AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 23, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MARKETING SERVICES GROUP, INC.
(Exact name of registrant as specified in its charter)
NEVADA 88-0085608
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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333 SEVENTH AVENUE
NEW YORK, NEW YORK 10001
(917) 339-7100
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
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J. JEREMY BARBERA
MARKETING SERVICES GROUP, INC
333 SEVENTH AVENUE
NEW YORK, NEW YORK 10001
(917) 339-7100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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COPIES TO:
MICHAEL L. PFLAUM, ESQ.
CAMHY KARLINSKY STEIN LLP
1740 BROADWAY
NEW YORK, NEW YORK 10019
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement number for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed Maximum Aggregate
Title of Shares Maximum Amount Aggregate Price Offering Amount of
to be Registered to Per Security (1) Price (1) Registration
be Registered Fee
- --------------------------------------------------------------------------------
Common Stock,
par value $.01 6,130,000(2) $16.22 $99,422,470 $26,247.53
per share
- --------------------------------------------------------------------------------
(1)Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended. The
proposed maximum offering price per share, the proposed maximum aggregate
offering price and the amount of registration fee have been computed on the
basis of the average high and low prices per share of the common stock on the
Nasdaq National Market System on March 16, 2000.
(2)The number of shares being registered represent the registrant's good faith
estimate of the maximum number of shares that may be issued to the selling
stockholders upon conversion of Series E Preferred Stock and exercise of
warrants; consists of shares issuable upon conversion of 30,000 shares of
Series E Preferred Stock and shares issuable upon exercise of warrants. For
purposes of estimating the number of shares of common stock to be included in
this Registration Statement, the Company calculated the number of shares of
common stock issuable in connection with the conversion of the Company's
Series E Preferred Stock and the exercise of the warrants. In addition to the
shares set forth in the table, the amount to be registered includes an
indeterminate number of shares issuable upon conversion of or in respect of
the Series E Preferred Stock and the warrants, as such number may be adjusted
as a result of stock splits, stock dividends and similar transactions in
accordance with Rule 416.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
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SUBJECT TO COMPLETION, DATED MARCH 23, 2000
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>
PROSPECTUS
MARKETING SERVICES GROUP, INC
6,130,000 SHARES OF COMMON STOCK
($.01 PAR VALUE)
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All of the common stock offered hereby may be sold from time to time by
and for the account of the selling stockholders named in this prospectus. The
selling stockholders acquired or will acquire the shares upon conversion of
shares of Series E preferred stock and the exercise of warrants issued to the
selling stockholders in a private placement with us.
The methods of sale of the common stock offered hereby are described under
the heading "Plan of Distribution." We will receive none of the proceeds from
such sales. However, we may receive up to $41,999,162 upon the exercise of
warrants. If received, such funds will be used for general corporate purposes,
including working capital requirements. We will pay all expenses, except for the
underwriting and brokerage expenses, fees, discounts and commissions, which will
all be paid by the selling stockholders, incurred in connection with the
offering described in this prospectus.
Our common stock is listed on the Nasdaq National Market System (Symbol:
MSGI). On March 22, 2000, the closing price of the shares was $19.25 per share.
THE SHARES OF OUR COMMON STOCK OFFERED OR SOLD UNDER THIS PROSPECTUS
INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 2.
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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.
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THE DATE OF THIS PROSPECTUS IS MARCH __, 2000.
<PAGE>
TABLE OF CONTENTS
THE COMPANY............................................................1
RECENT EVENTS..........................................................1
RISK FACTORS...........................................................2
FORWARD-LOOKING INFORMATION............................................9
USE OF PROCEEDS........................................................9
SELLING STOCKHOLDERS..................................................10
PLAN OF DISTRIBUTION..................................................10
WHERE YOU CAN FIND MORE INFORMATION...................................11
LEGAL MATTERS.........................................................13
EXPERTS...............................................................13
<PAGE>
THE COMPANY
We are a leader in the Internet incubation and integrated marketing
services industries. Our revenues have grown from $16 million in fiscal 1996 to
in excess of $200 million on an annualized basis. GE Capital and CMGi are
significant shareholders of our Company, with ownership interests of 16% and 9%,
respectively.
We have two business divisions, The Internet Group and The Direct Group.
MSGi Direct provides integrated marketing services across all mediums. The
Internet Group's primary focus is WiredEmpire and its Marketing Agent
technology, providing Internet marketing, e-commerce applications, Web
development and hosting, online ad sales and consulting. The Group's strategic
objective continues to focus on acquiring, investing in and incubating Internet
companies. MSGi Direct, which will continue to leverage the synergies across all
its companies in marketing and technology, provides strategic planning,
creative, direct marketing, database marketing and management, telemarketing,
telefundraising, print production, mailing and media planning and buying.
We are a Nevada corporation and maintain our executive offices at 333
Seventh Avenue, New York, New York. Our telephone number is (917) 339-7100.
RECENT EVENTS
In October 1999, we completed an acquisition of approximately 85% of the
outstanding common stock of Cambridge Intelligence Agency, Inc. for $1.6 million
in our common stock and the transfer of certain technology. Cambridge
Intelligence Agency, Inc. is a provider of Web-based e-mail response management
solutions.
In October 1999, we completed a 10% investment in Mazescape.com for
$250,000 in cash. Mazescape.com is a business-to-business web solution provider
in the corporate segment of the Internet recruitment industry.
In December 1999, we completed an approximate 10% investment in Fusion
Networks, Inc. for 1,500,000 shares of our common stock. We also obtained an
option to acquire an additional 9.13%. Fusion Networks, Inc. operates the Latin
American portal www.Latinfusion.com. The web site is an interactive, multimedia,
and entertainment Latin American based portal featuring television, music, and
e-commerce capability.
In February 2000, we completed a private placement of securities with RGC
International Investors, LDC and Marshall Capital Management, Inc., an affiliate
of Credit Suisse First Boston, in which we sold an aggregate of 30,000 shares of
Series E Convertible Preferred Stock, par value $.01, and warrants to acquire
1,471,074 shares of common stock for an aggregate purchase price of $30,000,000.
In March 2000, our majority-owned subsidiary, WiredEmpire, Inc., completed
a private placement of securities in which they sold an aggregate of 3,200,000
shares of Series A Convertible Preferred Stock, par value $.01, for an aggregate
purchase price of $20,000,000.
In March 2000, we completed the acquisition of all of the outstanding
capital stock of Grizzard Advertising, Inc. Grizzard and its wholly owned
subsidiary operate a vertically integrated network of marketing communications
companies. Pursuant to an Agreement and Plan of Merger dated as of July 8, 1999,
we acquired, by merger, all of the capital stock of Grizzard from its current
stockholders for approximately $100 million. The purchase price was paid
$50,000,000 in cash and the remainder in shares of our common stock. We funded
the acquisition in part with a $58,000,000 bank financing.
