AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 22, 2000
REGISTRATION NO. 333-
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INFODATA SYSTEMS INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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VIRGINIA 16-0954695
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12150 Monument Drive
Fairfax, VA 22033
(703-934-5205)
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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Steven M. Samowich
President and Chief Executive Officer
Infodata Systems Inc.
12150 Monument Drive
Fairfax, VA 22033
(703) 934-5205
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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COPY TO:
Arthur H. Bill, Esq.
Freedman, Levy, Kroll & Simonds
1050 Connecticut Avenue, N.W. (Suite 825)
Washington, D.C. 20036
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Approximate date of commencement of proposed sale to public: from time
to time after the effective date of this Registration Statement.
If any of the 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
<PAGE>
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.[ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Title Of Shares Amount To Be Proposed Maximum Aggregate Proposed Maximum Amount Of
To Be Registered Registered Price Per Share (1) Aggregate Price Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.03
Par Value Per Share 300,000 Shares (2) $0.875 $262,500 $69.30
========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration
fee. The aggregate offering price has been determined pursuant to
Rule 457(c) promulgated under the Securities Act of 1933, on the
basis of the average of the high and low sale prices of the
Registrant's Common Stock as reported on the NASDAQ SmallCap Market
on December 19, 2000.
(2) Includes 40,000 outstanding shares and 260,000 shares issuable upon
the exercise of outstanding options or warrants. Does not include a
presently undeterminable amount of shares that will be registered in
the event the closing ask price of the Common Stock is less than
$2.00 per share on the date that is three business days prior to the
date on which the issuer expects this Registration Statement to be
declared effective.
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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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE OR DATES AS THE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. 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 STATE OR FOREIGN JURISDICTION WHERE THE OFFER OR SALE IS NOT
PERMITTED.
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION,
DATED DECEMBER 22, 2000
INFODATA SYSTEMS INC.
300,000 SHARES OF COMMON STOCK
This prospectus is being used in connection with the resale by certain
of our stockholders of up to:
40,000 shares of our outstanding common stock, and
260,000 shares of our common stock issuable upon the exercise of
outstanding options or warrants.
The selling stockholders may sell shares either directly to purchasers
or through brokers, dealers or agents. We will receive no proceeds from the
sale of shares by the selling stockholders.
Our common stock is traded on the Nasdaq SmallCap Market under the
symbol "INFD." On December 21, 2000, the last reported sale price for our
common stock on the Nasdaq SmallCap Market was $0.56 per share.
INVESTMENT IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 7.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is ______, 2000.
<PAGE>
TABLE OF CONTENTS
Page
----
Where You Can Find More Information.........................................3
Forward-Looking Statements..................................................4
Infodata Systems Inc........................................................4
Risk Factors................................................................7
Use of Proceeds............................................................11
Selling Stockholders.......................................................11
Plan of Distribution.......................................................13
Description of Capital Stock...............................................14
Legal Matters..............................................................15
Experts....................................................................15
You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The selling stockholders are offering to sell,
and seeking offers to buy, shares of our common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of
the time of delivery of this prospectus or of any sale of our common stock. In
this prospectus, "Infodata," the "Company," "we," "us," and "our" refer to
Infodata Systems Inc., its predecessors and its consolidated subsidiaries.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference facilities in Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the regional offices of the SEC
located at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.
Please call the SEC at 1-800-SEC-0330 for further information on the public
reference facilities. Our SEC filings are also available to the public from
the SEC's web site at http://www.sec.gov.
This prospectus is part of a registration statement on Form S-3 under
the Securities Act that we filed with the SEC with respect to the securities
offered by this prospectus. This prospectus does not contain all of the
information in the registration statement and the exhibits filed with it. For
further information about us and the securities offered by this prospectus,
reference is made to the registration statement and the exhibits filed with
it. Statements in this prospectus regarding any document are not necessarily
complete, and each such statement is qualified in all respects by reference to
such document filed with the SEC.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference
the documents listed below and any future filings made with the SEC under
Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until
this offering is completed.
