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Registration No. 333-
As filed with the Securities and Exchange Commission on June 1, 2000.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------
TEAMSTAFF, INC.
(Exact name of Registrant as specified in charter)
New Jersey 22-1899798
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
300 Atrium Drive
Somerset, New Jersey 08873
(732) 748-1700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-----------------
Donald W. Kappauf
President and Chief Executive Officer
300 Atrium Drive
Somerset, New Jersey 08873
(732) 748-1700
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
With copies to:
Brian C. Daughney, Esq.
Goldstein & DiGioia, LLP
369 Lexington Avenue
New York, New York 10017
Telephone (212) 599-3322
Facsimile (212) 557-0295
Approximate date of commencement of proposed sale to the public: As soon
as practicable after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plan, 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]
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If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
-------------------.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. [ ]
---------------------
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed
Propose Maximum
Maximum Offering Amount of
Title of Each Class of Securities Amount to be Offering Price Aggregate Registration
Being Registered Registered per Share(1) Price(1) Fee
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<S> <C> <C> <C> <C>
Common Stock, $.001 par
value(2)................... 8,545,344 $1.109375 $9,479,991 $2,502.72
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Common Stock, $.001 par
value(3)................... 450,000 $1.109375 $499,219 $131.79
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Total...................... 8,995,344 $ $2,634.51
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</TABLE>
(1) Estimated solely for the purpose of determining the registration fee,
based on a share price of $1.109375 the average of the closing bid and
asked prices as quoted by the Nasdaq SmallCap Market on May 26, 2000.
(2) Shares of Common Stock to be sold by certain Selling Security Holders.
(3) Shares of Common Stock issuable upon exercise of outstanding Common Stock
Purchase Warrants held by certain Selling Security Holders. Pursuant to
Rule 416, there are also being registered such additional number of
shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions of the Warrants.
---------------------------
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.
===============================================================================
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Subject to completion, __________, 2000
P R O S P E C T U S
8,995,344 Shares of Common Stock
TEAMSTAFF, INC.
We are registering for resale 8,545,344 shares of common stock, $.001 par
value of TeamStaff, Inc., which shares are presently issued and outstanding and
held by certain of our shareholders and an additional 450,000 shares of common
stock which we will issue upon the exercise of outstanding common stock purchase
warrants held by the holders of outstanding warrants.
Our Common Stock is traded in the over-the-counter market and is included
in the SmallCap Market of the Nasdaq Stock Market under the symbol "TSTF". On
May 26, 2000, the closing high and low prices for the Common Stock as reported
by Nasdaq were $1.1562 and $1.00, respectively.
We will not receive any proceeds from the sale of the shares by the
selling security holders.
The shares may be sold from time to time by the selling security holders,
or by their transferees. No underwriting arrangements have been entered into by
the selling security holders. The distribution of the shares by the selling
security holders may be effected in one or more transactions that may take place
on the over the counter market, including ordinary brokers transactions,
privately negotiated transactions or through sales to one or more dealers for
resale of the shares as principals, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. Usual and customary or specifically negotiated brokerage fees or
commissions may be paid by the selling security holders in connection with such
sales. The selling security holders and intermediaries through whom such shares
are sold may be deemed underwriters within the meaning of the Act, with respect
to the shares offered by them.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 11 TO READ ABOUT CERTAIN
FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF COMMON STOCK.
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 Prospectus is __________, 2000
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TABLE OF CONTENTS
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Page
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<S> <C>
AVAILABLE INFORMATION..........................................................................1
INCORPORATION BY REFERENCE.....................................................................1
PROSPECTUS SUMMARY.............................................................................3
THE OFFERING...................................................................................8
RISK FACTORS...................................................................................9
SELLING SECURITY HOLDERS......................................................................15
PLAN OF DISTRIBUTION..........................................................................17
REPORTS TO SHAREHOLDERS.......................................................................18
LEGAL MATTERS AND EXPERTS.....................................................................18
ADDITIONAL INFORMATION........................................................................18
FORWARD LOOKING STATEMENTS ...................................................................19
</TABLE>
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AVAILABLE INFORMATION
Our company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information filed by our company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the Commission: New York Regional Office, 7 World Trade Center, 13th
Floor, New York, New York 10048; and Chicago Regional Office, 500 West Madison
Street, Room 1400, Chicago, Illinois 60661. Copies of such material may be
obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintain an Internet site, http://www.sec.gov, that
contains reports, proxy and information statements and other information that we
file electronically with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by TeamStaff with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference,
except as superseded or modified herein:
1. Our Annual Report on Form 10-K for the fiscal year ended September
30, 1999, including information specifically incorporated by
reference into our Form 10-K from our definitive Proxy Statement.
2. A description of our common stock contained in our registration
statement on Form 8-A filed April 27, 1990.
3. Our Form 8-K filed on April 20, 200.
4. Our Form 10-Q for the quarter ended December 31, 1999.
5. Our Form 10-Q for the quarter ended March 31, 2000.
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of this offering shall be deemed to be incorporated by reference in this
Prospectus and shall be part hereof from the date of filing of such document.
All documents filed by the registrant after the date of filing the
initial registration statement on Form S-3 of which this prospectus forms a part
and prior to the effectiveness of such registration statement pursuant to
Section 13(a), 13(c), 14 and 15(d) of the Securities Exchange
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Act of 1934 shall be deemed to be incorporated by reference into this prospectus
and to be part hereof from the date of filing of such documents.
We will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any document described above (other than exhibits). Requests for such
copies should be directed to TeamStaff, Inc., 300 Atrium Drive, Somerset, New
Jersey 08873, telephone (732) 748-1700, attention Donald Kelly.
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PROSPECTUS SUMMARY
The following summary is intended to set forth certain pertinent facts
and highlights from material contained in the our company's annual report on
Form 10-K for the fiscal year ended September 30, 1999 (the "Form 10-K") and our
quarterly reports on Form 10-Q for the quarters ended December 31, 1999 and
March 31, 2000 (the "Forms 10-Q"), incorporated by reference into this
prospectus.
THE COMPANY
TeamStaff, Inc., formerly Digital Solutions, Inc., a New Jersey
corporation, was founded in 1969 as a payroll service company and has evolved
into a leading provider of human resource management services to a wide variety
of industries in 50 states. TeamStaff's wholly-owned subsidiaries include
TeamStaff Solutions, Inc., DSI Staff ConnXions-Northeast, DSI Staff
ConnXions-Southwest, TeamStaff Rx, Inc., TeamStaff I, Inc., TeamStaff II, Inc.,
TeamStaff III, Inc., TeamStaff IV, Inc., TeamStaff V, Inc., TeamStaff VI, Inc.,
TeamStaff Insurance, Inc., TeamStaff VII, Inc., TeamStaff VIII, Inc., and
TeamStaff IX, Inc.
