AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 28, 1998
Registration No. 333-_________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------------------
NATIONAL TECHTEAM, INC.
(Exact name of registrant, specified in its charter)
---------------------------------
DELAWARE 7379 38-3774613
(State or other (Primary Standard (I.R.S.
jurisdiction of Industrial Employer
incorporation or Classification Identification No.)
organization) Number)
835 Mason Street, Suite 200
Dearborn, Michigan 48124
(313) 277-2277
(Address, including zip code, and telephone
number, including area code, of registrant's
principal executive offices)
-------------------------------
Robert A. Hudson, Esquire
Berry Moorman P.C.
600 Woodbridge Place
Detroit, Michigan 48226
(313) 5671000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please check the
following box. / /
<PAGE>
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, 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 the delivery of the prospectus is expected to be made pursuant to
Rule 434, please check the following box. / /
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH CLASS OF AMOUNT TO PROPOSED PROPOSED AMOUNT
SECURITIES TO BE BE MAXIMUM MAXIMUM OF
REGISTERED REGISTERED OFFERING AGGREGATE REGISTRATION
PRICE PER OFFERING FEE
SHARE(1) PRICE(1)
Common Stock, 350,000 $ 8.63 $ 3,020,500 $ 891.05
par value
$.01 per share
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(1) The registration fee is calculated pursuant to Rule 457(c) based on
the average of the high and low sales prices on the NASDAQ National
Market on May 27, 1998.
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 HAS 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 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 THESE
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
Preliminary Prospectus Dated May 28, 1998
Prospectus NATIONAL TECHTEAM, INC.
350,000 Shares of Common Stock
All of the 350,000 shares of Common Stock offered hereby (the
"Shares") are being offered for the account of a shareholder (the "Selling
Shareholder") of National TechTeam, Inc. (the "Company"). See "Selling
Shareholder." The Selling Shareholder is a former shareholder of Capricorn
Capital Group, Inc. ("Capricorn") and acquired the Shares in January, 1998,
pursuant to an Agreement and Plan of Merger dated January 30, 1998, between
Capricorn, the Company and TechTeam Acquisition No. 1, Inc., a wholly-owned
subsidiary of the Company, pursuant to which TechTeam Acquisition No. 1, Inc.
acquired all of the outstanding shares of capital stock of Capricorn. The
Company will not receive any of the proceeds from the sale of the Shares by
the Selling Shareholder.
The Company has been advised by the Selling Shareholder that the
Shares may be offered or sold by or for the account of such Selling
Shareholder from time to time, at prices and on terms to be determined at the
time of sale, to purchasers directly or through underwriters, brokers,
dealers or agents, who may receive compensation in the form of underwriting
discounts, commissions or concessions. From time to time the Selling
Shareholder may engage in short sales, short sales versus the box, puts and
calls and other transactions in securities of the Company, or derivatives
thereof, and may sell and deliver the Shares in connection therewith. The
Selling Shareholder and any brokers, dealers, agents or underwriters that
participate with the Selling Shareholder in the distribution of Shares may be
deemed to be "underwriters" within the meaning of the Securities Act, in
which event any discounts, concessions and commissions received by such
brokers, dealers, agents or underwriters and any profit on the resale of the
Shares purchased by them may be deemed to be underwriting discounts and
commissions under the Securities Act. The aggregate net proceeds to the
Selling Shareholder from the sale of the Shares offered by the Selling
Shareholder hereby will be the purchase price of such Shares, less any
commissions, if any, and other expenses of issuance and distribution not
borne by the Company. See "Plan of Distribution."
The Common Stock is quoted on the NASDAQ National Market under the
symbol "TEAM." On May 27, 1998, the closing price of the Common Stock was
$8.50 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 4.
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 28, 1998.
<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, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information can be inspected and copied at the
public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the following Regional
Offices of the Commission: Seven World Trade Center, 13th Floor, New York, NY
10048; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material may also be obtained at prescribed
rates from the Public Reference Section of the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549. The Commission maintains a
web site (http://www.sec.gov) that contains reports, proxy statements and
other information regarding registrants that file electronically with the
Commission.
