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Filed Pursuant to Rule 424(b)(4)
File No.333-38330
PROSPECTUS
1,535,712
SHARES OF COMMON STOCK
THE A CONSULTING TEAM, INC.
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The selling security holders identified in this prospectus are offering up
to 1,535,712 of our shares of common stock. Our common stock is traded on the
Nasdaq National Market under the symbol "TACX." The last reported sale price for
our common stock on the Nasdaq National Market on July 21, 2000 was $7.5625 per
share.
We will not receive any proceeds from the sale of shares of common stock
by the selling security holders. We are not offering any shares of common stock
for sale under this prospectus. See "Selling Security Holders" beginning on page
14 for a list of the selling security holders. See "Plan of Distribution"
beginning on page 16 for a description of how the shares of common stock can be
sold.
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Investing in our common stock includes risks. For more information, please
see "Risk Factors" beginning on page 7.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined whether
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is July 21, 2000
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TABLE OF CONTENTS
PAGE
AVAILABLE INFORMATION........................................................2
INCORPORATED DOCUMENTS.......................................................3
THE COMPANY..................................................................4
RECENT DEVELOPMENTS..........................................................6
RISK FACTORS.................................................................7
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS...........................13
USE OF PROCEEDS.............................................................13
SELLING SECURITY HOLDERS....................................................14
PLAN OF DISTRIBUTION........................................................16
LEGAL MATTERS...............................................................17
EXPERTS.....................................................................17
SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES..............18
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The shares of common stock are
not being offered in any state where the offer is not permitted. You should not
assume that the information in this prospectus or any supplement is accurate
after the date of such document.
AVAILABLE INFORMATION
We are subject to the information reporting requirements of the Securities
and Exchange Act of 1934. In accordance with these reporting requirements, we
will file reports and other information with the Securities and Exchange
Commission. Such reports and other information can be inspected and copied at
the Public Reference Room of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549 and at the Commission's regional offices at 500 West Madison Street,
Suite 1400, Chicago, IL 60661-2511 and 7 World Trade Center, 13th Floor, New
York, NY 10048, at prescribed rates. The Commission also maintains a web site
that contains reports, proxy and information statements and other information
regarding registrants, such as ourselves, that file electronically with the
Commission. The address of such web site is http://www.sec.gov. You may also
obtain information from the Public Reference Room by calling the Commission at
1-800-SEC-0330. In addition, our shares of common stock are quoted on the Nasdaq
National Market System, so our reports and other information can be inspected at
the offices of the National Association of Securities Dealers, Inc. at 1735 K
Street, N.W., Washington, D.C. 20006.
We intend to furnish our security holders with annual reports containing
additional financial statements and a report thereon by independent certified
public accountants prior to each of our annual meetings.
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INCORPORATED DOCUMENTS
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus. This means that we can disclose
important information to you by referring you to another document filed by us
with the Commission. Information incorporated by reference is deemed to be part
of this prospectus, except for any information superseded by this prospectus.
The following documents are incorporated herein by reference:
(a) Our Annual Report on Form 10-K for the fiscal year ended December
31, 1999 as filed with the Commission on March 29, 2000;
(b) Our Current Reports on Forms 8-K filed with the Commission on March
23, 2000, July 5, 2000 and July 18, 2000;
(c) Our Definitive Proxy Statement for the Annual Meeting of The A
Consulting Team, Inc. on Schedule 14A, dated April 25, 2000;
(d) Our Quarterly Report on Form 10-Q for the three-month period ended
March 31, 2000 as filed with the Commission on May 16, 2000, as
amended by our Amendment to our Quarterly Report on Form 10-Q/A for
the three-month period ended March 31, 2000 as filed with the
Commission on May 22, 2000; and
(e) The description of our common stock contained in the registration
statement under the Exchange Act on Form 8-A as filed with the
Commission on August 7, 1997, and including any subsequent amendment
or report filed for the purpose of updating such description.
In addition, all documents we have filed or subsequently file under
Sections 13(a), 13(c) 14 or 15(d) of the Exchange Act before the termination of
this offering are incorporated by reference.