Effective January 25, 1999, we acquired the ten entities operating under
the trade name, the TeamStaff Companies. In conjunction with the acquisition, we
changed our name from Digital Solutions, Inc., to TeamStaff, Inc. on February
10, 1999. In connection with the acquisition, we issued 8,233,334 shares of
common stock, which shares are being registered in this prospectus.
On April 8, 2000, pursuant to a definitive Asset Purchase Agreement,
dated April 7, 2000, we acquired to acquire substantially all of the assets of
the professional employer organization business of Outsource International,
Inc., which had operated under the tradename Synadyne. The assets were acquired
through one of our wholly-owned subsidiaries, of which Outsource had indirectly
held a 20% ownership interest. We subsequently purchased the 20% ownership
interest. We also acquired the tradename Synadyne as part of the transaction, as
well as all of the customer contracts of Synadyne's PEO business.
We currently provide three types of services related to the employee
leasing, temporary staffing and payroll service businesses: (1) professional
employer organization ("PEO") services, such as payroll processing, personnel
and administration, benefits administration, workers' compensation
administration and tax filing; (2) employer administrative services, such as
payroll processing and tax filing; and (3) contract staffing, or the placement
of temporary and permanent employees. We currently furnish PEO employees,
payroll and contract staffing services with over 20,000 work site employees,
1,500 staffing employees and processing for approximately 30,000 payroll service
employees and believes that it currently ranks, in terms of revenues and
worksite employees, as one of the top 10 PEOs in the United States. Our contract
staffing business mainly places temporary help in hospitals and clinics
throughout the United States through its Clearwater, Florida and Houston, Texas
offices. We have six regional offices located in Somerset, New Jersey; Houston
and El Paso, Texas; and Tampa, Delray Beach and Clearwater, Florida and
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nine sales service centers in New York, New York; El Paso and Houston, Texas;
Tampa, Orlando, Delray Beach and Clearwater, Florida; Atlanta, Georgia; and
Somerset, New Jersey.
Essentially, we provide services that function as the personnel
department for small to medium sized companies. We believe that by offering
services that relieve small and medium size businesses of the ever increasing
administrative burden of employee related record keeping, payroll processing,
benefits administration, employment of temporary and permanent specialized
employees and other human resource functions, we have positioned our company to
take advantage of a major growth opportunity during this decade and the next.
Recognizing the desire by many small businesses to be relieved of the
human resource administrative functions, we have formulated a strategy of
emphasizing PEO and "outsourcing" services. In PEO, a service provider becomes a
co-employer of the client company's employees and assigns these employees to the
client to perform their intended functions at the worksite.
Management has determined to emphasize our company's future growth on the
PEO and outsourcing industry. Our expansion program will focus on internal
growth through the cross marketing of our PEO services to our entire client base
and the acquisition of compatible businesses strategically situated in new areas
or with a client base serviceable from existing facilities. As part of our
effort to expand our PEO business, management has expanded the services of
TeamStaff Rx, Inc., our company's medical contract staffing subsidiary, to
include PEO, outsourcing and facilities management. While we continue to sell
stand-alone employer services, such as payroll and tax filing, we also will
emphasize the PEO component of our service offerings with a goal of becoming the
leading provider of PEO services in the United States. A major component of our
existing growth strategy is the acquisition of well-situated, independent PEO
companies whose business can be integrated into our company's operations.
However, there can be no assurance any such acquisition will be consummated.
Our company was organized under the laws of the State of New Jersey on
November 25, 1969 and maintains its executive offices at 300 Atrium Drive,
Somerset, New Jersey 08873 where our telephone number is (732) 748-1700.
OUR SERVICES
Professional Employer Organization (PEO)
Our company's core business, and the area management will continue to
emphasize, is our PEO services. When a client utilizes our services, the client
administratively transfers all or some of its employees to us and we in turn
provide them back to the client. Our company thereby becomes a co-employer and
is responsible for all human resource functions, including payroll, benefits
administration, tax reporting and personnel record keeping. The client still
manages the employees and determines salary and duties in the same fashion as
any employer. The client is, however, relieved of reporting and tax filing
requirements and other administrative tasks.
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Moreover, because of economies of scale, our company is able to negotiate
favorable terms on workers' compensation insurance, health benefits, retirement
programs, and other valuable services. The client company benefits because it
can then offer its employees the same or similar benefits as larger companies,
enabling it to successfully compete in recruiting highly qualified personnel, as
well as build the morale and loyalty of its staff.
As a PEO service provider, we can offer the following benefits to
employees:
COMPREHENSIVE MAJOR MEDICAL PLANS - Management believes that medical
insurance costs have forced small employers to reduce coverage provided to its
employees and to increase employee contributions. We are able to leverage our
large employee base and offer the employees assigned to their clients a variety
of health coverage plans from traditional indemnity plans to Health Maintenance
Organizations (HMO), Preferred Provider Organizations (PPO), or a Point of
Service Plan (POS).
DENTAL AND VISION COVERAGE - These types of benefits are generally beyond
the reach of most small groups. As a result of economies of scale available, a
client of our company can obtain these benefits for the assigned employees.
LIFE INSURANCE -- Affordable basic coverage is available.
SECTION 125 PREMIUM CONVERSION PLAN -- Employees can pay for benefits
with pre-tax earnings, reduce their taxable income and FICA payments, and
increase their take-home pay.
401(K) RETIREMENT PLANS -- Management believes that most small employers
do not provide any significant retirement benefits due to the administrative and
regulatory requirements associated with the establishment and maintenance of
retirement plans. The company enables small business owners to offer the
assigned employees retirement programs comparable to those of major
corporations. Such plans can be used to increase morale, productivity and
promote employee loyalty.
CREDIT UNION - Our company provides an opportunity for employees to
borrow money at lower interest than offered at most banks.
PAYROLL SERVICES -- Although ancillary to the PEO services, clients no
longer incur the expense of payroll processing either through in-house staff or
outside service. Our company's PEO services include all payroll and payroll tax
processing.
UNEMPLOYMENT COMPENSATION COST CONTROL - Our company provides an
unemployment compensation cost control program to aggressively manage
unemployment claims.
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HUMAN RESOURCES MANAGEMENT SERVICES - Our company can provide clients
with expertise in areas such as personnel policies and procedures, hiring and
firing, training, compensation and performance evaluation.
WORKERS' COMPENSATION PROGRAM - Our company has a national workers'
compensation policy which can provide our company with a significant advantage
in marketing its services, particularly in jurisdictions where workers'
compensation policies are difficult to obtain at reasonable costs. We also
provide our clients where applicable with independent safety analyses and risk
management services to reduce workers' injuries and claims.
