<PAGE>
As filed with the Securities and Exchange Commission on August 23, 2000
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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GREENWICH TECHNOLOGY PARTNERS, INC.
(Exact name of registrant as specified in its charter)
----------------
Delaware 7371 13-3944171
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification number)
incorporation or
organization)
123 Main Street
White Plains, NY, 10601
Telephone: (914) 289-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
Joseph P. Beninati
Chief Executive Officer
Greenwich Technology Partners, Inc.
123 Main Street
White Plains, NY 10601
(914) 289-8000
(Name, address, including zip code, and telephone number, including area code
of agent for service)
----------------
Copies to:
Kevin M. Barry, Esq. Stephen L. Burns, Esq.
Laurie A. Cerveny, Esq. Cravath, Swaine & Moore
Testa, Hurwitz & Thibeault, LLP Worldwide Plaza
125 High Street 825 Eighth Avenue
Boston, MA 02110 New York, NY 10019-7475
(617) 248-7000 (212) 474-1000
----------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
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, check the following box. [_]
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 this Form is a post-effective amendment filed pursuant to Rule 462(d)
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, check the following box. [_]
CALCULATION OF REGISTRATION FEE
<TABLE>
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<CAPTION>
Proposed Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee
---------------------------------------------------------------
<S> <C> <C>
Common stock, par value
$0.01 per share....... $55,000,000 $14,520
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</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
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Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until 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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 2000
Shares
[LOGO OF GREENWICH TECHNOLOGY PARTNERS]
Common Stock
--------
Prior to this offering, there has been no public market for our common stock.
The initial public offering price of the common stock is expected to be between
$ and $ per share. We have applied to list our common stock on The
Nasdaq Stock Market's National Market under the symbol "GTPI".
The underwriters have an option to purchase a maximum of additional shares
to cover over-allotments of shares.
Investing in the common stock involves risks. See "Risk Factors" on page 8.
<TABLE>
<CAPTION>
Underwriting Proceeds to
Discounts Greenwich
Price to and Technology
Public Commissions Partners
------------ ------------ ------------
<S> <C> <C> <C>
Per Share.................................. $ $ $
Total...................................... $ $ $
</TABLE>
Delivery of the shares of common stock will be made on or about , 2000.
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.
Credit Suisse First Boston
First Union Securities, Inc.
ING Barings
PaineWebber Incorporated
The date of this prospectus is , 2000.
<PAGE>
[INSIDE FRONT COVER ARTWORK]
The color artwork will be three ellipses containing the words "Building
Networks." Selected client logos will appear beneath the ellipses.
<PAGE>
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Prospectus Summary....................................................... 4
Risk Factors............................................................. 8
Note Regarding Forward-Looking Statements................................ 18
Use of Proceeds.......................................................... 19
Dividend Policy.......................................................... 19
Capitalization........................................................... 20
Dilution................................................................. 21
Selected Financial Data.................................................. 22
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 24
Business................................................................. 34
Management............................................................... 51
</TABLE>
<TABLE>
<CAPTION>
Page
----
<S> <C>
Related Party Transactions............................................... 61
Principal Stockholders................................................... 63
Description of Capital Stock............................................. 65
Shares Eligible for Future Sale.......................................... 69
Material United States Federal Tax Considerations for Non-United States
Holders................................................................. 71
Underwriting............................................................. 75
Notice to Canadian Residents............................................. 79
Legal Matters............................................................ 80
Experts.................................................................. 80
Where You Can Find Additional Information................................ 80
Index to Financial Statements............................................ F-1
</TABLE>
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You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
Dealer Prospectus Delivery Obligation
Until , 2000 (25 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to unsold allotments or subscriptions.
3
<PAGE>
PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all of the information
that may be important to you. You should read the entire prospectus, including
"Risk Factors" and the financial statements and the notes to those financial
statements, before deciding to invest in our common stock.
Greenwich Technology Partners, Inc.
GTP is a leading network infrastructure consulting and engineering company.
We design, build and manage complex networks that utilize advanced Internet
protocol, electro/optical, and other sophisticated technologies. Our clients
are service providers such as UUNET, a Worldcom Company, Global 2000
enterprises such as Bear Stearns, Chase Manhattan Corporation and Time Warner,
Inc., and select Internet companies such as Priceline.com.
Strategic Relationship with Juniper Networks and Technical Alliances
GTP has both a strategic and an equity relationship with Juniper Networks.
As provided in our agreement with Juniper Networks, we will be a provider of
premier professional services and shall retain the highest level affiliation
available from Juniper Networks. GTP and Juniper expect to work closely to
pursue joint engagements and engage in lead sharing and joint marketing
opportunities. Juniper Networks invested $10 million in GTP's series F
preferred stock in June of 2000. As part of our relationship with Juniper, we
also have the right to receive advance access to Juniper technology. In
addition to our relationship with Juniper, we also have established technical
alliances with several other leading technology companies, including Cisco
Systems, Foundry Networks, F5 Networks, Micromuse and NetScout Systems. These
relationships have resulted in customer leads, client referrals and joint
marketing opportunities.
Our Market
The tremendous recent growth of e-business has created an escalating demand
for complex, sophisticated and reliable networks. Today, network
infrastructures are competitive necessities as companies increasingly transact
business, communicate and operate electronically. The resulting demand for
increased bandwidth is being met by the development of rapidly evolving, highly
complex tools and services. The complexity of these technologies is making the
design, deployment and maintenance of network infrastructures increasingly
challenging both for enterprises who seek to achieve their e-business
initiatives, and for service providers who seek to increase their bandwidth
capacity. To cope with this traffic escalation, service providers and
enterprises are enhancing and expanding their existing network infrastructures
with advanced IP routing, electro/optical routing and switching, and other
sophisticated technologies such as optical transmission and wireless
communications. There is a scarcity of qualified network infrastructure
consultants and engineers to design, build and maintain these networks.
According to estimates from International Data Corporation, the worldwide
market for network consulting and integration services will grow from $15.5
billion in 1999 to $32.8 billion in 2004.
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<PAGE>
Our Solution
The cornerstone of our service offerings is our expertise in complex network
technologies, including the routing protocols and technologies used in service
provider and enterprise networks such as border gateway protocol, or BGP, open
shortest path first, or OSPF, and multiprotocol label switching, or MPLS. We
focus on seven key areas of network infrastructure: internetworking; security;
directory services; convergence; systems engineering; performance management;
and network management. Through our proprietary GTP NetValue methodology, we
provide a framework of best practices and procedures for positioning, managing
and delivering our professional services.
Our Strategy
Our goals are to become recognized as the leading provider of network
infrastructure consulting and engineering services and to increase the strength
of our relationships with existing enterprise and service provider clients. To
achieve this goal, we have adopted the following strategies:
. Enhance our technological expertise
. Continue to strengthen our service offerings
. Attract and retain experienced professionals and expand recruiting
efforts
. Expand geographically
. Leverage our strategic relationship with Juniper Networks and our
technical alliances
. Leverage our advisory board relationships
. Increase our brand visibility as a leader in network infrastructure
consulting and engineering
We commenced operations on May 1, 1997 and at July 31, 2000 employed 329
people, of which 200 were billable professionals. Our corporate headquarters
are 123 Main Street, White Plains, New York 10601, our telephone number is
(914) 289-8000, and we have employees in 19 other locations in the United
States and in London. In 1999, we generated $14.2 million in revenue. For the
six months ended June 30, 2000, we generated $13.6 million in revenue compared
with $6.4 million for the six months ended June 30, 1999.
Greenwich Technology Partners, GTP, GTP NetValue and Building Networks,
Creating Value are trademarks of Greenwich Technology Partners, Inc. Other
trademarks and service marks appearing in this prospectus are the property of
their respective holders.
5
<PAGE>
The Offering
Common stock offered by GTP.........
shares
Common stock to be outstanding
after the offering................. shares
Use of proceeds..................... For general corporate purposes, including
working capital, and potential
acquisitions.
Proposed Nasdaq National Market
symbol............................. GTPI
----------------
The number of shares of common stock to be outstanding after the offering is
based on our shares outstanding as of June 30, 2000 and excludes shares of
common stock as further described in "Capitalization."
----------------
Unless otherwise indicated, all information in this prospectus:
. reflects the conversion of all currently outstanding shares of preferred
stock into 33,038,561 shares of our common stock immediately prior to
completion of this offering;
. assumes no exercise of the underwriters' over-allotment option; and
. assumes the filing of our amended and restated certificate of
incorporation and by-laws.
6
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Summary Financial Data
(in thousands, except per share data)
The following tables summarize financial data and certain pro forma
financial data for our business during the years and as of the dates indicated.
The summary financial data do not purport to be indicative of future operations
and should not be construed as representative of future operations. You should
read this information together with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our audited financial
statements and accompanying notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Year ended Six months
Inception December 31, ended June 30,
through ----------------- ----------------
Dec. 31, 1997 1998 1999 1999 2000
------------- ------- -------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Da-
ta:
Revenues.................... $ 829 $ 6,028 $ 14,195 $ 6,413 $13,575
Gross profit................ 215 2,193 5,232 2,341 4,886
Operating loss.............. (616) (1,905) (6,657) (2,117) (6,813)
Net loss.................... (616) (1,874) (6,350) (2,055) (6,466)
Basic and diluted net loss
per share.................. $(3.51) $(11.92) $ (21.34) $ (6.46) $ (3.29)
Weighted average common
shares used to compute
basic and diluted net loss
per share.................. 177 177 316 348 2,022
Pro forma basic and diluted
net loss per share (1)..... $(0.67) $ (0.16) $ (0.29) $ (0.11) $ (0.20)
Weighted average common
shares used to compute pro
forma basic and diluted net
loss per share............. 917 11,974 21,601 18,509 31,733
</TABLE>
--------
(1) Pro forma basic and diluted net loss per share assumes the conversion of
all shares of preferred stock into common stock as of the original date of
preferred stock issuance.
<TABLE>
<CAPTION>
June 30, 2000
--------------------------
Pro forma
Actual as adjusted(2)
------- --------------
(unaudited)
<S> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.......................... $27,590
Working capital.................................... 34,832
Total assets....................................... 43,821
Total debt including borrowing under installment
loan and capitalized lease agreements............. 553
Total shareholders' equity......................... $39,971
</TABLE>
--------
(2) The pro forma as adjusted data give effect to:
. the conversion of 33,038,561 shares of preferred stock into 33,038,561
shares of common stock immediately prior to completion of this offering;
and
. the sale of shares of common stock at an assumed initial public
offering price of $ per share, after deducting underwriting discounts
and commissions and estimated offering expenses payable by us.
7
<PAGE>
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide to
buy our common stock. If any of the following events actually occurs, our
business and financial results may suffer. In this case, the market price of
our common stock could decline, and you could lose all or part of your
investment in our common stock.
Risks Related To Our Business
Our limited operating history makes evaluating our business prospects and
results of operations difficult
We commenced operations in May 1997 and therefore have only a limited
operating history for you to evaluate our business. Because of our limited
operating history, recent growth, recent acquisitions and the fact that many of
our competitors have longer operating histories than we do, we believe that the
prediction of our future success is difficult. You should evaluate our chances
of financial and operational success in light of the risks, uncertainties,
expenses, delays and difficulties associated with operating a new business,
many of which are beyond our control. You should not rely on our historical
results of operations as indications of future performance. The uncertainty of
our future performance and the uncertainties of our operating in a new and
expanding market increase the risk that the value of your investment will
decline.
We have a history of losses and expect to continue to incur losses for the
foreseeable future and may need additional financing
We have incurred substantial losses since we were founded, and we anticipate
we will continue to incur substantial losses for the foreseeable future. We
incurred net losses of $1.9 million and $6.4 million in 1998 and 1999,
respectively, and $2.1 million and $6.5 million for the six months ended June
30, 1999 and June 30, 2000, respectively. If we do achieve profitability, we
may not be able to sustain or increase profitability on a quarterly or annual
basis in the future. We expect to continue to incur increasing sales and
marketing, hiring and training, infrastructure development and general and
administrative expenses. As a result, we will need to generate significant
revenues to achieve profitability. We cannot be certain whether or when we will
achieve profitability because of the significant risks and uncertainties that
affect our business. If we fail to generate sufficient cash from our operations
to pay our expenses, our management will need to identify other sources of
funds. We may not be able to borrow money or issue more shares of common stock
to meet our cash needs on terms favorable to us, or at all. If we are able to
sell additional shares of common stock, the sale could result in further
dilution to the per share value of your common stock. If we are able to finance
operations with debt, we could be forced to accept terms that restrict our
ability to make capital expenditures and incur additional indebtedness, which
could impede our ability to grow.
Competition in our industry for experienced personnel is intense and our
inability to attract, develop and retain qualified personnel could interrupt
our business and adversely affect our growth
Our business involves the delivery of professional services and is labor
intensive. Our success depends in large part on our ability to attract, develop
and retain highly skilled employees,
8
<PAGE>
particularly consultants and engineers and other technical personnel, and we
cannot assure you we will be able to do so. We typically offer our employees
options to purchase our common stock. A decline in the price of our common
stock could adversely affect our ability to attract and retain employees. The
loss of a significant number of our personnel or the failure to attract new,
highly skilled employees could have a material adverse impact on us, including
on our ability to secure and complete engagements. Individuals with management
experience and consulting and technical skills are in short supply.
Accordingly, we may not be able to hire or retain the necessary number or mix
of personnel to implement our business strategy. Competition to hire from this
limited pool of qualified personnel is intense. In addition, we have
experienced, and may continue to experience, increasing compensation costs for
consultants and engineers. Our inability to recover increases in compensation
of consultants and engineers through higher billing rates, or to reduce other
expenses to offset such increases, could have an adverse effect on our
business.
The loss of executive management or other key personnel may harm our ability to
obtain and retain client engagements and to compete effectively
Our ability to continue to implement our business strategy and our future
success depends in large part on the continued services of a number of our key
personnel, including our founder, Chairman, Chief Executive Officer and
President, Joseph P. Beninati. The loss of the services of Mr. Beninati or any
of our other key personnel who have critical industry or client experience and
relationships could have a material adverse effect on our operating results. We
might not be able to prevent key personnel, who may leave our employ in the
future, from disclosing or using our technical knowledge, practices or
procedures. One or more of our key personnel might resign and join a competitor
or form a competing company. As a result, we might lose existing or potential
clients.
Because a large portion of our revenues to date has been generated from a small
number of clients, our revenues are difficult to predict and the loss of a
major client could significantly reduce our revenues
A small number of clients has accounted for a significant portion of our net
revenues to date, and we expect that this trend will continue for the
foreseeable future. For the six months ended June 30, 2000, Chase Manhattan
Corporation and Bear Stearns accounted for 22% and 18% of our total revenues,
respectively. In 1999, Crompton Corp., formerly known as CK Witco, and Bear
Stearns accounted for 18% and 11% of our total revenues, respectively, and in
1998, Unilever and Crompton Corp. accounted for 39% and 14% of our total
revenues, respectively. For the six months ended June 30, 2000, our five
largest clients represented 52% of our total revenues. In 1999 and 1998, our
five largest clients represented 51% and 68% of our total revenues,
respectively. Our dependence on a limited number of clients makes the
relationship between us and each client critically important to our business.
If one of our major clients discontinues or significantly reduces the use of
our services, we may not generate sufficient revenues to offset this loss of
revenues and our net income will decrease. In addition, the non-payment or late
payment of amounts due from a major client could adversely affect us.
9
<PAGE>
Because we generally have short-term service contracts and clients can cancel
or modify these arrangements without penalty and with little or no notice, our
revenue stream is uncertain
Our services are often delivered pursuant to short-term arrangements and
most clients can reduce or cancel their contracts for our services without
penalty and with little or no notice. If a major client or a number of small
clients terminate our contracts or significantly reduce or modify their
business relationships with us, we may not be able to replace the shortfall in
revenues in a timely fashion due to our relatively long sales cycle or minimize
the underutilization of employees and the resulting adverse impact on our
operating results. Consequently, you should not predict or anticipate our
future revenues based upon the number of clients we have currently or the
number and size of our existing projects.
Because our relationships with our strategic partner and our technical
alliances are part of our business strategy and important to our success in the
future, any failure to successfully grow these relationships could
significantly harm our business
We have a key strategic relationship with Juniper Networks, an Internet
infrastructure solutions provider to telecommunications and Internet service
providers. We also have technical alliances with several technology companies
including Cisco Systems, Foundry Networks, F5 Networks, NetScout Systems and
Micromuse. These relationships are key parts of our growth and business
strategy for the future. Any failure to maintain and develop these
relationships could significantly harm our business prospects. Pursuant to our
Professional Services Alliance agreement with Juniper Networks, GTP will be a
premier provider of professional services. This means that Juniper Networks
will use reasonable efforts to promote and solicit orders for our network
infrastructure consulting and engineering services from its customers. In
connection with this relationship, our consultants and engineers will gain more
advanced and sophisticated training on Juniper infrastructure solutions, giving
us an advantage over our competitors. We envision adding additional customers
as a result of the Juniper relationship. However, since we have recently
entered into this relationship, it is difficult to predict whether it will be
successful. If the relationship does not develop as anticipated, our business
could be harmed. Additionally, Juniper Networks may enter into similar
arrangements with other service providers, thus diluting the competitive
advantage that we believe our agreement currently affords us.
Our operating results may vary from quarter to quarter in future periods, and,
as a result, we may fail to meet the expectations of our investors and
analysts, which may cause our stock price to fluctuate or decline
We expect our quarterly revenues and operating results to be volatile and
difficult to predict. They are likely to vary significantly from quarter to
quarter. Factors that may cause our results to fluctuate include:
. the loss of key employees;
. an inability to hire and retain sufficient numbers of employees,
including consultants, engineers and account managers;
. reductions in our billing rates;
. unanticipated delays, deferrals or cancellations of major client
engagements;
. write-offs of billings or services performed at no charge as a result of
a failure to meet client expectations;
10
<PAGE>
. claims by clients for the actions of our employees arising from damages
to clients' businesses or otherwise;
. the efficiency with which we utilize our billable professionals;
. the ability of our internal sales force to solicit engagements from new
and existing clients;
. the loss of billable workdays due to severe weather conditions, or other
factors;
. a decrease in the growth of the networking industry as a whole;
. seasonality;
. general economic conditions; and
. ongoing market acceptance of our services.
Any decline in revenues or earnings or a greater than expected loss for any
quarter could reduce the market price of our common stock, even if not
reflective of any long-term problems with our business.
We derive a portion of our professional services revenues from fixed-fee
projects, under which we assume greater financial risk if we fail to accurately
estimate the costs of the projects
We derive a portion of our professional services revenues from fixed-fee
projects. For the six months ended June 30, 2000 and for the year ended
December 31, 1999, fixed-fee projects accounted for almost 23% and 19% of our
professional services revenues, respectively. We assume greater financial risks
on a fixed-fee project than on a time-and-materials based project. If we
miscalculate the resources or time we need to complete these fixed-fee
projects, the costs of completing these projects may exceed the fee we charge,
which could result in a loss on the project.
We may have difficulty managing our expanding operations, which may harm our
business
A key part of our strategy is to grow our business. From March 1997 through
July 31, 2000 our staff increased from 1 to 329 employees. Our rapid growth has
placed a significant strain on our managerial, financial and operational
resources. To manage our growth, we must continue to improve our financial and
management controls, reporting systems and procedures, and to train and manage
our employees. If we are unable to manage growth effectively and new employees
are unable to achieve anticipated performance levels, it will affect our
revenues.
We compete in a new and highly competitive industry that has low barriers to
entry; if we cannot effectively compete our revenues will decline
The network technology consulting industry is comprised of many
participants, is highly competitive and is subject to rapid technological
change. Many of our competitors have greater name recognition, longer operating
histories, more relationships with large and established clients and greater
financial, technical and managerial resources than we do. Furthermore, we
expect that our competitors may in the future form alliances with technology
vendors, which may give them an advantage in managing networks that use that
vendor's equipment.
11
<PAGE>
Most of our current clients and prospective clients have internal
information technology departments and could choose to satisfy their network
technology needs through these internal resources rather than by outsourcing
them to third-party service providers such as ourselves. The decision by
clients or prospective clients to rely on their own information technology
departments could harm our business. Moreover, as the domestic and global
markets for information technology services continue to grow, we expect to face
intense competition from new entrants into the network technology consulting
industry.
We believe that we compete with or in the future could compete with
organizations in the following categories:
. other network infrastructure consulting and engineering service
providers;
. information technology services firms;
. vendor affiliates;
. Internet professional services firms; and
. internal information technology departments.
There are relatively few barriers preventing competitors from entering the
network technology consulting industry. As a result, new market entrants pose a
threat to our business. We do not own any patented technology that precludes or
inhibits competitors from entering the network technology consulting industry.
Existing or future competitors may develop or offer services that are
comparable or superior to ours at a lower price, which could have a material
adverse effect on our business.
If we are unable to integrate our recent acquisitions of Aspire Technology
Group, Inc., NetGain LLC and Navigator Technologies, Inc. and other future
acquisitions, our business may be disrupted
We recently acquired Aspire Technology Group, Inc., a directory services
consulting company based in Virginia, NetGain LLC, a network performance
consulting company based in New York, and Navigator Technologies, Inc., a
company focused on converged voice and data solutions based in New Jersey. The
integration of these and any future acquisitions presents us with significant
financial, managerial and operational challenges. We may not be able to meet
these challenges effectively. To the extent our management is required to
devote significant time and attention to integrating the technology, operations
and personnel of acquired businesses, we may not be able to serve properly our
current clients or to attract new clients. Any difficulties in integrating
acquisitions could disrupt our ongoing business, distract our management and
employees, increase our expenses and otherwise adversely affect our business.
Commencing our international expansion efforts, which is a key part of our
growth strategy, may not be successful, and our business will be exposed to the
numerous risks associated with international operations
We have recently commenced international sales and marketing efforts. We
have had little experience in marketing, selling and distributing our services
internationally. We may not be able to
12
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maintain and expand our international operations or successfully market our
services internationally. International operations are also subject to many
risks, including:
. the impact of recessions in economies outside the United States resulting
in foreign currency devaluation, and less demand for products from the
United States;
. unexpected changes in regulatory requirements;
. reduced protection for intellectual property rights in some countries;
. potentially adverse tax consequences, including restrictions on
repatriation of earnings;
. difficulties and costs of staffing and managing foreign operations, as a
result of, among other things, distance, language and cultural
differences;
. political and economic instability resulting in taxes, tariffs and other
import barriers and increased governmental ownership or regulation of the
economy;
. the burdens of complying with the European Union Directive on the
Protection of Personal Data, which could be enforced by the member states
in different ways, as well as other foreign legislation which could
adversely impact our business activities abroad;
. fluctuations in currency exchange rates; and
. seasonal reductions in business activity, especially during the summer
months, in Europe and certain other parts of the world.
Failure to successfully expand into international markets may negatively
affect our business, as well as our ability to grow.
If we do not keep pace with technological changes, our services may become less
competitive and our business will suffer
Our market is characterized by rapidly changing technologies, frequent new
product and service offerings and evolving industry standards. As a result of
the complexities inherent in today's computing environments, we face
significant challenges in remaining abreast of such changes and new product
introductions. If we cannot keep pace with these changes, we will not be able
to meet our clients' increasingly sophisticated network technology consulting
needs, and our services will become less competitive.
Our future success will depend on our ability to:
. keep pace with continuing changes in industry standards, information
technology and client preferences, including the migration to optical
networking and wireless communications;
. respond effectively to these changes; and
. develop new services or enhance our existing services.
We may be unable to develop and introduce new services or enhancements to
existing services in a timely manner or in response to changing market
conditions or client requirements.
If the use of large-scale, complex networks does not continue to grow, we may
not successfully increase or maintain our client base and revenues
To date, a majority of our revenues has been from network technology
consulting services related to large-scale, complex networks. As a result, our
future success is highly dependent on the
13
<PAGE>
continued growth and acceptance of large-scale, complex networks and the
continued trend among our clients to use third-party service providers. If the
growth of the use of these networks does not continue or declines, our business
and our revenues may decline.
Our business depends on continued growth in the use of the Internet
The growing demand for network technology consulting services has been
driven in part by the growth of the Internet. The Internet may not prove to be
a viable commercial marketplace because of:
. inadequate development of the infrastructure necessary to support the
Internet;
. lack of development of complementary products (such as higher-speed
modems and higher-speed communication lines);
. implementation of competing technology;
. delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; or
. government regulation.
In particular, laws and regulations addressing privacy and security concerns
regarding the collection and transmission of data over the Internet, taxation
of commercial uses of the Internet, and liability for content delivered over
the Internet could make Internet use more costly and impede growth in e-
commerce.
Significant issues concerning the commercial use of Internet technologies
include security, reliability, cost, ease of use and quality of service. These
issues may inhibit the growth of Internet businesses that utilize large
networks.
Industry analysts and others have made many predictions concerning the
growth of the Internet as a business medium. You should not rely upon these
predictions. If the market for network infrastructure consulting services fails
to develop, or develops more slowly than expected, or if our services do not
achieve market acceptance, our business will not succeed and the value of your
investment in our common stock will decline.
Unauthorized use of our intellectual property by third parties may damage us
We regard our trade secrets and other intellectual property as critical to
our success. Unauthorized use of our intellectual property by third parties may
damage our brand and our reputation. We rely on trademark law and trade secret
protection and confidentiality, license and other agreements with our
employees, clients, partners and others to protect our intellectual property
rights. However, we do not have any patents or patent applications pending or
any registered copyrights, and existing trade secret and trademark laws afford
us only limited protection. Despite our precautions, it may be possible for
third parties to obtain and use our intellectual property without our
authorization. Furthermore, the validity, enforceability and scope of
protection of intellectual property in Internet-related industries is uncertain
and still evolving. The laws of some foreign countries are also uncertain or do
not protect intellectual property rights to the same extent as do the laws of
the United States.
14
<PAGE>
We may have to defend intellectual property infringement claims, which could be
expensive and, if we are not successful, could disrupt our business
We cannot be certain that our services or materials provided to us by our
clients for use in finished products do not or will not infringe valid patents,
copyrights, trademarks or other intellectual property rights held by third
parties. As a result, we may be subject to legal proceedings and claims from
time to time relating to the intellectual property of others in the ordinary
course of our business. We may incur substantial expenses in defending against
these third-party infringement claims, regardless of their merit. Successful
infringement claims against us may result in substantial monetary liability or
may materially disrupt the conduct of our business.
Because our services are often critical to our clients' operations, we may be
subject to significant claims if our services do not meet our clients'
expectations
Many of our projects are critical to the operations of our clients'
businesses. If we cannot complete these projects to our clients' expectations,
we could materially harm our clients' operations. Any failure to meet our
clients' expectations could result in our inability to collect payment from
clients, damage our reputation, subject us to increased risk of litigation or
result in our having to provide additional services to a client at no charge,
which could adversely affect our ability to attract new business from that
client or others. If we fail to perform adequately on a project, a client could
sue us for damages. In addition, we may be, in some instances, liable for
defects in the software of third parties that we incorporate into our network
solutions. Although we carry general liability insurance, our insurance may not
cover all potential claims to which we are exposed or may not be adequate to
indemnify us for all liability that may be imposed.
Our business may suffer if we have disputes with clients over our right to
reuse intellectual property developed during client engagements
Part of our business involves the development of software applications for
discrete client engagements. Ownership of client-specific software is generally
held by the client, although we typically retain the right to reuse some of the
processes and other intellectual property developed in connection with a client
engagement. Issues relating to the right to use intellectual property can be
complicated. Accordingly, disputes may arise that could adversely affect our
ability to reuse applications, processes and other intellectual property that
result from particular client engagements. Such disputes could damage our
relationships with our clients and our business reputation, divert our
management's attention and have an adverse effect on our ability to grow our
business.
Risks Related to this Offering
The net proceeds of this offering may be allocated in ways with which you and
other stockholders may not agree, and they may not be allocated effectively
Our management has significant flexibility in applying the proceeds we
receive in this offering. Because the proceeds are not required to be allocated
to any specific investment or transaction, you cannot determine at this time
the value or propriety of our management's application of the proceeds on our
behalf and you and other stockholders may not agree with our management's
decisions. In addition, our management may not allocate or invest these
proceeds effectively.
