<PAGE>
As filed with the Securities and Exchange Commission on May 29, 1998
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, 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]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) 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 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,
check the following box. [ ]
---------------
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- ------------------------------------ -------------------------------------------------------------------------------
Amount to be Proposed Maximum Amount of
Title of Each Class of Securities Registered Aggregate Offering Price (1) Registration Fee
- ------------------------------------ -------------------------------------------------------------------------------
<S> <C> <C> <C>
Common Stock, $.01 par value 3,271,667 shares $23,208,388 $6,847
- ------------------------------------ -------------------------------------------------------------------------------
</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 May 27, 1998 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.
<PAGE>
SUBJECT TO COMPLETION
PROSPECTUS DATED MAY 29, 1998
PROSPECTUS
3,271,667 SHARES
ELTRAX SYSTEMS, INC.
COMMON STOCK
This Prospectus relates to 3,271,667 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 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 May 27, 1998, the last reported sale price of the
Common Stock on the NASDAQ SmallCap Market System was $7.00 per share.
SEE "RISK FACTORS" ON PAGE 3 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 May 29, 1998.
-1-
<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 Annual Report on Form 10-KSB for the year ended
December 31, 1997, filed with the Commission on March 27, 1998 and
amended by Amendment No. 1 on Form 10-KSB/A filed with the
Commission on April 17, 1998.
2. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A (File No. 0-22190).
3. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998, filed with the Commission on May 12, 1998.
All documents that are filed pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act, subsequent to the date of this Prospectus and
prior to termination of the offering to which this Prospectus relates, are
incorporated by reference into this Prospectus, and they shall be considered
part hereof from the date of filing of such document.
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"), is a nationwide managed
network services company, providing communications products and services for
enterprise wide networks. Eltrax designs and installs networking systems for
corporate and government customers. The Company also provides
-2-
<PAGE>
monitoring, management, and maintenance services to support enterprise
networks. Eltrax has acquired several independent companies over the last two
years, and these acquisitions now comprise Eltrax's national network of
regional operations.
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, including a loss of $11,332,000 in 1997. As of March 31,
1998, the Company had an accumulated deficit of approximately $17,500,000. 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 two years, the Company has merged with or acquired seven 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.
NETWORK MANAGEMENT SERVICES. During the first quarter of 1998, the Company
began offering network management services on a nationwide basis. This effort is
part of the Company's long-term strategic plan, and represents an extension of
the Company's current service offerings. This effort has required capital
expenditures and expenditures for management, sales, and marketing personnel,
and technical resources. The success of this new line of business depends upon
the Company's ability to successfully market and deliver these services. 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
-3-
<PAGE>
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.
COMPETITION. Competition in the data communications industry is intense
and is expected to increase. The Company's current competitors include many
which 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. Many also have long-standing customer
relationships with large enterprises that are part of the Company's target
market and these relationships may make it more difficult to complete sales
of the Company's products to these enterprises. The Company expects increased
competition, particularly in the networking market. Increased competition
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 that the Company will be able to compete successfully in the
future.
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.
NEED FOR ADDITIONAL CAPITAL. 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 Company anticipates that cash may be
required to achieve this goal. The Company believes it has adequate access to
funding sources for its acquisitions in the short term, however, there can be
no assurances that cash will be available at acceptable levels when required.
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 acquisitions hold approximately 4.5 million shares of common
stock and warrants to purchase approximately 875,000 shares of the common
stock (1,275,000 shares of which are being registered for sale pursuant to
this Prospectus). 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. 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.
-4-
<PAGE>
SELLING SHAREHOLDERS
Each of the Selling Shareholders is an owner of shares of Common Stock
("Shares") and Warrant(s), pursuant to which Shares will be acquired ("Warrant
Shares"). The following table sets forth specified information regarding the
Selling Shareholders and the Shares, Warrants, and Warrant Shares beneficially
owned by them:
<TABLE>
<CAPTION>
Shares Beneficially
Owned After
Completion
Shares of the Offering
Beneficially Owned Number of Shares ---------------
Selling Shareholders Prior to the Offering(1) Being Offered Number(2) Percentage(3)
- -------------------- ----------------------- ---------------- -------- ------------
<S> <C> <C> <C> <C>
Douglas R. Aldridge 25,000(4) 25,000(5) 0 (6)
Edward C. Barrett 422,623(7) 25,000 397,623 3.7%
Broadland Capital
Partners L.P. 196,667(8) 166,667(9) 30,000 (6)
Christopher C. Demetree 150,000(10) 150,000(11) 0 (6)
Elisa A. Demetree 50,000(12) 50,000(13) 0 (6)
J. C. Demetree, Jr. 207,500(14) 187,500(15) 20,000 (6)
Mark Demetree 187,500(16) 187,500(17) 0 (6)
David C. Drysdale 100,000(18) 100,000(19) 0 (6)
</TABLE>
- -----------------------
1 Based upon questionnaires received from the Selling Shareholders 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 May 1,
1998. 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 the Selling Shareholders are not obligated to sell any Shares.