Relieved of personnel administrative tasks, the client is able to focus
on its core business. The client is also offered a broader benefits package for
its assigned employees, a competitive rate in workers' compensation insurance,
and savings in time and paperwork previously required in connection with
personnel administration.
PAYROLL SERVICES
We were established as a payroll service firm in 1969, and continue to
provide basic payroll services to our clients. Historically, the payroll
division provided these services primarily to the construction industry and
currently 70% of our company's approximately 750 payroll service clients are in
the construction industry. Our company offers most, if not all, of what other
payroll services provide, including the preparation of checks, government
reports, W-2's (including magnetic tape filings), remote processing (via modem)
directly to the clients offices, and certified payrolls.
In addition, our company offers a wide array of tax reporting services
including timely deposit of taxes, impounding of tax payments, filing of
returns, distribution of quarterly and year-end statements and responding to
agency inquiries.
TEMPORARY STAFFING SERVICES
We provide temporary staffing services through two subsidiaries which
have, in the aggregate, more than 30 years of experience in placing permanent
and temporary employees with specialized skills and talents with regional,
national and international employers. Temporary staffing enables clients to
attain management and productivity goals by matching highly trained
professionals and technical personnel to specific project requirements.
TeamStaff focuses its temporary staffing services in two specific markets where
it places people on a temporary long term assignment, or on a permanent basis:
(1) radiologic technologist, diagnostic sonographers, cardiovascular
technologists, radiation therapist and other medical professionals with
hospitals, clinics and therapy centers throughout the 50 states and (2)
technical employees such as engineers, information systems specialists and
project managers primarily with Fortune 100 companies for specific projects.
Clients whose staffing requirements vary depending on the level of current
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We provide temporary staffing services through two subsidiaries which
have, in the aggregate, more than 30 years of experience in placing permanent
and temporary employees with specialized skills and talents with regional,
national and international employers. Temporary staffing enables clients to
attain management and productivity goals by matching highly trained
professionals and technical personnel to specific project requirements.
TeamStaff focuses its temporary staffing services in two specific markets where
it places people on a temporary long term assignment, or on a permanent basis:
(1) radiologic technologist, diagnostic sonographers, cardiovascular
technologists, radiation therapist and other medical professionals with
hospitals, clinics and therapy centers throughout the 50 states and (2)
technical employees such as engineers, information systems specialists and
project managers primarily with Fortune 100 companies for specific projects.
Clients whose staffing requirements vary depending on the level of current
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projects or business are able to secure the services of highly qualified
individuals on an interim basis.
Our company's temporary staffing services provide clients with the
ability to "rightsize"; that is, expand or reduce its workforce in response to
changing business conditions. Management believes that these services provide
numerous benefits to the client, such as saving the costs of salary and benefits
of a permanent employee whose services are not needed throughout the year. The
client also avoids the costs, uncertainty and delays associated with searches
for qualified interim employees. Our company also provides insurance bonding
where necessary and assumes all responsibility for payroll tax filing and
reporting functions, thereby saving the client administrative responsibility for
all payroll, workers' compensation, unemployment and medical benefits.
Management believes that its temporary staffing services provides an
employer with an increased pool of qualified applicants, since temporary
staffing employees have access to a wide array of benefits such as health and
life insurance, Section 125 premium conversion plans, and 401(k) retirement
plans. These benefits provide interim employees with the motivation of full-time
workers without additional benefit costs to the client. A client is also able to
temporarily rehire a retired employee for short-term or specialized projects
without jeopardizing their pension plan. We believe that we have attained the
position of being number one or two in the terms of gross revenues for firms
specializing in the placement of temporary medical imaging personnel.
THE SYNADYNE ACQUISITION
Under the terms of the Asset Purchase Agreement, we paid an aggregate
purchase price of $3,500,000. The agreement also provides for an additional
potential payment in one year of up to $1,250,000 provided that the former
clients of Outsource have at least 9,500 worksite employees as of March 31,
2001. In the event there are less than 9,500 employees, the amount of the
earnout will be reduced by a pre-determined formula.
Pursuant to the terms of the Asset Purchase Agreement, Outsource has
agreed to indemnify us up to the purchase price for claims for breaches of
representations and warranties, subject an initial deductible of $50,000.
In connection with the acquisition, we received an increase in our
present lending facility with FINOVA Capital Corporation in order to fund the
acquisition and necessary working capital. The facility is comprised of a three
year term loan in the principal amount of $4,000,000, with a five year
amortization and a balloon payment at the end of three years and an increase in
our revolving line of credit from $2.5 million to $3.5 million. The term loan
bears an interest rate of prime plus 3 percent and the revolving loan bears an
interest rate of prime plus 1 percent. The term loan may be prepaid at any time
without penalty. Annual success fees of $500,000 are earned as of each
anniversary date of the loan commencing as of April 2000.
RECENT EVENTS
On May 31, 2000, at a special meeting of our shareholders, the
shareholders reaffirmed their previous approval of a reverse split of our common
stock. On April 14, 2000, our Board of Directors set and approved a reverse
split at a level of one (1) new share for each existing 3.5 shares of
TeamStaff stock. The stock split will become effective June 2, 2000, and will
trade under the symbol TSTFD for approximately 20 days, after which it will
return to TSTF.
As previously disclosed in our reports filed with the SEC, in August 1998
a judgment was assessed against us for $315,000, plus interest. We appealed the
judgment to the Appellate Court and were notified on May 31, 2000 that we
lost our appeal. We are currently reviewing our options, including a further
appeal to the Texas Supreme Court. We do not anticipate that this charge will
have a significant impact on our earnings.
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THE OFFERING
<TABLE>
<CAPTION>
<S> <C>
Common Stock outstanding prior to
Offering(1)................................. 27,932,513
Shares being offered for
sale by selling security holders......... 8,545,344
Shares underlying warrants being
offered for sale by selling
security holders............................. 450,000
Common Stock outstanding after the
Offering ...................................... 28,382,513
Risk Factors ................................. This offering involves a high degree of risk. See "Risk Factors."
Use of Proceeds(2).......................... All of the proceeds of this offering will be paid to the respective
selling security holders and none of the proceeds will be received by
our company. We anticipate that proceeds received from exercise of
any warrants will be used for working capital purposes. See "Use of
Proceeds."
Nasdaq SmallCap
Market Symbol.......................... TSTF
</TABLE>
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(1) As of May 22, 2000. Does not include:
- Options to purchase 6,000,000 Shares reserved for issuance under
our 2000 Employee Stock Option Plan of which none are issued and
outstanding and options to purchase 155,900 Shares issued and
outstanding under our 1990 Employee Stock Option Plan, which
expired in April, 2000.
