As filed with the Securities and Exchange Commission on March 24, 1998
Registration No. 333-60403
==========================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
ON FORM S-3
TO
FORM S-1
REGISTRATION STATEMENT
Under The Securities Act of 1933
COMFORCE Corporation
(Exact name of registrant as specified in its charter)
Delaware 7361 36 - 2262248
(State or other jurisdiction (Primary Standard Industrial (I.R.S Employer
of incorporation or Classification Code Number) Identification No.)
organization)
--------------------
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
--------------------
Christopher P. Franco
Chief Executive Officer
COMFORCE Corporation
2001 Marcus Avenue
Lake Success, New York 11042
(516) 328-7300
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
Copy to:
David G. Edwards, Esquire
Doepken Keevican & Weiss Professional Corporation
58th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219-2703
(412) 355-2600
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
(Cover page continued)
Approximate date of commencement of proposed sale to the public:
<PAGE>
From time to time after the effective date of this Post-Effective Amendment as
determined by market conditions and other factors.
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, 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. [ ]
THE COMPANY HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS
MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE COMPANY 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.
<PAGE>
PROSPECTUS
11,096,157 Shares
COMFORCE Corporation
COMMON STOCK
COMFORCE Corporation, a Delaware corporation (the "Company" or "COMFORCE")
is a provider of staffing, consulting and outsourcing solutions that address the
high technology needs of businesses.
The shares of common stock, par value $.01 per share ("Common Stock"), of
COMFORCE covered by this Prospectus ("Shares") may be offered from time to time
on the American Stock Exchange or otherwise at prices then obtainable by or for
the account of certain existing security holders of the Company named herein, or
certain transferees, pledgees or assignees ("Selling Stockholders"). See
"Selling Stockholders" and "Plan of Distribution."
In certain cases the Selling Stockholders, brokers executing sales orders
on their behalf and dealers purchasing Shares from the Selling Stockholders for
resale, may be deemed to be "underwriters," as that term is defined in Section
2(11) of the Securities Act of 1933, as amended (the "Securities Act"), and any
commissions received by them and any profit on the resale of Common Stock
purchased by them may be deemed underwriting commissions or discounts under the
Securities Act.
The Company will not receive any proceeds from sales of the Shares.
However, in that certain of the Shares to which this Prospectus relates are
issuable upon the exercise of warrants held by the Selling Stockholders, the
Company will receive the amount of the exercise prices of any warrants so
exercised. The Company cannot predict when or if it will receive proceeds from
the exercise of warrants, or the amount of any such proceeds.
SEE "RISK FACTORS" ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
On March 20, 1998, the closing price of the Common Stock on the American
Stock Exchange was $7-15/16 per share. The Company will bear certain of the
expenses of this offering, estimated to be $485,000.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is ______________.
<PAGE>
TABLE OF CONTENTS
Page
Available Information ....................................................2
Incorporation of Certain Documents .......................................3
Risk Factors..............................................................4
The Company...............................................................9
Use of Proceeds..........................................................10
Selling Stockholders.....................................................10
Plan of Distribution.....................................................19
Legal Matters............................................................19
Experts..................................................................19
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), in Washington, D.C., a Post-Effective Amendment to Registration
Statement on Form S-3, together with all amendments and exhibits thereto (the
"Registration Statement") under the Securities Act, with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement, certain parts of which are omitted in
accordance with the Rules and Regulations of the Commission. Statements made in
the Prospectus as to the contents of any contract, agreement or other document
referred to are not necessarily complete; with respect to each such contract,
agreement or other document filed as an exhibit to the Registration Statement,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference. The Registration Statement, including exhibits and schedules
filed therewith, may be inspected at the Commission's Public Reference Section,
450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the regional
offices of the Commission located at 7 World Trade Center, 13th Floor, New York,
New York 10048 and Suite 1400, 500 West Madison Street, Chicago, Illinois 60661.
Copies of such material may be obtained upon written request from the Public
Reference Section of the Commission at the address set forth above upon payment
of prescribed fees. The Commission also maintains a Web site at
"http://www.sec.gov" which contains reports, proxy statements and other
information regarding registrants that file electronically with the Commission.
The Company 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 Commission. Such reports, proxy statements and
other information may be inspected at the Public Reference Section of the
Commission or the Commission's regional offices at the addresses set forth above
or accessed through the Commission's Web site identified above, and copies of
such material may be obtained upon written request from the Public Reference
Section of the Commission upon payment of prescribed fees.
The Common Stock of the Company is listed on the American Stock Exchange
and such reports, proxy material and other information are also available for
inspection at the American Stock Exchange, 86 Trinity Place, New York, New York
10006.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
1-06081) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the Year ended December 31, 1996.
2. Amendment No. 1 to Annual Report on Form 10-K/A for the Year ended
December 31, 1996.
3. Amendment No. 1 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed November 8,
1996.
4. Amendment No. 1 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed November 19,
1996.
5. Amendment No. 2 to Current Report on Form 8-K/A dated January 13,
1997, amending original Current Report on Form 8-K filed September 3,
1996.
6. Amendment No. 2 to Current Report on Form 8-K/A dated February 4,
1997, amending original Current Report on Form 8-K filed November 8,
1996.
7. Amendment No. 2 to Current Report on Form 8-K/A dated February 4,
1997, amending original Current Report on Form 8-K filed November 19,
1996.
8. Amendment No. 3 to Current Report on Form 8-K/A dated February 3,
1997, amending original Current Report on Form 8-K filed May 23, 1996.
9. Current Report on Form 8-K dated March 14, 1997 and Amendment No. 1 to
Current Report on Form 8-K/A dated April 14, 1997.
10. Current Report on Form 8-K dated July 10, 1997 and Amendment No. 1 to
Current Report on Form 8-K/A dated July 11, 1997.
11. Current Report on Form 8-K dated August 20, 1997.
12. Current Report on Form 8-K dated October 28, 1997.
13. Current Report on Form 8-K dated December 9, 1997.
14. Quarterly Report on Form 10-Q for the quarter ended March 31, 1997.
15. Quarterly Report on Form 10-Q for the quarter ended June 30, 1997.
16. Quarterly Report on Form 10-Q for the quarter ended September 30,
1997.
17. The description of the Company's Common Stock included in the
Registration Statement on Form 8-A filed October 10, 1985, as amended
by Amendment No. 1 thereto on Form 8-A/A dated July 25, 1997.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus, or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus, 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 the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to COMFORCE Corporation, 2001 Marcus Road, Lake Success, New York 11042 to the
attention of Linda Connolly, telephone (516) 328-7300.
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RISK FACTORS
Prospective purchasers of the Common Stock offered hereby should consider
carefully the factors set forth below, as well as other information contained in
this Prospectus, before making a decision to purchase the Common Stock offered
hereby. This Prospectus contains, in addition to historical information,
forward-looking statements that involve risks and uncertainties. The Company's
actual results could differ materially from those projected or suggested in any
forward-looking statement. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed below as well as
those discussed elsewhere in this Prospectus.
Effect of Fluctuations in the General Economy
Demand for staffing and consulting services is significantly affected by
the general level of economic activity in the country. Companies use staffing
and consulting services to manage personnel costs and changes in staffing needs,
in part due to business fluctuations. When economic activity increases,
employees from staffing and consulting companies are often added before
full-time employees are hired. During such times, there is intense competition
among staffing and consulting companies for qualified personnel for placement.
As economic activity slows, many companies reduce their usage of employees from
staffing and consulting companies before undertaking layoffs of their regular
employees, and the Company may experience more competitive pricing pressure
during such periods of economic downturn. As a result, any significant economic
downturn could have a material adverse effect on the Company's business,
financial condition and results of operations. Similarly, there can be no
assurance that during periods of increased economic activity and higher general
employment levels the Company will be able to recruit and retain sufficient
personnel to meet the needs of its clients.
