<PAGE>
As filed with the Securities and Exchange Commission on May 13, 1999
Registration No. 333-77311
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SM&A CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA 33-0080929
(State or other jurisdiction or (I.R.S. Employer Identification No.)
incorporation or organization)
4695 MACARTHUR COURT, EIGHTH FLOOR
NEWPORT BEACH, CALIFORNIA 92660
(949) 975-1550
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
MICHAEL A. PIRAINO WITH COPIES TO:
PRESIDENT AND CHIEF OPERATING OFFICER THOMAS J. CRANE, ESQ.
SM&A CORPORATION ALISON M. BARBAROSH, ESQ.
4695 MACARTHUR COURT, EIGHTH FLOOR RUTAN & TUCKER, LLP
NEWPORT BEACH, CALIFORNIA 92660 611 ANTON BOULEVARD, SUITE 1400
(949) 975-1550 COSTA MESA, CALIFORNIA 92626
(Name, address, including zip code, and telephone (714) 641-5100
number, including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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 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
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE PER AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED(1) SHARE (2) PRICE (2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common stock, no par value 2,838,611 shares(3) $6.813 $19,338,037 $1,242.91(4)
====================================================================================================================================
</TABLE>
(1) In the event of a stock split, stock dividend or similar transaction
involving the Registrant's common stock, in order to prevent dilution, the
number of shares registered shall automatically be increased to cover the
additional shares in accordance with Rule 416(a) under the Securities Act
of 1933, as amended.
(2) In accordance with Rule 457(c), the aggregate offering price of shares of
SM&A's common stock is estimated solely for purposes of calculating the
registration fees payable pursuant hereto, as determined in accordance with
Rule 457(c) as of May 12, 1999.
(3) The number of shares of Common Stock registered hereunder includes 714,841
shares which were issued at the closing of the acquisition of
Decision-Science Applications, Inc., and 774,734 shares which were issued
at the closing of the acquisition of Space Applications Corporation. The
number of such shares of Common Stock registered hereunder also includes an
additional 537,464 shares which will be issued to the former stockholders
of Space Applications Corporation pursuant to the terms of the Agreement
and Plan of Reorganization and Merger.
(4) A registration fee in the amount of $4,133.06 has previously been paid.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
PROSPECTUS
SM&A CORPORATION
4695 MACARTHUR COURT, EIGHTH FLOOR
NEWPORT BEACH, CALIFORNIA 92660
(949) 975-1550
2,838,611 SHARES OF (NO PAR VALUE) COMMON STOCK
The stockholders listed in this Prospectus under the Section
"Registered Stockholders" may offer and sell a total of 2,838,611 shares of
our company's common stock, no par value. The Registered Stockholders include
stockholders who own shares of our common stock pursuant to our acquisition of
Space Applications Corporation and Decision-Science Applications, Inc., plus
additional stockholders of our company. This Prospectus has been prepared for
the purposes of registering the shares under the Securities Act of 1933, as
amended (the "Securities Act"), to allow the Registered Stockholders to make
future sales to the public without restriction. To our knowledge, the Registered
Stockholders have made no arrangement with any brokerage firm for the sale of
the shares.
The Registered Stockholders may sell their shares of common stock
described in this Prospectus for their own benefit in public or private
transactions, on or off the Nasdaq National Market, at prevailing market prices,
or at privately negotiated prices. The Registered Stockholders may sell the
shares directly to purchasers or through brokers or dealers. Brokers or dealers
may receive compensation in the form of discounts, concessions or commissions
from the Registered Stockholders. The compensation to a particular underwriter,
broker-dealer or agent may be in excess of customary commissions. The Registered
Stockholders will pay all commissions, transfer taxes and other expenses
associated with their sales of the shares. We will pay the expenses of the
preparation of this Prospectus. We have agreed to indemnify the Registered
Stockholders against certain liabilities, including liabilities arising under
the Securities Act. We will not receive any of the proceeds from the Registered
Stockholders' sales of the shares. In addition to sales under this Prospectus,
the Registered Stockholders may also engage in other sales of shares under Rule
144 or other exempt resale transactions. There can be no assurance that any or
all of the Registered Stockholders will sell any or all of the shares offered
pursuant this Prospectus. More information is provided in the section titled
"Plan of Distribution."
Our common stock is registered pursuant to Section 12(g) of the
Securities Exchange Act of 1934, as amended, and is currently traded on the
Nasdaq National Market under the symbol "WINS." On April 23, 1999, the last
reported sale price of our common stock on the Nasdaq National Market was $8.25
per share.
______________
SEE "RISK FACTORS" BEGINNING ON PAGE 4, FOR A DISCUSSION
OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY INVESTORS.
______________
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
Prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
This Prospectus is dated May 13, 1999
<PAGE>
TABLE OF CONTENTS
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Page
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WHERE YOU CAN FIND MORE INFORMATION.......................................... 2
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE.............................. 3
RISK FACTORS................................................................. 4
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS.................... 9
USE OF PROCEEDS.............................................................. 10
REGISTERED STOCKHOLDERS...................................................... 11
PLAN OF DISTRIBUTION......................................................... 18
LEGAL MATTERS................................................................ 20
EXPERTS...................................................................... 20
RECENT DEVELOPMENTS.......................................................... 20
INDEMNIFICATION OF DIRECTORS AND OFFICERS.................................... 20
This Prospectus is part of a Registration Statement we filed with the
Securities and Exchange Commission (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. The
Registered Stockholders will not make an offer of the shares 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 YOU CAN FIND MORE INFORMATION
We are a public company. We file annual, quarterly and special reports,
proxy statements and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SEC's website at
http://www.sec.gov. You may also read and copy any document we file with the SEC
at its public reference facilities at 450 Fifth Street, N.W., Washington, D.C.
20549, and at the SEC's Midwest Regional Offices at 500 West Madison Street,
Chicago, Illinois 60606 and Northeast Regional Office at 7 World Trade Center,
New York, New York 10048. You can also obtain copies of such material at
prescribed rates from the Public Reference Section of the SEC at its principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public references
facilities.
Our common stock is traded on the Nasdaq National Market under the
symbol "WINS." You may inspect reports, proxy statements and other information
concerning us at the National Association of Securities Dealers, Inc., at 1735 K
Street, N.W., Washington D.C. 2006.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information 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
an important part of this Prospectus and information that we file subsequently
with the SEC will automatically update this Prospectus. We incorporate by
reference the documents listed below:
o Annual Report on Form 10-K for the fiscal year ended December
31, 1998, as filed with the SEC on March 31, 1999 pursuant to
the Securities Exchange Act of 1934, as amended.
o Definitive Proxy Statement concerning the Annual Meeting of
Stockholders to be held on May 18, 1999, as filed with the SEC
on March 31, 1999.
o Current Report on Form 8-K, relating to the acquisition of
Space Applications Corporation, filed with the SEC on June
4,1998, as amended.
o Current Report on Form 8-K, as filed with the SEC on August
19, 1998.
o Current Report on Form 8-K, relating to the acquisition of
Decision-Science Applications, Inc., filed with the SEC on
August 21, 1998, as amended.
o The description of our common stock contained in our
Registration Statement on Form 8- A filed under the Securities
Exchange Act of 1934, as amended, including any amendment or
report filed to update such description.
o All other reports filed by us pursuant to Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended,
since the end of our fiscal year ended December 31, 1998.
We also incorporate by this reference any future filings we make with
the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Securities
Exchange Act of 1934, as amended. Documents filed with the SEC after the date of
this Prospectus are made a part of this Prospectus as of the date such documents
are filed with the SEC.
Any statement in a document incorporated or deemed to be incorporated
by reference in this Prospectus is deemed to be modified or superseded to the
extent that a statement contained in this Prospectus, or in any other document
we subsequently file with the SEC, modifies or supersedes such statement. If any
statement is so modified or superseded, it does not constitute a part of this
Prospectus, except as so modified or superseded.