15
<PAGE>
The market price of our common stock may be less than the initial public
offering price, or may be volatile, and you may not be able to resell your
shares at or above the initial public offering price
Prior to this offering there was no public market for our common stock. The
initial public offering price for our common stock will be determined through
negotiations between the underwriters and us. This initial public offering
price may vary from the market price of our common stock after the offering.
Trading prices of technology company stocks have been volatile and the per
share value of our stock may decline regardless of our performance. If you
purchase shares of common stock, you may not be able to resell those shares at
or above the initial public offering price.
We are controlled by a small group of our existing stockholders, whose
interests may differ from other stockholders
As of July 31, 2000, our directors, executive officers and affiliates
beneficially owned approximately 76.0% of the outstanding shares of our common
stock, and after the offering will beneficially own approximately % of the
outstanding shares of common stock. As a result, if these persons act together,
they will have the ability to exercise substantial control over our affairs and
corporate actions requiring stockholder approval, including the election of
directors, a sale of substantially all of our assets, a merger with another
entity or an amendment to our certificate of incorporation. The ownership
position of these stockholders could delay, deter or prevent a change in
control and could adversely affect the price that investors might be willing to
pay in the future for shares of our common stock. In addition, the interests of
these stockholders may differ from the interests of our other stockholders.
Shares eligible for public sale after this offering could adversely affect our
stock price
The market price of our common stock could decline as a result of sales by
our existing stockholders of shares of common stock in the market after this
offering, or the perception that these sales could occur. In addition, we have
a significant number of shares that are subject to outstanding options and
warrants. The exercise of these options or warrants and the subsequent sale of
the underlying common stock also could cause a decline in our stock price.
These sales also might make it difficult for us to sell equity securities in
the future at a time and at a price that we deem appropriate.
Investors in this offering will suffer immediate and substantial dilution
The initial public offering price per share will significantly exceed the
pro forma net tangible book value per share of $1.04 as of June 30, 2000.
Accordingly, investors purchasing shares in this offering will suffer immediate
and substantial dilution of their investment. In addition, we had 6,442,986
shares subject to options outstanding as of July 31, 2000 at a weighted average
exercise price of $0.73 per share and outstanding warrants to purchase
2,564,102 shares of common stock issuable at an exercise price of $1.17 per
share. The exercise of these options and warrants will result in further
dilution of the value of the shares purchased in this offering. The assumed
initial public offering price is $ per share. At this price, the aggregate
unrealized gain to be incurred by current shareholders is $ .
16
<PAGE>
Anti-takeover provisions of Delaware's General Corporation Law and our
certificate of incorporation could delay or deter a change in control
Provisions of our certificate of incorporation and by-laws, as well as
various provisions of the Delaware General Corporation Law, may make it more
difficult to effect a change in control of us. The existence of these
provisions may adversely affect the price of our common stock, discourage third
parties from making a bid for us or reduce any premiums paid to our
stockholders for their common stock. For example, our certificate of
incorporation authorizes our board of directors to issue up to 20,000,000
shares of "blank check" preferred stock and to attach special rights and
preferences to this preferred stock. The issuance of this preferred stock may
make it more difficult for a third party to acquire control of us. Our
certificate of incorporation provides for the division of our board of
directors into three classes as nearly equal in size as possible with staggered
three-year terms. This classification of the board of directors could have the
effect of making it more difficult for a third party to acquire us, or of
discouraging a third party from acquiring control of us. A special meeting of
stockholders only may be called by a majority of the board of directors or by
our president, chief executive officer or chairman. In addition, a stockholder
proposal for an annual meeting must be received within a specified period of
time to be placed on the agenda. Because stockholders do not have the ability
to require the calling of a special meeting of stockholders and are subject to
timing requirements in submitting stockholder proposals for consideration at an
annual meeting, any third-party takeover not supported by the board of
directors would be subject to significant delays and difficulties.
17
<PAGE>
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements, which are usually accompanied
by words such as "may," "might," "will," "should," "could," "intends,"
"estimates," "predicts," "potential," "continue," "believes," "anticipates,"
"plans," "expects" and similar expressions, relate to, without limitation,
statements about our market opportunities, our strategy, our competition, our
projected expense levels and the adequacy of our available cash resources. This
prospectus also contains forward-looking statements attributed to third parties
relating to their estimates regarding our industry and the growth of business-
to-business e-commerce activities, data traffic and the market for network
consulting and integration services. You should not place undue reliance on
these forward-looking statements which apply only as of the date of this
prospectus. Our actual results could differ materially from those expressed or
implied by these forward-looking statements as a result of various factors,
including the risks described above and elsewhere in this prospectus. Except as
may be required by federal securities laws, we undertake no obligation to
update publicly any forward-looking statements for any reason, even if new
information becomes available or other events occur in the future.
18
<PAGE>
USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of the shares of
common stock in this offering of $ million, assuming an initial public
offering price of $ per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses. If the underwriters
exercise their over-allotment option in full, we estimate that our net proceeds
will be $ million.
The primary purposes of this offering are to obtain additional equity
capital, create a public market for our common stock and facilitate future
access to public markets. As of the date of this prospectus, we have not made
any specific expenditure plans with respect to the proceeds of this offering.
Accordingly, our management will have significant flexibility in applying the
net proceeds of this offering. We expect to use the net proceeds of this
offering for general corporate purposes, including working capital. A portion
of the net proceeds also may be used for the acquisition of complementary
businesses or technologies. Currently, we have no specific understandings,
commitments or agreements and are not currently engaged in any active
negotiations with respect to any such acquisitions.
Pending such uses, we intend to invest the net proceeds of this offering in
short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock since
our inception. We intend to retain future earnings, if any, to finance the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future. Consequently, stockholders will need to
sell shares of common stock to realize a return on their investment, if any.
19
<PAGE>
CAPITALIZATION
The following table sets forth our capitalization as of June 30, 2000:
. on an actual basis;
. on a pro forma basis after giving effect, immediately prior to completion
of this offering, to the conversion of all outstanding shares of
preferred stock into common stock, which includes the reissuance of
177,000 shares held in treasury; and
. on a pro forma as adjusted basis to further reflect the sale of shares of
common stock at an assumed initial public offering price of $ per
share, after deducting underwriting discounts and commissions and
estimated offering expenses payable by us.
You should read this information together with our unaudited financial
statements and accompanying notes appearing elsewhere in this prospectus.
<TABLE>
<CAPTION>
June 30, 2000
---------------------------------
Pro forma
Actual Pro forma as adjusted
-------- --------- ------------
(in thousands)
(unaudited)
<S> <C> <C> <C>
Cash and cash equivalents..................... $ 27,590 $ 27,590 $
======== ======== =====
Total debt including borrowing under
installment loan and capitalized lease
agreements................................... $ 553 $ 553 $ 553
Shareholders' equity:
Convertible series A through F preferred
stock, $.01 par value, 38,925,219
authorized, 33,038,561 issued and
outstanding, actual; no shares authorized,
issued and outstanding, pro forma and pro
forma as adjusted........................... 330 --
Preferred stock, $.01 par value, no shares
issued and outstanding, actual; no shares
issued and outstanding, pro forma;
20,000,000 shares authorized, no shares
issued and outstanding, pro forma as
adjusted....................................
Common stock, $.01 par value, 71,074,781
shares authorized, 3,284,407 issued, actual;
71,074,781 authorized, 36,145,968 issued and
outstanding, pro forma; 300,000,000
authorized, issued and outstanding, pro
forma as adjusted........................... 33 361
Additional paid-in capital.................... 54,967 54,916
Accumulated deficit........................... (15,306) (15,306)
Treasury stock................................ (53) --
-------- -------- -----
Total shareholders' equity................... 39,971 39,971
Total capitalization........................ $ 40,524 $ 40,524 $
======== ======== =====
</TABLE>
The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of June 30, 2000 and excludes:
. 6,463,932 shares subject to options outstanding as of June 30, 2000 at a
weighted average exercise price of $0.69 per share;
. 6,456,163 additional shares reserved for issuance under our stock option
plans;
. 850,000 additional shares available for issuance under our employee stock
purchase plan; and
. the exercise of 2,564,102 warrants to purchase shares of our common
stock.
20
<PAGE>
DILUTION
Our pro forma net tangible book value as of June 30, 2000 was approximately
$37.4 million, or approximately $1.04 per share of common stock. Pro forma net
tangible book value per share is determined by dividing the amount of our total
tangible assets less total liabilities by the number of shares of common stock
outstanding after giving effect to the conversion of each share of preferred
stock into one share of common stock immediately prior to completion of this
offering. Dilution in pro forma net tangible book value per share represents
the difference between the amount per share paid by purchasers of shares of
common stock in this offering and the net tangible book value per share of
common stock immediately after the completion of this offering.
After giving further effect to our sale of shares offered hereby at an
assumed initial public offering price of $ per share and after deducting
estimated underwriting discounts and estimated offering expenses payable by us,
and the application of the estimated net proceeds from the offering, our pro
forma net tangible book value as of June 30, 2000 would have been $ , or $
per share. This represents an immediate increase in pro forma net tangible book
value of $ per share to existing stockholders and an immediate dilution in
net tangible book value of $ per share to new investors. The following table
illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share..................... $
Pro forma net tangible book value per share as of June 30, 2000... $1.04
Increase per share attributable to new investors..................
-----
Pro forma net tangible book value per share after this offering.....
---
Dilution in pro forma net tangible book value per share to new
investors.......................................................... $
===
</TABLE>
The following table summarizes, on a pro forma basis after giving effect to
the conversion of each outstanding share of preferred stock into common stock
immediately prior to this offering, the total number of shares of common stock
purchased from us, the total consideration paid to us and the average price per
share paid to us by existing stockholders and by new investors before deducting
the estimated underwriting discounts and commissions and estimated offering
expenses payable by us:
<TABLE>
<CAPTION>
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders...... 36,247,074 % $55,649,860 % $1.54
New investors..............
---------- ----- ----------- -----
Total.................... 100.0% $ 100.0%
========== ===== =========== =====
</TABLE>
The foregoing tables and calculations assume no exercise of any stock
options or warrants outstanding as of June 30, 2000. As of July 31, 2000, there
were options outstanding to purchase a total of 6,442,986 shares of common
stock with a weighted average exercise price of $0.73 per share and 2,564,102
shares of common stock issuable upon the exercise of warrants at an exercise
price of $1.17 per share. To the extent the outstanding warrants and options
are exercised there will be further dilution to new investors.
21
<PAGE>
SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
You should read these selected financial data in conjunction with
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," and our audited financial statements and the accompanying notes
included elsewhere in this prospectus.
The selected statement of operations data for the period from March 14, 1997
(inception) through December 31, 1997 and for the years ended December 31, 1998
and 1999, and the selected balance sheet data as of December 31, 1998 and 1999
have been derived from our audited financial statements included in this
prospectus. Balance sheet data as of December 31, 1997 have been derived from
our audited financial statements not included in this prospectus. The
consolidated statement of operations data for the six months ended June 30,
1999 and 2000 and the consolidated balance sheet data as of June 30, 2000 are
derived from the unaudited consolidated financial statements included elsewhere
in the prospectus. In the opinion of management, the unaudited consolidated
financial statements have been prepared on the same basis as the audited
consolidated financial statements and contain all adjustments, consisting only
of normal recurring adjustments, necessary for a fair presentation of our
results of operations for these periods and financial condition at these dates.
<TABLE>
<CAPTION>
Fiscal year
ended Six months
Inception December 31, ended June 30,
through ---------------- ----------------
Dec. 31, 1997 1998 1999 1999 2000
------------- ------- ------- ------- -------
(unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Da-
ta:
Revenues:
Professional services..... $ 472 $ 4,252 $12,539 $ 5,383 $12,970
Provisioning.............. 357 1,776 1,656 1,031 606
------ ------- ------- ------- -------
Total revenues.......... 829 6,028 14,195 6,414 13,576
------ ------- ------- ------- -------
Cost of revenues (exclusive
of depreciation and
amortization expense shown
separately below):
Professional services..... 306 2,473 7,704 3,271 8,186
Provisioning.............. 308 1,362 1,259 801 504
------ ------- ------- ------- -------
Total cost of revenues.. 614 3,835 8,963 4,072 8,690
------ ------- ------- ------- -------
Gross profit:
Professional services..... 166 1,779 4,835 2,112 4,784
Provisioning.............. 49 414 397 230 102
------ ------- ------- ------- -------
Total gross profit...... 215 2,193 5,232 2,342 4,886
Expenses:
Sales and marketing
expenses................. 174 1,762 5,734 2,440 5,630
General and administrative
expenses................. 447 2,139 5,408 1,824 5,320
Depreciation and
amortization expense..... 210 197 747 195 749
------ ------- ------- ------- -------
Operating loss.............. (616) (1,905) (6,657) (2,117) (6,813)
Other income, net........... -- 31 307 63 347
------ ------- ------- ------- -------
Net loss.................... $ (616) $(1,874) $(6,350) $(2,054) $(6,466)
====== ======= ======= ======= =======
Basic and diluted net loss
per share.................. $(3.51) $(11.92) $(21.34) $ (6.46) $ (3.29)
====== ======= ======= ======= =======
Weighted average common
shares used to compute
basic and diluted net loss
per share.................. 177 177 316 348 2,022
====== ======= ======= ======= =======
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
December 31,
-------------------- June 30,
1997 1998 1999 2000
----- ------ ------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Balance Sheet Data:
Cash and cash equivalents.................... $ 700 $ 695 $17,568 $27,590
Working capital.............................. 635 1,296 19,546 34,832
Total assets................................. 1,077 3,284 23,422 43,821
Total debt including borrowing under
installment loan and capitalized lease
agreements.................................. 25 55 44 553
Total shareholders' equity................... $ 818 $2,090 $21,054 $39,971
</TABLE>
23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and our financial statements and the accompanying
notes included elsewhere in this prospectus. This discussion contains forward-
looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking
statements as a result of certain factors including the risks discussed in
"Risk Factors" and elsewhere in this prospectus.
Overview
We derive a majority of our revenues from professional services. We provide
professional services on both a time-and-materials and fixed-fee basis. For the
six months ended June 30, 2000, 96% of our total revenues were professional
services revenues. Upon a client's specific request, we also sell hardware and
software, which we refer to as provisioning revenues. Profit margins derived
from professional services have been higher than those from provisioning. For
the six months ended June 30, 2000, gross profit margins for professional
services and provisioning were 37% and 17%, respectively.
Revenue is only recognized when a contract arrangement exists, services have
been rendered, the fees are fixed or determinable and collectibility is
reasonably assured. Provisioning revenues are recognized when equipment is
delivered to a client. Revenues are recognized for time-and-materials contracts
as services are provided. Revenues from fixed-fee contracts are recognized as
services are provided upon the achievement of specified milestones using the
percentage of completion method of accounting. Revenue is recognized on
partially completed milestones in proportion to the costs incurred for that
milestone and only to the extent that an irrevocable right to the revenue
exists. Costs incurred under time-and-materials and fixed-fee contracts are
recognized as incurred which generally is in the same period that revenue is
recorded. Reimbursable expenses are not reported in revenues. For the six
months ended June 30, 2000 and the year ended December 31, 1999, we derived
approximately 77% and 81% of our professional services revenues from time-and-
materials engagements, respectively. We believe that fixed-fee revenues will
increase in the future as a percentage of total revenues as we increase sales
of our productized services.
Revenues from several large clients historically have constituted a
significant portion of our total revenues in a particular quarter or year. In
the six months ended June 30, 2000, Chase Manhattan Corporation and Bear
Stearns accounted for 22% and 18% of our total revenues, respectively. In 1999,
Crompton Corp. and Bear Stearns accounted for 18% and 11% of our total
revenues, respectively. In the six months ended June 30, 2000 and 1999, our
five largest clients represented 52% and 58% of our total revenues,
respectively. We expect a relatively high level of client concentration to
continue, although not necessarily involving the same clients from period to
period.
Costs of professional services consist of compensation and benefits for our
GTP employee consultants and engineers and project-related costs that are not
billable to our clients. We expect that salaries for our billable professionals
will increase over time due to the intense competition in our industry for
qualified individuals. Costs of provisioning consist of the cost of hardware
and software sold and related shipping costs.
24
<PAGE>
Our gross profit is driven in large part by the overall utilization of
professionals in billable engagements and by the average bill rates we charge
our clients, both of which may vary from period to period.
Sales and marketing expenses consist primarily of compensation and benefit
costs for our sales and marketing personnel, travel expenses for our sales
personnel and certain advertising and promotional expenses. We believe that
continued expenditures for sales and marketing personnel and programs are
required to remain competitive and to promote awareness of our brand and
services. We therefore expect that these expenses will continue to increase for
the foreseeable future. However, we expect these expenses to decline as a
percentage of total revenues as we continue to grow our business.
General and administrative expenses consist primarily of compensation and
benefit costs and related expenses for general corporate functions, including
managerial, financial, personnel, facilities and other administrative expenses.
These expenses also include legal, accounting and other professional fees and
expenses. We expect our general and administrative expenses will increase for
the foreseeable future as we continue to hire personnel and incur expenses to
build our administrative infrastructure to support the growth of our business
and our operations. However, we expect these expenses to decline as a
percentage of total revenues as we continue to grow our business.
Our number of billable employees increased from 55 at December 31, 1998 to
91 at December 31, 1999 to 183 at June 30, 2000. Our total number of employees
increased from 101 at December 31, 1998 to 161 at December 31, 1999 to 301 at
June 30, 2000. We will continue to actively recruit billable professionals and
the staff required to support their activities and we expect our total number
of employees to increase in the six months ending December 31, 2000.
25
<PAGE>
Results of Operations
The following table presents for the periods indicated, our selected
statements of operations data in dollars (in thousands) and as a percentage of
our revenues.
<TABLE>
<CAPTION>
Six months
Inception Year ended ended Inception Year ended
through December 31, June 30, through December 31,
December 31, ---------------- ---------------- December 31, -----------------
1997 1998 1999 1999 2000 1997 1998 1999
------------ ------- ------- ------- ------- ------------ ------ ------
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Professional services..... $ 472 $ 4,252 $12,539 $ 5,383 $12,970 57 % 71 % 88 %
Provisioning.............. 357 1,776 1,656 1,031 606 43 29 12
----- ------- ------- ------- ------- --- ------ ------
Total revenues.......... 829 6,028 14,195 6,414 13,576 100 100 100
Cost of revenues (exclusive
of depreciation and
amortization expense shown
separately below):
Professional services..... 306 2,473 7,704 3,271 8,186 65(1) 58(1) 61(1)
Provisioning.............. 308 1,362 1,259 801 504 86(2) 77(2) 76(2)
----- ------- ------- ------- -------
Total cost of revenues.. 614 3,835 8,963 4,072 8,690 74 64 63
----- ------- ------- ------- -------
Gross profit:
Professional services..... 166 1,779 4,835 2,112 4,784 35(1) 42(1) 39(1)
Provisioning.............. 49 414 397 230 102 14(2) 23(2) 24(2)
----- ------- ------- ------- -------
Total gross profit...... 215 2,193 5,232 2,342 4,886 26 36 37
Expenses:
Sales and marketing
expenses................. 174 1,762 5,734 2,440 5,630 21 29 40
General and administrative
expenses................. 447 2,139 5,408 1,824 5,320 54 35 38
Depreciation and
amortization expense..... 210 197 747 195 749 25 3 5
Other income, net........... -- 31 307 63 347 -- 1 2
----- ------- ------- ------- ------- --- ------ ------
Net loss.................... $(616) $(1,874) $(6,350) $(2,054) $(6,466) (74)% (30)% (44)%
===== ======= ======= ======= ======= === ====== ======
<CAPTION>
Six months
ended
June 30,
-------------------
1999 2000
--------- ---------
<S> <C> <C>
Revenues:
Professional services..... 84 % 96 %
Provisioning.............. 16 4
--------- ---------
Total revenues.......... 100 100
Cost of revenues (exclusive
of depreciation and
amortization expense shown
separately below):
Professional services..... 61(1) 63(1)
Provisioning.............. 78(2) 83(2)
Total cost of revenues.. 63 64
Gross profit:
Professional services..... 39(1) 37(1)
Provisioning.............. 22(2) 17(2)
Total gross profit...... 37 36
Expenses:
Sales and marketing
expenses................. 38 42
General and administrative
expenses................. 29 39
Depreciation and
amortization expense..... 3 6
Other income, net........... 1 3
--------- ---------
Net loss.................... (32)% (48)%
========= =========
</TABLE>
--------
(1) Percentage of professional services revenues
(2) Percentage of provisioning revenues
Six Months Ended June 30, 1999 and June 30, 2000
Revenues
Total revenues increased $7.2 million, or 112%, to $13.6 million for the six
months ended June 30, 2000 from $6.4 million for the six months ended June 30,
1999. Revenues from professional services increased $7.6 million, or 141%, to
$13.0 million for the six months ended June 30, 2000 from $5.4 million for the
six months ended June 30, 1999. The increase in professional services revenues
was the result of an increase in the number of active clients, which led to an
increase in both the number of professional services projects and the number of
billable professionals engaged in those projects.
The increase in total revenues for the six months ended June 30, 2000 was
partially offset by a $425,000 decrease in provisioning revenues as compared to
the six months ended June 30, 1999. Provisioning revenues decreased 41% to
$606,000 for the six months ended June 30, 2000 from $1.0 million for the six
months ended June 30, 1999. This decrease was the result of our decision to
provide hardware and software resale services only upon a client's specific
request and in connection with a professional services project.
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Cost of Revenues
Cost of revenues for professional services increased 150% to $8.2 million
for the six months ended June 30, 2000 from $3.3 million for the six months
ended June 30, 1999. As a percentage of professional services revenues, cost of
professional services increased to 63% for the six months ended June 30, 2000
from 61% for the six months ended June 30, 1999. The increase in cost of
revenues for professional services was primarily due to the hiring of
additional consultants and engineers and their corresponding compensation and
benefits. We strive to hire in advance of new projects to ensure that we have
the resources required to respond quickly to our clients' needs.
Cost of provisioning revenues decreased 37% to $504,000 for the six months
ended June 30, 2000 from $801,000 for the six months ended June 30, 1999. This
decrease in cost of provisioning revenues was primarily due to the
corresponding reduction in provisioning sales. As a percentage of provisioning
revenues, cost of provisioning increased to 83% in the six months ended June
30, 2000 from 78% in the six months ended June 30, 1999.
Sales and Marketing Expenses
Sales and marketing expenses increased 131% to $5.6 million in the six
months ended June 30, 2000 from $2.4 million in the six months ended June 30,
1999. This increase was primarily attributable to a $1.3 million increase in
compensation and benefits for additional staff and a $1.1 million increase in
sales commissions earned as a result of increased revenue. As a percentage of
revenues, sales and marketing expenses increased to 42% in the six months ended
June 30, 2000 from 38% in the six months ended June 30, 1999.
General and Administrative Expenses
General and administrative expenses increased 192% to $5.3 million in the
six months ended June 30, 2000 from $1.8 million in the six months ended June
30, 1999. As a percentage of revenues, general and administrative expenses
increased to 39% for the six months ended June 30, 2000 from 29% for the six
months ended June 30, 1999. General and administrative expenses increased both
in absolute dollars and as a percentage of revenues primarily as a result of
increases in our personnel, consulting and recruiting costs to support the
growth of our business.
Depreciation and Amortization Expense
Depreciation and amortization expense consists of depreciation of property
and equipment and amortization of goodwill. Depreciation and amortization
expense increased 285% to $749,000 for the six months ended June 30, 2000 from
$195,000 in the six months ended June 30, 1999. This increase was primarily
attributable to the depreciation associated with property and equipment
purchases necessary to support our growth and the amortization of goodwill
related to acquisitions during 2000.
Other Income, Net
Other income, net increased 455% to $347,000 for the six months ended June
30, 2000 from $63,000 in the six months ended June 30, 1999. This increase was
primarily attributable to interest earned on the investment of proceeds
received from the issuance of series E preferred stock sold in the third and
fourth quarter of 1999 and the first quarter of 2000.
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Income Taxes
We did not incur any current U.S. Federal or State income tax provision for
any period presented because we have experienced operating losses since
inception. Utilization of our net operating loss carryforwards, which begin to
expire in 2002, may be subject to limitations under Section 382 of the Internal
Revenue Code of 1986. Due to the uncertainty regarding our ability to utilize
this deferred asset, we have recorded a valuation allowance to offset this
asset.
Years Ended December 31, 1998 and 1999
Revenues
Total revenues increased $8.2 million, or 135%, to $14.2 million in 1999
from $6.0 million in 1998. Revenues from professional services increased $8.3
million, or 195%, to $12.5 million in 1999 from $4.3 million in 1998. The
increase in professional services revenues was the result of an increase in the
number of active clients, which led to an increase in both the number of
professional services projects and the number of billable professionals engaged
in those projects.
The increase in total revenues in 1999 was offset in part by a $120,000
decrease in provisioning revenues as compared to the prior period. Provisioning
revenues decreased 7% to $1.7 million in 1999 from $1.8 million in 1998. This
decrease was the result of our decision to provide hardware and software resale
services only upon a client's specific request and in connection with a
professional services project.
Cost of Revenues
Cost of revenues for professional services increased 211% to $7.7 million in
1999 from $2.5 million in 1998. As a percentage of professional services
revenues, cost of professional services increased to 61% in 1999 from 58% in
1998. The increase in cost of revenues for professional services was primarily
due to the hiring of additional consultants and engineers and their
corresponding compensation and benefits. We strive to hire in advance of new
projects to ensure that we have the resources required to respond quickly to
our clients' needs.
Cost of provisioning revenues decreased 8% to $1.3 million in 1999 from $1.4
million in 1998. This decrease in cost of provisioning revenues was primarily
due to the corresponding reduction in provisioning sales. As a percentage of
provisioning revenues, cost of provisioning decreased to 76% in 1999 from 77%
in 1998.
Sales and Marketing Expenses
Sales and marketing expenses increased 225% to $5.7 million in 1999 from
$1.8 million in 1998. This increase was primarily attributable to a $2.0
million increase in compensation and benefits for additional staff and a $1.0
million increase in sales commissions earned as a result of increased revenues.
As a percentage of revenues, sales and marketing expenses increased to 40% in
1999 from 29% in 1998.
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General and Administrative Expenses
General and administrative expenses increased 153% to $5.4 million in 1999
from $2.1 million in 1998. General and administrative expenses increased
primarily as a result of increases in our personnel, facilities and recruiting
costs to support the growth of our business. As a percentage of revenues,
general and administrative expenses increased to 38% in 1999 from 35% in 1998.
Depreciation and Amortization Expense
Depreciation and amortization expense increased 280% to $747,000 in 1999
from $197,000 in 1998. This increase was primarily attributable to the
depreciation associated with property and equipment purchases in 1999 that were
necessary to support our growth. Additionally, in conjunction with upgrading
our computer systems, we recorded a charge of $207,000 in 1999 to reduce the
carrying amount of certain computer software assets that are to be disposed of
to zero.
Other Income, Net
Other income, net increased 891% to $307,000 in 1999 from $31,000 in 1998.
This increase was primarily attributable to interest earned on the investment
of proceeds received from the issuance of series D preferred stock and series E
preferred stock sold during 1999.
Inception (March 14, 1997) through December 31, 1997 and Year Ended December
31, 1998
Revenues
Total revenues increased $5.2 million, or 627%, to $6.0 million in 1998 from
$829,000 in the period from inception through December 31, 1997. Revenues from
professional services increased $3.8 million, or 801%, to $4.3 million in 1998
from $472,000 in the period from inception through December 31, 1997. The
increase was primarily the result of an increase in the number of professional
services projects combined with an increase in the size of these projects.
Provisioning revenues increased $1.4 million, or 397%, to $1.8 million in
1998 from $357,000 in the period from inception through December 31, 1997. This
increase was primarily attributable to an increase in both the number of
clients to whom we provided hardware and software resale services and the
number of projects with related hardware and software requirements. As a
percentage of revenues, provisioning revenues accounted for 29% of our revenues
in 1998 and 43% of our revenues for the period from inception through December
31, 1997. This decrease was the result of our decision to provide hardware and
software resale services only upon a client's specific request and in
connection with a professional services project.