Absence of Combined Operating History; Potential Inability to Integrate Acquired
Businesses
The Company's contingent staffing and consulting business has been
developed principally through the acquisition of established staffing and
consulting businesses, all of which have been acquired since October 1995. Prior
to their acquisition by the Company, each of these acquired companies operated
as a separate independent entity. The Company has not experienced any
significant difficulties to date in integrating the operations of its acquired
companies. However, the acquisitions in February 1997 of RHO Company,
Incorporated ("Rhotech") and in November 1997 of Uniforce Services, Inc.
("Uniforce") has resulted in a significant increase in the size of COMFORCE. The
significant increase in size, on the basis of net sales, number and location of
offices and nature of operations, may result in more complex problems in
integrating the operations of these entities than the Company has faced with
previous acquisitions. The Company's officers have had limited experience in
managing companies as large and as rapidly growing as the Company. The Company's
strategy of continuing its growth and expansion will place additional demands
upon the Company's current management and will require additional information
systems and management, operational and other financial resources. There can be
no assurance that the Company's management group will be able to adequately
manage the combined entity and effectively implement the Company's strategy or
effectively integrate the businesses acquired. If the Company is unable to hire
and retain the management personnel needed to manage its existing and future
acquired businesses, if such personnel are unable to achieve anticipated
performance levels or if the Company is unable to implement effective controls,
the Company's business, financial condition and results of operations could be
materially adversely affected.
Risks Associated with Rationalization of Operations
The Company intends to improve its financial results through the
rationalization of operations. In connection with the acquisition of Uniforce,
the Company expects to reduce operating expenses through the consolidation of
back office activities, branch system rationalization, personnel-related cost
savings and elimination of costs relating to Uniforce's obligations as a public
company. Although the Company believes that its strategies are reasonable, there
can be no assurance that it will be able to implement its plans without delay or
that it will not encounter unanticipated problems in connection with the
rationalization of operations or that, when implemented, its efforts will result
in the reduction of operating expenses that is currently anticipated. The
Company's plans will require substantial attention
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from members of the Company's management, which will limit the amount of time
such members have available to devote to the Company's day-to-day operations.
Future Capital Needs; Uncertainty of Financing; Potential Dilution
The Company will need to obtain additional financial resources to fund its
strategy of growth through acquisition, geographic expansion and market
development. The Company can give no assurance that (i) additional financing
will be available or, if available, that it will be available on terms
acceptable to the Company, or (ii) the Company's existing capital resources,
including the amounts available for borrowing under the Company's lines of
credit and the Company's cash flow from operations, will either individually or
collectively be sufficient to fund future acquisitions or satisfy the Company's
working capital requirements. There also can be no assurance that the Company or
any of the acquired businesses will generate positive cash flow or that adequate
financing or capital resources will be available as needed or on terms
acceptable to the Company. A lack of available funds may require the Company to
delay, scale back or eliminate all or some of its market development and
acquisition projects and could have a material adverse effect on the Company's
business, financial condition and results of operations.
If additional funds are raised by issuing equity securities, the Company's
stockholders may experience dilution. Further, such equity securities may have
rights, preferences, or privileges senior to those of the Common Stock. To the
extent the Company finances its activities by issuing debt securities, the
Company may become subject to certain financial and other covenants which may
restrict its ability to pursue its strategy of growth through acquisition. There
can be no assurance that adequate equity or debt will be available as needed or
on terms acceptable to the Company. A lack of available funds may require the
Company to delay, scale back or eliminate all or some of its market development
and acquisition projects and could have a material adverse effect on the
Company's business, financial condition and results of operations.
Reliance on Acquisitions for Company Growth and Risks Associated with
Acquisitions
The ability of the Company to achieve growth through acquisition will
depend on a number of factors, including the availability of attractive
acquisition opportunities, the availability of funds needed to complete
acquisitions, the availability of working capital needed to fund the operations
of acquired businesses and the effect of existing and emerging competition on
operations. The Company has consummated eight acquisitions during the period
from October 1995 through November 1997. These acquisitions may not achieve
levels of revenue, profitability or productivity comparable to those of the
Company's existing operations or may not otherwise perform as expected.
Acquisitions also involve special risks, including risks associated with
unanticipated liabilities and contingencies, diversion of management attention
and possible adverse effects on earnings resulting from increased goodwill
amortization, increased interest costs, the issuance of additional securities
and difficulties related to the integration of the acquired business. The
Company is actively seeking additional acquisition opportunities, although the
Company has no agreements, understandings or plans regarding any material
acquisitions at this time. There can be no assurance that the Company will be
able to successfully identify additional suitable acquisition candidates,
complete additional acquisitions or integrate acquired businesses into its
operations.
Impact of Pricing Pressure on Margins
Price competition in the contingent staffing and consulting industry is
intense. Pricing pressure from competitors and customers is increasing. The
trend toward larger customers demanding national contracts with a few preferred
providers of staffing and consulting services has resulted, in many cases, in
competitive bidding and determinations based on price, so that margins on these
contracts may be less than the historical margins for providing these staffers.
In addition, the trend toward national contracts may limit the ability of
staffing and consulting firms to pass on all employee costs to customers.
Finally, large, traditional staffing firms have begun to enter the specialty
staffing and consulting sector, and, as a result, margins may decrease,
particularly for the less highly skilled personnel in this sector. There can be
no assurance that the Company will be able to maintain or increase its current
margins,
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the reduction of which could have a material adverse effect on the Company's
financial condition and results of operations, including cash flow.
Liabilities for Customer and Employee Actions
Contingent staffing and consulting firms are in the business of
employing people and placing them in the workplace of other businesses. An
attendant risk of such activity includes possible claims by customers of
employee misconduct or negligence, including claims of discrimination and
harassment, as well as claims relating to employment of illegal aliens and other
similar claims. The Company has policies and guidelines in place to reduce its
exposure to these risks. However, a failure to follow these policies and
guidelines may result in negative publicity and the payment by the Company of
money damages or fines. Although the Company historically has not had any
significant problems in this area, there can be no assurance that the Company
will not experience such problems in the future. The Company is also exposed to
liability with respect to actions taken by its employees while on assignment,
such as damages caused by employee errors, misuse of customer proprietary
information or theft of customer property. Although the Company maintains
insurance, due to the nature of the Company's assignments, in particular its
access to customer information systems and confidential information, and the
potential liability with respect thereto, there can be no assurance that
insurance coverage will continue to be available or that it will be adequate to
cover any such liability.
Increases in Unemployment Insurance Premiums and Workers' Compensation Rates
The Company is required to pay unemployment insurance premiums and workers'
compensation benefits for its billable employees. Unemployment insurance
premiums are set annually by the states in which employees perform services and
could increase as a result of, among other things, increased levels of
unemployment and the lengthening of periods for which unemployment benefits are
available. Workers' compensation costs have increased as various states in which
the Company conducts operations have raised levels of compensation and
liberalized allowable claims. The Company may incur costs related to workers'
compensation claims at rates higher than anticipated if higher than anticipated
losses or an increase in the number or the severity of claims is experienced. In
addition, the Company's costs could increase as the result of any future health
care reforms. Certain federal and state legislative proposals have included
provisions extending health insurance benefits to billable employees who do not
presently receive such benefits. There can be no assurance that the Company will
be able to increase the fees charged to its customers in a sufficient amount to
cover increased costs related to workers' compensation, unemployment insurance
and health care reforms or other employment-related regulatory changes. Further,
there can be no assurance that the Company will be able to obtain or renew
workers' compensation insurance coverage in amounts and types desired at
reasonable premium rates.
Potential Impairment of Intangible Assets
More than 50% of the Company's total assets are intangible assets. These
intangible assets substantially represent amounts attributable to goodwill
recorded in connection with the Company's acquisitions and are generally
amortized over a five to forty year period, resulting in significant annual
charges. Various factors could impact the Company's ability to generate the
earnings necessary to support this amortization schedule, including fluctuations
in the economy, the degree and nature of competition, demand for the Company's
services, and the Company's ability to integrate the operations of acquired
businesses, to recruit and place staffing professionals, to expand into new
markets and to maintain gross margins in the face of pricing pressures. The
failure of the Company to generate earnings necessary to support the
amortization charge may result in an impairment of the asset. The resulting
write-off could have a material adverse effect on the Company's business,
financial condition and results of operations.