3 Based upon 10,856,771 shares of Common Stock outstanding as of May 8,
1998, as reported in the Company's Quarterly Report on Form 10-Q for the
period ended March 31, 1998, and rounded to the nearest one-tenth of one
percent.
4 Includes a Warrant to purchase 12,500 Warrant Shares.
5 12,500 Shares and 12,500 Warrant Shares.
6 Less than one percent (1%).
7 Includes options to acquire 4,500 Shares.
8 Includes Warrants to purchase 186,667 Warrant Shares.
9 166,667 Warrant Shares.
10 Includes a Warrant to purchase 75,000 Warrant Shares.
11 75,000 Shares and 75,000 Warrant Shares.
12 Includes a Warrant to purchase 25,000 Warrant Shares.
13 25,000 Shares and 25,000 Warrant Shares.
14 Includes a Warrant to purchase 100,000 Warrant Shares.
15 87,500 Shares and 100,000 Warrant Shares.
16 Includes a Warrant to purchase 100,000 Warrant Shares.
17 87,500 Shares and 100,000 Warrant Shares.
18 Includes a Warrant to purchase 50,000 Warrant Shares.
19 50,000 Shares and 50,000 Warrant Shares.
-5-
<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Owned After
Completion
Shares of the Offering
Beneficially Owned Number of Shares ---------------
Selling Shareholders Prior to the Offering(1) Being Offered Number(2) Percentage(3)
- -------------------- ----------------------- ---------------- -------- ------------
<S> <C> <C> <C> <C>
R. Neale Fisher 3,566(20) 2,500(21) 1,066 (6)
Virginia A. Fisher 3,566(22) 2,500(23) 1,066 (6)
Nanci Wolf Freedman 185,000(24) 100,000(25) 85,000 (6)
Mark A. Gergel 26,000(26) 25,000(27) 1,000 (6)
Richard Greene 75,000(28) 75,000(29) 0 (6)
Investors Equity, Inc. 69,663(30) 37,500(31) 32,163 (6)
Margaret Chapman Jackson 108,000(32) 100,000(33) 8,000 (6)
Kanawha Insurance Co. 50,000(34) 50,000(35) 0 (6)
Lancaster & Chester
Railway Company 270,000(36) 250,000(37) 20,000 (6)
Clunet R. Lewis 437,053(38) 285,714(39) 151,339 1.4%
William P. O'Reilly 1,433,266(40) 628,572(41) 804,694 7.4%
I.L. O'Sullivan, Jr. 50,000(42) 50,000(43) 0 (6)
</TABLE>
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20 Includes a Warrant to purchase 1,250 Warrant Shares.
21 1,250 Shares and 1,250 Warrant Shares.
22 Includes a Warrant to purchase 1,250 Warrant Shares.
23 1,250 Shares and 1,250 Warrant Shares.
24 Includes a Warrant to purchase 50,000 Warrant Shares.
25 50,000 Shares and 50,000 Warrant Shares.
26 Includes a Warrant to purchase 12,500 Warrant Shares and 1,000 Shares F/B/O
children.
27 12,500 Shares and 12,500 Warrant Shares.
28 Includes a Warrant to purchase 37,500 Warrant Shares.
29 37,500 Shares and 37,500 Warrant Shares.
30 Includes a Warrant to purchase 18,750 Warrant Shares. Mr. Robert W. Fisher is
a principal in Investors, Equity, Inc. and is also a principal in Webbmont
Holdings, L.P. (see footnote 56)
31 18,750 Shares and 18,750 Warrant Shares.
32 Includes a Warrant to purchase 50,000 Warrant Shares and 1,000 Shares F/B/O a
minor child.
33 50,000 Shares and 50,000 Warrant Shares.
34 Includes a Warrant to purchase 25,000 Warrant Shares.
35 25,000 Shares and 25,000 Warrant Shares.
36 Includes a Warrant to purchase 125,000 Warrant Shares.
37 125,000 Shares and 125,000 Warrant Shares.
38 Includes Warrants to purchase 142,857 Warrant Shares and options to purchase
135,500 Shares.
39 142,857 Shares and 142,857 Warrant Shares.
