<PAGE>
As filed with the Securities and Exchange Commission on October 2, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_______________
ELTRAX SYSTEMS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS GOVERNING INSTRUMENT)
MINNESOTA 41-1484525
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
_______________
WILLIAM P. O'REILLY
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
2000 TOWN CENTER, SUITE 690
SOUTHFIELD, MI 48075
(248) 358-1699
(Name, Address, Including Zip Code, and Telephone Number,
Including Area Code, of Agent for Service)
_______________
Copies of all correspondence to:
JEFFREY L. FORMAN, ESQ.
JAFFE, RAITT, HEUER & WEISS, P.C.
ONE WOODWARD AVENUE
SUITE 2400
DETROIT, MICHIGAN 48226
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement as determined by
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, please check the following box. X
------
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. .
------
_______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
Proposed Maximum Amount of
Title of Each Class of Securities Amount to be Registered Aggregate Offering Price (1) Registration Fee
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, $.01 par value 291,250 shares $1,820,312.50 $552.00
- ----------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for purposes of determining the registration fee pursuant
to Rule 457(c), based upon the average of the high and low prices of the
Registrant's common stock on September 30, 1997 on the NASDAQ SmallCap Market.
__________________________________
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities had been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of securities in any
State in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such State.
SUBJECT TO COMPLETION
PROSPECTUS DATED OCTOBER 2, 1997
PROSPECTUS
291,250 SHARES
ELTRAX SYSTEMS, INC.
COMMON STOCK
This Prospectus relates to 291,250 shares (the "Shares") of common stock,
par value $.01 per share (the "Common Stock"), of Eltrax Systems, Inc., a
Minnesota corporation (the "Company"). The Shares are held by, or may be issued
in the future to, certain shareholders and warrant holders (collectively, the
"Selling Shareholders"). See "Selling Shareholders."
The Company will not receive any proceeds from the sale of Shares by the
Selling Shareholders. Other than any commissions or discounts paid or allowed
by the Selling Shareholders to underwriters, dealers, brokers or agents, all
expenses incurred in connection with this offering are being borne by the
Company.
The Selling Shareholders have not advised the Company of any specific plans
for the distribution of the Shares, but it is anticipated that the Shares may be
sold from time to time in the over-the-counter market transactions (which may
include block transactions) on the NASDAQ SmallCap Market System at the market
prices then prevailing. Sales of the Shares may also be made through negotiated
transactions or otherwise. The Selling Shareholders and the brokers and dealers
through which the sales of the Shares may be made may be deemed to be
"underwriters" within the meaning set forth in the Securities Act of 1933, as
amended, and their commissions and discounts and other compensation may be
regarded as underwriters' compensation. See "Plan of Distribution."
The Common Stock is listed on the NASDAQ SmallCap Market System under the
symbol "ELTX". On September 30, 1997, the last reported sale price of the
Common Stock on the NASDAQ SmallCap Market System was $6.125 per share.
SEE "RISK FACTORS" ON PAGE 4 FOR CERTAIN FACTORS RELATING TO AN INVESTMENT IN
THE SHARES.
__________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
__________________________________
The date of this Prospectus is October 2, 1997.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational 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"). Such reports, proxy statements and other
information can be inspected at the Public Reference Section maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and the
following regional offices of the Commission: 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511 and Seven World Trade Center, 13th Floor, New
York, New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission maintains a Web site that contains
reports, proxy information and statements, and other information regarding
registrants that file electronically with the Commission. The Web site address
is http://www.sec.gov. The Company files electronically. In addition, the
Company's Common Stock is listed on the NASDAQ SmallCap Market System and such
reports, proxy statements and other information concerning the Company can be
inspected at the offices of the National Association of Securities Dealers,
Inc., Reports Section, 1735 K Street, N.W. Washington, D.C. 20006.
The Company has filed with the Commission a registration statement on Form
S-3 (the "Registration Statement"), of which this Prospectus is a part, under
the Securities Act of 1933, as amended (the "Securities Act" or "Securities Act
of 1933"), with respect to the Shares offered hereby. This Prospectus does not
contain portions of the information set forth in the Registration Statement,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. Statements contained in this Prospectus as to
the contents of any contract or other documents are not necessarily complete,
and in each instance, reference is made to the copy of such contract or
documents filed as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference and the exhibits and schedules
thereto. For further information regarding the Company and the Shares,
reference is hereby made to the Registration Statement and such exhibits and
schedules which may be obtained from the Commission at its principal office in
Washington, D.C. upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company under the
Exchange Act with the Commission and are incorporated herein by reference.
1. The Company's Transition Report on Form 10-KSB for the nine-month
period ended December 31, 1996, filed with the Commission on March
31, 1997.
2. The Company's current report on Form 8-K dated January 31, 1997 and
filed with the Commission on February 12, 1997.
3. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997, filed with the Commission on May 14, 1997.