<PAGE>
RISK FACTORS
WE MAY NOT HAVE OPERATING INCOME OR NET INCOME IN THE FUTURE; WE MAY HAVE
PROBLEMS RAISING MONEY WE NEED IN THE FUTURE. Recently, we have had significant
operating losses. During the years ended June 30, 1997, 1998 and 1999, we had
operating losses of approximately $3.6 million, $580,000 and $7.1 million,
respectively. It is possible that we may never achieve profitability, and even
if we do achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis in the future. For a detailed
account of our historical losses, please see the "Management's Discussion and
Analysis of Financial Condition and Results of Operations," contained in our
Annual Report on Form 10-K for the year ended June 30, 1999 and our Quarterly
Report on Form 10-Q for the quarter ended December 31, 1999.
We may require additional capital, especially in light of our continuing
acquisition program. We may, from time to time, seek additional funding through
public or private financing, including debt or equity financing. We cannot
assure you that adequate funding will be available as needed or, if it is
available, that it will be on acceptable terms. If additional financing is
required, the terms of the financing may be adverse to the interests of existing
stockholders, including the possibility of substantially diluting their
ownership position.
OUR HIGH LEVEL OF INDEBTEDNESS AND OTHER MONETARY OBLIGATIONS REQUIRE THAT
A SIGNIFICANT PART OF OUR CASH FLOW BE USED TO PAY INTEREST AND FUND THESE OTHER
OBLIGATIONS. We have a high level of debt. As of March 22, 2000, we and our
subsidiaries owed a combined total of approximately $49,000,000. Under our
existing lines of credit, we can borrow approximately an additional $9,500,000.
At March 22, 2000, we had approximately $19,500,000 of cash and cash equivalents
to help meet our obligations. Our high level of debt and other obligations could
have important negative consequences to us and investors in our securities.
These include:
o We may not be able to satisfy all of our obligations.
o We could have problems obtaining necessary financing in the future for
working capital, capital expenditures, debt service requirements, refinancing
or other purposes.
o We will have to use a significant part of our cash flow to make payments on
our debt, to pay the dividends on preferred stock (if we choose to pay them
in cash), and to satisfy the other obligations set forth above, which may
reduce the capital available for operations and expansion.
o Adverse economic or industry conditions may have more of a negative impact on
us.
We expect to be able to meet all of our obligations with existing cash,
cash generated from our operations, and our current lines of credit. We believe
that funds from these sources will be sufficient to meet our obligations and
operating needs for the next 12 months. However, our business is subject to
factors beyond our control, such as economic conditions and competition. We may
have to refinance all or some of our debt or secure new financing. We can not be
sure that we will be able to obtain such refinancing or new loans on reasonable
terms or at all. We have agreed in our loan agreements to limit the amount of
additional debt we will incur. If we can not meet all of our obligations, the
market value and marketability of our common stock will likely be adversely
affected. In addition, if we become the subject of bankruptcy proceedings, our
creditors and preferred stockholders will be entitled to our assets before any
distributions are made to common stockholders.
OUR FINANCIAL AND OPERATING ACTIVITIES ARE LIMITED BY RESTRICTIONS
CONTAINED IN THE TERMS OF OUR PRIOR FINANCINGS. The terms governing our and our
subsidiaries' indebtedness impose significant operating and financial
restrictions on us. These restrictions may significantly limit or prohibit us
from engaging in certain transactions, including the following:
o incurring additional indebtedness;
o creating liens on our assets;
o paying dividends;
o selling assets;
o engaging in certain mergers or acquisitions; and
o making certain investments.
Our failure to comply with the terms and covenants in our and our
subsidiaries' indebtedness could lead to a default under the terms of those
documents, which would entitle the lenders to accelerate the indebtedness and
declare all amounts owed due and payable. Moreover, the instruments governing
our indebtedness contain cross-default provisions so that a default under any of
our indebtedness will be considered a default under all other indebtedness. If a
cross-default occurs, the maturity of almost all of our indebtedness could be
accelerated and become immediately due and payable. If that happens, we would
not be able to satisfy all of our debt obligations, which would have a
substantial material adverse effect on the value of our common stock and our
ability to continue as a going concern. We cannot assure you that we will be
able to comply with these restrictions in the future or that our compliance
would not cause us to forego opportunities that might otherwise be beneficial to
us.
Further, certain of our subsidiaries are required to comply with specified
financial ratios and tests, including:
o interest expense;
o fixed charges;
o debt service; and
o total debt.
We are currently in compliance with all of these financial covenants and
restrictions. However, events beyond our control, such as economic, financial
and industry conditions, may affect our ability to continue meeting these
financial tests and ratios. The need to comply with these financial covenants
and restrictions could limit our ability to expand our business or prevent us
from borrowing more money when necessary.
OUR BUSINESS IS DIFFICULT TO EVALUATE BECAUSE OUR FINANCIAL STATEMENTS
REFLECT THE OPERATIONS OF OUR RECENT ACQUISITIONS FROM THEIR RESPECTIVE
ACQUISITION DATES. During the past two and one-half years, we have made many
significant acquisitions of operating divisions. Therefore, our historical
operating results may not be indicative of our future operating results. Our
financial statements are consolidated to reflect the operations of our recent
acquisitions of each of our subsidiaries from the date of acquisition and,
therefore, are not comparable to our historical financial statements, nor do
they give a clear indication of our future performance. Our pro forma financial
statements reflect the operations of our acquisitions for the full period, but,
since the businesses were not operating as a consolidated group, their
performance is no assurance that they will continue to operate with such
results.
A MAJOR STOCKHOLDER COULD ACQUIRE SIGNIFICANT AMOUNTS OF OUR COMMON STOCK
AT BELOW MARKET PRICES. In connection with a financing on December 24, 1997, we
granted G.E. Capital Corporation a warrant to purchase up to 10,670,000 shares
of our common stock at a nominal exercise price if we do not achieve certain
earnings targets. If we file a registration statement with the SEC, or arrange a
private placement, after December 20, 1999 and prior to April 30, 2000 which
permits G.E. Capital to sell at least 1,766,245 shares of our common stock (out
of a total of 4,340,622 shares) at a minimum price of $8.75 per share, then the
warrant will be replaced with a new warrant to purchase 300,000 shares of common
stock at an exercise price equal to one-third of the offering price of the
common stock under such registration statement. If we neither meet the earnings
targets nor complete a registered offering or private placement of our common
stock above the target price and date, the shares of common stock you receive
will be substantially diluted and may lose value. The new warrant agreement, the
first amendment, and the second amendment, relating to G.E. Capital's rights are
exhibits to our Current Reports on Form 8-K, as amended, filed on July 29, 1999
and September 9, 1999.