You may request a copy of the documents incorporated by reference in
this Prospectus, other than exhibits to such documents, at no cost, by writing
to or telephoning us at the following address:
SM&A Corporation
Attention: Michael A. Piraino, President
4695 MacArthur Court, Eighth Floor
Newport Beach, California 92660
(949) 975-1550
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<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION IN THIS PROSPECTUS, YOU SHOULD CAREFULLY
CONSIDER THE FOLLOWING FACTORS IN EVALUATING US AND OUR BUSINESS BEFORE
PURCHASING ANY SHARES OF THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
THERE ARE RISKS THAT OUR ACQUISITION STRATEGY WILL NOT RESULT IN ANTICIPATED
ECONOMIC AND OPERATIONAL BENEFITS
An element of our growth strategy is to expand our operations through
the acquisition of complementary businesses. We cannot be sure that we will be
able to identify suitable acquisition candidates. If identified, we are not sure
we will be able to acquire such companies on suitable terms. Also, other
companies which may have greater resources than us may compete for acquisition
candidates. Such competition could result in an increase in the price of
acquisition targets and a decrease in the number of attractive companies
available for acquisition by us.
There can be no assurance that the anticipated economic, operational
and other benefits of our acquisition of Space Applications Corporation or
Decision-Science Applications, Inc., or any future acquisitions, will be
realized. We cannot be sure that we will be able to successfully integrate
acquired businesses in a timely manner without substantial costs, delays or
other operational or financial problems. The difficulties of such integration
may initially be increased by our need to integrate personnel with different
business backgrounds and corporate cultures. In addition, acquisitions may
involve our spending significant funds. Our failure to effectively integrate the
acquired companies may adversely affect our ability to bid successfully on
certain engagements and otherwise grow our business. Client dissatisfaction or
performance problems at a single acquired company could have an adverse effect
on our reputation as a whole, and this could result in increased difficulty in
marketing services or acquiring companies in the future. In addition, we cannot
be certain that the acquired companies will operate profitably or will not
otherwise hurt operating results. There are other risks with acquisitions. These
include diversion of management attention, potential loss of key clients or
personnel, risks associated with unanticipated problems, liabilities or
contingencies and risks of entering markets in which we have limited or no
direct expertise. The occurrence of some or all of the events described in these
risks could have a material adverse effect on our business, operating results
and financial condition.
WE MAY FAIL TO MANAGE OUR FUTURE GROWTH EFFECTIVELY
We are currently experiencing significant growth and we intend to
pursue further growth as part of our business strategy. Our ability to manage
the growth of our operations will require us to continue to improve our
operational, financial and other internal systems and to attract, develop,
motivate and retain our employees. Our rapid growth has presented and will
continue to present numerous operational challenges, such as the assimilation of
financial reporting systems and increased pressure on our senior management and
will increase the demands on our systems and internal controls. In addition, our
success depends in large part upon our ability to attract, develop, motivate and
retain highly-skilled professionals and administrative employees. Our growth
strategy will require an increase in our personnel, particularly skilled systems
engineers and program managers. Qualified professionals are currently in great
demand and there is significant competition for employees with the requisite
skills from other major and boutique consulting firms, research firms,
government contractors, proposal management or business acquisition departments
of major corporations and other professional services firms. There can be no
assurance that we will be able to attract and retain the qualified personnel
necessary to pursue our growth strategy. There can be no assurance that we will
be able to maintain or increase our current rate of growth, effectively manage
our expanding operations or achieve planned growth on a timely or profitable
basis. To the extent that we are unable to manage our growth effectively and
efficiently, our business, financial condition and results of operations could
be materially and adversely affected.
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<PAGE>
OUR BUSINESS DEPENDS SUBSTANTIALLY ON THE DEFENSE INDUSTRY AND A REDUCTION IN
THE VOLUME OF CONTRACTS OR SUBCONTRACTS TO BE BID UPON BY OUR CLIENTS MAY RESULT
IN A REDUCTION IN THE VOLUME OF PROPOSALS WE MANAGE
Approximately 56.3% of our revenues were derived from Proposal
Management Group services related to government procurement contracts for the
fiscal year ended December 31, 1998. In addition, a significant portion of our
revenues are derived from contracts or subcontracts with the U.S. Government.
For the foreseeable future, we expect that the percentage of our revenues
attributable to such contracts will continue to be substantial. U.S. Government
expenditures for defense products may decline in the future with such reductions
having an effect on our clients, or, indirectly, on us. A number of trends may
contribute to such a decline, including:
o large weapon systems being replaced with smaller, more precise
high technology systems
o multiple procurements for similar weapons being consolidated
into joint service procurements, such as the Joint Strike
Fighter
o threat scenarios evolving away from global conflicts to
regional conflicts
o the continuing draw down of U.S. military forces in response
to the end of the Cold War
In the event expenditures for products of the type manufactured by our
clients are reduced and not offset by other new programs or products, there will
be a reduction in the volume of contracts or subcontracts to be bid upon by our
clients and, as a result, a reduction in the volume of proposals managed by us.
Unless offset, such reductions could materially and adversely affect our
business, operating results and financial condition.
THE RISKS ASSOCIATED WITH GOVERNMENT CONTRACTING COULD RESULT IN FINES,
PENALTIES AND TERMINATION OF U.S. GOVERNMENT CONTRACTS AND SUBCONTRACTS
We are subject to risks associated with compliance with governmental
regulations, both directly and through our government-contractor clients. The
fines and penalties which could result from noncompliance with appropriate
standards and regulations, or a client's suspension or debarment from the
bidding process for future government contracts could have a material adverse
effect on our business, operating results and financial condition. We rely for
the continuance and expansion of our business on a facility security clearance
from the U.S. Government, and individual security clearances, at various levels,
for nearly all members of our staff. There can be no assurance that necessary
security clearances will continue to be made available by the U.S. Government.
In addition, a significant portion of our revenues are derived from
contracts or subcontracts with the U.S. Government. Our services are performed
pursuant to the following types of contracts:
o cost reimbursable
o time-and-materials
o fixed-price contracts and subcontracts
Under fixed-price contracts and time-and-materials contracts, we bear any risk
of increased or unexpected costs that may reduce our profits or cause us to
sustain a loss.
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<PAGE>
Our U.S. Government contracts and subcontracts are subject to
termination, reduction or modification as a result of changes in the U.S.
Government's requirements or budgetary restrictions, or at the convenience of
the U.S. Government. When we participate as a subcontractor, we are also subject
to the risk that the primary contractor may fail or become unable to perform its
duties and responsibilities as a prime contractor. If a contract were to be
terminated for convenience, we would be reimbursed for allowable costs incurred
up to the date of termination and would be paid a proportionate amount of the
stipulated profits or fees attributable to the work actually performed.
Contracts with the U.S. Government are generally complex in nature, and
require us to comply with numerous U.S. Government regulations regarding
discrimination in the hiring of personnel, fringe benefits for employees,
safety, safeguarding classified information, responsibility for U.S. Government
property, fire prevention, equipment maintenance, record keeping and accounting,
management qualifications, drug free work place and numerous other matters.
Under certain circumstances the U.S. Government can suspend or bar
individuals or firms from obtaining future contracts with the U.S. Government
for specified periods of time. Any such suspension or disbarment of us of or our
major clients could have a material adverse effect upon us. Our books and
records are subject to audit by the Defense Contract Audit Agency, which can
result in adjustments to contract costs and fees. If any costs are improperly
allocated to a contract, such costs are not reimbursable and, if already
reimbursed, will require us to refund such amounts to the government. If
improper or illegal activities are discovered in the course of any audits or
investigations, the contractor may also be subject to various civil and criminal
penalties and administrative sanctions, including termination of contracts,
forfeitures of profits, suspension of payments, fines and suspension or
disqualification from doing business with the government. If we become subject
to penalties or sanctions, such penalties or sanctions could have a material
adverse effect on our business, financial condition and results of operations.