4. The Company's current report on Form 8-K dated May 15, 1997 and filed
with the Commission on June 11, 1997.
5. The Company's current report on Form 8-K dated July 1, 1997 and filed
with the Commission on August 1, 1997.
6. The Company's current report on Form 8-K dated July 21, 1997 and filed
with the Commission on July 31, 1997.
7. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1997, filed with the Commission on August 14, 1997.
8. The Company's current report on Form 8-K dated August 15, 1997 and
filed with the Commission on September 2, 1997.
9. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A (File No. 0-22190).
All documents filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act and prior to termination
of the offering of all Shares to which this Prospectus relates shall be deemed
to be incorporated by reference in this Prospectus and shall be part hereof from
the date of filing of such document.
Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus (in the case of a statement in a previously filed document
incorporated or deemed to be incorporated by reference herein), in any
accompanying Prospectus Supplement relating to a specific offering of Shares or
in any other
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<PAGE>
subsequently filed document that is also incorporated or deemed to be
incorporated by reference herein, modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus or any
accompanying Prospectus Supplement. Subject to the foregoing, all information
appearing in this Prospectus and each accompanying Prospectus Supplement is
qualified in its entirety by the information appearing in the documents
incorporated by reference.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon their
written or oral request, a copy of any or all of the documents incorporated
herein by reference (other than exhibits to such documents, unless such exhibits
are specifically incorporated by reference in such documents). Written requests
for such copies should be addressed to Nicholas J. Pyett, the Company's Chief
Financial Officer, at 2000 Town Center, Suite 690, Southfield, MI 48075,
telephone number (248) 358-1699.
AS USED HEREIN, THE TERM "COMPANY" INCLUDES ELTRAX SYSTEMS, INC., A
MINNESOTA CORPORATION, AND ONE OR MORE OF ITS SUBSIDIARIES.
THE COMPANY
Eltrax Systems, Inc. (the "Company" or "Eltrax"), through its wholly owned
subsidiaries, Atlantic Network Systems, Inc. ("ANS"), EJG Techline, Incorporated
("Techline"), Hi-Tech Connections, Inc. ("Hi-Tech"), and Four Corners
Technology, Inc. ("Four Corners"), is a value-added reseller of data
communications networking products and services. Eltrax designs and installs,
and in some cases maintains, wide-area-networking systems for end-user corporate
and government customers, and is a distributor of data communications equipment
to other value-added resellers. The Company's products and services include
data communications equipment used in remote access and enterprise-wide
communications networks and the installation and maintenance of that equipment.
The Company has announced and is currently in the process of implementing a
strategic plan to provide network management services to enterprise-wide network
customers on a nationwide process. The Company intends to begin offering these
services on October 1, 1997 to its existing customer base through its existing
sales and distribution channels.
The Company headquarters is located at 2000 Town Center, Suite 690,
Southfield, MI 48075, and its telephone number is (248) 358-1699. The Company
maintains a worldwide web address at www.eltrax.com.
RISK FACTORS
Prospective investors should carefully consider, among other factors, the
matters described below.
HISTORY OF LOSSES; UNCERTAIN PROFITABILITY PROSPECTS. The Company has a
history of net losses. As of June 30, 1997, the Company had an accumulated
deficit of approximately $12,000,000. The ability of the Company to achieve
profitability will depend upon several factors, including: the efficient
consolidation of the recently acquired businesses and of future acquisitions;
the ability to achieve sufficient levels of product sales and profit margins and
network management services sales and profit margins; and the ability to control
operating costs and other expenses. There can be no assurance that the Company
will achieve profitability during the current fiscal year or at any time in the
near future.
INTEGRATION OF ACQUISITIONS; MANAGEMENT OF EXPANDING OPERATIONS. During
the last 18 months, the Company has merged with or acquired six network products
and services companies, and its annual revenue run rate has increased from just
over $1 million to the current annual revenue run rate of over $50 million. The
Company intends to continue its rapid growth through future acquisitions and
through internal growth. This rapid growth has placed, and will continue to
place, a significant strain on the Company's administrative, operational, and
financial resources and on the Company's systems and controls. Management has
expended, and expects to continue to expend, significant time and effort in
integrating the operations of its acquisitions into the Company.
There can be no assurance that the Company's current systems, procedures
and controls will be adequate to support the Company's operations as they
expand. Any future growth will impose significant added responsibilities on
members of senior management, including the need to identify, recruit and
integrate new senior level managers and executives. There can be no assurance
that such additional management will be identified and retained by the Company.
If the Company is unable to manage growth effectively, customer confidence could
erode and demand for the Company's products and services could deteriorate,
which could materially and adversely affect the Company's business and operating
results.