We will provide without charge to any person (including any beneficial
owner) to whom this prospectus has been delivered, upon the oral or written
request of such person a copy of any document incorporated by reference in the
registration statement (not including exhibits to the information that is
incorporated by reference unless such exhibits are specifically incorporated by
reference into the information that the registration statement incorporates), of
which this prospectus forms a part. Such requests should be directed to Frank T.
Thoelen, The A Consulting Team, Inc., 200 Park Avenue South, New York, New York
10003. Our telephone number at that location is (212) 979-1010. Our corporate
web site address is http://www.tact.com. The information on our web site is not
intended to be a part of this prospectus.
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THE COMPANY
Introduction
Since 1983, we have provided IT services and solutions to Fortune 1000 and
other large organizations. In 1997, we became a public company, and our common
stock is listed on the Nasdaq National Market under the symbol TACX.
Headquartered in New York City, our growth strategy includes opening Solution
BranchesSM in strategic locations throughout the United States. Currently, we
have Solution Branches in New York, NY, Clark, NJ, Stamford, CT, Chicago, and
Atlanta. Our presence in major metropolitan business centers allows the use of
regional resources, ensures face-to-face relationships and accountability with
clients, and keeps a finger on the pulse of local market needs. We believe that
proven performance and public presence gives clients the confidence to rely on
us as a trusted long-term business partner.
Products and Services
Consulting We are an end-to-end e-Services provider. We deliver e-Services
solutions from web strategy and design through web development and integration
to web application hosting. Our clients include a broad range of Fortune 1000
companies and other large organizations.
Our primary focus is helping clients support their new business
imperatives by assisting these clients in the transition of their information
technologies from traditional mainframe and client/server environments to the
Internet and the Web. We offer to our clients the full scope of the web-enabling
process, and we provide partial or total solutions - from strategy and design,
to development, through conversions and integration, and ending with application
hosting and enterprise-scale deployment. We believe that our expertise leverages
clients' existing systems and data stores to significant business advantage: we
play an integral role in taking clients "from bricks and mortar to clicks and
mortar."
We also provide clients with enterprise-wide information technology
consulting, training services and software products. Our solutions cover the
entire spectrum of IT needs, including applications, data, and infrastructure.
We provide complete project life-cycle services--from application and system
design, through development and implementation, to documentation and training.
We believe that strategic alliances with leading software vendors ensure that
our solutions are dependable and within the mainstream of industry trends. These
partnerships allow us to provide a wide variety of business technology solutions
such as enterprise reporting applications, data warehousing, systems strategies,
data and database conversions, and application development services.
Software. We market and distribute a number of software products developed
by independent software developers. We believe our relationships with over 150
software clients throughout the country provide opportunities for the delivery
of additional TACT consulting and training services. The software products
offered by us are developed in the United States, England and Finland and
marketed primarily through trade shows, direct mail, telemarketing,
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client presentations and referrals. Our software personnel currently include
sales and marketing personnel as well as 24-hour technical support.
Training. We offer an extensive selection of technical training courses to
large organizations at either our Training Center or at a client's site. These
courses include classes in client/server and legacy technologies as well as in
recent technologies, such as JAVA, ActiveX, Active Server Pages and HTML. In
addition, we conduct presentations on specific topics, such as co-existence of
legacy and client/server systems, use of legacy mainframe databases as servers,
conversion/migration of legacy systems to new architectures and performance
monitoring/tuning. We offer end-user training for both off-the-shelf software,
such as Microsoft Office and Lotus Notes, and customer specific applications.
Growth Strategy
Our strategy is to:
o leverage our existing client base by cross-selling additional
information technology consulting services, software products and
training services to existing clients;
o expand our client base in geographic markets where we maintain Solution
Branch offices through targeted marketing initiatives, participation in
local and national trade shows, user group meetings and conventions,
referrals from existing clients and direct mail;
o increase name recognition and referral potential, reduce travel
expenses and attract locally-based, skilled consultants by opening
additional Solution Branch offices; and
o acquire companies and organizations that (i) are established in
geographic locations in which we are interested in expanding or (ii)
have service offerings that we find attractive.
