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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 27, 2000
REGISTRATION NO. 333-34260
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:
JEFFREY A. RINDE, ESQ.
BONDY & SCHLOSS LLP
6 E. 43RD STREET
NEW YORK, NEW YORK 10017
PHONE: (212) 661-3535
FAX: (212) 972-1677
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. [ ]
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If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration 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 Maximum Amount of
to be Registered Registered Maximum Offering Aggregate Offering Registration
Price Per Unit (7) Price (7) Fee (7)
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<S> <C> <C> <C> <C>
Common Stock, no par value 714,285 Shares (1) $.15 $107,143 $ 28.29
---------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value 714,285 Shares (2) $.15 $107,143 $ 28.29
---------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value 714,286 Shares (3) $.15 $107,143 $ 28.29
---------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value 277,778 Shares (4) $.15 $ 41,667 $ 11.00
---------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par value 5,000,000 Shares (5) $.15 $750,000 $198.00
---------------------------------------------------------------------------------------------------------------------------------
Total 7,420,634 Shares $.15 $1,113,095 $293.86
=================================================================================================================================
</TABLE>
(1) Represents 714,285 Shares issued to selling shareholder, Willowbrook
Marlin Inc.
(2) Represents 714,285 Shares issued to selling shareholder, Capital Advisory
Partners LLC
(3) Represents 714,286 Shares issued to selling shareholder, Channel Partners
Ltd.
(4) Represents 277,778 Shares issued to selling shareholder, Judith Adler.
(5) Represents 5,000,000 Shares issued to selling shareholder, Gata
Investments Ltd.
(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 October 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.
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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.
SUBJECT TO COMPLETION, DATED OCTOBER 27, 2000
PROSPECTUS
7,420,634 Shares of Common Stock
DELSOFT CONSULTING, INC.
Common Stock (no par value)
This prospectus covers the offer and sale of an estimated 7,420,634
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 October 24, 2000, the last reported
sales price of a share of Delsoft common stock was $0.16 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.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information........................................................................... 2
Prospectus Summary............................................................................................ 3
Risk Factors.................................................................................................. 5
Use of Proceeds...............................................................................................10
Selling Shareholders..........................................................................................10
Plan of Distribution..........................................................................................11
Legal Matters.................................................................................................13
Experts.......................................................................................................14
</TABLE>
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,
2000;
(b) Our Quarterly Reports on Form 10-QSB for the quarters ended
September 30, 1999, December 31, 1999 and March 31, 2000;
(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
(4) 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 a client's 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
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to maintain a database of available professionals to respond to increased
demand for our services on both existing projects and new engagements.
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: Providing highly-skilled software
professionals to augment the internal information management staffs of major
corporations 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.
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. Three of our largest clients accounted for almost 70% of our net
revenues for the quarter ending June 30, 2000. 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
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our name will depend 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;
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- pricing controls;
- characteristics and quality of products and services;
- 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. There is a statutory
limit on the number of new H1-B visas that may be issued. 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.
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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 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.
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<PAGE> 12
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 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."
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.
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
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<PAGE> 13
that will be held by any selling shareholders upon resale of shares of common
stock being registered hereby. See "PLAN OF DISTRIBUTION."
As of October 25, 2000, there were 19,530,617 shares of common stock
issued and 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>
Willowbrook Marlin Inc. 714,285 3.66% 714,285 0 0
Capital Advisory Partners 714,285 3.66% 714,285 0 0
Channel Partners Ltd. 714,286 3.66% 714,286 0 0
Judith Adler 277,778 1.42% 277,778 0 0
Gata Investments Ltd. 5,000,000 25.6% 5,000,000 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.
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:
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<PAGE> 14
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- 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;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the applicable
exchange;
- privately negotiated transactions;
- short sales;
- broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- 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.
DESCRIPTION OF SECURITIES
COMMON STOCK
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<PAGE> 15
Our authorized capital stock consists of 100,000,000 shares of common
stock, no par value. As of October 25, 2000, there were issued and outstanding
19,530,617 shares of common stock and approximately 444 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.
Five million (5,000,000) Shares of the 7,420.634 Shares of our common
stock to be registered on this Form S-3 Registration Statement 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 195,306 shares as of October 25, 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
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 June 30, 2000, a total of 21,400,000 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.
INTERESTS OF NAMED EXPERTS AND COUNSEL
Neither our named experts nor our counsel own a substantial interest as
the term substantial interest is defined in Item 509 of Regulation S-K.
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<PAGE> 16
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
us by Bondy & Schloss LLP, New York, New York.
EXPERTS
The financial statements of DelSoft Consulting, Inc. as of June 30,
2000 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 reports of such firm
(which are 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> 17
7,420,634 SHARES
DELSOFT CONSULTING, INC.
COMMON STOCK
PROSPECTUS
OCTOBER __, 2000
<PAGE> 18
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.............................. $ 293.86
Printing and Engraving Expenses................... 10,000.00
Legal Fees and Expenses........................... 20,000.00
Accounting Fees and Expenses...................... 10,000.00
Blue Sky Fees and Expenses........................ 10,000.00
Total............................................. $ 50,293.86
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 Bondy & Schloss LLP.
23.1 Consent of J.H. Cohn LLP, Independent Accountants.
23.2 Awareness Letter of J.H. Cohn LLP, Independent Accountants.
23.3 Consent of Bondy & Schloss LLP. (Included as part of Exhibit 5.1).
24.1 Power of Attorney (included on signature page II-3).
II-1
<PAGE> 19
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> 20
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 October 26,
2000.
DELSOFT CONSULTING, INC.
By: /s/ Brian Koch
---------------------------------
Brian Koch
President, Acting CFO and Director
II-3
<PAGE> 21
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 26th day of October, 2000.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/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
</TABLE>
II-4