Dependence on Availability of Qualified Staffing Personnel
The Company depends on its ability to attract, train and retain personnel
who possess the skills and experience necessary to meet the staffing and
consulting requirements of its customers. Competition for individuals
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with proven skills in certain areas, particularly information technology and
telecommunications, is intense. The Company competes for such individuals with
other contingent staffing and consulting firms, systems integrators, providers
of outsourcing services, computer systems consultants, customers and personnel
agencies. The Company must continually evaluate, train and upgrade its base of
available personnel to keep pace with changing customers' needs and emerging
technologies. There can be no assurance that qualified personnel will continue
to be available to the Company in sufficient numbers and on economic terms
acceptable to the Company. In addition, although the Company's employment
agreements contain non-compete covenants, there can be no assurance that the
Company can effectively enforce such agreements against its former employees.
Highly Competitive Market
The contingent staffing and consulting industry is highly competitive.
Heightened competition for customers as well as for contingent personnel could
adversely impact the Company's margins. Heightened competition for customers
could result in the Company being unable to maintain its current fee scales
without being able to reduce the personnel costs of its billable employees.
Large, traditional staffing companies have begun to enter the specialty staffing
and consulting sector, and, as a result, margins may decrease, particularly for
the less highly skilled personnel in that sector. Conversely, barriers to entry
to certain types of contingent staffing businesses, particularly the more
traditional sector, are low, and the Company could experience competition from
additional competitors entering the business. Shortages of qualified personnel,
which currently exist in some specialty sectors and could occur in the future,
may result in the Company being unable to fulfill its customers' needs.
Moreover, customers could employ personnel directly (rather than using the
Company's services) to ensure the availability of such personnel. Many of the
Company's competitors have greater marketing, financial and personnel resources
than the Company does and could provide increased competition to the Company.
The Company expects that the level of competition will remain high in the
future, which could have a material adverse effect on the Company's business,
financial condition and results of operations. Additionally, in certain markets
the Company has experienced significant pricing pressure from some of its
competitors.
Dependence on Key Personnel
The Company is highly dependent on its management. The Company's success
depends upon the availability and performance of James L. Paterek, the Chairman
of the Company, Christopher P. Franco, the Chief Executive Officer of the
Company, and Michael Ferrentino, the President of the Company. The loss of
services of any of these key persons could have a material adverse effect upon
the Company. The Company has entered into employment agreements with all of such
individuals which include covenants not to engage in a business similar to that
of the Company for a period of two years after termination of employment for any
reason, as well as customary non-disclosure and employer non-solicitation
provisions. The Company does not maintain key man life insurance on any of these
individuals.
Licensing Risks
The Company derives a portion of its net income from licensed operations in
the Professional Services portion of its Staffing Services division. Licensees
may terminate their agreements, resulting in a loss of revenues. While the
Company's licensing agreements contain non-competition covenants, former
licensees may pay the Company an amount based on a predetermined formula and
thereafter continue the operation of the business independently of the Company
and compete with the Company. The licenses are franchises under federal and
state laws and regulations, and the Company must comply with such federal and
state laws and regulations governing the sale of franchises, and with state laws
concerning the ongoing relationship with licensees (including the termination
and non-renewal of such relationships). The Company is subject to the risk of
litigation with licensees pursuant to such laws or otherwise.
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Control by Insiders
Current management of the Company currently controls more than one-quarter
of the Company's outstanding shares of Common Stock. As a result, such persons
are expected to have the ability to significantly influence all issues submitted
to the Company's stockholders including with respect to its management and the
selection of its Board of Directors. Such concentration of ownership could limit
the price that certain investors might be willing to pay in the future for
shares of Common Stock and could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company.
Anti-Takeover Provisions
Certain provisions of the Company's Certificate of Incorporation and Bylaws
authorize the issuance of "blank check" Preferred Stock and the establishment of
advance notice requirements for director nominations and actions to be taken at
stockholder meetings. These provisions could discourage or impede a tender
offer, proxy contest or other similar transaction involving control of the
Company, including transactions in which the stockholders might otherwise
receive a premium for their shares over then current market prices and other
transactions that they may deem to be in their best interests. In particular,
the issuance of preferred stock could have an adverse effect on holders of
Common Stock by delaying or preventing a change in control of the Company,
making removal of the present management of the Company more difficult or
resulting in restrictions upon the payment of dividends and other distributions
to the holders of Common Stock. For example, the Company could issue shares of
preferred stock with extraordinary voting rights or liquidation preferences to
make it more difficult for a hostile acquiror to gain control of the Company. In
addition to the anti-takeover effect of the issuance of preferred stock, holders
of preferred stock have a preferred position over holders of Common Stock on
liquidation, the right to a fixed or minimum dividend before any dividend is
paid (or accrued) on Common Stock, and the right to approve certain
extraordinary corporate matters.
No Cash Dividends
The Company anticipates that for the foreseeable future its earnings will
be retained for the operation and expansion of its business and that it will not
pay cash dividends on its Common Stock. In addition, the Company's revolving
credit facility prohibits the payment of cash dividends on the Common Stock
without the consent of the lender.
Historical and Pro Forma Losses
COMFORCE had a net loss for the nine months ended September 30, 1997 of
$1.3 million. On a pro forma basis, the Company had net losses for the year
ended December 31, 1996 and the nine months ended September 30, 1997 of $6.7
million and $7.0 million, respectively. No assurance can be given that the
Company's operations will be profitable in the future. The net loss for the nine
months ended September 30, 1997 included $5.8 million of bridge financing costs
related to certain prior refinancings, which contributed to the loss.
Risks Related to the Loss of Key Customers
As is common in the staffing industry, the Company's engagements to provide
services to its customers are generally non-exclusive, of a short-term nature
and subject to termination by the customer with little or no notice. On a
historical basis, for 1996, sales to one customer accounted for more than 19% of
COMFORCE's revenues, and for 1995, sales to three customers accounted for 17.3%,
12.6% and 10.1% of COMFORCE's revenues. In addition, on a historical basis, in
each of 1995 and 1996, revenues of COMFORCE's 10 largest customers accounted for
more than 50% of COMFORCE's total revenues. On a pro forma basis (taking into
account the Rhotech and Uniforce acquisitions), in 1996, sales to one customer
accounted for 8% of the Company's revenues, and sales to the 10 largest
customers of the Company accounted for more than 30% of its revenues. The loss
of or a material reduction in the
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revenues from any of the Company's significant customers could have an adverse
effect on the Company's business, results of operations and financial condition.
Possible Volatility of Stock Price
From time to time, there has been and may continue to be significant
volatility in the market price for the Company's Common Stock. Quarterly
operating results of the Company or of other staffing companies, changes in
general conditions in the economy, the financial markets or the staffing
industry, natural disasters or other developments could cause the market price
of the Company's Common Stock to fluctuate substantially. In addition, in recent
years the stock market has experienced extreme price and volume fluctuations.
This volatility has had a significant effect on the market prices of securities
issued by many companies for reasons unrelated to their operating performance.
THE COMPANY
The Company is a leading provider of specialty staffing, consulting and
outsourcing solutions primarily to Fortune 500 companies for their information
technology ("IT"), telecommunications, scientific and engineering-related needs.
Through its network of 86 offices (55 Company-owned and 31 licensed) located
throughout the United States, the Company recruits and places highly skilled
contingent personnel and outsources payrolling and other financial services for
a broad customer base of over 2,300 companies. The Company's labor force
includes approximately 7,800 billable employees, consisting primarily of
computer programmers, systems consultants and analysts, telecommunications and
other engineers and technicians, scientists and researchers, as well as skilled
office support personnel.
The Company's senior management team of Christopher P. Franco, James L.
Paterek and Michael Ferrentino established COMFORCE in 1995 to capitalize on the
consolidation opportunities in the specialty staffing and consulting industry.
Beginning with the initial acquisition of COMFORCE Telecom in October 1995, this
management team has successfully acquired and integrated eight specialty
staffing companies.