Where you can obtain additional information:
Executive Office
200 Park Avenue South
New York, New York 10-003
Telephone: (212) 979-1010
Website: http://www.tact.com
The information on our web site is not intended to be a part of this
prospectus.
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RECENT DEVELOPMENTS
As of March 19, 2000, we entered into an agreement with a group of
investors to issue an aggregate of 392,855 shares of our common stock and
warrants to purchase an aggregate of 1,607,142 shares of our common stock for an
aggregate purchase price of $2,750,000 pursuant to 30-day promissory notes
executed by such investors. The warrants consisted of sixty-day (subsequently
extended by an additional 14 days) warrants to purchase an aggregate of 607,142
shares of our common stock at an initial exercise price of $7.00 per share, and
two-year warrants to purchase an aggregate of an additional 1,000,000 shares of
our common stock, at an initial exercise price of $13.00 per share, in each case
subject to certain antidilution provisions. The sixty-day warrants were
exercised in part to purchase 142,857 shares of commom stock, and the remainder
expired by their terms. The shares of common stock issued to such investors, the
shares of common stock issued upon the partial exercise of the sixty-day
warrants and the shares of common stock underlying the two-year warrants are
being registered by us pursuant to the registration statement of which this
prospectus forms a part.
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RISK FACTORS
In this section, we highlight the significant risks associated with our
business and operations. Investing in our common stock involves a high degree of
risk. You should be able to bear a complete loss of your investment. To
understand the level of risk, you should carefully consider the following risk
factors, as well as the other information found in this prospectus, when
evaluating an investment in the shares.
We have incurred operating losses from time to time and expect to incur
net losses and negative cash flow for the foreseeable future. We incurred net
losses of $2,666,636 for the year ended December 31, 1999, due in part to
$2,600,000 in expenses attributable to the acquisition of our majority ownership
interest in T3 Media and an increase in the number of salaried personnel
supporting new Solution Branch offices, and a net loss of $1,451,152 for the
three months ended March 31, 2000 for the same reasons. We expect to incur
significant operating and capital expenditures and, as a result, we will need to
generate significant revenues to achieve and maintain profitability. We cannot
guarantee that we will achieve sufficient revenues for profitability. Even if we
do achieve profitability, we cannot guarantee that we can sustain or increase
profitability on a quarterly or annual basis in the future. If revenues grow
slower than we anticipate, or if operating expenses exceed our expectations or
cannot be adjusted accordingly, our business, results of operations and
financial condition will be materially and adversely affected. Because our
strategy includes acquisitions of other businesses and opening additional
Solution Branch offices, any cash used to make these acquisitions and increased
operating expenses will reduce our available cash.
We may be unable to meet our future capital requirements. We will not
receive any of the proceeds of the sale of the shares of common stock offered
hereby by the selling shareholders. We anticipate requiring additional financing
before September 30, 2000. We may not be able to obtain the financing or obtain
it on terms acceptable to us. Without additional financing, we may be forced to
delay, scale back or eliminate some or all of our product and services
development, marketing and other corporate programs. If we are able to obtain
such financing, the terms may contain restrictive covenants that might
negatively affect our shares of common stock, such as limitations on payments of
dividends or, in the case of a debt financing, reduced earnings due to interest
expenses. Any further issuance of equity securities would likely have a dilutive
effect on the holders of our shares of common stock. Our business, operating
results and financial condition may be materially harmed if revenues do not
develop or grow slower than we anticipate, if operating expenses exceed our
expectations or cannot be reduced accordingly, or if we cannot obtain additional
financing.
Client Revenue and Geographic Concentrations. We derive a significant
portion of our revenues from a relatively limited number of clients primarily
located in the New York/New Jersey metropolitan area of the United States.