WE RELY ON A RELATIVELY LIMITED NUMBER OF CLIENTS AND THE LOSS OF ANY
SIGNIFICANT CLIENT COULD MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS AND
FINANCIAL CONDITIONS
We derive a significant portion of our revenues from a relatively
limited number of clients. For example, our revenues from ten most significant
clients accounted for approximately 76.0%, 90.3%, 98.0%, 92.9% and 91.2% of our
total revenues for the years ended December 31, 1998, 1997, 1996, 1995 and 1994,
respectively. Three clients, the U.S. Government, Lockhead Martin Corporation,
and Raytheon Company accounted for approximately 57.2% and 33.3% of our total
revenues for the years ended December 31, 1998 and 1997, respectively. Lockheed
Martin Corporation is our single largest commercial client, accounting for
approximately 16.6%, 22.5% and 22.9% of our total revenues for the years ended
December 31, 1998, 1997 and 1996, respectively.
Clients typically retain us for major proposals as needed on an
engagement basis rather than pursuant to long-term contracts, and a client can
usually terminate our engagement at any time without a significant penalty.
Moreover, there can be no assurance that our existing clients will continue to
engage us for additional assignments or do so at the same revenue levels. The
loss of any significant client could materially and adversely affect our
business, financial condition and results of operations. In addition, the level
of our services required by an individual client may diminish over the life of
its relationship with us, and there can be no assurance that we will be
successful in establishing relationships with new clients as this occurs.
THE MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE AND OUR GROWTH PROSPECTS
COULD BE MATERIALLY AND ADVERSELY AFFECTED IF WE ARE UNSUCCESSFUL IN OUR EFFORTS
TO COMPETE
The market for proposal management services in the procurement of
government and commercial contracts for aerospace and defense is a niche market
with a number of competitors. We are the largest provider of such services and
principally compete with numerous smaller proposal management companies in this
highly specialized industry. We also compete with some of our clients' internal
proposal development resources.
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<PAGE>
We recently entered and seek to achieve significant growth in the
contract support services market, however, there can be no assurance that we
will be successful in such efforts. The market for services in the contract
support industry is highly competitive, highly fragmented and subject to rapid
change. Such competition is likely to increase in the future. Many of our
competitors have greater personnel, financial, technical and marketing resources
than us. Such competitors include many larger management consulting firms such
as McKinsey & Company, Booz Allen & Hamilton, and Science Applications
International Corp., as well as the consulting arms of major accounting firms.
We also compete with our clients' in-house resources. This source of competition
may increase as consolidation of the aerospace and defense industry creates
larger organizations. In addition, there can be no assurance that we will be
successful in such efforts. In addition, significant further expense for sales
and marketing may require us to promote a major expansion of our services in
such area. If we are unsuccessful in our efforts to penetrate further the market
for such services, or if our current 89.6% win rate in the proposal management
business drops significantly, our growth prospects could be materially and
adversely affected.
BECAUSE WE BELIEVE OUR PROPRIETARY RIGHTS ARE MATERIAL TO OUR SUCCESS,
MISAPPROPRIATION OF SUCH RIGHTS OR CLAIMS OF INFRINGEMENT OR LEGAL ACTIONS
RELATED TO INTELLECTUAL PROPERTY COULD ADVERSELY IMPACT OUR FINANCIAL CONDITION
We rely upon a combination of nondisclosure and other contractual
arrangements and trade secret, patent, copyright and trademark laws to protect
our proprietary rights. There can be no assurance that the steps taken by us to
protect our proprietary rights 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.
Although we believe that our services do not infringe on the
intellectual property rights of others and that we have all rights necessary to
utilize the intellectual property employed in our business, we are subject to
the risk of claims 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 asserted
infringement.
WE RELY HEAVILY UPON OUR KEY EMPLOYEES AND THE LOSS OF THEIR SERVICES COULD
MATERIALLY AND ADVERSELY AFFECT OUR BUSINESS
Our success is highly dependent upon the efforts, abilities, business
generation capabilities and project execution of our executive officers, in
particular those of Steven S. Myers, our Chief Executive Officer and Chairman of
the Board, and Michael A. Piraino, our President and Chief Operating Officer. We
entered into a two-year employment agreement with Mr. Myers in November 1997,
and a three-year employment agreement with Mr. Piraino in December 1998. The
loss of the services of either of these individuals for any reason could
materially and adversely affect our business, operating results and financial
condition, including our ability to secure and complete engagements. We
currently maintain a key- man life insurance policy in the amount of $2.0
million on Mr. Myers and are in the process of obtaining such a policy on Mr.
Piraino.
OUR QUARTERLY RESULTS MAY FLUCTUATE SIGNIFICANTLY
We may experience significant fluctuations in future quarterly
operating results due to a number of factors, including the size, timing and
duration of client engagements.
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<PAGE>
OUR STOCK PRICE IS SUBJECT TO SIGNIFICANT VOLATILITY WHICH COULD RESULT IN
LITIGATION AGAINST US
Our common stock was first publicly traded on January 29, 1998 after
our initial public offering at $12.00 per share. Between January 29, 1998 and
April 23, 1999, the closing sale price has ranged from a low of $8.25 per share
to a high of $31.13 per share. The market price of our common stock could
continue to fluctuate substantially due to a variety of factors, including:
o quarterly fluctuations in results of operations
o adverse circumstances affecting the introduction or market
acceptance of new services offered by us
o announcements of new services by our competitors
o our loss of key employees
o changes in the regulatory environment or market conditions
affecting the defense and aerospace industry
o changes in earnings estimates by analysts
o lack of market liquidity resulting from a relatively small
amount of public stock float
o changes in generally accepted accounting principles
o sales of common stock by existing holders
o the announcement and market acceptance of proposed
acquisitions
The market price for our common stock may also be affected by our
ability to meet analysts' expectations, and any failure to meet such
expectations, even if minor, could have a material adverse effect on the market
price of our common stock. In addition, the stock market is subject to extreme
price and volume fluctuations. This volatility has had a significant effect on
the market prices of securities issued by many companies for reasons unrelated
to the operating performance of these companies. In the past, following periods
of volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such a company. Any such
litigation instigated against us could result in substantial costs and a
diversion of management's attention and resources, which could have a material
adverse effect on our business, operating results and financial condition.
YEAR 2000 ISSUES COULD AFFECT OUR BUSINESS
The Year 2000 issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any of our
programs that have time-sensitive software may recognize a date using "00" as
the year 1900 rather than the year 2000. This could result in major system
failure or miscalculations. We have performed a review of our internal systems
to identify and resolve the effect of Year 2000 software issues on the integrity
and reliability of our financial and operational systems.
Based on this review, our management believes that our internal systems
are substantially compliant with Year 2000 issues. In addition, we are also
communicating with our principal service providers to ensure Year 2000 issues
will not have an adverse impact on us. If we, and third parties upon which we
rely, are unable to address this issue in a timely manner, it could result in a
material financial risk to us. In order to assure that this does not occur, we
plan to devote all resources required to resolve any significant Year 2000
issues in a timely manner.
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<PAGE>
Additionally, we noted some risk with legacy products marketed and
maintained by us, the vast majority of which have been delivered to the U.S.
Government. Information which we have collected to- date regarding such legacy
products indicates that while some products were designed with date and time
functions, most of our products have been heavily modified by the licensee or by
a third party integrator with whom we have no obligatory agreement.
Consequently, management believes the exposure has been reduced. However, we
will continue to evaluate these products and implement remediation plans, as
deemed appropriate. These products do not affect our internal operations.
OUR PRINCIPAL SHAREHOLDER HAS SIGNIFICANT CONTROL OVER SM&A, WHICH COULD PREVENT
A CHANGE IN CONTROL AND MAY ADVERSELY AFFECT RIGHTS OF OTHER HOLDERS OF OUR
COMMON STOCK
Steven S. Myers, our Chief Executive Officer and Chairman of the Board,
beneficially owns approximately 43.9% of our outstanding common stock and will
have the ability to control or significantly influence the election of directors
and the results of other matters submitted to a vote of stockholders. Such
concentration of ownership may have the effect of delaying or preventing a
change in control of SM&A and may adversely affect the voting or other rights of
other holders of common stock. Our Board of directors is currently comprised
entirely of individuals supported by Mr. Myers.