Cost of Revenues
Cost of revenues for professional services increased 709% to $2.5 million in
1998 from $306,000 in the period from inception through December 31, 1997. The
increase in cost of revenues for professional services was primarily
attributable to the hiring of consultants and engineers and their corresponding
compensation and benefits. As a percentage of professional services revenues,
these costs decreased to 58% in 1998 from 65% for the period from inception
through December 31, 1997.
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The cost of provisioning revenues increased 342% to $1.4 million in 1998
from $308,000 in the period from inception through December 31, 1997. The
increase in provisioning costs was a result of increases in product sales. As a
percentage of provisioning revenues, these costs decreased to 77% in 1998 from
86% from inception through December 31, 1997.
Sales and Marketing Expenses
Sales and marketing expenses increased 909% to $1.8 million in 1998 from
$174,000 in the period from inception through December 31, 1997. The increase
was primarily attributable to a $1.2 million increase in compensation and
benefits for additional sales personnel and an increase of approximately
$330,000 in sales commissions earned as a result of increased revenues. As a
percentage of revenues, sales and marketing expenses increased to 29% in 1998
from 21% in the period from inception through December 31, 1997.
General and Administrative Expenses
General and administrative expenses increased 379% to $2.1 million in 1998
from $447,000 in the period from inception through December 31, 1997. General
and administrative expenses increased as a result of increases in personnel,
facilities and recruiting expenses. As a percentage of revenues, general and
administrative expenses decreased to 35% in 1998 from 54% in the period from
inception through December 31, 1997.
Depreciation and Amortization Expense
Depreciation and amortization expense decreased 7% to $197,000 in 1998 from
$210,000 in the period from inception through December 31, 1997. Depreciation
and amortization decreased primarily as a result of a $101,000 decrease in the
amortization of goodwill. This decrease in goodwill was primarily attributable
to the value of a customer list acquired and substantially amortized in 1997.
This decrease was partially offset by the depreciation associated with
purchases of capital equipment in 1998 necessary to support our growth.
Other Income, Net
Other income, net increased to $31,000 in 1998. There was no net interest
income from inception to December 31, 1997. This increase was primarily
attributable to interest earned on the investment of proceeds received from the
issuance of series C preferred stock sold during 1998.
Quarterly Results of Operations
The following table presents our unaudited quarterly data for the six
quarters ending June 30, 2000. We derived these data from our unaudited
consolidated interim financial statements, and, in our opinion, these data
include all necessary adjustments, which consist only of normal recurring
adjustments necessary to present fairly the financial results for the periods
presented. Our quarterly operating results have varied significantly in the
past and will continue to vary in the future due to a number of factors
including, but not limited to, the number, size and scope of engagements,
unanticipated delays, deferrals or cancellation of significant engagements,
unanticipated changes in
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the scope of major engagements, utilization rates, realized hourly billing
rates and general economic conditions. Accordingly, our results for any given
quarter or series of quarters are not necessarily indicative of our results
that may be expected for any future period. However, our quarterly operating
results may represent trends that aid in understanding our business.
<TABLE>
<CAPTION>
Quarter Ended
---------------------------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31, Mar. 31, June 30,
1999 1999 1999 1999 2000 2000
-------- -------- --------- -------- -------- --------
(in thousands)
<S> <C> <C> <C> <C> <C> <C>
Statement of Operations:
Revenues:
Professional
services............. $2,490 $ 2,893 $ 3,596 $ 3,560 $ 4,688 $ 8,282
Provisioning.......... 458 573 415 210 315 291
------ ------- ------- ------- ------- -------
Total revenues...... 2,948 3,466 4,011 3,770 5,003 8,573
------ ------- ------- ------- ------- -------
Cost of revenues
(exclusive of
depreciation and
amortization expense
shown separately
below):
Professional
services............. 1,448 1,823 2,157 2,276 3,013 5,173
Provisioning.......... 360 441 310 148 272 232
------ ------- ------- ------- ------- -------
Total cost of
revenues........... 1,808 2,264 2,467 2,424 3,285 5,405
------ ------- ------- ------- ------- -------
Gross profit:
Professional
services............. 1,042 1,070 1,439 1,284 1,675 3,109
Provisioning.......... 98 132 105 62 43 59
------ ------- ------- ------- ------- -------
Total gross profit.. 1,140 1,202 1,544 1,346 1,718 3,168
Expenses:
Sales and marketing
expenses............. 1,152 1,288 1,460 1,834 2,416 3,214
General and
administrative
expenses............. 901 923 1,633 1,951 2,252 3,068
Depreciation and
amortization
expense.............. 77 118 146 406 268 481
Other income, net....... 13 50 63 181 231 116
------ ------- ------- ------- ------- -------
Net loss................ $ (977) $(1,077) $(1,632) $(2,664) $(2,987) $(3,479)
====== ======= ======= ======= ======= =======
</TABLE>
We experienced continued growth in total revenue in each of the six quarters
ended June 30, 2000, except in the quarter ended December 31, 1999.
Professional services revenues followed this trend with a slight decrease in
the quarter ended December 31, 1999. This decrease was primarily the result of
a delay in the start of new projects as clients approached the year 2000 with
caution. During this expected delay, we implemented a new, scalable business
model, which also affected the utilization rate of our billable professionals
for the quarter ended December 31, 1999. Over the past six quarters,
provisioning revenues as a percentage of total revenues have decreased. This
decrease as a percentage of total revenues was the result of our decision to
provide hardware and software resale services only upon a client's specific
request and in connection with a professional services project. Gross profit
increased in each of the six quarters ended June 30, 2000 except in the quarter
ended December 31, 1999 which was impacted by the lower utilization of billable
professionals and our continued hiring of billable professionals in advance of
new projects. Both sales and marketing and general and administrative expenses
increased in each of the last six quarters as we continued to add personnel,
systems and infrastructure to support the growth of our business and
operations.
Liquidity and Capital Resources
Since inception in 1997, we have financed our operations through the
issuance of preferred stock, raising a total of $52.9 million through June 30,
2000, net of issuance costs. As of June 30, 2000, we had $27.6 million in cash
and cash equivalents.
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Net cash used in operating activities was $10.2 million in the six months
ended June 30, 2000, $7.0 million in 1999, $2.4 million in 1998 and $374,000
for the period from inception through December 31, 1997. For the six months
ended June 30, 2000, net cash used in operating activities resulted primarily
from net losses for the period and increases in accounts receivable, advances
and other current assets, partially offset by an increase in accrued expenses.
For the periods 1999, 1998 and 1997, net cash used in operating activities
resulted primarily from net losses for the periods and increases in accounts
receivable, partially offset by increases in accounts payable and accrued
expenses.
Net cash used in investing activities was $3.0 million for the six months
ended June 30, 2000, which was due to the purchase of property and equipment
and business acquisitions. Net cash used in investing activities was $1.5
million in 1999, $817,000 in 1998, and $59,000 in 1997, primarily due to the
purchase of property and equipment.
Net cash provided by financing activities was $23.2 million for the six
months ended June 30, 2000. In the six months ended June 30, 2000, we raised
net proceeds of $23.3 million from the sale of 428,000 shares and 3.8 million
shares, respectively, of series E and series F preferred stock, and repaid a
loan in the amount of $750,000. The remaining net cash provided by financing of
$694,000 resulted primarily from the exercise of employee stock options. In
1999, we raised net proceeds of $25.3 million from the sale of 5.2 million
shares and 9.8 million shares of series D preferred stock and series E
preferred stock, respectively. Cash provided by financing activities was $3.2
million in 1998. In 1998, we raised net proceeds of $3.1 million from the sale
of 4.2 million shares of series C preferred stock. Net cash provided by
financing activities was $1.1 million in 1997. In 1997, we raised net proceeds
of $1.1 million from the issuance of 4.1 million shares and 5.7 million shares
of series A preferred stock and series B preferred stock, respectively.
Immediately prior to the completion of this offering, each preferred share will
convert into one common share.
During the six months ended December 31, 2000, we anticipate spending
between $3.0 million and $4.0 million in capital expenditures as a result of
expenditures to be incurred in opening new branch offices, upgrading our
computer systems and enhancing our networking lab.
At our current rate of expenditure, we believe that our current cash and
cash equivalents will be sufficient to fund our working capital and capital
expenditure requirements for at least the next 12 months. We believe our
current cash and cash equivalents, combined with the proceeds of this offering,
will allow us to grow our business substantially. To the extent we require
additional funds to support our operations or the expansion of our business, we
may need to sell additional equity, issue debt or convertible securities or
obtain credit facilities through financial institutions. If additional funds
are raised through the issuance of debt securities, these securities could have
rights, preferences and privileges senior to holders of common stock. The terms
of any debt securities could impose restrictions on our operations. If
additional funds are raised through the issuance of additional equity or
convertible securities, our stockholders could suffer dilution. We cannot
assure you that additional funding, if required, will be available to us in
amounts or on terms acceptable to us. If sufficient funds are not available or
are not available on acceptable terms, our ability to fund our expansion, take
advantage of acquisition opportunities, develop or enhance our services or
products, or otherwise respond to competitive pressures would be significantly
limited. Those limitations would materially and adversely affect our business,
results of operations and financial condition.
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Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standard No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"), SFAS 133 establishes new
accounting and reporting standards for derivatives and hedging activities. SFAS
133 will require GTP to measure all derivatives at fair value and to recognize
derivative contracts in the balance sheet as an asset or liability, depending
on GTP's rights or obligations under the applicable derivative contract. In
June 1999, the FASB issued SFAS 137 that deferred the effective date of
adoption of SFAS 133. This was followed in June 2000 by the issuance of
Statement of Financial Accounting Standard No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities," ("SFAS 138") which
amends SFAS 133. GTP will adopt SFAS 133 and SFAS 138 effective January 1,
2001. GTP does not expect the adoption of this standard to have a material
effect on our consolidated results of operations or financial position.
Quantitative and Qualitative Disclosure About Market Risk
We have no derivative financial instruments in our cash and cash equivalents
and investments. We invest our cash and cash equivalents in short term,
investment-grade securities. We anticipate investing the net proceeds from this
offering in similar investment-grade securities pending their use as described
in this prospectus. Our transactions are conducted and all our accounts are
denominated in United States dollars. As a result, we are not exposed to
foreign currency risk. However, we plan to open additional locations in Europe
in 2000. We will account for those operations by applying Statement of
Financial Accounting Standard No. 52, "Foreign Currency Translation" ("SFAS
52"). In accordance with SFAS 52, the assets, liabilities and operations of
those locations will be measured using the functional currency of those
operations. These locations may expose GTP to fluctuations in exchange rates
that could affect our results of operations. We intend to monitor and manage
the impact of fluctuations in exchange rates. We do not have any current
borrowings that require us to repay a variable interest rate and are therefore
not currently exposed to market risk from changes in interest rates.
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BUSINESS
Overview
GTP is a leading network infrastructure consulting and engineering company.
We design, build and manage complex networks that utilize advanced Internet
protocol, electro/optical and other sophisticated technologies. Our clients are
service providers such as UUNET, a Worldcom Company, Global 2000 enterprises
such as Bear Stearns, Chase Manhattan Corporation and Time Warner Inc., and
select Internet companies such as Priceline.com.
GTP commenced operations on May 1, 1997 and at July 31, 2000 employed 329
people, of which 200 were billable professionals. Our corporate headquarters
are in White Plains, New York and we have employees in 19 additional locations
in the United States and in London. In 1999, we generated $14.2 million in
revenue. For the six months ended June 30, 2000, we generated $13.6 million in
revenue, compared with $6.4 million in revenue for the six months ended June
30, 1999.
Industry Background
Several factors are converging to drive an accelerating demand for network
infrastructure consulting and engineering services. These factors include:
. the migration of business processes to an electronic infrastructure;
. the growth of Internet traffic and the need for additional bandwidth;
. the advent of technologies such as advanced IP routing, electro/optical
routing and switching and optical transmission and wireless
communications;
. the increased complexity of network design, implementation and
management; and
. the scarcity of qualified network infrastructure consultants and
engineers to design, build and maintain these networks.
The tremendous recent growth of e-business has created an escalating demand
for complex, sophisticated and reliable networks. Today, network
infrastructures are competitive necessities as companies increasingly transact
business, communicate and operate electronically. Applications and initiatives
that use network infrastructures have become a major focus for Global 2000
enterprises and service providers. Forrester Research, an independent research
firm, projects that all forms of e-business activities in the United States
will grow from $406 billion in 2000 to $2.7 trillion in 2004, a compound annual
growth rate of 61%.
Data-intensive and e-business applications are consuming an increasing
amount of bandwidth and generating an increasing amount of network traffic.
RHK, Inc., a leading market research and consulting firm, projects that data
traffic across communications networks will grow from 350,000 terabytes per
month in 1999 to more than 16 million terabytes per month in 2003. To cope with
this traffic escalation, service providers and enterprises are enhancing and
expanding their existing network infrastructures with advanced IP routing,
electro/optical routing and switching and other sophisticated technologies such
as optical transmission and wireless communications. In 1998 alone, service
providers purchased $65 billion of electrical/optical transmission equipment
and electrical switching equipment, according to RHK.
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The complexity of these technologies is making the design, deployment and
maintenance of network infrastructures increasingly challenging both for
enterprises who seek to achieve their e-business initiatives, and for service
providers who seek to increase their bandwidth capacity. The implementation of
this equipment and the maintenance of these network infrastructures requires
sophisticated technological skills and focused expertise. These skills are in
short supply, and developing or recruiting this expertise internally represents
a significant challenge for many organizations. In addition, many companies are
increasingly focusing on their core business competencies and outsourcing
functions considered to be outside of their main business, such as network
operations.
For these reasons, International Data Corporation anticipates that there
will be increasing demand for network consulting and engineering firms that
focus on providing sophisticated network consulting services. According to IDC,
the worldwide market for network consulting and integration services will grow
from $15.5 billion in 1999 to $32.8 billion in 2004. We believe that to
effectively address the demand for network consulting services, organizations
must focus on the expertise required by complex technologies. Neither
management consulting firms nor applications development companies can
effectively address the assessment, design, implementation and management
requirements presented by the network infrastructures of service providers and
enterprises.
We believe that there are a limited number of professional services
companies that specialize in network consulting and engineering. Large
information technology services companies provide a broad range of services,
including strategic guidance for technology investment, enterprise business
solution development, e-commerce applications and supply-chain management.
Other service providers are affiliated with a particular technology or product.
Management consulting firms provide e-business strategy services, but typically
do not provide engineering expertise to implement the required network
infrastructures. Finally, Internet professional services groups provide
technology strategy consulting, operational process applications and systems,
and application development, but typically do not focus on developing the
enabling network infrastructures. We believe that a significant opportunity
exists for a vendor-neutral service provider such as GTP that delivers complex
network infrastructure solutions to enterprise clients and service providers.
The Greenwich Technology Partners Solution
We provide consulting and engineering services to enable the design,
deployment and management of our clients' complex network infrastructures. The
key distinguishing elements of our solution include:
Strategic Relationship with Juniper Networks, Inc. GTP has entered into a
strategic and equity relationship with Juniper Networks. As provided in our
Professional Alliance Agreement with Juniper Networks, GTP will be a premier
provider of professional services and shall retain the highest level
professional services affiliation available with Juniper. GTP has the right to
receive advance access to Juniper technology, which allows GTP to introduce
service offerings in advance of competitors who do not have advanced access to
Juniper technology.
Technology Expertise. The cornerstone of our service offerings is our
expertise in complex network technologies, including the routing protocols and
technologies used in service provider networks such as border gateway protocol,
or BGP, open shortest path first, or OSPF, and
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<PAGE>
multiprotocol label switching, or MPLS. This expertise enables us to deliver
sophisticated network design, integration and management services. Our
commitment to maintaining technology expertise is reflected in our investment
in attracting and retaining experienced, highly skilled professionals. We have
seasoned professionals that possess in-depth knowledge in a variety of advanced
networking technologies, extensive field experience and the leading industry
certifications and credentials. In addition, the engineers in our practice
groups are skilled in the service provider and wireless industries. On average,
our billable professionals have more than nine years of relevant technology
experience. We enhance the abilities of our professionals by providing them
with ongoing training and with the opportunity to work with the latest
developments in network technology.
Focus on Integrated Network Infrastructure. As network consultants and
engineers, we focus on the design, implementation, management, performance and
security of our clients' network infrastructures. We believe that our focus on
network infrastructure enables us to provide complex solutions to our clients.
Additionally, our focus enables us to forge a unique brand identity that
enhances our firm's ability to establish new client relationships, attract
talented professionals and provide differentiated service.
Technical Alliances. We have technical alliances with industry-leading
developers of network equipment and software, including technical alliances
with Cisco Systems, Foundry Networks, F5 Networks, NetScout Systems and
Micromuse. Through these relationships we have preferred access to training,
equipment and information on advances in our alliance partners' respective
technologies. These relationships also provide us with customer leads and
accelerated access into new client accounts.
Integrated Service Offering. We have organized our consultants and engineers
into seven practice areas:
. internetworking;
. security;
. directory services;
. convergence;
. systems engineering;
. performance management; and
. network management.
Given the complex nature of our clients' network infrastructures, we often
provide customized solutions that draw upon a number of our practice areas. Our
organizational framework is designed to balance in-depth expertise in a given
practice area with the ability to provide an integrated solution. We offer our
clients multi-disciplinary teams of consultants and engineers to address the
most complex and sophisticated networking requirements in an integrated and
cost-effective fashion.
Objective Approach. As an independent consulting firm, we provide our
clients with objective, vendor-neutral recommendations. We are committed to
delivering optimal technology solutions within the context of our clients'
strategic business objectives, technology requirements and existing network
infrastructures. In order to ensure the continued ability to deliver leading
technologies to our clients, we continually evaluate new technologies and
enhance our service offerings in response to new market developments.
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Proprietary GTP NetValue Methodology. Our proprietary NetValue methodology
structures our client engagements and service delivery process. GTP NetValue
leverages the collective experience of our consultants and engineers, and
distills their knowledge into best practices that ensure consistent,
predictable, high-quality results. We believe that optimization of network
infrastructures is an ongoing process that continues throughout the lifecycle
of network technologies. As shown in the figure below, we initiate each
engagement by assessing a client's needs and reviewing its existing operating
environment. We then translate the client's business objectives into technology
strategies, and plan and design the enabling network infrastructures. We work
with our clients to deploy our recommended design improvements with their
existing infrastructures and to manage the performance of their networks. We
manage the entire delivery cycle and provide quality assurance and post-project
assessment.
[GRAPHIC]
Strategy
Our goals are to become recognized as the leading provider of network
infrastructure consulting and engineering services and to increase the strength
of our relationships with existing enterprise and service provider clients. We
have adopted the following strategies to become integral to the development and
ongoing implementation of our enterprise clients' network enabled e-business
objectives and our service provider clients' connectivity, managed hosting and
application-platform services:
Enhance our Technological Expertise. We will continue to enhance our
technological expertise to serve our clients better. Through the coursework and
laboratory facilities provided by GTP University, we will continue the training
and education of our professionals in leading-edge technologies such as:
. core Internet routing technologies, including such protocols and
technologies as BGP, OSPF and MPLS;
. Optical and electro/optical routing and switching transmission;
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. Wireless communications, including wireless application protocol, or
WAP, which is used to deliver wireless data services; and
. Voice and data convergence technologies, such as session initiation
protocol, or SIP, which is used for IP telephony applications in service
provider networks.
GTP University includes a state-of-the-art laboratory in which we maintain
advanced networking technologies for our professionals to use for training and
certification purposes. We also have developed technical alliances with
developers of equipment and software through which our professionals can become
certified experts in industry designations. In addition, we are investing
resources in our knowledge management systems to leverage the collective
experience of our professionals by promoting knowledge capture and transfer.
Continue to Strengthen our Service Offerings. We will continue to expand our
portfolio of service offerings in response to technological developments. For
example, we recently enhanced our service offerings to include our directory
services and voice/data convergence capabilities. We continue to develop new
productized service offerings, which are pre-defined, fixed-fee engagements. In
addition, in April 2000, we hired an experienced Chief Technology Officer to
enhance our efforts in analyzing the evolving technologies and issues relating
to infrastructure services and engineering. We believe that our investment in
expanding our practice areas improves our ability to help our clients optimize
the performance and maximize the utility of their networks.
Attract and Retain Experienced Professionals and Expand Recruiting
Efforts. We will continue to focus on attracting and retaining experienced and
talented network technology professionals. Through the coursework and hands-on
laboratory training offered by our GTP University, we regularly provide our
professionals with the opportunity to work with cutting-edge technologies such
as BGP, OSPF, MPLS, SIP and WAP. We also offer the opportunity to work on
challenging and high-profile projects. Our compensation packages are
competitive and include equity participation for all employees. As of July 31,
2000, our recruiting team consisted of 13 full-time employees. We will continue
to expand our recruiting efforts.
Expand Geographically. We intend to expand our presence in our current
markets and to enter new domestic and international markets. Our decentralized
model, under which business development and technical management professionals
have responsibility for the sales, operations and profitability of one or more
business units, facilitates this expansion. We have employees in 20 locations
in the United States and London. Since many of our clients are large,
geographically diverse businesses, we will continue to review opportunities to
enter new markets in response to our clients' needs.
Leverage our Strategic Relationship with Juniper Networks and our Technical
Alliances. We will continue to leverage our strategic relationship with Juniper
Networks to pursue joint engagements and marketing opportunities, particularly
in the service provider market. GTP has both a strategic and an equity
relationship with Juniper Networks. We also will continue to leverage our
technical alliances with Cisco Systems, Foundry Networks, F5 Networks, NetScout
Systems and Micromuse in order to further expand our client base and technology
leadership. In addition, we believe a significant opportunity exists for our
services in the emerging optical networking and wireless communications sectors
and we intend to continue to enter alliances with leading vendors in these
sectors.
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Leverage our Advisory Board Relationships. We intend to leverage our
advisory board members' technological expertise and industry relationships. Our
advisory board members are senior executives and representatives of leading
technology companies, service providers and telecommunications companies. The
advisory board consists of two committees: a technology committee and a
business and corporate development committee. The technology committee provides
GTP with advice on technology and service offerings, and the business and
corporate development committee provides advice on client leads and corporate
development.
Increase Brand Visibility. We intend to raise GTP's profile and recognition
as a leader in network infrastructure consulting and engineering. Our
professionals speak regularly at industry conferences, host seminars and
publish articles in leading trade and business publications. We have
established a public relations program consisting of media relations and
targeted communications to the professionals in our proprietary database. In
addition, we have established co-marketing campaigns with several of our
technical alliance partners. Finally, we promote our NetValue methodology as a
standard, replicable approach to achieve our clients' objectives.
Strategic Relationship with Juniper Networks
GTP has both a strategic and an equity relationship with Juniper Networks,
an Internet infrastructure solutions provider to telecommunications and
Internet service providers. As provided in our Professional Alliance Agreement
with Juniper Networks, GTP will be a premier provider of professional services
and shall retain the highest level professional services affiliation available
with Juniper. Juniper Networks invested $10 million in GTP's series F preferred
stock in June of 2000. GTP and Juniper expect to work closely to pursue joint
engagements and engage in lead sharing and joint marketing opportunities. GTP
also has the right to receive advance access to Juniper technology, which
allows GTP to introduce service offerings for these technologies in advance of
competitors that do not have advanced access to Juniper technology. This
advanced access will also allow GTP engineers and consultants to maintain their
leading expertise in complex network technology. Juniper has two
representatives on GTP's advisory board.
Technical Alliances
Our service offerings are enhanced through technical alliances with network
equipment and software manufacturers. These technical alliances help us to
maintain design and integration leadership in network infrastructures. We
define technical alliances as mutually beneficial relationships between
ourselves and other organizations that include mutual investments of resources
such as training and certifications. Significant benefits we derive from our
technical alliances include enhanced expertise with leading-edge products,
valuable technical certifications, an increased ability to deploy end-to-end
solutions, greater name recognition in the marketplace and enhanced lead
generation.
We undertake a comprehensive review of potential technical alliance partners
before entering into a technical alliance. We target partners that have
leading-edge technology, are aligned with GTP core competencies, have products
that require substantial professional services and can provide us access to new
client engagements. Some of our technical alliance partners in the
internetworking area
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include Cisco Systems, Foundry Networks and F5 Networks, and in the network and
performance management area, include NetScout Systems and Micromuse.
Our Consulting and Engineering Services
GTP's network consulting and engineering services focus exclusively on our
clients' infrastructure needs. Infrastructure consists of the network
technologies that support and enable enterprise applications and service
provider data transport. Our consulting and engineering services are organized
into seven practice areas: internetworking, security, directory services,
convergence, systems engineering, performance management and network
management.
Our Core Competencies
[GRAPHIC]
NetWork
Infrastructure
-------------------------------------------------------------------------------
Performance Management
-------------------------------------------------------------------------------
Internetworking
Security
Directory Services
Convergence
Systems Engineering
-------------------------------------------------------------------------------
Network Management
-------------------------------------------------------------------------------
Internetworking
GTP's internetworking practice focuses on the design and implementation of
high-performance networks for service providers and enterprises. Our
consultants and engineers use hardware and software to interconnect multiple,
geographically distributed networks into large, uniform data communications
systems. Our professionals use their specialized technical skills and relevant
industry experience to address the challenges associated with building,
integrating and operating heterogeneous infrastructures. Our internetworking
practice includes the following professional services offerings:
. Internet backbone design--the design and implementation of service
provider networks using core routing protocols and optical technology,
including BGP, OSPF and MPLS
. Hosting facility architecture--the design and building of robust,
scalable internetworks for hosting providers and ASPs
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. Network infrastructure design--the assessment, design and implementation
of network-enabled distributed computing environments and communications
systems using routing, switching and wireless technologies
. Remote access--the design and implementation of secure, high-performance
remote access and virtual private network solutions for our clients and
their geographically distributed employees, business associates and
supply-chain partners
Security
GTP's security practice provides organizations with security technology and
processes which enable them to mitigate the risk to corporate resources and
data. By balancing business needs with security technology, we enable our
clients to make clear, informed decisions regarding the protection of their
valuable resources and reputation. Our security practice includes the following
professional services offerings:
. Security policies, standards and guidelines--the assessment of the level
of risk to our clients' networks and the promulgation of rules and
standards for the security techniques and programs to be deployed
. Perimeter security--the design, deployment and validation of perimeter
security controls for wireless and landline networks, including
firewalls, intrusion detection systems and virtual private networks, or
VPNs, for the protection of corporate resources from unauthorized users
. Remote access VPNs--the design of VPNs to securely connect users to
specific computing resources
. Web access controls--the creation of centrally administered tools and
policies to control access to Web servers
. Public key infrastructures--the design, administration and management of
the cryptographic keys and identification certificates used to identify
users, applications and network devices
. Security event management--the analysis of all attempted intrusions to
maintain and strengthen security
Directory Services
GTP's directory services practice area enables clients to more effectively
control and manage information access. GTP's directory services practice area
provides customers with design, implementation and management services for
their directories. A major focus of this practice is tying complex e-business
applications and systems into a central directory strategy, which simplifies
and reduces the cost of administration while easing access to e-business
systems by clients, alliance partners and employees. Our directory services
practice includes the following professional services offerings:
. Directory structure and design--the creation of a detailed definition of
network elements, users and resources, their key attributes and their
relationships to each other
. Directory-based application integration--the integration of critical
applications such as messaging, groupware and web services into selected
directories
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. Network impact assessment--the assessment of current and planned network
infrastructure, including network operating systems to support the new
directory design
. Policy and procedure definition--the definition of individual users and
groups to access information and resources
. Security integration--the integration of security infrastructure, such
as public key infrastructure certificates, VPN and firewall access,
authentication and single sign-on with network resources
Convergence
GTP's convergence practice focuses on the design and implementation of
unified communications solutions. Unified communications create a centralized
management system for multiple message types and reduce message overload.
