Filed with the Securities and Exchange Commission on August 20, 1999.
Registration No. 333-69099
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST-EFFECTIVE AMENDMENT NO. 1
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
XCEED INC.
(Exact name of registrant as specified in its charter)
488 Madison Avenue, New York, New York 10022
(212) 419-1200
(Address and telephone number of registrant's principal executive offices)
Delaware 7379 13-3006788
(State or other jurisdiction (Standard Industrial (IRS Employer
of incorporation) Classification Code) I.D. Number)
Werner Haase, Chief Executive Officer
Xceed Inc.
488 Madison Avenue, New York, New York 10022
(212) 419-1200
(Name, address and telephone number of agent for service)
Copies of all Richard J. Blumberg, Esq.
communications to: McLaughlin & Stern, LLP
260 Madison Avenue
New York, New York 10016
(212) 448-1100
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to section 8(a), may
determine.
Approximate date of commencement of proposed sale to the public: from
time to time after the effective date of this Registration Statement depending
on market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [__]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
<PAGE>
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. [ X] 333-69099
<TABLE>
Calculation of Registration Fee
<CAPTION>
Title of each class Proposed Proposed maximum
of securities to be Amount to be maximum offering aggregate offering Amount of
registered registered price per unit price registration fee
<S> <C> <C> <C> <C>
Common Stock par 298,965 shares $7.78 $2,325,948.00 $686.15 (1)
value
$.01 per share
<FN>
(1) Estimated for purposes of this filing pursuant to Rule 457(c) at
$7.78 per share based upon the average of the closing bid and asked prices of
$7.75 and $7.81215, respectively, on December 14, 1998.
</FN>
</TABLE>
<PAGE>
PROSPECTUS
XCEED INC.
298,965 Shares of Common Stock, Par Value $.01 per Share.
This Prospectus relates to 298,965 shares of Common Stock of
Xceed Inc. (the "Company"), par value $.01 per share (the "Shares"), which may
be offered from time to time by the Selling Shareholders. See "Selling
Shareholders." This Prospectus is now being amended because one of the Selling
Shareholders has assigned a portion of its warrants to a third party who intends
to sell the shares underlying the warrants. This Prospectus does not relate to
the sale or issuance by the Company of any securities. Any Securities which are
offered will be offered for the account of the Selling Shareholders, who will
acquire the securities upon the exercise of warrants or who presently own
restricted securities which the Company has agreed to register. The Company will
receive the proceeds from the exercise of warrants payable by the Selling
Shareholders upon the exercise of their warrants. However, the Company will not
receive any proceeds from the sale of the Securities by the Selling
Shareholders. The Company has been advised by the Selling Shareholders that
there are no underwriting arrangements with respect to the sale of the Shares,
that the Shares will be sold by the Selling Shareholders from time to time on
the NASDAQ SmallCap Market at the then prevailing price and in private
transactions at negotiated prices and that usual and customary brokerage fees,
if any, will be paid by the Selling Shareholders in connection therewith.
The Company's Common Stock is traded on the NASDAQ National
Market under the symbol "XCED." The closing bid quotation for the Common Stock
on August 19, 1999 was $16.937.
----------------------
AN INVESTMENT IN THESE SECURITIES INVOLVES A
HIGH DEGREE OF RISK. YOU ARE URGED TO CAREFULLY READ
THE RISK FACTORS APPEARING ON PAGE 10 HEREIN.
----------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION, NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Amended Prospectus is August 17, 1999.
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WHERE YOU CAN FIND MORE INFORMATION
We are subject to the reporting requirements of the Securities
Exchange Act of 1934 and in accordance therewith files reports and information
with the Securities and Exchange Commission (the "Commission"). Such reports may
be inspected at the public reference facilities at the Commission at Judicial
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the following
regional offices of the Commission: Suite 1400, 500 West Madison Street,
Chicago, Illinois 60661-2511; Seven World Trade Center, 13th Floor, New York, NY
10048; Suite 500, 5757 Wilshire Boulevard, Los Angeles, California 90036-3648.
Copies of such material may be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549, at prescribed dates.
-----------------
We have continued and will continue to furnish our security
holders with annual reports containing audited financial statements at the end
of each fiscal year. In addition, we may, from time to time, issue unaudited
interim reports and financial statements.
We have filed with the Commission a Registration Statement on
Form S-3 (the "Registration Statement") under the Securities Act of 1933
relating to the securities offered hereby. This Prospectus is filed as part of
the Registration Statement and does not contain all of the information set forth
in the Registration Statement, certain parts of which have been omitted in
accordance with the rules and regulations of the Commission. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
For further information with respect to the Company and the securities offered
hereby, reference is made to the Registration Statement, including the exhibits
filed as a part thereof and other documents incorporated therein by reference.
Copies of the Registration Statement and the exhibits thereto may be inspected
and copied, at prescribed rates, at the public reference facilities maintained
by the Commission at the addresses set forth above.
FORWARD-LOOKING STATEMENTS
All statements other than statements of historical fact
included in this Prospectus regarding our financial position, business strategy
and the plans and objectives of our management of our future operations, are
forward-looking statements. When used in this Prospectus, words such as
"anticipate," "believe," "estimate," "expect," "intend" and similar expressions,
as they relate to us or our management, identify forward-looking statements.
Such forward-looking statements are based on the beliefs of our management, as
well as assumptions made by and information currently available to our
management. Actual results could differ materially from those contemplated by
the forward-looking statements as a result of certain factors such as those
disclosed under "Risk Factors," including but not limited to, competitive
factors and pricing pressures, loss of major customers, technological change or
difficulties, product development risks, commercialization and trade
difficulties and general economic conditions. Such statements reflect our
current views with respect to future events and are subject to these and other
risks, uncertainties and assumptions relating to our operations, results of
operations, growth strategy and
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liquidity. All subsequent written and oral forward-looking statements
attributable to us or persons acting on our behalf are expressly qualified in
their entirety by this paragraph.
PROSPECTUS SUMMARY
We set forth certain summary information which does not
purport to be complete and is qualified in its entirety by reference to the more
detailed information and financial statements appearing elsewhere in this
Prospectus or in documents incorporated by reference. We urge you to read this
Prospectus in its entirety.
THE COMPANY
We were originally incorporated under the name Trilling
Resources, Ltd. We changed our name to Trilling Medical Technologies, Inc. in
September 1987 and subsequently changed our name to Water-Jel Technologies, Inc.
in July 1991. On February 20, 1998, shareholders approved a name change to Xceed
Inc. and also approved a change in our state of incorporation from New York to
Delaware. Our executive offices are located at 488 Madison Avenue, New York, NY
10022 and our telephone number is (212) 753-5511.
From the inception of the Company until 1996, we were
primarily engaged in the development, manufacture and marketing of emergency
first aid products for industry and on a limited basis for the consumer
marketplace.
In July 1996, we acquired all of the outstanding stock of
Journeycraft, Inc., a company engaged through its Xceed Performance Group
division ("The Performance Group") in providing services to corporations in the
field of performance improvement services, Internet-based performance
improvement programs and corporate communications and through the Journeycraft
Travel Management division in providing travel management to corporate clients.
We also acquired all of the outstanding stock of TheraCom Integrated Medical
Communications, Inc. ("TheraCom"), which is engaged in training and
communications in the health care industry and provides patient education in the
area of women's health care and various aspects of prescription drugs.
During fiscal 1998, our management decided on a new strategy
designed to permit us to evolve as a fully integrated marketing and
communications company with Internet and interactive services at the core. We
decided to acquire companies which would be compatible with and complementary to
our existing operations, specifically The Performance Group and TheraCom, as
well as with each other, thus affording us the opportunity to participate in the
rapidly expanding Internet and interactive business sector.