FUTURE ACQUISITIONS. The Company continues to pursue acquisitions of
complementary businesses. Future acquisitions by the Company could result in
additional debt and amortization expenses that may adversely affect the
Company's balance sheet and profitability. Acquisitions also involve numerous
other risks, including difficulties in
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integrating the operations of new businesses into the Company, the potential
loss of key employees of the acquired business, and the risk that acquisitions
do not continue to perform at their historical levels. No assurance can be
given as to the effect of any future acquisition on the Company's business or
operating results.
NETWORK MANAGEMENT SERVICES. The Company intends to begin offering network
management services on a nationwide basis in the fourth quarter of this year.
This effort is part of the Company's long-term strategic plan, and is
essentially a new line of business for the Company. This effort will require
significant capital expenditures and expenditures for management, sales, and
marketing personnel, and technical resources. The success of this new line of
business depends principally upon the Company's ability to successfully develop
and deliver network management service products and the market's acceptance of
these products. While the Company believes that these investments will yield a
return in the near future, there can be no assurance of this result.
DEPENDENCE ON SENIOR MANAGEMENT AND KEY EMPLOYEES. The Company is
dependent upon the performance of its executive officers and other key
personnel. The loss of the services of any of its executive officers or other
key employees could have a material adverse effect on the Company. The
Company's future success will also depend in part upon its ability to attract
and retain highly skilled and qualified technical, managerial and marketing
personnel. Competition for such personnel in the data communications industry
is intense, and there can be no assurance that the Company will be successful in
attracting and retaining such personnel. The loss of any of the Company's key
management or the inability to hire or retain qualified personnel could have a
material adverse effect on the Company.
DEPENDENCE UPON CERTAIN MANUFACTURERS. The Company currently purchases
equipment directly from certain manufacturers including Adtran, Ascend, Cisco,
Micom, 3Com, and Motorola. There can be no assurance that these relationships
will continue or that the discounts received from such manufacturers will be
maintained.
COMPETITION. Competition in the data communications industry is intense
and is expected to increase. Competition on the Company's current product lines
is primarily from local or regional system integrators or equipment resellers.
To some extent, the Company competes with large, national organizations such as
IBM, EDS, AT&T, Ingram Micro, and Tech Data. Some of the Company's competitors
have longer operating histories and significantly greater financial, technical,
research, marketing, sales, distribution and other resources, as well as greater
name recognition and a larger customer base, than the Company. As a result,
they may be able to respond more quickly to new or emerging technologies and
changes in customer requirements or may be able to devote greater resources to
the development, promotion, sale and support of their products than the Company.
The Company expects increased competition in the future, which could result in
significant price competition, reduced profit margins or loss of market share,
any of which could have a material adverse effect on the Company's business,
operating results and financial condition. There can be no assurance what the
effect of increased competition will be on the Company in the future.
NORDATA PROBLEMS. Due to significant operational problems and losses
which occurred at the Company's Nordata, Inc. subsidiary ("Nordata"),
substantially all of the Nordata back-office and inventory functions were
consolidated at the Company's East Coast offices and warehouse in Raleigh,
North Carolina during the second quarter of this year. Mr. Howard Norton,
who sold Nordata to the Company in 1996, and served as its president after
the acquisition, was relieved of all of his responsibilities in May 1997, and
the responsibility for all sales activities has been consolidated under the
Company's National Sales Director. The operational problems at Nordata and
the consolidation of operations in North Carolina have caused significant
disruption and have had a significant negative impact on West Coast sales and
morale. There can be no assurance that the consolidation of operations and
sales responsibilities will solve these problems.
WRITE-DOWN OF NORDATA GOODWILL. During the second quarter of 1997, the
Company determined that there was a permanent impairment in the fair value of
the goodwill recorded in connection with the Nordata purchase in May 1996.
During the second quarter of 1997, the Company made an initial determination
that $2,458,000 of the remaining Nordata goodwill should be written off. It is
possible that additional amounts of such goodwill may be written off in the
future. No prediction can be made regarding the effect any future write-down
will have on the market price of the Company's common stock.
NORTON LITIGATION. Mr. Norton had a five-year employment agreement with
the Company, commencing May 17, 1996, at $175,000 per year, and the Company
terminated his employment in July 1997. Mr. Norton and Ms. Ruby Norton
initiated legal proceedings against the Company in response to the Company's
termination of Mr. Norton's employment. Mr. Norton is suing for money damages
and other relief under his employment agreement. Mr. Norton and Ms. Norton seek
an order requiring the Company to file a registration statement, under the
Securities Act of 1933, covering all shares of the Company's common stock held
by them. If Mr. Norton is successful in his damage claims against the Company,
that result will have an adverse effect on the Company's profitability. The
Company has not established any reserve related to this litigation. Although
the litigation is in the early stages, management believes that the risk of any
material loss is remote.
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Mr. and Ms. Norton hold approximately 900,000 shares of the Company's
common stock or approximately 11% of the number of shares outstanding. If Mr.
Norton and Ms. Norton succeed in requiring the Company to register their shares,
then the sale of such shares, or the perception that such sales could occur,
could adversely affect prevailing market prices for the Company's common stock.