IF WE ISSUE PREFERRED STOCK, THE RIGHTS OF HOLDERS OF COMMON STOCK WILL BE
SUBJECT TO THE RIGHTS OF HOLDERS OF PREFERRED STOCK
Our Board of Directors has the authority to issue up to ten million
shares of preferred stock and to determine the price, rights, preferences,
privileges and restrictions, including voting rights, of those shares without
any vote or action by the stockholders. The rights of the holders of the common
stock will be subject to, and may be adversely affected by, the rights of the
holders of any preferred stock that may be issued in the future. The issuance of
the preferred stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock. We have no present plan to issue any shares of
preferred stock.
THE NUMBER OF SHARES AVAILABLE FOR FUTURE SALE COULD ADVERSELY AFFECT THE PRICE
OF OUR PUBLICLY TRADED STOCK
As of April 23, 1999, we had 16,364,584 shares of common stock
outstanding. As of April 23, 1999, we had outstanding options to acquire,
subject to certain vesting requirements, 1,630,300 shares of common stock
pursuant to our 1997 Stock Option Plan. Additionally, in connection with our
acquisition of Space Applications Corporation, options were granted to purchase
an aggregate of 175,906 shares of our common stock. In addition, due to certain
price protection provisions relating to the shares of common stock issued in
connection with the acquisition of Space Applications Corporation, we are
required to issue an aggregate of 537,464 additional shares of common stock to
former stockholders of Space Applications Corporation. We also may be required
to issue additional shares of our common stock upon exercise of stock options by
the former SAC stockholders, depending upon the average closing price of our
common stock on the NASDAQ National Market for the twenty (20) trading days
immediately before the effective date of a registration statement on Form S-8.
See "Registered Stockholders" for a discussion of the SAC Acquisition.
We have registered on a registration statement on Form S-8 all
1,500,000 shares of common stock underlying the options outstanding or issuable
under our 1997 Stock Option Plan. The possibility that substantial amounts of
common stock may be sold in the public market would likely have a material
adverse effect on prevailing market prices of our common stock and could impair
our ability to raise capital through the sale of our equity securities.
- 9 -
<PAGE>
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and certain statements incorporated by reference from
documents we filed with the SEC are or may constitute forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and Section 21E
of the Securities Act of 1934. Such statements include those regarding the
development or possible assumed future results of operations of our business,
the markets for our services, anticipated capital expenditures, regulatory
developments, any statements beginning with, or ending with, or including the
words "believes," "expects," "anticipates," or similar expression, and other
statements contained or incorporated by reference in this Prospectus regarding
matters that are not historical facts. Forward-looking statements necessarily
involve risks and uncertainties, and SM&A's actual results may differ materially
from those expressed or implied by such forward-looking statements due to a
number of factors, including those set forth under the section titled "Risk
Factors" and elsewhere in this Prospectus. You should carefully read the factors
set forth in the section titled "Risk Factors" and other cautionary statements
made in this Prospectus, and you should understand that those factors and
statements are applicable to all related forward-looking statements wherever
they appear in this Prospectus. We do not undertake any obligation to release
publicly any revision to these forward-looking statements to reflect events or
circumstances after the date of this Prospectus or to reflect the occurrence of
unanticipated events, except as may be required by the federal securities laws.
- 10 -
<PAGE>
USE OF PROCEEDS
The Registered Stockholders will directly receive the proceeds from the sale of
the shares. We will not receive any proceeds from the sale of the shares offered
by this Prospectus.
- 11 -
<PAGE>
REGISTERED STOCKHOLDERS
We issued 819,743 shares of common stock to former SAC stockholders on
May 29, 1998, pursuant to the terms of an Agreement and Plan of Reorganization
and Merger (the "SAC Merger Agreement"), where we acquired 100% of the
outstanding common stock of SAC (the "SAC Acquisition"). As part of the SAC
Acquisition, we agreed to protect the former SAC stockholders against declines
in the price of our common stock. The SAC Merger Agreement provides that we will
issue additional shares of our common stock if, upon the effective date of this
Registration Statement, the average closing price of our common stock on the
NASDAQ National Market for the twenty (20) trading days immediately before the
effective date of this Registration Statement (the "Registration Closing
Average") is less than $13.931. We will issue to the former SAC stockholders
that number of shares of our common stock per share issued in the SAC
Acquisition, valued at the Registration Closing Average, equal to the difference
between $13.931 and the Registration Closing Average. The average closing price
of our common stock for the twenty trading days up to and including May 12, 1999
is $8.225 and, therefore, the aggregate number of such additional shares being
issued to former SAC stockholders is 537,464.
We also issued 714,841 shares of common stock to former DSA
stockholders on August 20, 1998, pursuant to the terms of an Agreement and Plan
of Reorganization and Merger, where we acquired 100% of the outstanding common
stock of DSA (the "DSA Acquisition").
In connection with the SAC Acquisition and the DSA Acquisition, we
entered into Registration Rights Agreements with those Registered Stockholders
who are former SAC and DSA stockholders, in which we agreed to file a
Registration Statement with the SEC to register for resale the shares of our
common stock they received pursuant to the SAC Acquisition and the DSA
Acquisition.
In addition, 811,572 shares of our common stock are being registered on
behalf of certain other shareholders of our company.
The following table sets forth certain information as of April 23,
1999, with respect to each Registered Shareholder for whom we are registering
securities for resale to the public. We will not receive any of the proceeds
from the sale of the shares by the Registered Stockholders. None of the
Registered Stockholders will beneficially own more than 1% of our outstanding
shares after the sale of the securities offered hereby.
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
NAME OF REGISTERED BENEFICIALLY OWNED BEING OFFERED PURSUANT BENEFICIALLY
SHAREHOLDER PRIOR TO THIS TO THIS PROSPECTUS(3) OWNED AFTER OFFERING(4)(5)
OFFERING(1)(2)
------------------ ------------------ ---------------------- --------------------------
<S> <C> <C> <C>
Guy A. Ackerson 102,966 102,966 0
Kathleen A. Ackerson 17,924 17,924 0
Betty B. Allman(6) 1,236 1,236 0
Michael H. Alonso 3,379 3,379 0
Thomas J. Amrhein 49,836 46,836 3,000
James L. Anderes 4,390 4,390 0
Johnny N. Asberry 4,947 4,947 0
Harry F. Bascom 7,063 7,063 0
Nathaniel E. Bent 9,497 9,497 0
Jodine L. Bergen(6) 4,121 4,121 0
Debra D. Berry(6) 4,121 4,121 0
</TABLE>
- 12 -
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
NAME OF REGISTERED BENEFICIALLY OWNED BEING OFFERED PURSUANT BENEFICIALLY
SHAREHOLDER PRIOR TO THIS TO THIS PROSPECTUS(3) OWNED AFTER OFFERING(4)(5)
OFFERING(1)(2)
------------------ ------------------ ---------------------- --------------------------
<S> <C> <C> <C>
Glenn V. Boeshaar(6) 74,176 74,176 0
Phillip Bruce(6) 10,303 10,303 0
Wallace Thomas Bucher, Jr.