The first of these acquisitions occurred just prior to the
end of the Company's fiscal year, August 31, 1998, when we acquired Reset, Inc.
("Reset"). On September 9, 1998, we acquired Mercury Seven, Inc. ("Mercury
Seven"), and subsequently on September 14, 1998, we acquired Zabit & Associates,
Inc. ("Zabit & Associates"). All of these acquisitions were by way of a merger.
Zabit & Associates was merged into the Company, and Reset and Mercury Seven were
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<PAGE>
merged into newly created subsidiaries. Subsequently the operations of these
companies were fully integrated into our existing operation.
As presently constituted, the Company has two subsidiaries,
Journeycraft (consisting of The Performance Group and Journeycorp divisions) and
TheraCom. In addition, the Company has now integrated its Zabit & Associates,
Reset and Mercury Seven divisions. Water-Jel continues to operate as a separate
division. Set forth below is a description of each of the subsidiaries and
divisions.
Journeycraft Subsidiary - The Performance Group Division
The Performance Group offers a full-service approach to its
corporate clients for the establishment of specially designed performance
improvement programs. This full-service approach consists of identifying the
client's business objectives and budget parameters, as well as analyzing the
demographics of the program's participants to arrive at the optimal type and mix
of awards. As part of its services, The Performance Group offers a specially
designed Internet technology, "Maestro," to communicate the business objectives
and contest rules to participants as well as to maintain the excitement and
enthusiasm for the program's objectives throughout the life of a program, which
can range from three months to one year. Ongoing communication to the program
participants of their ranking in the program and feed-back from the participants
to management are the key factors by which a program sponsor achieves possible
results and, ultimately, a measurable return on investment.
We believe that Maestro has the potential to significantly
increase the Company's market share of performance improvement services;
however, there can be no assurance that Maestro will serve to attract additional
clients. In addition, competitors may adopt similar type programs. See "Risk
Factors."
The Performance Group derives its revenues from service fees
from clients for designing, executing and monitoring performance improvement
programs and fees from Maestro, as well as from mark-ups on the merchandise
and/or services provided as awards.
The Performance Group markets its services through direct
contacts by its sales representatives with corporate sales, marketing and human
resource executives. For the fiscal year ended August 31, 1998 ("fiscal 1998")
the division had revenues of approximately $35,206,000, accounting for
approximately 60% of our total revenues.
Two clients of The Performance Group accounted for
approximately 60% of the division's total revenues: Pfizer Pharmaceutical
accounted for 45%, and MCI accounted for 15%. A loss of any one of these
customers or a reduction in fees paid by any one of these customers could have a
material effect on The Performance Group's revenues in the future. See "Risk
Factors." The Performance Group is concentrating on building a wider client
base, but there can be no assurance that these efforts will be successful. See
"Risk Factors." We believe that the recently acquired companies may be able to
introduce The Performance Group services to their respective corporate clients,
which could possibly result in an expansion of our client base.
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TheraCom Subsidiary
The TheraCom subsidiary is a medical communications agency. It
offers continuing educational and training programs to doctors, pharmacists,
nurses and other health care professionals. TheraCom's major clients are
pharmaceutical companies, hospitals and managed care organizations which sponsor
such programs. TheraCom provides all of the necessary services to organize
medical seminars including agenda preparation, procurement of faculty to
lecture, publicity and travel and meeting place arrangements.
TheraCom has also expanded into providing health care
education beyond the traditional channels. TheraCom has prepared, in conjunction
with medical professionals, programs for patients in such areas as menopause,
compliance with drug regimens, and psycho-social aspects of medicine.
TheraCom's current clients include Pfizer, Inc., Merck and
Co., SmithKline Beecham, Schering-Plough Corp. and Novartis Pharmaceutical Corp.
For fiscal 1998, TheraCom had revenues of $7,063,085. Pfizer, Inc. accounted for
more than 85% of those revenues. A loss of Pfizer, Inc. could have a material
effect on our future revenues. See "Risk Factors."
Journeycraft Subsidiary - Journeycorp Division
The Journeycorp division provides comprehensive travel
services primarily for business travel by corporate clients. Travel services
include trip planning, reservations, ticketing, and other incidental services.
In addition, the division acts as a consultant regarding corporate travel policy
and travel budgeting. For these purposes, the division has created a management
system which analyzes a corporation's historical travel expenses data in order
to develop a definitive corporate travel policy and to enable the client to
budget on an ongoing basis. The system also captures travel expense data and
provides the client with a program to plan, account for and control travel and
entertainment expenses. Like The Performance Group division, Journeycorp uses
Internet technology and software to facilitate direct booking through the
Internet, to access current data via e-mail and to quickly create travel expense
reports and analyses.
Journeycorp derives its revenues primarily from commissions
from suppliers and fees from customers generated by travel bookings. In
addition, a portion of its revenues are derived from management or consulting
fees charged to certain selected accounts. At the present time, the airlines are
shifting away from paying travel agents fees, and as a result, this division is
reorienting its customer relationships towards fee-based travel management.
However, there can be no assurance that this reorientation will be successful.
See "Risk Factors."
Journeycorp markets its services through direct contacts by
its sales representative with clients, targeted direct mailings, and
participation in trade shows. In fiscal 1998, Journeycorp had revenues of
$10,988,000, accounting for approximately 18.6% of our total revenues.
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Water-Jel Division
The Water-Jel First Aid division manufactures and markets a
proprietary line of first aid products for burns and a line of generic creams
and ointments. The proprietary line of first aid products for burns consists of
fire blankets, burn dressings and topical creams which are marketed to the
industrial as well as, on a limited basis, the consumer marketplaces. The
division's generic creams and ointment product line consists of hydrocortisone
cream, triple antibiotic ointment, first aid cream, antiseptic gel and a hand
and body lotion which are marketed under the WJ brand. The division also
provides private label packing of its creams and ointment products to some of
its customers. For the fiscal year ended August 31, 1998, the Water-Jel
division's revenues accounted for approximately 10% of the Company's total
revenues.
Reset Division
On August 29, 1998, we acquired Reset, Inc., a privately held
company, by way of a merger. The consideration for the transaction was the
issuance of "restricted" Common Stock having a market value of $6,250,000 in
exchange for all of the issued and outstanding stock of Reset owned by its three
principals. Reset has now been integrated into our operations.
Reset was originally established in 1996 and is engaged in
creating Internet-based business solutions for corporate clients through
Internet consulting, interactive marketing strategies and e-commerce
development. At the present time, Reset derives 70% of its revenues by providing
these services to the entertainment industry. As a result of the Reset
acquisition, our current clients include, among others, Home Box Office, MCA,
Inc., New Line Cinema, Warner Bros. Online, Consolidated Edison, Inc., and The
Wall Street Journal.
Mercury Seven Division
On September 9, 1998 we completed the acquisition of Mercury
Seven, Inc. ("Mercury Seven"), a privately held company, by way of merger. We
paid a total consideration consisting of 1,073,333 shares of "restricted" Common
Stock having a market value of $8,050,000 and a cash payment of $1,500,000.
Mercury Seven was established in late 1996. The company is
engaged in creating Internet-based business solutions for corporate clients
through Internet consulting, interactive marketing strategies and e-commerce
development. As a result of the acquisition, current clients include, among
others, Spree.com, WorldNow/Gannaway, AnotherUniverse.com, Ericsson, Men's
Health, the New York Rangers, and Madison Square Garden.