- Our Annual Report on Form 10-KSB for the year ended December 31,
1999;
- Our Quarterly Reports on Form 10-QSB for the quarters ended March
31, June 30 and September 30, 2000; and
- Our Current Reports on Form 8-K (dated June 14, 2000) filed on July
5, 2000, and Form 8-K (dated June 15, 2000) filed on June 21, 2000.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Infodata Systems Inc.
Attn: Curtis D. Carlson, Secretary
12150 Monument Drive
Fairfax, VA 22033
(703) 934-5205
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<PAGE>
You should rely only on the information incorporated by reference or
provided in this prospectus or any prospectus supplement. Any statement
contained in a document incorporated by reference in this prospectus shall be
deemed to be modified or superseded for purposes of this prospectus to the
extent that a statement contained in this prospectus or in any subsequently
filed document which is also incorporated by reference modifies or supersedes
such statement. Any earlier statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
prospectus.
FORWARD-LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Forward-looking statements deal with our
current plans, intentions, beliefs and expectations and statements of future
economic performance. Statements containing terms such as "believes," "does
not believe," "plans," "expects," "intends," "estimates," "anticipates" and
other phrases of similar meaning are considered to contain uncertainty and are
forward-looking statements. The forward-looking statements include statements
relating to product and service development, future contracts, revenue and the
adequacy of working capital and are based on current expectations that involve
uncertainties and risks associated with new products and service offerings
including, but not limited to, market conditions, successful product
development, service introduction and acceptance, the introduction of
competitive products, economic conditions and the timing of orders and
contract initiation.
Forward-looking statements involve known and unknown risks and
uncertainties which may cause our actual results in future periods to differ
materially from what is currently anticipated. We make cautionary statements
in certain sections of this prospectus, including under "Risk Factors." You
should read these cautionary statements as being applicable to all related
forward-looking statements wherever they appear in this prospectus, in the
materials referred to in this prospectus, in the materials incorporated by
reference into this prospectus, or in our press releases.
No forward-looking statement is a guarantee of future performance, and
you should not place undue reliance on any forward-looking statement.
INFODATA SYSTEMS INC.
We design, develop and implement solutions for web-based knowledge
management (KM), electronic document management (EDM) and e-commerce systems.
Solutions include web-based KM systems integration, document management
analysis and implementation, web-site design, system architecture, application
development and turnkey implementation or complex business-to-business (B2B)
web infrastructures and consulting services surrounding the implementation of
proprietary products.
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Products and services are provided in three market segments including:
- B2B web-site design solutions, knowledge management consulting, or
"e-content" solutions,
- sales of proprietary products, and
- the sale of third party software and hardware on a limited basis.
SOLUTIONS
We provide consulting, systems integration and application frameworks
for business solutions. Consulting and systems integration include
requirements studies, identification and analysis of appropriate document
management systems and the implementation of such systems, which may include
either our proprietary products or third party products. Application
frameworks are repeatable, reusable software components that shorten
implementation time and improve time-to-market for customers. These frameworks
include:
- E-Hub Framework - a data transformation and tagging engine.
- Web-Based Annotation Framework - provides users the ability to
mark-up and annotate documents through a web browser.
PROPRIETARY PRODUCTS
While it is not a major part of our revenue base or planned future
growth, we do own and sell Proprietary products. These include our legacy
product: INQUIRE(R)/Text and WebINQUIRE(R); Adobe Acrobat plug-in products:
Compose(R) and Aerial(R); and the maintenance associated with each of these
products.
COMPOSE is a suite of plug-in tools for Adobe Acrobat Exchange that
automate and streamline a variety of document production tasks, such as the
creation of tables of contents, hyperlinks, document indexes, and other
document navigation features.
AERIAL is a plug-in product that enables Adobe Acrobat to print any
document that needs to be formatted for printing on multiple pages that are
then pieced together to form one page, such as a large spreadsheet or a
computer aided design (CAD) drawing. Aerial also enables Adobe Acrobat to
format tables into spreadsheets, and converts portable document format (PDF)
to a text format that can be edited with Microsoft Word or other word
processors.