Unified communications also provide value to mobile employees by establishing
access to all types of messages, including voicemail, fax and e-mail across
both wired and wireless networks. Our convergence practice includes the
following professional services offerings:
. Unified communications assessment--the evaluation of a client's wired
and wireless communications environment to determine the modifications
required to enable the client to implement a wireless communications
solution
. Voice and data infrastructure assessment--the evaluation of a client's
voice and data infrastructure to determine the modifications required to
enable the client to implement a unified communications scheme
. Messaging integration--the integration of existing voicemail, e-mail and
fax solutions into an integrated communications framework
. Unified communications design and deployment--the creation of a complete
unified communication solution including voicemail, e-mail and fax
solutions.
Systems Engineering
GTP's systems engineering practice area provides comprehensive design and
integration services to increase the robustness and reliability of our clients'
distributed computing environments. Our systems engineering practice includes
the following professional services offerings:
. Data and storage management--the addressing of data availability and
integrity issues, including storage area networks and disaster
prevention and recovery programs
. Data processing architecture--the deployment of operating platforms,
application hosting, load balancing and server clusters to ensure high
availability
. Systems infrastructure engineering--the translation of system
availability and scalability requirements into hardware and software
specifications, and the integration of web and application server
systems into new or existing environments
. Systems administration--the creation of formal operating policies and
procedures with a focus on technical issues such as addressing and
domain management
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. Thin client enterprise solutions--the reduction of administrative costs
and the improvement of networked application performance
Performance Management
GTP's performance management practice focuses on maintaining optimal
application performance across wireless and landline networks. We use
sophisticated tools and techniques to gather, organize and warehouse network
data. The data and tools then are used for a number of related performance
analysis applications, including capacity planning and network simulation
modeling. Our performance management practice includes the following
professional services offerings:
. Capacity planning--the analysis of new systems under heavy traffic to
determine the resources required to achieve target response times for
estimated user populations
. Response-time monitoring--the design and implementation of tools to
measure application response time across multiple networks and systems
. Application analysis--the establishment of the operational performance
parameters of the current network infrastructure to use as a benchmark
to evaluate the impact of changes to the network, particularly those
involving additional investment
. Performance monitoring systems development--the creation of a
comprehensive view of application performance by deploying customized
performance analysis tools and techniques
. Network economics--the reduction of costs and the improvement of voice
and data networks through the renegotiation of agreements with service
providers and the redesigning of networks
Network Management
GTP's network management practice encompasses the operation, monitoring,
maintenance and measurement of large-scale, highly complex landline and
wireless networks. We design and implement network management systems that
provide network traffic control, data collection, analysis and reporting
services. These systems translate network data into useable information that
enables our clients to manage their networks proactively. We institute
processes that allow clients to identify, isolate, resolve and prevent network
failures. Our network management practice includes the following professional
services offerings:
. Instrumentation and monitoring--the design and implementation of
solutions to collect, store and analyze network traffic data
. Configuration management--the creation of the processes needed to store,
update, distribute and document network device configurations
. Fault management--the detection, diagnosis and correction of network
performance degradation and failure resulting from hardware or software
issues
. Change management--the planning, tracking and documentation of changes
to the network infrastructure and associated management systems
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. Accounting management--the measurement of network traffic, the
collection and storage of data and the analysis of bandwidth utilization
which enable the client to allocate costs based on usage
. Policy management--defining the rules governing how different types of
traffic should be prioritized and accommodated on the network
Productized Services
We have formulated standardized service offerings to address commonly
recurring network infrastructure needs. These productized services are
distinguished by pre-defined delivery and pricing structures that are
replicable across a wide variety of industries. Our productized services offer
our business development executives an opportunity to market an easily
understood, fixed-fee project to potential clients. Furthermore, our
productized services can be priced based on the value offered to the client,
rather than on the cost of providing the service. Our productized services
currently consist of:
Internetwork Assessment
This productized solution involves an evaluation of the client's existing
network topology, including: wide area network and local area network
environments, naming, addressing, routing, switching, performance, capacity,
connectivity, redundancy and management considerations. The report we generate
from our assessment enables the client to understand the performance and
reliability of the network, provides specific recommendations for network
improvements and analyzes the benefits that can be achieved through the
recommended improvements.
Security Assessment
This assessment analyzes the security controls on clients' Internet-visible
networks, including network devices, firewalls, applications and servers, and
documents vulnerabilities to external Internet-based assaults and intrusions.
In addition, our report explains how these vulnerabilities expose the client to
service interruptions and financial risks. We provide a prioritized set of
recommendations for reducing or eliminating identified vulnerabilities.
Virtual Chief Information Officer
Through our Virtual CIO service offering, a team of senior professionals
provides high-level strategic advice to help a client utilize network-based
technologies to leverage its existing competencies and business model. After
thoroughly analyzing the client's operating processes and legacy technology
assets, the Virtual CIO uses our proprietary GTP NetValue methodology to
develop solutions to meet the client's e-business objectives. The Virtual CIO
then manages the implementation of these recommendations, often employing GTP
expertise and resources.
Usage-Based Cost Recovery
This service utilizes sophisticated hardware and software to generate
individual user bills that accurately reflect the utilization of network
resources. Our report details how, when, where, why and by whom network
resources are consumed. We collaborate with our clients to create an internal
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billing policy for the allocation of costs associated with providing network
bandwidth and application services consistent with the client's business
objectives, ultimately producing usage-based bills for each user on the
network.
Thin-Client Enterprise Solution
Ensuring that application software is correctly configured, inventoried,
licensed and secured has become a logistical challenge that consumes an
increasing amount of our clients' information technology resources. In
addition, many client/server-based applications have not been optimized for
utilization across distributed networks. Our thin-client enterprise solution
redesigns our clients' system architecture to provide centralized application
services and management. This centralization reduces administrative costs and
challenges and improves application performance on the remote access network.
Voice-Enhanced Messaging
With this offering, GTP integrates voice and fax message-handling
capabilities into a client's e-mail platform. Once implemented, users can log
into an e-mail system and receive e-mail, voicemail and faxes. Similarly, users
can log into voicemail and get access to e-mail and faxes through a telephone.
Clients
At June 30, 2000, we had active engagements with 139 clients. During the six
months ended June 30, 2000, Chase Manhattan Corporation and Bear Stearns
accounted for 22% and 18% of our total revenues. In 1999, Crompton Corp. and
Bear Stearns accounted for 18% and 11% of our total revenues, respectively, and
in 1998, Unilever and Crompton Corp. accounted for 39% and 14% of our total
revenues, respectively. During the six months ended June 30, 2000, our five
largest clients represented 52% of our total revenues and in 1999 and 1998, our
five largest clients represented 51% and 68% of our total revenues,
respectively. Our clients include:
Phillips Publishing
AIG International, ESPN, Inc. Priceline.com, Inc.
Inc. FleetBoston Financial SempraEnergy Trading
Bear Stearns Companies Corp. Sony Corporation
Bristol-Myers Squibb GTECH Holdings Starwood
Company Corporation St. John's University
Chase Manhattan Guardian Life Telemedia Accelerator
Corporation Insurance Company of Time Warner, Inc.
Cisco Systems, Inc. America Unilever PLC
The CIT Group, Inc. HomeRuns.com, Inc. University of
Citizens Banking Corp. LivePerson, Inc. Connecticut Health
Citizens Maimonides Medical Systems
Communications Co. Center UUNET Technologies,
Crompton Corp. Micromuse, Inc. Inc.,
Credit Suisse First McKinsey & Company a Worldcom Company
Boston MCI Worldcom, Inc. Washington Post
Dayton Hudson Corp. NASDAQ Stock Market, Company
Dow Jones & Company, Inc. Wit SoundView Group,
Inc. NetScout Systems, Inc. Inc.
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Representative Case Studies
A Large Financial Services Company
Challenge: A large financial services company was alerted to possible
discrepancies between its security policies and current best practices, which
could have resulted in unauthorized access to the client's network.
Solution: A team of GTP security experts utilized our productized security
assessment to analyze the client's security environment. We assessed the
client's policies and guidelines for its network infrastructure and compared
them to the actual network configurations. We analyzed internal and external
detection systems, and evaluated escalation and contingency planning
procedures. As a result of this analysis, our security team compiled a report
detailing our findings, identifying methods to improve the client's procedural,
operational, organizational, physical and technical plan. Additionally, this
report identified and prioritized recommended remediation procedures.
Result: We provided a full risk assessment and quantified the potential
impact on the client's business. Following this analysis, GTP implemented the
recommended policy changes and reconfigured the client's network to improve its
security.
Chase Manhattan Corporation
Challenge: Chase Capital Partners, an affiliate of Chase Manhattan
Corporation, wanted to review its overall technology strategy and improve its
technology investment decision process.
Solution: We are providing Chase with a team of senior professionals as a
Virtual CIO in order to develop Chase's technology strategy. To date, our
Virtual CIO has delivered strategic advice in three key areas: determining
technology investment procedures, overseeing the automation of backoffice
business processes and designing and implementing an extranet to link Chase's
employees, partners and investors.
Result: To date, we have accomplished a number of objectives in this role,
including designing a new system architecture to consolidate Chase's backoffice
data. We continue to work on a number of ongoing projects for Chase.
UUNET Technologies, Inc., a Worldcom Company
Challenge: UUNET, an Internet service provider, was concerned about traffic
congestion on its network due to the exceptional growth in demand for
bandwidth. GTP assisted UUNET in meeting its network growth plans to ensure the
highest levels of service to its current and prospective clients.
Solution: A team of GTPs internetworking experts provided UUNET's internal
Technical Assistance Center with remedies that both addressed the immediate
tactical concerns and were consistent with long-term planning and service
strategies. GTP professionals continue to offer technical assessments of
UUNET's complex and dynamic network environment, and provide expert
recommendations using in-depth knowledge of protocols, systems, internetworking
techniques, network management tools, networking devices, traffic engineering
and advanced hardware and software technologies.
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Result: GTP rapidly provided significant improvement plans for service
quality and structural relief from anticipated bandwidth constraints.
GTP University
To attract and retain our consultants and engineers, we have created a
laboratory, a professional development program and a knowledge management
system that we collectively call GTP University. GTP University enables us to
effectively respond to our clients' and alliance partners' needs for
consultants and engineers trained in particular technologies, such as Internet
backbone routing, optical networking and wireless communication. GTP University
currently consists of three components:
Laboratory. Our distributed, networked laboratory enables our consultants
and engineers to obtain hands-on training on technologies that enhance their
knowledge and skills. It also provides a forum for developing problem solving
skills and exploring cutting-edge technologies, including BGP, OSPF and MPLS.
The laboratory enables us to test complex scenarios before deploying them at
client sites. We believe the laboratory helps us to attract potential clients
and to recruit talented engineers. Our main laboratory is in White Plains, New
York and remote access provides hands-on expertise to consultants and engineers
who are onsite at client engagements or otherwise working remotely.
Professional Development Programs. We have developed training programs that
provide career development and technical education for our consultants and
engineers. These programs assist with recruiting and retention and enable us to
fulfill the demand from our alliance partners and clients for engineers with
specific skills. These programs rely on a mix of in-house and vendor-provided
training and enable our consultants and engineers to obtain expertise and
industry recognized certifications. We also offer peer-to-peer programs, on-
site workshops and study groups that enable information exchange within a
practice area.
Knowledge Management Systems. We have created online forums through which
our engineers and consultants can hold discussions and exchange technical
information. This information
is archived and enables our consultants, engineers and project managers to
capture and share our client and project experiences.
Recruiting
As of July 31, 2000, our recruiting team consisted of 13 full-time
professionals, nine of which were dedicated recruiters and four of which were
management and administrative personnel. Since January 1, 2000, we have
recruited and hired 168 employees. In addition to our direct recruiting
efforts, we have developed an internal referral program for existing employees,
a network of fee-based external agencies, and an Internet recruiting strategy.
From January 1, 2000 to July 31, 2000 31% of our new hires have come from the
internal referral program. We seek to hire experienced and highly talented
consultants and engineers that possess in-depth knowledge in a wide variety of
advanced networking technologies, extensive field experience and the leading
industry certifications and credentials. On average, our billable professionals
have more than nine years of relevant technology experience.
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Corporate Infrastructure and Systems
As of June 30, 2000, our administrative personnel located at our White
Plains headquarters consisted of 44 full-time professionals in the following
departments: accounting, finance, human
resources, legal affairs, facilities and information systems. These departments
are headed by experienced professionals and are responsible for administrative
processes and the support of our recruiting and professional service
departments in the tracking, control and management of our business activities.
In addition to the professionals in these departments, we have invested in
accounting and operations management applications and systems to provide
operating data and reports, assist with timely accounting for our engagements
and operations and to manage the assets of the company. We are committed to
building a scalable infrastructure to ensure that our ability to deliver
consistent, quality services to our clients will not be compromised as we grow.
We will continue to invest in developing our back office support functions,
including a professional services application providing broader and improved
functionality, a human resources application and a financial reporting package.
These investments are aimed at leveraging the experience of our administrative
staff and reducing the marginal cost of our support services.
Sales and Marketing
As of July 31, 2000, our sales team consisted of 19 full-time professionals
focused on pursuing service providers and Global 2000 enterprises. We are
continuing to expand our sales staff as we open new locations and intensify our
efforts toward particular industries. To support our direct sales efforts, we
have invested in, and will continue to invest in, a wide range of training,
sales and lead generation, sales tracking and contact management tools.
Additionally, we support our direct sales efforts with telemarketing campaigns
to identify new business opportunities in new markets. We complement our direct
sales efforts with indirect sales, leads generated by our technical alliance
partners, our clients and our advisory board.
As of July 31, 2000, we had a marketing team of four full time
professionals. Our marketing team focuses on three primary areas: internal and
external communications, strategic marketing and relationship marketing. This
team built and maintains a proprietary database of professionals to whom we
target communications about our business and our industry. Our marketing team
also focuses on ongoing public relations initiatives targeted at industry and
general business publications. We conduct focused network technology seminars
for industry constituents and we participate in a wide range of technology
events.
Competition
The technology consulting industry is comprised of many participants, is
highly competitive and is subject to rapid technological change. Many of our
competitors or potential competitors have greater name recognition, longer
operating histories, more relationships with large and established clients and
greater financial, technical and managerial resources. Furthermore, we expect
that our competitors may in the future form alliances with other technology
vendors, which may give them an advantage in managing networks that use that
vendor's equipment.
We believe that our most direct competitors are other network consulting and
engineering companies. Other competitors include large information technology
services firms and affiliates or product or technology firms. Potential
competitors include Internet professional services firms if they
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decide to extend their capabilities in this area. In addition, most of our
current clients and prospective clients have internal information technology
departments and, if they are able to attract and retain qualified personnel,
could choose to satisfy their network management needs through internal
resources rather than by outsourcing them to third-party service providers such
as ourselves. The decision by clients or prospective clients to rely on their
own information technology departments could have a material adverse effect on
our business, results of operations and financial condition. Moreover, as the
domestic and global markets for infrastructure consulting and engineering
services continues to grow, we expect to face competition from new entrants.
We believe that the principal competitive factors in the infrastructure
consulting and engineering market are the quality and breadth of services
offered, the ability to attract and retain qualified personnel, a focus on
providing infrastructure consulting and engineering services, price and
reliability of services provided and the strength of client relationships. We
believe we compete favorably with respect to all of these factors.
Proprietary Rights
We regard our trade secrets and other intellectual property as critical to
our success. Unauthorized use of our intellectual property by third parties may
damage our brand and our reputation. We rely on trademark law and trade secret
protection and confidentiality and/or license and other agreements with our
employees, clients, alliance partners and others to protect our intellectual
property rights. However, we do not have any patents or patent applications
pending or any registered copyrights, and existing trade secret and trademark
laws afford us only limited protection. Despite our precautions, it may be
possible for third parties to obtain and use our intellectual property without
our authorization. Furthermore, the validity, enforceability and scope of
protection of intellectual property in Internet-related industries is uncertain
and still evolving. The laws of some foreign countries are also uncertain or do
not protect intellectual property rights to the same extent as do the laws of
the United States.
Employees
At July 31, 2000 we had a total of 329 employees of whom 200 were billable
professionals. None of our employees is represented by a labor union. We have
not experienced any work stoppages, and we consider relations with our
employees to be satisfactory. Competition for qualified personnel in our
industry is intense. We believe that we will need to continue to attract, hire
and retain qualified personnel to be successful in the future.
Government Regulation
In general, existing laws and regulations apply to transactions and other
activities on the Internet. The precise applicability of these laws and
regulations to the Internet is sometimes uncertain, since the vast majority of
these laws were adopted prior to the advent of the Internet and, as a result,
do not contemplate or address the unique issues of the Internet or electronic
commerce. Nevertheless, in the United States numerous federal and state
government agencies have already demonstrated significant activity in promoting
consumer protection and enforcing other regulatory
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and disclosure statutes on the Internet. Additionally, due to the increasing
use of the Internet as a medium for commerce and communication, it is likely
that new laws and regulations may be enacted with respect to the Internet and
e-commerce, covering issues such as user privacy, freedom of expression,
advertising and marketing, spam laws, pricing, content and quality of products
and services, taxation, intellectual property rights and information security.
The adoption of such laws or regulations and the applicability of existing laws
and regulations to the Internet may adversely impact the growth of Internet
use, thereby negatively affecting our business.
The European Union and its member states have promulgated privacy
regulations. The European Union Directive on the Protection of Personal Data,
which became effective in October 1998, promotes electronic commerce by
establishing a stable framework to ensure both a high level of protection for
private individuals and the free movement of personal data within the European
Union. The EU and the U.S. Department of Commerce have been seeking an
agreement under which the privacy policies of American businesses may be deemed
to be adequate under the EU Directive. Until an agreement is formally adopted
by the Department of Commerce, the EU has informally agreed to a moratorium on
enforcement of the EU Directive against U.S. businesses. The EU Directive
could, among other things, affect U.S. companies that collect information over
the Internet from individuals in European Union Member countries, and may
impose restrictions that are more stringent than current Internet privacy
standards in the United States. Although we did not have revenues from outside
of the United States in the six month period ended June 30, 2000, this could
adversely affect our ability to expand our sales efforts into Europe.
A number of proposals have been made at the state and local level that would
impose additional taxes on the sale of goods and services over the Internet.
Legislation limiting the ability of the states to impose taxes on Internet-
based transactions has been proposed in the U.S. Congress. This legislation
could ultimately be enacted into law or this legislation could contain a
limited time period in which this tax moratorium will apply. In the event that
the tax moratorium is imposed for a limited time period, legislation could be
renewed at the end of this period. Failure to enact or renew this legislation
could allow various states to impose taxes on electronic commerce, and the
imposition of these taxes could impair the growth of commerce on the Internet
and, as a result, adversely affect our business.
Locations
We currently lease approximately 29,400 square feet of space at our
headquarters in White Plains, New York. We also lease office space in Andover,
MA; Atlanta, GA; Chantilly, VA; Chicago, IL; Columbia, MD; Irving, TX; East
Berlin, CT; Los Angeles, CA; New York City, NY; Parsippany, NJ; and Whippany,
NJ.
We believe that our existing facilities are adequate for our current needs
and that additional space will be available as needed.
Legal Proceedings
We are not presently a party to any material legal proceedings.
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MANAGEMENT
The following table contains information about the directors and executive
officers of Greenwich Technology Partners.
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Joseph P. Beninati............. 36 Chief Executive Officer, President and Chairman of
the Board
Dennis M. Goett................ 52 Senior Vice President, Chief Financial Officer and
Director
Richard Haverly................ 51 Senior Vice President Professional Services
Johna Till Johnson............. 35 Senior Vice President and Chief Technology Officer
John Stopper................... 47 Senior Vice President Business Development
Ronald V. Davis(2)............. 53 Director
Edmund A. Hajim(1)............. 64 Director
Jonathan R. Lynch(1)(2)........ 33 Director
William Jefferson Marshall(2).. 45 Director
David H.W. Turner(1)........... 41 Director
</TABLE>
--------
(1) Member of the audit committee.
(2) Member of the compensation committee.
Joseph P. Beninati founded Greenwich Technology Partners in May 1997 and has
served as Chief Executive Officer, President and Chairman of the Board since
that time. From 1992 through 1995, Mr. Beninati was at Telos Corporation, a
large technical services government contractor, where he served initially as
Chief Financial Officer from February 1992 through December 1993 and as
Chairman of the Board from January 1994 to January 1995. In February 1995, Mr.
Beninati co-founded Antares Investment Partners. Mr. Beninati has a B.A. from
Middlebury College.
Dennis M. Goett has been Senior Vice President, Chief Financial Officer and
a director of GTP since December 1998. From February 1996 until February 1998,
Mr. Goett served as Chief Financial Officer of Claremont Technology Group, an
information technology services firm. Since February 1998, Mr. Goett has been
the sole shareholder and until May 2000 was the President of CrossRoads
Strategy Group, Inc., a private consulting services firm. Since February 1999,
Mr. Goett has not devoted any of his business time to CrossRoads. In 1989, Mr.
Goett founded Gabriel Partners, a financial and management consulting company,
and served as its President until January 1996. Mr. Goett has a B.A. from
Fordham University.
Richard Haverly joined GTP in January 2000 as Senior Vice President
Operations and became Senior Vice President Professional Services in June 2000.
Before joining GTP, Mr. Haverly was a Partner at Andersen Consulting from
September 1980 until November 1999. Mr. Haverly joined Andersen Consulting in
1970 and, in addition to his duties as a Partner, served as a Quality Assurance
Partner for various engagements starting in 1991. Mr. Haverly has a B.S. from
Rensselaer Polytechnic Institute.
Johna Till Johnson has served as Senior Vice President and Chief Technology
Officer since April 2000. From September 1996 through March 2000, Ms. Johnson
served as Vice President and Director of the Global Networking Strategy Service
of META Group, Inc., a technology advisory
51
<PAGE>
firm. From 1990 until September 1996, Ms. Johnson served in various capacities
at Data Communications Magazine, most recently as Senior Technology Editor,
where she oversaw the lab testing program. Ms. Johnson has a B.S. in electrical
engineering and computer science from The John Hopkins University and performed
graduate work at the University of Rochester.
John Stopper has served as Senior Vice President Business Development since
June 2000 and from August 1999 until May 2000, as Senior Vice President Sales
and Marketing. Prior to joining GTP, Mr. Stopper served from September 1997
until June 1999 as a vice president and member of the worldwide management
board of James Martin & Company, an IT consulting firm. Prior to that time, Mr.
Stopper founded the eastern division of Paranet, a network consulting firm,
where he served as Division Manager from June 1995 until September 1997. Mr.
Stopper has a B.A. from Wheeling Jesuit University and has performed graduate
work at the University of Bridgeport.
Ronald V. Davis has served as a director since December 1997. Mr. Davis has
served as the Chairman of Davis Capital, L.L.C., an investment firm, since
January 1994. Mr. Davis served as a President of Reid Plastics from December
1998 until July 1999, and has served as Chairman of the Executive Committee of
Consolidated Container Corporation since July 1999. Previously, Mr. Davis
founded the Perrier Group of America and served as its Chief Executive Officer
from October 1979 until January 1994. Mr. Davis is a member of the board of
directors of Celestial Seasonings and Consolidated Container Company. Mr. Davis
has a B.A. from California State University, Fullerton and an M.B.A. from the
University of Southern California.
Edmund A. Hajim has served as a director since October 1998. He has served
as Chairman and Chief Executive Officer of ING Furman Selz Asset Management, a
division of ING Group, since July 1998. In addition, Mr. Hajim was Co-Chairman
of ING Barings, Americas Region, from December 1997 until February 1999. From
October 1983 until December 1997, he served as Chairman and Chief Executive
Officer of Furman Selz LLC. Mr. Hajim is also a director of Tosco Corporation.
Mr. Hajim has a B.S. from the University of Rochester and an M.B.A. with
distinction from the Harvard Business School.
Jonathan R. Lynch has served as a director since September 1999. He has
served as a Principal at Chase Capital Partners, a private equity fund, since
January 1997 and oversees the Information Technology Services Practice. Prior
to becoming a Principal, Mr. Lynch was an associate at Chase from August 1993
until January 1997. He has a B.S. from Georgetown University and an M.B.A. from
the Harvard Business School.
William Jefferson Marshall has served as a director since February 1999. He
has served as a Partner of VantagePoint Venture Partners, a venture capital
firm, since January 1998 and as a Senior Advisor to VantagePoint from January
1996 until December 1997. Prior to that time, he served as Senior Managing
Director, Chief Technology Officer and head of the Communications Technologies
Group at Bear Stearns from 1985 until 1996. Mr. Marshall has a B.S. from New
York University and completed the Harvard Management Program.
David H.W. Turner has served as a director since March 2000. He has served
as the Executive Vice President of Reuters America Holdings, Inc. since January
1995 and as the Chief Financial Officer of Reuterspace since January 2000. From
January 1999 until December 1999, Mr. Turner
52
<PAGE>
served as the Commercial Director for Reuters Information. Mr. Turner also
served as the Chief Financial Officer for Reuters America from January 1996 to
January 1999. Mr. Turner has a B.Sc. with Honors, from Saint Andrews University
in Scotland.
Composition of the Board
Prior to the closing of this offering, we intend to file a revised
certificate of incorporation pursuant to which our board of directors will be
divided into three classes, each of whose members will serve for a staggered
three-year term. Upon the expiration of the term of a class of directors,
directors for that class will be elected for three-year terms at the annual
meeting of stockholders in the year in which their term expires. Our board of
directors has resolved that William Jefferson Marshall and Ronald V. Davis will
be Class I Directors whose terms expire at the 2001 annual meeting of
stockholders, Dennis M. Goett and Edmund A. Hajim will be Class II Directors
whose terms expire at the 2002 annual meeting of stockholders and Joseph P.
Beninati, David H.W. Turner and Jonathan R. Lynch will be Class III Directors
whose terms expire at the 2003 annual meeting of stockholders.
Board Committees
The Audit Committee of the board of directors will review, act on and report
to the board of directors with respect to various auditing and accounting
matters, including the recommendation of our auditors, the scope of the annual
audits, fees to be paid to the auditors, the performance of our independent
auditors and our accounting practices. Messrs. Turner, Hajim and Lynch are
members of the Audit Committee.
The board of directors has a Compensation Committee consisting of Messrs.
Marshall, Lynch and Davis. The Compensation Committee was created in August
1999. The Compensation Committee will recommend, review and oversee the
salaries, benefits and stock option plans for our employees, consultants,
directors and other individuals whom we compensate. The Compensation Committee
will also administer our compensation plans.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee serves as a member of the board of
directors or compensation committee of any entity that has one or more
executive officers serving as a member of Greenwich Technology Partners' board
of directors or Compensation Committee.
Director Compensation
Directors who are also employees of GTP receive no additional compensation
for their services as directors. Directors who are not employees of GTP will
not receive a fee for attendance at meetings of the board of directors or
committees of the board of directors, but they will be reimbursed for travel
expenses and other out-of-pocket costs incurred in connection with their
attendance at meetings. Pursuant to our 2000 Stock Option and Incentive Plan,
non-employee directors will be granted an option to purchase 25,000 shares of
common stock upon initial election to the board of directors, and an option to
purchase 10,000 shares of common stock upon each subsequent re-election to the
board of directors. The options will vest quarterly over two years and the
exercise prices will equal the fair market value of the common stock at the
time of grant.
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<PAGE>
Advisory Board
GTP has created an advisory board. The advisory board consists of two
committees: a technology committee and a business and corporate development
committee. The technology committee provides GTP with advice on technology and
service offerings, and the business and corporate development committee
provides advice on client leads and corporate development. The board of
directors appoints new members to the advisory board and grants the new members
options to purchase shares of common stock. The option grants vest based on the
individual member's attendance at advisory board meetings. The current members
of the advisory board are:
Technology Committee
. David Beckemeyer, Chief Technology Officer, Earthlink, Inc.
. Kevin Boyne, Chief Operating Officer, UUNET Technologies, Inc., a
Worldcom Company
. Robert Garbarino, Senior Managing Director, Information Technology
Group, Bear Stearns & Co. Inc.
. Clint Heiden, President, Onlineofficesupplies.com; former executive of
UUNET Technologies, Inc., a Worldcom Company
. Donald Henderson, Managing Director, Information Technology Group, Bear
Stearns & Co. Inc.