Mercury Seven is also the publisher and creator of
ChannelSeven.com, an online network for Internet professionals worldwide. The
network incorporates cross-marketing navigational techniques and centralized
rich media advertising management to connect Internet professionals with
valuable resources and services. In addition to the online network, ChannelSeven
provides its core audience with printed publications, special industry events, a
speaker's bureau and a subscription-based e-mail newsletter. ChannelSeven
derives its revenues from advertising and
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sponsorships. The present advertisers and sponsors include, among others, Intel,
Microsoft, DoubleClick, Ericsson and Cyberlabs, Inc.
Zabit & Associates Division
On September 14, 1998 the Company completed a Plan of Merger
with Zabit & Associates, Inc. ("Zabit & Associates"), a privately held company,
which plan provided for Zabit & Associates to merge into the Company. We paid a
total consideration which consisted of the issuance of 2,258,724 shares of
"restricted" Common Stock and the issuance of four notes totaling 6,730,208. Two
of the notes for $4.8 million were paid on March 15, 1999, and the other two
notes aggregating $1,930,208 are due on or before September 14, 2002. All of the
notes bear interest. In separate transactions, we purchased for $2 million all
of the issued and outstanding stock of Water Street Design, Inc., a company
engaged in design and production and owned by the principals of Zabit, and we
also purchased the trade name and trademark of Zabit for $3.2 million in cash.
Zabit & Associates was established in 1993. Since its
formation, the company has been engaged in advising organizations, primarily
publicly held companies, in developing strategic communication solutions in
connection with the dissemination of information to employees, shareholders,
customers and the general public. At the current time approximately sixty (60%)
percent of the division's revenues are derived from work performed in connection
with the dissemination of information to employees regarding human resource
programs, including compensation plans, 401(k) programs, health programs, stock
option plans and other employee-related programs. The remaining forty (40%)
percent of the division's revenues are derived from services for general
employee communication, marketing communication and public relations services.
Currently, the division maintains an ongoing client consulting
relationship with Aetna Life Insurance, Pitney Bowes, Dell Computer, McKesson
Corp., Transamerica Corp., Oracle, and Fireman's Fund. Each of these clients has
paid fees to Zabit & Associates in amounts exceeding $200,000 for services. In
addition, Zabit & Associates has other ongoing clients such as Kaiser
Permanente, Inc., Promus and Indiana Power and Light. Fireman's Fund presently
accounts for more than fifteen (15%) percent of Zabit & Associates' total
revenues. To date, Zabit & Associates has also generated fees of less than
$200,000 from clients who include Starbucks, Applied Materials, United Airlines,
Sears, Bechtel and Shell/Texaco.
Additionally, and as part of the Zabit transaction, the
Company entered into an employment agreement with William Zabit, the principal
owner of Zabit, making him President of Xceed. His employment agreement is for a
period of four years and provides for an annual salary of $400,000, with the
potential for bonuses based upon our performance and profitability.
The mergers of Reset, Mercury Seven and Zabit & Associates
have been accounted for by the purchase method of accounting. As a result of
these transactions, our future financial statements will reflect goodwill and
other intangibles of approximately $41 million.
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OTHER RECENT DEVELOPMENTS
As part of our new objectives to operate as an integrated
marketing and communications company, we also entered into an employment
agreement with Scott Mednick, who assumed the position of Chairman of the Board
of Directors and Chief Strategic Officer of the Company. Mr. Werner Haase
remains as Co-Chairman and Chief Executive Officer. Mr. Mednick has also assumed
the responsibilities of Chief Strategic Officer of the Company.
Mr. Mednick was the founder and past chairman and chief
executive officer of THINK New Ideas, Inc. ("THINK"). Under Mr. Mednick's
direction, THINK was named as one of the top interactive agencies of the year
(1995) by both Adweek and the Advertising Club of New York. Mr. Mednick enjoys a
reputation as a highly respected marketing strategist and graphic designer.
Mr. Mednick's employment agreement is for a period of four
years at an annual salary of $350,000 per year, together with bonuses based on
the Company's performance and profitability. In addition, Mr. Mednick received a
signing bonus of $960,000 payable in twelve monthly installments and options to
purchase 1,000,000 shares of the Company's Common Stock at an exercise price of
$6.00 per share. However, of the 1,000,000 shares, 500,000 may only be sold in
increments of 100,000 shares when the market price of the Common Stock attains
certain price levels, ranging from $12.00 a share to $24.00 a share. The
foregoing restrictions are for a period of four years from the date of the
employment agreement.
On November 19, 1998, Mr. Wolf Boehme joined the Company as
its Chief Operations Officer. Prior to joining the Company since 1986, Mr.
Boehme served as operations controller for Bloomberg Financial Markets.
On June 11, 1999, we completed a private placement of 976,562
shares of our Common Stock to twelve accredited investors and received gross
proceeds of $10 million. Pursuant to the terms of the securities purchase
agreements, the purchasers were granted limited "piggyback" rights entitling
them to have their shares included in a registration statement filed by us. In
addition, the purchasers were also granted demand registration rights. The
proceeds from the private placement will be used for strategic acquisitions and
general working capital purposes.
SELECTED FINANCIAL DATA
The selected financial data presented below for the Company's
statements of operations for the years ended August 31, 1998, 1997 and 1996 and
the balance sheet data at August 31, 1998 and 1997 are derived from the
Company's financial statements which have been audited by Holtz Rubenstein &
Co., LLP, independent public accountants, and which are incorporated by
reference. The statement of operations data for the years ended August 31, 1995
and 1994 and the balance sheet data at August 31, 1996, 1995 and 1994 are
derived from audited financial statements of the Company which are not included
in this Registration Statement. The statement of operations data for the nine
months ended May 31, 1999 and 1998 and the balance sheet data at May 31, 1999
are derived from unaudited financial statements which are incorporated by
reference.
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<TABLE>
<CAPTION>
Nine Months
Ended May 31, Year Ended August 31,
----------------- --------------------------------------------------------------
1999 1998 1998 1997 1996 1995 1994
---- ---- ---- ---- ---- ---- ----
(unaudited) (in thousands, except per share amounts)
----------- ----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income Statement
Data:
Net Revenues $55,590 $44,348 $59,198 $62,885 $54,864 $43,515 $41,333
Operating income
(loss) $(3,167) $2,017 $1,600 $3,924 $1,219 $2,770 $(302)
Net income (loss) $(2,329) $1,289 $1,550 $1,877 $632 $2,131 $(1,353)
Net income (loss)
per common
share
-Basic $(0.16) $0.18 $0.20 $0.27 $0.09 $0.30 $(0.20)
-Diluted $(0.16) $0.16 $0.18 $0.26 $0.09 $0.30 $(0.20)
Weighted average
number of shares
outstanding (1)
-Basic 14,466,202 14,466,202 7,755,795 7,023,770 7,001,295 6,999,180 6,738,327
-Diluted 14,466,202 14,466,202 8,607,636 7,339,625 7,394,012 7,079,388 6,790,310
Balance Sheet
Data:
Working capital $25,746 $17,333 $10,042 $7,964 $5,199 $3,854
Total assets $89,128 $34,716 $18,800 $17,383 $17,475 $13,143
Long-term debt $5,069 -0- $52 $91 $130 $18
Cash Dividends -0- -0- -0- -0- -0- -0-
<FN>
- ---------------------------
(1) Net income per common share and weighted average number of shares
outstanding data for periods prior to December 31, 1997 have been retroactively
restated to reflect computation under Financial Accounting Standards Board
Statement No. 128 "Earnings Per Share."
</FN>
</TABLE>
THE OFFERING
Common Stock - 298,875 shares of Common Stock consisting of
98,875 shares of restricted stock owned by four Selling
Shareholders and 200,000 shares underlying 200,000
warrants held by three Selling Shareholders. This
Post-Effective Amendment relates to the inclusion of an
additional selling shareholder. One hundred thousand
warrants permit the holders thereof to purchase one
share of Common Stock at an exercise price of $2.00 per
share and the other 100,000 warrants permit the
purchase of one share of Common Stock at $2.19 per
share.
