<PAGE>
As filed with the Securities and Exchange Commission on , 2000
REGISTRATION NO. 333-______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
DELSOFT CONSULTING, INC.
(Exact name of registrant as specified in its charter)
Georgia 22-274288
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
106 Bombay Lane
Roswell, Georgia 30076
(770) 518-4289
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's Principal Executive Offices)
Briskin & Associates, L.C.
1001 Cambridge Square
Suite D
Atlanta, GA 30004
(770) 410-1555
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
Copies to:
M. David Sayid, Esq.
315 W. 57th Street
Suite 14K
New York, New York 10019
Phone: (212) 262-6188
Fax: (212) 957-6522
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable 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|
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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 statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is filed in a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement of the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Each Class of Securities Amount to be Proposed Proposed Amount of
to be Registered Registered Maximum Maximum Registration
Offering Aggregate Offering Fee (6)
Price Per Unit Price (6)
(6)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par value 2,331,767 Shares (1) $1.36 $3,171,203.12 $837.19
Common Stock, no par value 50,000 Shares (2) $1.36 $68,000 $17.95
Common Stock, no par value 50,000 Shares (3) $1.36 $68,000 $17.95
Common Stock, no par value 50,000 Shares (4) $1.36 $68,000 $17.95
Common Stock, no par value 666,667 Shares (5) $1.36 $906,667.12 $239.36
Total 3,148,434 Shares $1.36 $4,281,870.24 $1,130.40
</TABLE>
(1) Represents 2,331,767 Shares issued to selling shareholder, Benjamin
J. Giacchino.
(2) Represents 50,000 Shares issued to selling shareholder, David
Giachhino.
(3) Represents 50,000 Shares issued to selling shareholder, Benjamin
Joseph Giachhino.
(4) Represents 50,000 Shares issued to selling shareholder, Katiann
Giachhino.
(5) Represents 666,667 Shares issued to selling shareholder, John A.
Taylor.
(6) Estimated in accordance with Rule 457(c) solely for the purpose of
computing the amount of the registration fee based on the average of
the high and low prices of DelSoft Common Stock as reported on the
Nasdaq Stock Market OTC Bulletin Board on March 24, 2000.
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 THAT 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.
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
SUBJECT TO COMPLETION, DATED , 2000
PROSPECTUS
3,148,434 Shares of Common Stock
DELSOFT CONSULTING, INC.
Common Stock (no par value)
This prospectus covers the offer and sale of an estimated 3,148,434 shares
of our common stock. The common stock is being offered and sold by certain of
our shareholders.
The selling shareholders may without limitation offer their shares of
common stock for sale through public or private transactions, on or off the
United States exchanges, at prevailing market prices, or at privately negotiated
prices. See "Plan of Distribution." The Company will bear all expenses in
connection with the preparation of this prospectus.
THE PROCEEDS AND DETERMINING THE OFFERING PRICE
All proceeds from the sale of the common stock under this prospectus will
go to the selling shareholders. The Company will not receive any proceeds from
sales of the common stock offered by the selling shareholders.
Our common stock is currently traded on the Nasdaq Stock Market OTC
Bulletin Board under the symbol "DSFT." On March 24, 2000, the last reported
sales price of a share of Delsoft common stock was $1.2812 per share.
INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is ________, 2000.
<PAGE>
TABLE OF CONTENTS
Page
----
Where You Can Find More Information........................................ 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 5
Use of Proceeds............................................................10
Selling Shareholders.......................................................11
Plan of Distribution.......................................................12
Legal Matters..............................................................14
Experts....................................................................14
THIS PROSPECTUS IS A PART OF A REGISTRATION STATEMENT WE FILED WITH THE
SEC. YOU SHOULD RELY ONLY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE DOCUMENT.
WHERE CAN YOU FIND MORE INFORMATION
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy the documents we file at the SEC's public
reference room in Washington, D.C., New York, New York and Chicago, Illinois.
You can request copies of these documents by writing to the SEC and paying a fee
for the copying cost. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public at no cost from the SEC's Website at http://www.sec.gov.
The SEC allows us to "incorporate by reference" information that we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities and Exchange Act of 1934 (the "Exchange Act"):
(a) Our Annual Report on Form 10-KSB for the year ended June 30,
1999;
(b) Our Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 1999 and Form 10-QSB/A for the quarter ended
December 31, 1999;
(c) All of our other reports and forms filed by the Registrant
pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), prior to the
date hereof; and
(d) The "Description of Securities" as contained in our
Registration Statement on Form 10-SB as filed with the
Securities and Exchange Commission on May 5, 1998.