. John Jendricks, Chief Information Officer and Vice President Business
Development, Juniper Networks, Inc.
. William LaPerch, Executive Vice President, MetroMedia Fiber Network
. Richard Liebhaber, Director of Qwest Communications International, Inc.;
former Chief Technology Officer, MCI Worldcom, Inc.
. Daniel Lockwood, Sr. Manager of Professional Services, Juniper Networks,
Inc.
. Kevin McGilloway, CIO and Managing Director, Lehman Brothers, Inc.
. Woody Shackleton, Vice President, North American Sales, Foundry
Networks, Inc.
. Pablo Tapia, President and Founder, Apogee Networks, Inc.
. Paul Weinstein, Partner, Azure Partners; former Institutional Investor
ranked equity research analyst in the communications/network industry
Business and Corporate Development Committee
. Graham Albutt, President of Reuters Trading Systems, Reuters America
Holdings Inc.
. Greg Berger, President and CEO of Colin Services, Inc.
. James P. Cabrera, Managing Partner, Antares Investment Partners
. Joseph A. Cabrera, Executive Managing Director, Insignia/ESG, Inc.
. Anthony M. Carvette, President, StructureTone Inc.
. Jeffrey G. Dishner, Managing Director, Starwood Capital Group, L.L.C.
. Ross Finegan, Partner, Chase Capital Partners, London
. Pieter Hooft, Partner, Chase Capital Partners, London
. Brent Jones, Partner, University Ventures; former All-Pro San Francisco
49er
. Stephen B. Siegel, Chairman and CEO, Insignia/ESG, Inc.
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<PAGE>
Employment Agreements and Severance Arrangements
On December 9, 1997, GTP entered into an employment agreement with Joseph P.
Beninati, GTP's Chief Executive Officer, President and Chairman. The initial
term of the agreement extends until December 31, 2002. The agreement will renew
automatically every year thereafter, unless GTP or Mr. Beninati gives notice of
termination ninety days prior to the end of the initial term or ninety days
prior to the end of any other successive yearly term. In addition, this
employment agreement will terminate automatically if GTP sells substantially
all of its assets, consolidates or merges with another company, dissolves or
liquidates, or upon the public offering of common stock at a price of at least
$5.00 per share and gross proceeds to GTP of at least $10.0 million. The
agreement provides for the payment of salary and of bonuses as GTP may
determine from time to time. The agreement contains a covenant by Mr. Beninati
not to compete with GTP during his employment with us or for three years after
his employment with us ends. GTP may increase Mr. Beninati's annual salary. At
February 1, 2000, Mr. Beninati's annual salary was $270,000. The employment
agreement provides for other benefits to Mr. Beninati including the payment of
finance payments for an automobile Mr. Beninati uses. The employment agreement
does not contain severance provisions.
On December 1, 1998, GTP and Dennis M. Goett, GTP's Senior Vice President
and Chief Financial Officer entered into an employment letter providing for the
terms of Mr. Goett's employment with GTP at a salary of $100,000 for the first
year and $200,000 for the second year. Thereafter, Mr. Goett's salary will be
increased by a percentage equal to the consumer price index for the New York
metropolitan area. At February 1, 1999, Mr. Goett's annual salary was $200,000.
Mr. Goett's employment letter also provides for reimbursement for car expenses
and participation in a bonus plan. Mr. Goett's employment letter also provides
that he will be entitled to receive three months of salary and benefits if his
employment with GTP is terminated without cause. In connection with his
employment, Mr. Goett was issued options to purchase 500,000 shares of common
stock on December 1, 1998 that will vest over a period ending on December 1,
2001. The corresponding stock option agreement provides that any unvested
options will vest in full upon the acquisition or initial public offering of
GTP or in the event GTP terminates Mr. Goett without cause. In addition, any
unvested shares vest in full upon the termination, resignation or any other
event resulting in Mr. Beninati no longer holding the full-time position of
Chief Executive Officer of GTP. Mr. Goett's employment letter also states that
GTP will issue immediately exercisable options to purchase up to 33,333 shares
of common stock on each of the first three anniversaries of his employment. Mr.
Goett has received additional stock option awards since December 1, 1998. The
employment letter also contains a covenant by Mr. Goett not to compete with GTP
during his employment and for a period of one year after his employment with
GTP ends.
On October 1, 1999, GTP and John Stopper, GTP's then Senior Vice President
Sales and Marketing, entered into an employment letter providing for the terms
of Mr. Stopper's employment with GTP at an initial salary of $150,000. At
February 1, 2000, Mr. Stopper's annual salary was $150,000. Mr. Stopper's
employment letter also provides for participation in a bonus plan. In
connection with his employment, Mr. Stopper was granted options to purchase
168,600 shares of common stock. In addition, in 2000 Mr. Stopper also received
112,400 options to purchase shares of common stock. If, following a change of
control of GTP, Mr. Stopper is terminated without cause within twelve months of
starting his employment with GTP, options to purchase 70,250 shares of common
stock will automatically vest and, in any event, at least 25% of the options
granted to Mr.
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<PAGE>
Stopper will vest. If, following a change in control, Mr. Stopper is terminated
without cause within six months of starting his employment, he will be entitled
to six months' severance pay; if he has been with GTP between six and twelve
months, he will be entitled to nine months' severance pay; and, if he has been
with GTP over twelve months, he will be entitled to twelve months' severance
pay. The employment letter also contains a covenant by Mr. Stopper not to
compete with GTP during his employment and for a period of one year after his
employment with GTP ends.
On January 26, 2000, GTP and Richard Haverly, GTP's then Senior Vice
President Operations, entered into an employment letter providing for the terms
of Mr. Haverly's employment with GTP at an initial base salary of $150,000. Mr.
Haverly's employment letter provides for a car allowance and participation in a
bonus plan. Mr. Haverly also was granted options to purchase up to 300,000
shares of common stock. Pursuant to Mr. Haverly's employment letter, if his
employment with GTP is terminated without cause or if Mr. Haverly cannot
continue his employment due to his death or permanent disability prior to his
first anniversary of employment with GTP, 25% of his options automatically will
vest. The employment letter contains a covenant by Mr. Haverly not to compete
with GTP during his employment and for a period of one year after his
employment with GTP ends. Prior to, but in anticipation of, Mr. Haverly's
employment with GTP, GTP allowed Mr. Haverly to purchase 100,000 shares of its
series E preferred stock at $2.11 per share.
On March 13, 2000, GTP and Johna Till Johnson, GTP's Senior Vice President
and Chief Technology Officer, entered into an employment letter providing for
the terms of Ms. Johnson's employment with GTP at an initial base salary of
$150,000. Ms. Johnson will receive a yearly bonus of $12,500 with an additional
bonus of up to $50,000 based on merit. Ms. Johnson's employment letter also
provides for a computer allowance of $2,000 per year. Ms. Johnson was granted
an option to purchase 125,000 shares of common stock. If Ms. Johnson's
employment with GTP is terminated without cause or if Ms. Johnson resigns her
position with GTP for cause prior to her first anniversary with GTP, then 25%
of the options granted to her will automatically vest. The employment letter
also contains a covenant by Ms. Johnson not to compete with GTP during her
employment and for a period of ninety days after her employment with GTP ends.
Executive Compensation
The following table contains information concerning all compensation paid by
GTP during 1999 to our CEO and our two other most highly compensated executive
officers.
<TABLE>
<CAPTION>
Annual Compensation
--------------------
Name and All Other
Principal Position Salary Bonus Securities Underlying Options Compensation(1)
------------------ ---------- --------- ----------------------------- ---------------
<S> <C> <C> <C> <C>
Joseph P. Beninati...... $ 250,375 $ -- 25,000 $8,748
Chief Executive Officer
Dennis M. Goett(2)...... 108,333 -- 108,333 3,356
Chief Financial Officer
John Stopper(3)......... 61,875 62,500 168,600 --
Senior Vice President
Sales and Marketing
</TABLE>
--------
(1) These amounts consist of car allowances and 401(k) plan contributions.
(2) Mr. Goett joined GTP on December 1, 1998. Mr. Goett was paid his salary and
car allowance for December 1998 in February 1999.
(3) Mr. Stopper joined GTP in August of 1999 and did not receive salary prior
to that date.
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<PAGE>
Option Grants in 1999
The following table sets forth information regarding grants of stock options
for the year ended December 31, 1999 to our Chief Executive Officer and to each
executive officer named in the Summary Compensation Table. All options were
granted pursuant to our 1997 Stock Plan. We have never granted stock
appreciation rights. The percentage of total options granted to employees in
the last fiscal year is based on options to purchase an aggregate of 2,659,375
shares of common stock granted under our option plans.
<TABLE>
<CAPTION>
Individual Grants(1)
------------------------------------------
Potential Realizable
% of Total Value At Assumed
Number of Options Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees Exercise For Option Term(2)
Options in Fiscal Price Per Expiration ----------------------
Name Granted Year Share Date 5% 10%
---- ---------- ---------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Beninati(3)... 25,000 * $0.30 8/24/09 $ 4,750 $ 12,000
Dennis M. Goett(4)...... 50,000 1.9% 0.30 2/1/09 9,500 24,000
Dennis M. Goett(3)...... 25,000 * 0.30 8/24/09 4,750 12,000
Dennis M. Goett(4)...... 33,333 1.3 0.60 12/2/09 12,667 32,000
John Stopper(5)......... 145,000 5.5 0.30 8/24/09 27,550 69,600
John Stopper(5)......... 23,600 * 0.60 12/2/09 8,968 22,656
</TABLE>
--------
* Less than 1%.
(1) Each option represents the right to purchase one share of common stock.
This table does not reflect GTP's grant of an option to purchase common
stock on February 15, 2000 to Dennis Goett for 66,667 shares. 33,333 of
these options vest on December 1, 2000 and 33,334 vest on December 1, 2001.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock prices.
These amounts represent certain assumed rates of appreciation in the value
of our common stock from the fair market value on the date of grant. Actual
gains, if any, on stock option exercises depend on the future performance
of the common stock. The amounts reflected in the table may not necessarily
be achieved.
(3) These options vest according to the following schedule: 12.5% of the
options vest at the end of each calendar quarter over a two-year period
beginning with the quarter ending on September 30, 1999.
(4) These options were immediately exercisable upon grant.
(5) These options vest according to the following schedule: 25% on the options
vest August 3, 2000, with an additional 2.08% of the option grant vesting
each month after that for 36 consecutive months.
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<PAGE>
Aggregated Option Exercises in Fiscal 1999 and Fiscal Year-End Option Values
The following table provides certain summary information concerning stock
options held as of December 31, 1999 by each of the named executive officers.
The value of unexercised in-the-money options at December 31, 1999, is based on
$ per share, the assumed fair market value of the common stock at December
31, 1999, less the exercise price of the share.
<TABLE>
<CAPTION>
Number of Securities
Underlying Options Value of Unexercised
Unexercised In-the-Money Options
Shares at December 31, 1999 at December 31, 1999(1)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ------------ ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Joseph P. Beninati...... -- -- 6,250 18,750 $ $
Dennis M. Goett......... 256,250 -- 352,083
John Stopper............ -- -- -- 168,600
</TABLE>
--------
(1) There was no public trading market for the common stock as of December 31,
1999. Accordingly, these values have been calculated on the basis of the
initial public offering price $ per share, less the applicable exercise
price per share, multiplied by the number of shares underlying such
options.
Stock Option Plans
2000 Stock Option and Incentive Plan
GTP's 2000 Stock Option and Incentive Plan was adopted by the board of
directors in August 2000 and approved by GTP's stockholders in , 2000, to be
effective upon the closing of this offering. The 2000 Stock Option and
Incentive Plan provides for the grant of stock-based awards to employees,
officers and directors of, and consultants or advisors to, GTP. Under the 2000
Stock Option and Incentive Plan, GTP may grant options that are intended to
qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, options not intended to qualify as
incentive stock options, restricted stock and other stock-based awards.
Incentive stock options may be granted only to employees of GTP. A total of
6,000,000 shares of common stock may be issued upon the exercise of options or
other awards granted under the 2000 Stock Option and Incentive Plan after the
completion of this offering. The maximum number of shares with respect to which
awards may be granted to any employee under the 2000 Stock Option and Incentive
Plan may not exceed 1,000,000 shares of common stock during any calendar year.
The 2000 Stock Option and Incentive Plan is administered by the board of
directors and the compensation committee. Subject to the provisions of the 2000
Stock Option and Incentive Plan, each of the board of directors and the
compensation committee has the authority to select the persons to whom awards
are granted and to determine the terms of each award, including the number of
shares of common stock subject to the award. Payment of the exercise price of
an award may be made in cash, shares of common stock, a combination of cash and
stock, a promissory note, or by any other method approved by the board or
compensation committee, consistent with Section 422 of the Internal Revenue
Code and Rule 16b-3 under the Securities Exchange Act of 1934. Unless otherwise
permitted by the board of directors, awards are not assignable or transferable
except by will or the laws of descent and distribution, and, during the
participant's lifetime, may be exercised only by the participant.
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<PAGE>
The board of directors or compensation committee may, in its sole
discretion, amend, modify or terminate any award granted or made under the 2000
Stock Option and Incentive Plan, so long as the amendment, modification or
termination would not materially and adversely affect the participant. The
board of directors or compensation committee may also, in its sole discretion,
accelerate or extend the date on which any options granted under the 2000 Stock
Option and Incentive Plan may be exercised.
1997 Stock Plan
Our 1997 Stock Plan was adopted by the board of directors and approved by
our stockholders on May 1, 1997. We have authorized 10,150,000 shares of common
stock for issuance under this plan. We are authorized to grant to our employees
options to purchase common stock intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code. In addition, we are authorized
to grant non-qualified stock option to purchase shares of common stock to
employees, consultants and directors. In general, options granted pursuant to
the 1997 Stock Plan are exercisable within ten years of the original grant
date. The board of directors has the discretion to make each option immediately
exercisable or exercisable in installments. Options are not assignable or
transferable except by will or the laws of descent or distribution. As of July
31, 2000, an aggregate of 6,442,986 shares of common stock at a weighted
average price of $0.73 per share were outstanding under the 1997 Stock Plan. No
additional option grants will be made under the 1997 Stock Plan following this
offering.
2000 Employee Stock Purchase Plan
The 2000 Employee Stock Purchase Plan was adopted by the board of directors
in August 2000 and approved by GTP's stockholders in , 2000, to be effective
upon the closing of this offering. The 2000 Employee Stock Purchase Plan
provides for the issuance of a maximum of 850,000 shares of common stock.
The 2000 Employee Stock Purchase Plan is administered by the Compensation
Committee of the board of directors. All employees of GTP whose customary
employment is for more than 20 hours per week and for more than five months in
any calendar year and who have completed more than three months of employment
with GTP on or before the first day of any six-month payment period are
eligible to participate in the 2000 Employee Stock Purchase Plan. Employees who
would own 5% or more of the total combined voting power or value of GTP's stock
immediately after the grant may not participate in the 2000 Employee Stock
Purchase Plan. To participate in the 2000 Employee Stock Purchase Plan, an
employee must authorize GTP to deduct an amount (not less than 1% nor more than
10% of a participant's total cash compensation) from his or her pay during six-
month pay periods. The first payment period will commence following this
offering or a date determined by the board of directors and will end on
December 31, 2001. Thereafter, the payment periods will commence on the six-
month periods commencing on July 1 and January 1, respectively, and ending on
the following December 31 and June 30, respectively, of each year, but in no
case will an employee be entitled to purchase more than 1,000 shares in any one
payment period. The exercise price for the option granted in each payment
period is 85% of the lesser of the average market price of the common stock on
the first or last business day of the payment period, in either event rounded
up to the nearest cent to avoid fractions of a dollar other than 1/4, 1/2 and
3/4. If an employee is not a
59
<PAGE>
participant on the last day of the payment period, the employee is not entitled
to exercise his or her option and the amount of his or her accumulated payroll
deductions will be refunded. Options granted under the 2000 Employee Stock
Purchase Plan may not be transferred or assigned. An employee's rights under
the 2000 Employee Stock Purchase Plan terminate upon his or her voluntary
withdrawal from the plan at any time or upon termination of employment. No
options have been granted to date under the 2000 Employee Stock Purchase Plan.
401(k) Plan
GTP has established a tax-qualified employee savings and retirement plan.
Employees must complete two months of service at GTP before they are eligible
to participate on the first day of the month following completion. Employees
may contribute a percentage of their pre-tax compensation and GTP may, in its
discretion from year-to-year, make matching contributions to employees. Amounts
matched by GTP vest over four years.
Limitation of Liability and Indemnification Matters
GTP's amended and restated certificate of incorporation and by-laws provide
that the directors and officers of GTP shall be indemnified by GTP to the
fullest extent permitted by Delaware law, as it now exists or may in the future
be amended, against all expenses and liabilities reasonably incurred in
connection with their service for or on behalf of GTP. In addition, the amended
and restated certificate of incorporation provides that the directors of GTP
will not be personally liable for monetary damages to GTP for breaches of their
fiduciary duty as directors, unless they violated their duty of loyalty to GTP
or its stockholders, acted in bad faith, knowingly or intentionally violated
the law, authorized illegal dividends or redemptions or derived an improper
personal benefit from their action as directors. GTP intends to obtain
insurance which insures the directors and officers of GTP against certain
losses and which insures GTP against certain of its obligations to indemnify
its directors and officers.
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RELATED PARTY TRANSACTIONS
We believe that all of the transactions set forth below were made on terms
no less favorable to us than could have been obtained from unaffiliated third
parties. We intend that all future transactions, including loans between us and
our officers, directors, principal stockholders and their affiliates will be
approved by a majority of the board of directors, including a majority of the
independent and disinterested members of the board of directors, and will be on
terms no less favorable to us than those that could be obtained from
unaffiliated third parties.
Sales of Stock and Warrants
Series D Preferred Stock and Warrant financing. On February 1, 1999, we sold
an aggregate of 5,128,205 shares of series D preferred stock for $1.17 per
share for an aggregate purchase price of $6.0 million to seven accredited
investors, and we issued two warrants, which are subject to vesting, to
purchase up to an aggregate of 4,273,504 shares of series D preferred stock at
an exercise price of $1.17 per share to two of those investors. Investors
owning five percent or more of our outstanding capital stock who invested over
$60,000 are as follows:
<TABLE>
<CAPTION>
Series D
Series D Preferred Stock
Investor Preferred Stock Warrant
-------- --------------- ---------------
<S> <C> <C>
VantagePoint Communications Partners, LP....... 2,849,002 2,849,002
VantagePoint Venture Partners 1996, LP......... 1,424,502 1,424,502
FG-GTPD........................................ 747,863 --
</TABLE>
FG-GTPD and four of its affiliates collectively own more than 25% of our
capital stock and are collectively referred to in this prospectus as the FG II
Entities.
William Jefferson Marshall, one of our directors, is a partner of
VantagePoint Partners, an affiliate of the above-referenced VantagePoint
entities.
In addition, Dennis M. Goett, one of our directors and our Senior Vice
President and Chief Financial Officer was issued 85,470 shares of series D
preferred stock and was paid $200,000 for consulting services provided by
CrossRoads Strategy Group, Inc. to GTP in connection with GTP's series D
preferred stock financing. The fees under the consulting agreement consisted of
a percentage of the proceeds and a percentage of the shares sold in the series
D preferred stock financing. The agreement was terminated in February 1999.
Series E Preferred Stock financing. GTP issued an aggregate of 10,235,188
shares of its series E preferred stock for $2.11 per share for an aggregate
purchase price of $21.6 million, between September 10, 1999 and January 14,
2000. Dennis M. Goett invested over $60,000 in this financing as follows:
<TABLE>
<CAPTION>
Series E
Investor Date of Purchase Preferred Stock
-------- ---------------- ---------------
<S> <C> <C>
Dennis M. Goett.............................. 10/28/99 18,957
1/14/00 14,218
Dennis M. Goett (through IRA FBO Dennis M.
Goett)...................................... 10/28/99 28,435
</TABLE>
61
<PAGE>
Investors owning five percent or more of our outstanding capital stock who
invested over $60,000 in this financing are as follows:
<TABLE>
<CAPTION>
Series E
Investor Date of Purchase Preferred Stock
-------- ---------------- ---------------
<S> <C> <C>
Chase Venture Capital Associates, L.P......... 9/10/99 4,739,337
10/28/99 473,933
VantagePoint Communications Partners, L.P. ... 9/10/99 947,867
10/28/99 316,114
VantagePoint Venture Partners 1996, L.P....... 9/10/99 473,934
10/28/99 157,820
FG-GTPF....................................... 9/10/99 236,967
</TABLE>
FG-GTPF is one of the FG II Entities.
Registration Rights. In connection with the issuance of series D preferred
stock, series E preferred stock and series F preferred stock, we granted
registration rights to the holders of such stock. See "Description of Capital
Stock--Registration Rights."
Agreements with stockholders or their affiliates.
GTP has entered into a Master Services Agreement with Chase Capital
Partners, an affiliate of Chase Venture Capital Associates, L.P., dated
September 28 1999, requiring GTP to provide information technology services to
Chase. GTP also entered into a Master Agreement for consulting services with
Chase Manhattan Bank, another affiliate of Chase Venture Capital Associates,
L.P.
GTP has also provided information technology consulting services to FG II,
an affiliate of the FG II Entities.
In addition, GTP has also entered into a Master Services Agreement with
VantagePoint Venture Partners, an affiliate of the VantagePoint Entities, dated
June 8, 1999, requiring GTP to provide information technology consulting
services to VantagePoint Venture Partners.
GTP entered into an agreement with CrossRoads Strategy Group, Inc. on
October 15, 1999. The agreement provided that CrossRoads would receive cash and
GTP capital stock in exchange for consulting services rendered to GTP in
connection with GTP's private financing activity. GTP satisfied its commitment
to CrossRoads by issuing 85,470 shares of its series D preferred stock to
Dennis M. Goett, the sole shareholder of CrossRoads, and by paying CrossRoads
$200,000.
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<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of our common stock as of July 31, 2000, and as adjusted to reflect
the sale of the shares of common stock offered by us in this offering for:
. each person known by us to beneficially own more than 5% of our common
stock;
. each executive officer named in the Summary Compensation Table;
. each of our directors; and
. all of our executive officers and directors as a group.
Unless otherwise indicated, the address of each beneficial owner listed
below is c/o Greenwich Technology Partners, Inc., 123 Main Street, White
Plains, New York 10601.
The following table gives effect to the shares of common stock issuable
within 60 days of July 31, 2000 upon the exercise of all options and other
rights beneficially owned by the indicated stockholders on that date.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power
with respect to the shares. Unless otherwise indicated, the persons named in
the table have sole voting and sole investment control with respect to all
shares beneficially owned.
<TABLE>
<CAPTION>
Percentage of Shares
Beneficially Owned(1)
Number of Shares ------------------------------
Beneficial Owner Beneficially Owned Before Offering After Offering
---------------- ------------------ --------------- --------------
<S> <C> <C> <C>
Named Executive Officers and
Directors:
Joseph P. Beninati(2)....... 4,496,650 12.4% %
Ronald V. Davis(3).......... 9,969,180 27.5
Dennis M. Goett(4).......... 746,038 2.0
Edmund A. Hajim(5).......... 9,636,180 26.6
Jonathan R. Lynch(6)........ 5,228,895 14.4
William Jefferson
Marshall(7)................ 9,176,316 23.6
John Stopper................ 72,870 *
David H.W. Turner(8)........ 27,473 *
Other 5% Stockholders:
Chase Venture Capital
Associates, L.P.(6)........ 5,228,895 14.4
FG II Entities(9)........... 9,620,555 26.5
Persistence Partners,
L.P.(2).................... 4,271,025 11.8
VantagePoint Entities(10)... 9,160,691 23.6
All directors and executive
officers as a group:
(10 persons)(11)........... 29,833,047 76.0
</TABLE>
--------
* Less than 1%.
(1) Percentage of beneficial ownership is based on 36,247,074 shares of common
stock outstanding as of July 31, 2000 and shares of common stock
outstanding after this offering.
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<PAGE>
(2) Includes 200,000 shares of common stock gifted to various family trusts,
10,000 shares of common stock held by Mr. Beninati's wife and 4,271,025
shares of common stock owned by Persistence Partners, L.P. Mr. Beninati is
the Chief Executive Officer and majority shareholder of JoBen Equities,
LTD., the general partner of Persistence Partners, L.P. and may be deemed
to be a beneficial owner of all the shares held by Persistence. Also
includes 15,625 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days.
(3) Includes 9,620,555 shares of common stock owned by the FG II Entities, as
described in note 9 below, 333,000 shares of common stock owned by Mr.
Davis and 15,625 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days. Mr. Davis' address is c/o of Davis Capital, L.L.C., 332 Forest
Avenue, Suite 22, Laguna Beach, California 92651.
(4) Includes 64,000 shares of common stock issued to the Dennis M. Goett
Children's Irrevocable Trust as to which Mr. Goett disclaims beneficial
ownership, 10,000 shares of common stock held by Mr. Goett's sister and
28,435 shares issued to an individual retirement account for the benefit
of Mr. Goett. Also includes 284,027 shares of common stock issuable upon
the exercise of options that are currently exercisable or that are
exercisable within 60 days.
(5) Includes 9,620,555 shares of common stock owned by the FG II Entities, as
described in note 9 below, and 15,625 shares of common stock issuable upon
the exercise of options that are currently exercisable or that are
exercisable within 60 days. Mr. Hajim's address is c/o ING Furman Selz
Asset Management, 230 Park Avenue, 13th Floor, New York, New York 10169.
(6) Includes 15,625 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days. Mr. Lynch is a Principal of and may be deemed to beneficially own
all of the shares held by Chase Venture Capital Associates, L.P. Mr.
Lynch's address is c/o Chase Capital Partners, 1221 6th Avenue, 39th
Floor, New York, New York, 10020.
(7) Includes 9,160,691 shares of common stock owned by the VantagePoint
Entities, as described in note 10 below, and 15,625 shares of common stock
issuable upon the exercise of options that are currently exercisable or
become exercisable within 60 days. Mr. Marshall's address is c/o
VantagePoint Venture Partners, One Stamford Landing, Suite 201, Stamford,
Connecticut 06902.
(8) Includes 15,625 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days. Mr. Turner's address is c/o Reuters American Holding Incorporated,
263 Tresser Boulevard, Stamford, Connecticut 06901.
(9) Includes 4,000,000 shares held by FG-GTP, 4,139,999 shares held by FG-
GTPC, 747,863 shares held by FG-GTPD, 495,726 shares held by FG-GTPE and
236,967 shares held by FG-GTPF. These entities are all affiliated with FG
II. Messrs. Davis and Hajim are both members of FG II. As a result,
Messrs. Davis and Hajim may be deemed to be beneficial owners of all of
the shares held by the FG II Entities. The address for the FG II Entities
is c/o FG II, 20 Dayton Avenue, Greenwich, Connecticut 06830.
(10) Includes 2,564,102 shares of common stock issuable upon the conversion of
warrants which are currently exercisable or will be exercisable within 60
days. This number does not include any shares that the VantagePoint
Entities may purchase in the offering. The VantagePoint Entities are
controlled by VantagePoint Venture Partners. Mr. Marshall is a Managing
Partner of VantagePoint Venture Partners and may be deemed to beneficially
own all of the shares held by the VantagePoint Entities. Mr. Marshall has
disclaimed beneficial ownership as to all of the shares owned by the
VantagePoint Entities. The VantagePoint entities address is c/o
VantagePoint Venture Partners, One Stamford Landing, Suite 201, Stamford,
Connecticut 06902.
(11) Includes 426,951 shares of common stock issuable upon the exercise of
options which are currently exercisable or which are exercisable within 60
days and 2,564,102 shares of common stock issuable upon the exercise, and
subsequent conversion, of warrants to purchase 2,564,102 shares of common
stock which will become exercisable immediately prior to the offering.
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
General
The following description of our common stock and preferred stock and the
relevant provisions of our amended and restated certificate of incorporation
and by-laws to be effective upon the closing of this offering are summaries and
are qualified by reference to our amended and restated certificate of
incorporation and by-laws, copies of which have been filed with the Securities
and Exchange Commission as exhibits to our registration statement, of which
this prospectus forms a part.