All expenses relating to the registration of these
securities, estimated at $11,500, have been borne by
the Company.
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Use of Proceeds - We will not receive any proceeds from the
sale of the securities. However, we will receive
approximately $419,000, assuming those Sellers elect to
exercise all of their warrants.
RISK FACTORS
In evaluating our business, prospective investors should
carefully consider the following risks in addition to the other information
contained in this Prospectus. Any of the following risks could materially
impact our business, operating results and financial condition and result in a
substantial loss of your investment.
We Are Faced with Competition
Our Internet and interactive operations provide services in a
highly competitive market. We compete with local, national and global web
consultancy, web development and interactive companies as well as national and
global advertising and communications companies which have begun to develop or
acquire these capabilities. Some of our competitors have longer operating
histories, longer client relationships and greater financial and technological
resources. There can be no assurance that existing or future competitors will
not develop superior Internet technologies, develop greater expertise in
interactive marketing strategies or take smarter e-commerce solutions to market,
including pricing advantages, all of which could have a material adverse effect
on our financial condition and operating results.
The Performance Group division offers performance improvement
and communications services to corporate clients in a highly competitive
marketplace. Well-established companies such as Maritz, Inc., Carlson Marketing
Group, Inc. and B.I. Performance Group, Inc. have greater name recognition and a
much broader customer base and generate revenues far in excess of The
Performance Group. In addition, The Performance Group competes with numerous
smaller incentive marketing companies and consultants, and, at times, has to
compete with corporations' in-house staff which designs and executes performance
improvement and communications programs. Only recently, The Performance Group
introduced "Maestro," a proprietary Inter- and intranet software product
applying net-based technology to the performance improvement sector. While The
Performance Group believes that this technology is unique, competitors may
develop their own software and compete against The Performance Group in the
market.
The Zabit & Associates division competes with several
companies, including Andersen Consulting, Towers and Perrin, William M. Mercer &
Company and Watson Wyatt Worldwide. These competitors for the most part have
longer operating histories, longer client relationships, greater financial
resources and greater technological resources than Zabit & Associates. While we
believe we can effectively compete and have acquired a significant client base,
there can be no assurances that the Zabit & Associates operations will be able
to keep the present client base or attract new clients. In the event the Zabit &
Associates operations cannot compete effectively, this could have a material
effect on the financial condition and operating results of the Company.
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The TheraCom subsidiary, which provides integrated training,
communications and data to the health care industry, competes with many
consultants who provide similar services to the health care industry. TheraCom
competes on the basis of price and quality of its services. To date, TheraCom
has only one significant customer, Pfizer, Inc. TheraCom is attempting to
broaden its client base, and no assurances can be made that it will be able to
attract additional clients or effectively compete with other consultants.
The Journeycorp division, which provides comprehensive travel
services for business travel, faces intense competition, since there are more
than 30,000 travel agents in the United States which are capable of providing
business travel services. In addition, the ongoing consolidation in the travel
industry has created mega-agencies, national and global in scope, which make it
even more difficult to compete.
The Water-Jel division manufactures and markets a line of
first aid products for burns and a line of generic creams and ointments. There
are other companies, such as Spenco Medical Corporation, C.R. Bard, Inc. and
Johnson & Johnson, which manufacture similar first aid products for burns. These
companies have been established for a longer period of time, are better known
and have financial resources and facilities which are greater than Water-Jel's.
While some segments of the burn first aid market are dominated by large
manufacturers, other segments of the market are characterized by intense
competition among smaller manufacturers such as Water-Jel.
Market and Technological Changes Affect Journeycorp and The Performance Group
Several of the markets in which our products and services are
offered are undergoing technological advances and other changes. In particular,
and with respect to Journeycorp, the airlines have lowered the commissions they
are willing to pay travel agents. As a result, the corporate travel business is
changing from commission paid by suppliers to fee-based services in which
corporate travel service providers such as Journeycorp are paid fixed fees by
their clients in lieu of commissions based upon the volume of travel services
purchased. These developments have tended to reduce the revenues available to
travel service providers such as Journeycorp. Also, the corporate travel
business is experiencing technological changes such as "ticketless" air travel
and Internet-based reservation systems which tends to reduce the need for
outside travel agents. These changes are further accelerating the trend for
travel service businesses to act as consultants working for fixed fees rather
than commission-based booking agencies. With respect to The Performance Group, a
significant amount of its business is based upon the development of innovative
technologies for delivering incentive programs using the Internet. The Internet
is characterized by rapid technological advances which may render The
Performance Group's technologies, specifically Maestro, out-of-date or obsolete.
There is no assurance that The Performance Group will be in a position to adapt
to such technological advances and market changes.
We Are Confronted with Risks of Integration
In light of the recent acquisitions of Reset, Mercury Seven
and Zabit & Associates, our success will depend in part on our ability to manage
the combined operations of those companies and to integrate the operations of
these companies along with its other subsidiaries and
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divisions into a single organizational structure. There can be no assurance that
we will be able to effectively integrate the operations of its subsidiaries and
divisions into a single organizational structure. Integration of these
operations could also place additional pressures on our management as well as on
our key technical resources. The failure to successfully manage this
integration could have an adverse material effect on us. Finally, while it is
management's belief that the newly acquired entities can market these services
to our existing clients as well as market our established businesses to existing
clients of the newly acquired companies, there can be no assurance that the
cross-marketing will be achieved or sustained. Additionally, there can be no
assurance that we will continue to be able to retain those clients which we
acquired in connection with the recent acquisitions.
We May Need to Raise Additional Capital
The acquisitions of Mercury Seven and Zabit & Associates
required the Company at closing to pay cash as part of the consideration: $1.5
million in the case of Mercury Seven and $5.2 million in the case of Zabit &
Associates and Water Street Design, Inc. The Zabit & Associates transaction also
required the Company to pay an additional $4.8 million in March 1999 and $1.9
million is due on or before September 14, 2002, together with interest. In light
of the recently concluded private placement we believe that our present cash
position and cash flow from operations will be sufficient to fund our operations
and provide for further expansion. However, we may require additional financing
to sustain further growth and expand our business. In such an event, there can
be no assurance that we will be able to successfully negotiate or obtain
additional financing or that such financing will be on terms favorable or
acceptable to the Company. The failure to secure necessary financing could have
a material adverse impact on our future viability.
We Depend on the Internet's Developing Market
Our ability to derive revenues by providing marketing
solutions through the use of the Internet will depend in part upon a robust
industry and the infrastructure for providing Internet access and the management
of Internet traffic. While the Internet has made significant improvements in
both accessing and managing traffic, there can be no assurance that as more
demand is made upon the Internet technological improvements will keep pace.
Additionally, critical issues concerning the use of the Internet, including
security, reliability, cost, ease of use and access and quality of service still
remain to be resolved, and as such the Internet may eventually prove not to be a
commercially viable marketplace. This could result in impacting our future
operating results.
We May Not Be Able to Respond to Rapid Technological Changes
The market for such interactive marketing services as the
Company now provides is characterized by rapid changes in technology. As such it
will require us to maintain our technical competence to effectively compete with
other integrated marketing service providers as well as traditional advertising
agencies. There can be no assurance that we will be successful in providing
competitive solutions to our clients. Failure to do so could result in the loss
of existing
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customers or the inability to attract and retain new customers, and as a result,
this could have a material adverse effect on our business, financial condition
and operating results.
We Face Project Profit Exposures; We Need to Develop Recurring Revenue
Zabit & Associates, Mercury Seven and Reset have normally
generated a substantial majority of their revenue through project fees on fixed
fee-for-service basis. As such, we assume greater financial risk on fixed-price
type contracts than on either time- and material- or cost-reimbursable contract.