WE NEED TO BE ABLE TO ACQUIRE AND INTEGRATE COMPANIES AND NEW PRODUCT
LINES SUCCESSFULLY TO IMPLEMENT OUR GROWTH STRATEGY. Our growth strategy
includes completing acquisitions that expand and complement our business. If we
are unable to make these acquisitions, we may not be able to meet or exceed our
historical levels of revenue growth and earnings. As a result, our stock price
may be adversely affected.
We may be unable to make acquisitions due to, among other reasons, these
factors:
- the Internet companies we seek to acquire or invest in have excessive
valuation;
- we may not be able to identify suitable companies to buy because many of
the companies in the direct marketing business are relatively small when
compared to us;
- we may not be able to purchase companies at favorable prices, or at
all, due to increased competition for these companies; and,
- we may not be able to raise funds in the future to finance future
acquisitions.
Future acquisitions only will succeed if we can effectively assess
characteristics of potential target companies or product lines, such as:
- financial condition and results of operations;
- attractiveness of products;
- suitability of distribution channels; and
- management ability.
We cannot assure you that we can identify attractive acquisition
candidates or negotiate acceptable acquisition terms, and our failure to do so
may adversely affect our results of operations and our ability to sustain
growth.
Completed acquisitions may give rise to a number of additional
difficulties, including:
- difficulty integrating acquired technologies, operations and
personnel with the existing business;
- diversion of management attention in connection with both negotiating
the acquisitions and integrating the assets;
- strain on managerial and operational resources as management tries to
oversee larger operations;
- potential issuance of securities in connection with the acquisition,
which issuance lessens or dilutes the rights and values of currently
outstanding securities;
- incurrence of additional debt;
- the write-off of in-process research and development of software
acquisition and development costs;
- the amortization of goodwill and other intangible assets;
- loss of key personnel from acquired companies;
- failure of an acquired business to achieve targeted financial
results; and
- unanticipated problems and liabilities of acquired companies.
Our growth has placed significant demands on our administrative,
operational and financial resources. To continue our future growth, we also will
be required to improve our operational and financial systems and obtain
additional management, operational and financial resources. These additional
costs may outweigh the benefits we expect to obtain from internal growth.
We may not be able to successfully address these problems. Our future
operating results will depend to a significant degree on our ability to
successfully manage growth and integrate acquisitions. Furthermore, some of our
investments may be in early-stage companies with limited operating histories and
limited or no revenues. We may not be able to successfully develop these young
companies.
OUR STRATEGY OF SELLING ASSETS OF, OR INVESTMENTS IN, OUR ACQUIRED AND
DEVELOPED COMPANIES PRESENTS CERTAIN RISKS. Our business plan involves investing
in early-stage companies and subsequently selling, in public or private
offerings, all or portions of our interests in these companies. Market and other
conditions largely beyond our control affect:
- our ability to engage in such sales on favorable terms, or at all;
- the timing of such sales; and
- the amount of proceeds from such sales.
If we are unable to sell our interests at favorable prices, our future
operating results and business would be harmed. Fluctuations in the market price
and valuations of the securities we intend to hold in such companies depends on
market and other conditions that are beyond our control, and may result in
fluctuations of the market price of our stock.
THE DIRECT MARKETING SERVICES INDUSTRY AND THE MARKET FOR INTERNET
PRODUCTS AND SERVICES ARE HIGHLY COMPETITIVE. The direct marketing services
industry is highly competitive. The marketing resources of our clients are
divided among many services other than those services in which we compete, such
as television, radio and newspaper advertising. Many of our competitors have
certain competitive advantages over us due to factors including:
- greater financial resources;
- longer operating histories;
- stronger name recognition;
- larger or more advanced technical resources; and
- greater ability to quickly respond to new or emerging technologies.
In addition, we compete with the in-house telemarketing and direct mail
operations of certain of our clients and potential clients.
The market for Internet products and services is already highly
competitive. Exacerbating this situation is the fact that the market for
Internet products and services lacks significant barriers to entry, making it
relatively easy for new businesses to enter this market. Competition in the
market for Internet products and services may intensify in the future. Numerous
well-established companies and smaller entrepreneurial companies are focusing
significant resources on developing and marketing products and services that
will compete with our products and services. In addition, many of our current
and potential competitors have greater financial, technical, operational and
marketing resources than us. We may not be able to compete successfully against
these competitors in selling our goods and services. Competitive pressures also
may force prices for Internet goods and services down, and such price reductions
likely would reduce our revenues.
WE DO NOT GENERALLY ENTER INTO LONG-TERM CONTRACTS WITH OUR CLIENTS. Our
contracts or other arrangements with our direct marketing clients are generally
entered into on a project-by-project basis. Moreover, if we were to lose a
long-standing client, replacing such client with a comparable client may require
significant lead time. In addition, new client programs often begin with a pilot
project that is smaller in scale, more limited in scope, and has a smaller
marketing budget than projects conducted with long-standing clients. Although we
believe that we have historically achieved satisfactory levels of client
retention, we cannot assure you that we will be able to do so in the future.
WE DEPEND ON OUR KEY PERSONNEL. We are highly dependent upon the continued
services and experience of our senior management team, including J. Jeremy
Barbera, Chairman of the Board and Chief Executive Officer, Mike Dzvonik, Chief
Operating Officer and Rudy Howard, Chief Financial Officer. Our decentralized
management philosophy delegates day-to-day operating decisions to the managers
of each of our divisions. Therefore, we are also highly dependent upon the
effectiveness of a small group of 17 people at the division level. We depend on
the services of Mssrs. Barbera, Dzvonik and Howard and the other members of our
senior management and certain key employees to, among other things:
- successfully integrate the operations of acquired companies;
- continue our acquisition, investment and growth strategies; and
- maintain and develop our client relationships.
The loss of any key person could have a significant bearing upon our
profitability, our ability to consummate future acquisitions, and our ability to
finance, manage, or develop marketing programs. Our operational success is
contingent upon our ability to retain and expand our staff of qualified
personnel on a timely basis. We cannot assure you that adequate replacements can
be found if we were to lose the services of any senior management or key
employees. We are also dependent upon the specialized skills of certain other
personnel and may need to hire additional skilled personnel if we experience
growth in our business. Competition for such personnel is intense and the
inability to attract or maintain qualified employees could materially and
adversely affect our business, financial condition and results of operations.