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PROSPECTUS SUMMARY
The following summarizes the business and operations of DelSoft
Consulting, Inc. (referred to in this prospectus as "we", "us", "DelSoft" or the
"Company"). This summary highlights certain information about us that is
included and incorporated by reference in this prospectus. This summary is not
complete and does not contain all of the information about us or all of the
information that you should consider before investing in our common stock. You
should read the entire prospectus carefully, including the information under the
caption "Risk Factors" and the information in the financial statements and the
notes to the financial statements that are incorporated by reference in this
prospectus. The securities offered by this prospectus involve a high degree of
risk. See "Risk Factors."
The Company
Delsoft Consulting, Inc. is a leading global professional services firm.
We provide our clients with an integrated set of strategy, creative and
technology services including intranet, extranet, and Web site solutions,
professional services staffing, strategy consulting, and related services. We
deliver Internet solutions designed to improve clients' business processes
including strategic planning, analysis and design, technology development,
systems implementation, and systems integration. We also provide consulting
services in the areas of ERP/CRM application development and integration and
large scale application development. Our solutions target clients' specific
business functions enabling the linkage of people, processes, and technologies
in the new digital economy.
We market our services and solutions to senior executives in organizations
of both existing and potential clients where technology-enabled change
(primarily Internet centric) can have a significant competitive impact. We
continue to identify opportunities to become a client's preferred provider of
comprehensive information technology ("IT") services and solutions.
Our revenues primarily consist of fees from consulting services
engagements, including both time-and-materials and fixed-price engagements.
Revenues from time-and-materials engagements are recognized as services are
provided. Billable rates vary by the service provided and the geographical
region. Historically, a substantial portion of our projects have been
client-managed applications development and Year 2000 remediation related work
performed on a time-and-materials basis. Now that our Year 2000 solutions have
been fully implemented, our goal is to greatly increase the number of projects
we do that are based on Internet applications development and to execute them on
a fixed-price basis. The pricing, management, and execution of individual
engagements are the responsibility of the consulting office that performs or
coordinates the services.
Our cost of revenues includes direct costs, such as personnel salaries and
benefits and the cost of any third-party hardware or software included in an
Internet solution, and overhead expenses directly related to the engagement. Our
most significant cost item is our personnel expense, which consists primarily of
the salaries and benefits of our billable personnel. The number of IT
professionals assigned to projects varies depending on the size and duration of
each engagement. In addition, project terminations and completion and scheduling
delays may result in short periods when personnel are not assigned to active
projects. We manage our personnel costs by closely monitoring client needs and
basing personnel increases on specific project engagements. While the number of
IT professionals may be adjusted to reflect active projects, we continue to
process H1-B visas and to maintain a database of available professionals to
respond to increased demand for our services on both existing projects and new
engagements.
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We provide our services and solutions primarily to Fortune 1000 companies
with significant IT budgets and recurring staffing or software development
needs. Substantially all of our clients are large companies, major systems
integrators or governmental agencies.
The solutions we offer include the following:
(a) INTERNET CENTRIC SERVICES AND SOLUTIONS: We provide professional
services to clients who are creating or weaving the Internet into their existing
businesses to achieve e-Business capabilities. We expect a significant portion
of our future revenues to be derived from professional services related to
Internet consulting, including intranet, extranet, and Web site solutions.
(b) PROFESSIONAL SERVICES STAFFING: We provide highly-skilled software
professionals to augment the internal information management staffs of major
corporations which currently represents the majority of our business. We supply
clients' staffing needs from among our diverse supply of software professionals.
We are committed to expanding our professional services staffing operations in
conjunction with our solutions business. We expect that future revenues will be
dependent on the number and scope of client engagements. Currently, our IT
professionals have significant experience in mainframe, client/server, ERP, and
CRM applications development and systems integration.
We are headquartered in the metropolitan Atlanta area and have satellite
offices in Indianapolis, Indiana, Detroit, Michigan, New York, New York, Boston,
Massachusetts, and Dallas, Texas. In addition, we have human resources officers
stationed in Bangalore and Madras, India who are actively recruiting IT
professionals.
Our Web site address is http://www.delsoft-consulting.com. Information
contained on our Website is not a part of this Prospectus.
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RISK FACTORS
The following factors should be reviewed carefully in conjunction with the
other information in this Prospectus and our financial statements which are
incorporated by reference. These factors, among others, could cause actual
results to differ materially from those currently anticipated and contained in
forward-looking statements made in this Prospectus and presented elsewhere by
our management from time to time. See "Note Regarding Forward-Looking
Statements."
Risks Related to Our Financial Condition and Business Model
We have had a very limited operating history. We commenced operations in
July 1996. Accordingly, investors can only evaluate our business based on our
limited operating history. The changes in our financial and operational success
should be evaluated in light of the risks, uncertainties, expenses, delays and
difficulties associated with starting a new business, many of which may be
beyond our direct control. As a result of our limited operating history, our
growth and the emerging nature of the markets in which we compete, we believe
that quarter-to-quarter comparisons of our results of operations for preceding
quarters are not necessarily meaningful. You should not rely upon them as
indications of future performance. The uncertainty of our future performance and
the uncertainties of our operating in new and expanding markets increase the
risk that the value of your investment will decline.