In addition, the Company's Common Stock is quoted on the NASDAQ
National Market System. Reports, proxy and information statements and other
information concerning the Company can be inspected at the offices of the
National Association of Securities Dealers, Inc., 1735 K Street, N.W.,
Washington, D.C. 20006.
The Company has filed with the Commission a registration statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the Common
Stock offered hereby. This Prospectus does not contain all of the information
set forth in the Registration Statement. For further information with respect
to the Company and the Common Stock offered hereby, reference is made to the
Registration Statement. Statements contained herein concerning any document
are not necessarily complete and, in each instance, reference is made to the
copy of such document filed as an exhibit to the Registration Statement. Each
such statement is qualified in its entirety by such reference. Copies of all
or any part of the Registration Statement, including exhibits thereto, may be
obtained, upon payment of the prescribed fees, at the offices of the
Commission.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The Company hereby incorporates by reference:
1. The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
2. The Company's Current Report on Form 8-K as filed with the SEC
February 13, 1998.
3. The Company's Current Report on Form 8-K/A as filed with the SEC
April 14, 1998.
4. The Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998.
5. The descriptions of the Company's Common Stock that are contained
in the Registration Statement on Form 8-A filed by the Company to register
such securities under Section 12 of the Exchange Act, File No. 0-16284,
including any amendment or report filed for the purpose of updating such
descriptions.
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<PAGE>
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering described herein
shall be deemed to be incorporated by reference in the Registration Statement
and to be a part hereof from the date of filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated
by reference herein shall be deemed to be modified or superseded for purposes
hereof to the extent that a statement contained herein or any subsequently
filed document which is deemed to be incorporated by reference herein
modifies or supersedes such document. Any statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a
part hereof.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon written or oral request, a copy of
any document incorporated herein by reference (other than exhibits to such
document which are not specifically incorporated by reference in such
document). Requests for such documents should be directed to: National
TechTeam, Inc., Attn: G.K. DeSantis, 835 Mason Street, Suite 200, Dearborn,
Michigan 48124, telephone (313) 277-2277. In order to insure timely delivery
of the documents, any request should be made by no later than five business
days prior to the date on which such person must make a final investment
decision.
THE COMPANY
National TechTeam, Inc. ("TechTeam" or "Company") is a leading
provider of information technology ("IT") outsourcing support services to
large national and multi-national corporations, government agencies and
service organizations. The Company offers its services through two global
business units: (i) Call Center Services, which provides its clients with
inbound telephone support for their computer product end-users and (ii)
Corporate Computer Services, which provides corporations with technical
staffing (principally on-site help desk support), systems integration and
instructor-led, computer-based training. TechTeam's client base includes a
significant number of major corporations and many of TechTeam's clients
utilize services offered by both of TechTeam's business units.
FORWARD-LOOKING INFORMATION
This Prospectus incorporates by reference certain forward-looking
statements and information relating to the Company that are based on the
beliefs of the Company's management as well as assumptions made by and
information currently available to the Company's management. When used in the
documents incorporated by reference, the words "anticipate", "believe",
"estimate", "expect" and similar expressions, as they relate to the Company
or the Company's management, are intended to identify forward-looking
statements. Such statements reflect the current view of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions that are detailed below under "Risk Factors." These risks may
include, without limitation, those related to concentration of revenues,
management of growth, competition, reliance on key executives, attraction and
retention of employees, economic conditions, international operations, user
acceptance, rapid technology changes and dependence on new solutions and
technological difficulties. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as
anticipated, believed, estimated or expected. The Company does not intend to
update these forward-looking statements.
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<PAGE>
RISK FACTORS
RESTATEMENT OF FINANCIAL STATEMENTS
In November, 1997, the Company announced it was restating its
results of operations for the fourth quarter of 1996 and for the first two
quarters of 1997, reflecting significant reductions in reported revenues and
earnings and resulting in reporting a net loss in each of the first two
quarters of 1997 and a significant reduction in net income for 1996. The
cumulative effect of the restatement negatively impacts the Company's
December 31, 1997 financial condition. See Notes to the Consolidated
Financial Statements -- Note A, Restatement of Previously Issued Financial
Statements. In addition, the Company's restated first quarter and second
quarter 1997 revenues and operating results were not favorable when compared
to the same 1996 quarters. The Company believes that there may continue to be
a negative impact on the Company from the restatement.
