisted by Nasdaq, the
liquidity of our Common Stock could be impaired, not only in the number of
securities which could be bought and sold, but also through delays in the timing
of transactions, reduction in security analysts' and the news media's coverage,
and lower prices for our Common Stock than might otherwise be attained.
If our Common Stock were to be delisted from The Nasdaq SmallCap
Market, it may become subject to additional sales practice requirements on
broker-dealers which sell such securities to persons other than established
customers and institutional accredited investors. If the broker-dealer is
subject to such restrictions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transaction prior to sale. Consequently, the rule may affect the
price of the Common Stock and your ability to sell our Common Stock.
The Commission's regulations define a "penny stock" to be any equity
security that has a market price which is less than $5.00 per share, subject to
certain exceptions. The penny stock restrictions will not apply to our Common
Stock as long as it is listed on The Nasdaq SmallCap Market.
13. We do not anticipate paying Common Stock dividends. We presently
intend to retain future earnings, if any, in order to provide funds for use in
the operation and expansion of our business and, accordingly, we do not
anticipate paying cash dividends on our Common Stock in the foreseeable future.
14. Shares may be issued pursuant to warrants and options; and holders
have certain registration rights. We may issue stock grants or options to
purchase up to an aggregate 377,540 shares of Common Stock pursuant to the
Plans, as in effect on December 31, 1998, of which 362,540 shares are subject to
outstanding options. We have issued Series B Warrants to purchase 292,500 shares
of Common Stock at an exercise price of $6.00 per share and 631,875 shares of
Common Stock at an exercise price of $12.00 per share. These warrants expire
December 31, 1999. During the term of such options and warrants, the holders
will have the opportunity to profit from a rise in the market price of the
Common Stock, and their exercise may dilute the book value per share of the
Common Stock. The holders of Series B Warrants have certain demand and piggyback
registration rights. We will bear the cost of preparing such registration
statements but will not receive any proceeds from the sale of shares of Common
Stock pursuant thereto other than payment of the exercise price of the options
or warrants being exercised. The existence of these registration rights, as well
as the sale of shares of Common Stock pursuant to any registration statements
which we may be required to prepare, may have a depressive effect on the price
of the Common Stock in the open market. In addition, the existence of such
warrants and options and the registration rights referred to above may adversely
affect the terms on which we can obtain additional equity financing. The holders
of options and warrants are likely to exercise them at a time when we would
otherwise be able to obtain capital on better terms than those provided by the
options or warrants.
15. The rights of the holders of Common Stock may be affected by the
potential issuance of Preferred Stock. Our certificate of incorporation gives
the board of directors the right to determine the designations, rights,
preferences and privileges of the holders of one or more series of Preferred
Stock. Accordingly, the board of directors is empowered, without stockholder
approval, to issue Preferred Stock with voting, dividend, conversion,
liquidation or other rights which could adversely affect the voting power and
equity interest of the holders of Common Stock. The Preferred Stock, which could
be issued with the right to more than one vote per share, could be utilized as a
method of discouraging, delaying or preventing a change of control of the
Company. The possible impact on takeover attempts could adversely affect the
price of the Company Stock. Although we have no present intention to issue any
additional shares of Preferred Stock or to create any additional series of
Preferred Stock, we may issue such shares in the future. Furthermore, if we
issue Preferred Stock in a manner which dilutes the voting rights of the holders
of Common Stock, our listing on The Nasdaq SmallCap Market may be impaired.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Shares. If any
Selling Stockholders exercise Options, we will receive the exercise price of
such Options. The Company will use any such proceeds for working capital and
general corporate purposes.
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<PAGE>
<TABLE>
SELLING STOCKHOLDERS
The following table sets forth (i) the name of each Selling
Stockholder, (ii) any position, office or other material relationship which he
had with the Company or any of its affiliates during the last three years, (iii)
the number of shares of Common Stock owned by him prior to the offering, (iv)
the number of shares of Common Stock offered by him, (v) the number of shares of
Common Stock he would own if he exercise all of his Options and sells the
Shares, and (vi) his percentage ownership of Common Stock if he sells all of his
Shares.
<S> <C> <C> <C> <C>
Shares of Shares of
Common Stock Common Stock Shares of Percentage
Owned Prior Offered For Account Common Stock Owned
Selling Stockholder to Offering (1) of Selling Stockholder Owned After Offering (2) After Offering
------------------- ------------- ---------------------- ---------------------- --------------
James L. Conway3 127,582 40,000 87,582 3.1%
Edward D. Bright4 78,922 56,922 22,000 *
John F. Phillips5 73,922 51,922 22,000 *
Gerald O. Koop6 58,223 37,984 20,239 *
Anthony F. Grisanti7 52,461 45,821 6,640 *
Seymour Richter8 10,000 10,000 0 *
Joseph G. Sicinski9 10,000 10,000 0 *
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* Less than 1%.
