<PAGE>
PROSPECTUS DATED OCTOBER 8, 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 8, 1997.
<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 subsequently filed document that is also incorporated or deemed to
be incorporated by reference herein, modifies or
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<PAGE>
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 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.
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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.
Mr. and Ms. Norton hold approximately 520,000 shares of the Company's
common stock or approximately 6% of the number of shares outstanding. If Mr.
Norton and Ms. Norton succeed in requiring the Company to register their
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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.
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 approximately 4.1 million shares of common stock and
warrants to purchase approximately 850,000 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 520,000 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 Number of the Offering (2)(3)
Owned Prior to the 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)
</TABLE>
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<TABLE>
<CAPTION>
Shares Beneficially
Owned After
Shares of Common Completion of
Stock Beneficially Number of the Offering (2)(3)
Owned Prior to the Shares ------------------
Selling Shareholder Offering (1) Being Offered Number Percent
------------------- ------------ ------------- ------ -------
<S> <C> <C> <C> <C>
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)
--------- ------- --------- ------
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%).
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.
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<PAGE>
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 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.
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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
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Available Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Incorporation of Certain Documents
by Reference. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
The Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Selling Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
291,250 SHARES
ELTRAX SYSTEMS, INC.
COMMON STOCK
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PROSPECTUS
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OCTOBER 8, 1997