LITIGATION
Commencing in August 1997, several class action lawsuits were filed
in the United States District Court for the Eastern District of Michigan
against the Company and two of its officers. On January 22, 1998 those
actions were consolidated into a single action. Plaintiffs in the underlying
actions purport to represent various classes consisting of all persons who
purchased shares of the Company's common stock during certain class periods,
the longest of which is from September 27, 1996 through July 18, 1997.
Plaintiffs allege in their complaints that the Company and the individual
defendants engaged in a scheme to artificially inflate the price of the
Company's common stock by improperly accelerating the recognition of revenue
from the licensing of the Company's proprietary software. Plaintiffs assert
claims against all defendants for alleged violations of Section 10(b) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder as well
as claims against the individual defendants for alleged "controlling person"
liability under Section 20(a) of the Securities Exchange Act. While
Management believes that meritorious defenses exist to plaintiffs' claims,
the disposition of this litigation could have a material adverse effect on
the Company's financial condition, results of operations and cash flows.
In addition, the Company is subject of a related investigation
initiated on September 9, 1997 by the United States Securities and Exchange
Commission ("SEC"). The SEC has stated that the purpose of the investigation
is to determine whether the Company may have violated certain provisions of
the Securities Act of 1933 and the Securities Exchange Act of 1934 in
connection with its recognition of revenue from the licensing of its
proprietary software. This investigation is ongoing and the outcome cannot be
predicted at this time, although the Company believes it has complied fully
with all applicable provisions of the federal securities laws.
IMPACT OF BUSINESS WITH MAJOR CLIENTS
Historically, TechTeam has been heavily dependent upon major clients
for a substantial portion of its revenues. Any loss of (or failure to retain
a significant amount of business with) its key clients could have a material
adverse impact on the Company. Until 1996, Ford Motor Company ("Ford") was
TechTeam's largest client. Ford accounted for 33.1%, 22.6% and 21.3% of the
Company's revenue for the years ended December 31, 1995, 1996, and 1997,
respectively. Ford represented significantly higher proportions of TechTeam's
revenues in earlier years. In 1996, Hewlett-Packard became
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<PAGE>
TechTeam's largest client, representing 26.7% of TechTeam's revenues in that
year. In 1997, Hewlett-Packard accounted for 21.3% of the Company's revenues.
In the past several years, Chrysler Corporation ("Chrysler") has also become
a major client, representing between 5 and 10% of the Company's total
revenues. In 1997, the percentage of total revenues derived from Chrysler
increased to 14.6%, and United Parcel Service became a significant client
generating 6.5% of total revenues. Those clients will continue to constitute
a high percentage of TechTeam's revenues for the foreseeable future. As of
March 31, 1998, the OEM call center business conducted directly by TechTeam
will be substantially reduced due to the scheduled termination of the two
largest of its eight contracts with Hewlett-Packard. In April 1998, TechTeam,
in keeping with its strategic focus on corporate help desk solutions, sold
its remaining OEM call center product support business to its joint venture
with General Electric.
Management recognizes the need to diversify its client base from
both a client and industry perspective. TechTeam's services are not specific
to any single industry and can be beneficial to most large corporations.
TechTeam's technical staffing and training programs cover most of the popular
software applications and can be customized to improve the productivity of
microcomputer users in most companies.
MANAGEMENT OF GROWTH
The Company's revenues have grown from $34.3 million in 1994 to
$47.1 million in 1995, $72.2 million in 1996 and $81.3 million in 1997. The
Company intends to pursue the continued growth of its business; however,
there can be no assurance that such growth will be achieved. The Company's
future operating results will depend in part on management's ability to
manage any future growth and control expenses. An unexpected decline in
revenues without a corresponding and timely reduction in staffing and other
expenses, or a staffing increase that is not accompanied by a corresponding
increase in revenues, could have a material adverse effect on the Company's
operating results.
Although the market in which the Company participates has
experienced significant growth in recent years, continued growth in the
industry may be adversely impacted by, among other things, recessionary
pressures or a slowdown in the rate of technological advances. A slowdown or
reversal of industry growth could impact the Company's ability to grow.