We maintain key person life insurance for certain members of our senior
management team.
WE MAY EXPERIENCE VARIATIONS FROM QUARTER TO QUARTER IN OPERATING RESULTS
AND NET INCOME WHICH COULD ADVERSELY AFFECT THE PRICE OF OUR COMMON STOCK. We
expect to experience significant fluctuations in future quarterly operating
results. Quarterly fluctuations could adversely affect the market price of our
common stock. Many factors, some of which are beyond our control, may cause
future quarterly fluctuations, including:
- the timing of our clients' direct marketing programs and the
commencement of new contracts;
- new customer contracts which may require us to incur costs in
periods prior to recognizing revenue under those contracts;
- the effect of the change of business mix on profit margins;
- the timing of additional selling, general and administrative
expenses to support new business;
- the costs and timing of the completion and integration of
acquisitions, sales of assets and investments;
- the timing of sales of assets;
- the cyclical elements of our clients' industries;
- the demand for our Internet products and services;
- the market acceptance of new products and services;
- specific economic conditions in the Internet and direct marketing
industries; and
- general economic conditions.
The anticipated quarterly fluctuations, along with the emerging nature of
commercial use of the Internet, makes predictions concerning our future revenues
difficult. We believe that period-to-period comparisons of our results of
operations will not necessarily be meaningful and should not be relied upon as
indicative of our future performance for any subsequent fiscal quarter or for a
full fiscal year. It also is possible that in some future quarters our operating
results will be below the expectations of securities analysts and investors. In
such circumstances, the price of our common stock may decline.
OUR MANAGEMENT AND SIGNIFICANT STOCKHOLDERS EXERCISE SUBSTANTIAL CONTROL
OVER OUR BUSINESS. As of March 22, 2000, our directors and executive officers
beneficially owned, in the aggregate, 4,496,078 shares of our common stock,
representing approximately 13.8% of the common stock outstanding. Three
significant stockholders will beneficially own, in the aggregate, 8,161,706
shares, representing approximately 27.3% of the common stock. Accordingly, if
these persons act together, they could exercise considerable influence over
matters requiring approval of our stockholders, including the election of our
board of directors.
THE PRICE OF OUR STOCK HAS BEEN VOLATILE. The market price of our common
stock has been, and is likely to continue to be, volatile, experiencing wide
fluctuations. Such fluctuations may be triggered by:
- differences between our actual or forecasted operating results and
the expectations of securities analysts and investors;
- announcements regarding our products, services or technologies;
- announcements regarding the products, services or technologies of our
competitors;
- developments relating to our patents or proprietary rights;
- specific conditions affecting the Internet industry;
- specific conditions affecting the direct marketing services industry;
- sales of our common stock into the public market;
- general market conditions; and
- other factors.
In recent years the stock market has experienced significant price and
volume fluctuations which have particularly impacted the market prices of equity
securities of many companies providing Internet-related products and services.
Some of these fluctuations appear unrelated or disproportionate to the operating
performance of such companies. Future market movements may adversely affect the
market price of our stock.
FUTURE SALES OF OUR SHARES COULD ADVERSELY AFFECT ITS STOCK PRICE. As of
March 22, 2000, there were 29,854,081 shares of our common stock outstanding. An
additional 1,290,000 shares are currently issuable upon the conversion of 30,000
shares of Series E preferred Stock and approximately 4,380,000 shares are
issuable upon the exercise of currently exercisable warrants and options. If all
these shares were issued, we would have approximately 34,234,081 shares of our
common stock outstanding. In addition, approximately 1,813,000 shares of our
common stock are issuable upon the exercise of outstanding options that are not
currently exercisable. In addition, we have the authority to issue up to
approximately 1,537,000 shares of our common stock under our stock option plans.
Of the common stock outstanding prior to the filing of this registration
statement, approximately 19.9 million shares are freely tradable without
restriction under the Securities Act or are eligible for sale in the public
market without regard to the availability of current public information, volume
limitations, manner of sale restrictions, or notice requirement under Rule
144(k), and does not include any shares held by or purchased from persons deemed
to be our "affiliates" which are subject to certain resale limitations pursuant
to Rule 144 under the Securities Act. As of the date of this registration
statement/prospectus, the remaining shares of common stock outstanding are
eligible for sale pursuant to rule 144 under the Securities Act.
Sales of our common stock could adversely affect the market price of our
common stock and could impair our future ability to raise capital through the
sale of equity securities or make acquisitions for stock.
WE DO NOT INTEND TO PAY DIVIDENDS. We do not intend to pay any cash
dividends on our common stock for the foreseeable future. Our existing credit
arrangement prohibits the payment of cash dividends. In addition, we cannot
assure you that our operations will generate sufficient revenues to enable us to
declare or pay dividends. We have not paid cash dividends on any of our capital
stock in at least the last six years. It is anticipated that future earnings, if
any, will be used to finance our future growth.
OUR ABILITY TO ISSUE "BLANK CHECK" PREFERRED STOCK AND CERTAIN OTHER
PROVISIONS OF OUR CERTIFICATE OF INCORPORATION COULD PREVENT OR DELAY TAKEOVERS.
Our restated certificate of incorporation authorizes the issuance of "blank
check" preferred stock (that is, preferred stock which our board of directors
can create and issue without prior stockholder approval) with rights senior to
those of our common stock. Furthermore, we have a staggered board of directors.
These provisions, together with certain provisions of Nevada law limiting the
voting rights of an acquiror of a controlling interest in a Nevada corporation
(such as ourselves), as well as restrictions on certain business combinations
(including certain mergers and exchanges), could delay or impede a merger,
tender offer or other transaction resulting in a change in control, even if such
a transaction would have significant benefits to our stockholders. As a result,
these provisions could limit the price that certain investors might be willing
to pay in the future for shares of our common stock.
OUR FUTURE SUCCESS IN THE INTERNET BUSINESS DEPENDS ON HOW OUR INTERNET
STRATEGY EVOLVES AND THE FUTURE OF THE INTERNET. Our future success in the
Internet business depends on our successful implementation of our acquisition
strategy and upon the continuation of current trends in the Internet industry.
These factors include:
- an ability to develop and maintain brand name awareness;
- he continued increasing trend of Internet use;
- our ability to form relationships with third parties who provide
Internet services upon which we are dependent;
- the continued viability of the Internet's infrastructure;
- our ability to adapt to the evolving Internet technology and consumer
demands; and
- our ability to identify and acquire interests in Internet companies
at reasonable valuations.