40 Includes Warrants to purchase 314,286 Warrant Shares, a Warrant to purchase
100,000 Warrant Shares owned by The William P. O'Reilly TTEE 1997 Charitable
Remainder Unitrust UAD 2/17/97 (see footnote 58); and options to purchase
235,500 Shares.
41 314,286 Shares and 314,286 Warrant Shares.
42 Includes a Warrant to purchase 25,000 Warrant Shares.
43 25,000 Shares and 25,000 Warrant Shares.
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<PAGE>
<TABLE>
<CAPTION>
Shares Beneficially
Owned After
Completion
Shares of the Offering
Beneficially Owned Number of Shares ---------------
Selling Shareholders Prior to the Offering(1) Being Offered Number(2) Percentage(3)
- -------------------- ----------------------- ---------------- -------- ------------
<S> <C> <C> <C> <C>
Morgan Q. & Cynthia Payne 317,147(44) 100,000(45) 217,147 2.0%
Raville 1994 Family
Limited Partnership 50,000(46) 50,000(47) 0 (6)
John D. Soffe 100,000(48) 100,000(49) 0 (6)
David W. Spatz 135,474 5,000 130,474 1.2%
Sterne Agee Investors No. 1 75,000(50) 75,000(51) 0 (6)
Richard H. Stewart 64,850(52) 50,000(53) 14,850 (6)
Mack V. Traynor, III 500,000(54) 85,714(55) 414,286 3.8%
Webbmont Holdings, L.P. 250,750(56) 107,500(57) 143,250 1.3%
William P. O'Reilly TTEE
1997 Charitable Remainder
Unitrust UAD 2/17/97 200,000(58) 200,000(59) 0 (6)
</TABLE>
Based upon questionnaires received from the Selling Shareholders in
connection with the preparation of the Registration Statement on Form S-3, of
which this Prospectus is a part, the Selling Shareholders had the following
relationships with the Company during the past three (3) years:
EDWARD C. BARRETT: Mr. Barrett has been the Company's Executive Vice President
and Chief Operating Officer since February 9, 1998. Mr. Barrett was the
President of the Company's Hi-Tech Connections, Inc. subsidiary from its
acquisition by the Company in August 1997 until the end of 1997. Prior to the
acquisition of Hi-Tech by the Company, Mr. Barrett was the President, a
director, and a principal shareholder of Hi-Tech.
CLUNET R. LEWIS: Mr. Lewis has served as a director of the Company since 1995
and as Secretary and General Counsel of the Company since April 1997. From
September 1996 to March 1997, Mr. Lewis served
- --------------------------
44 Includes a Warrant to purchase 50,000 Warrant Shares; warrants to purchase
186,667 Shares that are owned by Broadland Capital Partners L.P., 166,667 of
which are part of this offering (see footnote 8); 100 shares of Common Stock
owned by Mr. Payne C/F Jennifer Payne; 10,000 Shares owned by Broadland Capital
Partners, L.P; and 900 shares of Common Stock owned by Broadland Capital, Inc.
45 Includes 50,000 Shares and 50,000 Warrant Shares.
46 Includes a Warrant to purchase 25,000 Warrant Shares. Mr. Stephen E. Raville,
who is the general partner of the Raville 1994 Family Limited Partnership and is
a director of the Company, also owns 50,000 Shares and options to purchase
35,000 Shares, individually, which are not included in this number.
47 25,000 Shares and 25,000 Warrant Shares.
48 Includes a Warrant to purchase 50,000 Warrant Shares.
49 50,000 Shares and 50,000 Warrant Shares.
50 Includes a Warrant to purchase 37,500 Warrant Shares.
51 37,500 Shares and 37,500 Warrant Shares.
52 Includes a Warrant to purchase 25,000 Warrant Shares.
53 25,000 Shares and 25,000 Warrant Shares.
54 Includes Warrants to purchase 42,857 Warrant Shares and options to purchase
278,447 Shares.
55 42,857 Shares and 42,857 Warrant Shares.
56 Includes a Warrant to purchase 53,750 Warrant Shares.
57 53,750 Shares and 53,750 Warrant Shares.
58 Includes a Warrant to purchase 100,000 Warrant Shares.
59 100,000 Shares and 100,000 Warrant Shares.
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<PAGE>
as Acting Chief Financial Officer of the Company. Mr. Lewis was a consultant to
the Company from June 1996 until April 1997, at which time he became an employee
of the Company.
MORGAN Q. PAYNE: Mr. Payne has acted as a consultant to the Company continuously
since February 9, 1996.
WILLIAM P. O'REILLY: Mr. O'Reilly has served as a director and Chairman of the
Board of the Company since 1995 and as Chief Executive Officer of the Company
since January 1997. Mr. O'Reilly was a consultant to the Company from June 1996
until April 1997, at which time he became an employee of the Company.