- Options to purchase 635,000 Shares issued and outstanding under
our 1990 Senior Management Plan, which expired in April, 2000.
- Options to purchase 107,500 Shares issued and outstanding under
our 1990 Non-Executive Director Plan, which expired in April,
2000. At our most recent annual meeting on April 13, 2000, our
stockholders approved our 2000 Non-Executive Director Stock
Option Plan, pursuant to which no options have been granted.
- Up to approximately 799,879 Shares reserved for issuance upon
exercise of outstanding warrants.
(2) We will receive approximately $579,007.50 in proceeds if all of the warrants
being registered in this prospectus are exercised.
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RISK FACTORS
An investment in the securities offered hereby involves a high degree of
risk. The following factors, in addition to those discussed elsewhere, should be
considered carefully in evaluating us and our business. An investment in the
securities is suitable only for those investors who can bear the risk of loss of
their entire investment.
WE HAVE GRANTED TO OUR LENDER A SECURITY INTEREST IN OUR ASSETS AND UPON
A DEFAULT THE LENDER MAY FORECLOSE ON OUR ASSETS.
We have granted security interests with respect to substantially all of
our assets to secure certain of our indebtedness. In the event we default on our
secured obligations, the secured creditor could declare our indebtedness to be
immediately due and payable and foreclose on the assets securing the defaulted
indebtedness. Moreover, to the extent that all of our assets continue to be
pledged to secure outstanding indebtedness, such assets will not be available to
secure additional indebtedness. Our loan agreement with our institutional lender
restricts our ability to incur additional indebtedness and may limit our ability
to obtain additional financing on terms favorable to us or at all.
WE MAY ACQUIRE ADDITIONAL COMPANIES WHICH MAY RESULT IN ADVERSE EFFECTS
ON OUR EARNINGS.
We may at times become involved in discussions with potential acquisition
candidates. Any acquisition that we may consummate may have an adverse effect on
our liquidity and earnings and may not be profitable to us. In the event that we
consummate an acquisition or obtain additional capital through the sale of debt
or equity to finance an acquisition, current shareholders may experience
dilution in their shareholder's equity.
SIGNIFICANT GROWTH THROUGH ACQUISITIONS MAY ADVERSELY AFFECT OUR
MANAGEMENT AND OPERATING SYSTEMS.
We completed two significant acquisition during the past eighteen months
and intend to continue to pursue a strategy of acquiring compatible businesses
in the future. Our growth is making significant demands on our management,
operations and resources, including working capital. If we are not able to
effectively manage our growth, our business and operations will be materially
harmed. To manage growth effectively, we will be required to continue to improve
our operational, financial and managerial systems, procedures and controls, hire
and train new employees while managing our current operations and employees.
Historically, our cash flow from operations has been insufficient to expand
operations and sufficient capital may not be available in the future.
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OUR PAYROLL BUSINESS MAY BE ADVERSELY AFFECTED IF THERE IS AN ECONOMIC
DOWNTURN IN THE CONSTRUCTION BUSINESS.
Although we have expanded our services to a number of industries, our
payroll service business continues to rely to a material extent on the
construction industry. During the last fiscal year, construction related
business accounted for approximately 70% of our total gross margin. Accordingly,
if there is a slowdown in construction activities, it may affect our revenues
and profitability. Management believes our reliance on the construction business
will continue to decline as our customer base expands and becomes more
diversified.
UNFAVORABLE INTERPRETATIONS OF GOVERNMENT LAWS MAY HARM OUR OPERATIONS.
Our operations are affected by many federal, state and local laws
relating to labor, tax, insurance and employment matters and the provision of
managed care services. Many of the laws related to the employment relationship
were enacted before the development of alternative employment arrangements, such
as those that we provide, and do not specifically address the obligations and
responsibilities of non-traditional employers. The unfavorable resolution of
unsettled interpretive issues concerning our relationship could have a material
adverse effect on our results of operations, financial condition and liquidity.
Uncertainties arising under the Internal Revenue Code of 1986 include, but are
not limited to, the qualified tax status and favorable tax status of certain
benefit plans we and other alternative employers provide. In addition, new laws
and regulations may be enacted with respect to our activities which may also
have a material adverse effect on the Company's business, financial condition,
results of operations and liquidity.
OUR FINANCIAL CONDITION MAY BE AFFECTED BY INCREASES IN HEALTH CARE AND
WORKERS' COMPENSATION INSURANCE COSTS.
Health care costs, insurance premiums and workers' compensation insurance
coverage comprise a significant part of our operating expenses. Accordingly, we
use managed care procedures in an attempt to control these costs. Changes in
health care and workers' compensation laws or regulations may result in an
increase in our costs and we may not be able to immediately incorporate such
increases into the fees charged to clients because of its existing contractual
arrangements with clients. As a result, any such increases in these costs could
have a material adverse effect on our financial condition, results of operations
and liquidity.
WE MAY NOT BE ABLE TO OBTAIN ALL OF THE LICENSES AND CERTIFICATIONS THAT
WE NEED TO OPERATE.
State and federal authorities extensively regulate the managed health
care industry and some of our arrangements relating to specialty managed care
services or the maintenance or operation
10
<PAGE> 16
of health care provider networks require us to satisfy operating, licensing or
certification requirements. Any further expansion of the range of specialty
managed care services that we offer is likely to require that we satisfy
additional licensing and regulatory requirements. If we are unable to obtain or
maintain all of the required licenses or certifications that we need, we could
experience material adverse effects on our results of operations, financial
condition and liquidity.
HEALTH CARE OR WORKERS' COMPENSATION REFORM COULD IMPOSE UNEXPECTED
BURDENS ON OUR ABILITY TO CONDUCT OUR BUSINESS.
Regulation in the health care and workers' compensation fields continues
to evolve, and we cannot predict what additional government regulations
affecting our business may be adopted in the future. Changes in any of these
laws or regulations may adversely impact the demand for our services, require
that we develop new or modified services to meet the demands of the marketplace,
or require that we modify the fees that we charge for our services. Any such
changes may adversely impact our competitiveness and our financial condition.
IF WE LOSE OUR QUALIFIED STATUS FOR CERTAIN TAX PURPOSES, OUR BUSINESS
WOULD BE ADVERSELY AFFECTED.