THE OPERATING PERFORMANCE OF OUR SYSTEMS AND SERVERS IS CRITICAL TO OUR
BUSINESS AND REPUTATION. Any system failure, including network, software or
hardware failure, that causes an interruption or a decrease in the
responsiveness of our services could result in reduced user traffic and
therefore, reduced revenues. Our systems are vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure, computer
viruses, electronic break-ins, earthquakes or similar events. Our insurance
policies have low coverage limits and may not adequately compensate us for
losses that may occur due to interruptions in our service.
Our users and customers depend on Internet service providers, online
service providers and other Web site operators for access to our products and
services. Each of these providers has experienced significant outages in the
past, and could experience outages, delays and other difficulties in the future
due to system failures unrelated to our systems.
We maintain extensive computer processing equipment and telemarketing
equipment at our facilities throughout the United States, and such equipment
represents a majority of our data services capability. Although back-up client
files and databases are maintained off-site, and we maintain business
interruption insurance and have not had a major failure of our equipment, the
risk of such failure does exist and, if our back-up systems and databases prove
inadequate, such failure could have a material adverse effect on our business.
WE MAY BE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS AND WE MAY BE
LIABLE FOR INFRINGING THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. Our success
depends in part on our intellectual property rights and our ability to protect
such rights under applicable patent, trademark, copyright and trade secret laws.
We seek to protect the intellectual property rights underlying our products and
services by filing applications and registrations, as appropriate, and through
our agreements with our employees, suppliers, customers and partners. However,
the measures we have adopted to protect our intellectual property rights may not
prevent infringement or misappropriation of our technology or trade secrets. A
further risk is introduced by the fact that many legal standards relating to the
validity, enforceability and scope of protection of certain proprietary rights
in the context of the Internet industry currently are not resolved.
We license certain components of our products and services from third
parties. Our failure to maintain such licenses, or to find replacement products
or services in a timely and cost effective manner, may damage our business and
results of operations. Although we believe our products and information systems
do not infringe upon the proprietary rights of others, there can be no assurance
that third parties will not assert infringement claims against us. From time to
time we have been, and we expect to continue to be, subject to claims in the
ordinary course of our business, including claims of our alleged infringement of
the intellectual property rights of third parties. Any such claims could damage
our business and results of operations by:
- subjecting us to significant liability for damages;
- resulting in invalidation of our proprietary rights;
- being time-consuming and expensive to defend even if such claims are
not meritorious; and
- resulting in the diversion of management time and attention.
Even if we prevail with respect to the claims, litigation could be
time-consuming and expensive to defend, and could result in the diversion of our
time and attention. Any claims from third parties also may result in limitations
on our ability to use the intellectual property subject to these claims unless
we are able to enter into agreements with the third parties making such claims.
GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES COULD HARM OUR BUSINESS. The
telemarketing industry has become subject to an increasing amount of federal and
state regulation. Violation of these rules may result in injunctive relief,
monetary penalties or disgorgement of profits, as well as private actions for
damages. While the FTC's new rules have not caused us to alter our operating
procedures, additional federal or state consumer-oriented legislation could
limit our telemarketing activities and those of our clients or significantly
increase our costs of regulatory compliance. Several of the industries which we
intend to serve, including the financial services and healthcare industries,
also are subject to varying degrees of government regulation. Although
compliance with these regulations is generally the responsibility of our
clients, we could be subject to a variety of enforcement or private actions for
our failure or the failure of our clients to comply with such regulations.
In addition, the growth of information and communications technology has
produced a proliferation of information of various types and has raised many new
issues concerning the privacy of such information. Congress and various state
legislatures have considered legislation which would restrict our access to, and
use of, credit and other personal information for direct marketing purposes. The
direct marketing services industry, of which we are a part, could be negatively
impacted in the event any of these or similar types of legislation are enacted.
With the exception of regulations applicable to businesses generally, with
respect to our Internet products and services, we are not currently subject to
direct regulation by any government agency. Due to increasing popularity and use
of the Internet, however, it is possible that a number of laws may be adopted
with respect to the Internet in the future, covering issues such as:
- user privacy;
- pricing of goods and services offered; and
- types of products and services offered.
If the government adopts any additional laws or regulations covering use
of the Internet, such actions could decrease the growth of the Internet. Any
such reduction in the growth of the Internet may reduce demand for our goods and
services and raise our cost of producing our goods and services. Finally, our
sales of goods and services may be reduced and our costs to produce these goods
and services may be increased if existing U.S. state and federal laws and
foreign laws governing issues such as commerce, taxation, property ownership,
defamation and personal privacy are increasingly applied to the Internet.
WE FACE SECURITY RISKS CONCERNING THE TRANSMISSION OF CONFIDENTIAL
INFORMATION. The secure transmission of confidential information over public
telecommunications facilities is a significant barrier to e-commerce and
communications on the Internet. Many factors may cause compromises or breaches
of the security systems used by us or other Internet sites to protect
proprietary information, including:
- advances in computer and software functionality; or
- new discoveries in the field of cryptography.
A compromise of security on the Internet would have a negative effect on
the se of the Internet for e-commerce and communications. This in turn would
have a negative effect on our business. A party that is able to circumvent our
security measures could misappropriate our proprietary information or cause
interruptions our operations. Protecting against the threat of such security
breaches or alleviating problems caused by such breaches may require us to
expend significant capital and other resources. When our activities and the
activities of our customers and sponsors involve the storage and transmission of
proprietary information, such as credit card numbers, security breaches may
expose us to a risk of loss or litigation and possible liability. There is no
guarantee that our security measures will prevent security breaches.
FORWARD-LOOKING INFORMATION
Some of the statements contained in or incorporated by reference in this
prospectus discuss our plans and strategies for our respective businesses or
state other forward-looking statements, as this term is defined in the Private
Securities Litigation Reform Act of 1995. The words "anticipate," "believe,"
"estimate," "expect," "plan," "intend," "should," "seek," "will," and similar
expressions are intended to identify these forward-looking statements, but are
not the exclusive means of identifying them. Since we are incorporating by
reference pro forma financial statements consolidating our financial statements
with the companies we have acquired or will acquire, as if we acquired such
companies at an earlier date, the financial data we present are based on
estimates and do not necessarily reflect the results that would have been
achieved at that time had we actually acquired those companies at such earlier
date, and, for that reason, may not accurately reflect future results. These
forward-looking statements reflect the current views of our management. However,
various risks, uncertainties and contingencies could cause our actual results,
performance or achievements to differ materially from those expressed in, or
implied by, these statements, including the following:
- our success or failure to implement our business strategies; and
- other factors discussed under the heading "Risk Factors" and elsewhere
in this prospectus.