Our future success is uncertain because we are an early-stage company.
Because the Company is in an early stage of development, we are subject to the
risks that we will fail to implement our business model and strategy
successfully or to revise our business model and strategy should industry
conditions and competition change. The risks are even greater because we are
operating in a new and rapidly evolving market. We cannot assure you that we
will be successful in addressing these risks. If we are not, our business,
results of operations and financial condition will be materially adversely
affected.
Our revenues could be affected by the loss of a major client. A
substantial portion of our revenue is generated from a limited number of
clients. Two of our largest clients accounted for 68% of our net revenues for
the quarter ending December 31, 1999. If one of our major clients discontinues
or reduces the use of our services, our business, results of operations and
financial condition could materially suffer. We cannot assure you that our
clients will continue to use our services in the future. In addition, the
non-payment or late payment of amounts due from a major client could have a
material adverse effect on our business, results of operations and financial
condition.
If clients prematurely terminate or reduce the scope of existing
contracts, our revenues may decline. Our services are often sold pursuant to
short-term arrangements and most clients can reduce or cancel their contracts
for our services without penalty and with little or no notice. If a major client
or a number of small clients were to terminate, significantly reduce or modify
their business relationships with us, then our business, results of operations
and financial condition would be materially adversely affected. Consequently,
investors should not predict or anticipate our future revenue based upon the
number of clients we currently have or the number and size of our existing
projects.
Our revenues are difficult to predict, which could lead to poor operating
results. We derive our revenues in part from fees for services generated on a
project-by-project basis. These projects vary in length and complexity, as well
as in the fees charged for our services. As a result, there may be considerable
fluctuation in the amount of revenue generated by a particular client in
different periods. Aggregate quarterly results may fluctuate as well.
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If we fail to accurately estimate costs of fixed-fee projects, our
operating results may suffer. We derive a significant portion of our revenues
from fixed-fee projects. We assume greater financial risks on a fixed-fee
project than on a time-and-materials project. We have limited experience in
estimating our costs for fixed-fee projects. If we miscalculate the resources or
time we need for these projects, the costs of completing these projects may
exceed the fixed-fee, which could materially adversely affect our operating
results. Further, the average size of our contracts is currently increasing,
resulting in a corresponding increase in our exposure to the financial risks of
fixed-fee projects. We recognize revenues from fixed-fee projects based on our
estimate of the percentage of each project completed in a reporting period. To
the extent our estimates are inaccurate, the revenues and operating profits, if
any, that we report for periods during which we are working on a project may not
accurately reflect the final results of the project and we may be required to
record an expense for this period equal to the amount by which our revenues were
previously overstated.
We depend heavily on certain key personnel. We are heavily dependent on
the experience of our executive officers, Brian Koch and Adil Choksey, who have
contributed and continue to contribute to our development. If we were to lose
the services of either one or both of them, before a qualified replacement could
be obtained, our business, financial condition or results of operations could be
materially affected. Our future success will depend on our continuing ability to
attract, retain and motivate other highly skilled employees. If we do not
succeed in attracting new personnel or retaining and motivating our current
personnel, our business, financial condition and operations will be adversely
affected.
We do not maintain key person life insurance on the lives of our key
personnel. We intend to apply for such insurance before the end of the year
2000. See "Management."
Risks Related to Our Strategy and Market
We face intense competition, which could harm our business. Our market is
new, intensely competitive, highly fragmented and subject to rapid technological
change. We expect competition to intensify and increase over time because there
are no substantial barriers to entering the Internet professional services
market. Many of our competitors have longer operating histories, greater name
recognition, larger established client bases, longer client relationships and
significantly greater financial, technical, personnel and marketing resources
than we do. Such competitors may be able to undertake more extensive marketing
campaigns, adopt more aggressive pricing policies and make more attractive
offers to potential clients, employees and strategic partners. Further, our
competitors may develop Internet solutions that are equal or superior to our
services or that achieve greater market acceptance than our services. We may
lose projects to our competitors, which could adversely affect our business,
results of operations and financial condition.
If we are unable to identify, hire, train and retain highly qualified
Internet professionals, our business and growth will suffer. Our success depends
on our ability to identify, hire, train and retain highly qualified Internet
professionals. These individuals are in high demand and we may not be able to
attract and retain the number of highly qualified Internet professionals that we
need. Historically, we have experienced significant employee turnover. If we
cannot retain, attract and hire the necessary Internet professionals, our
ability to grow, complete existing projects and bid for new projects would be
adversely affected and our business, results of operations and financial
condition would suffer.