Several years ago, the Internal Revenue Service established an Employee
Leasing Market Segment Group for the purpose of identifying specific compliance
issues prevalent in certain segments of the PEO industry. One issue that arose
in the course of these audits is whether PEOs should be considered the employers
of worksite employees under Internal Revenue Code provisions applicable to
employee benefit plans, which would permit PEOs to offer benefit plans that
qualify for favorable tax treatment to worksite employees. If the IRS concludes
that PEOs are not employers of worksite employees for purposes of the Internal
Revenue Code, we would need to respond to the following adverse implications:
-- the tax qualified status of our 401(k) plan could be revoked and
our cafeteria plan may lose its favorable tax status;
-- worksite employees would not be able to continue to participate in
such plans or in other employee benefit plans;
-- we may no longer be able to assume the client company's federal
employment tax withholding obligations;
-- if such a conclusion were applied retroactively, then employees'
vested account balances would become taxable immediately, the
Company would lose its tax deduction to the extent contributions
were not vested, the plan trust would become a taxable trust and
penalties and additional taxes for prior periods could be
assessed.
In such a circumstance, we would face the risk of client dissatisfaction
as well as potential litigation, and our financial condition, results of
operations and liquidity could be materially adversely affected.
11
<PAGE> 17
WE MAY BE HELD LIABLE FOR THE ACTIONS OF OUR CLIENTS AND EMPLOYEES AND
THEREFORE INCUR UNFORESEEN LIABILITIES.
A number of legal issues with respect to the co-employment arrangements
among PEOs, their clients and worksite employees remain unresolved. These issues
include who bears the ultimate liability for violations of employment and
discrimination laws. As a result of our status as a co-employer, we may be
liable for violations of these or other laws despite contractual protections.
While our client service agreements generally provide that the client is to
indemnify us for any liability caused by the client's failure to comply with its
contractual obligations and the requirements imposed by law, we may not be able
to collect on such a contractual indemnification claim and may then be
responsible for satisfying such liabilities. In addition, worksite employees may
be deemed to be our agents, which could make us liable for their actions.
OUR STAFFING OF HEALTHCARE PROFESSIONALS EXPOSES US TO POTENTIAL
MALPRACTICE LIABILITY.
Through our TeamStaff Rx subsidiary, we engage in the business of
contract staffing of temporary and permanent healthcare professionals. The
placement of such employees increases our potential liability for negligence and
professional malpractice of those employees. Although TeamStaff is covered by
liability insurance which we deem reasonable under the circumstances, not all of
the potential liability we face will be fully covered by insurance. Any
significant adverse claim which is not covered by insurance may have a material
adverse effect on us.
WE MAY NOT BE FULLY COVERED BY THE INSURANCE WE PROCURE.
Although we carry liability insurance, the insurance we purchase may not
be sufficient to cover any judgments, settlements or costs relating to any
present or future claims, suits or complaints. In addition, sufficient insurance
may not be available to us in the future on satisfactory terms or at all. If the
insurance we carry is not sufficient to cover any judgments, settlements or
costs relating to any present or future claims, suits or complaints, our
business, financial condition, results of operations and liquidity could be
materially adversely affected.
OUR BUSINESS WILL SUFFER IF OUR SERVICES ARE NOT COMPETITIVE.
Each of the payroll, temporary employee placement and the employee
leasing industries are characterized by vigorous competition. Since we compete
with numerous entities that have greater resources than us in each of our
business lines, our business will suffer if we are not competitive in with
respect to each of the services we provide. We believe that our major
competitors with respect to its payroll and accounting services are Automatic
Data Processing, Inc., Ceridian Corp. and Paychex, Inc. and with respect to
employee placement (including temporary placements and employee leasing), Butler
Arde, Tech Aid, Inc., Comp Health, Staff Leasing, Inc. and Administaff, Inc.
These companies have greater financial and marketing
12
<PAGE> 18
resources than do we. We also compete with manual payroll systems and
computerized payroll services provided by banks, and smaller independent
companies.
IF WE CANNOT OBTAIN SUFFICIENT LEVELS OF TEMPORARY EMPLOYEES, OUR
BUSINESS MAY BE AFFECTED.
Two of our subsidiaries, Team Solutions, and TeamStaff Rx are temporary
employment agencies which depend on a pool of qualified temporary employees
willing to accept assignments for our clients. The business of these
subsidiaries is materially dependent upon the continued availability of such
qualified temporary personnel. Our inability to secure temporary personnel would
have a material adverse effect on our business.
SINCE WE HAVE NOT PAID DIVIDENDS ON OUR COMMON STOCK YOU CANNOT EXPECT
INCOME FROM AN INVESTMENT IN OUR COMMON STOCK.
We have not paid any dividends on our common stock since our inception
and do not contemplate or anticipate paying any dividends on our common stock in
the foreseeable future. We may not pay dividends on our common stock unless we
have earnings or capital surplus and our lender prohibits us from paying
dividends without its prior consent. Therefore, holders of our common stock may
not receive any dividends on their investment in us. Earnings, if any, will be
retained and used to finance the development and expansion of our business.
WE HAVE SOLD RESTRICTED SHARES OF COMMON STOCK WHICH MAY DILUTE OUR STOCK
PRICE WHEN THEY ARE SELLABLE UNDER RULE 144.
Of the 27,932,513 issued and outstanding shares of our common stock prior
to this offering, approximately 11,141,550 shares may be deemed "restricted
shares" and, in the future, may be sold in compliance with Rule 144 under the
Act. Possible or actual sales of our common stock by our present shareholders
under Rule 144 may, in the future, have a depressing effect on the price of our
common stock in the open market. Rule 144 provides that a person holding
restricted securities which have been outstanding for a period of one year after
the later of the issuance by our company or sale by an affiliate of our company,
may sell in brokerage transactions an amount equal to 1% of our company's
outstanding common stock every three months. A person who is a "non-affiliate"
of our company and who has held restricted securities for over two years is not
subject to the aforesaid volume limitations as long as the other conditions of
the Rule are met. In addition, we have previously registered approximately
6,700,000 shares on behalf of selling stockholders and have outstanding 898,400
previously registered shares under our stock option plans. The sale of these
shares may have a depressive effect on the market for our common stock.
13
<PAGE> 19
WE MAY ISSUE PREFERRED STOCK WITH RIGHTS SENIOR TO OUR COMMON STOCK WHICH
MAY ADVERSELY IMPACT THE VOTING AND OTHER RIGHTS OF THE HOLDERS OF OUR COMMON
STOCK.
Our certificate of incorporation authorizes the issuance of "blank check"
preferred stock with such designations, rights and preferences as may be
determined from time to time by our board of directors up to an aggregate of
5,000,000 shares of preferred stock. Accordingly, our board of directors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which would adversely affect the
voting power or other rights of the holders of our common stock. In the event of
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of our
company, which could have the effect of discouraging bids for our company and
thereby prevent stockholders from receiving the maximum value for their shares.