We assume no obligation to update any forward-looking statements contained
in this prospectus, whether as a result of new information, future events or
otherwise. For a discussion of important risks of an investment in our
securities, including factors that could cause actual results to differ
materially from results referred to in the forward-looking statements, see "Risk
Factors." You should carefully consider the information set forth under the
caption "Risk Factors." In light of these risks, uncertainties and assumptions,
the forward-looking events discussed in or incorporated by reference in this
prospectus might not occur.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares
offered by the selling stockholders. However, we may receive $41,999,162 upon
exercise of warrants, the underlying shares of which are included hereunder. If
received, such funds will be used for general corporate purposes, including
working capital requirements.
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders and
the number of shares being registered for sale as of the date of the prospectus
and sets forth the number of shares of common stock known by us to be
beneficially owned by each of the selling stockholders as of March 22, 2000.
None of the selling stockholders has had a material relationship with the
Company within the past three years other than as a result of the ownership of
the shares or other securities of the Company. The shares offered by this
prospectus may be offered from time to time by the selling stockholders. The
percent of beneficial ownership for each stockholder is based on 29,854,081
shares of common stock outstanding as of March 22, 2000.
Beneficial Ownership
After Offering
-------------------
Number of
Shares of Number of
Common Stock Shares of Number
Selling Stockholder Beneficially Common Stock of Shares Percent
Owned (1) to be Sold
- --------------------------------------------------------------------------------
Marshall Capital 3,065,000 (2) 3,065,000 (2) -0- -0-
Management, Inc...........
- --------------------------------------------------------------------------------
RGC International 3,065,000 (2) 3,065,000 (2) -0- -0-
Investors, LDC............
- --------------------------------------------------------------------------------
Total Common Stock..... 6,130,000 6,130,000 -0- -0-
- --------------------------------------------------------------------------------
(1)The figures for the number of shares and the percentage of shares
beneficially owned by the selling stockholders after the offering are based
on the assumption that all of the selling stockholders will sell all of the
shares registered for sale hereby. Because the selling stockholders may offer
all, some or none of the shares pursuant to this prospectus, and because
there are currently no agreements, arrangements or understandings with
respect to the sale of any of the shares, no estimate can be given as to the
number of shares that will be held by the selling stockholders after
completion of the sale of shares hereunder. See "Plan of Distribution."
(2)The number of shares set forth in the table for each of the selling
stockholders represents an estimate of the number of shares of common stock
to be offered by the selling stockholders. The actual number of shares of
common stock issuable upon conversion of the Series E Preferred Stock and
exercise of the warrants is indeterminate, is subject to adjustment and could
be materially less or more than such estimated number depending on factors
which cannot be predicted by us at this time, including, among other factors,
the future market price of the common stock. The actual number of shares of
common stock offered in this prospectus, and included in the registration
statement of which this prospectus is a part, includes such additional number
of shares of common stock as may be issued or issuable upon conversion of the
Series E Preferred Stock and exercise of the warrants by reason of any stock
split, stock dividend or similar transaction involving the common stock, in
accordance with Rule 416 under the Securities Act. Under the terms of the
Series E Preferred Stock, if the Series E Preferred Stock had been actually
converted on March 22, 2000, the conversion price would have been $24.47, at
which price the Series E Preferred Stock would have been converted into
approximately 1,225,991 shares of common stock. The warrants issued in
connection with the Series E Preferred Stock are exercisable into an
aggregate of 1,471,075 shares of common stock at an exercise price of $28.55.
Under the terms of the Series E Preferred Stock and the warrants, the shares
of Series E Preferred Stock are convertible and the warrants are exercisable
by any holder only to the extent that the number of shares of common stock
issuable pursuant to such securities, together with the number of shares of
common stock owned by such holder and its affiliates (but not including
shares of common stock underlying unconverted shares of Series E Preferred
Stock or unexercised portions of the warrants) would not exceed 4.9% of the
then outstanding common stock as determined in accordance with Section 13(d)
of the Exchange Act. Accordingly, the number of shares of common stock set
forth in the table for the selling stockholders exceeds the number of shares
of common stock that the selling stockholders could own beneficially at any
given time through their ownership of the Series E Preferred Stock and the
warrants. In that regard, the beneficial ownership of the common stock by the
selling stockholders set forth in the table is not determined in accordance
with Rule 13d-3 under the Exchange Act.
PLAN OF DISTRIBUTION
The shares being offered by the selling stockholders or their respective
pledgees, donees, transferees or other successors in interest, will be sold from
time to time in one or more transactions, which may involve block transactions,
on the Nasdaq National Market or on such other market on which the common stock
may from time to time be trading:
o in privately-negotiated transactions;
o through the writing of options on the shares;
o short sales; or
o any combination thereof.
The sale price to the public may be:
o the market price prevailing at the time of sale;
o a price related to such prevailing market price;
o at negotiated prices; or
o such other price as the selling stockholders determine from time
to time.
The shares may also be sold pursuant to Rule 144. The selling stockholders shall
have the sole and absolute discretion not to accept any purchase offer or make
any sale of shares if they deem the purchase price to be unsatisfactory at any
particular time.
The selling stockholders or their respective pledgees, donees, transferees
or other successors in interest, may also sell the shares directly to market
makers acting as principals and/or broker-dealers acting as agents for
themselves or their customers. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the selling stockholders
and/or the purchasers of shares for whom such broker-dealers may act as agents
or to whom they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that a selling stockholder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. The
selling stockholders cannot assure that all or any of the shares offered in this
prospectus will be issued to, or sold by, the selling stockholders. The selling
stockholders and any brokers, dealers or agents, upon effecting the sale of any
of the shares offered in this prospectus, may be deemed "underwriters" as that
term is defined under the Securities Act or the Exchange Act, or the rules and
regulations under such acts.
The selling stockholders, alternatively, may sell all or any part of the
shares offered in this prospectus through an underwriter. No selling stockholder
has entered into any agreement with a prospective underwriter and there is no
assurance that any such agreement will be entered into. If a selling stockholder
enters into such an agreement or agreements, the relevant details will be set
forth in a supplement or revisions to this prospectus.
The selling stockholders and any other persons participating in the sale
or distribution of the shares will be subject to applicable provisions of the
Exchange Act and the rules and regulations under such act, including, without
limitation, Regulation M. These provisions may restrict certain activities of,
and limit the timing of purchases and sales of any of the shares by, the selling
stockholders or any other such person. Furthermore, under Regulation M, persons
engaged in a distribution of securities are prohibited form simultaneously
engaging in market making and certain other activities with respect to such
securities for a specified period of time prior to the commencement of such
distributions, subject to specified exceptions or exemptions. All of these
limitations may affect the marketability of the shares.
