As filed with the Securities and Exchange Commission on January 10, 2001
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
Conolog Corporation
(Name of issuer in its charter)
Delaware 3679 52-0853566
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(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of organization) Classification Code No.) Identification No.)
5 Columbia Road
Somerville, NJ 08876
(908) 722-8081
(Address and telephone number of principal executive offices)
Robert S. Benou, President
Conolog Corporation
5 Columbia Road
Somerville, NJ 08876
(908) 722-8081
(Name, address and telephone number of agent for service)
Copies to:
Arnold N. Bressler, Esq.
Milberg Weiss Bershad Hynes & Lerach LLP
One Pennsylvania Plaza
New York, NY 10119
(212) 594-5300
(212) 868-1229 (Fax)
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Approximate date of proposed sale to the public: As soon as reasonably
practicable 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 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. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Proposed
Title of Each Maximum Maximum Amount of
Class of Securities Amount to be Offering Price Aggregate Registration
to be Registered Registered per Offering Price Fee
Security(1)
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<S> <C> <C> <C> <C>
Common Stock,
$.01 par value per
share, issuable up- 3,000,000 $.6875 $2,062,500 $515.63
on conversion of
Convertible
Debentures
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Total Registration 3,000,000 $.6875 $2,062,500 $515.63
and Fee
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</TABLE>
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(1) Estimated solely for purposes of calculating registration fee pursuant to
Rule 457 under the Securities Act of 1933. The proposed maximum offering
price was calculated based upon the average of the high and low price of
the Company's Common Stock on the Nasdaq SmallCap Market for January 5,
2001.
<PAGE>
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
i
<PAGE>
We will amend and complete the information in this prospectus. Although we are
permitted by US federal securities laws to offer these securities using this
prospectus, these securities may not be sold 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 jurisdiction where the offer or sale is not
permitted.
SUBJECT TO COMPLETION - January 10, 2001
================================================================================
Prospectus
January __, 2001
Conolog Corporation
3,000,000 Shares of Common Stock
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The Company:
o Conolog Corporation is an engineering company with three lines of
business. We provide short- and long-term engineering and technical staff,
through our Atlas Design subsidiary. We also design and manufacture small
electronic components for military and commercial applications. We also
provide installation, maintenance and troubleshooting services for
commercial and corporate computer systems and networks to business in the
greater New York metropolitan area.
o Conolog Corporation
5 Columbia Road
Somerville, NJ 08876
(908) 722-8081
o Conolog common stock is listed on the Nasdaq SmallCap Market (symbol
CNLG).
The Offering:
o This is an offering of shares of common stock of Conolog Corporation.
o The shares are being offered by an entity that has the right to acquire
them. This right comes from a convertible debenture and options to acquire
convertible debentures held by the entity. Conolog will not receive any
proceeds from the sale of the shares by the selling stockholder.
o On January 5, 2001, the last reported sale price for the Common Stock on
the Nasdaq SmallCap Market was $0.6875 per share.
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Investing in the common stock involves certain risks. See "Risk Factors"
beginning on page 8.
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<PAGE>
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Neither the SEC nor any state securities commission has determined whether this
prospectus is truthful or complete. Nor have they made, nor will they make, any
determination as to whether anyone should buy these securities. Any
representation to the contrary is a criminal offense.
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<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION OR REPRESENTATIONS. THIS PROSPECTUS IS
AN OFFER TO SELL ONLY THE SHARES OFFERED HEREBY, BUT ONLY UNDER CIRCUMSTANCES
AND IN JURISDICTIONS WHERE IT IS LAWFUL TO DO SO. THE INFORMATION CONTAINED IN
THIS PROSPECTUS IS CURRENT ONLY AS OF ITS DATE.
TABLE OF CONTENTS
PAGE
Prospectus Summary.............................................................4
Risk Factors...................................................................8
Recent Developments...........................................................13
Disclosure of SEC Position on
Indemnification for Securities Act Liabilities................................13
Selling Stockholder and Plan of Distribution..................................14
Validity of Capital Stock.....................................................15
Experts.......................................................................15
Available Information.........................................................15
Incorporation of Certain Documents by Reference...............................16
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<PAGE>
PROSPECTUS SUMMARY
This prospectus contains forward-looking statements based on our current
expectations, assumptions, estimates and projections about Conolog and our
industry. Our actual results could differ materially from those anticipated in
these forward-looking statements as a result of various factors, including all
the risks discussed in "Risk Factors" and elsewhere in this prospectus. Conolog
undertakes 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.