and Patricia Ann
Bucher, Trustees, W.T. and
P.A. Bucher Revocable Trust
dated 3/7/97(9) 48,513 46,513 2,000
Phillip A. Burns 7,965 7,965 0
Peter Cappelano 4,335 4,335 0
Robert G. Carlisle 6,078 5,378 700
John T. Clancy 10,899 10,899 0
Lawrence M. Clarke, Jr. 10,212 10,212 0
Daniel P. Croghan 3,240 3,040 200
Charles A. Cullian(10) 89,908 85,908 4,000
Kai K. Dai(6) 825 825 0
Lawrence A. Danforth 5,481 5,481 0
Peter J. Dukellis(6) 3,091 3,091 0
Gary K. Eiserman 14,994 14,994 0
Roger D. Ellis 8,471 8,471 0
Jeffrey A. Evans 6,918 6,918 0
Diane M. Feldstein 4,528 4,528 0
Anthony J. Feldstein 6,540 6,540 0
Simeon H. K. Fitch 4,065 4,065 0
James E. Fucillo 21,540 21,540 0
George F. Gorman 14,537 14,537 0
Cheryl D. Green 4,683 4,683 0
Christopher M. Green 5,049 5,049 0
Mark W. Gulick 5,674 5,674 0
Christopher R. Hamlett 4,676 4,676 0
John W. Harms(6) 12,363 12,363 0
Stanley Hee, Trustee of The
Hee Family Trust(6) 330,287 330,287 0
Thomas F. Heinsheimer,
Trustee of the
Heinsheimer Living Trust
Dated July 17, 1968(11) 189,137 179,887 9,250
Richard L. Hodges, Jr. 7,399 7,399 0
Ronald and Linda Hunn
Trust Dated
January 26, 1990(12) 69,952 69,852 100
Douglas H. Hurlburt 6,777 6,777 0
Kathleen E. Keller 18,988 18,988 0
Sean M. Kelley 3,876 3,876 0
David H. Kellogg 29,069 29,069 0
</TABLE>
- 13 -
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
NAME OF REGISTERED BENEFICIALLY OWNED BEING OFFERED PURSUANT BENEFICIALLY
SHAREHOLDER PRIOR TO THIS TO THIS PROSPECTUS(3) OWNED AFTER OFFERING(4)(5)
OFFERING(1)(2)
------------------ ------------------ ---------------------- --------------------------
<S> <C> <C> <C>
Anne S. Kelly, Trustee of the
Kelly Living Trust Dated
5/29/81(6) 51,512 51,512 0
James D. Kiernan 4,033 4,033 0
Waymouth G. Knight(6) 1,648 412 1,236
Joseph C. Krupp and
Margaret M. Krupp,
Trustees of The Joseph C.
and Margaret M. Krupp
Living Trust Dated
January 29, 1997 14,768 14,768 0
Robert W. Krueger(6) 19,966 19,966 0
Wesley M. Kurowski 21,336 21,336 0
Richard A. Kuseski(6) 4,121 4,121 0
Lawrence R. Lausten 17,328 17,328 0
Earl Lazarus 19,436 19,436 0
Fook Wah Leong 7,423 7,423 0
Amos Lu(6) 82,417 20,604 61,813
Amos Lu, Trustee of the
Amos Lu Small Fund
Living Trust(6) 20,604 20,604 0
Gary L. Lucas 53,082 53,082 0
Alfred E. Lyle(6) 32,967 32,967 0
James F. Madewell and
Arlene F. Madewell,
Trustees, J & A Madewell
Revocable Trust(13) 64,539 63,539 1,000
Robert P. Maloney 10,777 10,777 0
Steven R. Mast(6) 41,209 4,121 37,088
Chad A. McAllister 10,205 10,205 0
David E. McDevitt &
Ann E. McDevitt(14) 56,037 50,787 5,250
Theresa M. McGrath 3,592 3,592 0
James R. McNeece 16,348 16,348 0
Michael R. Megargee 5,511 4,311 1,200
Charles J. Meyers Jr. &
Margaret C. Meyers, Trustees
UA Dtd Feb. 13, 98 The Charles
J. Meyers Jr. & Margaret C.
Meyers Trust(15) 51,207 48,207 3,000
John W. Montgomery &
Dian Y. Montgomery,
Trustees of the J. and D.
Montgomery Revocable
Trust(16) 127,608 123,608 4,000
Thomas J. Morin 10,376 10,376 0
Robert H. Morrell(6) 39,149 2,061 37,088
Irene S. Murphy(6) 412 412 0
Randy E. Nees 3,554 3,554 0
Patricia D. Nelson(6) 4,121 4,121 0
William J. Nevills 5,428 5,428 0
</TABLE>
- 14 -
<PAGE>
<TABLE>
<CAPTION>
NUMBER OF SHARES NUMBER OF SHARES NUMBER OF SHARES
NAME OF REGISTERED BENEFICIALLY OWNED BEING OFFERED PURSUANT BENEFICIALLY
SHAREHOLDER PRIOR TO THIS TO THIS PROSPECTUS(3) OWNED AFTER OFFERING(4)(5)
OFFERING(1)(2)
------------------ ------------------ ---------------------- --------------------------
<S> <C> <C> <C>
John W. Newell(6) 16,483 16,483 0
Susan Y. Park 7,381 7,381 0
Ajaykumar K. Patel &
Elizabeth Ann Stillman(17) 56,135 51,435 4,700
Robin M. Pettit 5,768 5,768 0
Arnold C. Rausch 7,399 7,399 0
Dana R. Rauscher 15,987 15,987 0
Sue Ellen Reavill 626 626 0
Kathleen E. Reece 7,099 7,099 0
Starla L. Richman 4,341 4,341 0
Paul E. Scesney 14,668 14,668 0
Paul M. Shayda 6,268 6,268 0
Roger H. Skinner(6) 554,257 554,257 0
Clarence E. Smith(6) 55,202 34,598 20,604
Joseph G. Smith 7,131 7,131 0
Space Applications Corporation
Employer Stock Trust(6)(7) 63,815 63,815 0
Janice G. Stringfellow(6) 412 412 0
Philip G. Tomlinson 38,992 38,992 0
Annette L. Totten 5,129 5,129 0
James L. Wagner 14,960 14,960 0
Christopher A. Warner 3,548 3,548 0
Thelma G. Welter, Trustee
of the Thelma G. Welter
Living Trust(6) 41,209 41,209 0
Steven R. Williams 8,287 8,287 0
Kenneth M. Wisehart
and Holly ann
Wisehart(18) 48,000 45,000 3,000
</TABLE>
- -----------------------
(1) Beneficial ownership is determined in accordance with the rules of the
SEC and generally includes voting or investment power with respect to
securities. The number of shares of common stock owned prior to this
offering includes shares of common stock issued to certain Registered
Stockholders pursuant to the SAC Acquisition and the DSA Acquisition,
plus any additional shares of our common stock beneficially held by the
Registered Stockholder. The number of shares beneficially owned and
being offered pursuant to this Prospectus includes that number of
shares placed in an escrow account pursuant to the terms and conditions
of the SAC and DSA acquisition agreements, and an aggregate of 537,464
additional shares which will be issued to the former SAC stockholders
pursuant to the terms of the SAC Merger Agreement. Except for the
shares placed in an escrow account, and except as otherwise indicated
by footnote and subject to applicable community property laws, the
persons named in the table above have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned
by them. Based on an aggregate of 16,364,584 shares of common stock
issued and outstanding as of April 23, 1999.
- 15 -
<PAGE>
(2) Includes 195,529 shares issuable upon exercise of outstanding stock
options which are exercisable during the 60 day period commencing April
20, 1999, which includes our good faith estimate of additional shares
which may be issued upon exercise of stock options by the former SAC
stockholders pursuant to the terms of the SAC Merger Agreement. Such
estimate is based upon the average closing price of our common stock
for the twenty trading days up to and including May 12, 1999, which is
$8.225. The exact number of such additional shares will be adjusted if,
upon the effective date of a registration statement on Form S-8, the
average closing price of our common stock on the NASDAQ National Market
for the twenty (20) trading days immediately before the effective date
of such registration statement is different than $8.225, the assumed
amount.
(3) The number of shares of common stock being offered under this
Prospectus includes those shares of our common stock issued at the
closing of the acquisitions of SAC and DSA, and 537,464 additional
shares which will be issued to the former SAC stockholders pursuant to
the terms of the SAC Merger Agreement.
(4) Assumes that all of the shares are sold pursuant to this Prospectus.
(5) None of the Registered Stockholders will beneficially own more than one
percent (1%) of our outstanding shares after the sale of securities
offered pursuant to the Prospectus.
(6) The number of shares of common stock indicated as beneficially owned
and being offered under this Prospectus includes an aggregate of
537,464 additional shares to be issued to the former SAC stockholders
pursuant to the terms of the SAC Merger Agreement.