Adverse economic conditions affecting this region could have an adverse effect
on the financial condition of our clients located there, which in turn could
adversely impact our business and future growth. Revenues from our ten most
significant clients accounted for a majority of our revenues during the year
ended December 31, 1999. In each of the last three years, we have had at least
one customer who represented at least 10% of our revenues for that year. During
the year ended December 31, 1997, our largest customer
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represented 24% of our revenues. During the year ended December 31, 1998, our
three largest customers represented 16%, 15% and 12% of our revenues. During the
year ended December 31, 1999, our two largest customers represented 23% and 14%
of revenues. During the three months ended March 31, 2000, our two largest
customers represented 13% and 11% of revenues. Besides these customers, no other
customer represented greater than 10% of our revenues. In any given year, our
ten most significant customers may vary based upon specific projects for those
clients during that year. There can be no assurance that our significant clients
will continue to engage us for additional projects or do so at the same revenue
levels. Clients engage us on an assignment-by- assignment basis, and a client
can generally terminate an assignment at any time without penalty. The loss of
any significant customer could have a material adverse effect on our business,
results of operations and financial condition. Our failure to develop
relationships with new customers could have a material adverse effect on our
business, results of operations and financial condition.
Our projects entail significant risks. Many of our engagements involve
projects that are critical to the operations of our clients' businesses and
provide benefits that may be difficult to quantify. Our failure or inability to
meet a client's expectations in the performance of our services could result in
a material adverse change to the client's operations and therefore could give
rise to claims against us or damage our reputation, adversely affecting our
business, results of operations and financial condition.
Our business is subject to rapid technological change and is dependent on
new solutions. Our success will depend in part on our ability to develop
information technology solutions, to meet client expectations, including
e-commerce solutions, and offer software solutions that keep pace with
continuing changes in information technology, evolving industry standards,
changing client preferences and a continuing shift to outsourced solutions by
clients. We cannot assure you that we will be successful in adequately
addressing the outsourcing market or other information technology developments
on a timely basis or that, if addressed, we will be successful in the
marketplace. We also cannot assure you that products or technologies developed
by others will not render our services uncompetitive or obsolete. Our failure to
address these developments could have a material adverse effect on our business,
results of operations and financial condition.
We face difficulties typically encountered by development state companies
in new and rapidly evolving markets because of our new e-commerce initiative. We
recently began to provide e-commerce Web design and Web business planning,
strategic planning and marketing strategy consulting services through our
majority-owned subsidiary, T3 Media, Inc. We also provide remote application
hosting and off-site documentation storage to Web-based companies through a
strategic relationship with Always-On, Inc. (formerly LightPC.com, Inc.)
Revenues from our e-commerce services constituted 21% of our revenues for the
year ended December 31, 1999 and 39% for the three months ended March 31, 2000.
An investor purchasing our shares of common stock must therefore consider the
risks and difficulties frequently encountered by early stage companies in new
and rapidly evolving markets, such as e-commerce. These risks involve our and
our subsidiary's and strategic partners' abilities to:
o create a customer base;
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o respond to changes in a rapidly evolving and unpredictable business
environment;
o maintain current and develop new strategic relationships;
o manage growth;
o continue to develop and upgrade technology; and
o attract, retain and motivate qualified personnel.
We cannot assure you that any products or services developed by us, our
subsidiary or our strategic partners will achieve market acceptance.
Our ability to maintain billing margins is uncertain. We derive revenues
primarily from the hourly billing of our consultants' services and, to a lesser
extent, from fixed-price projects. Our most significant cost is project
personnel cost, which consists of consultant salaries and benefits. Thus, our
financial performance is primarily based upon billing margin (billable hourly
rate less the consultant's hourly cost) and personnel utilization rates (number
of days worked by a consultant during a two-week billing cycle divided by the
number of billing days in that cycle). To date, we have been able to maintain
our billing margins by offsetting increases in employee salaries with increases
in our hourly rates. There can be no assurance, however, that our revenues will
continue to be billed primarily on a time and materials basis or that we will be
able to continue to pass along increases in our cost of services to our clients.