THIS SUMMARY HIGHLIGHTS SOME INFORMATION FROM THIS PROSPECTUS. YOU SHOULD
ALSO READ THE MORE DETAILED INFORMATION AND CONSOLIDATED FINANCIAL STATEMENTS
AND THE NOTES TO THOSE STATEMENTS APPEARING IN OTHER PARTS OF THIS PROSPECTUS OR
INCORPORATED BY REFERENCE.
Conolog Corporation
We are an engineering company with three lines of business manufacturing,
temporary staffing and computer services. One of our non-manufacturing
businesses recruits and places professionals, primarily in the engineering
fields, for a variety of businesses. Our other non- manufacturing business
provides installation, maintenance and troubleshooting services for commercial
and corporate computer systems and networks to businesses in the greater New
York metropolitan area. Our manufacturing business is engaged in the design,
manufacture (directly or through subcontractors) and distribution of small
electronic and electromagnetic components and subassemblies for use in
telephone, radio and microwave transmission and reception and other
communication areas that are used in both military and commercial applications
Our products are used for transceiving various quantities, data and protective
relaying functions in industrial, utility and other markets.
Our History
We were organized in 1968 and engaged primarily in the design and
manufacture of electronic components and systems for military applications.
In July 1971, we merged with DSI Systems, Inc., then engaged in the
development and manufacture of terminal viewers for digital retrieval of
microfilm. Later that year, we changed our name from DSI Systems, Inc. to
Conolog Corporation.
By 1980, it became apparent that the military segment of our business was
growing while the terminal viewer segment was a drain on our cash and other
resources. By the year-end, the terminal viewer business was discontinued and
the inventory relating to it was written off, allowing us to concentrate on our
military business.
In 1981, we acquired one of our customers, Iniven Corporation. At that
time, we were manufacturing, on behalf of Iniven, a line of transmitters and
receivers used for controlling and transceiving the measurement of the flow of
gases and liquids, by gas and water utilities for controlling the flow of waste
water and sewage and measuring and controlling traffic.
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<PAGE>
Since the 1980's, we have been an active participant in providing
electromagnetic wave filters for major military programs, such as, the Patriot
Missile, Hawk Missile and Sea Sparrow Missile. In addition to these projects,
Conolog components are currently used by the military in tanks, the Apache
helicopters and the MK-50 torpedoes.
During 1987, we made the strategic decision to redirect our focus from
military to commercial markets. Since then, we have refocused on manufacturing
and marketing our products for the commercial marketplace rather than depending
on the military and defense-related markets. This effort has included the
introduction of new products, the redesign of existing products and increased
advertising and marketing efforts, as permitted by our limited financial
resources. The decision to embark on this program entailed a major design
effort, including the coordination of outside engineering consultants to develop
a complete line of products aimed at our target markets. The primary emphasis
was on products for electric utilities, co-generation of power, gas and water
companies, traffic control for departments of transport (DOT) and airports
utilizing Digital Signal Processing (DSP) technology.
Testing of our first commercial product group, the Teleprotection Series
PTR-1000, was under way in the latter part of 1992 by the Bonneville Power
Administration. This detailed test permitted us to "fine tune" the product for
power transmission applications. In March 1994, the PTR-1000 was approved for
use by Bonneville and thereafter by other utilities and municipalities. To date,
we have sold and delivered approximately 1200 PTR-1000 sets to 15 utilities and
5 municipalities, most of which are installed and in service.
Following the PTR-1000, in 1993, we introduced our "98 Series" Tone
Products for water, gas, telephone and oil companies, waste water, traffic
control and airports. In 1994, we unveiled the following products:
o the Power Supply Series -- this allows the various utilities to
power-up the equipment from any power source,
o the "40 Series" for transmission of analog variable data (water
levels, gas pressures and temperature),
o the Multiplexer Series -- this permits the transmission of up to 900
separate data points, again using a telephone line, microwave link,
or satellite, and
o the "68 Series" tone products -- this series is the "98 Series"
repackaged mechanically specifically for customers with older
systems who want to upgrade to DSP technology without the expense of
a complete mechanical installation. The "68 Series" offers the
entire line offered by the "98 Series".
In 1995, we introduced a stand alone "98 Series" transmitter and receiver
for field installations and a wide range fiber optic interface for the Iniven
products. The fiber optic interface is also available as a stand alone coupling
device. We launched our industrial grade 1200 Baud Modem for data
transmission/communication, and completed the PTR-1000 Systems options.