Mr. Norton's employment agreement provides that he is prohibited from
participating in any business that competes with the Company for a period of two
(2) years following termination of his employment. It is possible that Mr.
Norton may take the position that this non-compete covenant is unenforceable due
to the Company's termination of his employment. While the Company believes that
its termination of Mr. Norton was justified and that Mr. Norton's non-compete
covenant remains enforceable, it is possible that the non-compete covenant may
be held to be unenforceable. In this event, Mr. Norton may compete with the
Company, and such competition could have an adverse effect on the Company's
sales and income.
Management believes that Mr. Norton's claims against the Company are
without merit, and the Company is vigorously contesting Mr. Norton's claims.
However, there can be no assurance that the Company will prevail in this
litigation.
UNCERTAINTY OF MARKET ACCEPTANCE. Many of the Company's products and
services are based on new or improved technology that has not previously been
available. The Company's marketing strategy will have to overcome the
difficulties inherent in the introduction of new or improved technology to the
communications industry. Market acceptance of the Company's products and
services will depend in large part on the ability of the Company and its sales
personnel to demonstrate to customers the technical capabilities of the
Company's products and services. There can be no assurance that the Company's
products and services will be accepted in the market in preference to competing
products and services presently available or products and services that may be
developed in the future. Lack of market acceptance of the Company's products and
services would adversely effect the Company's performance.
GENERAL ECONOMIC CONDITIONS. Demand for the Company's products and
services depends, in large part, on the overall demand for communications and
networking products, which may be effected by industry capital spending levels
and general economic conditions, including interest rate fluctuations, economic
recessions and customer business cycles. There can be no assurance that the
Company will not experience a decline in demand for its products and services
due to general economic conditions. Any such decline could have an adverse
effect on the Company's business, operating results and financial condition.
NON-COMPLIANCE UNDER LINE OF CREDIT. The Company currently has a
$5,500,000 credit facility under its revolving credit agreement with State
Street Bank and Trust Company ("State Street Bank"). The Company is currently
not in compliance with several provisions of its agreement with State Street
Bank, including requirements that the Company have positive earnings before
interest, depreciation and amortization, as well as maintain certain financial
ratios. While State Street Bank recently agreed to temporarily increase the
maximum credit facility to $5,500,000 (from $5,000,000) through September 30,
1997, and has not demanded repayment of the credit line, there can be no
assurance that such a demand will not be made. Should such a demand be made,
the Company would not have sufficient working capital to continue operations
without obtaining additional financing.
NEED FOR ADDITIONAL CAPITAL FOR OPERATIONS, FUTURE ACQUISITIONS, AND
NETWORK MANAGEMENT SERVICES. The Company has developed a strategy to grow
through additional acquisitions. While the Company believes it will continue to
structure the payment of the purchase price of the majority of its acquisitions
with stock, the possibility exists that greater cash may be required to achieve
this goal. The Company also has immediate cash needs to fund current and future
operations. For example, the Company has varying credit terms with its major
vendors. In some cases, the Company's accounts payable to these vendors exceed
the stated terms. As a result, certain of the Company's vendors withhold credit
from the Company from time to time until the Company reduces its balance owing
to these vendors. In addition, the Company will also need additional capital in
the near future to fund the continued development and implementation of its new
network management services line of business.
The Company is presently negotiating to increase the availability under its
bank line of credit and is attempting to raise additional equity through a
private placement. However, while the Company expects to complete these efforts
in the near future, there can be no assurance that these efforts will be
successful. If the Company is not successful in raising additional funds, it
would adversely affect the Company's ability to operate and to pursue its
strategic plan.
ADVERSE EFFECT ON PRICE OF SHARES AVAILABLE FOR FUTURE SALE. Sales of a
substantial number of shares of the Company's common stock, or the perception
that such sales could occur, could adversely affect prevailing market prices for
the shares. The Company's officers and directors and former shareholders of the
Company's subsidiaries hold
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approximately 4 million shares of common stock and warrants to purchase
approximately 750,000 shares of the common stock. These shares may be sold
pursuant to registration rights granted to the holders thereof in certain
instances or pursuant to Rule 144 promulgated by the Commission pursuant to the
Securities Act of 1933. In addition, Howard Norton and Ruby Norton have
indicated that they intend to sell all of their approximately 900,000 remaining
shares of the Company's common stock pursuant to Rule 144, subject, however, to
the limitation that they may not sell more than 90,000 shares per month. No
prediction can be made regarding the effect that future sales will have on the
market price of the Company's common stock.
LACK OF DIVIDENDS. The Company has not paid dividends on its common stock
and does not anticipate paying cash dividends in the foreseeable future. The
Company intends to retain any earnings to finance the development of its
business. There can be no assurance that the Company will ever pay cash
dividends.