We may have difficulty managing our growth. Our expansion is dependent
upon, among other things,
o our ability to hire and retain consultants as employees or independent
consultants,
o our ability to identify suitable new geographic markets with sufficient
demand for our services, hire and retain skilled management, marketing,
customer service and other personnel, and successfully manage growth,
including monitoring operations, controlling costs and maintaining
effective quality and service controls, and
o if we consummate additional acquisitions, our ability to successfully
and profitably integrate any acquired businesses into our operations.
If our management is unable to manage growth or new employees or
consultants are unable to achieve anticipated performance levels, our business,
results of operations and financial condition could be materially adversely
affected.
We rely on key executives. Our success is highly dependent upon the
efforts and abilities of our executive officers, particularly Shmuel BenTov, our
Chief Executive Officer and President. In addition, we are dependent upon the
services of Frank T. Thoelen, our Chief Financial Officer. Although Mr. BenTov
has entered into an employment agreement, which terminates on December 31, 2001,
containing noncompetition, nondisclosure and nonsolicitation covenants, this
contract does not guarantee that Mr. BenTov will continue his employment with
us. Mr. Thoelen currently does not have an employment agreement with us. The
loss of the services of either of these key executives for any reason could have
a material adverse
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effect upon our business, results of operations and financial condition.
Our quarterly results of operations are variable. Variations in our
revenues and results of operations occur from time to time as a result of a
number of factors, such as the timing of new Solution Branch openings, the size
and significance of client engagements commenced and completed during a quarter,
the number of business days in a quarter, consultant hiring and utilization
rates and the timing of corporate expenditures. The timing of revenues is
difficult to forecast because our sales cycle can be relatively long and may
depend on such factors as the size and scope of assignments and general economic
conditions. A variation in the number of client assignments or the timing of the
initiation or the completion of client assignments, particularly at or near the
end of any quarter, can cause significant variations in results of operations
from quarter to quarter and can result in losses to us. In addition, our
engagements generally are terminable by the client at any time without penalty.
Although the number of consultants can be adjusted to correspond to the number
of active projects, we must maintain a sufficient number of senior consultants
to oversee existing client projects and to assist with our sales force in
securing new client assignments. An unexpected reduction in the number of
assignments could result in excess capacity of consultants and increased
selling, general and administrative expenses as a percentage of revenues. We
have also experienced, and may in the future experience, significant
fluctuations in the quarterly results of our software sales as a result of the
variable size and timing of individual license transactions, competitive
conditions in the industry, changes in customer budgets, and the timing of the
introduction of new products or product enhancements. In the event that our
results of operations for any period are below the expectation of market
analysts and investors, the market price of our shares of common stock could be
adversely affected.
Our President and Chief Executive Officer currently owns more than 50% of
our shares of common stock; his interests may conflict with yours. As of July
21, 2000, Shmuel BenTov, our President and Chief Executive Officer, beneficially
owns 51.97% of shares of common stock. Mr. BenTov would be able to control the
outcome of any matter requiring shareholder approval.
We have anti-takeover provisions that could prevent an acquisition of our
business at a premium price. Some of the provisions of our certificate of
incorporation could discourage, delay or prevent an acquisition of our company
at a premium price or at all. For example, these provisions authorize the
issuance of preferred stock in one or more series. Moreover, Section 912 of the
New York Business Corporation Law prohibits a domestic corporation from engaging
in a business combination with an interested shareholder (defined as the
beneficial owner of 20% or more of the stock of the corporation) for a period of
five years from the time the shareholder acquired the stock unless certain
conditions are met. These provisions are intended to encourage any person
interested in acquiring our company to negotiate with and obtain the approval of
our board of directors in connection with the transaction.
Our common stock price may fluctuate, which may make it difficult to
resell your shares of common stock at attractive prices. The market price of our
common stock may be highly volatile. The market prices of securities of other
technology-based companies currently are highly volatile. Factors that could
cause volatility in our ordinary share price include:
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o fluctuations in our quarterly operating results;
o deviations in our results of operations from the estimates of
securities analysts;
o changes in the market valuations of other technology companies and
stock market price and volume fluctuations generally;
o economic conditions specific to the information technology and
e-commerce industries;
o announcements by us or our competitors relating to new services or
technologies, significant acquisitions, strategic relationships, joint
ventures or capital commitments;
o regulatory developments; and
o additions or departures of our key personnel.