Throughout 1997 and 1998, we designed, and we currently are in the process of
completing and building, the PTR-1500 Quad System, Protection Equipment,
exclusively for the General Electric
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<PAGE>
Company. This product will be labeled GE-NS50 Series, for worldwide sales as
detailed in the agreement between GE and Conolog dated April 1, 1997.
In February 1999, we completed field testing of our PTR-1500 and
introduced the unit to US and Canadian utilities. In March 1999, GE advised us
that it sold its Power Line Business to the Trench Group in Canada, which has
been in negotiations with us to enter into a potential purchase and sales
agreement. We have received an initial $200,000 order for PTR-1500 units from
Boston Edison Energy Company.
In September 1998, we acquired the assets of Atlas Design, Inc., a human
resource outsourcing company, to further our strategy of mergers and
acquisitions, and to assist in providing qualified engineering and technical
staff in support of our longer term contracts.
In August 2000, we acquired Independent Computer Maintenance Corporation,
a provider of installation, maintenance and troubleshooting services for
commercial and corporate computer systems and networks to businesses in the
greater New York metropolitan area.
Our principal executive offices are located at 5 Columbia Road,
Somerville, New Jersey 08876. Our telephone number is (908) 722-8081.
The Offering
Common Stock offered by the selling stockholders ............. 3,000,000
Common Stock to be outstanding after the offering ............ 12,406,459 shares
Use of proceeds . . . . . We will not receive any of the proceeds from the
sale of the shares by the selling stockholder. We
will, however, receive proceeds in connection with
any exercise by the selling stockholder of the option
we granted to acquire the convertible debentures.
We anticipate that we will use any proceeds received
for general corporate purposes and for the
acquisition of complementary businesses.
Nasdaq SmallCap Market Symbol ............................................ CNLG
The 12,406,459 shares of common stock to be outstanding after this
offering assumes the conversion in full of the $2,040,000 principal amount of
the convertible debentures that may be issued to the selling stockholder into
3,000,000 shares of common stock.
The shares to be outstanding after this offering exclude
o 8,813 shares held in our treasury;
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<PAGE>
o 5,236,950 shares of common stock issuable upon exercise of
outstanding warrants at a weighted average exercise price of $6.00
per share; and
o 155,241 shares of common stock issuable upon conversion of
outstanding Series A and B preferred stock. Each share of Series A
preferred stock may be exchanged for one share of common stock upon
surrender of the preferred stock and payment of $1,200 per share.
Each five shares of Series B preferred stock is convertible into one
share of common stock.
Summary Financial Data
Set forth below is our summary financial data for the years ended July 31,
2000, 1999 1998, 1997 and 1996, which are derived from our audited consolidated
financial statements. Also set forth below is the summary financial data for the
three months ended October 31, 2000 and 1999, which are derived from our
unaudited financial statements. The unaudited financial statements include all
adjustments consisting of normal recurring accruals, which we consider necessary
for a fair presentation of the financial position and results of operations for
these periods.
(in thousands, except per share amounts)
Year Ended July 31,
<TABLE>
<CAPTION>
2000 1999 1998 1997 1996
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<S> <C> <C> <C> <C> <C>
Operations Summary:
Net sales and other income $ 5,611 $ 2,508 $ 746 $ 1,123 $ 1,924
Net income (loss) $(1,884) $(1,043) $(1,765) $(3,810) $ 292
Income (loss) per share $ (.28) $ (.24) $ (.54) $ (2.41) $ .28
Balance Sheet Summary:
Total assets $ 6,657 $ 6,620 $ 4,819 $ 4,340 $ 3,928
Long-term debt and capitalized -- -- -- -- 5
lease obligations
</TABLE>
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<PAGE>
(in thousands, except per share amounts)
FOR THE THREE MONTHS ENDED
OCTOBER 31
(unaudited)
2000 1999
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Operations Summary:
Net sales and other income $1,812 $ 762
Income (loss) before taxes $ 188 $ (399)
Net income (loss) $ 124 $ (400)
Income (loss) per Share $ .01 $ (.07)
Balance Sheet Summary:
October 31, 2000
(unaudited)
Cash $ 857
Total Current Assets $5,634
Total Assets $6,766
Total Current Liabilities $ 367
Total Stockholders' Equity $6,399
RISK FACTORS
We have a history of operating losses and we may not be able to continue to be
profitable.