The Company operates through four divisions, as described below:
COMFORCE Information Technologies. The Company's IT division provides
highly skilled programmers, help desk personnel, systems consultants and
analysts, software engineers and project managers for a wide range of technical
assignments, including client server, mainframe, Year 2000, desktop services,
internet/intranet and MIS. The IT division also provides payrolling services in
addition to these staffing solutions to certain of its IT customers. The
Company's principal IT customers include Microsoft Corporation, BellSouth
Telecommunications, Inc., Boeing Information Services, Inc., Eastman Kodak
Company, Tyson Foods, Inc., First Union Corporation, NationsBanc Services, Inc.
and MCI Telecommunications Corporation.
COMFORCE Telecom. The Company's Telecom division provides skilled personnel
to plan, design, engineer, install and maintain wireless and wireline
telecommunications systems, including cellular, PCS, microwave, radio, satellite
and other networks. The Company's staffing and consulting business originated
with this specialty sector, and the Company and several of the companies it has
acquired have long-standing relationships with leading telecommunications
companies. The Telecom division's principal customers include AT&T Corporation,
Northern Telecom, Inc., Harris Corporation, Lucent Technologies, Inc., Reltec
Corporation, ALCATEL Network Systems, Inc., Motorola, Inc., Sprint Corporation
and Omnipoint Corporation.
COMFORCE Staffing Services. The Company's Staffing Services division
operates in two areas, Technical Services and Professional Services. The Company
provides Technical staffing solutions and, in some cases, payrolling services to
a group of technology-intensive clients working in the areas of aerospace,
avionics, electronics, laser and weapons technology, environmental safety and
alternative energy source development. The Company's Technical Services business
is generally conducted through long-term, high-volume contracts that are not
subject to fixed prices
9
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and require low administrative overhead. The Company offers Professional
staffing services through 10 Company-owned and 31 licensed locations that
provide services including medical office staffing solutions, office automation
personnel, customer service/call center personnel and laboratory professionals.
The Staffing Services division's principal Technical Services customers include
The Boeing Company, Westinghouse Electric Corporation, McDonnell Douglas
Corporation and the National Department of Energy National Research Laboratories
at Los Alamos, Sandia and Lawrence Livermore. The Staffing Services division's
Professional Services customers include R.R. Donnelley & Sons Co., Estee Lauder
Companies, Inc. and Dial Corporation, as well as many smaller companies such as
independent medical providers and accounting firms.
COMFORCE Financial Services. The Company's Financial Services division
provides payroll funding services and back office support to approximately 100
independent consulting and staffing companies and provides consulting and
related payrolling services to clients in connection with their use of
independent contractors. The Financial Services division significantly benefits
from Uniforce's sophisticated back office operations.
The Company was incorporated in Illinois in 1954 and became a Delaware
corporation through its merger with a Delaware subsidiary in 1969. It maintains
its headquarters at 2001 Marcus Avenue, Lake Success, New York 11042. The
Company's telephone number is (516) 328-7300.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, in that certain of the
Shares of Common Stock to which this Prospectus relates are issuable upon the
exercise of warrants held by the Selling Stockholders, the Company will receive
the amount of the exercise prices of any warrants so exercised. The Company
cannot predict when or if it will receive proceeds from the exercise of
warrants, or the amount of any such proceeds. The Company intends to use the
proceeds, if any, received from the exercise of warrants for working capital
purposes. See "Plan of Distribution."
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the shares of
Common Stock held by, or issuable upon the exercise of warrants of the Company,
to the persons offering shares pursuant to this Prospectus ("Selling
Stockholders"). In cases where the Selling Stockholder serves or has served
within the past three years as an officer, director or employee of the Company
or any of its subsidiaries, this relationship is noted. Because the Selling
Stockholders may offer all or some part of the Common Stock that they hold
pursuant to the offering contemplated by this Prospectus, and because this
offering is not being underwritten (on a firm commitment or any other basis), no
estimate can be given as to the amount of Common Stock that will be held by
Selling Stockholders upon termination of this offering.
Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Arabella S.A. (1) 25,000 25,000
Avalon Corporation (2) 109,808 109,808
Charles E. Balis (1) 4,066 4,066
Robert Barker (1) 75,000 75,000
William Belzberg (3) 45,000 45,000
Ann W. Bensen (4) 10,000 10,000
Reed Berkey (4)(54) 11,250 11,250
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Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Belmad Enterprises, L.P. (1) 112,500 112,500
Boeckman Investments (5) 55,882 55,882
Salvatore Bova (4) 5,000 5,000
John Bramsen (6)(52) 45,000 45,000
Elliott Broidy (7)(53) 30,000 30,000
Kenneth Buchanan (4)(53) 22,500 22,500
Luke Buse & Brent D. Richardson 40,000 40,000
JTWROS (4)
Callaway, an Arizona Partnership (4) 15,000 15,000
Campbell Family Partnership (4) 40,000 40,000
Woodrow Chamberlain (8)(52) 56,250 56,250
Charles J. Christian (9)(52) 13,500 13,500
Matthew D. Coleman (1) 4,066 4,066
Howard Conant (10)(52) 210,000 210,000
Cypress Int'l Partners Ltd. (7)(53) 110,000 110,000
Cypress Partners L.P. (7)(53) 620,000 620,000
James L. Davis (4) 15,000 15,000
Delaware Charter Guarantee & Trust 10,000 10,000
Company, Cust. fbo Mark S. Howells
SEP/IRA (4)
Delaware Charter Guarantee & Trust 16,000 16,000
Company, Cust fbo Jeffrey J. Puglisi
SEP/IRA (4)
Delaware Charter Guarantee & Trust 1,500 1,500
Company, Cust. fbo Irving M. Rollinger
SEP/IRA (4)
Delta Traders (4) 60,000 60,000
Dan T. Doerge (1) 6,750 6,750
David J. Doerge Trust (11)(52) 74,997 74,997
Dobbins Partners, L.P. (12) 714,215 714,215
Mark Dorian (13)(52) 45,000 45,000
Michael F. Dura (4) 5,000 5,000
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Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Empire Metals Profit Sharing Plan (4) 5,000 5,000
Stephen N. Engberg Associates 45,000 45,000
Pension Plan and Trust (14)(52)
Fairway Capital Ltd. (15)(A) 79,538 79,538
Michael Ferrentino (16) 999,794 999,794
Christopher P. Franco (16) 999,794 999,794
William A. Franke (4) 15,000 15,000
David Furth (7)(53) 4,000 4,000
Gifford Fund Ltd. (17) 63,796 63,796
Matthew A. Gohd (18)(54) 59,214 59,214
Matthew A. Gohd & Frann Setzer-Gohd (7) 13,400 13,400
G.P.S. Fund Ltd. (17) 4,557 4,557
Howard Grafman (19)(52) 22,500 22,500
Thomas Gries (20)(52) 11,250 11,250
Clark Gunderson (21)(54) 35,000 35,000
Peter Harvey (1) 150,000 150,000
Parris H. Holmes, Jr. (4) 10,000 10,000
Mark S. Howells (4) 9,000 9,000
Infinity Investors, Ltd. (15)(B) 800,004 800,004
Irvine Capital Partners (4) 20,000 20,000
JMG Capital Partners (17) 91,137 91,137
Robert Jones (22)(54) 48,200 48,200
S. Houston Jones II (1) 1,000 1,000
Anna Gambrelle Jones (1) 1,000 1,000
Genin Quinn Jones (1) 1,000 1,000
Robert G. Jones (1) 1,000 1,000
Cynthia McGee (1) 300 300
Kevin Kiernan (16) 222,174 222,174
KFT Ltd. (4) 5,000 5,000
Thomas E. Kigin (23)(52) 22,500 22,500
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Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Patrick Koo (24)(54) 70,000 70,000
Stephen M. Levy, FBO (25) 5,000 5,000
David J. Lewittes (1) 4,066 4,066
Levy S.D. (26) 10,000 10,000
Maynard Louis (27) 10,000 10,000
Philip P. Lovell (4) 10,000 10,000