COMPETITION
The Company faces intense competition in both the call center and
corporate computer services markets. In the call center market, the Company
competes with other call center companies, some of which have substantially
greater resources including more call center locations, greater financial
resources, a larger client base and more name recognition. In the corporate
computer services market, the Company competes with many entities including
systems implementation firms, application software firms, staffing firms,
large accounting firms, facilities management firms and computer consulting
firms. Many of these firms have far greater resources, clients and name
recognition than the Company.
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<PAGE>
The Company also faces significant competition in both markets from
its own clients and potential clients whose internal resources represent a
fixed cost to the client. Such competition may impose additional pricing
pressures on the Company. There can be no assurance that the Company will
compete successfully with its existing competitors or with any new
competitors.
CONTRACT RISKS
The great majority of the Company's contracts are terminable without
cause on short notice, often upon 90 days notice. Several other of the
Company's contracts expire on set dates and may not be renewed or replaced.
Terminations and non-renewals of major contracts can have a significant
impact upon the Company's revenues and operating results.
RELIANCE ON KEY EXECUTIVES
The success of the Company is highly dependent upon the efforts and
abilities of its executive officers, particularly William F. Coyro, Jr., the
Company's founder, Chairman and Chief Executive Officer. Other than Harry A.
Lewis, President and Chief Operating Officer, none of the Company's key
executives are subject to employment contracts, and the Company does not
maintain key-man insurance on its executives. The loss of the services of any
of these key executives for any reason could have a material adverse effect
on the Company's business, operating results and financial condition.
ATTRACTION AND RETENTION OF EMPLOYEES
The Company's business involves the delivery of professional
services and is labor-intensive. The Company's success depends in large part
upon its ability to attract, develop, motivate and retain highly skilled
technical employees. Qualified technical employees are in great demand and
are likely to remain a limited resource for the foreseeable future. There can
be no assurance that the Company will be able to attract and retain
sufficient numbers of highly skilled technical employees in the future. The
loss of technical personnel could have a material adverse effect on the
Company's business, operating results and financial condition, including its
ability to secure and complete engagements.
PROJECT RISKS
Many of the Company's engagements involve projects that are critical
to the operations of its clients' businesses and provide benefits that may be
difficult to quantify. The Company's failure or inability to meet a client's
expectations in the performance of its services could result in a material
adverse change to the client's operations and therefore could give rise to
claims against the Company or damage the Company's reputation, adversely
affecting its relationship with its client, its business, operating results
and financial condition.
VARIABILITY OF QUARTERLY OPERATING RESULTS
Variations in the Company's revenue and operating results occur from
time to time as a result of a number of factors, such as the significance of
client engagements commenced and completed during a quarter, the number of
business days in a quarter and employee hiring and utilization rates. The
timing of revenues is difficult to forecast because the Company's sales cycle
can be relatively long and may depend on factors such as the size and scope
of assignments and general economic conditions.
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<PAGE>
Because a high percentage of the Company's expenses are relatively fixed, a
variation in the number of clients, assignments or the timing of the
initiation or the completion of client assignments, particularly at or near
the end of any quarter, can cause significant variations in operating results
from quarter to quarter and could result in losses to the Company. In
addition, the Company's engagements generally are terminable by the client
without penalty.
VOLATILITY OF STOCK PRICE
The market price of the Company's common stock has fluctuated over a
wide range during the past several years and may continue to do so in the
future. The market price of the common stock could be subject to significant
fluctuations in response to various factors or events, including, among other
things, the depth and liquidity of the trading market of the common stock,
quarterly variations and actual anticipated operating results, growth rates,
changes in estimates by analysts, market conditions in the industry in which
the Company competes, announcements by competitors, regulatory actions,
litigation including class action litigation and general economic conditions.
In addition, the stock market has from time to time experienced significant
price and volume fluctuations, which have particularly affected the market
prices of the stocks of high technology companies. As result of the
foregoing, the Company's operating results and prospects from time to time
may be below the expectations of public market analysts and investors. Any
such event would likely result in a material adverse effect on the price of
the common stock.