Sales of shares eligible for future sale could impair our stock price. As
of July 21, 2000, there were 6,609,996 of our shares of common stock
outstanding, of which 1,124,996 were restricted securities as that term is
defined by Rule 144 under the Securities Act of 1933, including the 535,712
outstanding shares of common stock registered in this offering. Such restricted
outstanding shares will be eligible for public sale only if a current
registration statement under the Securities Act is in effect with respect to
such shares or such shares are sold in accordance with Rule 144. The market
price of our common stock could drop due to the sale of a large number of our
shares of common stock, such as the shares of common stock sold under this
prospectus or under Rule 144, or the perception that these sales could occur.
These factors could also make it more difficult for us to raise funds through
future offerings of shares of common stock.
Competition. The market for information technology services includes a
large number of competitors, is subject to rapid change and is highly
competitive. Our primary competitors include participants from a variety of
market segments, including consulting divisions of the "Big Five" accounting
firms, interactive advertising agencies, web development companies, systems
consulting and implementation firms, application software firms and management
consulting firms. Many of these competitors have significantly greater
financial, technical and marketing resources and greater name recognition than
we do. In addition, we compete with our clients' internal resources,
particularly when these resources represent a fixed cost to the client. In the
future, such competition may impose additional pricing pressures on us. We
cannot assure you that we will compete successfully with our existing
competitors or with any new competitors.
Intellectual Property Rights. Our business includes the development of
custom software applications in connection with specific client engagements.
Ownership of such software is generally assigned to the client. We rely upon a
combination of nondisclosure and other contractual arrangements and trade
secret, copyright and trademark laws to protect its 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
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proprietary information. However, we cannot assure you that the steps taken by
us in this regard will be adequate to deter misappropriation of proprietary
information or that we will be able to detect unauthorized use and take
appropriate steps to enforce our intellectual property rights. We are subject to
the risk of litigation alleging infringement of third-party intellectual
property rights. Any such claims could require us to spend significant sums in
litigation, pay damages, develop non-infringing intellectual property or acquire
licenses to the intellectual property which is the subject of the asserted
infringement. In addition, we are aware of other users of the term "TACT" and
combinations including "A Consulting," which users may be able to restrict our
ability to establish or protect our right to use these terms. We have in the
past been contacted by other users of the term "TACT" alleging rights to the
term. We have completed filings with the U.S. Patent and Trademark Office in
order to protect certain marks, including "TACT" and "The A Consulting Team."
Our inability or failure to establish rights to these terms or protect our
rights may have a material adverse effect on our business, results of operations
and financial condition.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, and the other reports we have filed from time to time
with the Securities and Exchange Commission, contain forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of the
Exchange Act. Forward-looking statements deal with our current plans,
intentions, beliefs, expectations and statements of future economic performance.
Statements containing terms like "believes," "does not believe," "plans,"
"expects," "intends," "estimates," "anticipates," and other phrases of similar
meaning are considered to imply uncertainty and are forward-looking statements.
Forward-looking statements involve known and unknown risks and
uncertainties that may cause our actual results in future periods to differ
materially from what is currently anticipated. We make cautionary statements
throughout this prospectus, including under "Risk Factors." You should read
these cautionary statements as being applicable to all related forward-looking
statements wherever they appear in this prospectus, the materials referred to in
this prospectus, the materials incorporated by reference into this prospectus
and our press releases.
We cannot guarantee our future results, levels of activity, performance or
achievements. Neither we nor any other person assumes responsibility for the
accuracy and completeness of these statements.
We are under no duty to update any of the forward-looking statements after
the date of this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of shares of common
stock by the selling security holders.
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SELLING SECURITY HOLDERS
Our shares of common stock to which this prospectus relates are being
registered for resales by the selling security holders.