Philip P. Lovell Pension Plan (4) 15,000 15,000
C.G.E. Manolovici (7)(53) 20,000 20,000
Manufacturers Indemnity and Insurance 1,212,876 1,212,876
Company of America (28)
James McGill (29)(52) 22,500 22,500
Johanna McGill (30)(52) 22,500 22,500
MSAM Partners (31) 10,000 10,000
John and Else Muehlstein (32)(52) 13,500 13,500
James L. Paterek (16) 1,666,322 1,666,322
Robert C. Pearson & Nancy L. Pearson 5,000 5,000
JTWROS (4)
Porpoise Fund (33) 49,999 49,999
Porpoise Investors I, L.P. (7)(53) 26,700 26,700
Pro Futures Special Equities Fund, L.P. (17) 91,137 91,137
Jeffrey J. Puglisi (4) 50,000 50,000
Ray Rashkin (34) 12,500 12,500
Stanley Rashkin (34) 100,000 100,000
Charles Reeder (35)(52) 90,000 90,000
Julia L. Reynolds Trust #2 (36)(52) 22,500 22,500
Evan D. Ritchie Living Trust (37)(52) 22,500 22,500
Irving M. Rollinger (4) 8,500 8,500
Rubenstein Family Ltd. Partnership #1 (4) 15,000 15,000
Byron H. Rubin (4) 20,000 20,000
Gerald Rubin (4) 70,000 70,000
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Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Jay Rubin (4) 20,000 20,000
Seymour Sacks & Star Sacks JTWROS (4) 5,000 5,000
John M. Schottenstein Revocable Trust (4) 7,500 7,500
Seacrest Capital Limited (15)(C) 129,350 129,350
Michael Dain Searle (38)(52) 13,500 13,500
Martha Seelbach (39)(52) 6,750 6,750
Aaron M. Shenkman & Cynthia Shenkman 20,000 20,000
JTWROS (4)
Norman F. Siegel (40) 66,667 66,667
Paul Smeets (41)(52) 45,000 45,000
Lillian D. Snow (4) 10,000 10,000
Jim Sowell Construction Co., Inc. (4) 20,000 20,000
John C. Stacey, DDC, SC, Pension Plan (4) 10,000 10,000
A. E. Staley III Trust (42)(52) 45,000 45,000
Henry M. Staley Trust (43)(52) 51,300 51,300
Robert C. Staley Trust (44)(52) 22,500 22,500
STK&K Profit Sharing Plan & Trust (4) 5,000 5,000
Avery Stone Trust (45)(52) 27,000 27,000
Shephard C. Swift Trust (46)(52) 45,000 45,000
Michael Targoff (1) 41,765 41,765
Michael Targoff Family Foundation (1) 11,765 11,765
E. B. Tarrson (47)(52) 45,000 45,000
Ronald Tarrson (48)(52) 45,000 45,000
Steve Tarrson (49)(52) 45,000 45,000
Christiane L. Turner (7)(53) 3,000 3,000
Marc Werner (1) 100,000 100,000
Michael Werner (7)(53) 30,000 30,000
Ronald Werner (7)(53) 30,000 30,000
Westminster Capital (50)(52) 15,000 15,000
Whitney Holdings Incorporated (1) 75,000 75,000
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Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Whittier Ventures L.L.C. (17) 45,568 45,568
Diane Wilson (51)(52) 9,450 9,450
Timothy Wright (4) 6,000 6,000
Jack Zerelli & Ray Ann Zerelli JTWROS (4) 5,000 5,000
Robert A. Calabrese (55) 5,000 5,000
Michael Laundrie (56) 35,000 35,000
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Number of Shares Shares
Name of Beneficial Owner Beneficially Owned Offered
Hereby
Millison Investment Mgt. (57) 16,250 16,250
---------- ----------
Total 11,096,157 11,096,157
- - ----------
(1) The shares offered by the named stockholder are owned of record by the
stockholder.
(2) The shares offered by Avalon Corporation are owned of record and were
transferred to it by the David J. Doerge Trust.
(3) The shares offered by William Belzberg are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable to him upon the exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(4) The shares offered by the named stockholder are shares issued to the
stockholder upon conversion of Series D Preferred Stock held by the stockholder.
(5) The shares offered by Boeckman Investments are (i) 16,667 shares
issuable to it upon its exercise of a warrant at an exercise price of $3.375 per
share, which warrant expires October 17, 2000, and (ii) 39,215 shares owned of
record by it.
(6) The shares offered by John Bramsen are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable to him upon the exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires on June 1, 2001.
(7) The shares offered by the named stockholder are shares issued to the
stockholder upon the automatic conversion of Series E Convertible Preferred
Stock held by the stockholder.
(8) The shares offered by Woodrow Chamberlain are (i) 37,500 shares owned
of record and (ii) 18,750 shares issuable to him upon his exercise of a warrant
at an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(9) The shares offered by Charles J. Christian are (i) 9,000 shares owned
of record and (ii) 4,500 shares issuable to him upon the exercise of a warrant
at an exercise price of $3.375 per share, which warrant expires on June 1, 2001.
(10) The shares offered by Howard Conant are (i) 30,000 shares issuable to
him upon his exercise of a warrant at an exercise price of $2.00 per share,
which warrant expires September 11, 2000, (ii) 50,000 shares issuable to him
upon his exercise of a warrant at an exercise price of $3.375 per share, which
warrant expires October 17, 2000, and (iii) 130,000 shares owned of record by
him.
(11) The shares offered by David J. Doerge Trust are (i) 15,881 shares
owned of record and (ii) 70,666 shares issuable to it upon its exercise of a
warrant at an exercise price of $3.375 per share, which warrant expires on June
1, 2001.
(12) The shares offered by Dobbins Partners, L.P. are (i) 225,000 shares
issuable to it upon its exercise of a warrant at an exercise price of $3.375 per
share, which warrant expires October 17, 2000, and (ii) 489,215 shares owned of
record by it.
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<PAGE>
(13) The shares offered by Mark Dorian are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable to him upon his exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires on June 1, 2001.
(14) The shares offered by Stephen N. Engberg Associates Pension Plan and
Trust are (i) 30,000 shares owned of record and (ii) 15,000 shares issuable to
him upon his exercise of a warrant at an exercise price of $3.375 per share,
which warrant expires on June 1, 2001.
15(A) The shares offered by Fairway Capital Ltd. are (i) 65,780 shares
owned of record and (ii) 13,758 shares issuable to it upon exercise of a warrant
at $19.00 per share, which warrant expires on December 26, 1999.
15(B) The shares offered by Infinity Investors, Ltd. are (i) 644,120 shares
owned of record and (ii) 155,884 shares issuable to it upon exercise of a
warrant at $19.00 per share, which warrant expires on December 26, 1999.
15(C) The shares offered by Seacrest Capital Limited are (i) 110,100 shares
owned of record and (ii) 29,250 shares issuable to it upon exercise of a warrant
at $19.00 per share,which warrant expires on December 26, 1999.
(16) The shares offered by the named stockholder are shares owned of record
by the stockholder. The shares were issued to the named stockholder in
consideration for agreeing to direct the Company's entry into the technical
staffing business. James L. Paterek is the Chairman of the Company, Michael
Ferrentino is the President of the Company, Christopher Franco is the Chief
Executive Officer of the Company, and Kevin Kiernan is Vice President of
COMFORCE Telecom, Inc., a subsidiary of the Company.
(17) The shares offered by the named stockholder are shares issued upon
conversion of Series F Preferred Stock held by the stockholder.
(18) The shares offered by Matthew Gohd are (i) 6,666 shares issuable to
him upon his exercise of a warrant at an exercise price of $3.375 per share,
which warrant expires October 17, 2000, (ii) 33,333 shares issuable to him for
payment of service and (iii) 19,215 shares owned of record by him.
(19) The shares offered by Howard Grafman are (i) 15,000 shares owned of
record and (ii) 7,500 shares issuable to him upon his exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(20) The shares offered by Thomas Gries are (i) 7,500 shares owned of
record and (ii) 3,750 shares issuable to him upon his exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(21) The shares offered by Clark Gunderson are (i) 10,000 shares issuable
to him upon his exercise of a warrant at an exercise price of $2.00 per share,
which warrant expires August 30, 2000 and (ii) 25,000 shares issued to him for
conversion of a note in the amount of $50,000 at a price per share of $2.00.