INQUIRE/TEXT is a full-text retrieval product used for storing,
indexing, retrieving, and managing large collections of documents on IBM and
IBM-compatible mainframes. INQUIRE/Text software is widely used by major
companies, utilities, hospitals and government agencies for automating
document-centered applications such as on-line manuals, legislative tracking
and regulatory compliance, library management, litigation support, medical
records and government and military intelligence.
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WEBINQUIRE is an extension product that provides Web browser access to
INQUIRE/Text collections. It enables users to utilize their mainframe as an
intranet superserver with all the search capabilities of INQUIRE/Text.
WebINQUIRE permits users to store documents created using desktop software on
a mainframe computer, retrieve documents from the mainframe and edit them on
their desktop using desktop applications, such as Microsoft Excel and
Microsoft Word. In addition, WebINQUIRE's search formats and views can be
easily customized.
Although INQUIRE/Text maintenance and options carry a high gross margin,
they are not expected to be a significant percentage of our future revenues.
THIRD PARTY PRODUCTS
Third Party Products include software products from companies such as
Documentum and Plumtree. By maintaining expertise with these products, we are
able to provide a wide variety of solutions and tailor them to each customer's
needs. As a result of lower gross margins associated with the sale of Third
Party Products, we decided during 1999 to de-emphasize Third Party Product
sales unless directly tied to a solutions implementation.
BUSINESS STRATEGY
We emphasize our efforts in two business areas:
- Solutions
- e-business Solutions, which includes web-based knowledge management,
or "e-content" solutions, and B2B e-business solutions.
- Intelligence Solutions, which includes knowledge management
consulting and systems integration services provided to the U.S.
intelligence community.
- Proprietary Products
- Compose - Proprietary Adobe Acrobat Exchange plug-in product.
- INQUIRE/Text - Proprietary mainframe text retrieval software.
As an information technology professional services firm with experience
in the design and development of web-based knowledge management systems and
electronic document management systems, our experience is directly applicable
to the fast-growing B2B e-business market.
We design and implement complex e-business systems for emerging B2B
companies with short time-to-market requirements. We target both "dot.com"
startups and traditional "brick-and-mortar" businesses that value low-risk,
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<PAGE>
high-reliability implementations and specialize in building electronic
marketplaces that are crafted from state-of-the-art, best-of-breed components
together with our own Extensible Markup Language-based application frameworks.
Our principal executive offices are located at 12150 Monument Drive,
Fairfax, Virginia 22033, and our telephone number is 703-934-5205.
RISK FACTORS
You should consider carefully the following factors relating to our
business and this offering, in addition to other information set forth
elsewhere in this prospectus and in our Annual Report on Form 10-KSB and other
documents incorporated in this prospectus by reference, before purchasing
shares of our common stock.
WE HAVE A RECENT HISTORY OF LOSSES.
We have incurred net losses in each of our fiscal years ended December
31, 1997, 1998 and 1999, and in each of the quarters ended March 31, June 30
and September 30, 2000. Any future losses could depress the price of our
common stock.
WE DEPEND ON KEY PERSONNEL. THE LOSS OF KEY EMPLOYEES OR FAILURE TO ATTRACT
NEW KEY PERSONNEL COULD HARM OUR BUSINESS.
Our business is managed by a limited number of key management and
operating personnel. In addition, some of our large customer accounts are
based to a larger degree on the relationship between the customer and a
particular Infodata executive or employee. The loss of those people could harm
our business. We believe that our future success will depend in large part on
our continued ability to attract and retain highly skilled and qualified
personnel.
OUR REVENUE PATTERNS ARE UNPREDICTABLE.
A significant portion of our revenues is derived from contractual
programs which originate on a project by project basis. Since these projects
are susceptible to change, delay or cancellation as a result of specific
client financial or other circumstantial issues, as well as changes in the
overall economy, our revenue is unpredictable and may vary significantly from
period to period.
FUTURE SALES OF OUR COMMON STOCK BY EXISTING STOCKHOLDERS MAY ADVERSELY AFFECT
OUR STOCK PRICE.