Our continued existence is dependent upon us successfully expanding our
business and attaining profitable operations. Although we reported net income of
$123,942 for the quarter ended October 31, 2000, we reported net losses of
$1,883,663 and $1,042,919 for the fiscal years ended July 31, 2000 and 1999,
respectively. Thus, we may not be able to continue to be profitable.
We only began our placement services business in September 1998, so your basis
for evaluating us is limited.
We only entered the placement services business in September 1998 when we
acquired the operating assets of Atlas Design. None of our officers have any
prior experience in this business. We cannot assure you that we will be
successful in operating this business.
Our placement services business is a substantial burden on our limited cash.
On October 31, 2000, we had approximately $856,846 in cash. We pay the
personnel we place through our Atlas Design subsidiary on a weekly basis.
However, our customers are invoiced when we pay the employees and typically take
30 days or more to pay their bills. As our placement services business expands,
this has created a cash flow problem for us. We may not have sufficient
financing capital to allow us to support the placement services business.
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<PAGE>
We only began our computer services business in August 2000, so your basis for
evaluating us is limited.
We only entered the computer services business in August 2000 when we
acquired the operating assets of Independent Computer Maintenance Corporation, a
provider of installation, maintenance and troubleshooting services for
commercial and corporate computer systems and networks. None of our officers has
any prior experience in this business. We cannot assure you that we will be
successful in operating this business.
Our computer services business is a substantial burden on our limited cash.
As our computer services business expands, it has created a cash flow
problem for us. We may not have sufficient financing capital to allow us to
support the computer services business.
We have many competitors and we may not be able to compete effectively against
them.
The placement services industry is intensely competitive and highly
fragmented, with few barriers to entry by potential competitors at the local
level. We compete for both clients and qualified personnel with other firms
offering such placement services. The majority of our competitors are
significantly larger than we are and have greater marketing and financial
resources than we do. Many clients use more than one placement services company
and it is common for a client to use several placement services companies at the
same time. We also face the risk that our clients may decide to provide similar
services internally or use independent contractors.
The markets for our manufactured products and computer services are also
very competi tive. We are an insignificant factor in both of these industries.
There are several companies which manufacture products of the type we produce.
Most of these companies are substantially larger than us and have substantially
greater name recognition, financial resources and personnel than we do. The
market is also characterized by rapid technological changes and advances. We
would be adversely affected if our competitors introduced technology superior
products or offered these products at significantly lower prices than our
products.
There are also several companies that provide similar computer services as
the computer services that we provide. These companies are larger than we are
and have greater name recognition, financial resources and personnel.
Competition in all the industries we engage in is expected to continue and
intensify.
Our success depends on keeping up with rapid technological changes.
The market for our manufactured products is characterized by rapid
technological changes and advances. Our failure to introduce new products in a
timely or cost effective manner or our failure to improve our existing products
or remain price competitive, would materially adversely affect our operating
results.
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<PAGE>
We are dependent on a few large customers.
Our computer services business has fewer than 15 customers. Most of the
sales of our manufactured products are to a few major customers. Our dependence
on major customers subjects us to significant financial risks in the operation
of our business if a major customer were to terminate or materially reduce, for
any reason, its business relationship with us.
An economic downturn in the New York City area would adversely affect us.
A majority of our revenues derived from both placement and computer
services are generated within the New York City metropolitan area. An economic
downturn in this area could have a material adverse effect on our results of
operations or financial condition. During such downturns, the use of temporary
and contract employees usually is curtailed, the recruitment of permanent
employees is reduced and we may face increased competitive pricing pressures.
Similarly, during economic downturns, the use of the computer services that we
provide may also be curtailed and we may face increased competitive pricing
pressures. As economic activity increases, temporary and contract employees
often are added to the workforce before permanent employees are hired. During
periods of increased economic activity and generally higher levels of
employment, the competition among placement services firms for qualified
personnel becomes even greater. During these periods we may not be able to
recruit the personnel necessary to fill our clients' needs.
We may not be able to attract the qualified personnel we need to succeed.
Because of the technical nature of our business, we are dependent upon our
ability to attract and retain technologically qualified personnel. Competition
for individuals with proven professional or technical skills is intense, and
demand for such individuals is expected to remain very strong for the
foreseeable future. We may not be successful in attracting qualified personnel.
We may make acquisitions that are not successful.