Our efforts to raise awareness of the DelSoft "brand" may not be
successful, which may limit our ability to expand our client base and attract
highly qualified consultants. We believe that building the DelSoft brand is
critical for attracting and expanding our targeted client base and attracting
highly qualified consultants. If we do not continue to build the DelSoft brand
on a national basis, we may not be able to effect our strategy. We also believe
that reputation and name recognition will grow in importance as the number of
companies competing in the market for Internet professional services increases.
Promotion and enhancement of our name will depend
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largely on our success in continuing to provide high quality, reliable and
cost-effective services. If clients do not perceive our services as meeting
their needs, or if we fail to market our services effectively, we will be
unsuccessful in maintaining and strengthening our brand. If we fail to promote
and maintain our brand, or incur excessive expenses to do so, our business,
results of operations and financial condition will materially suffer.
The market for our Internet services and our revenue growth depend on
the acceptance and growth of Internet solutions. Our future growth is dependent
on our ability to provide professional services that are accepted by our
existing and future clients. Since we expect to derive a substantial amount of
our revenues from providing Internet professional services, our future success
is highly dependent on the increased use of the Internet as a communications and
commercial medium. If this market fails to develop or develops more slowly than
expected, our business, results of operations and financial condition could
materially suffer. Most of our current or potential clients have limited
experience with the Internet as a communications and commercial medium and may
determine that the Internet is not an effective method for expanding their
businesses. We cannot assure you that the market for Internet professional
services will continue to grow or become sustainable.
Our revenues will not grow if the Internet does not grow and become an
accepted commercial marketplace. The Internet may not prove to be a viable
commercial marketplace because of inadequate development of the necessary
infrastructure; insufficient development of complementary products;
implementation of competing technology; delays in the development or adoption of
new standards and protocols required to handle increased levels of Internet
activity; and governmental regulation or other reasons. Should the Internet not
become a viable commercial marketplace, our business, results of operations and
financial condition would be materially and adversely affected.
The Internet has experienced, and is expected to continue to
experience, significant growth in the number of users and volume of traffic. We
cannot assure you that the Internet infrastructure will be able to support the
demands placed on it by this continued growth. Moreover, critical issues
concerning the use of Internet solutions (including security, reliability, cost,
ease of deployment and administration and quality of service) remain unresolved
and may affect the growth of the use of Internet technologies to solve business
problems. For example, certain states have recently permitted telephone
companies to charge increased rates for consumers connecting to the Internet.
Risks Related to Legal Uncertainty
Governmental regulations regarding the Internet may be enacted which
could impede our business. To date, governmental regulations have not materially
restricted the use of the Internet by our clients in their markets. However, the
legal and regulatory environment that pertains to the Internet may change. New
laws and regulations, or new interpretations of existing laws and regulations,
could increase our costs of doing business and prevent our clients from
delivering products and services over the Internet. They may also significantly
slow the growth of the Internet. This could delay growth in demand for our
services, limit the growth of our revenues and materially and adversely affect
our business, results of operations and financial condition.
New and existing laws may cover issues such as:
- sales and other taxes;
- user privacy;
- pricing controls;
- characteristics and quality of products and services;
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- consumer protection;
- cross-border commerce;
- libel and defamation;
- copyright, trademark and patent infringement; and
- other claims based on the nature and content of Internet materials.
We may be unable to adequately protect our intellectual property. We rely on
a combination of nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect our proprietary rights and the
proprietary rights of third parties from whom we license intellectual property.
We enter into confidentiality agreements with our employees and limit
distribution of proprietary information. There can be no assurance that these
steps will be adequate to deter the misappropriation of proprietary information
or that we will be able to detect unauthorized use and take appropriate steps to
enforce our intellectual property rights. The intellectual property rights to
the software we develop in connection with a client engagement is typically
assigned to the client.
There can be no assurance that third parties will not assert infringement
claims against us, that assertion of such claims will not result in litigation
or that we would prevail in such litigation or be able to obtain a license for
the use of any infringed intellectual property from a third party on
commercially reasonable terms. Furthermore, litigation, regardless of its
outcome, could result in substantial costs. Any infringement claim or litigation
against us could, therefore, materially and adversely affect our business,
operating results and financial condition.
Increased restrictions by the government on the use of foreign labor could
adversely impact our hiring practices. Some of our consultants are citizens of
other countries, most of whom are working in the United States under H1-B
temporary visas. The H1-B visa, which is issued subject to approval by the
Immigration and Naturalization Service, allows companies that can prove that
they need workers with certain skills Americans cannot provide to hire foreign
nationals for such jobs for up to six years. The current statutory limit on the
number of new H1-B visas that may be issued was reduced for the year 2000 and
will be reduced for the years 2001 and 2002. For years in which the limit is
reached, we may be unable to obtain enough H1-B visas to bring sufficient
foreign employees to the U.S. In addition, we may have to replace existing
employees whose H1-B visas expire at the end of their term with new employees,
some of whom may also require visas. If we are unable to obtain H1-B visas in
sufficient quantities or at a sufficient rate for a significant period of time,
our business, operating results and financial condition could be materially
adversely affected.