Our stock price will likely decline if the supply of our stock being
sold in the open market exceeds the demand for our stock. Substantially all of
our shares of common stock, other than shares held by our management, are
eligible for sale in the open market.
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<PAGE>
BECAUSE WE DO NOT INTEND TO PAY DIVIDENDS, YOUR ABILITY TO PROFIT FROM AN
INVESTMENT IN OUR COMMON STOCK WILL DEPEND SOLELY ON AN INCREASE IN MARKET
PRICE.
We have never declared or paid any cash dividends on our common stock.
Payment of any future dividends will depend on our earnings and capital
requirements and other factors our directors consider appropriate. We intend
to retain earnings, if any, to finance the development and expansion of our
business, and do not anticipate paying any dividends in the foreseeable
future.
OUR REVENUES COULD BE NEGATIVELY AFFECTED BY THE LOSS OF A MAJOR CUSTOMER.
We derive a significant portion of our revenues from large projects with
a limited number of customers. In 1999, our five largest clients accounted for
approximately 31% of our revenues. In the first nine months of 2000, our five
largest clients accounted for approximately 45% of our revenues. Although no
single customer accounted for more than 14% of revenues during either of the
above periods, the loss of a major client would adversely affect our revenues.
OUR CONTRACTS WITH THE GOVERNMENT ARE SUBJECT TO TERMINATION OR MODIFICATION
THAT COULD ADVERSELY AFFECT US.
Sales to government customers accounted for approximately 65% of our
revenues in 1999 and 42% of our revenues in the first nine months of 2000. Our
government contracts contain standard termination clauses that permit the
government to terminate the contracts at any time, without cause, for the
convenience of the government. In addition, our government contracts require
compliance with various procurement regulations, and changes in those
regulations could increase our costs of performing the contracts. Our
government contract revenues and costs are subject to adjustment as a result
of audits by the Defense Contract Audit Agency and other government auditors.
Our government contract revenues could be adversely affected by contract
terminations or modifications or the results of government regulations and
audits.
IN VIEW OF OUR RECENT NEGATIVE CASH FLOW FROM OPERATIONS, WE HAVE BEEN AND
EXPECT TO BE DEPENDENT ON OUR LINE OF CREDIT TO FUND OUR WORKING CAPITAL
NEEDS. ALTERNATIVE SOURCES OF CAPITAL, IF NEEDED, MAY NOT BE AVAILABLE ON
ACCEPTABLE TERMS.
The amount of net cash used in our operating activities amounted to
approximately $2.1 million in the year ended December 31, 1999 and $1.7
million in the nine months ended September 30, 2000. We believe that available
working capital combined with borrowings against our $1,000,000 line of credit
will be sufficient to meet our planned working capital requirements for the
next twelve months. However, our actual cash requirements may vary materially
from those now planned and will depend upon numerous factors, including the
general market acceptance of our products and services, the growth of our
marketing channels and the technological advances and activities of
competitors. We had borrowed approximately $714,000 under our line of credit
as of December 12, 2000. Although the lender recently extended the line of
credit through April 30, 2001 and has waived our noncompliance with the
minimum tangible net worth covenant under the line through December 31, 2000,
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we may not be able to continue, renew or extend the line in the future, in
which event we would have to seek another source for borrowings to accommodate
our working capital needs. If needed, we may find that alternative sources of
capital are not available on acceptable terms.
OUR BUSINESS IS INTENSELY COMPETITIVE.
The market for our knowledge management solutions is intensely
competitive and subject to rapid change caused by technological advances, new
product introductions and other marketing activities of industry participants.
Furthermore, the market for consulting, systems integration and related
technology services in the B2B e-business industry is very competitive, with
hundreds of companies claiming to provide various services. Many of our
competitors have longer operating histories, significantly greater financial,
marketing, service, support, technical and other resources, better name
recognition and a larger customer base than we do.
WE COULD BE ADVERSELY AFFECTED IF OUR INTELLECTUAL PROPERTY AND PROPRIETARY
RIGHTS ARE NOT ADEQUATELY PROTECTED.