Failure to anticipate technical problems, estimate costs accurately or control
costs during performance of a fixed-price contract may reduce our profits or
cause a loss. Although the majority of the projects typically last six to twelve
weeks and therefore each individual short-term project creates less exposure
than a long-term fixed-price contract, in the event we do not accurately
anticipate the progress of a number of significant revenue-generating projects,
it could have a material adverse effect on our operating results. Our future
success will depend in part on our ability to convert these project-by-project
relationships to continuing relationships characterized by recurring revenue.
There can be no assurance that our efforts will be successful.
We Currently Depend on a Few Customers
At the present time, approximately 85% of TheraCom's services
are supplied to one customer, Pfizer, Inc. ("Pfizer"). Of the revenues from The
Performance Group's business and for the fiscal year ended August 31, 1998, 60%
was derived from two clients, Pfizer and MCI Communications, Inc., which
represent 45% of revenues and 15% of The Performance Group's revenues,
respectively. The loss of either of these clients or a reduction in the amount
of business generated from these two clients could materially adversely affect
the Company's future business and prospects. While both TheraCom and The
Performance Group are attempting to increase their client bases, there can be no
assurance that such efforts will be successful.
We Generally Have No Contracts with Customers
As a general rule, we do not have written agreements with most
of our customers or clients, or such agreements are terminable at will upon
relatively short notice. Unexpected or other termination of relations with
significant customers could adversely affect our business and prospects. See
"Competition" and "Dependence on Few Customers."
We Need Market Acceptance for Company's Products and Services
We believe that our ability to market our products and
services requires educating potential users as to their benefits and
applications. This is particularly true for the Internet technologies developed
by The Performance Group and the first aid product line for burns manufactured
by the Water-Jel division. No assurance can be given that we will be able to
successfully increase the market for our products and services.
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<PAGE>
We Have Limited Proprietary Protection
The Performance Group
The Performance Group division has developed a proprietary
software, "Maestro," which is designed to enable clients to communicate business
objectives, track and report sales and deliver awards over the Internet. The
clients who elect to utilize Maestro do not receive the software, but rather are
only granted a license to utilize the software, which is at all times maintained
at the Company's offices. The clients feed information to the "Maestro" program
over the Internet by using a sign-on identification and password. The clients
can thereafter gain access with the proper password to Maestro to enable them to
evaluate the progress of their awards program. We do not hold any patents or
copyrights to the Maestro software. The actual software is retained under
stringent controls at the Company's offices and only four people within the
Company and under confidentiality agreements have access to the software and
code. Should the Company's Maestro software and other proprietary technology be
disclosed publicly, the business and prospects of The Performance Group could be
adversely affected. Likewise, and if there was public disclosure of the software
and codes, the Company at the present time may have no or very limited legal
recourse, unless the Company could demonstrate that the codes and software were
illegally converted or taken or that the clients violated their licence
agreements with the Company.
Water-Jel
The design of Water-Jel's Fire Blanket products was protected
by United States and foreign patents which were assigned to Water-Jel in 1979
and 1985. The United States patent which protected a substantial portion of
Water-Jel's technology expired in 1992. New competitors are free to enter
Water-Jel's markets. Water-Jel may be materially and adversely affected if
Water-Jel should fail to establish a secure market base before the entrance of
significant new competitors now that the original United States patent has
expired. See "Competition." Further, in January 1995, Water-Jel was granted a
patent for a synthetic fabric containing a therapeutic, non-toxic, water-soluble
and bio-degradable gel used in Water-Jel's Burn Dressing product line. This
patent expires in April 2014. However, no assurance can be given that this
patent will prove enforceable or prevent others from marketing products similar
to, or which perform comparable functions. The Water-Jel burn dressing products
covered by this patent account for approximately thirty percent (30%) of
Water-Jel's revenues.
Our Water-Jel Products Are Regulated by the Food and Drug Administration
Water-Jel's emergency first aid products and manufacturing
practices are subject to regulation by the Food and Drug Administration ("FDA")
as well as by similar foreign authorities. The Water-Jel Fire Blanket and Burn
Dressing are medical devices subject to regulation by the FDA. Water-Jel's
generic creams and ointment, Burn Jel and UnBurn line are classified as
over-the-counter drugs. FDA requirements include adherence to good manufacturing
practices, proper labeling, and either premarket notification under section
510(k) of the Medical Device Amendments to the Federal Food, Drug and Cosmetics
Act or premarket approval (depending on the category of product) prior to
commercial marketing in the United States. Water-Jel is also
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<PAGE>
subject to periodic inspections by the FDA relating to good manufacturing
practices. The FDA has the authority to require a suspension of manufacturing
operations if it finds serious deficiencies. Additional regulation may, in the
future, be imposed by Federal, state or local authorities, particularly the FDA.
Any new products will also be subject to review of various regulatory
authorities in virtually every foreign country in which such products are
offered for sale. To the extent that any new products which Water-Jel may
develop are deemed to be new pharmaceutical or new medical devices, such
products will require FDA and other regulatory clearance and/or approvals prior
to marketing. Such governmental regulation may prevent or substantially delay
the marketing of any products developed by Water-Jel, cause Water-Jel to
undertake costly procedures, and furnish a competitive advantage to the more
substantially capitalized companies which compete with Water-Jel. There can be
no assurance that Water-Jel will have the requisite financial resources to
complete the regulatory approval process with respect to any new products which
may be developed.
We Face Potential Product Liability
To date, there have been no material claims on threatened
claims against us by users of our products, particularly the Water-Jel products,
based on a failure to perform as specified. In the event that any claims for
substantial amounts were to be asserted against us, they could have a materially
adverse effect on our financial condition and our ability to distribute our
products. We maintain $11,000,000 of general product liability insurance. There
is no assurance that this amount will be sufficient to cover potential claims or
that the present amount of insurance can be maintained at the present level of
cost.
Dependence on Management
We are significantly dependent upon the continued
availability of Scott Mednick, Chairman, Werner Haase, Co-Chairman and CEO, and
William Zabit, President. Mr. Mednick and Mr. Zabit are under employment
agreements with the Company until December 2002. Mr. Haase's employment
agreement expires in May, 2001. The loss or unavailability of Mr. Mednick, Mr.
Haase or Mr. Zabit to the Company for an extended period of time would have a
material adverse effect on our business operations and prospects. To the extent
that Mr. Mednick's, Mr. Haase's, or Mr. Zabit's services would be unavailable to
us for any reason, we would be required to procure other personnel to manage our
operations. There can be no assurance that we would be able to locate or employ
such qualified personnel on acceptable terms. At the present time, we do not
have "key man" life insurance covering any of our principal officers.
Mr. Haase and Mr. Zabit Hold Considerable Voting Power
Werner Haase, Co-Chairman and CEO of the Company, and his wife
Nurit Kahane, who is a Senior Vice President of the Company, own together a
total of 2,319,374 shares of the Company's Common Stock, and Mr. Zabit owns
1,048,675 shares, which together represent approximately 19% of the total shares
outstanding. Under Delaware law, a simple majority of stockholders may
constitute a quorum for a meeting of stockholders and may effect any action
requiring a vote of stockholders. There are no requirements for supermajority
votes on any matter,
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nor is there any cumulative voting for directors. Therefore, Mr. Haase, his wife
and Mr. Zabit, as a group, will be in a position to substantially influence the
election of directors and the conduct of the Company's affairs.