SELLING SHAREHOLDERS
Each of the Selling Shareholders is a holder of shares of Common Stock or
stock warrants pursuant to which shares of Common Stock may be acquired. The
following table sets forth certain information regarding the Selling
Shareholders and the shares of Common Stock beneficially owned by each of them:
<TABLE>
<CAPTION>
Shares Beneficially
Owned After
Shares of Common Completion of
Stock Beneficially the Offering (2)(3)
Owned Prior to the Number of Shares -------------------
Selling Shareholder Offering (1) Being Offered Number Percent
- ------------------- ------------ ------------- ------ -------
<S> <C> <C> <C> <C>
Dennis Hanish 2,700 (4) 2,700 0 (7)
Wayne Mills 5,000 (4) 5,000 0 (7)
John Ryden 2,700 (4) 2,700 0 (7)
Richard B. Heise 62,300 (4) 62,300 0 (7)
John E. Feltl 62,300 (4) 62,300 0 (7)
Walter C. Lovett 442,113 (5) 21,250 382,500 (5) 4.6%
Douglas L. Roberson 442,113 (5) 30,000 412,113 (5) 4.9%
B. Taylor Koonce 143,533 (6) 10,000 133,533 (5) 1.6%
Edward J. Gorlitz, Jr. and Kathleen M. Gorlitz 138,000 30,000 108,000 1.3%
Colin E. Quinn and Diane C. Quinn 92,000 20,000 72,000 (7)
Ross Crossland Weston & Co. 20,000 20,000 0 (7)
Mag-Tek, Inc. 25,000 25,000 0 (7)
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TOTAL 1,437,759 291,250 1,146,509 13.77%
</TABLE>
(1) Based upon questionnaires received from each Selling Shareholder, or a
representative of the Selling Shareholder, in connection with the
preparation of the Registration Statement on Form S-3, of which this
Prospectus is a part, showing beneficial ownership as of August 15, 1997.
Shares not outstanding but deemed beneficially owned by virtue of the right
of a person or member of a group to acquire them within 60 days are treated
as outstanding only when determining the amount and percentage owned by
such person or group.
(2) Assumes that all Shares being offered and registered hereunder are sold,
although no Selling Shareholder is obligated to sell any Shares.
(3) Based upon 8,323,126 shares of Common Stock outstanding as of August 21,
1997 (8,173,126 shares as reported in the Company's Quarterly Report on
Form 10-Q for the quarter ended June 30, 1997 plus 150,000 shares issued in
the Hi-Tech merger).
(4) Consists solely of shares of Common Stock which may be acquired pursuant to
warrants exercisable within sixty days of September 12, 1997.
(5) Includes 38,363 shares of Common Stock which may acquired pursuant to
warrants exercisable within sixty days of September 12, 1997.
(6) Includes 13,533 shares of Common Stock which may acquired pursuant to
warrants exercisable within sixty days of September 12, 1997.
(7) Less than one percent (1%).
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Based upon questionnaires received from each Selling Shareholder, set forth
below are the various relationships between each of the Selling Shareholders and
the Company that existed during the past three (3) years:
WALTER C. LOVETT - Mr. Lovett is the Vice President and Treasurer of
Atlantic Network Systems, Inc., a wholly-owned subsidiary of the Company. Mr.
Lovett was a principal shareholder of Atlantic Network Systems, Inc. prior to
its acquisition by the Company pursuant to a merger. The Shares included in
this offering that are being offered by Mr. Lovett were obtained by him pursuant
to such merger.
DOUGLAS L. ROBERSON - Mr. Roberson is the President of Atlantic Network
Systems, Inc. Mr. Roberson was a principal shareholder of Atlantic Network
Systems, Inc. prior to its acquisition by the Company pursuant to a merger. The
Shares included in this offering that are being offered by Mr. Roberson were
obtained by him pursuant to such merger.
B. TAYLOR KOONCE - Mr. Koonce is a sales manager of ANS.
EDWARD J. GORLITZ, JR. - Mr. Gorlitz is the President of EJG Techline,
Incorporated, a wholly-owned subsidiary of the Company. Mr. Gorlitz was a
principal shareholder of EJG Techline, Incorporated prior to its acquisition by
the Company pursuant to a merger. The Shares included in this offering that are
being offered by Mr. Gorlitz were obtained by him pursuant to such merger.
KATHLEEN M. GORLITZ - Ms. Gorlitz is an office manager of EJG Techline,
Incorporated. Ms. Gorlitz was a principal shareholder of EJG Techline,
Incorporated prior to its acquisition by the Company pursuant to a merger. The
Shares included in this offering that are being offered by Ms. Gorlitz were
obtained by her pursuant to such merger.
COLIN E. QUINN - Mr. Quinn is an employee of EJG Techline, Incorporated.
Mr. Quinn was a principal shareholder of EJG Techline, Incorporated prior to its
acquisition by the Company pursuant to a merger. The Shares included in this
offering that are being offered by Mr. Quinn were obtained by him pursuant to
such merger.