We rely primarily on a combination of copyrights and trademark, trade
secrets, confidentiality procedures and contractual provisions to protect our
intellectual property and proprietary rights. We license rather than sell our
software and our licenses impose certain restrictions on the licensees'
ability to use the software. Despite our efforts to protect our proprietary
rights, unauthorized parties may attempt to copy our products or to obtain and
use information that we regard as proprietary. We may not be able to
effectively protect our intellectual property rights and our competitors may
develop similar or enhanced technology independently.
OUR BUSINESS WILL BE NEGATIVELY AFFECTED IF WE DO NOT KEEP UP WITH THE
INTERNET'S RAPID TECHNOLOGICAL CHANGE, EVOLVING INDUSTRY STANDARDS AND
CHANGING CLIENT REQUIREMENTS.
The Internet professional services market is characterized by rapidly
changing technology, evolving industry standards and changing customer
requirements. If we are not able to keep up with those changes, our business
will be adversely affected.
OUR B2B E-BUSINESS SOLUTIONS BUSINESS IS DEPENDENT UPON CONTINUED GROWTH IN
THE USE OF THE INTERNET.
Our B2B e-business solutions consulting business is dependent upon the
continued growth in the use of the Internet. If such growth were to not
continue due to limited capacity, concerns over security, increases in access
costs or other factors, the demand for our services may decrease, resulting in
a decline in our revenues.
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WE WILL BE ADVERSELY AFFECTED IF WE FAIL TO MEET CUSTOMER EXPECTATIONS OR
DELIVER EFFECTIVE SOLUTIONS.
Our B2B e-business solutions and knowledge management consulting and
intelligence systems integration services involve the creation, implementation
and maintenance of systems and other solutions that are important to our
customers' businesses. Any failures in the performance of those systems or
solutions or other failures to meet customer expectations could result in
reduced revenues or increased costs, negative publicity and claims for
damages. Our general liability insurance coverage may not continue to be
available on reasonable terms or in sufficient amounts to cover one or more
large claims. The successful assertion of any such large claim against us
could adversely affect our business, financial condition and operating
results.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES.
Reference is made to the discussion set forth above under
"Forward-Looking Statements." Such statements involve risks and uncertainties
which may cause our actual results in future periods to differ materially from
what is currently anticipated.
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USE OF PROCEEDS
We will receive no proceeds from the sale of shares by selling
stockholders.
In addition to the possible resale of 40,000 outstanding shares of
common stock, this prospectus also covers the possible resale of a total of
260,000 shares that underlie presently exercisable outstanding warrants and
options to purchase such shares. If the holders of all of those warrants and
options exercise such warrants and options, we would receive gross proceeds of
$1,127,530. The exercise prices of the warrants and options exceed the current
market value of the common stock. Therefore, there is no assurance that any of
the options or warrants will be exercised. Any proceeds from the exercise of
the options and warrants will be added to our working capital and used for
general corporate purposes.
SELLING STOCKHOLDERS
The following table sets forth information regarding the number and
percentage of outstanding shares beneficially owned by the selling
stockholders before and after this offering. The calculations are based on
there being a total of 4,693,950 outstanding shares on December 11, 2000. The
footnotes to the table set forth information regarding the transactions in
connection with which the selling stockholders acquired their shares or their
right to acquire shares. Unless disclosed in the footnotes to the table, no
selling stockholder has held any position or office or had any other material
relationship with us during the past three years.
For purposes of this table, a person is deemed to be the beneficial
owner of our common stock if such person:
- has or shares the power to vote or direct the voting of the common
stock or to dispose or direct the disposition of the common stock;
or
- has the right to acquire beneficial ownership of the common stock
within 60 days.
Accordingly, more than one person may be deemed to be a beneficial owner
of the same securities. Except as otherwise indicated in a footnote to this
table, each stockholder has sole voting and dispositive power with respect to
the shares of common stock he or she holds.
The number of shares offered for sale for the account of a selling
stockholder and the number and percentage of shares beneficially owned by a
selling stockholder before this offering include shares of common stock held
by the stockholder as of the date of this prospectus and shares we are
registering that are issuable upon the exercise of options or warrants. The
number and percentage of shares beneficially owned by each selling stockholder
after this offering assumes the sale of all shares offered for sale for the
account of that stockholder.