1 The number of shares of Common Stock owned by each person includes
shares of Common Stock issuable upon the exercise of Options granted
under the Plans that are currently exercisable or will become
exercisable within 60 days of January 20, 1999, except as otherwise
noted below.
2 The number of shares of Common Stock owned by each person after the
offering assumes that such person exercises all of his Options and
sells all of his Shares.
3 Mr. Conway has been has been president and a director of the Company
since January 1996 and chief executive officer since April 1998. From
1993 until April 1998, he was president of S-Tech, which, until April
1998, was a wholly-owned subsidiary of Consolidated that manufactures
specialty vending equipment for postal, telecommunication and other
industries. From 1997 until April 1998, Mr. Conway was also president
of other subsidiaries of Consolidated engaged in manufacturing. Shares
owned by Mr. Conway include (a) 40,000 shares of Common Stock issuable
upon exercise of Options, (b) 55,333 shares of Common Stock issuable
upon exercise of warrants that have exercise prices of $6.00 (18,333
shares) and $12.00 (35,000 shares), and (c) 23,916 shares of Common
Stock issuable upon exercise of warrants held by Mr. Conway's wife
that have exercise prices of $6.00 (9,666 shares) and $12.00 (14,250
shares). Mr. Conway disclaims beneficial interest in the secureities
owned by his wife. In addition, Mr. Conway was granted an option to
purchase 50,000 shares of Common Stock pursuant to an amendment to the
1998 Plan which was approved by the board of directors, subject to
stockholder approval (the "1998 Amendment"). The registration
statement of which this Prospectus is a part (the "Registration
Statement") does not options issuable pursuant to the 1998 Amendment.
4 Mr. Bright has been chairman of the board and a director of the
Company since April 1998. He is also a member of the audit and
compensation committees of the board of directors. In April 1998, Mr.
Bright was also elected as chairman, secretary, treasurer and a
director of Consolidated, a public company whose business, in addition
to its interest in the Company, includes technical temporary staffing
services through Trans Global Services, Inc. ("Trans Global"), a
public corporation in which Consolidated is the controlling
stockholder, and telecommunications services, through a subsidiary,
and chairman of the board and a director of Trans Global. From January
1996 until April 1998, Mr. Bright was an executive officer of or
advisor to CSM, a subsidiary of the Company. Shares owned by Mr.
Bright include 51,922 shares of Common Stock issuable upon the
exercise of Options. If Mr. Bright is a director on April 1, 1999, he
will receive the automatic grant of an option to purchase 5,000 shares
of Common Stock at the fair market value on such date. Such Shares are
included in the Registration Statement and in the table. In addition,
Mr. Bright was granted an option to purchase 45,000 shares of Common
Stock pursuant the 1998 Amendment.
</TABLE>
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<PAGE>
5 Mr. Phillips has been a director of the Company and vice president of
CSM since June 1994 and vice president-marketing of the Company since
1996. Shares owned by Mr. Phillips include 51,922 shares of Common
Stock issuable upon the exercise of Options. In addition, Mr. Phillips
was granted an option to purchase 50,000 shares of Common Stock
pursuant the 1998 Amendment.
6 Mr. Koop has been a director of the Company since June 1998. He has
held management positions with CSM for more than the past five years,
most recently as its chief executive officer, a position he has held
since 1996. Shares owned by Mr. Koop include 37,984 shares of Common
Stock issuable upon the exercise of Options. In addition, Mr. Koop was
granted an option to purchase 50,000 shares of Common Stock pursuant
the 1998 Amendment.
7 Mr. Grisanti has been treasurer of the Company since June 1994,
secretary since February 1995 and chief financial officer since
January 1996. Shares owned by Mr. Grisanti include 45,821 shares of
Common Stock issuable upon the exercise of Options. In addition, Mr.
Grisanti was granted an option to purchase 50,000 shares of Common
Stock pursuant the 1998 Amendment.
8 Mr. Richter has been a director of the Company since April 1998. Mr.
Richter is a member of the Company's audit and compensation committees
of the board of directors. Since April 1998, he has been president,
acting chief executive officer and a director of Consolidated and a
director of Trans Global. Shares owned by Mr. Richter represent 5,000
shares of Common Stock issuable upon the exercise of Options. If Mr.
Richter is a director on April 1, 1999, he will receive the automatic
grant of an option to purchase 5,000 shares of Common Stock at the
fair market value on such date. Such Shares are included in the
Registration Statement and in the table. In addition, Mr. Richter was
granted an option to purchase 10,000 shares of Common Stock pursuant
the 1998 Amendment.