(7) Voting and investment power is held by the Administrative Committee of
the Space Applications Corporation Employer Stock Trust.
(8) Mr. Amrhein has been the President and General Manager of our Systems
Solutions Group since November 1998. From January 1996 to June 1998,
Mr. Amrhein was a Vice President of our company, and he was President
and General Manager of Space Applications Corporation from June 1998 to
December 1998. The shares owned beneficially as of April 23, 1999
include 3,000 shares issuable upon exercise of stock options which are
exercisable during the 60 day period commencing April 20, 1999.
(9) Mr. Bucher is a Vice President of our company. The shares owned
beneficially as of April 23, 1999 include 2,000 shares issuable upon
exercise of stock options which are exercisable during the 60 day
period commencing April 20, 1999.
(10) Mr. Cullian was an employee of our company until March 1999. The shares
owned beneficially as of April 23, 1999 include 4,000 shares issuable
upon exercise of stock options which are exercisable during the 60 day
period commencing April 20, 1999.
(11) Dr. Heinsheimer has been our Senior Vice President and Chief Technical
Officer since 1993. The shares owned beneficially as of April 23, 1999
include 9,250 shares issuable upon exercise of stock options which are
exercisable during the 60 day period commencing April 20, 1999.
(12) Mr. Hunn is a consultant to our company, and was our Chief Financial
Officer from September 1995 to October 1998, a Vice President from
September 1995 to July 1998, a Senior Vice President from July 1998 to
October 1998, and Secretary of our company from August 1997 to October
1998.
(13) Mr. Madewell has been our Senior Vice President, Corporate Development,
since July 1998. Mr. Madewell joined our company in August 1997 as Vice
President, Business Development. The shares owned beneficially as of
April 23, 1999 include 1,000 shares issuable upon exercise of stock
options which are exercisable during the 60 day period commencing April
20, 1999.
(14) Mr. McDevitt is our Vice President, Operations. The shares owned
beneficially as of April 23, 1999 include 5,250 shares issuable upon
exercise of stock options which are exercisable during the 60 day
period commencing April 20, 1999.
(15) Mr. Meyers has been a Vice President of our Proposal Management Group
since January 1998. Mr. Meyers joined our company as an Associate in
January 1992. The shares owned beneficially as of April 23, 1999
include 3,000 shares issuable upon exercise of stock options which are
exercisable during the 60 day period commencing April 20, 1999.
(16) Mr. Montgomery is a Vice President of the Proposal Management Group of
our company. The shares owned beneficially as of April 23, 1999 include
3,000 shares issuable upon exercise of stock options which are
exercisable during the 60 day period commencing April 20, 1999.
(17) Mr. Patel has been the President and General Manager of our Proposal
Management Group since October 1998. From January 1995 to July 1996,
Mr. Patel was the Vice President for the Department of Energy and
Environmental Services. From August 1996 to June 1997, he was Vice
President, Business Development, and he served as Vice President,
Operations, from June 1997 until October 1998. The shares owned
beneficially as of April 23, 1999 include 4,000 shares issuable upon
exercise of stock options which are exercisable during the 60 day
period commencing April 20, 1999.
(18) Mr. Wisehart is a Vice President of our Proposal Management Group. The
shares beneficially owned as of April 23, 1999 include 3,000 shares
issuable upon exercise of stock options which are exercisable during
the 60 day period commencing April 20, 1999.
We will prepare and file such amendments and supplements to the
Registration Statement as may be necessary in accordance with the rules and
regulations of the Securities Act to keep it effective until the earlier to
occur of (i) the date as of which all shares may be resold in a public
transaction without volume limitations or other material restrictions without
registration under the Securities Act, including without limitation, pursuant to
Rule 144 under the Securities Act or (ii) the date as of which all shares
offered hereby have been resold. We have has agreed to pay the expenses, other
than broker discounts and commissions, if any, in connection with this
Prospectus.
- 16 -
<PAGE>
PLAN OF DISTRIBUTION
The Registered Stockholders have advised us that they will offer for
sale, from time to time, all or a portion of the shares offered by this
Prospectus in one or more private or negotiated transactions, in open market
transactions on the Nasdaq National Market, in settlement of short sale
transactions, in settlement of option transactions, or otherwise, or a
combination of these methods, at prices and terms then obtainable, at fixed
prices, at prices then prevailing at the time of sale, at prices related to such
prevailing prices, or at negotiated prices or otherwise. The Registered
Stockholders may effect these transactions by selling the shares (i) to or
through underwriters; (ii) through broker-dealers or agents, which may include
underwriters, including: (a) in a block trade in which the broker or dealer so
engaged will attempt to sell the shares of common stock as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) in purchases by a broker or dealer and resale by such broker or
dealer as a principal for its account pursuant to this Prospectus; (c) in
ordinary brokerage transactions and (d) in transactions in which the broker
solicits purchasers; or (iii) directly to one or more purchasers. THE REGISTERED
STOCKHOLDERS AND ANY UNDERWRITERS, DEALERS, BROKERS OR AGENTS EXECUTING SELLING
ORDERS ON BEHALF OF THE REGISTERED STOCKHOLDERS MAY BE DEEMED TO BE
"UNDERWRITERS" WITHIN THE MEANING OF THE SECURITIES ACT AND ANY PROFITS ON THE
SALE OF THE SHARES BY THEM AND ANY DISCOUNTS, COMMISSIONS OR CONCESSIONS
RECEIVED BY SUCH UNDERWRITERS, DEALERS, BROKERS OR AGENTS MAY BE DEEMED TO BE
UNDERWRITING DISCOUNTS AND COMMISSIONS UNDER THE SECURITIES ACT. The
compensation to a particular underwriter, broker-dealer or agent may be in
excess of customary commissions. To our knowledge, the Registered Stockholders
have made no arrangement with any brokerage firm for the sale of the shares.
Any broker-dealer participating in such transactions as agent may
receive commissions from the Registered Stockholders and, if they act as agent
for the purchaser of such shares, from such purchaser. Broker-dealers may agree
with the Registered Stockholders to sell a specified number of shares at a
stipulated price per share and, to the extent such a broker-dealer is unable to
do so acting as agent for the Registered Shareholder, to purchase as principal
any unsold shares at the price required to fulfill the broker-dealer commitment
to the Registered Shareholder. Broker-dealers who acquire shares as principal
may thereafter resell such shares from time to time in transactions, which may
involve crosses and block transactions and which may involve sales to and
through other broker-dealers, including transactions of the nature described
above, in the over-the-counter market, in negotiated transactions or otherwise
at market prices prevailing at the time of sale or at negotiated prices, and in
connection with such resales may pay to or receive from the purchasers of such
shares commissions computed as described above. To the extent required under the
Securities Act, a supplemental prospectus will be filed, disclosing (a) the name
of any such broker-dealers; (b) the number of shares involved; (c) the price at
which such shares are to be sold; (d) the commissions paid or discounts or
concessions allowed to such broker-dealers, where applicable; (e) that such
broker-dealers did not conduct any investigation to verify the information set
out or incorporated by reference in this Prospectus, as supplemented; and (f)
other facts material to the transaction.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, as amended, any person engaged in a distribution of the shares may
not simultaneously engage in market making activities with respect to the shares
for a period beginning when such person becomes a distribution participant and
ending upon such person's completion of participation in the distribution,
including stabilization activities in the common stock to effect covering
transactions, to impose penalty bids or to effect passive marketing making bids.
In addition to and without limiting the foregoing, in connection with
transactions in the shares, the Registered Stockholders and any underwriters,
dealers, brokers or agents executing selling orders on behalf of the Registered
Stockholders may be subject to applicable provisions of the Securities Exchange
Act of 1934,as amended, and the rules and regulations thereunder, including,
without limitation, Rule 10b-5 thereof and, insofar as SM&A and the Registered
Stockholders are distribution participants, Regulation M and Rules 100, 101,
102, 103, 104 and 105 thereof. All of the foregoing may affect the marketability
of the shares.