We face risks in connection with legal proceedings in which we are
involved. We are from time to time, a party to litigation arising in the normal
course of business. We believe that none of these actions, individually or in
the aggregate, will have a material adverse effect on our financial position or
results of operations.
Risks Related to this Offering
As an Internet-related company, our stock price is likely to be highly
volatile and could drop unexpectedly. Following this offering, the price at
which our common stock will trade is likely to be highly volatile and may
fluctuate substantially. As a result, investors in our common stock may
experience a decrease in the value of their common stock regardless of our
operating performance or prospects. In addition, the stock market has from time
to time experienced significant price and volume fluctuations that have affected
the market prices for the securities of technology companies, particularly
Internet companies. In the past, following periods of
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volatility in the market price of a particular company's securities, securities
class action litigation was often brought against that company. Many
technology-related companies have been subject to this type of litigation. We
may also become involved in this type of litigation. Litigation is often
expensive and diverts management's attention and resources, which could have a
material adverse effect upon our business, financial condition and results of
operations.
The absence of a large public market for our common stock may make it
difficult for you to resell your shares at or above the offering price, and our
stock price may fluctuate. Prior to this offering there has only been a small
public market for our common stock. Although the offering price reflects the
most recent price at which our common stock has been trading, this may not be
the market price of the shares after the offering. The trading price of the
shares could be subject to wide fluctuations in response to factors included in
this prospectus, many of which are beyond our control. In addition, in recent
years, the stock market has experienced extreme price and volume fluctuations
particularly in Internet related stocks. These fluctuations have had a
substantial effect on the market prices of many emerging growth companies, often
unrelated to the operating performance of the specific companies. Such market
fluctuations could adversely affect the price of our common stock.
We do not plan to pay dividends. We have never declared or paid any
cash dividends on our common stock and do not plan to pay dividends any time in
the foreseeable future. We expect to retain our earnings, if any, and use them
to finance the growth and development of our business.
The so called "Penny Stock Rule" could make it cumbersome for brokers
and dealers to trade in the common stock, making the market for the common stock
less liquid. Trading in our securities is conducted on the Nasdaq OTC Bulletin
Board. As long as the common stock is not quoted on the Nasdaq National Market
or at any time that we have less than $2,000,000 in net tangible assets, trading
in the common stock is covered by Rule 15g-9 under the Securities Exchange Act
of 1934 for non-Nasdaq and non-exchange listed securities. Under that rule,
broker-dealers who recommend covered 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 are exempt from this rule
if the market price is at least $5.00 per share.
The SEC has adopted regulations that generally define a penny stock to
be any equity security that has a market price of less than $5.00 per share,
subject to certain exemptions. Such exemptions include an equity security listed
on Nasdaq and an 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 (3) years; (ii) net tangible assets of at least $5,000,000, if such
issuer has been in continuous operation for less than three (3) years; or (iii)
average revenue of at least $6,000,000 for the proceeding three (3) years.
Unless such an exemption is available, the regulations require the delivery of a
disclosure schedule explaining the penny stock market and the risks associated
therewith prior to any transaction involving a penny stock. If our common stock
continues to be subject to the regulations on penny stocks, that factor could
have a severe adverse effect on the market liquidity for the common stock due to
these limitations on the ability of broker-dealers to sell the common stock in
the public market.
Our directors have the authority to designate one or more classes of
preferred stock. Our Articles of Incorporation authorize us to issue, without
the approval of our shareholders, one or more classes or series of preferred
stock. Such preferred stock may have such preferences, powers and relative,
participating, optional and other rights, including preferences over our common
stock respecting dividends and distributions, as our board of directors may
determine. The terms of one or more classes or series of preferred stock could
adversely impact the voting power or value of our common stock. For example, we
might afford holders of preferred stock the right to elect some number of our
directors in all events or on the happening of specified events or the right to
veto specified transactions. Similarly, the repurchase or redemption rights or
liquidation preferences we might assign to holders of preferred stock could
affect the residual value of the common stock. Our directors could use this
9
<PAGE>
authority, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of DelSoft. To date, no shares of preferred stock
have been issued, and although the directors currently have no intention of
issuing any shares of preferred stock in the future, they may nevertheless
decide it is in our best interests to do so. See "Description of Securities."
You will experience immediate, substantial dilution of the net tangible
book value of the shares you purchase. Assuming the sale of all of the shares we
offer, purchasers of our common stock in this offering:
* will pay a price per share that substantially exceeds the
value on a per share basis of our assets after we subtract
from those assets our intangible assets and our liabilities;
* will incur immediate dilution in net tangible book value of
$ 1.25 per share;
* will only own approximately 29% of the outstanding shares of
our common stock;
* may experience further dilution in the net tangible value of
their common stock as a result of future issuances of common
stock.