Although we have no present intention to issue any shares of our preferred stock
in order to discourage or delay a change of control of our company, we may do so
in the future.
14
<PAGE> 20
SELLING SECURITY HOLDERS
<TABLE>
<CAPTION>
SHARES PERCENTAGE
OWNED SHARES OF SHARES
PRIOR TO SHARES OWNED OWNED
NAME AND ADDRESS OF OFFERING OFFERED AFTER AFTER
SECURITY HOLDER (1)(2) OFFERING OFFERING
<S> <C> <C> <C> <C>
Warren M. Cason, Sr. (11) 2,220,654(3) 2,220,654(3) - --
Kirk A. Scoggins (11) 3,286,931(4) 3,286,931(4) - -
Dorothy Cason (11) 160,338 (5) 160,338 (5) - --
Warren Cason, Jr., trustee, 1,843,889(6) 1,843,889(6) _ _
Dorothy C. Cason 1997
Three Year Grantor Retained Annuity Trust (11)
Melissa C. Scoggins, trustee, 721,522(7) 721,522(7) _ _
Kirk A. Scoggins 1997
Three Year Grantor Retained Annuity Trust (11)
Raymond James & Assoc., Inc. 337,010(8) 337,010(8) - -
Donald & Co. Securities, Inc. 300,000(9) 300,000(9) - -
SR Capital Partners, LLC 125,000(10) 125,000(10) - -
</TABLE>
------------------------
1. Includes all shares as to which the individual has sole or shared voting
power or investment power and also any shares that the individual has the
right to acquire within 60 days of the date of this prospectus through
the exercise of any stock option or other right. Unless otherwise
indicated in the footnotes, each individual has sole voting and
investment power (or shares such powers with his or her spouse) with
respect to the shares shown as beneficially owned).
15
<PAGE> 21
2. See "Plan of Distribution"
3. Shares directly held by listed shareholder. Does not include 1,843,889
shares held in the Dorothy C. Cason 1997 Three Year Grantor Retained
Annuity Trust, Warren Cason, Jr., trustee, and 160,338 shares held by
Dorothy C. Cason, his spouse.
4. Shares directly held by listed shareholder. Does not include 721,522
shares held in the Kirk A. Scoggins 1997 Three Year Grantor Retained
Annuity Trust, Melissa C. Scoggins, trustee. Does not include 100,000
shares issued to Mr. Scoggins, a director of TeamStaff, pursuant to our
Senior Management Stock Option Plan.
5. Shares directly held by listed shareholder. Does not include 1,843,889
shares held in the Dorothy C. Cason 1997 Three Year Grantor Retained
Annuity Trust, Warren Cason, Jr., trustee; and 2,220,654 shares held by
Warren M. Cason, Sr., her spouse.
6. Shares directly held by listed shareholder. Does not include 2,220,654
shares directly held by Warren M. Cason, Sr.; and 160,338 shares held by
Dorothy C. Cason.
7. Shares directly held by listed shareholder. Does not include 3,286,931
directly held by Kirk A. Scoggins.
8. 25,000 shares issuable upon exercise of warrants issued to the holder and
312,010 shares issued to the shareholder as compensation for services
rendered as our investment banker in connection with the acquisition by
Digital Solutions, Inc. of the TeamStaff companies.
9. Shares issuable upon exercise of warrants. Teamstaff retained Donald &
Co. Securities, Inc. to act as investment bankers pursuant to an
agreement dated November 29, 1999. As compensation for its services, we
issued 350,000 warrants to Donald & Co. which have an exercise price of
$1.186 per share. Mr. Skiptunis is an employee of Donald & Co. and
received 50,000 of the warrants.
10. Shares issuable upon exercise of warrants. Mr. Raymond Skiptunis is the
principal owner and officer of SR Capital Partners, LLC. Mr. Skiptunis
served as the Chief Executive Officer of Teamstaff until 1996. 75,000 of
the warrants held by SR Capital Partners have an exercise price of $1.50
per share and 50,000 warrants are exercisable at $1.186 per share.
11. Pursuant to a registration rights agreement dated January 25, 1999, we
are only required to register 33.3% of the listed shares per year
commencing on the first anniversary of the registration rights agreement
(January 25, 2000). Certain of the shares are being held in escrow to
satisfy possible claims for indemnification which may be made under the
documents governing the acquisition of the former TeamStaff Companies.
Accordingly, the listed holder may only sell a maximum of 33.3% of the
listed shares per year following the effectiveness of this registration
statement.
16
<PAGE> 22
PLAN OF DISTRIBUTION
The common stock covered by this prospectus, including the shares
underlying the warrants which will be issued by Teamstaff upon the exercise by
the holders of the warrants, may be offered and sold from time to time by the
selling security holders, and pledgees, donees, transferees or other successors
in interest selling shares received after the date of this prospectus from the
selling security holders as a pledge, gift or other non-sale related transfer,
including in one or more of the following transactions:
- on the over the counter market;
- in transactions other than on the over the counter market such as
private resales;
- in connection with short sales;
- by pledge to secure debts and other obligations;
- in connection with the writing of options, in hedge transactions,
and in settlement of other transactions in standardized or
over-the-counter options;
- in a combination of any of the above transactions; or
- pursuant to Rule 144 under the Securities Act, assuming the
availability of an examination from registration.
The selling security holders may sell their shares at market prices
prevailing at the time of sale, at prices related to prevailing market prices,
at negotiated prices, or at fixed prices.
Broker-dealers that are used to sell shares will either receive discounts
or commissions from the selling shareholders, or will receive commissions from
the purchasers for whom they acted as agents.
The selling security holders and intermediaries through whom shares are
sold may be deemed underwriters within the meaning of the Securities Act with
respect to the shares offered.
There can be no assurance that the selling security holders will sell all
or any of the common stock.
17
<PAGE> 23
We have agreed to keep this prospectus effective for a period expiring on
the earlier of the date on which all of the selling security holders' shares
have been sold or the date on which all such shares are eligible for sale
pursuant to Rule 144 under the Securities Act.
The selling shareholders and us have agreed to customary indemnification
obligations with respect to the sale of common stock by use of this prospectus.
REPORTS TO SHAREHOLDERS
Our company distributes annual reports to its stockholders, including
financial statements examined and reported on by independent public accountants,
and will provide such other reports as management may deem necessary or
appropriate to keep stockholders informed of our company's operations.
LEGAL MATTERS
The legality of the offering of the shares will be passed upon for us by
Goldstein & DiGioia, LLP, 369 Lexington Avenue, New York, New York l00l7.