- 17 -
<PAGE>
The Registered Stockholders will pay all commissions, transfer taxes
and other expenses associated with their sales of the shares. The shares offered
hereby are being registered pursuant to our contractual obligations, and we have
agreed to pay the expenses of the preparation of this Prospectus. We have also
agreed to indemnify the Registered Stockholders against certain liabilities,
including, without limitation, liabilities arising under the Securities Act.
We will not receive any of the proceeds from the sale of the shares by
the Registered Stockholders.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
shares may not be sold unless the shares have been registered or qualified for
sale in these states or an exemption from registration or qualification is
available and complied with.
Our common stock is currently traded on the Nasdaq National Market
under the symbol "WINS." Concurrently with sales under this Prospectus, the
Registered Stockholders may effect other sales of shares under Rule 144 or other
exempt resale transactions. There can be no assurance that the Registered
Stockholders, or any of them, will sell any or all of the shares offered
hereunder.
- 18 -
<PAGE>
LEGAL MATTERS
The validity of the shares offered pursuant to this Prospectus will be
passed upon for us by Rutan & Tucker, LLP, Costa Mesa, California.
EXPERTS
The consolidated financial statements and related consolidated
financial statement schedule, incorporated in this Prospectus by reference from
our Annual Report on Form 10-K for the year ended December 31, 1998, have been
audited by KPMG LLP, independent auditors, as stated in their report, which is
incorporated in this Prospectus by reference, and have been so incorporated in
reliance upon the report of such firm given upon their authority as experts in
accounting and auditing.
The consolidated financial statements of Decision-Science Applications,
Inc. as of January 31, 1998 and 1997, and for each of the three years in the
period ended January 31, 1998, incorporated in this Prospectus by reference from
our Current Report on Form 8-K, filed with the SEC on August 21, 1998, as
amended, have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their report, which is incorporated in this Prospectus by reference,
and have been so incorporated in reliance upon the report of such firm given
upon their authority as experts in accounting and auditing.
The consolidated financial statements of Space Applications Corporation
as of June 27, 1997 and June 28, 1996, and for each of the three years in the
period ended June 27, 1997, incorporated in this Prospectus by reference from
our Current Report on Form 8-K, filed with the SEC on June 4, 1998, as amended,
have been audited by Ernst & Young LLP, independent auditors, as set forth in
their reports included therein and incorporated in this Prospectus by reference
in reliance upon such reports given on the authority of such firm as experts in
accounting and auditing.
RECENT DEVELOPMENTS
On March 30, 1999, we entered into an Agreement and Plan of
Reorganization and Merger with Systems Integration Software, a Delaware
corporation ("SIS"), pursuant to which we acquired 100% of the outstanding
common stock of SIS for an aggregate cash consideration of $3,330,000 and a
contingent payment based on the future performance of SIS to be paid on March
31, 2000.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
SM&A's Amended and Restated Articles of Incorporation provide that the
liability of SM&A's directors for monetary damages shall be eliminated to the
fullest extent permissible under California law. This is intended to eliminate
the personal liability of a director for monetary damages in an action brought
by or in the right of SM&A for breach of a director's duties to SM&A or its
stockholders except for liability: (i) for acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law; (ii) for acts
or omissions that a director believes to be contrary to the best interests of
SM&A or its stockholders or that involve the absence of good faith on the part
of the director; (iii) for any transaction for which a director derived an
improper personal benefit; (iv) for acts or omission that show a reckless
disregard for the director's duty to SM&A or its stockholders in circumstances
in which the director was aware, or should have been aware, in the ordinary
course of performing a director's duties, of a risk of serious injury to SM&A or
its stockholders; (v) for acts or omissions that constitute an unexcused pattern
of inattention that amounts to an abdication of the director's duty to SM&A or
its stockholders; (vi) with respect to certain transactions, or the approval of
transactions in which a director has a material financial interest; and (vii)
expressly imposed by statute, for approval of certain improper distributions to
stockholders or certain loans or guarantees.
The Articles also provide that SM&A is authorized to provide
indemnification to its agents, as defined in Section 317 of the California
Corporations Code, through SM&A's Bylaws or through agreements with such agents
or both, for breach of duty to SM&A and its stockholders, in excess of the
indemnification otherwise permitted by Section 317 of the California
Corporations Code, subject to the limits on such excess indemnification set
forth in Section 204 of the California Corporations Code.
- 19 -
<PAGE>
SM&A's Bylaws provide for indemnification of SM&A's officers,
directors, employees, and other agents to the extent and under the circumstances
permitted by California law. The Bylaws further provide that no indemnification
shall be made in the case of a derivative suit in respect to any claim as to
which such person has been adjudged to be liable to the corporation, except with
court approval, nor shall indemnification be made for amounts paid in settling
or otherwise disposing of a threatened or pending action, with or without court
approval, or for expenses incurred in defending a threatened or pending action
which is settled or otherwise disposed of without court approval.
Indemnification under the Bylaws is mandatory in the case of an agent of SM&A,
present or past, who is successful on the merits in defense of a suit against
him or her in such capacity. In all other cases where indemnification is
permitted by the Bylaws, a determination to indemnify such person must be made
by a majority of a quorum of disinterested directors, a majority of
disinterested stockholders, or the court in which the suit is pending.
SM&A has entered into agreements to indemnify its directors and
executive officers in addition to the indemnification provided for in the
Articles of Incorporation and Bylaws. Among other things, these agreements
provide that SM&A will indemnify, subject to certain requirements, each of
SM&A's directors and executive officers for certain expenses, including
attorneys' fees, judgments, fines and settlement amounts incurred by such person
in any action or proceeding, including any action by or in the right of SM&A, on
account of services by such person as a director or officer of SM&A, or as a
director or officer of any other company or enterprise to which the person
provides services at SM&A's request.
To the extent indemnification for liabilities arising under the
Securities Act may be permitted to SM&A's directors, officers and controlling
persons pursuant to the foregoing provisions, or otherwise, SM&A 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.
- 20 -
<PAGE>
================================================================================
No dealer, sales representative or any other person has been authorized to give
any information or to make any representations in connection with the offering
described in this Prospectus other than those contained in this Prospectus, and,
if given or made, such information or representations must not be relied upon as
having been authorized by SM&A or any of the Registered Stockholders. This
Prospectus does not constitute an offer to sell or a solicitation of an offer to
buy, nor shall there be any sale of these securities by any person in any
jurisdiction in which such an offer, solicitation or sale would be unlawful.
Neither the delivery of this Prospectus nor any sale made hereunder shall, under
any circumstances, create any implication that there has been no change in the
affairs of SM&A since the date of this Prospectus or that the information
contained in this Prospectus is correct as of any time subsequent to the date of
this Prospectus.
------------------------
TABLE OF CONTENTS
PAGE
----
Where You Can Find More
Information..................................................................2
Incorporation of Certain Documents
By Reference.................................................................3
Risk Factors...................................................................4
Cautionary Statement Regarding Forward-
Looking Statements...........................................................9
Use of Proceeds...............................................................10
Registered Stockholders.......................................................11
Plan of Distribution..........................................................18
Legal Matters.................................................................20
Experts.......................................................................20
Recent Developments...........................................................20
Indemnification of Directors and Officers.....................................20
------------------------
2,838,611 Shares
SM&A CORPORATION
COMMON STOCK
-----------------
PROSPECTUS
-----------------
MAY 13, 1999
================================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCES AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with the
Offering described in this Registration Statement:
SEC registration fee...............................$ 5,375.97
Printing and engraving expenses.................... 2,000.00
Legal fees and expenses............................ 6,000.00
Blue Sky fees and expenses......................... 3,000.00
Accounting fees and expenses....................... 4,000.00
Miscellaneous...................................... 2,000.00
-----------
Total......................................$ 22,375.97
===========
All of the above expenses will be paid by SM&A.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Amended and Restated Articles of Incorporation limit, to
the maximum extent permitted by California law, the personal liability of
directors for monetary damages in an action brought by or in the right of the
Registrant for breach of a director's duties to the Registrant or its
stockholders, except for liability: (i) for acts or omissions that involve
intentional misconduct or a knowing and culpable violation of law; (ii) for acts
or omissions that a director believes to be contrary to the best interests of
the Registrant or its stockholders or that involve the absence of good faith on
the part of the director; (iii) for any transaction for which a director derived
an improper personal benefit; (iv) for acts or omission that show a reckless
disregard for the director's duty to the Registrant or its stockholders in
circumstances in which the director was aware, or should have been aware, in the
ordinary course of performing a director's duties, of a risk of serious injury
to the Registrant or its stockholders; (v) for acts or omissions that constitute
an unexcused pattern of inattention that amounts to an abdication of the
director's duty to the Registrant or its stockholders; (vi) with respect to
certain transactions, or the approval of transactions in which a director has a
material financial interest; and (vii) expressly imposed by statute, for
approval of certain improper distributions to stockholders or certain loans or
guarantees.