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<TABLE>
<CAPTION>
Number of Percent of Numbers of Number of Shares
NAME OF SELLING STOCKHOLDER Presently Outstanding Shares Beneficially Owned
---------------------------
OWNED SHARES SHARES OFFERED FOR AFTER THIS OFFERING
SALE
<S> <C> <C> <C> <C>
PMG Capital(1)...................... 100,000 2.13% 100,000 -
Firebrand Financial Group, Inc. (2). 85,500 1.82% 85,500 -
Earth Satellite Corporation(3)...... 40,000 0.85% 40,000 -
David M. Nussbaum(2)................ 16,000 0.34% 16,000 -
Roger Gladstone(2).................. 16,000 0.34% 16,000 -
Robert Gladstone(2)................. 16,000 0.34% 16,000 -
Jay Goldman(2)...................... 16,000 0.34% 16,000 -
Lester Rosenkrantz(2)............... 5,500 0.12% 5,500 -
Burton Stem(2)...................... 4,000 0.09% 4,000 -
Deborah Novick(2)................... 1,000 0.02% 1,000 -
</TABLE>
(1) PMG Capital is the holder of a warrant issued on October 22, 2000
entitling it to purchase 100,000 shares of our common stock at a
price of $1.6753 per share through October 22, 2005. The firm
provides financial advisory services to us.
(2) The above organization and persons own options entitling them to
purchase an aggregate of 160,000 shares of our common stock at a
price of $6.00 per share prior to February 17, 2003. The options were
transferred to them on January 11, 2000 by GKN Securities Corp.,
which served as an underwriter of our public offering on February 17,
1998 of 1,600,000 shares of common stock at a price of $5.00 per
share.
(3) The shares owned by Earth Satellite Corporation were acquired from us
on March 30, 2000, when we acquired from it a business unit
specializing in providing software development services to the U.S.
intelligence community. Our acquisition price of that business was
$142,520, which consisted of 40,000 shares of our common stock with a
market value on that date of $3.563 per share. Under our agreement
with Earth Satellite Corporation, if the closing ask price of our
common stock on the NASDAQ SmallCap Market is less than $2.00 per
share on the date that is three business days prior to the date on
which we expect the registration statement of which this prospectus
is a part to be declared effective, then we will convey additional
shares to Earth Satellite Corporation so that the number of shares
owned by it and covered by this prospectus multiplied by the closing
ask price equals $80,000.
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PLAN OF DISTRIBUTION
Sales by selling stockholders may be made pursuant to this prospectus
from time to time as each selling stockholder determines. Sales may be made
directly to purchasers or through brokers, dealers or agents. Brokers, dealers
or agents who participate in sales of shares may receive discounts,
concessions or commissions from the sellers or purchasers.
Since the selling stockholders and any participating brokers, dealers or
agents may be deemed to be underwriters within the meaning of the Securities
Act, any profits they receive on the sale of the shares and any related
discounts, commissions or concessions may be deemed to be underwriting
discounts and commissions under the Securities Act.
The shares may be sold in one or more transactions:
- on any exchange on which the shares may be listed at the time
of the sale;
- in the over-the-counter markets;
- in negotiated transactions other than on such exchange or in
the over-the counter market; or
- through the writing of options.
The selling stockholders may sell the shares from time to time in one or
more transactions at:
- fixed prices;
- prevailing market prices at the time of sale;
- varying prices determined at the time of sale; or
- negotiated prices.
In addition, subject to applicable state and foreign laws, the shares
which qualify for sale under an applicable exemption from registration under
the Securities Act may be sold pursuant to the exemption rather than this
prospectus.
To the best of our knowledge, there are currently no plans, arrangements
or understandings regarding the sale of shares between any of the selling
stockholders and any broker, dealer, agent or underwriter. There is no
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certainty that any selling stockholder will sell any or all of the shares
offered by such selling stockholder under this prospectus or that any selling
stockholder will not transfer, devise or donate such shares by means not
described in this prospectus.