We have agreed to indemnify the selling stockholders, or their transferees
or assignees, against certain liabilities, including liabilities under the
Securities Act, or to contribute to payments the selling stockholders or their
respective pledgees, donees, transferees or other successors in interest, may be
required to make in respect of such liabilities.
We will pay all expenses associated with filing and maintaining the
effectiveness of this registration statement. Other expenses incident to the
offering and sale of our common stock by the selling stockholders, including
brokerage and underwriting commissions, will be paid by the selling
stockholders.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the SEC a registration statement under the Securities
Act with respect to the shares of common stock offered hereby on Form S-3. This
prospectus is a part of that registration statement. The rules and regulations
of the SEC allow us to omit some information included in the registration
statement from this document.
In addition, we file reports, proxy statements and other information with
the SEC under the Securities Exchange Act of 1934, as amended. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. You
may read and copy this information at the following locations of the SEC:
Public Reference Section Northeast Regional Office Midwest Regional Office
Room 1024 7 World Trade Center 500 West Madison Street
450 Fifth Street, N.W. Suite 1300 Suite 1400
Judiciary Plaza New York, NY 10048 Chicago, Illinois
Washington D.C. 20549 60661-2511
The SEC maintains an Internet World Wide Web site (http://www.sec.gov)
that contains our reports, proxy statements and other information about us and
other companies who file electronically with the SEC.
Our common stock is traded on the Nasdaq National Market System.
The SEC allows us to "incorporate by reference" information into this
document. This means that we can disclose important information to you by
referring you to another document filed separately with the SEC. The information
incorporated by reference is considered to be a part of this document, except
for any information that is superseded by information that is included directly
in this document.
This document incorporates by reference the documents listed below that we
have previously filed with the SEC. They contain important information about us
and our financial condition. Some of these filing have been amended by later
filings, which are also listed.
SEC Filings Date Description or Period/As of
- --------------------------------------------------------------------------------
Annual Report on Form 10-K Year ended June 30, 1999
Quarterly Report on Form 10-Q Quarter ended September 30, 1999;
Quarter ended December 31, 1999
Current Reports on Form 8-K, as amended Reports
dated February 24, 2000; July 8, 1999,
as amended; May 24, 1999; March 24,
1999, as amended; February 1, 1999; and
September 28, 1998
We incorporate by reference additional documents that we may file with the
SEC after the date of this document. These documents include periodic reports,
including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference into this
document from us, or from the SEC through the SEC's web site at the address
provided above. Documents incorporated by reference are available from the
companies without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit in this
document.
You can obtain documents incorporated by reference in this document by
requesting them in writing or by telephone from us at the following addresses:
Marketing Services Group, Inc.
333 Seventh Avenue
New York, New York 10001
Attn: Investor Relations
(917) 339-7100
If you request any incorporated documents from us, we will mail them to
you by first class mail, or another equally prompt means, within one business
day after we receive your request.
We have not authorized anyone to give any information or make any
representation about us that differs from, or adds to, the information in this
document or in our documents that are publicly filed with the SEC. Therefore, if
anyone does give you different or additional information, you should not rely on
it.
If you are in a jurisdiction where it is unlawful to offer to exchange or
sell, or to ask for offers to exchange or buy, the securities offered by this
document or to ask for proxies, or if you are a person to whom it is unlawful to
direct these activities, then the offer presented by this document does not
extend to you.
The information contained in this document speaks only as of its date
unless the information specifically indicates that another date applies.
LEGAL MATTERS
Certain legal matters with respect to the validity of our common stock
will be passed upon for us by McDonald Carano Wilson McCune Bergin Frankovich &
Hicks LLP, Reno, Nevada.
EXPERTS
The financial statements and financial statement schedule included in the
1999 Annual Report on Form 10-K of MSGI for the year ended June 30, 1999 and the
financial statements of Stevens-Knox & Associates, Inc. and Affiliates and CMG
Direct Corporation, included in MSGI's Current Reports on Form 8-K/A filed on
April 6, 1999 and July 29, 1999, respectively, incorporated by reference in this
prospectus, have been so incorporated in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
<PAGE>
================================================================================
6,130,000 SHARES
MARKETING SERVICES GROUP, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------------
PROSPECTUS
------------------------
MARCH , 2000
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by Marketing Services Group, Inc. in
connection with the offering described in this Registration Statement are as
follows:
Registration fee............................. $26,247.53
Legal fees and expenses...................... 15,000.00
Accounting fees and expenses................. 2,500.00
Printing and duplicating expenses............ 2,500.00
Miscellaneous expenses....................... 3,752.47
-- --------
Total........................................ $50,000.00
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 78.751 of Chapter 78 of the Nevada Revised Statutes and Article XI
of our articles of incorporation contain provisions for indemnification of our
officers, directors, employees and agents. The articles of incorporation require
us to indemnify such persons to the full extent permitted by Nevada law. The
indemnification provisions of the Nevada General Corporation Law require
indemnification of a director who has been successful on the merits or otherwise
in defense of any action to which such person was a party because such person is
or was a director of the corporation. We will indemnify each such person in any
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, our best interest. Indemnification would
cover expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement.
Our articles of incorporation and bylaws also provide that our board of
directors may cause us to purchase and maintain insurance on behalf of any
present or past director or officer insuring against any liability asserted
against such person incurred in the capacity of director or officer or arising
out of such status, whether or not we would have the power to indemnify such
person. We presently have directors' and officers' liability insurance in
effect.
We carry policies of insurance which cover the our individual directors
and officers for legal liability and which would pay on our behalf for expenses
of indemnification of directors and officers in accordance with our articles of
incorporation.
Under the merger agreement among us, GCG Merger Corp. and Grizzard
Advertising Incorporated dated as of July 8, 1999, for a period of three years
after the effective time of the merger, we are required to maintain or shall
cause the surviving corporation to maintain in effect a directors' and officers'
liability insurance policy covering Grizzard's directors and officers with
coverage arising out of their actions or omissions prior to the effective time
of the merger.
ITEM 16. EXHIBITS.