Future Sales Could Adversely Affect the Price of Our Common Stock
As of the current time, there are presently 17,300,000 shares
of our Common Stock outstanding. Approximately 6,863,932 of the outstanding
shares are deemed to be "restricted securities" ("Restricted Securities") within
the meaning of Rule 144 promulgated under the Securities Act of 1933 (the "Act")
by virtue of the fact that they are held by "affiliates" of the Company. Of the
Restricted Securities, approximately 2,319,375 are currently eligible for public
sale in accordance with Rule 144. Sales made pursuant to Rule 144 could have an
adverse effect on the price of the Common Stock. Likewise, and given the fact
the purchasers of the 976,562 Shares sold by us in the recent private placement
have "piggyback" and demand registration rights, any sale of those securities
under a registration statement could impact the market price of our Common
Stock.
We Have Not Paid Any Dividends
We have not paid any cash dividends on our Common Stock since
its inception and, by reason of its present financial status and its
contemplated financial requirements, does not anticipate paying any cash
dividends in the foreseeable future. It is anticipated that earnings, if any,
which may be generated from operations will be used to finance the our
operations.
We Must Achieve Year 2000 Compliance
We have taken remedial steps to ensure that our computer
systems are compliant with the Year 2000 ("Y2K"). In this regard, The
Performance Group has purchased for internal operations new personal computers
(PCs) which have been tested by the National Software Testing Laboratories
(NSTL) and have been certified as Y2K compliant. With respect to client support,
the division has upgraded its software at no extra cost and is compliant with
Y2K. With respect to the Company's internal software affecting accounting
systems and telecommunications, we estimate that we will be required to purchase
additional equipment for $15,000 in order to achieve Y2K compliance in this
area. With respect to the Journeycorp division reservation systems, the division
utilizes PC hardware provided by the Sabre Group, the American Airlines
reservations system. American Airlines has given the Company assurances that
their reservations system is now Y2K compliant. In the event American Airlines
fails to achieve actual compliance, this could result in material adverse
consequences to Journeycorp's operations and would affect our ability to provide
reservations and ticketing for its clients.
USE OF PROCEEDS
Assuming those Selling Shareholders who hold warrants (three
in number) exercise all of their warrants, the total proceeds to the Company
would amount to $419,000. Expenses of the registration, including legal fees,
accounting fees, Blue Sky fees and miscellaneous expenses are
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estimated at $11,500, which would leave net proceeds to the Company from the
exercise of the options of $407,500. Any net proceeds will be added to the
working capital of the Company. The Company will not receive any proceeds from
the sale of the 298,965 shares of Common Stock by the Selling Shareholders.
SELLING SHAREHOLDERS
The 298,875 shares of Common Stock being offered hereby are
held by six selling shareholders, one of whom, Target Capital Corp., is being
added through this Post-Effective Amendment to our Registration Statement and
Prospectus. The Selling Shareholders listed below may choose not to sell all of
their shares of Common Stock owned by them in this offering. The chart below
sets forth the number of shares to be offered for sale by each such Selling
Shareholder, which information was furnished to the Company by each such Selling
Shareholder. The chart also sets forth the amount and percentage of Common Stock
to be owned by each after completion of the offering, assuming the sale of all
such shares owned by such Selling Shareholder. Unless otherwise indicated, none
of the Selling Shareholders listed below has held any position with the Company
in the last three years. The Selling Shareholders have not entered into any
arrangements regarding the sale of their shares and have informed the Company
that any shares sold would be sold in normal brokerage transactions.
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<TABLE>
<CAPTION>
Securities Owned Securities Securities to Be
Name before Offering To Be Sold Owned after Offering
- ---- --------------- ---------- --------------------
<S> <C> <C> <C>
Adrian Oradean (1) 337,500 21,775 315,725
James Altucher (1) 456,250 29,435 426,815
Michel Maitenaz (1) 456,250 29,435 426,815
JDW Partners, Inc. (2) 18,230 18,230 -0-
Whale Securities, Inc. (3) 100,000 (4) 50,000 -0-
Target Capital Corp.(5) 50,000 50,000 -0-
Jason H. Pollack (6) 100,000 100,000 -0-
<FN>
- --------------
(1) Messrs. Oradean, Altucher and Maitenaz were the former owners of
Reset. In connection with the merger agreement, the Company agreed to register a
sufficient number of shares of the Company's Common Stock received in the merger
by the parties to yield them, as a group, proceeds of $625,000. Messrs. Oradean,
Altucher and Maitenaz also entered into three-year employment agreements with
the company. The three individuals are responsible for the day-to-day operation
of the Reset subsidiary. The balance of the shares of the Company's Common Stock
held by these individuals are "restricted" shares and may only be sold pursuant
to a registration statement or an exemption from registration.
(2) JDW Partners, Inc. ("JDW") was responsible for the introduction of
Reset to the Company. Pursuant to a formal agreement between the Company and JDW
and authorized by the Board of Directors, the Company agreed to pay JDW a fee of
one and three-quarters percent (.0175%) of the total consideration paid by the
Company to the owners of Reset ($6,250,000). By agreement, the fee was paid by
the issuance of 18,230 "restricted" shares.
(3) On July 1, 1997, the Company entered into a consulting agreement
with Whale Securities Co., LP ("Whale"), a registered broker-dealer and member
of the NASD. Pursuant to the agreement, Whale is to render consulting services
to the Company for a period of two years. In consideration of the services to be
performed by Whale, the Company agreed to grant Whale 100,000 warrants entitling
Whale to purchase 100,000 shares of the Common Stock at an exercise price of
$2.00 per share. The exercise price was based on the closing bid price as of the
date of grant. The warrants expire on June 30, 2001. The warrants vest at the
rate of 4,165 warrants at the end of each month for 23 months during the term of
the agreement and at the rate of 4,205 at the end of the 24th month. All of the
warrants have vested; however, Whale has elected to exercise only 50,000
warrants and assign the remaining 50,000 to Target Capital Corp.
(4) Whale makes a market in the Company's Common Stock and as such and
from time to time may own the Company's Common Stock in its trading account.
Whale has advised the Company that its only investment in the Company consists
of the 100,000 warrants which are held in Whale's investment account.
(5) Target Capital Corp. is owned by Mr. Yitz Grossman, who was the
former Chairman of Water-Jel Technologies, Inc. Mr. Grossman resigned his
position in July, 1996.
(6) On February 11, 1998, the Company entered into a Merger and
Acquisition Consulting Agreement with Jason Pollack ("Pollack"). Pursuant to the
terms of the Agreement, Pollack is to render services for one year to the
Company to locate potential acquisitions and implement mergers and such
acquisitions. The agreement provides that Pollack is to receive 100,000 warrants
for his services entitling Pollack to purchase 100,000 shares at an exercise
price of $2.19 per share based on the closing bid price on
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the date of grant. The warrants vest at the end of each month at the rate of
8,337 warrants. At the current time, only 83,337 warrants have vested.
</FN>
</TABLE>
PLAN OF DISTRIBUTION
The shares are being offered for the respective accounts of
the Selling Shareholders. The Company will not receive any of the proceeds from
the sale of securities. The Company will, however, receive the proceeds of the
exercise prices of the warrants of $2.00 and $2.19 respectively for gross
proceeds of $419,000 assuming the Selling Shareholders exercise all of their
warrants.
The sale for the shares by the Selling Shareholders may be
effected from time to time in transactions on the NASDAQ National Market, at
fixed prices or negotiated prices relating to the then prevailing market price.
The Selling Shareholders may effect such transaction by selling the Securities
to or through registered broker-dealers, and such broker-dealers may receive
compensation in the form of discounts or commissions from the Selling
Shareholders and for the purchases of the Securities for which such
broker-dealers may act as agent or to whom they may sell as principal or both.