The selling stockholders and any other person participating in the
offering will be subject to applicable provisions of the Securities Exchange
Act and the rules and regulations thereunder, which provisions may limit the
timing of purchases and sales of the shares by the selling stockholders. These
restrictions may affect the marketability of the shares and the ability of any
person to engage in market-making activities with respect to the shares.
We will pay substantially all of the expenses incidental to the
registration, offering and sale of the shares covered by this prospectus,
except expenses for discounts, commissions and concessions of brokers, dealers
and agents participating in sales.
We have entered into an indemnification agreement with each of the
selling stockholders which provides that we and each selling stockholder will
be indemnified by the other against certain liabilities, including certain
liabilities under the Securities Act, or will be entitled to contribution in
connection with any such liabilities.
We will make copies of this prospectus available to the selling
stockholders. At or before the time of any sale of shares by a selling
stockholder pursuant to this prospectus, the selling stockholder must deliver
a copy of this prospectus to the purchaser.
DESCRIPTION OF CAPITAL STOCK
GENERAL
Our authorized capital stock consists of 12,000,000 shares of common
stock, par value $0.03 per share, and 340,000 shares of preferred stock, par
value $1.00 per share. As of December 11, 2000, there were 4,693,950 shares of
common stock outstanding. No shares of preferred stock are currently
outstanding.
COMMON STOCK
The holders of shares of common stock are entitled to one vote for each
share held of record on all matters to be voted on by stockholders. There is
no cumulative voting with respect to the election of directors, with the
result that the holders of more than 50% of the shares voted can elect all of
the directors then being elected. The holders of common stock are entitled to
receive dividends when, as and if declared by the Board of Directors out of
funds legally available therefore. In the event of our liquidation,
dissolution or winding up, the holders of common stock are entitled to share
ratably in all assets remaining available for distribution to them after
payment of liabilities and after provision has been made for each class of
stock, if any, having preference over the common stock. Holders of shares of
common stock, as such, have no redemption, preemptive or other subscription
rights, and there are no conversion provisions applicable to the common stock.
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All of the outstanding shares of common stock are fully paid and
nonassessable.
PREFERRED STOCK
Our authorized shares of preferred stock may be issued in one or more
series. The Board of Directors is expressly vested with the authority to fix
by resolution the designations, powers, preferences, qualifications,
limitations or restrictions of and upon shares of each series, including,
without limitation, voting, dividend, conversion, redemption and liquidation
rights. In addition, the Board of Directors may fix the number of shares
constituting any such series and increase or decrease the number of shares in
any such series.
We believe that the availability of preferred stock issuable in series
will provide increased flexibility for structuring possible future financings
and acquisitions, if any, and in meeting other corporate needs. It is not
possible to state the actual effect of the authorization and issuance of any
series of preferred stock upon the rights of holders of common stock until the
Board of Directors determines the specific terms, rights and preferences of a
series of preferred stock. However, such effects might include, among other
things, restricting dividends on the common stock, diluting the voting power
of the common stock, or impairing liquidation rights of such shares without
further action by holders of the common stock. In addition, under various
circumstances, the issuance of preferred stock may have the effect of
facilitating, as well as impeding or discouraging, a merger, tender offer,
proxy contest, the assumption of control by a holder of a large block of the
Company's securities or the removal of incumbent management.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the common stock is American Stock
Transfer & Trust Company.
LEGAL MATTERS
The legality of the common stock offered by this prospectus has been
passed upon for us by Freedman, Levy, Kroll & Simonds, Washington, D.C.
EXPERTS
The financial statements incorporated in this Prospectus by reference to
the Annual Report on Form 10-KSB for the year ended December 31, 1999 have
been so incorporated in reliance on the report of PricewaterhouseCoopers LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following statement sets forth the expenses payable in connection
with this Registration Statement (estimated except for the registration fee),
all of which will be borne by Infodata Systems Inc.:
Securities and Exchange Commission filing fee................ $ 69.30
Legal fees and expenses...................................... $ 25,000.00
Accountant's fees and expenses............................... $ 8,000.00
Miscellaneous (including printing and distribution costs).... $ 2,000.00
Total........................................................ $ 35,069.30
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article 10 ("Article 10") of Chapter 9 of Title 13.1 of the Virginia
Stock Corporation Act ("VSCA") authorizes a Virginia corporation to indemnify
its officers, directors, employees and agents under certain circumstances
against expenses and liabilities incurred in legal proceedings involving such
persons because of their holding or having held such positions with the
corporation and to purchase and maintain insurance for such indemnification.