EXPERTS
The financial statements and schedules incorporated by reference in this
prospectus and elsewhere in the registration statement, to the extent and for
the periods indicated in their reports, have been audited by Arthur Andersen
LLP, independent public accountants, and are included herein in reliance upon
the authority of said firm as experts in giving said reports.
ADDITIONAL INFORMATION
Our company has filed a Registration Statement under the Act with the
Securities and Exchange Commission, with respect to the securities offered by
this prospectus. This prospectus does not contain all of the information set
forth in the registration statement. For further information with respect to our
company and such securities, reference is made to the registration statement and
to the exhibits and schedules filed therewith. Each statement made in this
prospectus referring to a document filed as an exhibit to the registration
statement is qualified by reference to the exhibit for a complete statement of
its terms and conditions. The registration statement, including exhibits
thereto, may be inspected without charge to anyone at the office of the
Commission, and copies of all or any part thereof may be obtained from the
Commission's principal office in Washington, D.C. upon payment of the
Commission's charge for copying.
18
<PAGE> 24
FORWARD LOOKING STATEMENTS
Certain statements contained herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "1995 Reform Act"). TeamStaff, Inc. desires to avail itself of
certain "safe harbor" provisions of the 1995 Reform Act and is therefore
including this special note to enable the Company to do so. Forward-looking
statements included in this report involve known and unknown risks,
uncertainties, and other factors which could cause the Company's actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) achievements expressed or implied
by such forward-looking statements. Such future results are based upon
management's best estimates based upon current conditions and the most recent
results of operations. These risks include, but are not limited to, risks
associated with the Company's risks of current as well as future acquisitions,
risks from potential workers compensation claims and required payments, risks
associated with payroll and employee related taxes which may require
unanticipated payments by the Company, liabilities associated with the company's
status under certain federal and state employment laws as a co-employer, effects
of competition and technological changes and dependence upon key personnel.
19
<PAGE> 25
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of the
securities being registered herein are estimated.
<TABLE>
<CAPTION>
Amount
--------
<S> <C>
Securities and Exchange Commission
Registration Fee..........................................................................................$2,634.51
Printing and Engraving Expenses............................................................................ $5,000*
Accounting Fees and Expenses............................................................................... $12,500*
Legal Fees and Expenses.................................................................................... $35,000*
Blue Sky Fees and Expenses................................................................................ $2,000*
Transfer Agent and Registrar Fees.......................................................................... $2,000*
Miscellaneous Fees and Expenses..............................................................................$1,500*
Total................................................................$60,634.51*
===========
</TABLE>
* Estimated.
ITEM 15 INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our company's By-Laws require us to indemnify, to the full extent
authorized by Section 14A:3-5 of the New Jersey Business Corporation Act, any
person with respect to any civil, criminal, administrative or investigative
action or proceeding instituted or threatened by reason of the fact that he, his
testator or intestate is or was a director, officer or employee of our company
or any predecessor of our company is or was serving at the request of our
company or a predecessor of our company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.
Section 14A:3-5 of the New Jersey Business Corporation Act authorized the
indemnification of directors and officers against liability incurred by reason
of being a director or officer and against expenses (including attorneys fees)
in connection with defending any action seeking to establish such liability, in
the case of third-party claims, if the officer or director acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the corporation and if such officer or director shall not have been
adjudged liable for negligence
20
<PAGE> 26
or misconduct, unless a court otherwise determines. Indemnification is also
authorized with respect to any criminal action or proceeding where the officer
or director had no reasonable cause to believe his conduct was unlawful.
In accordance with Section 14A:2-7 of the New Jersey Business Corporation
Act, our company's Certificate of Incorporation eliminates the personal
liability of officers and directors to our company and to stockholders for
monetary damage for violation of a director's duty owed to our company or our
shareholders, under certain circumstances.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling our
company pursuant to the foregoing provisions, our company has been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
ITEM 16. EXHIBITS
The exhibits designated with an asterisk (*) are filed herewith. All
other exhibits have been previously filed with the Commission and, pursuant to
17 C.F.R. Secs. 20l.24 and 240.12b-32, are incorporated by reference to the
document referenced in brackets following the descriptions of such exhibits.
EXHIBIT NO. DESCRIPTION
---------- -----------
2.1 -- Plan and Agreement of Merger and
Reorganization dated as of October 29, 1998
among the Company, the Merger
Corporations, the TeamStaff Entities and
certain individuals and trusts as
shareholders of the TeamStaff Entities
(filed as Exhibit A to Proxy Statement of
Digital Solutions, Inc, dated November 12,
1998).
2.2 - Form of Asset Purchase Agreement dated as
of April 7, 2000 by and between TeamStaff
Inc., Teamstaf V, Inc., Outsource
International, Inc. and Synadyne I, Inc.,
Synadyne II, Inc., Synadyne III, Inc.,
Synadyne IV, Inc., Synadyne V, Inc.,
Guardian Employer East LLC and Guardian
Employer West LLC . (Filed as Exhibit 3.1
to Form 8-K dated April 19, 2000).
3.1 -- Amended and Restated Certificate of
Incorporation of Registrant (Filed as
Exhibit A to Definitive Proxy Material
dated July 20, 1990).
3.1.1 -- Form of Amendment to Amended and Restated
Certificate of Incorporation (filed as
Exhibit G to our company's Proxy Statement
dated November 12, 1998 as filed with the
Securities and Exchange Commission).
21
<PAGE> 27
3.2 -- By-Laws of Registrant (Exhibit 10.1 to Form 8-K
dated March 2l, 1990)
4.1* - Form of Warrant issued to Raymond James &
Associates, Inc.
4.2* - Form of Warrant issued to Donald & Co. Securities,
Inc.
4.2.1* - Form of Warrant issued to Donald & Co. Securities,
Inc.
4.3* - Form of Warrant issued to SR Capital Partners, LLC.
5.1 - Opinion of Goldstein & DiGioia, LLP re: Legality of
Shares (to be filed an amendment)
10.2 -- Employment Agreement with Donald Kappauf (Exhibit 3
to Form 8-K dated May 17, 1990).
10.4 -- Agreement between Registrant and First
Fidelity Bank, N.A. (Exhibit 10.4 to Form
10-K for fiscal year ended September 30,
1991).
10.5 -- Agreement between Registrant and
Midatlantic Banks, Inc. dated October 11,
1991 (Exhibit 10.5 to Form 10-K for fiscal
year ended September 30, 1991).
10.6 --
Lease dated 10/15/91 for office space at
4041 Hadley Road, South Plainfield, New
Jersey (Exhibit 10.6 to Form 10-K for
fiscal year ended September 30, 1991).
10.7 -- Employment Agreement between Karl Dieckmann
and our company dated November 1, 1991
(Exhibit 10.7 to Form 10-K for fiscal year
ended September 30, 1991).