RAVILLE 1994 FAMILY LIMITED PARTNERSHIP: Stephen E. Raville, the general partner
of The Raville 1994 Family Limited Partnership, has served as a director of the
Company since October 1997.
MACK V. TRAYNOR: Mr. Traynor has served as a director of the Company since 1995.
Mr. Traynor also served as the Chief Executive Officer of the Company from
August 1995 to January 1997, President of the Company from August 1995 to
September 1997, and Chief Financial Officer of the Company from September 1995
to May 1996.
Except as specifically set forth above, none of the Selling Shareholders
has had any position, office or other material relationship with the Company or
any of its predecessors or affiliates, within the past three years.
USE OF PROCEEDS
The Company will not receive any of the proceeds of any sale by the Selling
Shareholders. However, each Selling Shareholder has notified the Company
that it will exercise its Warrants to acquire the Warrant Shares. The
exercise of such Warrants will result in net cash proceeds to the Company of
approximately $6,500,000. These funds will be used to pay down the Company's
credit line (the balance of which was approximately $4,712,000 as of May 28,
1998), with the remainder being used for general corporate purposes.
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. The Sellers may pay usual and
customary commissions. 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 the Shares and or stock warrants to acquire the
Warrant Shares, the Company has agreed to indemnify the Selling Shareholders
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.
-8-
<PAGE>
LEGAL MATTERS
Jaffe, Raitt, Heuer & Weiss, Professional Corporation, of Detroit, Michigan
will pass on the legality of the Shares for the Company.
EXPERTS
The consolidated balance sheets as of December 31, 1997 and 1996, and the
consolidated statements of operations, shareholders' equity and cash flows for
the year ended December 31, 1997 and the nine months ended December 31, 1996,
incorporated by reference in this prospectus, have been incorporated herein in
reliance on the report of Coopers & Lybrand L.L.P., independent accountants,
given on the authority of that firm as experts in accounting and auditing.
-9-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
======================================= ========================================
No dealer, salesperson or other
individual has been authorized to give
any information or to make any 3,271,667 SHARES
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, ELTRAX SYSTEMS, INC.
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 COMMON STOCK
PROSPECTUS ------------
PROSPECTUS
Page
------------
Available Information.....................2
Incorporation of Certain Documents by
Reference........................2
The Company...............................2
Risk Factors..............................3
Selling Shareholders......................5
Use of Proceeds...........................8
Plan of Distribution......................8
Legal Matters.............................9
Experts...................................9
======================================= ========================================
May 29, 1998
</TABLE>
-10-
<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.
<TABLE>
<CAPTION>
<S> <C>
Registration Fee........................................$ 6,847
Legal Fees and Expenses................................. 2,000
Accounting Fees and Expenses............................ 4,000
Miscellaneous........................................... 1,000
-------
Total...................................................$13,847
-------
-------
</TABLE>
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
<TABLE>
<CAPTION>
<S> <C>
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)
</TABLE>
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 May 27, 1998.
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 Clunet R. Lewis, or either 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.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/s/ William P. O'Reilly Chief Executive Officer, Chairman of May 27, 1998
--------------------------------- the Board of Directors, and Director
William P. O'Reilly (principal executive officer)
/s/ Clunet R. Lewis Director May 27, 1998
---------------------------------
Clunet R. Lewis
/s/ James C. Barnard Director May 27, 1998
---------------------------------
James C. Barnard
/s/ Patrick J. Dirk Director May 27, 1998
---------------------------------
Patrick J. Dirk
/s/ Stephen E. Raville Director May 27, 1998
---------------------------------
Stephen E. Raville
/s/ Mack V. Traynor, III Director May 27, 1998
---------------------------------
Mack V. Traynor, III
</TABLE>
II-3
<PAGE>
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
Director May , 1998
---------------------------------
Thomas F. Madison
/s/ Nicholas J. Pyett Chief Financial Officer (principal May 27, 1998
--------------------------------- financial officer and principal
/s/ Nicholas J. Pyett accounting officer)
</TABLE>
II-4
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
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
</TABLE>
<PAGE>
[JAFFE, RAITT, HEUER & WEISS LETTERHEAD]
May 28, 1998
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
3,271,667 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 May 29, 1998 (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.
May 28, 1998
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.
May 28, 1998 --------------------------------------
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 26, 1998, on our audits of the financial statements of Eltrax
Systems, Inc. We also consent to the reference to our firm under the captions
"Experts."
Coopers & Lybrand L.L.P.
Detroit, Michigan
May 29, 1998