The bylaws of Infodata Systems Inc. and Paragraph 10 of its Articles of
Incorporation provide that the Company shall indemnify its officers and
directors to the fullest extent permitted by Article 10 of the VSCA.
Section 13.1-692.1 of the VSCA limits the personal liability of an
officer or director to the corporation for damages arising out of certain
alleged breaches of the director's duties to the corporation. No such
limitation of liability is available if the officer or director engaged in (i)
willful misconduct or (ii) a knowing violation of the criminal law or of any
federal or state securities law, including, without limitation, any claim of
unlawful insider trading or manipulation of the market for any security.
Paragraph 9 of the Articles of Incorporation of Infodata Systems Inc.
eliminates the personal liability of the directors and officers of the company
to the fullest extent permitted by Section 13.1-692.1 of the VSCA.
<PAGE>
ITEM 16. EXHIBITS.
Exhibits
5 - Opinion of Freedman, Levy, Kroll & Simonds
23.1 - Consent of Freedman, Levy, Kroll & Simonds is contained in their
opinion filed as Exhibit 5 to this registration statement
23.2 - Consent of PricewaterhouseCoopers LLP
24 - Power of Attorney is set forth on the signature page of this
registration statement
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;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of this 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 this registration
statement. Notwithstanding the foregoing, any increase or
decrease in 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 end of the
estimated maximum offering range may be reflected in 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 a 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 this
registration statement or any material change to such
information in this registration statement; provided,
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however, that paragraphs (i) and (ii) above do not apply if
the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic
reports filed or furnished to the Commission by the
Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by
reference in this 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.
(4) 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 of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
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 or persons controlling the
registrant pursuant to the foregoing provisions, the registrant has been
informed that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by 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.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Fairfax, State of Virginia, on this
21st day of December, 2000.
INFODATA SYSTEMS INC.
By: /S/ STEVEN M. SAMOWICH
----------------------
Steven M. Samowich
President and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons in the
capacities and on the dates indicated. Each person whose signature appears
below authorizes Steven M. Samowich and Gary I. Gordon, or either of them, as
attorney-in-fact to sign and file in each capacity stated below, all
amendments and post-effective amendments to this registration statement.
SIGNATURE TITLE DATE
/S/ STEVEN M. SAMOWICH
---------------------
Steven M. Samowich President, Chief Executive December 20, 2000
Officer and Director
(Principal executive officer)
/S/ GARY I. GORDON
------------------
Gary I. Gordon Chief Accounting Officer December 20, 2000
(Principal financial and
accounting officer)
/S/ RICHARD T. BUESCHEL
----------------------
Richard T. Bueschel Chairman of the Board December 20, 2000
and Director
/S/ ALAN S. FISHER
-----------------
Alan S. Fisher Director December 20, 2000
<PAGE>
/S/ LAURENCE C. GLAZER
---------------------
Laurence C. Glazer Director December 20, 2000
/S/ ROBERT M. LEOPOLD
--------------------
Robert M. Leopold Director December 20, 2000
/S/ ISAAC M. POLLAK
------------------
Isaac M. Pollak Director December 20, 2000
-------------------
Millard H. Pryor, Jr. Director
/S/ CHRISTINE HUGHES
-------------------
Christine Hughes Director December 20, 2000
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EXHIBIT INDEX
NUMBER EXHIBIT
5 -- Opinion of Freedman, Levy, Kroll & Simonds
23.1 -- Consent of Freedman, Levy, Kroll & Simonds is
contained in their opinion filed as Exhibit 5 to
this registration statement
23.2 -- Consent of PricewaterhouseCoopers LLP
24 -- Power of Attorney is set forth on the signature page
of this registration statement
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