DIANE C. QUINN - Ms. Quinn was a principal shareholder of EJG Techline,
Incorporated prior to its acquisition by the Company pursuant to a merger. The
Shares included in this offering that are being offered by Ms. Quinn were
obtained by her pursuant to such merger.
ROSS CROSSLAND WESTON & CO. - Ross Crossland Weston & Co. served as the
investment advisor to the Hi-Tech shareholders with respect to the Hi-Tech
merger with the Company. The Shares included in this offering that are being
offered by Ross Crossland Weston & Co. were obtained by it for such services.
MAG-TEK, INC. - Mag-Tek, Inc. sold products to the Company that were used
in the Company's discontinued historical medical administrative data card
business.
Except as specifically set forth above, none of the Selling Shareholders
has, or within the past three years has had, any position, office or other
material relationship with the Company or any of its predecessors or affiliates.
USE OF PROCEEDS
The Company will not receive any of the proceeds of any sale by the Selling
Shareholders.
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold by the Selling Shareholders or,
subject to applicable law, by pledgees, donees, transferees or other successors
in interest (collectively with the Selling Shareholders, the "Sellers") acting
as principals for their own accounts. The Company will not receive any of the
proceeds of this offering.
The Sellers, directly or through brokers, dealers, underwriters, agents or
market makers, may sell some or all of the Shares. Any broker, dealer,
underwriter, agent or market maker participating in a transaction involving the
Shares may receive a commission from the Sellers. Usual and customary
commissions may be paid by the Sellers. The broker, dealer, underwriter or
market maker may agree to sell a specified number of the Shares at a stipulated
price per Share and, to the extent that such person is unable to do so acting as
an agent for the Sellers, to purchase as principal any of the Shares remaining
unsold at a price per Share required to fulfill the person's commitment to the
Sellers.
A broker, dealer, underwriter or market maker who acquires the Shares from
the Sellers as a principal for its own account may thereafter resell such Shares
from time to time in transactions (which may involve block or cross transactions
and which may also involve sales to or through another broker, dealer,
underwriter, agent or market maker, including transactions of the nature
described above) in the over-the-counter market, in negotiated transactions or
otherwise, at market prices prevailing at the time of the sale or at negotiated
prices. In connection with such resales, the broker, dealer, underwriter, agent
or market maker may pay commissions to or receive commissions from the
purchasers
-7-
<PAGE>
of the Shares. The Sellers also may sell some or all of the Shares directly to
purchasers without the assistance of a broker, dealer, underwriter, agent or
market maker and without the payment of any commissions.
Other than any commissions or discounts paid or allowed by the Sellers to
underwriters, dealers, brokers or agents, all expenses incurred in connection
with this offering are being borne by the Company.
Pursuant to the registration rights granted to the Selling Shareholders in
connection with the issuance of stock warrants or Common Stock to the Selling
Shareholders, the Company has agreed to indemnify the Selling Shareholders and
any person who controls a Selling Shareholder against certain liabilities and
expenses arising out of or based upon the information set forth or incorporated
by reference in this Prospectus, and the Registration Statement of which this
Prospectus is a part, including liabilities under the Securities Act. Any
commissions paid or any discounts or concessions allowed to any broker, dealer,
underwriter, agent or market maker and, if any such broker, dealer, underwriter,
agent or market maker purchases any of the Shares as principal, any profits
received on the resale of such Shares, may be deemed to be underwriting
commissions or discounts under the Securities Act.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for the
Company by Jaffe, Raitt, Heuer & Weiss, Professional Corporation, Detroit,
Michigan.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and March 31, 1996, and for the nine months ended December 31, 1996 and
the year ended March 31, 1996 included in the Company's Transition Report on
Form 10-KSB for the nine months ended December 31, 1996 and incorporated by
reference herein, have been audited by Coopers & Lybrand L.L.P., independent
accountants, to the extent and for the periods indicated in their reports and
have been incorporated herein in reliance on such reports given on the
authority of that firm as experts in accounting and auditing.
-8-
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
No dealer, salesperson or other individual has been authorized to give any
information or to make any representations not contained or incorporated by
reference in this Prospectus in connection with any offering to be made by the
Prospectus. If given or made, such information or representations must not be
relied upon as having been authorized by the Company. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
Securities, in any jurisdiction where, or to any person to whom, it is unlawful
to make such offer or solicitation. Neither the delivery of this Prospectus nor
any offer or sale made hereunder shall, under any circumstance, create an
implication that there has been no change in the facts set forth in this
Prospectus or in the affairs of the Company since the date hereof.
TABLE OF CONTENTS
PROSPECTUS
PAGE
Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents by Reference. . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
291,250 SHARES
ELTRAX SYSTEMS, INC.
COMMON STOCK
______________
PROSPECTUS
______________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
OCTOBER 2, 1997
-9-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the issuance and distribution of the securities being
registered.