We are seeking to expand into new markets and may do so by acquiring
businesses, which may or may not be related to our existing businesses. Our
strategy of making acquisitions is subject to the following risks:
o We may not be able to identify suitable acquisition candidates.
o If the purchase price includes cash, we may need to use all or a
portion of our available cash.
o Even if we do identify such suitable candidates, we may not be able
to make such acquisitions on commercially reasonable terms.
o We may not be able to consummate any acquisition or successfully
integrate the acquired services, products and personnel of any
acquisition into our operations.
o Acquisitions may cause a disruption in our ongoing business,
distract our management and drain our other resources.
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o We may not be able to retain key employees of the acquired companies
or maintain good relations with its customers or suppliers.
o We may be required to incur additional debt.
o We may be required to issue equity securities, which may be dilutive
to existing shareholders, to pay for acquisitions.
o We may have to incur significant accounting charges, such as for
goodwill, which may adversely affect our results of operations.
Our minimal staff may have difficulty managing our operations.
We only employ about 22 people on a full time basis. Approximately 8 of
our full time employees are involved in production. Our success is dependent
upon the services of our current management, particularly Robert S. Benou, our
President. Mr. Benou has entered into an employment agreement with us which
expires on May 31, 2002. However, if the employment of Mr. Benou terminates, or
he is unable to perform his duties, we may be materially and adversely affected.
We are dependent on component manufacturers to provide us with the parts we
need.
We are dependent on outside suppliers for all of the subcomponent parts
and raw materials we need to manufacture our products. A shortage, delay in
delivery, or lack of availability of a part could lead to manufacturing delays,
which could reduce sales. We also purchase some custom parts, primarily printed
circuit boards. The failure of a supplier of one of these customized components
could cause a lengthy delay in production, resulting in a loss of revenues.
On March 8, 2001, our common stock may be delisted from the Nasdaq Small Cap
Market -- if this happens, you would find it more difficult to dispose of our
stock.
Our common stock and class A warrants are currently listed on the Nasdaq
SmallCap Market. For continued listing on Nasdaq, a company, among other things,
must have $2,000,000 in net tangible assets, 500,000 shares in the public float,
$1,000,000 in market value of public float and a minimum bid price of $1.00 per
share. In a letter to us, dated December 8, 2000 from the Nasdaq Stock Market,
Inc., we were notified that our common stock failed to maintain a minimum bid
price of $1.00 as required by Marketplace Rule 4310(c)(4), and we had until
March 8, 2001 to regain compliance with this rule. In order to regain
compliance, the closing price for our common stock must be at least $1.00 for
ten consecutive days by March 8, 2001. Since December 8, 2000, the closing price
of our common stock has not been at least $1.00. If we are unable to satisfy the
requirements for continued quotation on Nasdaq, trading, if any, in our common
stock would be conducted in the over-the-counter market in what are commonly
referred to as the "pink sheets" or on the NASD OTC Electronic Bulletin Board.
As a result, you may find it more difficult to dispose of, or to obtain accurate
quotations as to the price of, our common stock. These rules may materially
adversely affect the liquidity of the market for our common stock.
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<PAGE>
If we are delisted from the Nasdaq SmallCap Market, you may also find it more
difficult to trade our common stock due to "penny stock" rules.
In the event that our shares are delisted, we anticipate that they will
continue to be traded on the Electronic Bulletin Board. In that event, trading
in our shares would be covered by "penny stock" rules promulgated for non-Nasdaq
and non-exchange listed securities. Under these rules, any broker/dealer who
recommends our shares to persons other than prior customers and investors
meeting certain financial requirements, must, prior to sale, make a special
written suitability determination for the purchaser and receive the purchaser's
written agreement to a transaction. Securities are exempt from these rules if
the market price is at least $5.00 per share.
The SEC has adopted regulations that generally define a penny stock to be
an equity security that has a market price of less than $5.00 per share, subject
to certain exceptions. Unless an exception is available, the regulations require
the delivery, prior to any transaction involving a penny stock, of a disclosure
schedule explaining the penny stock market and the risks associated with trading
in the penny stock market.
If our shares become subject to the regulations on penny stocks, the price
and ability to sell our shares would be severely affected because the shares
could only be sold in compliance with the penny stock rules. We cannot be sure
that our securities will not be subject to the penny stock regulations or other
regulations that would negatively affect the market for our securities.
The issuance and sale of a significant number of authorized and unissued shares
in the public market may adversely affect prevailing market prices of our common
stock.
We are authorized to issue 20,000,000 shares of our common stock, of
which, as of January 8, 2001:
9,406,459 shares of common stock are outstanding (excluding treasury
stock).