The Articles also authorize the Registrant to provide indemnification to
its agents, as defined in Section 317 of the California Corporations Code,
through the Registrant's Bylaws or through agreements with such agents or both,
for breach of duty to the Registrant and its stockholders, in excess of the
indemnification to agents or both, for breach of duty to the Registrant and its
stockholders, in excess of the indemnification otherwise permitted by Section
317 of the California Corporations Code, subject to the limits on such excess
indemnification set forth in Section 204 of the California Corporations Code.
The Registrant's Bylaws provide for indemnification of the Registrant's
officers, directors, employees, and other agents to the extent and under the
circumstances permitted by California law,
II-1
<PAGE>
The Registrant has entered into agreements to indemnify its directors and
executive officers in addition to the indemnification provided for in the
Articles of Incorporation and Bylaws. Among other things, these agreements
provide that the Registrant will indemnify, subject to certain requirements,
each of its directors and executive officers for certain expenses, including
attorneys' fees, judgments, fines and settlement amounts incurred by such person
in any action or proceeding, including any action by or in the right of the
Registrant, on account of services by such person as a director or officer of
the Registrant, or as a director or officer of any other company or enterprise
to which the person provides services at the Registrant's request.
ITEM 16. EXHIBITS
EXHIBIT NO. DESCRIPTION
----------- -----------
4.1 Registration Rights Agreement dated May 29,
1998, by and among the Registrant and certain
shareholders of Space Applications Corporation
identified therein (filed on June 4, 1998 as
Exhibit 2 to the Registrant's Current Report on
Form 8-K and incorporated herein by reference)
4.2 Registration Rights Agreement dated August 20,
1998, by and among the Registrant and certain
shareholders of Decision-Science Applications,
Inc. set forth therein (filed on August 21, 1998
as Exhibit 10.1 to the Registrant's Current
Report on Form 8-K and incorporated herein by
reference)
5 Opinion of Rutan & Tucker, LLP*
23.1 Consent of KPMG LLP*
23.2 Consent of Ernst & Young LLP*
23.3 Consent of Deloitte & Touche LLP*
23.4 Consent of Rutan & Tucker, LLP (included in
Exhibit 5)*
- ------------------------
* filed herewith
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price present no more than a 20% change in
the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
Registration Statement;
II-2
<PAGE>
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed with or
furnished to the SEC by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities of 1934, as amended, that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or 15(d) of the Securities of 1934, as amended
(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 the time shall be deemed to be the initial BONA
FIDE offering thereof.
The undersigned registrant hereby undertakes to deliver or cause to be delivered
with the prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14a-3 or Rule 14c-3 under the Securities of 1934, as amended; and, where interim
financial information requires to be presented by Article 3 of Regulation S-X
are not set forth in the prospectus, to deliver, or cause to be delivered to
each person to whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to provide such
interim financial information.
II-3
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, 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 the City of Newport Beach, State of California, on May 10, 1999.
SM&A CORPORATION
By: /S/ MICHAEL A. PIRAINO
----------------------------------------
Michael A. Piraino, President and Chief
Operating Officer
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ STEVEN S. MYERS Chief Executive Officer, May 10, 1999
- ----------------------------- Chairman of the Board and
Steven S. Myers Director (Principal
Executive Officer)
/S/ MICHAEL A. PIRAINO President, Chief Operating May 10, 1999
- ----------------------------- Officer, Chief Financial
Michael A. Piraino Officer, Secretary and
Director, (Principal
Financial and Principal
Accounting Officer)
/S/ J. CHRISTOPHER LEWIS Director May 10, 1999
- -----------------------------
J. Christopher Lewis
</TABLE>
II-4
<PAGE>
<TABLE>
EXHIBIT INDEX
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
4.1 Registration Rights Agreement dated May 29, 1998, by and among the
Registrant and certain shareholders of Space Applications
Corporation identified therein (filed on June 4, 1998 as Exhibit 2
to the Registrant's Current Report on Form 8-K and incorporated
herein by reference)
4.2 Registration Rights Agreement dated August 20, 1998, by and among
the Registrant and certain shareholders of Decision-Science
Applications, Inc. set forth therein (filed on August 21, 1998 as
Exhibit 10.1 to the Registrant's Current Report on Form 8-K and
incorporated herein by reference)
5 Opinion of Rutan & Tucker, LLP
23.1 Consent of KPMG LLP
23.2 Consent of Ernst & Young LLP
23.3 Consent of Deloitte & Touche LLP
23.4 Consent of Rutan & Tucker, LLP (included in Exhibit 5)
</TABLE>
II-5
Exhibit 5
April 28, 1999
SM&A Corporation
4695 MacArthur Court, Eighth Floor
Newport Beach, California 92660
Re: Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
At your request, we have examined the form of Registration Statement on
Form S-3 (the "Registration Statement") to be filed by SM&A Corporation (the
"Company") with the Securities and Exchange Commission pursuant to the
Securities Act of 1933, as amended, for the purpose of registering the sale of
certain shares of Common Stock of the Company by the shareholders set forth
therein. We are familiar with the proceedings taken and proposed to be taken in
connection with the issuance and sale of the securities in the manner set forth
in the Registration Statement. Subject to completion of the proceedings
contemplated in connection with the foregoing matters, we are of the opinion
that all of the Common Stock to be sold pursuant to the Registration Statement
has been duly authorized and, when issued and sold in the manner set forth in
the Registration Statement will, upon such issuance and sale, be validly and
legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement or any amendment thereto.
Respectfully submitted,
/s/ RUTAN & TUCKER, LLP
Exhibit 23.1
Consent of KPMG LLP, Independent Auditors
-----------------------------------------
To the Board of Directors
SM&A Corporation
We consent to incorporation by reference of our report dated January
25, 1999, except for notes 5 and 13 which are dated as of March 12, 1999, and to
the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG LLP
Orange County, California
May 11, 1999
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
--------------------------------------------------
We consent to the reference to our firm under the caption "Experts" in
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-77311) and
related Prospectus of SM&A Corporation for the registration of shares of its
common stock and to the incorporation by reference therein of our reports dated
October 3, 1997 and September 20, 1996, with respect to the consolidated
financial statements of Space Applications Corporation included in SM&A
Corporation's Current Report (Form 8-K/A dated August 4, 1998), filed with the
Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
Washington, D.C.
May 10, 1999
II-8
INDEPENDENT AUDITORS' CONSENT
-----------------------------
We consent to the incorporation by reference in the Registration Statement on
Form S-3 of SM&A Corporation, as amended by Pre-Effective Amendment No. 1, of
our report on our audits of the consolidated financial statements of
Decision-Science Applications, Inc. and Subsidiary for the years ended January
31, 1998, 1997, and 1996, dated April 13, 1998, appearing in the Current Report
on Form 8-K of SM&A Corporation, filed with the Securites and Exchange
Commission on August 21, 1998, as amended by Form 8-K/A, filed with the SEC on
October 23, 1998, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of such Registration Statement.
/s/ DELOITTE & TOUCHE LLP
May 11, 1999
II-9