Registration Fee . . . . . . . . . . . . . . . . . . . $552
Legal Fees and Expenses. . . . . . . . . . . . . . . . 5,000
Accounting Fees and Expenses . . . . . . . . . . . . . 3,000
Miscellaneous. . . . . . . . . . . . . . . . . . . . . 2,500
------
Total. . . . . . . . . . . . . . . . . . . . . . . . $11,052
------
------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article V of the Company's Amended and Restated Articles of Incorporation
limits the liability of its directors to the fullest extent permitted by the
Minnesota Business Corporation Act (the "MBCA"). Specifically, directors of the
Company will not be personally liable for monetary damages for breach of
fiduciary duty as directors, except liability for (i) any breach of the duty of
loyalty to the Company or its shareholders, (ii) acts or omissions not in good
faith or that involve intentional misconduct or a knowing violation of law,
(iii) dividends or other distributions of corporate assets that are in
contravention of certain statutory or contractual restrictions, (iv) violations
of certain Minnesota securities laws, or (v) any transaction from which the
director derives an improper personal benefit.
Article IV of the Company's restated Articles of Incorporation gives the
Company the power and authority to provide indemnification to officers,
directors, employees and agents of the Company to the fullest extent permissible
under the MBCA. Section 302A.521 of the MBCA requires that the Company
indemnify any director, officer or employee made or threatened to be made a
party to a proceeding, by reason of the former or present official capacity of
the person, against judgments, penalties, fines, settlements and reasonable
expenses incurred in connection with the proceeding if certain statutory
standards are met. "Proceeding" means a threatened, pending or completed civil,
criminal, administrative, arbitration or investigative proceeding, including a
derivative action in the name of the Company. Reference is made to the detailed
terms of Section 302A.531 of the MBCA for a complete statement of such
indemnification rights.
Article VII of the Company's Restated Bylaws provides that the Company
shall indemnify such persons, for such expenses and liabilities, in such manner,
under such circumstances, and to such extent, as permitted by the MBCA, as now
enacted or hereafter amended, provided that a determination is made in each
case, in the manner required by such statute, that the person seeking
indemnification is eligible therefor.
The Company maintains directors' and officers' liability insurance,
including a reimbursement policy in favor of the Company.
ITEM 16. EXHIBITS
Exhibit No. Description
----------- -----------
4.1 Form of Common Stock Certificate (Incorporated by
reference from Exhibit 4.1 of the Company's
Registration Statement on Form S-18, File No. 33-51456)
5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation, as to legality of securities
23.1 Consent of Coopers & Lybrand L.L.P., independent
accountants
23.2 Consent of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of
this registration statement)
II-1
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set
forth in this registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in
volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table set forth in this registration statement;
and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in this registration
statement or any material change to such information in this
registration statement;
provided, however, that subparagraphs (i) and (ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the Securities offered herein, 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.
The undersigned Registrant hereby undertakes that, for the purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the Securities offered herein, and the offering of such Securities
at that time shall be deemed to be the initial bona fide offering thereof; 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 provisions described under Item 15 above 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 against the Registrant 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-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all 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 Southfield, State of Michigan, on September 17, 1997.
ELTRAX SYSTEMS, INC.,
a Minnesota corporation
By: /s/ William P. O'Reilly
------------------------------------------------
William P. O'Reilly, Chairman of the Board
and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned officers and
directors of Eltrax Systems, Inc. hereby constitutes and appoints William P.
O'Reilly and Mack V. Traynor, III, or any of them, his attorneys-in-fact and
agents, with full power of substitution and resubstitution for him in any and
all capacities, to sign any or all amendments or post-effective amendments to
this Registration Statement, and to file the same, with exhibits thereto and
other documents in connection therewith or in connection with the registration
of the shares of Common Stock under the Securities Act of 1933, with the
Securities and Exchange Commission, granting unto each of such attorneys-in-fact
and agents full power and authority to do and perform each and every act and
thing requisite and necessary in connection with such matters as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that each of such attorneys-in-fact and agents or his substitute
or substitutes may 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 by the following persons in the
capacities and on the date indicated.