The Selling Shareholders and any broker-dealers who act in
connection with the Sale of the securities hereunder may be deemed to be
"underwriters" within the meaning of Section 2 (11) or the Securities Act and
any commissions received by them and any profit received by them on any sale of
the Securities as principal might be deemed to represent underwriting discounts
or commissions under the Securities Act.
LEGAL MATTERS
Certain legal matters in connection with this offering are
being passed upon for the Company by McLaughlin & Stern, LLP, 260 Madison
Avenue, New York, New York 10016.
EXPERTS
The financial statements of Xceed Inc. for the fiscal years
ended August 31, 1998, 1997 and 1996, incorporated by reference from the
Company's annual report on Form 10-K, have been examined by Holtz Rubenstein &
Co. LLP, independent certified public accountants, as stated in their report,
and are included in reliance upon the report of such firm and upon their
authority as experts on accounting and auditing.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Securities and Exchange Commission allows us to
"incorporate by reference" information into this Prospectus, which means that we
can disclose information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference becomes part of this Prospectus and information we
later file with the Securities and Exchange Commission will automatically update
and supersede this
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<PAGE>
information. We incorporate by reference the documents listed below that we have
previously filed with the Securities and Exchange Commission.
1. The Company's Annual report on Form 10-K for the fiscal year ended August
31, 1998 filed with the Commission on December 9, 1998.
2. Quarterly Report on Form 10-Q for quarter ended February 28, 1999.
3. Quarterly Report on Form 10-Q for quarter ending May 31, 1999.
4. The Company's Current Report on Form 8-K dated January 28, 1998.
5. The Company's Current Report on Form 8-K, together with exhibits, filed
with the Commission on March 25, 1999.
6. The Company's Current Report on Form 8 -K, together with Exhibits, filed
with the Commission on June 24, 1999.
7. The section entitled "Description of Securities" in the Company's
Registration Statement on Form S-1 (Registration No. 33-23910) declared
effective on October 31, 1988.
In addition, all documents filed by us pursuant to Section
13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to the termination of the
offering of the Shares shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
These include periodic reports on Form 10-K, quarterly reports on Form 10-K,
reports on Form 8-K and proxy statements. Any statement modified in a document
incorporated by reference herein shall be deemed to be contained herein or
superseded for purposes hereof to the extent that a statement contained herein
(or in any subsequently filed document which is also incorporated by reference
herein) modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed to constitute a part hereof except as so modified
or superseded.
A copy of the documents incorporated by reference in this
Prospectus (not including exhibits to the incorporated documents unless the
documents specifically incorporate the exhibits by reference) will be furnished
without charge to each person, including any beneficial owner to whom this
prospectus is delivered, on the written or oral request of such person. All such
requests should be addressed to: Lynn Ball, Investor Relations, Xceed Inc., 59
Maiden Lane, New York, NY 10038.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's Certificate of Incorporation permits the
Company to indemnify directors, officers, employees and agents to the fullest
extent permissible under the Delaware General Corporation Law.
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<PAGE>
Insofar as indemnification for liabilities arising under
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to any charter provision, by-law contract
arrangements statute, or otherwise, the Company has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is therefore,
unenforceable.
21
<PAGE>
- ------------------------------------------ -----------------------------------
No dealer, salesman or any other person
has been authorized to give any
information or to make any representations
other than those contained in this
Prospectus in connection with this
offering and, if given or made, such
information or representations must not be
relied upon as having been authorized by
the Company or the Underwriters. This
Prospectus does not constitute an offer to
sell, or the solicitation of an offer to
buy, any of the securities offered hereby
in any jurisdiction to any person to whom 298,875 Shares
it is unlawful to make such offer or of Common Stock
solicitation in such jurisdiction. Neither ($.01 Par Value)
the delivery of this Prospectus nor any
sale made hereunder shall, under any
circumstances, create any implication that
the information contained herein is
correct as of any time subsequent to the Xceed Inc.
date hereof or that there has been no
change in the affairs of the Company since
such date.
--------------------------
TABLE OF CONTENTS
PAGE __________________________
WHERE YOU CAN FIND MORE INFORMATION......3
FORWARD-LOOKING STATEMENTS...............4
PROSPECTUS SUMMARY.......................4 PROSPECTUS
SELECTED FINANCIAL DATA..................9
THE OFFERING............................11 __________________________
RISK FACTORS............................11
USE OF PROCEEDS.........................19
SELLING SHAREHOLDERS....................19
PLAN OF DISTRIBUTION....................21
LEGAL MATTERS...........................21
EXPERTS.................................21
INCORPORATION OF CERTAIN INFORMATION
BY REFERENCE.......................21
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES........................23
--------------------------
August 17, 1999
- ------------------------------------------ -----------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
The expenses in connection with the issuance and distribution
of the securities being registered hereunder are estimate as follows:
Blue Sky qualification fees and expenses..............$ 2,000
Legal fees and expenses..................................5,000
Accountant's fees and expenses...........................3,000
Miscellaneous........................................ 1,500
Total $11,500
ITEM 15. Indemnification of Directors and Officers
Pursuant to Section 145 of the General Corporation Law of
Delaware (the "Delaware Corporation Law"), Article 7 of the Company's
Certificate of Incorporation, a copy of which is filed as Exhibit 3(c) to this
Registration Statement, provides that the Company shall indemnify, to the
fullest extent permitted by Section 145 of the Delaware Corporation Law, as
amended from time to time, each person that such section grants the Corporation
the power to indemnify. Section 145 of the Delaware Corporation Law permits the
Company to indemnify any person in connection with the defense or settlement of
any threatened, pending or completed legal proceeding (other than a legal
proceeding by or in the right of the Company) by reason of the fact that he is
or was a director or officer of the Company or is or was a director or officer
of the Company serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership or other enterprise
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred in connection with the defense or
settlement of such legal proceeding if he acted in good faith and in a manner
that he reasonably believes to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action of proceeding, if he had no
reasonable cause to believe that his conduct was unlawful. It the legal
proceeding, however, is by or in the right of the Company, the director or
officer may be indemnified by the Company against expense (including attorneys'
fees) actually and reasonably incurred in connection with the defense or
settlement of such legal proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the Company
and except that he may not be indemnified in respect of any claim, issue or
matter as to which he shall have been adjudged to be liable to the Company
unless a court determines otherwise.
Pursuant to Section 102(b)(7) of the Delaware Corporation Law,
Article 7 of the Certificate of Incorporation of the Company, a copy of which is
filed as Exhibit 3(c) to this Registration Statement, provides that no director
of the Company shall be personally liable to the Company or its stockholders for
monetary damages for any breach of his fiduciary duty as a director; provided,
however, that such clause shall not apply to any liability of a director (i) for
breach of his duty of loyalty to the Company or its stockholders, (ii) for acts
or omissions that are not in good faith
II-1
<PAGE>
or involve intentional misconduct or a knowing violation of the law, (iii) under
Section 174 of the Delaware Corporation Law, or (iv) for any transaction from
which the director derived an improper personal benefit. The aforesaid provision
also eliminates the liability of any stockholder for managerial acts or
omissions, pursuant to Section 350 of the Delaware Corporation Law or any other
provision of Delaware law, to the same extent that such liability is limited for
a director.
The Company maintains directors and officers liability
insurance.