Upon the closing of our offering, our authorized capital stock will consist
of 300,000,000 shares of common stock, par value $0.01 per share, and
20,000,000 shares of preferred stock, par value $0.01 per share.
Common Stock
As of July 31, 2000, there were 36,247,074 shares of our common stock
outstanding on an as- converted basis held of record by 193 stockholders.
Holders of shares of common stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
those dividends, if any, as may be declared by our board of directors out of
funds legally available, subject to any preferential dividend rights of any
outstanding preferred stock. Upon the liquidation, dissolution or winding up of
GTP, the holders of our common stock are entitled to receive ratably our net
assets available, if any, after the payment of all debts and other liabilities
and subject to the prior rights of any outstanding preferred stock. Holders of
our common stock have no preemptive, subscription, redemption or conversion
rights. The outstanding shares of our common stock are, and the shares offered
in this offering will be, when issued in consideration for payment, fully paid
and nonassessable. The rights, preferences and privileges of holders of common
stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock which GTP may designate and
issue in the future.
Preferred Stock
Upon the closing of this offering, there will be no shares of preferred
stock outstanding. Our board of directors will be authorized, without further
stockholder approval, to issue from time to time up to an aggregate of
20,000,000 shares of preferred stock in one or more series and to fix or alter
the designations, preferences, rights and any qualifications, limitations or
restrictions of the shares of each series of preferred stock, including the
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, including sinking fund provisions, redemption price or prices,
liquidation preferences and the number of shares constituting any series or
designation of series. For more information, see "--Anti-Takeover Effects of
Provisions of Delaware Law and Our Certificate of Incorporation and By-laws."
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<PAGE>
Options
10,150,000 shares of our common stock are authorized for issuance under our
1997 Stock Plan, 6,000,000 shares of common stock reserved for issuance, upon
exercise of stock options under our 2000 Stock Option and Incentive Plan and
850,000 shares of common stock reserved for issuance under our 2000 Employee
Stock Purchase Plan. As of July 31, 2000, there were outstanding options to
purchase a total of 6,442,986 shares of common stock. Since GTP intends to file
a registration statement on Form S-8 as soon as practicable following the
closing of this offering, any shares issued upon exercise of these options will
be immediately available for sale in the public market, subject to the terms of
lock-up agreements entered into with the underwriters. For more information,
see "Management--Stock Option Plans" and "Shares Eligible for Future Sale."
Warrants
We have two outstanding warrants. The warrants entitle the respective
holders the right to purchase up to 2,849,002 and 1,424,502 shares of Series D
preferred stock, convertible into shares of common stock, at an exercise price
of $1.17 per share. Both warrants expire on February 1, 2004. The warrants
become exercisable upon the earliest to occur of (i) the completion of an
initial public offering of GTP's common stock; (ii) the merger or acquisition
of the company where fifty percent of the outstanding capital stock of GTP or
fifty percent of the voting power in GTP is transferred; (iii) a sale or other
disposition of all or substantially all of GTP's assets; and (iv) January 1,
2001. Notwithstanding the above, fifty percent of the warrants vests if an
event described in (i)-(iii) above, with a value of greater than $4.68 per
share, occurs prior to June 30, 2000 and sixty percent of the warrants vests if
the event occurs prior to December 31, 2000, with the remaining rights pursuant
to the warrants terminating.
Registration Rights
Pursuant to the terms of a registration rights agreement, beginning six
months after the closing of this offering, the holders of 21,762,966 shares of
common stock and shares of common stock issuable upon the exercise of warrants
to purchase common stock will be entitled to demand registration rights with
respect to the registration of their shares under the Securities Act of 1933.
GTP is not required to effect more than one registration pursuant to these
demand registration rights. In addition, these holders will be entitled to
piggyback registration rights with respect to the registration of their shares
under the Securities Act of 1933, subject to various limitations. Further, at
any time after GTP becomes eligible to file a registration statement on Form S-
3, these holders may require us to file one or more registration statements
under the Securities Act of 1933 on Form S-3 with respect to their shares of
common stock. These registration rights are subject to conditions and
limitations, among them the right of the underwriters of an offering to limit
the number of shares of common stock held by security holders with registration
rights to be included in a registration. Generally, we are required to bear all
of the expenses of all of these registrations, except underwriting discounts
and selling commissions. Registration of any shares of common stock held by
security holders with registration rights would result in shares becoming
freely tradeable without restriction under the Securities Act of 1933
immediately upon effectiveness of the registration.
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<PAGE>
Anti-Takeover Effects of Provisions of Delaware Law and Our Certificate of
Incorporation and By-laws
Upon completion of this offering, GTP will be subject to the provisions of
Section 203 of the General Corporation Law of Delaware. Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years after the date of
the transaction in which the person became an interested stockholder, unless
the business combination is approved in a prescribed manner. A "business
combination" includes mergers, asset sales and other transactions resulting in
a financial benefit to the interested stockholder. Subject to certain
exceptions, an "interested stockholder" is a person who, together with
affiliates and associates, owns, or within the last three years did own, 15% or
more of the corporation's voting stock.
GTP's amended and restated certificate of incorporation provides for the
division of the board of directors into three classes as nearly equal in size
as possible with staggered three-year terms. See "Management--Composition of
the Board." In addition, GTP's amended and restated certificate of
incorporation provides that directors may be removed only for cause by the
affirmative vote of the holders of 75% of the shares of capital stock of GTP
entitled to vote. Under the amended and restated certificate of incorporation,
any vacancy on the board of directors, including a vacancy resulting from an
enlargement of the board, may only be filled by vote of a majority of the
directors then in office. The likely effect of the classification of the board
of directors and the limitations on the removal of directors and filling of
vacancies is an increase in the time required for the stockholders to change
the composition of the board of directors. For example, in general, at least
two annual meetings of the stockholders will be necessary for stockholders to
effect a change in a majority of the members of the board of directors.
The amended and restated certificate of incorporation also provides that,
after the closing of this offering, any action required or permitted to be
taken by the stockholders of GTP at an annual meeting or special meeting of
stockholders may only be taken if it is properly brought before the meeting and
may not be taken by written action in lieu of a meeting. The amended and
restated certificate of incorporation further provides that special meetings of
stockholders may only be called by the board of directors, the Chairman of the
board of directors or the President of GTP. Under the restated by-laws, in
order for any matter to be considered "properly brought" before a meeting, a
stockholder must comply with certain requirements regarding advance notice to
GTP. These provisions could have the effect of delaying until the next
stockholders' meeting stockholder actions which are favored by the holders of a
majority of GTP's outstanding voting securities. These provisions may also
discourage another person or entity from making a tender offer for GTP's common
stock, because such person or entity, even if it acquired a majority of the
outstanding voting securities of GTP, would be able to take action as a
stockholder (such as electing new directors or approving a merger) only at a
duly called stockholders meeting, and not by written consent.
The Delaware General Corporation Law provides generally that the affirmative
vote of a majority of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation or by-laws, unless a
corporation's certificate of incorporation or by-laws, as the case may be,
require a greater percentage. The amended and restated certificate of
incorporation requires the affirmative vote of the holders of at least 75% of
the shares of capital stock of GTP issued and
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<PAGE>
outstanding and entitled to vote to amend or repeal any of the foregoing
provisions of the amended and restated certificate of incorporation, and to
reduce the number of authorized shares of common stock and preferred stock. The
restated by-laws also may be amended or repealed by a majority vote of the
board of directors subject to any limitations set forth in the restated by-
laws, and amendment by stockholders of provisions described above requires the
affirmative vote of the holders of at least 75% of the shares of capital stock
of GTP issued and outstanding and entitled to vote. The 75% stockholder vote
would be in addition to any separate class vote that might in the future be
required pursuant to the terms of any series preferred stock that might be
outstanding at the time any such amendments are submitted to stockholders.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is ChaseMellon
Shareholder Services, L.L.C.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. Furthermore,
none of the currently issued shares of our common stock will be available
public for sale shortly after this offering because of certain contractual and
legal restrictions on resale described below, sales of substantial amounts of
common stock in the public market after these restrictions lapse could
adversely affect the prevailing market price and our ability to raise equity
capital in the future.
Upon the closing of this offering, we will have outstanding an aggregate of
shares of our common stock, assuming no exercise of outstanding options and
warrants. Of these shares, all shares sold in this offering will be freely
tradeable without restriction or further registration under the Securities Act
unless such shares are purchased by "affiliates" as that term is defined in
Rule 144 under the Securities Act. The following table illustrates the shares
eligible for sale in the public market:
<TABLE>
<CAPTION>
Number of Shares Date
---------------- ----
<C> <S>
0 After the date of this prospectus, freely tradeable shares
sold in this offering and shares saleable under Rule 144(k)
that are not subject to the 180-day lock-up
247,566 After 90 days from the date of this prospectus, shares
saleable under Rule 144 or Rule 701 that are not subject to
the 180-day lock-up
31,322,561 After 180 days from the date of this prospectus, the 180-
day lock-up is released and these shares are saleable under
Rule 144 (subject, in some cases, to volume limitations),
Rule 144(k) or Rule 701
4,924,513 After 180 days from the date of this prospectus, restricted
securities that are held for less than one year are not yet
saleable under Rule 144
</TABLE>
Lock-up Agreements
Holders of substantially all of our outstanding shares have signed lock-up
agreements under which they agreed not to transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible into
or exercisable or exchangeable for shares of our common stock for 180 days
after the date of this prospectus without prior written consent of Credit
Suisse First Boston Corporation.
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any three-
month period a number of shares that does not exceed the greater of:
. 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after the offering; or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.
Sales under Rule 144 are also subject to certain manner-of-sale provisions,
notice requirements and the availability of current public information about
us.
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<PAGE>
Rule 144(k)
Under Rule 144(k), a person who is not one of our affiliates at any time
during the 90 days preceding a sale and who has beneficially owned the shares
proposed to be sold for at least two years, including the holding period of any
prior owner other than an affiliate, is entitled to sell the shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. Therefore, unless otherwise contractually
restricted, "144(k)" shares may be sold immediately upon completion of this
offering.
Rule 701
In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchased shares from us in
connection with a compensatory stock plan or other written agreement is
eligible to resell the shares 90 days after the effective date of this offering
in reliance on Rule 144, but without compliance with certain restrictions,
including the holding period, contained in Rule 144.
Registration Rights
After this offering, the holders 21,762,966 shares of common stock and
shares of common stock issuable upon the exercise of warrants to purchase
common stock will be entitled to certain rights with respect to the
registration of those shares under the Securities Act. For more information,
see "Description of Capital Stock--Registration Rights." Once registered, these
shares of our common stock become freely tradeable without restriction under
the Securities Act. These sales could have a material adverse effect on the
trading price of our common stock.
Stock Plans
We intend to file a registration statement under the Securities Act covering
17,000,000 shares of common stock reserved for issuance under our 1997 Stock
Plan, 2000 Stock Option and Incentive Plan and 2000 Employee Stock Purchase
Plan and the shares reserved for issuance upon exercise of outstanding non-plan
options. We expect this registration statement to be filed and to become
effective as soon as practicable after the effective date of this offering.
As of July 31, 2000, options to purchase 6,442,986 shares of common stock
were outstanding. All of these shares will be eligible for sale in the public
market from time to time, subject to vesting provisions, Rule 144 volume
limitations applicable to our affiliates and, in the case of some options, the
expiration of lock-up agreements.
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<PAGE>
MATERIAL UNITED STATES FEDERAL TAX
CONSIDERATIONS FOR NON-UNITED STATES HOLDERS
General
This section is a general discussion of the material U.S. Federal income and
estate tax consequences to holders of common stock that are "non-U.S. holders."
In general, you are a non-U.S. holder if you are:
. an individual that is a nonresident alien of the U.S.;
. a corporation organized or created under non-U.S. law;
. an estate that is not taxable in the U.S. on its worldwide income; or
. a trust that is either not subject to primary supervision over its
administration by a U.S. Court or not subject to the control of a U.S.
person with respect to substantial trust decisions.
If a partnership holds common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partnership or a partner of a partnership holding
common stock, we suggest that you consult your tax advisor.
This discussion does not address all aspects of U.S. Federal taxation, and
in particular is limited in the following ways:
. The discussion only covers you if you hold your common stock as a capital
asset (that is, for investment purposes), and if you do not have a
special tax status, such as your status as an insurance company, tax-
exempt organization, financial institution, broker-dealer, U.S.
expatriate, or holder of our securities as part of a "straddle," "hedge"
or "conversion transaction."
. The discussion does not cover tax consequences that depend upon your
particular tax situation in addition to your ownership of the common
stock.
. The discussion is based on provisions of the United States Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed
Treasury regulations thereunder and administrative and judicial
interpretations thereof, all as of the date hereof. Changes in the law
may change the tax treatment of holding the common stock possibly on a
retroactive basis.
. The discussion does not cover state, local or foreign law.
. We have not requested a ruling from the Internal Revenue Service ("IRS")
on the tax consequences of owning the common stock. As a result, the IRS
could disagree with portions of this discussion.
If you are considering buying common stock, we suggest that you consult your
tax advisors about the United States Federal, state, local and non-U.S. income
and other tax consequences of holding the common stock in your particular
situation.
Distributions
Distributions paid on the shares of common stock generally will constitute
dividends for U.S. Federal income tax purposes to the extent paid from our
current or accumulated earnings and profits, as determined under U.S. Federal
income tax principles. Dividends paid to you generally will be
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<PAGE>
subject to United States withholding tax at a 30% rate or, if a tax treaty
applies, a lower rate specified by the treaty, unless you receive the dividends
in connection with a trade or business you conduct in the United States.
Currently, withholding generally is imposed on the gross amount of a
distribution, regardless of whether we have sufficient earnings and profits to
cause the distribution to be a dividend for U.S. Federal income tax purposes.
However, withholding on distributions made after December 31, 2000, may be on
less than the gross amount of the distribution if the distribution exceeds a
reasonable estimate of our accumulated and current earnings and profits.
In order to claim an exemption from withholding on the ground that the
dividends are effectively connected with a U.S. trade or business that you
conduct in the United States, you must provide to us or our paying agent a duly
completed Form 4224 or Form W-8ECI (or substitute form) certifying your
exemption and comply with other applicable certification and disclosure
requirements. However, dividends exempt from U.S. withholding because they are
effectively connected generally are subject to U.S. Federal income tax on a net
income basis at the regular graduated United States Federal income tax rates.
These rules might be altered by an applicable tax treaty. You should consult
your tax advisors about your entitlement, if any, to benefits under an
applicable tax treaty. If you are a corporation, any effectively connected
dividends received by you may also, under certain circumstances, be subject to
an additional "branch profits tax" at a 30% rate or a lower rate specified by
an applicable income tax treaty.
Under current U.S. Treasury regulations, dividends paid before January 1,
2001, to an address outside the United States are presumed to be paid to a
resident of the country of address, unless the payor has knowledge to the
contrary, for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. However, U.S. Treasury
regulations applicable to dividends paid after December 31, 2000 eliminate this
presumption, subject to certain transition rules. To receive a reduced treaty
rate for dividends paid to you after December 31, 2000, you must furnish to us
or our paying agent a duly completed Form W-8BEN (or substitute form)
certifying to your qualification for the reduced rate.
You may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund along with the required information with the IRS.
Gain on Disposition of Common Stock
You generally will not be subject to U.S. Federal income tax with respect to
gain recognized on a sale or other disposition of the common stock unless one
of the following applies:
. If the gain is effectively connected with a trade or business you conduct
in the United States (and, if a tax treaty applies, is attributable to a
permanent establishment you maintain in the United States) you will,
unless an applicable treaty provides otherwise, be taxed on your net gain
on the sale under regular graduated U.S. Federal income tax rates. If you
are a foreign corporation, you may also, under certain circumstances, be
subject to an additional branch profits tax at a 30% rate, unless an
applicable income tax treaty provides for a lower rate and you
demonstrate your qualification for such rate.
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<PAGE>
. If you are an individual and are present in the United States for 183 or
more days in the taxable year of the sale or other disposition and
certain other conditions are met, you will be subject to a flat 30% tax
on your gain from the sale, which may be offset by certain U.S. capital
losses.
. If we are or have been a "U.S. real property holding corporation" for
U.S. Federal income tax purposes at any time during the shorter of the
five-year period ending on the date of the disposition or the period
during which you held the common stock, and certain other conditions
apply, you may be taxable in the U.S. on your gain from a sale of the
common stock pursuant to the effectively connected rules described above.
We believe that we are not currently and do not anticipate becoming a
U.S. real property holding corporation for U.S. Federal income tax
purposes.
Federal Estate Tax
If you are an individual non-U.S. holder who is not a citizen or resident,
as defined for U.S. Federal estate tax purposes, common stock held by you at
the time of your death will be included in your gross estate for U.S. Federal
estate tax purposes, and may be subject to U.S. Federal estate tax, unless an
applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding Tax
We generally must report annually to the IRS the amount of dividends paid to
you and the tax withheld with respect to the dividends. Pursuant to an
applicable tax treaty, that information may also be made available to the tax
authorities in your country of residence.
Under some circumstances, U.S. Treasury regulations require information
reporting and backup withholding at a rate of 31% on certain payments on common
stock. Under currently applicable law, backup withholding and information
reporting requirements generally will not apply to dividends paid before
January 1, 2001 to a non-U.S. holder at an address outside the United States.
For dividends paid after December 31, 2000, however, a non-U.S. holder of
common stock that fails to certify its non-U.S. holder status in accordance
with applicable U.S. Treasury regulations may be subject to backup withholding
at a rate of 31% on payments of dividends.
As a general matter, information reporting and backup withholding will not
apply to a payment to you by or through a foreign office of a foreign broker of
the proceeds of a sale of common stock effected outside the U.S. However,
information reporting requirements, but currently not backup withholding,
generally will apply to a payment by or through a foreign office of a broker of
such proceeds if the broker:
. is a U.S. person for U.S. Federal income tax purposes;
. is a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the U.S.;
. is a "controlled foreign corporation" as defined in the Code; or
. is a foreign partnership with certain U.S. connections (for payments made
after December 31, 2000).
73
<PAGE>
Information reporting requirements will not apply to the payment of the
proceeds of the sale of common stock in the above cases if the broker has
documentary evidence in its records that you are a non-U.S. holder and certain
conditions are met or you otherwise establish an exemption. Effective after
December 31, 2000, backup withholding may apply to the payment of disposition
proceeds by or through a non-U.S. office of a broker in the above cases unless
certification requirements are satisfied or an exemption is otherwise
established and the broker has no actual knowledge that the holder is a U.S.
person. Non-U.S. holders should consult their own tax advisors regarding the
application of the information reporting and backup withholding rules to them,
including changes to these rules that will become effective after December 31,
2000.
Payment of the proceeds of a sale of common stock by or through a U.S.
office of a broker is subject to both backup withholding and information
reporting unless you certify to the payor in the manner required as to your
non-U.S. status under penalties of perjury or otherwise establish an exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. Federal income tax. Rather, any amounts withheld under the backup
withholding rules will be refunded or allowed as a credit against your U.S.
Federal income tax liability, if any, provided the required information or
appropriate claim for refund is filed with the IRS.
The foregoing discussion is only a summary of the material U.S. Federal
income and estate tax consequences of the ownership, sale or other disposition
of common stock by non-U.S. holders. You are urged to consult your own tax
advisor with respect to the particular tax consequences to you of ownership and
disposition of common stock, including the effect of any state, local, foreign
or other tax laws and any applicable income or estate tax treaties.
74
<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, First Union Securities,
Inc., ING Barings LLC and PaineWebber Incorporated are acting as
representatives, the following respective numbers of shares of common stock:
<TABLE>
<CAPTION>
Number
Underwriter of Shares
----------- ---------
<S> <C>
Credit Suisse First Boston Corporation............................
First Union Securities, Inc.......................................
ING Barings LLC...................................................
PaineWebber Incorporated .........................................
---
Total...........................................................
===
</TABLE>
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering price
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to broker/dealers may be changed by
the representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
<TABLE>
<CAPTION>
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Underwriting Discounts
and Commissions paid by
us..................... $ $ $ $
Expenses payable by us.. $ $ $ $
</TABLE>
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
75
<PAGE>
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933
relating to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any of our common stock, or publicly disclose
the intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus except issuances
pursuant to the exercise of employee stock options outstanding on the date
hereof.
Our officers and directors and holders of substantially all of our
outstanding stock have agreed that they will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any shares of our
common stock or securities convertible into or exchangeable or exercisable for
any shares of our common stock, enter into a transaction that would have the
same effect, or enter into any swap, hedge or other arrangement that transfers,
in whole or in part, any of the economic consequences of ownership of our
common stock, whether any such aforementioned transaction is to be settled by
delivery of our common stock or other such securities, in cash or otherwise, or
publicly disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of Credit Suisse
First Boston Corporation for a period of 180 days after the date of this
prospectus.
The underwriters have reserved for sale at the initial public offering price
up to shares of the common stock for employees, directors and certain other
persons associated with us who have expressed an interest in purchasing common
stock in the offering. The number of shares available for sale to the general
public in the offering will be reduced to the extent these persons purchase
such reserved shares. Any reserved shares not so purchased will be offered by
the underwriters to the general public on the same terms as the other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in that respect.
We have applied to list the shares of common stock on The Nasdaq Stock
Market's National Market under the symbol "GTPI".
Credit Suisse First Boston Venture Fund I, L.P. purchased 236,987 shares of
our series E preferred stock in a private placement on September 10, 1999.
Credit Suisse First Boston Corporation is a limited partner of the Credit
Suisse First Boston Venture Fund I, L.P.
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiation
between us and the underwriters. The principal factors to be considered in
determining the public offering price include the following:
. the information included in this prospectus and otherwise available to
the representatives;
. market conditions for initial public offerings;
. the history and the prospects for the industry in which we will compete;
. the ability of our management;
76
<PAGE>
. the prospects for our future earnings;
. the present stage of our development and our current financial
condition;
. the general condition of the securities markets at the time of this
offering; and
. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.
In connection with the offering the underwriters may engage in stabilizing
transactions, over-allotment transactions, syndicate covering transactions,
penalty bids and passive market making in accordance with Regulation M under
the Securities Exchange Act of 1934 (the "Exchange Act").
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Over-allotment involves sales by the underwriters of shares in excess of
the number of shares the underwriters are obligated to purchase, which
creates a syndicate short position. The short position may be either a
covered short position or a naked short position. In a covered short
position, the number of shares over-allotted by the underwriters is not
greater than the number of shares that they may purchase in the over-
allotment option. In a naked short position, the number of shares
involved is greater than the number of shares in the over-allotment
option. The underwriters may close out any short position by either
exercising their over-allotment option and/or purchasing share in the
open market.
. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions. In determining the source of shares to
close out the short position, the underwriters will consider, among
other things, the price of shares available for purchase in the open
market as compared to the price at which they may purchase shares
through the over-allotment option. If the underwriters sell more shares
than could be covered by the over-allotment option--a naked short
position--that position can only be closed out by buying shares in the
open market. A naked short position is more likely to be created if the
underwriters are concerned that there may be downward pressure on the
price of the shares in the open market after pricing that could
adversely affect investors who purchase in the offering.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short position.
. In passive market making, market makers in the common stock who are
underwriters or prospective underwriters may, subject to limitations,
make bids for or purchases of the common stock until the time, if any,
at which a stabilizing bid is made.
These stabilizing transactions, syndicate covering transactions and penalty
bids may have the effect of raising or maintaining the market price of the
common stock or preventing or retarding a
77
<PAGE>
decline in the market price of the common stock. As a result the price of the
common stock may be higher than the price that might otherwise exist in the
open market. These transactions may be effected on The Nasdaq National Market
or otherwise and, if commenced, may be discontinued at any time.
A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make Internet distributions on the
same basis as other allocations.
78
<PAGE>
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.
Representations of Purchasers
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.
Notice to British Columbia Residents
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.
79
<PAGE>
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.
LEGAL MATTERS
The validity of the common stock will be passed upon for us by Testa,
Hurwitz & Thibeault, LLP, Boston, Massachusetts. Testa, Hurwitz & Thibeault,
LLP, using the name High Street Investors 2000, and attorneys at the firm hold
in the aggregate 70,631 shares common stock. Cravath, Swaine & Moore, New York,
New York, has represented the underwriters in this offering.
EXPERTS
The financial statements and schedule included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules), under the Securities
Act with respect to the common stock to be sold in this offering. This
prospectus does not contain all of the information set forth in that
registration statement. For further information about Greenwich Technology
Partners and the shares of common stock to be sold in the offering, please
refer to this registration statement. For additional information, please refer
to the exhibits that have been filed with our registration statement on Form S-
1.
You may read and copy all or any portion of the registration statement or
any other information Greenwich Technology Partners files at the Securities and
Exchange Commission's public reference room at 450 Fifth Street, N.W., room
1200, Washington, D.C., 20549. You can request copies of these documents upon
payment of a duplicating fee, by writing to the Securities and Exchange
Commission. Please call the Securities and Exchange Commission at 1-800-SEC-
0330 for further information about the public reference rooms. Greenwich
Technology Partners' Securities and Exchange Commission filings, including the
registration statement, will also be available to you on the Securities and
Exchange Commission's web site (http://www.sec.gov). As a result of this
offering, we will become subject to the information and reporting requirements
of the Securities Exchange Act of 1934, and will file periodic reports, proxy
statements and other information with the Securities and Exchange Commission.
We intend to furnish our stockholders annual reports containing audited
financial statements and to make available to our stockholders quarterly
reports for the first three quarters of each year containing unaudited
financial information.
80
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Report of Independent Public Accountants.................................. F-2
Balance Sheets as of December 31, 1998 and 1999 and June 30, 2000
(unaudited).............................................................. F-3
Statements of Operations for the period from inception (March 14, 1997)
through December 31, 1997, for the years ended December 31, 1998 and
December 31, 1999 and for the six months ended
June 30, 1999 and June 30, 2000 (unaudited).............................. F-4
Statements of Shareholders' Equity for the period from inception (March
14, 1997) through December 31, 1997, for the years ended December 31,
1998 and December 31, 1999 and for the six months ended June 30, 2000
(unaudited).............................................................. F-5
Statements of Cash Flows for the period from inception (March 14, 1997)
through December 31, 1997, for the years ended December 31, 1998 and
December 31, 1999 and for the six months ended
June 30, 1999 and June 30, 2000 (unaudited).............................. F-6
Notes to Financial Statements............................................. F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Greenwich Technology Partners, Inc.:
We have audited the accompanying balance sheets of Greenwich Technology
Partners, Inc. (a Delaware corporation) as of December 31, 1998 and 1999, and
the related statements of operations, shareholders' equity and cash flows for
the period from inception (March 14, 1997) through December 31, 1997 and for
the years ended December 31, 1998 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Greenwich Technology
Partners, Inc. as of December 31, 1998 and 1999, and the results of its
operations and its cash flows for the period from inception (March 14, 1997)
through December 31, 1997 and for the years ended December 31, 1998 and 1999 in
conformity with accounting principles generally accepted in the United States.
Arthur Andersen LLP
Stamford, Connecticut
February 2, 2000
F-2
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
------------------------- 2000
June 30, Pro forma
1998 1999 2000 (Note 2)
----------- ------------ ------------ ------------
(unaudited)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents.......... $ 695,182 $ 17,568,371 $ 27,590,109
Accounts receivable
(net of allowance for
doubtful accounts of
$97,038, $216,615,
and $795,366,
respectively)........ 1,644,636 4,244,590 9,313,308
Inventory............. 27,280 2,118 148,244
Advances and other
current assets....... 79,416 66,718 1,148,363
----------- ------------ ------------
Total current as-
sets............... 2,446,514 21,881,797 38,200,024
Property, plant and
equipment, at cost..... 921,474 1,927,275 3,732,295
Less: Accumulated
depreciation and
amortization........... (103,910) (496,519) (1,023,940)
----------- ------------ ------------
Property, plant and
equipment, net ........ 817,564 1,430,756 2,708,355
Goodwill, net of accumu-
lated amortization..... -- -- 2,550,379
Other long-term assets.. 19,796 109,394 361,787
----------- ------------ ------------
Total assets........ $ 3,283,874 $ 23,421,947 $ 43,820,545 $ 43,820,545
=========== ============ ============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of
installment loan and
capitalized lease
obligations.......... $ 10,536 $ 11,569 $ 83,071
Accounts payable...... 573,480 610,359 769,701
Accrued expenses...... 501,463 1,606,371 2,335,187
Other current
liabilities.......... 64,706 107,125 180,129
----------- ------------ ------------
Total current lia-
bilities........... 1,150,185 2,335,424 3,368,088
Installment loan and
capitalized lease obli-
gations................ 43,994 32,426 470,015
Other long-term liabili-
ties................... -- -- 11,155
----------- ------------ ------------ ------------
Total liabilities... 1,194,179 2,367,850 3,849,258 3,849,258
----------- ------------ ------------ ------------
Shareholders' equity:
Preferred Stock--
Series A, par value
$.01, Authorized and
outstanding shares
4,100,000, at par.