(22) The shares offered by Robert Jones are (i) 15,000 shares issuable to
him upon his exercise of a warrant at an exercise price of $2.00 per share,
which warrant expires August 30, 2000, and (ii) 33,200 shares owned of record.
(23) The shares offered by Thomas E. Kigin are (i) 15,000 shares owned of
record and (ii) 7,500 shares issuable to him upon his exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(24) The shares offered by Patrick Koo are (i) 20,000 shares issuable to
him upon his exercise of a warrant at an exercise price of $2.00 per share,
which warrant expires October 3, 2000, and (ii) 50,000 shares issued to him for
conversion of a note in the amount of $100,000 at a price per share of $2.00.
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<PAGE>
(25) The shares offered by Stephen M. Levy are 5,000 shares issuable to it
upon its exercise of a warrant at an exercise price of $2.00 per share, which
warrant expires September 12, 2000.
(26) The shares offered by Levy S.D. are 10,000 shares usable to it upon
its exercise of a warrant at an exercise price of $2.00 per share, which warrant
expires September 12, 2000.
(27) The shares offered by Maynard Louis are 5,000 shares issuable to him
upon his exercise of a warrant at an exercise price of $2.00 per share, which
warrant expires September 11, 2000 and 5,000 shares owned of record.
(28) The shares offered by Manufacturers Indemnity and Insurance Company of
America are (i) 174,000 shares issuable to it upon its exercise of a
supplemental warrant at an exercise price of $9.00 per share, and (ii) 927,876
shares held of record by it, and (iii) 111,111 shares issuable to it upon
exercise of a supplemental warrant at an exercise price of $13.25 per share.
(29) The shares offered by James McGill are (i) 15,000 shares owned of
record and (ii) 7,500 shares issuable to him upon his exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(30) The shares offered by Johanna McGill are (i) 15,000 shares owned of
record and (ii) 7,500 shares issuable to her upon her exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(31) The shares offered by MSAM Partners are 10,000 shares issuable to it
upon its exercise of a warrant at an exercise price of $2.062 per share, which
warrant expires July 16, 2000.
(32) The shares offered by John and Else Muehstein are (i) 9,000 shares
owed of record and (ii) 4,500 shares issuable to them upon the exercise of a
warrant at an exercise price of $3.375 per share, which warrant expires on June
1, 2001.
(33) The shares offered by Porpoise Fund are (i) 26,666 shares issuable to
it upon its exercise of a warrant at an exercise price of $3.375 per share,
which warrant expires October 17, 2000 and (ii) 23,333 shares owned of record by
it.
(34) The shares offered by the named stockholder are shares issuable to the
stockholder upon the exercise of an option at $7.375 per share, which option
expires May, 2006.
(35) The shares offered by Charles Reeder are (i) 60,000 shares owned of
record and (ii) 30,000 shares issuable to her upon her exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(36) The shares offered by Julia L. Reynolds Trust #2 are (i) 15,000 shares
owned of record and (ii) 7,500 shares issuable to it upon its exercise of a
warrant at an exercise price of $3.375 per share, which warrant expires June 1,
2001.
(37) The shares offered by Evan D. Ritchie Living Trust are (i) 15,000
shares owned of record and (ii) 7,500 shares issuable to it upon its exercise of
a warrant at an exercise price of $3.375 per share, which warrant expires June
1, 2001.
(38) The shares offered by Michael Dain Searle are (i) 9,000 shares owned
of record and (ii) 4,500 shares issuable to him upon the exercise price of
$3.375 per share, which warrant expires on June 1, 2001.
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<PAGE>
(39) The shares offered by Martha Seelbach are (i) 2,250 shares owned of
record by her, and (ii) 4,500 shares issuable to her upon her exercise of a
warrant at an exercise price of $3.375 per share, which warrant expires June 1,
2001.
(40) The shares offered by Norman F. Siegel are (i) 40,000 shares held of
record by him and (ii) 16,667 shares issuable to him upon his exercise of a
supplemental warrant at an exercise price of $9.00 per share.
(41) The shares offered by Paul Smeets are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable to him upon his exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(42) The shares offered by A.E. Staley III Trust are (i) 30,000 shares
owned of record and (ii) 15,000 shares issuable upon the exercise of a warrant
at an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(43) The shares offered by Henry M. Staley Trust are (i) 30,000 shares
owned of record and (ii) 17,100 shares issuable upon the exercise of a warrant
at an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(44) The shares offered by Robert C. Staley Trust are (i)15,000 shares
owned of record and (ii) 7,500 share issuable upon the exercise of a warrant at
an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(45) The shares offered by Avery Stone Trust are (i) 18,000 shares owned of
record and (ii) 9,000 shares issuable upon the exercise of a warrant at an
exercise price of $3.375 per share, which warrant expires June 1, 2001.
(46) The shares offered by Shepard C. Swift Trust are (i) 30,000 shares
owned of record and (ii) 15,000 shares issuable upon the exercise of a warrant
at an exercise price of $3.375 per share, which warrant expires June 1, 2001.
(47) The shares offered by E.B. Tarrson are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable upon the exercise of a warrant at an
exercise price of $3.375 per share, which warrant expires June 1, 2001.
(48) The shares offered by Ronald Tarrson are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable upon the exercise of a warrant at an
exercise price of $3.375 per share, which warrant expires June 1, 2001.
(49) The shares offered by Steve Tarrson are (i) 30,000 shares owned of
record and (ii) 15,000 shares issuable upon the exercise of a warrant at an
exercise price of $3.375 per share, which warrant expires June 1, 2001.
(50) The shares offered by Westminster Capital are 15,000 shares issuable
upon the exercise of a warrant at an exercise price of $3.375 per share.
(51) The shares offered by Diane Wilson are (i) 6,300 shares issuable to
her upon her exercise of a warrant at an exercise price of $3.375 per share,
which warrant expires June 1, 2001, and (ii) 5,166 shares owned of record by
her.
(52) These shares were offered pursuant to a private placement during
October and November 1995.
(53) These shares were offered in connection with the sale of Series E
Preferred Stock pursuant to an offering under Regulation D in April and May
1996.
(54) The warrant or convertible note, as applicable, was issued in
connection with extension of credit to the Company during the period from July
through October 1995.
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<PAGE>
(55) The shares offered by Robert A. Calabrese are 5,000 shares owned of
record.
(56) The shares offered by Michael Laundrie are (i) 10,000 shares issuable
to him upon his exercise of a warrant at an exercise price of $2.00 per share,
which warrant expires September 8, 2000, and (ii) 25,000 shares owned of record.
(57) The shares offered by Millison Investment Mgt. are 16,250 shares
issuable to it upon the exercise of a warrant at an exercise price of $4.00 per
share.
PLAN OF DISTRIBUTION
The Company is not aware of any plan of distribution with respect to the
Shares. Distribution of the Shares by the Selling Stockholders may be effected
from time to time in one or more transactions (which many involve block
transactions) (i) on the American Stock Exchange, (ii) in the over-the-counter
market, (iii) in transactions otherwise than on such exchange or in the
over-the-counter market or (iv) in a combination of any such transactions. Such
transactions may be effected by the Selling Stockholders at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices. The Selling Stockholders may
effect such transactions by selling Shares to or through underwriters, brokers
or dealers, and such underwriters, brokers or dealers may receive compensation
in the form of discounts or commissions from the Selling Stockholders and may
receive commissions from the purchasers of Shares for whom they may act as
agent. COMFORCE has agreed to indemnify the Selling Stockholders against certain
civil liabilities, including liabilities under the Securities Act.
The Selling Stockholders and any broker-dealers who participate in a sale
of its shares of Common Stock may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received by
them, and proceeds of any such sales as principal, may be deemed to be
underwriting discounts and commissions under the Securities Act.
All expenses of the registration of Common Stock offered hereby, estimated
to be approximately $15,000, will be borne by the Company. As and when the
Company is required to update this Prospectus, it may incur additional expenses
in excess of this estimated amount. Normal commission expenses and brokerage
fees, as well as any applicable transfer taxes, are payable individually by the
Selling Stockholders.