ITEM 16. Exhibits
(2)(b) Certificate of Merger (1)
(2)(c) Merger Agreement (1)
(2)(d) Agreement and Plan of Merger and Reorganization between X-ceed, Inc
and Reset, Inc. (2)
(2)(e) Agreement and Plan of Merger by and among X-ceed, Inc., X-ceed
Merger, Inc., Mercury Seven, Inc. and the Shareholders of Mercury
Seven, Inc. (3)
(2)(f) Certificate of Merger of Mercury Seven, Inc. into X-ceed Merger,
Inc. (3)
(2)(g) Agreement and Plan of Merger among X-ceed, Inc., Zabit & Associates,
Inc. and the Shareholders Named Therein (3)
(2)(h) Certificate of Merger of Zabit & Associates, Inc. and the
Shareholders Named Therein (3)
(3)(a) Certificate of Incorporation (Water-Jel), previous Amendments (3)(6)
(7). (4)
(3)(b) By-laws of the Registrant (4)
(3)(c) Certificate of Incorporation of X-ceed, Inc. (5)
(4)(a) Form of Common Stock (6)
(4)(b) Form of Class A Warrant and Class B Warrants (7)
(4)(c) Form of Warrant Agreement (7)
(5) Opinion of McLaughlin & Stern, LLP*
(10)(d) Copy of Non-Qualified Stock Option Plan (4)
(10)(e) Copy of 1990 Stock Option Plan (8)
(10)(f) Copy of 1995 Stock Option Plan (9)
(10)(g) Agreement and Plan of Merger dated as of May 17, 1996, by and among
Water-Jel and Journeycraft, Inc. et al. (10)
(10)(h) Employment Agreement, dated as of July 1, 1996, by and among
the Company and Nurit Kahane Haase (10)
(10)(i) Employment Agreement, dated as of December 11, 1996, by and
among the Company and Werner Haase (10)
(10)(j) Stock Purchase Agreement among X-ceed, Inc., William Zabit and Joyce
Weslowski (3)
(10)(k) Purchase Agreement by and among X-ceed, Inc., William Zabit
and Joyce Weslowski (3)
(10)(l) Employment Agreement of Scott Mednick (11)
(10)(m) Employment Agreement of William Zabit (11)
(10)(n) Copy of 1998 Stock Option Plan (12)
(10)(o) Stock Purchase Agreement dated April 30, 1999 (13)
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<PAGE>
(23)(a) Consent of Holtz Rubenstein & Co., LLP dated December 17, 1998*
(23)(b) Consent of McLaughlin & Stern, LLP (included in Exhibit 5)*
- -----------------------------
* Filed herewith
(1) Incorporated by reference from the Company's Registration Statement
on Form 8-K, dated February 27, 1998 and filed with the Commission on February
27,1998.
(2) Incorporated by reference from the Company's Report on Form 8-K
dated August 13, 1998 and filed with the Commission on August 14, 1998.
(3) Incorporated by reference from the Company's Report on Form 8-K
dated September 17, 1998 and filed with the Commission on September 17, 1998.
(4) Incorporated by reference from Water-Jel's Registration Statement
on Form S-18, File No. 2-90512-NY, initially filed with the Commission on
January 8, 1998.
(5) Incorporated by reference from the Company's Report on Form 8-K,
dated February 27, 1998 and filed with the Commission on February 28,1998.
(6) Incorporated by reference from the Company's Registration Statement
on Form S-18 filed with the Commission on April 12, 1989, Commission File No.
2-90512-NY.
(7) Incorporated by reference from the Company's Registration Statement
on Form S-1, File No. 33-23910, initially filed with the Commission on August
23, 1998.
(8) Incorporated by reference from the Company's Annual Report on From
10-K for the fiscal year ended August 31, 1990.
(9) Incorporated by reference from the Company's Registration Statement
on Form S-8, File No. 333-01685, initially filed with the Commission on March
13, 1996.
(10) Incorporated by reference from the Company's Report on Form 8-K
filed with the Commission on July 12, 1996.
(11) Incorporated by reference from the Company's Registration
Statement on Form S-3, Amendment No. 5 filed with the Commission on November 19,
1998, Registration No. 333-57173.
(12) Incorporated by reference from the Company's Definitive Proxy
Statement filed with the Commission on January 8, 1998.
(13) Incorporated by reference from the Company's Form 8-K filed with
the Commission on June 24, 1999.
ITEM 17. Undertakings
The undersigned Company 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) of the Act and (ii) to reflect
in the prospectus any facts or events arising after the effective date of
II-3
<PAGE>
the Registration Statement (or the most recent post-effective amendment thereof)
which individually or in the aggregate represents a fundamental change in the
information in the Registration Statement and (iii) to include any material
information with respect to the plan of distribution not previously disclosed in
the Registration Statement or any material change to such information in the
Registration Statement; provided, however, that if the information required to
be included in a post-effective amendment is included in periodic reports filed
or furnished to the Commission by the Company pursuant to section 13 or Section
15(d) of the Exchange Act, then the Company shall not be required to file a
post-effective amendment.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, 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 of 1933, each filing of Company's annual report pursuant to
Section 13(a) or 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 the Registration Statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) In the event acceleration is requested by the Company and
insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of 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 Act and will be governed by the final adjudication of
such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the Registrant, Xceed Inc., has duly caused this Registration Statement on
Form S-3 to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York on August 17, 1999.
XCEED INC.
By: /s/ Werner G. Haase
Werner G. Haase
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned
hereby constitutes and appoints Werner G. Haase his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all pre-effective and post-effective amendments to the Registration
Statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and
agent, or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
/s/ Scott Mednick Chairman, Chief 8/17/99
Scott Mednick Strategic Officer
/s/ Werner G. Haase Chief Executive 8/17/99
Werner G. Haase Officer, Co-Chairman
/s/ William Zabit President 8/17/99
William Zabit
/s/ Norman Doctoroff Director 8/17/99
Norman Doctoroff
/s/ John Bermingham Director 8/17/99
John Bermingham
Exhibit 5
MCLAUGHLIN & STERN, LLP
260 MADISON AVENUE
NEW YORK, NEW YORK 10016
(212) 448-1100
FAX (212) 448-0066
RICHARD J. BLUMBERG MILLBROOK OFFICE
Direct Phone: (212) 448-6205 Franklin Avenue
P.O. Box 1369
Millbrook, New York 12545
(914) 677-5700
Fax (914) 677-0097
December 17, 1998
United States Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Xceed Inc.
Gentlepersons:
We have acted as counsel to Xceed Inc. in connection with
the Registration Statement on Form S-3 (the "Registration Statement") filed with
the Securities and Exchange Commission by Xceed Inc. (the "Company").
We hereby advise you that we have examined originals or copies
certified to our satisfaction of the Company's Certificate of Incorporation,
minutes of the meetings of the Board of Directors and Shareholders and such
other documents and instruments as we deemed necessary, and we have made such
examination of law as we have deemed appropriate as a basis for the opinions
hereinafter expressed.
Based on the foregoing, we are of the opinion that:
1. The Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware.
2. The 98,875 Shares of Common Stock offered by four selling
shareholders constituting a portion of the offering being so registered have
been duly authorized and validly issued, are fully paid and non-assessable.
3. With respect to the 200,000 shares of the Common Stock
which are subject to issuance upon exercise of warrants by two selling
shareholders (also constituting a portion of this offering), said shares, upon
payment of the consideration required to exercise such warrants, will be validly
issued, fully paid and non-assessable.
We hereby consent to the reference to this Firm in this
Registration Statement and to the filing of this opinion as an Exhibit to the
Registration Statement.
Very truly yours,
/s/ McLaughlin & Stern, LLP
McLAUGHLIN & STERN, LLP
Exhibit 23(a)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference into Post-Effective
Amendment No. 1 to the Registration Statement on Form S-3 of our report dated
November 13, 1998 with respect to the consolidated financial statements of Xceed
Inc. included in the Company's Annual Report on Form 10-K for the year ended
August 31, 1998, and to the reference to us under the heading "Experts" in the
Prospectus which is part of such Registration Statement.
/s/ Holtz Rubenstein & Co., LLP
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
August 18, 1999
Exhibit 23(b)
(included in Exhibit 5)