None outstanding on a
pro forma basis...... 41,000 41,000 41,000 --
Preferred Stock--
Series B, par value
$.01, Authorized and
outstanding shares
5,723,000, 5,533,031
and 5,533,031,
respectively, at par.
None outstanding on a
pro forma basis...... 57,230 55,330 55,330 --
Preferred Stock--
Series C, par value
$.01, Authorized and
outstanding shares
4,216,697, 4,206,666
and 4,206,666,
respectively, at par.
None outstanding on a
pro forma basis...... 42,167 42,067 42,067 --
Preferred Stock--
Series D, par value
$.01, Authorized
shares 9,487,179;
outstanding shares
none, 5,213,675 and
5,213,675,
respectively, at par.
None outstanding on a
pro forma basis...... -- 52,137 52,137 --
Preferred Stock--
Series E, par value
$.01, Authorized
shares 11,848,342;
outstanding shares
none, 9,807,139 and
10,235,188,
respectively, at par.
None outstanding on a
pro forma basis...... -- 98,072 102,352 --
Preferred Stock--
Series F, par value
$.01, Authorized and
outstanding shares
3,750,001 in 2000, at
par. None outstanding
on a pro forma
basis................ -- -- 37,500 --
Common stock--Par
value $.01,
Authorized shares
71,074,781; issued
177,000, 1,019,849
and 3,284,407,
respectively, at par.
36,145,968 shares
issued and
outstanding on a pro
forma basis.......... 1,770 10,198 32,844 361,460
Additional paid-in
capital.............. 4,437,225 29,648,470 54,967,265 54,915,935
Accumulated deficit... (2,489,697) (8,840,077) (15,306,108) (15,306,108)
Less--177,000 shares
of common stock held
in treasury in 1999
and 2000, at cost.
None outstanding on a
pro forma basis...... -- (53,100) (53,100) --
----------- ------------ ------------ ------------
Total shareholders'
equity............. 2,089,695 21,054,097 39,971,287 39,971,287
----------- ------------ ------------ ------------
Total liabilities
and shareholders'
equity............. $ 3,283,874 $ 23,421,947 $ 43,820,545 $ 43,820,545
=========== ============ ============ ============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-3
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Pro forma
For the six months for the
Inception For the years ended ended six months
through December 31, June 30, ended
December 31, ------------------------ ------------------------ June 30,
1997 1998 1999 1999 2000 2000 (Note 2)
------------ ----------- ----------- ----------- ----------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Professional servic-
es.................... $ 471,844 $ 4,251,734 $12,539,406 $ 5,383,330 $12,970,039
Provisioning........... 357,180 1,775,943 1,655,522 1,030,084 605,278
--------- ----------- ----------- ----------- -----------
Total revenues....... 829,024 6,027,677 14,194,928 6,413,414 13,575,317
Cost of revenues
(exclusive of
depreciation and
amortization expense
shown separately
below):
Professional servic-
es.................... 305,707 2,473,266 7,703,602 3,270,908 8,185,990
Provisioning........... 307,983 1,361,295 1,259,149 801,112 503,601
--------- ----------- ----------- ----------- -----------
Total cost of reve-
nues................ 613,690 3,834,561 8,962,751 4,072,020 8,689,591
--------- ----------- ----------- ----------- -----------
Gross profit............ 215,334 2,193,116 5,232,177 2,341,394 4,885,726
Sales and marketing ex-
penses................. 174,651 1,762,397 5,734,535 2,439,957 5,629,604
General and administra-
tive expenses.......... 446,684 2,138,862 5,407,923 1,824,228 5,320,143
Depreciation and amorti-
zation expense......... 210,297 196,603 747,146 194,541 749,365
--------- ----------- ----------- ----------- -----------
Operating loss.......... (616,298) (1,904,746) (6,657,427) (2,117,332) (6,813,386)
Other income, net....... 377 30,970 307,047 62,562 347,355
--------- ----------- ----------- ----------- -----------
Loss before income tax-
es..................... (615,921) (1,873,776) (6,350,380) (2,054,770) (6,466,031)
Provision for income
taxes.................. -- -- -- -- --
--------- ----------- ----------- ----------- -----------
Net loss................ (615,921) (1,873,776) (6,350,380) (2,054,770) (6,466,031)
Preferred stock dividend
requirements .......... (6,193) (236,131) (386,307) (193,994) (193,994)
--------- ----------- ----------- ----------- -----------
Net loss applicable to
common shareholders for
basic and diluted loss
per share.............. $(622,114) $(2,109,907) $(6,736,687) $(2,248,764) $(6,660,025)
========= =========== =========== =========== ===========
Net loss per share:
Basic.................. $ (3.51) $ (11.92) $ (21.34) $ (6.46) $ (3.29)
========= =========== =========== =========== ===========
Diluted................ $ (3.51) $ (11.92) $ (21.34) $ (6.46) $ (3.29)
========= =========== =========== =========== ===========
Weighted average shares
outstanding:
Basic.................. 177,000 177,000 315,643 348,287 2,021,502
========= =========== =========== =========== ===========
Diluted................ 177,000 177,000 315,643 348,287 2,021,502
========= =========== =========== =========== ===========
Pro forma net loss per
share--basic and
diluted (unaudited).... $ (.20)
===========
Pro forma weighted
average shares
outstanding--basic and
diluted (unaudited).... 31,732,755
===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-4
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common
Stock Held in Additional
Preferred Preferred Preferred Preferred Preferred Preferred Common Treasury, at Paid-In Accumulated
Stock (A) Stock (B) Stock (C) Stock (D) Stock (E) Stock (F) Stock Cost Capital Deficit
--------- --------- --------- --------- --------- --------- ------- ------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Issuance of
177,000 shares
of common
stock........... $ -- $ -- $ -- $ -- $ -- $ -- $ 1,770 $ -- $ 298,230 $ --
Issuance of
4,100,000 shares
of preferred
stock (A)....... 41,000 -- -- -- -- -- -- -- 967,916 --
Issuance of
5,723,000 shares
of preferred
stock (B)....... -- 57,230 -- -- -- -- -- -- 67,770 --
Net loss........ -- -- -- -- -- -- -- -- (615,921)
------- ------- ------- ------- -------- ------- ------- -------- ----------- ------------
Balance, December
31, 1997......... 41,000 57,230 -- -- -- -- 1,770 -- 1,333,916 (615,921)
Issuance of
4,216,697 shares
of preferred
stock (C)....... -- -- 42,167 -- -- -- -- -- 3,103,309 --
Net loss........ -- -- -- -- -- -- -- -- -- (1,873,776)
------- ------- ------- ------- -------- ------- ------- -------- ----------- ------------
Balance, December
31, 1998......... 41,000 57,230 42,167 -- -- -- 1,770 -- 4,437,225 (2,489,697)
Conversion of
189,969 shares
to common
stock........... -- (1,900) -- -- -- -- 1,900 -- -- --
Conversion of
10,031 shares to
common stock.... -- -- (100) -- -- -- 100 -- -- --
Issuance of
5,213,675 shares
of preferred
stock (D)....... -- -- -- 52,137 -- -- -- -- 5,644,926 --
Issuance of
9,807,139 shares
of preferred
stock (E)....... -- -- -- -- 98,072 -- -- -- 19,468,044 --
Options
exercised....... -- -- -- -- -- -- 6,428 -- 198,264 --
Purchase of
Treasury
shares.......... -- -- -- -- -- -- -- (53,100) -- --
Employee loans.. -- -- -- -- -- -- -- -- (99,989) --
Net loss........ -- -- -- -- -- -- -- -- -- (6,350,380)
------- ------- ------- ------- -------- ------- ------- -------- ----------- ------------
Balance, December
31, 1999......... 41,000 55,330 42,067 52,137 98,072 -- 10,198 (53,100) 29,648,470 (8,840,077)
Common shares
issued.......... -- -- -- -- -- -- 6,775 -- 1,099,725 --
Issuance of
428,049 shares
of preferred
stock (E)....... -- -- -- -- 4,280 -- -- -- 874,314 --
Issuance of
3,750,001 shares
of preferred
stock (F)....... -- -- -- -- -- 37,500 -- -- 22,416,220 --
Options
exercised....... -- -- -- -- -- -- 15,871 -- 677,763 --
Other........... -- -- -- -- -- -- -- -- 250,773 --
Net loss........ -- -- -- -- -- -- -- -- -- (6,466,031)
------- ------- ------- ------- -------- ------- ------- -------- ----------- ------------
Balance, June 30,
2000
(unaudited)...... $41,000 $55,330 $42,067 $52,137 $102,352 $37,500 $32,844 $(53,100) $54,967,265 $(15,306,108)
======= ======= ======= ======= ======== ======= ======= ======== =========== ============
<CAPTION>
Total
Shareholders'
Equity
-------------
<S> <C>
Issuance of
177,000 shares
of common
stock........... $ 300,000
Issuance of
4,100,000 shares
of preferred
stock (A)....... 1,008,916
Issuance of
5,723,000 shares
of preferred
stock (B)....... 125,000
Net loss........ (615,921)
-------------
Balance, December
31, 1997......... 817,995
Issuance of
4,216,697 shares
of preferred
stock (C)....... 3,145,476
Net loss........ (1,873,776)
-------------
Balance, December
31, 1998......... 2,089,695
Conversion of
189,969 shares
to common
stock........... --
Conversion of
10,031 shares to
common stock.... --
Issuance of
5,213,675 shares
of preferred
stock (D)....... 5,697,063
Issuance of
9,807,139 shares
of preferred
stock (E)....... 19,566,116
Options
exercised....... 204,692
Purchase of
Treasury
shares.......... (53,100)
Employee loans.. (99,989)
Net loss........ (6,350,380)
-------------
Balance, December
31, 1999......... 21,054,097
Common shares
issued.......... 1,106,500
Issuance of
428,049 shares
of preferred
stock (E)....... 878,594
Issuance of
3,750,001 shares
of preferred
stock (F)....... 22,453,720
Options
exercised....... 693,634
Other........... 250,773
Net loss........ (6,466,031)
-------------
Balance, June 30,
2000
(unaudited)...... $39,971,287
=============
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-5
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Inception For the years ended For the six months ended
through December 31, June 30,
December 31, ------------------------ -------------------------
1997 1998 1999 1999 2000
------------ ----------- ----------- ----------- ------------
(unaudited)
<S> <C> <C> <C> <C> <C>
Cash flows from operat-
ing activities
Net loss................ $ (615,921) $(1,873,776) $(6,350,380) $(2,054,770) $ (6,466,031)
Adjustments to reconcile
net loss to net cash
used in operating
activities:
Depreciation and amor-
tization............. 210,297 196,603 747,146 194,541 749,365
Provision for doubtful
accounts............. 25,204 95,433 166,194 11,658 469,655
Loss on disposal of
fixed assets......... -- -- 87,024 -- 84,465
Non-cash charges...... -- -- -- -- 168,974
(Increase) in accounts
receivable........... (134,687) (1,588,469) (2,766,148) (1,760,129) (4,611,846)
(Increase)/Decrease in
advances and other
current assets....... (2,240) (77,176) 12,698 (142,538) (888,325)
(Increase)/Decrease in
inventory............ (16,789) (7,658) 25,162 (5,212) 101,584
(Increase) in other
long term assets..... (2,079) (13,271) (89,598) (7,650) (242,134)
Increase/(Decrease) in
accounts payable..... 44,365 492,706 36,878 (23,220) (16,963)
Increase/(Decrease) in
other current
liabilities.......... 21,764 8,282 45,071 (6,278) (168,320)
Increase in accrued
expenses............. 95,656 405,807 1,104,908 323,701 574,891
---------- ----------- ----------- ----------- ------------
Net cash used in
operating activities... (374,430) (2,361,519) (6,981,045) (3,469,897) (10,244,685)
Cash flows from invest-
ing activities
Purchase of property,
plant and equipment.... (58,696) (817,203) (1,710,565) (506,037) (1,295,526)
Sale of assets.......... -- -- 260,552 -- --
Acquisition of
businesses, net of cash
acquired............... -- -- -- -- (1,678,504)
---------- ----------- ----------- ----------- ------------
Net cash used in
investing activities... (58,696) (817,203) (1,450,013) (506,037) (2,974,030)
Cash flows from financ-
ing activities
Proceeds from
installment loan....... -- 33,989 -- -- --
Payments on installment
loan and capitalized
lease obligations...... (682) (5,669) (10,535) (8,140) (36,188)
Repayment of loan....... -- -- -- -- (749,307)
Net proceeds from
issuance of preferred
stock (A).............. 1,008,916 -- -- -- --
Net proceeds from
issuance of preferred
stock (B).............. 125,000 -- -- -- --
Net proceeds from
issuance of preferred
stock (C).............. -- 3,145,476 -- -- --
Net proceeds from
issuance of preferred
stock (D).............. -- -- 5,697,063 5,697,063 --
Net proceeds from
issuance of preferred
stock (E).............. -- -- 19,566,116 -- 878,594
Net proceeds from
issuance of preferred
stock (F).............. -- -- -- -- 22,453,720
Issuance of common
stock.................. -- -- 104,703 -- 693,634
Purchase of treasury
stock.................. -- -- (53,100) -- --
---------- ----------- ----------- ----------- ------------
Net cash provided by
financing activities... 1,133,234 3,173,796 25,304,247 5,688,923 23,240,453
---------- ----------- ----------- ----------- ------------
Net increase (decrease)
in cash................ 700,108 (4,926) 16,873,189 1,712,989 10,021,738
Cash and cash equiva-
lents, beginning of pe-
riod................... -- 700,108 695,182 695,182 17,568,371
---------- ----------- ----------- ----------- ------------
Cash and cash equiva-
lents, end of period... $ 700,108 $ 695,182 $17,568,371 $ 2,408,171 $ 27,590,109
========== =========== =========== =========== ============
Supplemental cash flow
information
Cash paid for interest.. $ 1,486 $ 1,317 $ 6,230 $ 2,490 $ 9,188
Cash paid for income
taxes.................. $ 1,200 $ 2,893 $ 10,747 $ 10,680 $ 49,500
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
F-6
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
1. THE COMPANY
Antares Networks, Inc. ("Antares"), a Delaware corporation, was incorporated
on March 14, 1997. During 1997, Antares acquired all of the assets and
liabilities of Datamax Inc. The acquisition was accounted for as a purchase
whereby all assets and liabilities were recorded at their fair values at the
date of purchase. Goodwill of approximately $300,000 from this purchase was
amortized over 12 months. On August 22, 1997, the name was changed to Greenwich
Technology Partners, Inc. ("GTP").
GTP is a network infrastructure consulting and engineering company. GTP is
comprised of one business segment. GTP focuses on designing, building and
managing complex networks.
GTP's headquarters is in White Plains, New York, with employees in 19
additional locations in the United States and London.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Unaudited Interim financial statements
The accompanying balance sheet as of June 30, 2000 and statements of
operations, stockholders' equity and cash flows for the six months ended June
30, 1999 and 2000 included herein have been prepared by the Company and are
unaudited. The information furnished in the unaudited financial statements
referred to above includes all adjustments which are, in the opinion of
management, necessary for a fair presentation of such financial statement. The
results of operations for the six months ended June 30, 2000 are not
necessarily indicative of the results to be expected for the entire fiscal
year.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make various estimates
and assumptions. Actual results could differ from those estimates.
Revenue Recognition
GTP derives revenue from professional services and provisioning and records
revenue in accordance with the principles of Staff Accounting Bulletin No. 101.
Professional services revenue is only recognized when a contract arrangement
exists, services have been rendered, the fees are fixed or determinable and
collectibility is reasonably assured. Revenues are recognized for time-and-
materials contracts as services are provided. Revenues from fixed-fee contracts
are recognized as services are provided upon the achievement of specified
milestones using the percentage of completion method of accounting. Revenue is
recognized on partially completed milestones in proportion to the costs
incurred for that milestone and only to the extent that an irrevocable right to
the revenue exists. Costs incurred under time-and-materials and fixed-fee
contracts are recognized as
F-7
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
incurred which generally is in the same period that revenue is recorded.
Provisioning refers to the sale of hardware and software. Revenue from
provisioning is recognized when equipment is delivered to customers. For the
year ended December 31, 1998, 39% of the total revenue was derived from one
customer and for the year ended December 31, 1999, 18% of the total revenue was
derived from a different customer. For the six months ended June 30, 2000, 22%
of the total revenue was derived from one customer. In 1998, 1999 and the six
months ended June 30, 2000, GTP's five largest clients represented 68%, 51% and
52% of total revenues, respectively.
Cash and Cash Equivalents
Cash and cash equivalents represents highly liquid investments with original
maturities of three months or less.
On July 30, 1999, GTP entered into a revolving $2.5 million credit facility
with First Union National Bank. This facility is available to finance working
capital requirements. The financing is collateralized by a pledge of $1.0
million held in a depository account with First Union. This amount represents
restricted cash. There were no amounts outstanding under this facility at
December 31, 1999. The facility was closed in February 2000.
Inventories
Inventory represents non-client specific parts and hardware utilized in
installation and service. Inventories are valued at the lower of cost or
market, determined on the first in, first out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment are carried at cost and depreciated and
amortized over their estimated useful lives using the straight-line method.
Leasehold improvements are depreciated over the term of the lease or the life
of the asset, as appropriate, using the straight-line method. GTP reviews the
carrying value of long lived assets for impairment when events indicate that
the carrying value may not be recoverable. GTP evaluates property, plant and
equipment for impairment by comparing the carrying value to undiscounted future
net pre-tax cash flows. If impairment is identified, the asset-carrying amount
is adjusted to fair value. Expenditures for maintenance and repairs are charged
to operations as incurred.
Goodwill
Goodwill represents the excess of purchase price and related costs over the
value assigned to the net tangible assets of businesses acquired. Goodwill is
amortized on a straight-line basis over 5 years. Periodically, the Company
reviews the recoverability of goodwill. The measurement of possible impairment
is based primarily on the ability to recover the balance of the goodwill from
expected future operating cash flows on an undiscounted basis. In management's
opinion, no impairment exists at June 30, 2000. Amortization expense was
$100,997 in 1998, zero in 1999, and $137,480 (unaudited) for the six months
ended June 30, 2000.
F-8
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
Deferred Income Taxes
Deferred income taxes are determined utilizing a liability approach. The
statement of operations effect is derived from changes in deferred income
taxes on the balance sheet. This approach gives consideration to future tax
consequences associated with differences between financial accounting and tax
bases of assets and liabilities. Deferred income tax assets are reduced by a
valuation allowance when it is more likely than not that they will not be
realized.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts and other
receivables, and accounts payable approximate fair value due to the short-term
maturity of these instruments.
Concentration of Credit Risk
Trade accounts receivable potentially subject the Company to a
concentration of credit risk. GTP performs an ongoing credit evaluation of
customers and generally does not require collateral on accounts receivable.
GTP maintains allowances for potential credit losses and such losses have been
assessed within management's expectations.
Unaudited Pro forma information
The Company's historical capital structure is not indicative of its
prospective structure due to the automatic conversion of all shares of its
convertible preferred stock into common stock immediately prior to the closing
of the Company's anticipated initial public offering. (See Note 7 for
conversion terms.) The unaudited pro forma consolidated balance sheet as of
June 30, 2000, reflects the conversion of 33,038,561 shares of the convertible
preferred stock into 33,038,561 shares of common stock which includes the
reissuance of 177,000 shares of treasury stock. Pro forma loss per share is
computed using the weighted average number of common shares outstanding during
the period assuming conversion of the convertible preferred stock into common
stock as of the date of issuance.
Reclassification
Certain prior year amounts have been reclassified to conform to the current
year presentation.
3. NET LOSS PER SHARE
Net loss per share is calculated in accordance with Statement of Financial
Accounting Standard No. 128, "Earnings per Share". Basic net loss per common
share is computed based upon the average number of common shares outstanding.
Diluted net loss per common share includes dilutive stock options, warrants
and convertible securities. Dilutive net loss per common share is equivalent
to basic loss per share as
F-9
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
stock options, warrants and convertible preferred stock are antidilutive. The
following table summarizes the calculation of earnings per share:
<TABLE>
<CAPTION>
For the six months
For the years ended ended
December 31, June 30,
Inception through ------------------------ ------------------------
December 31, 1997 1998 1999 1999 2000
----------------- ----------- ----------- ----------- -----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net loss................ $(615,921) $(1,873,776) $(6,350,380) $(2,054,770) $(6,466,031)
Preferred stock dividend
requirements........... (6,193) (236,131) (386,307) (193,994) (193,994)
--------- ----------- ----------- ----------- -----------
Net loss applicable to
common shareholders
for basic and diluted
loss per share........ $(622,114) $(2,109,907) $(6,736,687) $(2,248,764) $(6,660,025)
========= =========== =========== =========== ===========
Weighted average shares
for basic and diluted
loss per share........ 177,000 177,000 315,643 348,287 2,021,502
Basic loss per share
from net loss.......... $ (3.51) $ (11.92) $ (21.34) $ (6.46) $ (3.29)
Diluted loss per share
from net loss.......... $ (3.51) $ (11.92) $ (21.34) $ (6.46) $ (3.29)
</TABLE>
In addition, the potential dilutive effect of outstanding employee stock
options and preferred stock convertible into common stock at the following
dates are not included in the calculation of net loss per share as the effects
are antidilutive. The following table summarizes shares outstanding at:
<TABLE>
<CAPTION>
December 31,
------------------------------- June 30,
1997 1998 1999 2000
--------- ---------- ---------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Stock options................... 594,000 2,002,025 3,744,626 6,463,932
Convertible preferred stock..... 9,823,000 14,039,700 28,860,511 33,038,561
</TABLE>
4. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
December 31,
Estimated ------------------- June 30,
Life (years) 1998 1999 2000
------------ -------- ---------- -----------
(unaudited)
<S> <C> <C> <C> <C>
Furniture and fixtures.......... 10 $ 86,773 $ 155,219 $ 690,703
Computers and software.......... 1-3 691,138 1,536,402 2,595,950
Office equipment................ 5 39,252 66,017 277,794
Leasehold improvements.......... (lease term) 69,410 134,736 132,947
Autos........................... 3 34,901 34,901 34,901
-------- ---------- ----------
921,474 1,927,275 3,732,295
Less: Accumulated depreciation
and amortization............... 103,910 496,519 1,023,940
-------- ---------- ----------
$817,564 $1,430,756 $2,708,355
======== ========== ==========
Capitalized lease amounts in-
cluded in above................ $ 19,864 $ 14,682 $ 523,982
</TABLE>
During the fourth quarter of 1999, GTP made a decision to replace certain
software assets within the Company. The Company will replace these software
assets with a new software package in the third quarter of 2000. As a result,
in 1999 GTP recorded a charge of $207,000 to reduce the carrying amount of
certain computer software assets to be discarded of to zero. This charge was
recorded as depreciation expense in the Statement of Operations.
F-10
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
5. COMMITMENTS, INSTALLMENT LOANS AND CONTINGENCIES
GTP is obligated under various operating leases and subleases for its
corporate offices, operations facilities and various equipment used in the
business. The facilities leases and subleases are for various terms and provide
for escalations and landlord cost reimbursements consistent with applicable
market conditions. Capitalized lease commitments relate to GTP's telephone
system. The following is a schedule of the future minimum lease payments under
all operating leases and capitalized lease commitments:
<TABLE>
<CAPTION>
Operating Capitalized
Fiscal Year Leases Leases
----------- --------- -----------
<S> <C> <C>
2000.................... $585,366 $ 6,406
2001.................... 297,762 6,406
2002.................... 48,550 5,106
2003.................... 8,261 --
-------- --------
$939,939 17,918
========
Less: interest factor... (2,127)
--------
Present value of total
capitalized lease obli-
gations................ 15,791
Less: current portion... (5,195)
--------
Long term portion of
capitalized lease obli-
gations................ $ 10,596
========
</TABLE>
Subsequent to December 31, 2000, GTP entered into certain capitalized lease
obligations related to furnitures and fixtures, as well as a telephone system
for the Company's White Plains, New York headquarters.
Payments associated with GTP's capitalized lease obligations for the six
month periods ended June 30, 1999 and June 30, 2000 were $3,727 (unaudited) and
$31,733 (unaudited). For the years ended December 31, 1998 and 1999 payments
for capitalized lease obligations were $4,687 and $4,750. In addition payments
for operating lease obligations for the six month periods ending June 30, 1999
and June 30, 2000 were $280,365 (unaudited) and $643,062 (unaudited). For the
years ended December 31, 1998 and 1999 payments for operating lease obligations
were $179,877 and $698,515.
At December 31, 1998, 1999 and June 30, 2000, GTP had an outstanding
installment loan of $33,987, $28,204 and $25,094 (unaudited) relating to the
purchase of automobiles. This installment loan has an interest rate of 9.7%.
The loan is payable monthly through 2002.
6. INCOME TAXES
The provision for income taxes is zero due to GTP's net operating loss.
Deferred income taxes are determined based on the temporary differences between
the financial reporting and tax bases of assets and liabilities. The current
federal and state tax rates in effect during the year are used to calculate the
temporary differences.
F-11
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
GTP has established a valuation allowance to offset the net deferred tax
asset, as the realizability of the asset is uncertain.
The components of the deferred tax assets and (liabilities) are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------ June 31,
1998 1999 2000
----------- ----------- -----------
(unaudited)
<S> <C> <C> <C>
Allowance for doubtful accounts....... $ 38,815 $ 88,812 $ 326,100
Accrued bonus......................... 27,605 28,295 --
Net operating loss carryforwards...... 865,696 3,330,831 5,575,226
Depreciation.......................... 88,337 (106,763) (239,392)
Goodwill.............................. 40,399 99,925 158,175
Other, net............................ 230 235 235
Valuation allowance................... (1,061,082) (3,441,335) (5,820,344)
----------- ----------- -----------
Total deferred taxes, net......... $ -- $ -- $ --
=========== =========== ===========
</TABLE>
At December 31, 1998 and 1999 and June 30, 2000 the federal and state net
operating loss carryforward, "NOL" carryforwards are as follows:
<TABLE>
<CAPTION>
December 31,
--------------------- June 30,
1998 1999 2000
---------- ---------- -----------
(unaudited)
<S> <C> <C> <C>
Federal.................................... $2,031,647 $8,122,130 $13,598,113
State...................................... 2,064,564 8,078,258 13,514,707
</TABLE>
These carryforwards begin to expire in 2012 and 2002, for federal and state
purposes, respectively. Future utilization of NOL may be subject to certain
limitations imposed by the Internal Revenue Service Code.
7. CAPITAL STOCK
Greenwich Technology Partners has issued six classes of preferred stock
which include series A preferred stock, series B preferred stock, series C
preferred stock, series D preferred stock, series E preferred stock, and series
F preferred stock. The preferred stockholders may, at the option of the holder,
convert their preferred shares into fully paid shares of GTP's common stock.
All shares of preferred stock automatically convert into shares of common stock
immediately upon the closing of a public offering of GTP pursuant to an
effective registration statement under the Securities Act of 1933 with a per
share price of at least $5.50 and at least $30.0 million in net proceeds to
GTP. The number of shares of common stock to which a holder of preferred stock
shall be entitled upon conversion is determined using the applicable
"Conversion Rate" for that series of preferred stock. As of June 30, 2000, each
share of preferred stock is convertible into one share of common stock. During
1999, 189,969 shares of series B preferred stock and 10,031 shares of series C
preferred stock were converted into 200,000 shares of GTP's common stock.