Future sales of our common stock may depress our stock price. Future
sales of shares of common stock by existing shareholders under Rule 144 of the
Act or through the exercise of outstanding registration rights or the issuance
of shares of common stock upon the exercise of options or warrants could
materially adversely affect the market price of the common stock and could
materially impair our future ability to raise capital through an offering of
equity securities. A substantial number of shares of common stock are available
for sale under Rule 144 in the public market or will become available for sale
in the near future and 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 common stock prevailing from time to time.
Forward Looking Statements. This Prospectus and the information
incorporated into it by reference contains various "forward-looking statements"
within the meaning of federal and state securities laws, including those
identified or predicated by the words "believes," "anticipates," "expects,"
"plan" or similar expressions. Such statements are subject to a number of
uncertainties that could cause the actual results to differ materially from
those projected. Such factors include, but are not limited to, those described
under "Risk Factors." Given these uncertainties, prospective purchasers are
cautioned not to place undue reliance upon such statements.
USE OF PROCEEDS
The shares of common stock offered hereby are being registered for the
account of the selling shareholders identified in this prospectus. See "Selling
Shareholders." All net proceeds from the sale of the common stock will go to the
shareholders who offer and sell their shares of common stock. The principal
purpose of this offering is to effect an orderly disposition of the selling
shareholders' shares. We will not receive any part of the proceeds from such
sales of common stock.
SELLING SHAREHOLDERS
The following list of selling shareholders includes (1) the number of
shares of common stock currently owned by each selling shareholder, (2) the
number of shares being offered for resale hereby by each selling shareholder;
and (3) the number and percentage of shares of common stock to be held by each
selling shareholder after the completion of this offering. The registration of
the shares does not necessarily mean that the selling shareholders will sell all
or any of the shares.
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<PAGE>
The selling shareholders provided us with all information with respect to
their share ownership. Because the selling shareholders may sell all, part or
none of their shares, we are unable to estimate the number of shares that will
be held by any selling shareholders upon resale of shares of common stock being
registered hereby. See "PLAN OF DISTRIBUTION."
As of March 28, 2000, there were 10,989,149 shares of common stock
outstanding.
Pursuant to Rule 416 under the Securities Act, selling shareholders may
also offer and sell shares issued with respect to the warrants, debentures and
preferred stock as a result of (1) stock splits, stock dividends or similar
transactions and (2) the effect of anti-dilution provisions contained in the
underlying documents.
<TABLE>
<CAPTION>
Shares to be
Shares Beneficially owned prior to sold in Shares Beneficially Owned
Name Offering (1) Offering After Offering (2)
---- ------------ ------------ -------------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Benjamin J. Giacchino 2,331,767(3) 17.8% 2,331,767 0 0
David Giacchino 50,000(4) .38% 50,000 0 0
Benjamin Joseph Giacchino 50,000(5) .38% 50,000 0 0
Katiann Giacchino 50,000(6) .38% 50,000 0
John A. Taylor 666,667(7) 5.1% 666,667 0 0
</TABLE>
(1) Beneficial ownership is determined in accordance with SEC rules and
generally includes voting or investment power with respect to
securities. Shares of common stock subject to options, warrants and
convertible preferred stock currently exercisable or convertible, or
exercisable or convertible within sixty (60) days, are counted as
outstanding for computing the percentage of the person holding such
options or warrants but are not counted as outstanding for computing
the percentage of any other person.
(2) Assumes that all of the shares held by the selling shareholders and
being offered under this prospectus are sold and that the selling
shareholders acquire no additional shares of common stock before the
completion of this offering. The actual number of shares of common
stock offered hereby is subject to change and could be materially
greater or lesser than the estimated amount indicated, depending
upon a number of factors, including whether the number of shares of
common stock outstanding have been adjusted to account for any stock
dividend, stock split and similar transactions or adjustment.
(3) Benjamin J. Giacchino is a director of DelSoft.
(4) David Giacchino is a minor child of Benjamin J. Giacchino.
(5) Benjamin Joseph Giacchino is a minor child of Benjamin J. Giacchino.
(6) Katiann Giacchino is a minor child of Benjamin J. Giacchino.
11
<PAGE>
(7) John A. Taylor is an employee of DelSoft as that term is defined by
Item 507 in Regulation S-K and incorporated by reference in Item 7 of the
General Instructions.
PLAN OF DISTRIBUTION
The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as principal
to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling shareholders may also engage in short sales against the box,
puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The selling shareholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a selling
shareholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the selling shareholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling shareholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling shareholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling shareholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares, including fees and disbursements of counsel to the selling
shareholders. We have agreed to indemnify the selling shareholders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.