Name Title Date
---- ----- ----
/s/ William P. O'Reilly Chief Executive Officer, September 17, 1997
- -------------------------- Chairman of the Board of
William P. O'Reilly Directors, and Director
(principal executive
officer)
/s/ Mack V. Traynor, III Director September 18, 1997
- --------------------------
Mack V. Traynor, III
/s/ James C. Barnard Director September 17, 1997
- --------------------------
James C. Barnard
/s/ Patrick J. Dirk Director September 17, 1997
- --------------------------
Patrick J. Dirk
/s/ Mark D. Johnson Director September 23, 1997
- --------------------------
Mark D. Johnson
/s/ Clunet R. Lewis Director September 17, 1997
- --------------------------
Clunet R. Lewis
II-3
<PAGE>
Name Title Date
---- ----- ----
/s/ Thomas F. Madison Director September 19, 1997
- --------------------------
Thomas F. Madison
/s/ Nicholas J. Pyett Chief Financial Officer September 19, 1997
- -------------------------- (principal financial
Nicholas J. Pyett officer and principal
accounting officer)
II-4
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
4.1 Form of Common Stock Certificate (Incorporated by
reference from Exhibit 4.1 of the Company's
Registration Statement on Form S-18, File No. 33-51456)
5.1 Opinion of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation, as to legality of securities
23.1 Consent of Coopers & Lybrand L.L.P., independent
accountants
23.2 Consent of Jaffe, Raitt, Heuer & Weiss, Professional
Corporation (included in Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of
this registration statement)
II-5
<PAGE>
[LETTERHEAD]
October 2, 1997
Eltrax Systems, Inc.
2000 Town Center, Suite 690
Southfield, MI 48075
Gentlemen:
We have acted as counsel to Eltrax Systems, Inc. (the "Company"), a
Minnesota corporation, in connection with the registration by the Company of
291,250 shares (the "Shares") of Common Stock, $.01 par value per share ("Common
Stock") pursuant to a Registration Statement on Form S-3 to be filed with the
Securities and Exchange Commission on or about October 2, 1997 (the
"Registration Statement"). This opinion letter is furnished to you at your
request to enable you to fulfill the requirements of Item 601(b)(5) of
Regulation S-K, 17 C.F.R. 229.601(b)(5), in connection with the Registration
Statement.
We do not purport to be experts on or to express any opinion in this letter
concerning any law other than the laws of the State of Michigan and the
Minnesota Business Corporation Act, and this opinion is qualified accordingly.
This opinion is limited to the matters expressly set forth in this letter, and
no opinion is to be inferred or may be implied beyond the matters expressly so
stated. In rendering the opinion contained in this letter, we have assumed
without investigation that the information supplied to us by the Company is
accurate and complete.
For purposes of this opinion letter, we have examined copies of the
following documents:
A. An executed copy of the Registration Statement;
B. The Company's Amended and Restated Articles of Incorporation;
C. The Bylaws of the Company;
D. The Company's corporate minute book; and
E. An Officer's Certificate (the "Certificate"), a copy of which is
attached to this letter as Exhibit A.
The documents listed in items A-E above are collectively referred to as the
"Documents".
In rendering our opinion, we have assumed, without independent
verification, that: (i) all signatures are genuine; (ii) all Documents submitted
to us as originals are authentic; and (iii) all Documents submitted to us as
copies conform to the originals of such Documents. Our review has been limited
to examining the Documents and applicable law.
To the extent that any opinion in this letter relates to or is dependent
upon factual information, we have relied exclusively upon the factual
representations and warranties set forth in the Certificate, and we have not
undertaken to independently verify any such facts or information.
<PAGE>
Eltrax Systems, Inc.
October 2, 1997
Page 2
Based upon, subject to and limited by the foregoing, we are of the opinion
that, as of the date hereof:
1. The Shares that have been issued are validly issued, fully paid, and
non-assessable.
2. The Shares that may be issued in the future upon exercise of warrants (as
described in the Registration Statement) have been duly authorized.
3. Upon issuance of the Shares that are to be issued upon exercise of warrants
in accordance with such warrant agreements, such Shares will be validly
issued, fully paid, and non-assessable.
We hereby consent to the filing of this opinion letter as Exhibit 5.1 to
the Registration Statement, and to the use of the name of our firm in the
Prospectus under the caption "LEGAL MATTERS".
Very truly yours,
JAFFE, RAITT, HEUER & WEISS
Professional Corporation
/s/ Jeffrey L. Forman
Jeffrey L. Forman
<PAGE>
EXHIBIT "A"
OFFICER'S CERTIFICATE
The undersigned, the duly elected and acting Chief Executive Officer and
Chairman of the Board of ELTRAX SYSTEMS, INC., a Minnesota corporation (the
"Corporation"), hereby represents and warrants the following to Jaffe, Raitt,
Heuer & Weiss, professional corporation ("JRH&W"):
1. Eltrax Systems, Inc. ("Eltrax") is a corporation formed under the laws
of the State of Minnesota.
2. The Amended and Restated Articles of Incorporation of the Company have
not been amended since July 23, 1996.
September _____, 1997 ____________________________________________
William P. O'Reilly, Chief Executive Officer
and Chairman of the Board
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in this registration statement on Form S-3 of our
report dated March 28, 1997, on our audits of the consolidated financial
statements of Eltrax Systems, Inc., which report is incorporated by reference
from the Transition Report on Form 10-KSB for the nine month transition period
ending December 31, 1996. We also consent to the reference to our firm under
the caption "Experts."
Coppers & Lybrand L.L.P.
Minneapolis, Minnesota
September 26, 1997