3(i) Amended and Restated Articles of Incorporation
(a)
3(ii) Certificate of Amendment to the Amended and
Restated Articles of Incorporation of the
Registrant (a)
3(iii) Certificate of Amendment to the Articles of Incorporation
authorizing the change of name to All-Comm Media Corporation
(b)
3(iv) By-Laws (a)
3(v) Certificate of Amendment of Articles of Incorporation
authorizing the increase in number of authorized shares of
common and preferred stock to 36,300,000 (c)
3(vi) Certificate of Amendment of Articles of
Incorporation authorizing the change of name to
Marketing Services Group, Inc. (d)
3(vii) Certificate of Amendment of Articles of Incorporation
authorizing the increase in number of authorized shares of
common and preferred stock to 75,150,000 (e)
3(viii) The Amended Certificate of Designation, Preferences and
Relative, Participating and Optional and Other Special
Rights of Preferred Stock and Qualifications, Limitations
and Restrictions Thereof for the Series D Convertible
Preferred Stock (f)
3(ix) Certificate of Designation, Preferences, and
Rights of Series E Convertible Preferred Stock
of Marketing Services Group, Inc. (g)
3(x) Certificate of Amendment to the Certificate of
Designation, Preferences, and Rights of Series
E Convertible Preferred Stock of Marketing
Services Group, Inc. (g)
4.1 Warrant Agreement between Marketing Services
Group, Inc. and Marshall Capital Management,
Inc. (g)
4.2 Warrant Agreement between Marketing Service
Group, Inc. and RCG International Investors,
LDC (g)
4.3 Registration Rights Agreement, dated as of
February 18, 2000, by and among the Company,
RGC International Investors, LDC and Marshall
Capital Management, Inc. (g)
5.1 Opinion of McDonald Carano Wilson McCune Bergin Frankovich &
Hicks LLP as to legality of securities being offered
(including consent)*
10.1 Securities Purchase Agreement dated as of February 18, 2000,
by and among the Company, RGC International Investors, LDC
and Marshall Capital Management, Inc. (g)
23.1 Consent of PricewaterhouseCoopers LLP
23.2 Consent of McDonald Carano Wilson McCune Bergin
Frankovich & Hicks LLP (contained in Exhibit
5.1)
24.1 Powers of Attorney (included on pages II-4
hereof)
* Filed herewith.
(a) Incorporated by reference to the Registrant's
Registration Statement on Form S-4, Registration
Statement No.
33-45192
(b) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30,
1995
(c) Incorporated by reference to the Registrant's Annual
Report on Form 10-K for the fiscal year ended June 30,
1996
(d) Incorporated by reference to the Registrant's Annual
Report on Form 10-KSB for the fiscal year ended June
30, 1997
(e) Incorporated by reference to the Registrant's Annual
Report on Form 10-KSB for the fiscal year ended June
30, 1998
(f) Incorporated by reference to the
Company's Report on Form 8-K dated January 13, 1996.
(g) Incorporated by reference to the Registrant's Current
Report on Form 8-K dated February 24, 2000, as amended.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in the volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum offering range
may be reflected on the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraph (1)(i) and (1)(ii) above do not apply if
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934, as amended, that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act (and, where applicable, each filing of an employee
benefit plan's annual report pursuant to section 15(d) of the Securities
Exchange Act) that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions set forth in response to Item 15, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant has
duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York, State of New
York, on March 22, 2000.
MARKETING SERVICES GROUP, INC.
By:/s/ JEREMY BARBERA
------------------
Name: J. Jeremy Barbera
Title: Chairman of the Board
and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints each of J. Jeremy Barbera and Alan I.
Annex, or either of them, each acting alone, his or her true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for such person and in is or her name, place and stead, in any and all
capacities, in connection with the Registrant's Registration Statement on Form
S-3 under the Securities Act of 1933, including to sign the Registration
Statement in the name and on behalf of the undersigned as a director or officer
of the Registrant and any and all amendments or supplements thereto, including
any and all stickers and post-effective amendments thereto, and any and all
additional registration statements relating to the same offering of securities
as those that are covered by the Registration Statement that are filed pursuant
to Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission and any applicable securities exchange or
securities self-regulatory body, granting unto said attorneys-in-fact and
agents, each acting alone, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or his, her or their substitutes, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/J. JEREMY BARBERA Chairman of the Board and Chief March 22, 2000
- -------------------- Executive Officer
J. Jeremy Barbera (Principal Executive Officer)
/s/ALAN I. ANNEX Director March 22, 2000
- ----------------
Alan I. Annex
/s/JAMES COPPERSMITH Director March 22, 2000
- --------------------
James Coppersmith
/s/JOHN T. GERLACH Director March 22, 2000
- ------------------
John T. Gerlach
/s/SEYMOUR JONES Director March 22, 2000
- ----------------
Seymour Jones
/s/STEPHEN J. KILLEEN Director March 22, 2000
- ---------------------
Stephen J. Killeen
/s/ANTHONY WAINWRIGHT Director March 22, 2000
- ---------------------
Anthony Wainwright
/s/CINDY H. HILL Chief Accounting Officer March 22, 2000
- ---------------- Principal Accounting Officer)
Cindy H. Hill
<PAGE>
EXHIBIT 5.1
March 23, 2000
Board of Directors
Marketing Services Group, Inc.
333 Seventh Avenue
New York, New York 10001
Gentlemen:
At your request, we have examined the Registration Statement on Form S-3
(No. 333- ) filed by Marketing Services Group, Inc. (the "Company") with the
Securities and Exchange Commission on March 23, 2000 (the "Registration
Statement") in connection with the registration under the Securities Act of
1933, as amended, of 6,130,000 shares (the "Shares") of the common stock, par
value $.01 per share, of the Company by various selling stockholders of the
Company, as identified in greater detail in the Registration Statement. In our
capacity as your counsel on matters of Nevada law, we are familiar with the
proceedings taken and proposed to be taken by the Company in connection with the
authorization, issuance, and sale of the Shares.
It is our opinion that the Shares have been duly authorized and, when sold
by the respective selling stockholders, will be legally and validly issued,
fully paid and non-assessable.
We consent to the use of this opinion as an exhibit to the Registration
Statement and further consent to all references to us in the Registration
Statement, including the prospectus constituting a part thereof, and any
amendments thereto.
Sincerely,
McDONALD CARANO WILSON McCUNE
BERGIN FRANKOVICH & HICKS LLP
By:/s/ A. J. HICKS
---------------
A.J. Hicks, Partner
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated September 24, 1999, relating to the
financial statements and financial statement schedule appearing in Marketing
Services Group, Inc.'s Annual Report on Form 10-K for the year ended June 30,
1999. We also consent to the incorporation by reference in this Registration
Statement of our reports dated March 12, 1999 and July 22, 1999, relating to the
financial statements of Stevens-Knox & Associates, Inc. and Affiliates and CMG
Direct Corporation, respectively, which appear in Marketing Services Group,
Inc.'s Current Reports on Form 8-K/A filed on April 6, 1999 and July 29, 1999,
respectively. We also consent to the reference to us under the heading "Experts"
in this Registration Statement.
/s/ PricewaterhouseCoopers LLP
New York, New York
March 23, 2000