10.6.1 -- Lease dated May 30, 1997 for office space
at 300 Atrium, Somerset, New Jersey
(Exhibit 10.6.1 to Form 10-K for the fiscal
year ended September 30, 1997).
10.15.1 -- Employment agreement between George J. Eklund and
our company dated March 12, 1996 (Exhibit
10.15.1 to Form 10-K for the fiscal year
ended September 30, 1997).
10.15.2 -- Amended employment agreement between George
J. Eklund and our company dated December
16, 1997 (Exhibit 10.15.2 to Form 10-K for
the fiscal year ended September 30, 1997).
22
<PAGE> 28
10.16.1 -- Seventh Amended Loan Agreement between
Registrant and Summit Bank and sixth
amended Promissory Note (Exhibit 10.16.1
to Form 10-K for the fiscal year ended
September 30, 1997).
10.17 -- Loan and Security Agreement dated April 28,
1998 among Digital Solutions, Inc. and
FINOVA Capital Corporation (Filed as
Exhibit 10.17 to Form 10-K filed January
12, 1999).
10.18 -- Secured Promissory Note in the principal
amount of $2,500,000 dated April 28, 1998
in favor of FINOVA Capital Corporation
(Filed as Exhibit 10.18 to Form 10-K filed
January 12, 1999).
10.19 -- Stock Pledge Agreement (Security Agreement)
dated April 28, 1998 between FINOVA Capital
Corporation and Digital Solutions, Inc.
(Filed as Exhibit 10.19 to Form 10-K filed
January 12, 1999).
10.20 -- Employment Agreement between our company
and Kirk Scoggins dated January 25, 1999
(Filed as Exhibit 10.1 to Form 8-K dated
January 25, 1999).
10.21 -- Registration Rights Agreement between our
company and certain former shareholders of
the TeamStaff Companies dated as of January
25, 1999 (Filed as Exhibit 10.2 to Form 8-K
dated January 25, 1999).
10.22 -- Amended and Restated Loan and Security
Agreement between our company and Finova
Capital Corporation dated January 25, 1999
(Filed as Exhibit 10.3 to Form 8-K dated
January 25, 1999).
23
<PAGE> 29
10.23 -- Amended and Restated Note in the principal
amount of $2,166,664 dated January 25, 1999
(Filed as Exhibit 10.4 to Form 8-K dated
January 25, 1999).
10.24 -- Secured Note in the amount of $2,500,000 in
favor of Finova Capital Corporation dated
January 25, 1999 (Filed as Exhibit 10.5 to
Form 8-K dated January 25, 1999).
10.25 -- Secured Note in the amount of $750,000 in
favor of Finova Capital Corporation dated
January 25, 1999 (Filed as Exhibit 10.6 to
Form 8-K dated January 25, 1999).
10.26 -- Schedule to Amended and Restated Loan
Agreement dated January 25, 1999 with
Finova Capital Corporation (Filed as
Exhibit 10.7 to Form 8-K dated January 25,
1999).
10.27* - Form of Agreement between Teamstaff and
Donald & Co. Securities, Inc.
10.28 First Amendment to the Amended and Restated
Schedule to the Amended and Restated Loan
and Security Agreement among TeamStaff,
Inc. and its Subsidiaries as Co-Borrowers
and FINOVA Capital Corporation dated April
7, 2000 (Filed as Exhibit 10.1 to Form 8-K
dated April 19, 2000).
10.29 Second Amended and Restated Secured
Promissory Note A dated April 7, 2000 in
the principal amount of $1,541,659 payable
to FINOVA Capital Corporation (Filed as
Exhibit 10.2 to Form 8-K dated April 19,
2000).
10.30 Amended and Restated Secured Promissory
Note B dated April 7, 2000 in the principal
amount of $1,899,996 payable to FINOVA
Capital Corporation (Filed as Exhibit 10.3
to Form 8-K dated April 19, 2000).
10.31 Secured Promissory Note C dated April 7,
2000 in the principal amount of $4,000,000
payable to FINOVA Capital Corporation
(Filed as Exhibit 10.4 to Form 8-K dated
April 19, 2000).
10.32* Employment Agreement dated October 1, 1999
between our company and Donald Kappauf.
10.33* Employment Agreement dated October 1, 1999
between our company and Donald Kelly.
21 -- Subsidiaries of Registrant (Filed as Exhibit 21
to Form 10-K dated January 11, 2000).
24
<PAGE> 30
23.1 * -- Consent of Arthur Andersen LLP.
23.2 - Consent of Goldstein & DiGioia, LLP, contained
in exhibit 5.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
A. (1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or
the most recent post-effective amendment thereto) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to such information
in the registration statement;
provided, however, that paragraphs (a)(1)(i) - (a)(1)(iii)
do not apply if the information required to be included in a
post-effective amendment by such clauses is contained in periodic
reports filed with and furnished to the Commission by the Company
pursuant to Section 13 or Section 15(d) of the Exchange Act of
1934 that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under
the Securities Act 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) For purposes of determining any liability under the
Securities Act of 1933, each filing of our company's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of
the
25
<PAGE> 31
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.
B. 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.
26
<PAGE> 32
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
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 Somerset, State of New Jersey, on the 23rd day of
May, 2000.
TEAMSTAFF, INC.
By: /s/Donald W. Kappauf
------------------------
Donald W. Kappauf
President, Chief Executive Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below substitutes and appoints Donald W. Kappauf or Donald Kelly as his true and
lawful attorney-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this 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 don 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 substitute, 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:
<TABLE>
<CAPTION>
Signature Capacity Date
--------- -------- ----
<S> <C> <C>
/s/Donald W. Kappauf President, Chief Executive May 23, 2000
----------------------- Officer and Director
Donald W. Kappauf
/s/Karl W. Dieckmann Chairman of the Board May 23, 2000
-----------------------
Karl W. Dieckmann
/s/Charles R. Dees Director May 23, 2000
-----------------------
Charles R. Dees
/s/Martin J. Delaney Director May 23, 2000
-----------------------
Martin J. Delaney
</TABLE>
27
<PAGE> 33
<TABLE>
<S> <C> <C>
/s/John H. Ewing Director May 23, 2000
-----------------------
John H. Ewing
/s/William J. Marino Director May 23, 2000
-----------------------
William J. Marino
/s/ Rocco Marano Director May 23, 2000
-----------------------
Rocco Marano
/s/Kirk A. Scoggins Director May 23, 2000
-----------------------
Kirk A. Scoggins
/s/Donald T. Kelly Chief Financial Officer and May 23, 2000
----------------------- Principal Accounting Officer
Donald T. Kelly
</TABLE>
28