12
<PAGE>
DESCRIPTION OF SECURITIES
Common stock
Our authorized capital stock consists of 100,000,000 shares of common
stock, no par value. As of March 28, 2000, there were issued and outstanding
10,989,149 shares of common stock and 412 holders of record. All outstanding
shares of common stock are fully paid and nonassessable. Holders of the common
stock are entitled to one vote per share on all matters voted on by
shareholders, including elections of directors, and the holders of the common
stock exclusively possess all voting power. The articles of incorporation do not
provide for cumulative voting in the election of directors. The holders of
common stock are entitled to such dividends as may be declared from time to time
by the board of directors from funds available therefor, and upon liquidation
they are entitled to receive pro rata all assets of the Company available for
distribution to such holders. The holders of common stock have no preemptive
rights.
Our articles of incorporation and bylaws do not contain any provision that
would delay, defer or prevent a change in control.
All of the 10,989,149 shares of common stock outstanding as of March 28,
2000 are subject to the limitations of Rule 144 promulgated under the Securities
Act. In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who holds shares of restricted securities as to
which a minimum of one year has elapsed since the latter of the date of
acquisition from the issuer or from an affiliate of the issuer, and any person
who is an "affiliate" as that term is defined under the Securities Act, is
entitled to sell, within any three month period, a number of shares that does
not exceed the greater of (i) one percent of the then outstanding shares of
common stock of the Company (approximately 130,633 shares as of March 28, 2000)
or (ii) the average weekly trading volume of the common stock during the four
calendar weeks preceding a sale by such person. Sales under Rule 144 are also
subject to certain manner of sale provisions, notice requirements and the
availability of current public information about the issuer. Under Rule 144,
however, a person who holds restricted securities as to which a minimum of two
years has elapsed since their acquisition from the issuer or an affiliate of the
issuer and who is not, and for the three months prior to the sale of such shares
has not been, an affiliate of the issuer is free to sell such shares without
regard to the volume, manner of sale and certain other limitations contained in
Rule 144.
Warrants and options
We entered into a consulting agreement with Tech Fund to compensate Tech
Fund for corporate consulting and other services being provided to us. The
consulting agreement provides for the issuance of an option to Tech Fund's
principal, Keith Hall, to purchase 1,100,000 shares at the exercise price of
$0.16 per share (the "Option"). The Option expires five years after the date of
grant. The Option was exercised in full on February 4, 2000.
Under the Employee Stock Option Plan, stock options for the purchase of
up to 2,000,000 shares of our common stock may be granted by the Board of
Directors to key executives, other members of management, other employees and
directors of the Company. The options are exercisable at the fair market value
of the common stock on the date of grant. The options expire ten years after the
date of grant. As of December 31, 1999, a total of 235,500 options were issued
and outstanding.
We have entered into employment agreements with certain directors and
officers (collectively the "D & O Plan"), pursuant to which we have granted
options to purchase a total of 4,650,000 shares of our common stock. Options to
purchase 125,000 of the shares at the exercise price of $2.00 per share were
granted on July 1, 1996 and expire on June 30, 2006. Options to purchase 125,000
of the shares at the exercise price of $2.00 per share were granted on November
19, 1999, and expire on November 18, 2009. Options to purchase 4,200,000 of the
Shares at the exercise price of $0.24 were granted on November 19, 1999, and
expire on November 18, 2009. All of the options granted under the D & O Plan are
subject to forfeiture unless exercised within ninety days of the date of
termination of employment.
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<PAGE>
INTERESTS OF NAMED EXPERTS AND COUNSEL
Neither our named experts nor our counsel has any substantial interest in
our securities, as the term substantial interest is defined in Item 509 of
Regulation S-K.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for us
by Sayid & Associates, New York, New York.
EXPERTS
The financial statements of DelSoft Consulting, Inc. as of June 30, 1999
and for the years ended June 30, 1999 and June 30, 1998 have been audited by
J.H. Cohn LLP, Independent Public Accountants, and have been incorporated by
reference in this prospectus in reliance upon the report of such firm (which is
also incorporated by reference) and upon their authority as experts in
accounting and auditing.
You may rely only on the information contained in this prospectus. We
have not authorized anyone to provide information different from that contained
in this prospectus. Neither the delivery of this prospectus nor sale of common
stock means that information contained in this prospectus is correct after the
date of this prospectus. This prospectus is not an offer to sell or solicitation
of an offer to buy these shares of common stock in any circumstances under which
the offer and/or solicitation is unlawful.
14
<PAGE>
3,148,434 SHARES
DELSOFT CONSULTING, INC.
COMMON STOCK
PROSPECTUS
APRIL __, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses payable by the Company in
connection with the sale, issuance and distribution of the securities being
registered, other than underwriting discounts and commissions. All amounts are
estimates except the SEC registration fee.