9 Mr. Sicinski has been a director of the Company since June 1998. Mr.
Sicinski is a member of the Company's audit and compensation
committees of the board of directors. He is president and a director
of the Trans Global, a position he held with Trans Global and its
predecessor since September 1992. Since April 1998, he has also been
chief executive officer of Trans Global. Shares owned by Mr. Sicinski
represent 5,000 shares of Common Stock issuable upon the exercise of
Options. If Mr. Sicinski is a director on April 1, 1999, he will
receive the automatic grant of an option to purchase 5,000 shares of
Common Stock at the fair market value on such date. Such Shares are
included in the Registration Statement and in the table. In addition,
Mr. Sicinski was granted an option to purchase 10,000 shares of Common
Stock pursuant the 1998 Amendment.
PLAN OF DISTRIBUTION
The Selling Stockholders may sell the Shares from time to time in
transactions (which may include block transactions) on Nasdaq, in negotiated
transactions or both. They may sell the Shares at fixed prices which may be
changed, at market prices or in negotiated transactions, a combination of such
methods of sale or otherwise. The Selling Stockholders may also transfer Shares
by gift. The Selling Stockholders may not transfer their Options except in case
of death.
The Selling Stockholders may sell the Shares directly to purchasers,
through broker-dealers acting as agents for the Selling Stockholders or to
broker-dealers who may purchase securities as principals for their own account.
The Selling Stockholders pay the broker-dealers a brokerage fee or a discount
from the sales price. The purchaser of the Shares may also pay a brokerage fee
or other charge. The compensation to a particular broker-dealer may exceed
customary commissions. We do not know of any arrangements by any Selling
Stockholder for the sale of any of the Shares.
The Selling Stockholders and broker-dealers, if any, acting in
connection with such sales might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act and any commission received by
them and any profit on the resale of the securities might be deemed to be
underwriting discounts and commissions under the Securities Act.
The Selling Stockholders understand that the anti-manipulative rules
under the Exchange Act, which are set forth in Regulation M, may apply to its
sales in the market. We have furnished the Selling Stockholders with a copy of
Regulation M, and we have informed them that they should deliver a copy of this
Prospectus when they sell any Shares.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon
by our counsel, Esanu Katsky Korins & Siger, LLP.
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<PAGE>
EXPERTS
The consolidated financial statements incorporated by reference in
this Prospectus and elsewhere in the Registration Statement to the extent and
for the periods indicated in their report have been audited by Moore Stephens,
P.C., independent certified public accountants, and are included herein in
reliance upon the authority of such firm as experts in accounting and auditing
in giving such report.
- 8 -
<PAGE>
PART II
INFORMATION REQUESTED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Relevance.
The following documents have been filed by Netsmart Technologies, Inc.
(the "Company") with the Securities and Exchange Commission (the "Commission")
(File No. 0-21177) and are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997, as amended by an amendment on Form 10-K/A;
(2) The Company's Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998;
(3) The Company's Current Report on Form 8-K, dated June 30,
1998, which we filed with the Commission on July 17, 1998,
and amended by a Form 8-K/a which we filed with the
Commission on July 28, 1998;
(4) All other reports filed by the Company pursuant to Section
13(a) and 15(d) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act"), since December 31, 1997; and
(5) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A, which
became effective on August 13, 1996.
All documents subsequently filed pursuant to Sections 13(a), 13(c), 14
and 15 of the Exchange Act prior to the filing of a post-effective amendment
which indicates that all securities hereby have been sold or which deregisters
securities then remaining unsold shall be deemed to be incorporated by reference
in this Registration Statement and to be a part hereof from the date of filing
of such documents.
The exhibit index appears on page II-2 of this Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable
Item 6. Indemnification of Officers and Directors.
Under the Delaware General Corporation Law ("DGCL"), a corporation may
indemnify any director, officer, employee or agent against expense (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with any specified threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative (other than an action
by or in the right of the corporation) if such person acted in good faith and in
a manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal proceeding, had
no reasonable cause to believe that his or her conduct was unlawful.
Article EIGHTH of the Registrant's Restated Certificate of
Incorporation provide for indemnification of directors and officers of the
Registrant to the fullest extent permitted by the DGCL.
The Company also maintains directors and officers liability insurance
("D&O Insurance"). The D&O Insurance covers any person who has been or is an
officer or director of the Company or of any of its subsidiaries for all
expense, liability and loss (including attorneys' fees, investigation costs,
judgments, fines, penalties and amounts paid or to be paid in settlement)
actually and reasonably incurred by such person in connection with such action,
suit or proceeding, net of the deductible.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, offices or 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 Securities
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the
II-1
<PAGE>
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered hereunder, the registrant will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
Item 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits
4.1(1) 1993 Long-Term Incentive Plan.