5,236,950 shares of common stock are reserved for issuance upon the
exercise of warrants and options to purchase common stock.
155,241 shares of common stock are reserved for issuance upon the
conversion of all of our outstanding preferred stock.
3,000,000 shares of common stock are reserved for issuance upon the
exercise of options to acquire convertible debentures and the subsequent
conversion of the convertible debentures.
In addition, we are authorized to issue 2,000,000 shares of preferred
stock, of which 155,241 are outstanding.
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<PAGE>
The market price of our common stock could decline as a result of sales by
our existing stockholders of a large number of shares of common stock in the
market after this offering, or the perception that these sales may occur. These
sales also might make it more difficult for us to sell equity securities in the
future at a time and at a price that we deem appropriate.
RECENT DEVELOPMENTS
See "Selling Stockholder and Plan of Distribution" for a description of
the Option Agree ment between Clog II LLC and Conolog, dated as of November 29,
2000.
We are currently undergoing ISO 9000:2000 certification, funded by a grant
by the State of New Jersey. We anticipate that this certification will be
completed shortly.
DISCLOSURE OF SEC POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Article Eighth of Conolog's Certificate of Incorporation provides that the
Company shall, to the full extent permitted by Section 145 of the Delaware
General Corporation Law, as amended from time to time, indemnify all persons
whom it may indemnify pursuant thereto.
Section 145 of the General Corporation Law of the State of Delaware
authorizes a corporation to provide indemnification to a director, officer,
employee or agent of the corporation, including attorneys' fees, judgments,
fines and amounts paid in settlement, actually and reasonably incurred by him in
connection with such action, suit or proceeding, if such party acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful as
determined in accordance with the statute, and except that with respect to any
action which results in a judgment against the person and in favor of the
corporation the corporation may not indemnify unless a court determines that the
person is fairly and reasonably entitled to the indemnification.
Section 145 further provides that indemnification shall be provided if the
party in question is successful on the merits.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Securities Act") may be permitted to directors, officers and
controlling persons of Conolog pursuant to the foregoing provisions, or
otherwise, Conolog has been advised that in the opinion of the SEC such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. If a claim for indemnification against such
liabilities (other than the payment by Conolog of expenses incurred or paid by a
director, officer or controlling person of Conolog 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) Conolog
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.
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SELLING STOCKHOLDER AND PLAN OF DISTRIBUTION
This prospectus relates to the offer and sale of 3,000,000 shares of
common stock by Clog II LLC ("Clog II" or "selling stockholder").
Conolog and Clog II entered into an Option Agreement, dated as of November
29, 2000. Under the Option Agreement, Conolog granted an option to Clog II to
purchase convertible debentures having an aggregate principal amount of up to
$2,040,000. Clog II's option may be exercised at any time prior to November 29,
2002.
Each convertible debenture is convertible into common stock of Conolog at
a conversion price of $.68 per share. If Clog II were to exercise its option for
all $2,040,000 of convertible debentures, it would have the right to convert
those debentures into 3,000,000 shares of common stock. In the event of
conversion in full, the shares would represent approximately 24% of the
outstanding common stock of Conolog. The Option Agreement provides that Clog II
agrees to vote any shares of common stock into which the convertible debentures
are converted (the "conversion shares") in the same manner and proportion as
Conolog's other shareholders (e.g., if a shareholder vote on a proposal is
required and, of the votes cast, 60% vote for and 40% vote against the proposal,
Clog II will vote the conversion shares 60% for and 40% against the proposal.
Each convertible debenture will bear interest at the rate of 8% per annum
and will be due 12 months from the date it is issued, subject to acceleration
under certain circumstances. At maturity, except with respect to the initial
$100,000 loaned, Conolog will have the option to pay each debenture, together
with all accrued interest thereon, by issuing shares of a new Series C preferred
stock having a value of $5.00 per share for purposes of such repayment.
The Series C preferred will be non-voting and carry a cumulative dividend
of 8% per annum, which may be payable by the issuance of additional shares of
Series C preferred stock valued at $5.00 per share. The Series C preferred will
be convertible into common stock at the rate of one share of common stock for
each share of Series C preferred and have a liquidating preference of $5.00 per
share. The Series C preferred may be redeemed by Conolog at any time by paying
$5.00 in cash therefor.