SEC Registration Fee.............................. $ 1,130.40
Printing and Engraving Expenses................... 10,000.00
Legal Fees and Expenses........................... 40,000.00
Accounting Fees and Expenses...................... 10,000.00
Blue Sky Fees and Expenses........................ 10,000.00
Total............................................. $ 71,130.40
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Georgia Business Corporation Code (the "GBCC"), in general, allows
corporations to indemnify their directors and officers against expenses actual
and reasonable in connection with a proceeding, if the person acted in good
faith and in a manner the person reasonably believed to be in, or not opposed
to, the best interests of the corporation. In the case of a criminal action or
proceeding, the director or officer must have had no reasonable cause to believe
that the person's conduct was unlawful. The GBCC also provides that
indemnification is not exclusive, and a corporation may make any other or
further indemnification under any bylaw, agreement, vote of shareholders or
disinterested directors or otherwise, however no indemnification may be made, if
a judgment or other final adjudication establishes such director or officers'
actions or omissions to act, were material to the cause of action so adjudicated
and constitute: (a) a violation of the criminal law, unless the director or
officer had reasonable cause to believe his/her conduct was lawful or had no
reasonable cause to believe his/her conduct was unlawful; (b) a transaction from
which the director or officer derived an improper personal benefit; (c) in the
case of a director, a director held liable for an unlawful distribution, as
defined by the GBCC; or (d) willful misconduct or a conscious disregard for the
best interests of the corporation in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in a proceeding by or in the
right of shareholder.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION
5.1 Opinion of Sayid & Associates.
23.1 Consent of J.H. Cohn LLP, Independent Accountants.
23.2 Consent of Sayid & Associates. (Included as part of Exhibit 5.1).
24.1 Power of Attorney (included on signature page II-3).
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus
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; and
(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. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) 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. Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers
and controlling persons of the registrant pursuant to provisions described
in Item 15, 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 successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
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 of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in Roswell, Georgia, on April , 2000.
DELSOFT CONSULTING, INC.
By: /s/ Brian Koch
----------------------------------
Brian Koch
President, Acting CFO and Director
II-3
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Brian Koch, 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) of and supplements 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, granting unto such attorney-in-fact and agent full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in and about the premises, to all intents and purposes and as fully
as they might or could do in person, hereby ratifying and confirming all that
such attorney-in-fact and agent, or his substitute, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities indicated on the ____ day of April, 2000.
Signature Title
--------- -----
/s/ Brian Koch President, Acting CFO and Director
- ---------------------------------
Brian Koch
/s/ Adil Choksey Secretary and Director
- ---------------------------------
Adil Choksey
/s/ Benjamin J. Giacchino Director
- ---------------------------------
Benjamin J. Giacchino
II-4
<PAGE>
April [ ], 2000
The Board of Directors
DelSoft Consulting, Inc.
106 Bombay Lane
Roswell, Georgia 30076
Re: DelSoft Consulting, Inc.
Registration Statement on Form S-3
Gentlemen:
You have requested our opinion with respect to the public offering for
resale by certain shareholders of DelSoft Consulting, Inc., a Georgia
corporation (the "Company"), pursuant to a Registration Statement (the
"Registration Statement") on Form S-3, under the Securities Act of 1933, as
amended (the "Act"), of up to 3,148,434 common shares, no par value (the
"Shares").
We have examined originals, or copies certified or otherwise identified to
our satisfaction, of such documents and corporate and public records as we deem
necessary as a basis for the opinion hereinafter expressed. With respect to such
examination, we have assumed the genuineness of all signatures appearing on all
documents presented to us as originals, and the conformity to the originals of
all documents presented to us as conformed or reproduced copies. Where factual
matters relevant to such opinion were not independently established, we have
relied upon certificates of appropriate state and local officials, and upon
certificates of executive officers and responsible employees and agents of the
Company.
Based upon the foregoing, it is our opinion that the Shares being offered
in the above- captioned offering, when sold and issued in accordance with the
terms of such offering, will be validly issued, fully paid and non-assessable.
Please be advised that we consent to the use of our name under "Legal
Matters" in your Registration Statement on Form S-3 and Prospectus filed with
the Securities and Exchange Commission.
By giving this consent, we do not concede that we come within the
categories of persons whose consent is required under the Act or the General
Rules and Regulations promulgated thereunder.
Very truly yours,
/s/ M. David Sayid
Sayid & Associates
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders,
DelSoft Consulting, Inc.
We consent to the incorporation by reference in the prospectus of this
Registration Statement on Form S-3 being filed by DelSoft Consulting, Inc. (the
"Company") of our report, dated July 23, 1999, appearing in the Company's Annual
Report on Form 10-KSB for the fiscal year ended June 30, 1999 (the "Form
10-KSB") on our audits of the financial statements of the Company as of June 30,
1999 and for the years ended June 30, 1999 and 1998, also appearing in the Form
10-KSB. We also consent to the reference to our firm under the caption "Experts"
in the prospectus of this Registration Statement.
/s/ J.H. Cohn LLP
April 7, 2000