4.2(2) 1998 Long-Term Incentive Plan
5.1 Opinion of Esanu Katsky Korins & Siger, LLP.
23.1 Consent of Moore Stephens, P.C. (Page II-5)
23.2 Consent of Esanu Katsky Korins & Siger, LLP (contained in
Exhibit 5.1 hereto).
24.1 Power of Attorney (included on the signature page).
- -------------------
1 Filed as an exhibit to the Registrant's registration statement on Form
S-1, File No. 333-2550, which was declared effective by the Commission
on August 13, 1996.
2 Included as Exhibit A to the Registrant's proxy statement dated August
13, 1998, relating to its 1998 Annual Meeting of Stockholders.
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of
1933, as amended (the "Securities Act");
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not
exceed that which was registered) and any
deviation from the low or high end of the
estimated maximum offering range may be
reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume
and price represent no more than a 20%
change in the maximum aggregate offering
price set forth in the "Calculation of
Registration Fee" table in the effective
registration statement;
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by
those paragraphs is contained in periodic reports
filed with or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d)
of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered
II-2
<PAGE>
therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(h) Insofar as indemnification for liabilities arising under the
Securities Act 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 Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe that
it meets all the requirements for filing on Form S-8 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Town of Islip, State of New York on this th day of
January, 1999.
NETSMART TECHNOLOGIES, INC.
By: /S/ James L. Conway
----------------------------
James L. Conway, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons on behalf
of the registrant and in the capacities and on the dates indicated. Each person
whose signature appears below hereby authorizes James L. Conway and Anthony F.
Grisanti or either of them acting in the absence of the others, as his true and
lawful attorney-in-fact and agent, with full power of substitution and
resubstitution for him and in his name, place and stead, in any and all
capacities to sign any and all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission.
Signature Title Date
- --------- ----- ----
/S/ James L. Conway
- -----------------------
James L. Conway President, Chief Executive January 29, 1999
(Principal Executive Officer) Officer and Director
/S/ Anthony F. Grisanti
- -----------------------
Anthony F. Grisanti Chief Financial Officer January 29, 1999
(Principal Financial
and Accounting Officer)
/S/ Edward D. Bright
- -----------------------
Edward D. Bright Director January 29, 1999
- ----------------------
John F. Philips Director January , 1999
Gerald O. Koop Director January , 1999
/S/ Seymour Richter
- ----------------------
Seymour Richter Director January 29, 1999
/S/ Joseph G. Sicinski
- ----------------------
Joseph G. Sicinski Director January 29, 1999
II-4
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form S-8 of our
report dated March 26, 1998 [Except for Note 19, as to which the date is April
2, 1998], the financial statements of Netsmart Technologies, Inc. (the
"Company"), which was included in the Company's Annual Report on Form 10-K for
the year ended December 31, 1997 and incorporated by reference in this
Registration Statement, and to the use of our name, and the statements with
respect to us as appearing under the heading "Experts" in the Prospectus.
MOORE STEPHENS, P.C.
Certified Public Accountants.
Cranford, New Jersey
January 29, 1999
II-5
Letterhead of Esanu Katsky Korins & Siger, LLP
January 29, 1999
13146-02
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Netsmart Technologies, Inc.
Gentlemen:
We refer to the registration statement on Form S-8 (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Act"), filed by
Netsmart Technologies, Inc., a Delaware corporation (the "Company"), with the
Securities and Exchange Commission. Terms defined in the Registration Statement
and not otherwise defined in this opinion shall have the same meanings herein as
in the Registration Statement.
We have examined the originals or photocopies or certified copies of such
records of the Company, certificates of officers of the Company and public
officials, and other documents as we have deemed relevant and necessary as a
basis for the opinion hereinafter expressed. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as certified copies or photocopies and the authenticity of the
originals of such latter documents.
Based on our examination mentioned above, we are of the opinion that the
shares of Common Stock issuable upon the exercise of the Options granted or to
be granted under the 1998 Plan (the "Plan") are duly authorized and, when issued
upon exercise of the Options in accordance with the terms of the Plan, will be
validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm under "Legal Matters" in
the related Prospectus. In giving the foregoing consent, we do not hereby admit
that we are in the category of persons whose consent is required under Section 7
of the Act or the rules and regulations of the Securities and Exchange
Commission.
Very truly yours,
ESANU KATSKY KORINS & SIGER, LLP
II-6