The Agreement also provides that, during the period commencing on the
issuance of any shares of Series C preferred stock to Clog II and ending on the
second anniversary thereof (the "Registration Period") Clog II may elect to
include its Series C preferred in any post-effective amendment to the
Registration Statement or any new registration statement under the Securities
Act. In addition, the Agreement provides that, during the Registration Period,
Clog II may give notice to the Company to the effect that it desires to register
its shares under the Securities Act for public distribution, in which case the
Company will file a post-effective amendment to a then current registration
statement or a new registration statement.
The securities offered hereby may be sold from time to time directly by
the selling stockholder. Alternatively, the selling stockholder may from time to
time offer such securities through underwriters, brokers, dealers or agents. The
distribution of securities by the selling stockholder may be effected in one or
more transactions that may take place on the over-the-
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counter market, including ordinary broker's transactions, privately-negotiated
transactions or through sales to one or more broker-dealers for resale of such
securities as principals, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices. Usual
and customary or specifically negotiated brokerage fees or commissions may be
paid by the selling stockholder in connection with such sales of securities. The
selling stockholder and intermediaries through whom such securities are sold may
be deemed "underwriters" within the meaning of the Act with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.
At the time a particular offer of securities is made by or on behalf of
the selling stockholder, to the extent required, a prospectus will be
distributed which will set forth the number of securities being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for securities
purchased from the selling stockholder and any discounts, commissions or
concessions allowed or reallowed or paid to dealers, and the proposed selling
price to the public.
Under the Exchange Act, and regulations thereto, any person engaged in a
distribution of the securities of Conolog offered by the selling stockholder may
not simultaneously engage in market-making activities with respect to such
securities of Conolog during the applicable "cooling off" period (nine days)
prior to the commencement of such distribution. In addition, and without
limiting the foregoing, the selling stockholder will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Regulation M, in connection with transactions in
such securities, which provisions may limit the timing of purchase and sales of
such securities by the selling stockholder.
VALIDITY OF COMMON STOCK
The validity of the shares of common stock offered hereby will be passed
upon for Conolog by Milberg Weiss Bershad Hynes & Lerach LLP.
EXPERTS
The financial statements of Conolog for each of the three years in the
period ended July 31, 2000, incorporated by reference in this prospectus, have
been audited and reported upon by Rosenberg Rich Baker Berman & Company,
independent accountants. Such financial statements have been incorporated by
reference in this prospectus in reliance upon the report of Rosenberg Rich Baker
Berman & Company, incorporated by reference herein, and upon the authority of
such firm as experts in accounting and auditing. To the extent that Rosenberg
Rich Baker Berman & Company audits and reports on the financial statements of
Conolog issued at future dates and consents to the use of their report thereon,
such financial statements also will be incorporated by reference in this
prospectus in reliance upon their report and said authority.
AVAILABLE INFORMATION
Conolog is subject to the informational requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports, proxy
statements and other information with the SEC. The public may read and copy any
materials we file with the SEC at the SEC's Public
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Reference Room at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1- 800-SEC-0330. The SEC maintains an
Internet site that contains reports, proxy and information statements, and other
information regarding issuers, such as Conolog, that file electronically with
the SEC. The address of the site is http://www.sec.gov
Conolog has filed with the SEC a Registration Statement on Form S-3 under
the Securities Act. This prospectus does not contain all of the information,
exhibits and undertakings set forth in the Registration Statement, certain
portions of which are omitted as permitted by the Rules and Regulations of the
SEC. Copies of the Registration Statement and the exhibits are on file with the
SEC and may be obtained, upon payment of the fee prescribed by the SEC, or may
be examined, without charge, at the offices of the SEC set forth above. For
further information, reference is made to the Registration Statement and its
exhibits.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by Conolog with the SEC (File No. 0-8174)
are incorporated by reference in this prospectus:
(1) Annual Report on Form 10-K for the year ended July 31, 2000.
(2) Quarterly Report on Form 10-Q for the quarter ended October 31,
2000.
(3) Proxy Statement for the Annual Meeting of Stockholders, held on
October 12, 2000.
(4) All other reports filed by Conolog pursuant to Sections 13 or 15(d)
of the Exchange Act since July 31, 2000.
(5) The description of Conolog's common stock contained in its
Registration Statement on Form S-1 (No. 333-35489), including any
amendments or reports filed for the purpose of updating such
description.
All documents filed by Conolog pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering hereunder shall be deemed to be incorporated by
reference in this prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained herein or in a document all or any
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus.