In connection with the issuance of series D preferred stock, warrants for
the purchase of 4,273,504 additional shares of series D preferred stock at
$1.17 per share were issued. The fair value
F-12
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
of these warrants was de minimus at the date of issuance. These warrants vest
at the earliest of the following: (i) the completion of an initial public
offering of GTP's common stock; (ii) the merger or acquisition of the company
where fifty percent of the outstanding capital stock of GTP or fifty percent of
the voting power in GTP is transferred; (iii) a sale or other disposition of
all or substantially all of GTP's assets; and (iv) January 1, 2001.
Notwithstanding the above, fifty percent of the warrants vests if an event
described in (i)-(iii) above, with a value of greater than $4.68 per share,
occurs prior to June 30, 2000 and sixty percent of the warrants vests if the
event occurs prior to December 31, 2000, with the remaining rights pursuant to
the warrants terminating.
On January 14, 2000, the Company completed a third round of series E
convertible preferred equity financing with net proceeds totaling $878,594. The
financing resulted in the issuance of 428,049 shares of series E preferred
stock at $2.11 per share. Series E preferred shares are identical with respect
to rights and protections as existing classes of preferred stock.
On June 8, 2000, the Company completed its offering of series F convertible
preferred equity financing with net proceeds totaling $22,453,720. The
financing resulted in the issuance of 3,750,001 shares of series F preferred
stock at $6.00 per share. Series F preferred shares are identical with respect
to rights and protections as existing classes of preferred stock.
Holders of series A, series B and series C preferred stock are entitled to
cumulative cash dividends at a rate of 9% of the original issue price. GTP has
not declared cumulative dividends on common stock and preferred stock from
inception through June 30, 2000. The amount of dividends undeclared on the
series A preferred stock, series B preferred stock and series C preferred stock
at June 30, 2000 were $235,805, $29,081 and $557,739, respectively. Upon
conversion of preferred stock into common stock, preferred stockholders are no
longer entitled to any of these undeclared dividends.
Greenwich Technology Partners has a share repurchase agreement with certain
of its stockholders. Under terms of which, before a shareholder can sell its
GTP capital stock to a third party, the shareholder must first offer the shares
to the Company on terms equal to the third party offer. A stockholder
voluntarily separated from GTP during 1998 and in accordance with the above
agreement, during 1999 GTP purchased 177,000 shares from the individual for
$53,100.
8. STOCK INCENTIVE PLAN
Greenwich Technology Partners' board of directors has authorized the
issuance of up to 9,150,000 million shares at June 30, 2000 that may be awarded
as stock options under GTP's 1997 Stock Plan (the "Plan") to employees,
directors and consultants of GTP. Stock options, granted at fair market value,
under the Plan extend for 10 years from the date of grant and generally vest
ratably over a two to four year period.
F-13
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
GTP accounts for stock options by applying Accounting Principles Board
"Accounting for Stock Issued to Employees" (APB 25). No compensation cost has
been recognized for its employee stock option grants as the options have been
granted at fair market value as determined by GTP's board of directors. Had
stock options been accounted for based on the fair value method of Statement of
Financial Accounting Standards "Accounting for Stock-Based Compensation" (SFAS
123), the impact on the net loss would have been as follows:
<TABLE>
<CAPTION>
Six months
Inception through Year ended December 31, ended
December 31, ------------------------ June 30,
1997 1998 1999 2000
----------------- ----------- ----------- ------------
(unaudited)
<S> <C> <C> <C> <C>
Net loss:
As reported........... $(615,921) $(1,873,776) $(6,350,380) $(6,466,031)
Pro forma............. (633,088) (1,960,178) (6,439,766) (6,506,948)
Basic and Diluted net
loss per share:
As reported........... $ (3.51) $ (11.92) $ (21.34) $ (3.29)
Pro forma............. $ (3.61) $ (12.41) $ (21.63) $ (3.32)
</TABLE>
The fair market value of options is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants during the years ended December 31, 1997, 1998 and
1999 and six months ended June 30, 2000, respectively, dividend yield of 0% for
all periods; expected volatility of 0% for all periods; risk-free interest
rates ranging from 5.96% to 6.69% in 1997, 4.17% to 5.73% in 1998, 4.70% to
6.44% in 1999 and 6.10% to 6.78% (unaudited) for the six months ended June 30,
2000; and an expected option life of four years for all periods.
Option award activity from the period of inception through December 31, 1997
and during 1998, 1999 and through June 30, 2000 (unaudited) are summarized as
follows:
<TABLE>
<CAPTION>
Weighted
Average
Shares Exercise Price
---------- --------------
<S> <C> <C>
Inception, March 14, 1997
Granted................................... 594,000 $0.50
---------- -----
Outstanding at December 31, 1997............ 594,000 0.50
Granted................................... 1,413,525 0.30
Forfeited................................. (5,500) 0.30
---------- -----
Outstanding at December 31, 1998............ 2,002,025 0.30
Granted................................... 2,659,375 0.35
Exercised................................. (642,849) 0.32
Forfeited................................. (273,925) 0.30
---------- -----
Outstanding at December 31, 1999............ 3,744,626 0.33
Granted................................... 4,645,291 0.87
Exercised................................. (1,587,056) 0.44
Forfeited................................. (338,929) 0.54
---------- -----
Outstanding at June 30, 2000................ 6,463,932 $0.69
========== =====
Exercisable at June 30, 2000................ 1,149,313 $0.46
========== =====
Weighted average fair value of options
granted during 2000........................ $0.26
=====
</TABLE>
F-14
<PAGE>
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS -- (Continued)
On December 3, 1998, GTP's Board of Director's elected to re-price the
exercise price of all 1997 option grants from $0.50 to $0.30. The purpose of
the re-pricing was to price options at the fair market value of the common
stock on the date of grant.
The following table summarizes information on stock options outstanding at
June 30, 2000 (unaudited):
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Exercise Price Options Remaining Life of Options
(per share) Outstanding Options Outstanding Exercisable
---------------- ----------- ------------------- -----------
<S> <C> <C> <C>
$0.30 2,247,738 8.39 yrs 554,493
$0.60 3,336,144 9.67 yrs 588,270
$2.00 880,050 9.94 yrs 6,550
--------- ---------
6,463,932 1,149,313
========= =========
</TABLE>
9. EMPLOYEE BENEFIT PLAN
Greenwich Technology Partners established a salary deferral plan (the
"Plan") pursuant to Section 401(k) of the Internal Revenue Code, as amended.
Effective January 1, 1998, all employees that are at least age 21 are eligible
to join the Plan. After January 1, 1998, employees are eligible to join the
Plan if they are at least age 21 and have completed two months of service with
GTP. GTP will match 25% of the first 6% of pay the employee contributes to the
Plan through salary deferral. These matching contributions vest ratably over
four years. GTP's contributions to the Plan during 1998, 1999 and the six
months ended June 30, 2000 were $16,492, $81,511 and $71,906 (unaudited),
respectively.
10. RELATED PARTIES
During 1999, GTP paid fees of $200,000 and issued 85,470 shares of series D
preferred stock to a senior officer of GTP for his services rendered prior to
becoming an employee of GTP. The payments were made in connection with services
rendered in the offering of the series D preferred stock and were recorded as a
reduction to the gross proceeds.
In December 1999, GTP loaned certain employees $99,989 in connection with
the exercise of stock options. The employees have signed demand notes payable
to GTP in exchange for the loans, which bear a 5.5% rate of interest. The note
receivable is reported as a reduction of additional paid in capital.
F-15
<PAGE>
[INSIDE BACK COVER ARTWORK]
The color artwork will be three ellipses containing the words, "Creating Value."
Selected technical alliance partner logos will appear beneath the ellipses.
<PAGE>
[LOGO OF GREENWICH TECHNOLOGY PARTNERS]
<PAGE>
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the estimated costs and expenses, other than
the underwriting discounts and commissions, payable by the registrant in
connection with the sale of the common stock being registered.
<TABLE>
<CAPTION>
Amount
to be
Paid
-------
<S> <C>
SEC registration fee................................................ $14,520
NASD filing fee..................................................... 6,000
Nasdaq National Market listing fee.................................. *
Legal fees and expenses............................................. *
Accounting fees and expenses........................................ *
Printing and engraving expenses..................................... *
Transfer agent and Registrar fees and expenses...................... *
Miscellaneous....................................................... *
-------
Total............................................................. $ *
=======
</TABLE>
--------
* To be provided by amendment
Item 14. Indemnification of Directors and Officers
The Delaware General Corporation Law and GTP's charter and by-laws provide
for indemnification of GTP's directors and officers for liabilities and
expenses that they may incur in such capacities. In general, directors and
officers are indemnified with respect to actions taken in good faith in a
manner reasonably believed to be in, or not opposed to, the best interests of
GTP, and with respect to any criminal action or proceeding, actions that the
indemnitee had no reasonable cause to believe were unlawful. Reference is made
to GTP's amended and restated charter and by-laws filed as Exhibits 3.2 and
3.4, respectively.
The Underwriting Agreement provides that the underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of GTP against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of Underwriting Agreement filed
as Exhibit 1.1 hereto.
GTP intends to apply for a directors' and officers' insurance policy.
Item 15. Recent Sales of Unregistered Securities
Common Stock
GTP initially issued 3,000 shares of its common stock to Antares Networks,
Inc. for an aggregate consideration of $2,000 on April 30, 1997, which
subsequently were cancelled.
II-1
<PAGE>
On December 9, 1997, GTP issued 177,000 shares of its common stock to
Vincent Yenko, as described more fully below. The fair market value of the
shares of common stock at that date was $.30 per share.
On February 1, 1999, Persistence Partners, L.P., a limited partnership
controlled by Joseph Beninati, President and Chief Executive Officer of GTP,
converted 189,696 of its Series B preferred stock and 10,031 shares of its
Series C preferred stock into common stock on a one-to-one basis for a total of
200,000 shares of common stock.
On March 1, 2000, GTP issued 98,250 and 79,250 shares of its common stock to
John Rothenberger and G. Richard Rothenberger, respectively, in connection with
the acquisition of Aspire Technology Group, Inc. The fair market value of the
common stock at that time was $.60 per share.
On April 13, 2000, GTP issued 500,000 shares of its common stock to Michael
Waresk in connection with the merger of Navigator Technologies, Inc. into GTP.
The fair market value of the shares of common stock at that date was $2.00 per
share.
Preferred Stock and Warrants.
On December 9, 1997, GTP issued 5,723,000 shares of its series B preferred
stock and 177,000 shares of its common stock to Persistence Partners, L.P., a
limited partnership controlled by Joseph Beninati, President and Chief
Executive Officer of GTP, and Vincent Yenko, respectively, in consideration of
these two parties' ownership, equal to all of the outstanding interests, in
Antares Networks, Inc.
Also on December 9, 1997, GTP issued 4,100,000 shares of its series A
preferred stock to two investors one of which was an FG II Entity for an
aggregate purchase price of $1,025,000. The FG II Entities collectively
beneficially own greater than 5% of GTP's capital stock.
On June 25, 1998, GTP issued an aggregate of 3,060,000 shares of its series
C preferred stock to two investors for an aggregate purchase price of
$2,295,000. On August 7, 1998, GTP issued an aggregate of 823,364 shares of its
series C preferred stock to two investors one of which was an FG II Entity for
an aggregate purchase price of $617,523. On October 26, 1998, GTP issued
333,333 shares of its series C preferred stock to an FG II Entity for an
aggregate purchase price of $249,999.75.
On February 1, 1999, GTP issued 5,213,675 shares of its series D preferred
stock to eight investors for an aggregate purchase price of $6,099,999.75.
Included in these figures is a grant of 85,470 shares of series D preferred
stock that GTP issued to Dennis M. Goett as partial payment for services
rendered by Mr. Goett's company, CrossRoads Strategy Group, Inc. to GTP in
connection with the financing. GTP also issued two warrants to purchase up to
an aggregate of 4,273,504 shares of series D preferred stock at $1.17 per
share. The warrants become exercisable upon the earliest to occur of (i) the
initial public offering of GTP's common stock below; (ii) the merger or
acquisition of the company where fifty percent of the outstanding capital stock
of GTP or fifty percent of the voting power in GTP is transferred; (iii) a sale
or other disposition of all or substantially all of GTP's assets; and (iv)
January 1, 2001. Notwithstanding the above, fifty percent of the warrants will
vest if a liquidity event with a value of greater than $4.68 occurs prior to
June 30, 2000 and sixty percent of the warrants will vest prior to December 21,
2000, with the remaining rights pursuant to the warrants
II-2
<PAGE>
terminating. The purchasers of series D preferred stock include VantagePoint
Communications Partners and VantagePoint Venture Partners 1996, L.P., an FG II
Entity and Dennis M. Goett. The VantagePoint Entities and the FG II Entities
each beneficially own greater than 5% of GTP's outstanding capital stock. Mr.
Goett is GTP's Chief Financial Officer.
On September 10, 1999, GTP issued 7,582,940 shares of its series E preferred
stock to six investors for an aggregate purchase price of $16,000,003.40. These
investors include: Chase Venture Capital Associates, L.P. for $10.0 million;
Credit Suisse First Boston Venture Fund I, L.P., an affiliate of Credit Suisse
First Boston Corporation for $0.5 million; STV Partners III, L.L.C. for $1.0
million; FG-GTPF for $0.5 million; VantagePoint Communications Partners, L.P.
for $2.0 million; VantagePoint Venture Partners 1996, L.P. for $1.0 million;
and Wheatley Partners II L.P. for $1.0 million. On October 28, 1999, GTP sold
an additional 2,224,199 shares of its series E preferred stock to 49 investors
for an aggregate purchase price of $4,693,059.89. On January 14, 2000, GTP sold
428,049 shares of its series E preferred stock to 22 investors for an aggregate
purchase price of $903,183.39. The purchasers of series D preferred stock
include Dennis Goett, individually and through a retirement account for his
benefit, Chase Venture Capital Associates, L.P., VantagePoint Communications
Partners, L.P., VantagePoint Venture Partners 1996, L.P. and an FG II entity.
Mr. Goett is GTP's Chief Financial Officer and each of the other purchasers
beneficially owns greater than 5% of GTP's outstanding capital stock.
On June 8, 2000, GTP issued 3,750,001 shares of its series F preferred stock
to three investors for an aggregate purchase price of $22,500,006.
No underwriters were used in the foregoing transactions. All sales of
securities described above were made in reliance upon the exemption from
registration provided by Section 3(a)(9) and Section 4(2) of the Securities Act
of 1933 (and/or Regulation D promulgated thereunder) for transactions by an
issuer not involving a public offering.
Grants and Exercises of Stock Options
Since April 21, 1997 through July 31, 2000, GTP has granted stock options to
purchase 9,496,291 shares of common stock with exercise prices ranging from
$.30 to $2.00 per share, to employees, directors, and consultants pursuant to
our 1997 Stock Plan. Of these options, 2,331,013 have been exercised for an
aggregate consideration of $942,531 as of July 31, 2000. The issuance of these
options and the common stock issuable upon the exercise of the options was
exempt either pursuant to Rule 701, as a transaction pursuant to a compensatory
benefit plan, or pursuant to Section 4(2), as a transaction by an issuer not
involving a public offering.
II-3
<PAGE>
Item 16. Exhibits and Financial Statement Schedule
(a) Exhibits.
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Stock Purchase Agreement by and among the Registrant and Aspire
Technology Group, Inc. dated as of March 1, 2000
2.2 Asset Purchase Agreement by and among the Registrant and NetGain, LLC
dated as of March 31, 2000
2.3 Agreement and Plan of Merger and Reorganization by and between the
Registrant, Navigator Technologies, Inc. and Michael Waresk dated as of
April 12, 2000
2.4 Asset Purchase Agreement between VY Inc. and the Registrant dated April
30, 1997
3.1 Fourth Amended and Restated Certificate of Incorporation, filed June 8,
2000
3.2* Form of Amended and Restated Certificate of Incorporation to be in
effect upon the closing of this offering
3.3 By-laws of the Registrant
3.4* Form of Amended and Restated By-laws to be in effect upon the closing
of this offering
3.5 Delaware Certificate of Merger of Navigator Technologies, Inc. and the
Registrant filed as of April 13, 2000
3.6 New Jersey Certificate of Merger of Navigator Technologies, Inc. and
the Registrant, filed April 13, 2000
3.7 Certificate of Ownership and Merger merging Antares Networks, Inc. into
the Registrant, filed December 8, 1997
4.1* Specimen Common Stock certificate
4.2 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions defining the rights
of holders of common stock of the registrant
4.3 Form of Series D Preferred Stock Purchase Warrant
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
10.1 Loan Agreement with First Union National Bank dated July 30, 1999
10.2 Security Agreement with First Union National Bank dated July 30, 1999
10.3 Promissory Note to First Union National Bank dated July 30, 1999
10.4 1997 Stock Option Plan as amended
10.5 2000 Stock Option and Incentive Plan
10.6 2000 Employee Stock Purchase Plan
10.7 Investment Agreement, dated December 9, 1997
10.8 Investment Agreement (Series C Preferred Stock), dated June 25, 1998
10.9 Investment Agreement (Series C Preferred Stock), dated August 7, 1998
10.10 Investment Agreement (Series D Preferred Stock), dated February 1, 1999
10.11 Investment Agreement (Series E Preferred Stock), dated September 10,
1999
10.12 Amendment No. 1 to Investment Agreement (Series E Preferred Stock),
dated January 14, 2000
10.13 Amended and Restated Shareholders' Agreement, dated September 10, 1999
10.14 Amended and Restated Registration Rights Agreement, dated September 10,
1999
10.15 Sublease Agreement for the Registrant dated March 22, 2000
10.16 Employment Agreement dated December 9, 1997 with Joseph P. Beninati
10.17 Employment Letter dated December 1, 1998 with Dennis M. Goett
10.18 Amendment to Employment Letter with Dennis M. Goett
10.19 Employment Letter dated October 1, 1999 with John Stopper
10.20 Employment Letter dated January 26, 2000 with Richard Haverly
10.21 Employment Letter dated March 13, 2000 with Johna Till Johnson
10.22 Letter Agreement dated July 27, 1999 with Credit Suisse First Boston
Corporation
10.23 Letter Agreement regarding indemnification dated July 27, 1999 with
Credit Suisse First Boston Corporation
10.24 Shareholders' Agreement between John Rothenberger and G. Richard
Rothenberger and the Registrant, dated March 1, 2000
10.25 Shareholders' Agreement between Michael Waresk and the Registrant dated
April 12, 2000
10.26 Escrow Agreement between Michael Waresk, Navigator Technologies, Inc.
and the Registrant dated April 12, 2000
10.27 Escrow Agreement between John Rothenberger, G. Richard Rothenberger and
the Registrant, dated March 1, 2000
10.28 Letter Agreement dated March 17, 2000 with Credit Suisse First Boston
Corporation
10.29 Letter Agreement regarding indemnification, dated March 17, 2000 with
Credit Suisse First Boston Corporation
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.30 Investment Agreement (Series F Preferred Stock), dated June 8, 2000
10.31 Amendment No. 1 to Amended and Restated Shareholders' Agreement, dated
June 8, 2000
10.32 Amendment No. 1 to Amended and Restated Registration Rights Agreement,
dated June 8, 2000
10.33 Letter Agreement between CrossRoads Strategy Group, Inc. and the
Registrant dated October 15, 1998
10.34 Professional Services Alliance Agreement with Juniper Networks, Inc.
dated May 30, 2000
11.1* Statement re: Computation of Basic and Diluted Net Loss Per Share
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (See Signature Page)
27.1 Financial Data Schedule
</TABLE>
--------
* To be supplied by amendment.
(b) Financial Statement Schedule.
Schedule II--Valuation and Qualifying Accounts
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act, and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of 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 Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424 (b)(1) or (4), or
497(h) under the Securities Act of 1933, shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in White Plains, New York,
on this 23rd day of August, 2000.
Greenwich Technology Partners, Inc.
/s/ Joseph P. Beninati
By: _________________________________
Joseph P. Beninati
Chief Executive Officer and
President
POWER OF ATTORNEY
We, the undersigned directors and/or officers of Greenwich Technology
Partners, Inc. (the "Company"), hereby severally constitute and appoint Joseph
P. Beninati and Dennis M. Goett and each of them individually, with full powers
of substitution and resubstitution, our true and lawful attorneys, with full
powers to them and each of them to sign for us, in our names and in the
capacities indicated below, the Registration Statement on Form S-1 filed with
the Securities and Exchange Commission, and any and all amendments to said
Registration Statement (including post-effective amendments), and any
registration statement filed pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, in connection with the registration under the Securities
Act of 1933, as amended, of equity securities of the Company, and to file or
cause to be filed the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys, and each of them, full power and authority to do and
perform each and every act and thing requisite and necessary to be done in
connection therewith, as fully to all intents and purposes as each of them
might or could do in person, and hereby ratifying and confirming all that said
attorneys, and each of them, or their substitute or substitutes, shall do or
cause to be done by virtue of this Power of Attorney.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title(s) Date
--------- -------- ----
<S> <C> <C>
/s/ Joseph P. Beninati Chief Executive Officer, August 23, 2000
______________________________________ President and Chairman of
Joseph P. Beninati the Board of Directors
(Principal Executive
Officer)
/s/ Dennis M. Goett Senior Vice President, August 23, 2000
______________________________________ Chief Financial Officer,
Dennis M. Goett Treasurer and Director
(Principal Financial and
Accounting Officer)
/s/ Ronald V. Davis Director August 23, 2000
______________________________________
Ronald V. Davis
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
Signature Title(s) Date
--------- -------- ----
<S> <C> <C>
/s/ Edmund A. Hajim Director August 23, 2000
______________________________________
Edmund A. Hajim
/s/ Jonathan R. Lynch Director August 23, 2000
______________________________________
Jonathan R. Lynch
/s/ William Jefferson Marshall Director August 23, 2000
______________________________________
William Jefferson Marshall
/s/ David H.W. Turner Director August 23, 2000
______________________________________
David H.W. Turner
</TABLE>
II-7
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Greenwich Technology Partners, Inc.:
We have audited in accordance with auditing standards generally accepted in
the United States, the financial statements of Greenwich Technology Partners,
Inc included in this registration statement and have issued our report thereon
dated February 2, 2000. Our audits were made for the purpose of forming an
opinion on the basic financial statements taken as a whole. The schedule of
valuation and qualifying accounts is the responsibility of the company's
management and is presented for purposes of complying with the Securities and
Exchange Commission's rules and is not part of the basic financial statements.
This schedule has been subjected to the auditing procedures applied in the
audits of the basic financial statements and, in our opinion, fairly states in
all material respects the financial data required to be set forth therein in
relation to the basic financial statements taken as a whole.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
February 2, 2000
S-1
<PAGE>
Schedule II--Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
Greenwich Technology Partners, Inc.
<TABLE>
<CAPTION>
Inception Years ended
through December 31,
December 31, ---------------- Six months ended
1997 1998 1999 June 30, 2000
------------ ------- -------- ----------------
(in thousands) (unaudited)
<S> <C> <C> <C> <C>
Balance at beginning of
period.................... $ -- $20,000 $ 97,038 $216,615
Additions charged to
Statement of Operations... 25,204 95,433 166,194 469,655
Other additions............ -- -- -- 172,916
Deductions................. 5,204 18,395 46,617 (63,820)
------- ------- -------- --------
Balance at end of period... $20,000 $97,038 $216,615 $795,366
======= ======= ======== ========
</TABLE>
S-2
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
1.1 Form of Underwriting Agreement
2.1 Stock Purchase Agreement by and among the Registrant and Aspire
Technology Group, Inc. dated as of March 1, 2000
2.2 Asset Purchase Agreement by and among the Registrant and NetGain, LLC
dated as of March 31, 2000
2.3 Agreement and Plan of Merger and Reorganization by and between the
Registrant, Navigator Technologies, Inc. and Michael Waresk dated as of
April 12, 2000.
2.4 Asset Purchase Agreement between VY Inc. and the Registrant dated April
30, 1997
3.1 Fourth Amended and Restated Certificate of Incorporation, filed June 8,
2000
3.2* Form of Amended and Restated Certificate of Incorporation to be in
effect upon the closing of this offering
3.3 By-laws of the Registrant
3.4* Form of Amended and Restated By-laws to be in effect upon the closing
of this offering
3.5 Delaware Certificate of Merger of Navigator Technologies, Inc. and the
Registrant filed as of April 13, 2000.
3.6 New Jersey Certificate of Merger of Navigator Technologies, Inc. and
the Registrant, filed April 13, 2000
3.7 Certificate of Ownership and Merger merging Antares Networks, Inc. into
the Registrant, filed December 8, 1997
4.1* Specimen Common Stock certificate
4.2 See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions defining the rights
of holders of common stock of the registrant
4.3 Form of Series D Preferred Stock Purchase Warrant
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
10.1 Loan Agreement with First Union National Bank dated July 30, 1999
10.2 Security Agreement with First Union National Bank dated July 30, 1999
10.3 Promissory Note to First Union National Bank dated July 30, 1999
10.4 1997 Stock Option Plan as amended
10.5 2000 Stock Option and Incentive Plan
10.6 2000 Employee Stock Purchase Plan
10.7 Investment Agreement, dated December 9, 1997
10.8 Investment Agreement (Series C Preferred Stock), dated June 25, 1998
10.9 Investment Agreement (Series C Preferred Stock), dated August 7, 1998
10.10 Investment Agreement (Series D Preferred Stock), dated February 1, 1999
10.11 Investment Agreement (Series E Preferred Stock), dated September 10,
1999
10.12 Amendment No. 1 to Investment Agreement (Series E Preferred Stock),
dated January 14, 2000
10.13 Amended and Restated Shareholders' Agreement, dated September 10, 1999
10.14 Amended and Restated Registration Rights Agreement, dated September 10,
1999
10.15 Sublease Agreement for the Registrant dated March 22, 2000.
10.16 Employment Agreement dated December 9, 1997 with Joseph P. Beninati
10.17 Employment Letter dated December 1, 1998 with Dennis M. Goett
10.18 Amendment to Employment Letter with Dennis M. Goett
10.19 Employment Letter dated October 1, 1999 with John Stopper
10.20 Employment Letter dated January 26, 2000 with Richard Haverly
10.21 Employment Letter dated March 13, 2000 with Johna Till Johnson
10.22 Letter Agreement dated July 27, 1999 with Credit Suisse First Boston
Corporation
10.23 Letter Agreement regarding indemnification dated July 27, 1999 with
Credit Suisse First Boston Corporation
10.24 Shareholders' Agreement between John Rothenberger and G. Richard
Rothenberger and the Registrant, dated March 1, 2000
10.25 Shareholders' Agreement between Michael Waresk and the Registrant dated
April 12, 2000.
10.26 Escrow Agreement between Michael Waresk, Navigator Technologies, Inc.
and the Registrant dated April 12, 2000
10.27 Escrow Agreement between John Rothenberger, G. Richard Rothenberger and
the Registrant, dated March 1, 2000
10.28 Letter Agreement dated March 17, 2000 with Credit Suisse First Boston
Corporation
10.29 Letter Agreement regarding indemnification, dated March 17, 2000 with
Credit Suisse First Boston Corporation
10.30 Investment Agreement (Series F Preferred Stock), dated June 8, 2000
10.31 Amendment No. 1 to Amended and Restated Shareholders' Agreement, dated
June 8, 2000
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Number Description
------ -----------
<C> <S>
10.32 Amendment No. 1 to Amended and Restated Registration Rights Agreement,
dated June 8, 2000
10.33 Letter Agreement between CrossRoads Strategy Group, Inc. and the
Registrant dated October 15, 1998
10.34 Professional Services Alliance Agreement with Juniper Networks, Inc.,
dated May 30, 2000
11.1* Statement re: Computation of Basic and Diluted Net Loss Per Share
21.1 Subsidiaries of the Registrant
23.1 Consent of Arthur Andersen LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (See Signature Page)
27.1 Financial Data Schedule
</TABLE>
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* To be supplied by amendment.