The selling security holders may resell all, a portion or none of such
shares of common stock from time to time. The table below sets forth with
respect to each selling security holder, based upon information available to us
as of July 21, 2000, the number of shares of common stock beneficially owned,
the number of shares of common stock registered by this prospectus and the
number and percent of outstanding shares of common stock that will be owned
after the sale of the registered shares of common stock assuming the sale of all
of the registered shares of common stock.
<TABLE>
<CAPTION>
Shares Beneficially Shares Beneficially
Owned Before Owned After
the Offering (1) (2) the Offering(1) (3)
---------------------------- ----------------------------
Shares Percent Shares Offered Shares Percent
------------- ------------- ------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Arison Investments Ltd.(4) 556,721 8.0% 556,721 0 0
Yossi Vardi(5) 542,856 7.9 542,856 0 0
DS Polaris Group(6) 203,782 3.0 203,782 0 0
SFK Group(6) 203,782 3.0 203,782 0 0
Rita Folger(7) 28,571 * 28,571 0 0
</TABLE>
---------------------
* Less than 1%
(1) As used in this table, "beneficial ownership" means the sole or shared
voting and investment power of shares of common stock. Unless otherwise
indicated, each selling security holder listed below has sole voting and
investment power with respect to the shares of common stock indicated as
beneficially owned thereby. A person is deemed to have "beneficial
ownership" of any shares of common stock that such person has a right to
acquire within sixty days of the date of this prospectus. In accordance
with Rule 13d-3 of the Exchange Act, any shares of common stock that any
selling security holder has the right to acquire within sixty days of the
date of this prospectus are deemed to be outstanding for the purpose of
computing the beneficial ownership percentage of such selling security
holder, but have not been deemed outstanding for the purpose of computing
the percentage for any other selling security holder.
(2) These shares of common stock include up to an aggregate of 1,000,000
shares of common stock which may be acquired by the selling security
holders within sixty days of the date of this prospectus upon the exercise
of warrants granted by us.
(3) With respect to the selling security holders, it has been assumed that all
shares of common stock so offered will be sold.
(4) Includes 378,150 shares of common stock underlying warrants.
(5) Includes 271,428 shares of common stock underlying warrants.
(6) Includes 168,068 shares of common stock underlying warrants.
(7) Includes 14,286 shares of common stock underlying warrants.
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The information provided in the table above with respect to the selling
security holders has been obtained from such selling security holders.
Except as otherwise disclosed above or in documents incorporated herein by
reference, the selling security holders have not within the past three years had
any position, office or other material relationship with our company. Because
the selling security holders may sell all or some portion of the shares of
common stock beneficially owned by them, only an estimate (assuming the selling
security holders sells all of the shares offered hereby) can be given as to the
number of shares of common stock that will be beneficially owned by the selling
security holders after this offering. In addition, the selling security holders
may have sold, transferred or otherwise disposed of, or may sell, transfer or
otherwise dispose of, at any time or from time to time since the dates on which
they provided the information regarding the shares of common stock beneficially
owned by them, all or a portion of the shares of common stock beneficially owned
by them in transactions exempt from the registration requirements of the
Securities Act.
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PLAN OF DISTRIBUTION
This prospectus covers the sale of shares of common stock by the selling
security holders. As used herein, "selling security holders" include donees,
pledgees, transferees or other successors in interest selling shares of common
stock received from a selling security holder after the date of this prospectus
as a gift, pledge, partnership distribution or other non-sale related transfer.
Any distribution of any such securities by the selling security holders in
interest may be effected from time to time in one or more of the following
transactions:
o to underwriters who will acquire securities for their own account and
resell them in one or more transactions, including negotiated
transactions, at a fixed public offering price or at varying prices
determined at the time of sale (any public offering price and any
discount or concessions allowed or reallowed or paid to dealers may
change from time to time);
o through brokers, acting as principal or agent, in transactions (which
may involve block transactions) on the Nasdaq National Market or on
such other market or exchange on which the securities are then listed,
in special offerings, exchange distributions pursuant to the rules of
the applicable exchanges or in the over-the-counter market or
otherwise, at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices or at
fixed prices;
o directly or through brokers or agents in private sales at negotiated
prices;
o through put or call options transactions relating to the shares of
common stock or through short sales of shares of common stock at market
prices prevailing at the time of sale or at negotiated prices; or
o by any other legally available means.