Conolog will provide, without charge, to each person (including any
beneficial owner) to whom this prospectus is delivered, upon written or oral
request, a copy of any or all of the foregoing documents (other than exhibits to
such documents unless such exhibits are specifically
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<PAGE>
incorporated by reference into the information that this prospectus
incorporates). Requests should be directed to Conolog Corporation, 5 Columbia
Road, Somerville, New Jersey 08876, telephone (908) 722-8081.
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses in connection with this offering are as follows:
SEC filing fee.............................................. $ 515.63
Nasdaq filing fee........................................... $ 7,500
NASD filing fee............................................. $ -0-
Printing and engraving*..................................... $ 5,000
Transfer Agent Fees*........................................ $ -0-
Legal fees and expenses*.................................... $30,000
Accounting fees and expenses*............................... $20,000
Blue Sky fees and expenses*................................. $15,000
Miscellaneous expenses*..................................... $18,000
Total.............................................. $96,015.63
----------
* Indicates expenses that have been estimated for the purpose of filing.
Item 15. Indemnification of Officers and Directors
The Company's Certificate of Incorporation requires Conolog to indemnify
its officers, directors and employees to the fullest extent permitted by law,
including full or partial indemnification for any judgment, settlement or
related expense. In addition, advances of ex penses to officers and directors
are permitted upon an undertaking by the person to be indemni fied to repay all
such expenses if he or she is ultimately found not to be entitled to
indemnification. The indemnification provision in Conolog's Certificate of
Incorporation applies to all actions and proceedings including those brought by
or in the right of Conolog. Directors and officers remain liable for acts and
omissions not in good faith or which involve intentional misconduct and
transactions from which such officer or director derives improper personal
benefit.
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<PAGE>
Item 16. Exhibits
Exhibit
Number Description
------ -----------
4* Specimen certificate for shares of common stock
5 Opinion of Milberg Weiss Bershad Hynes & Lerach LLP
23(a) Consent of Rosenberg Rich Baker Berman & Company
(b) Consent of Milberg Weiss Bershad Hynes & Lerach LLP, contained in
its opinion under Exhibit 5
99(a) Option Agreement between Clog II LLC and Conolog, dated as of
November, 29, 2000.
(b) Form of Convertible Debenture to be issued upon exercise of options
under the Option Agreement between Clog II LLC and Conolog, dated as
of November, 29, 2000.
* Incorporated by reference to Conolog's Registration Statement on Form S-1
(File No. 33- 92424) filed with the Commission on May 17, 1995.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) For purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual report pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934 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.
(2) To deliver or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report, to
security holders that is incorporated by reference in the prospectus and
furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule
14c-3 under the Securities Exchange Act of 1934; and, where interim
financial information required to be presented by Article 3 of Regulation
S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the
latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Somerville, State of New Jersey, on this 9 day
of January, 2001.
CONOLOG CORPORATION
By /s/ Robert S. Benou
--------------------------------
Robert S. Benou
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933,
as amended, this Registration Statement has been signed below by the following
persons in the capacities and on the dates indicated.
Date: January 9, 2001 /s/ Robert S. Benou
--------------------------------
Robert S. Benou
President,
Chief Executive Officer
and Director
Date: January 9, 2001 /s/ Arpad J. Havasy
--------------------------------
Arpad J. Havasy
Executive Vice President,
Secretary, Treasurer and
Director
Date: January 9, 2001 /s/ Marc R. Benou
--------------------------------
Marc R. Benou
Vice President, Assistant
Secretary and Director
Date: January 9, 2001 /s/ Louis S. Massad
--------------------------------
Louis S. Massad
Director
Date: January 9, 2001 /s/ Edward J. Rielly
--------------------------------
Edward J. Rielly
Director
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<PAGE>
Exhibit Index
Exhibit
Number Description
------ -----------
4* Specimen certificate for shares of common stock
5 Opinion of Milberg Weiss Bershad Hynes & Lerach LLP
23(a) Consent of Rosenberg Rich Baker Berman & Company
(b) Consent of Milberg Weiss Bershad Hynes & Lerach LLP, contained
in its opinion under Exhibit 5
99(a) Option Agreement between Clog II LLC and the Company, dated as of
November, 29, 2000
(b) Form of Convertible Debenture to be issued upon exercise of
options under the Option Agreement between Clog II LLC and the
Company, dated as of November, 29, 2000
* Incorporated by reference to Conolog's Registration Statement on Form S-1
(File No. 33- 92424) filed with the Commission on May 17, 1995.
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