The Company will not receive any proceeds from the sale of the Common Stock
offered hereby by the Selling Stockholders. However, insofar as the holders of
the warrants to purchase shares of the Common Stock must exercise their warrants
in order to sell the underlying shares (which are registered hereby), the
Company will receive the amount of the exercise prices of any warrants so
exercised. The Company cannot predict when or if it will receive proceeds from
the exercise of warrants, or the amount of any such proceeds. The Company
intends to use the proceeds, if any, received from the exercise of warrants for
working capital purposes.
LEGAL MATTERS
The validity of the Common Stock being offered hereby will be passed upon
for the Company by Doepken, Keevican & Weiss Professional Corporation,
Pittsburgh, Pennsylvania.
EXPERTS
The consolidated balance sheets of COMFORCE Corporation and Subsidiaries as
of December 31, 1996 and 1995, and the related consolidated statements of
operations, changes in stockholders' equity (deficit) and cash flows for each of
the three years in the period ended December 31, 1996, incorporated by reference
in this Prospectus from the Company's Annual Report on Form 10-K for the year
ended December 31, 1996, have been incorporated herein in reliance on the report
of Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.
The balance sheets of RHO Company Incorporated as of December 31, 1995 and
1996, and the related statements of income, changes in shareholders' deficit and
cash flows for the years ended December 31, 1995 and
20
<PAGE>
1996, which are incorporated by reference in this Prospectus from the Company's
Annual Report on Form 10-K for the year ended December 31, 1996, have been
audited by Arthur Andersen LLP, independent public accountants, as indicated in
their report with respect thereto which is incorporated herein by reference, and
have been so incorporated in reliance upon the authority of said firm as experts
in giving said report.
The consolidated balance sheets of Uniforce Services, Inc. and Subsidiaries
as of December 31, 1996 and 1995, and the related consolidated statements of
earnings, stockholders' equity and cash flows for each of the years in the three
year period ended December 31, 1996, have been incorporated by reference herein
in reliance upon the report of KPMG Peat Marwick LLP, independent certified
public accountants, incorporated by reference herein, and upon the authority of
said firm as experts in accounting and auditing.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits
2.1 Stock Purchase Agreement dated September 11, 1995 among Spectrum
Technologies, Inc., the Company, COMFORCE Corporation, ARTRA Group
Incorporated, Peter R. Harvey, Marc L. Werner, James L. Paterek, Michael
Ferrentino and Christopher P. Franco (included as an exhibit to the
Company's Current Report on Form 8-K dated September 11, 1995 and
incorporated herein by reference).
2.2 Purchase Agreement among COMFORCE Telecom, Inc., Williams Communications
Services, Inc. and Bruce Anderson (included as an exhibit to the
Company's Current Report on Form 8-K dated March 13, 1996 and
incorporated herein by reference).
2.3 Stock Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.,
Raphael Rashkin and Stanley Rashkin (included as an exhibit to the
Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996 filed May 16, 1996 and incorporated herein by reference).
2.4 Asset Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., DataTech Technical Services, Inc.,
Raphael Rashkin and Stanley Rashkin (included as an exhibit to the
Company's Amended Quarterly Report on Form 10-Q/A for the quarter ended
March 31, 1996 filed May 16, 1996 and incorporated herein by reference).
2.5 Asset Purchase Agreement effective as of May 13, 1996 among the Company,
COMFORCE Technical Services, Inc., RRA, Inc., Raphael Rashkin and
Stanley Rashkin (included as an exhibit to the Company's Amended
Quarterly Report on Form 10-Q/A for the quarter ended March 31, 1996
filed May 16, 1996 and incorporated herein by reference).
2.6 Letter Agreement dated May 6, 1996 amending Asset Purchase Agreement
effective as of May 13, 1996 among the Company, COMFORCE Technical
Services, Inc., RRA, Inc., Raphael Rashkin and Stanley Rashkin (included
as an exhibit to the Company's Amended Quarterly Report on Form 10-Q/A
for the quarter ended March 31, 1996 filed May 16, 1996 and incorporated
herein by reference).
2.7 Letter Agreement dated April 19, 1996 among CTS Acquisition Co. I,
COMFORCE Technical Services, Inc., Project Staffing Support Team, Inc.
and RRA, Inc. (included as an exhibit to the Company's Amended Quarterly
Report on Form 10-Q/A for the quarter ended March 31, 1996 filed May 16,
1996 and incorporated herein by reference).
II-1
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2.8 Agreement and Plan of Reorganization dated October 22, 1996 between
AZATAR Computer Systems, Inc. and the Company (included as an exhibit to
the Company's Current Report on Form 8-K dated November 8, 1996 and
incorporated herein by reference).
2.9 Asset Purchase Agreement dated October 25, 1996 by and among Continental
Field Services Corporation, Michael Hill, Roy Hill and COMFORCE Telecom,
Inc. (included as an exhibit to the Company's Current Report on Form 8-K
dated November 19, 1996 and incorporated herein by reference).
2.10 Asset Purchase Agreement dated October 25, 1996 between Progressive
Telecom, Inc., Beth Wilson Hill and COMFORCE Telecom, Inc. (included as
an exhibit to the Company's Current Report on Form 8-K dated November
19, 1996 and incorporated herein by reference).
2.11 Amendment to Escrow Agreement and Purchase Agreements dated November 8,
1996 by and among Continental Field Service Corporation, Progressive
Telecom, Inc., Michael Hill, Roy Hill, Beth Wilson Hill, McCarthy,
Fingar, Donovan, Drazen & Smith, and COMFORCE Telecom, Inc. (included as
an exhibit to the Company's Current Report on Form 8-K dated November
19, 1996 and incorporated herein by reference).
2.12 Subscription Agreement dated October 28, 1996 by and among RHO Company,
Inc., J. Scott Erbe, COMFORCE Corporation and COMFORCE Technical
Services, Inc. (included as an exhibit to the Company's Current Report
on Form 8-K dated November 19, 1996 and incorporated herein by
reference).
2.13 Stock Sale and Termination Agreement dated October 28, 1996 by and
between James R. Ratcliff and RHO Company, Inc. (included as an exhibit
to the Company's Current Report on Form 8-K dated November 19, 1996 and
incorporated herein by reference).
2.14 Letter Agreement dated November 4, 1996 amending Stock Sale and
Termination Agreement between RHO Company, Inc. and James R. Ratcliff
(included as an exhibit to the Company's Current Report on Form 8-K
dated November 19, 1996 and incorporated herein by reference).
2.15 Agreement and Plan of Merger, dated as of August 13, 1997, by and among
COMFORCE Corporation, COMFORCE Columbus, Inc. and Uniforce Services,
Inc. (included as an exhibit to the Company's Current Report on Form 8-K
dated August 20, 1997 and incorporated herein by reference).
2.16 Stockholders Agreement, dated as of August 13, 1997, by and among
COMFORCE Corporation, COMFORCE Columbus, Inc., John Fanning and Fanning
Asset Partners (included as an exhibit to the Company's Current Report
on Form 8-K dated August 20, 1997 and incorporated herein by reference).
2.17 Registration Rights Agreement dated as of August 13, 1997 by and among
the Company, John Fanning and Fanning Asset Partners, L.P., a Georgia
limited partnership (included as an exhibit to Amendment No. 2 to the
Registration Statement on Form S-4 of the Company filed with the
Commission on October 24, 1997 and incorporated herein by reference).
3.1 Restated Certificate of Incorporation of the Company, as amended by
Certificates of Amendment filed with the Delaware Secretary of State on
June 14, 1987 and February 12, 1991 (included as an exhibit to Amendment
No. 1 to the Registration Statement on Form S-1 of the Company filed
with the Commission on May 10, 1996 and incorporated herein by
reference).
3.2 Certificate of Ownership (Merger) of COMFORCE Corporation into the
Company (included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1995 and incorporated herein by
reference).
II-2
<PAGE>
3.3 Bylaws of the Company, as amended and restated effective as of February
26, 1997 (included as an exhibit to the Company's Annual Report on Form
10-K for the year ended December 31, 1996 and incorporated herein by
reference).