We will not receive any proceeds from the sale of the shares of common
stock. The aggregate proceeds to the selling security holders from the
securities offered hereby will be the offering price less applicable commissions
or discounts, if any. We do not know if the selling security holders will sell
any of the securities offered hereby or transfer, devise or gift securities by
other means not described in this prospectus.
The selling security holders and such underwriters, brokers, dealers or
agents, upon effecting a sale of securities, may be considered "underwriters" as
that term is defined in the Securities Act. The selling security holders will be
subject to the prospectus delivery requirements because the selling security
holders may be deemed to be "underwriters" within meaning of Section 2(a)(11) of
the Securities Act. Sales effected through agents, brokers or dealers will
ordinarily involve payment of customary brokerage commissions although some
brokers or dealers may purchase such securities as agents for others or as
principals for their own account. The selling security holders will pay any
sales commissions or similar selling expenses applicable to the sale of shares
of common stock. A portion of any proceeds of sales and discounts, commissions
or other sellers' compensation may be deemed to be underwriting compensation for
purposes of the Securities Act.
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Selling security holders also may resell all or a portion of the shares of
common stock in open market transactions in reliance upon Rule 144 under the
Securities Act, provided they meet the criteria and conform to the requirements
of such rule.
Pursuant to applicable rules and regulations under the Exchange Act, any
person engaged in the distribution of the securities offered hereby may not
simultaneously engage in market activities for the shares of common stock for a
period of five business days prior to the commencement of such distribution. In
addition, each selling security holder and any other person who participates in
a distribution of the securities will be subject to applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M,
which provisions may limit the timing of purchases and may affect the
marketability of the securities and the ability of any person to engage in
market activities for the shares of common stock.
At the time a particular offering of securities is made, to the extent
required, a prospectus supplement will be distributed which will set forth the
number of securities being offered and the terms of the offering, including the
purchase price or the public offering price, the name or names of any
underwriters, dealers or agents, the purchase price paid by any underwriters for
securities purchased from the selling security holders, any discounts,
commissions and other items constituting compensation from the selling security
holders and any discounts, commissions or concessions allowed or reallowed or
paid to dealers. In addition, we will file a supplement to this prospectus upon
a selling security holder notifying us that a donee, pledgee, transferee or
other successor-in-interest intends to sell more than 500 shares.
In order to comply with the securities laws of certain states, if
applicable, the securities will be sold in such jurisdictions, if required, only
through registered or licensed brokers or dealers. In addition, in certain
states the securities may not be sold unless the securities have been registered
or qualified for sale in such state or an exemption from registration or
qualification is available and the conditions of such exemption have been
satisfied.
We have agreed that we will bear all costs, expenses and fees in
connection with the registration or qualification of the shares of common stock
under federal and state securities laws. We and each selling security holder
have agreed to indemnify each other and certain other persons against certain
liabilities in connection with the offering of the securities, including
liabilities arising under the Securities Act.
LEGAL MATTERS
The validity of the shares of common stock offered hereby will be passed
upon for The A Consulting Team by Orrick, Herrington & Sutcliffe LLP.
EXPERTS
Ernst & Young LLP, independent auditors, have audited our consolidated
financial statements and schedule included in our Annual Report on Form 10-K for
the year ended December 31, 1999, as set forth in their report, which is
incorporated by reference in this prospectus and elsewhere in the registration
statement. Our financial statements and schedule are incorporated by reference
in reliance on Ernst & Young LLP's report, given on their authority as experts
in accounting and auditing.
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SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, or otherwise, we have been advised that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by one of our directors, officers or
controlling persons 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, we will, unless in the opinion of our 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.
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1,535,712
SHARES OF COMMON STOCK
THE A CONSULTING TEAM, INC.
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PROSPECTUS
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July 21, 2000
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