3.4 Designation of Rights and Preferences of Series F Preferred Stock
(included as an exhibit to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996 and incorporated herein by reference).
3.5 Certificate of Ownership (Merger) of AZATAR into the Company (included
as an exhibit to the Company's Current Report on Form 8-K dated November
8, 1996 and incorporated herein by reference).
4.1 Indenture dated as of November 26, 1997 with respect to 12% Senior Notes
due 2007 between COMFORCE Operating, Inc., as issuer, and Wilmington
Trust Company, as trustee (included as an exhibit to the Company's
Current Report on Form 8-K dated December 9, 1997 and incorporated
herein by reference).
4.2 Indenture dated as of November 26, 1997 with respect to 15% Senior
Secured PIK Debentures due 2009 between COMFORCE Corporation, as issuer,
and The Bank of New York, as trustee (included as an exhibit to the
Company's Current Report on Form 8-K dated December 9, 1997 and
incorporated herein by reference).
5.1 Opinion of Doepken Keevican & Weiss Professional Corporation.*
10.1 Management Agreement dated as of April 9, 1993 between the Company and
Nitsua, Ltd. (a corporation wholly-owned by Austin Iodice, formerly
Lori's Chairman and Chief Executive Officer) (included as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31,
1992 and incorporated herein by reference).
10.2 Letter Agreement dated June 29, 1995, among the Company, ARTRA Group
Incorporated, James L. Paterek, Michael Ferrentino and Christopher P.
Franco (included as an exhibit to the Company's Current Report on Form
8-K dated September 11, 1995 and incorporated herein by reference).
10.3 Amendment dated October 6, 1995 of Letter Agreement dated June 29, 1995,
among the Company, ARTRA Group Incorporated, James L. Paterek, Michael
Ferrentino and Christopher P. Franco (included as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference).
10.4 Assumption Agreement dated October 17, 1995 between the Company and
ARTRA GROUP Incorporated respecting ARTRA's assumption of substantially
all of the Company's pre-existing liabilities (included as an exhibit to
the Company's Annual Report on Form 10-K for the year ended December 31,
1995 and incorporated herein by reference).
10.5 Asset Purchase Agreement dated as of April 11, 1996 among Lawrence
Jewelry Corporation, ARTRA GROUP Incorporated, the Company and Hanover
Advisors, Inc. respecting the disposition of the assets of the Company's
jewelry business (included as an exhibit to the Company's Annual Report
on Form 10-K for the year ended December 31, 1995 and incorporated
herein by reference).
10.6 Loan and Security Agreement dated as of November 26, 1997 among COMFORCE
Corporation and specified subsidiaries thereof and Heller Financial,
Inc., as lender and agent for other lenders (included as an exhibit to
the Company's Current Report on Form 8-K dated December 9, 1997 and
incorporated herein by reference).
10.7 Purchase Agreement, dated as of November 19, 1997, by and between
COMFORCE Operating, Inc. and NatWest Capital Markets Limited, as Initial
Purchaser (included as an exhibit to the Registration Statement on Form
S-4 of the Company filed with the Commission on December 24, 1997 and
incorporated herein by reference).
II-3
<PAGE>
10.8 Purchase Agreement, dated as of November 19, 1997, by and between the
Company and NatWest Capital Markets Limited, as Initial Purchaser
(included as an exhibit to the Registration Statement on Form S-4 of the
Company filed with the Commission on December 24, 1997 and incorporated
herein by reference).
10.9 Exchange Offer and Registration Rights Agreement, dated as of November
26, 1997, by and between COMFORCE Operating, Inc. and NatWest Capital
Markets Limited, as Initial Purchaser (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.10 Exchange Offer and Registration Rights Agreement, dated as of November
26, 1997, by and between the Company and NatWest Capital Markets
Limited, as Initial Purchaser (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.11 Warrant Agreement dated November 26, 1997 by and between the Company and
C.E. Unterberg, Towbin, L.P. (included in the initial filing of this
Registration Statement with the Commission on January 15, 1998).
10.12 Warrant Agreement dated November 26, 1997 by and between the Company and
The Bank of New York, as Warrant Agent (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.13 Unit Agreement dated November 26, 1997 by and between the Company and
NatWest Capital Markets Limited (included as an exhibit to the
Registration Statement on Form S-4 of the Company filed with the
Commission on December 24, 1997 and incorporated herein by reference).
10.14 Pledge Agreement by and between the Company and The Bank of New York, as
Collateral Agent (included as an exhibit to the Registration Statement
on Form S-4 of the Company filed with the Commission on December 24,
1997 and incorporated herein by reference).
10.15 Employment Agreement dated December 1, 1997 between the Company and
Michael Ferrentino (included as an exhibit to the Registration Statement
on Form S-4 of the Company filed with the Commission on December 24,
1997 and incorporated herein by reference).
10.16 Employment Agreement dated December 1, 1997 between the Company and
Christopher Franco (included as an exhibit to the Registration Statement
on Form S-4 of the Company filed with the Commission on December 24,
1997 and incorporated herein by reference).
10.17 Employment Agreement dated December 1, 1997 between the Company and
James L. Paterek (included as an exhibit to the Registration Statement
on Form S-4 of the Company filed with the Commission on December 24,
1997 and incorporated herein by reference).
21.1 List of Subsidiaries (included as an exhibit to the Registration
Statement on Form S-4 of the Company filed with the Commission on
December 24, 1997 and incorporated herein by reference).
23.1 Consent of Doepken Keevican & Weiss Professional Corporation (included
in the opinion filed as Exhibit 5.1 to this Registration Statement).*
23.2 Consent of Coopers & Lybrand L.L.P.
23.3 Consent of Arthur Andersen LLP.
23.4 Consent of KPMG Peat Marwick LLP.
II-4
<PAGE>
24.1 Powers of Attorney (included on signature page).*
- - ----------
* Previously filed.
(b) Financial Statement Schedules.
None.
II-5
<PAGE>
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 Lake Success, State of New York, on March 23, 1998.
COMFORCE Corporation
(Registrant)
By: /s/ Christopher P. Franco
----------------------------
Christopher P. Franco,
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/James L. Paterek* Chairman March 23, 1998
----------------------------
James L. Paterek
/s/Christopher P. Franco Chief Executive Officer,
---------------------------- Secretary and Director March 23, 1998
Christopher P. Franco
/s/Michael Ferrentino* President and
---------------------------- Director March 23, 1998
Michael Ferrentino
/s/Paul Grillo* Chief Financial Officer
---------------------------- (Principal Financial
Paul Grillo Officer) March 23, 1998
/s/Andrew Reiben* Vice President of Finance and
---------------------------- Chief Accounting Officer
Andrew Reiben (Principal Accounting Officer) March 22, 1998
/s/Richard Barber* Director March 22, 1998
----------------------------
Richard Barber
/s/Keith Goldberg* Director March 23, 1998
----------------------------
Keith Goldberg
/s/ Glen Miller* Director March 23, 1998
----------------------------
Glen Miller
/s/Christopher P. Franco
----------------------------
By: Christopher P. Franco
As attorney-in-fact
</TABLE>
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
COMFORCE Corporation on Form S-3 (File No. 333-60403) of our report dated
January 30, 1997, except as to Note 20 for which the date is March 21, 1997, on
our audits of the consolidated financial statements and financial statement
schedules of COMFORCE Corporation as of December 31, 1996 and 1995 and for the
years ended December 31, 1996, 1995 and 1994, which report is included in the
Annual Report on Form 10-K.
/s/ Coopers & Lybrand L.L.P.
COOPERS & LYBRAND L.L.P.
Melville, New York
March 5, 1998
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated January 24, 1997,
incorporated by reference in COMFORCE Corporation's Form 10-K for the year ended
December 31, 1996, and to all references to our Firm included in this
registration statement.
/s/ Arthur Andersen LLP
Seattle, Washington
March 5, 1998
Exhibit 23.4
KPMG Peat Marwick LLP
The Board of Directors
Uniforce Services, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
KPMG PEAT MARWICK LLP
Jericho, New York
March 5, 1998