CYCLICALITY
Certain of the Company's clients and potential clients are in
industries, such as the automobile and financial services industries, that
experience cyclical variations in profitability, which may in turn affect
their willingness or ability to fund systems projects such as those for which
the Company may be engaged. The Company's experience indicates, however, that
competitive pressures in cyclical industries could compel businesses to
undertake projects even during periods of losses or reduced profitability.
INTERRUPTION OF TELECOMMUNICATIONS SERVICES
The Company's operations are dependent on its ability to protect its
call centers against damage from fire, power loss, telecommunications failure
or similar event. The Company has taken precautions to protect itself from
events that could interrupt its operations, including off-site storage of
back-up data, contractual arrangements for back-up facilities with a leading
disaster recovery services company and Halon fire suppression systems in the
data centers (which are designed to extinguish a fire without damaging
computer equipment). No assurance can be given that such precautions will be
adequate, and operations may still be interrupted, even for extended periods.
In addition, the on-line services provided by the Company are dependent on
telecommunications links to the regional Bell operating companies for which
the Company currently has no back-up. Any damage to call centers or any
failure of the Company's telecommunication links that cause interruptions in
the Company's operations could have a material adverse effect on the
Company's business, operating results or financial condition. The Company's
property and business interruption insurance with current limits of $2
million may not be adequate to compensate the Company for all losses that may
occur.
GROWTH THROUGH ACQUISITIONS AND NEW PRODUCTS
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The Company's business strategy includes growth through acquisitions
of businesses and technology sources complementary to the Company's business.
The Company has acquired several significantly smaller companies in the past
and believes that it has been successful in integrating the acquired assets
and businesses into the Company's operations. There can be no assurance,
however, that future acquisitions will be consummated on acceptable terms or
that any acquired assets or business will be successfully integrated into the
Company's operations. Further, acquisitions may involve special risks such as
diversion of management's attention, unanticipated events, legal liabilities
and amortization of intangibles, any of which could have an adverse effect on
the Company's operations and earnings.
RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS
Certain risks are inherent in the Company's business strategy, which
includes plans for the global expansion of its operations. Among other
things, the Company may encounter difficulties in marketing, selling and
delivering its services due to differences in cultures, languages, labor and
employment policies and differing political and social systems. In addition,
the Company may encounter significant effects on its operations and financial
condition as a result of currency fluctuations and differing tax laws.
RAPID TECHNOLOGICAL CHANGES; DEPENDENCE ON NEW SOLUTIONS
The Company's success will depend in part on its ability to develop
IT solutions that keep pace with continuing changes in IT, evolving industry
standards and changing client preferences. There can be no assurance that the
Company will be successful in adequately addressing these developments on a
timely basis or that, if these developments are addressed, the Company will
be successful in the marketplace. In addition, there can be no assurance that
products or technologies developed by others will not render the Company's
services uncompetitive or obsolete. The Company's failure to address these
developments could have a material adverse effect on the Company's business,
operating results and financial condition.
INTELLECTUAL PROPERTY RIGHTS
The Company's success is dependent upon certain methodologies it
utilizes in designing, installing and integrating computer software and
information systems and other proprietary intellectual property rights. The
Company's business includes the development of custom software in connection
with specific client engagements. Ownership of such software is generally
assigned to the client. The Company also develops certain foundation and
application software products, or software "tools", which remain the property
of the Company.
The Company relies upon a combination of nondisclosure and other
contractual arrangements and trade secret, copyright and trademark laws to
protect its proprietary rights and the proprietary rights of third parties
from whom the Company licenses intellectual property. The Company enters into
confidentiality agreements with its employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by
the Company in this regard will be adequate to deter misappropriation of
proprietary information or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its intellectual
property rights.
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<PAGE>
Although the Company believes that its services do not infringe on
the intellectual property rights of others and that it has all rights
necessary to utilize the intellectual property employed in its business, the
Company is subject to the risk of litigation alleging infringement of
third-party intellectual property rights. Any such claims could require the
Company to spend significant sums in litigation, pay damages, develop
non-infringing intellectual property or acquire licenses of the intellectual
property that is the subject of asserted infringement.
USE OF PROCEEDS
The Company will receive no proceeds from the sale of Shares by the
Selling Shareholder.
SELLING SHAREHOLDER
As of May 27, 1998, the Company had 16,502,433 shares of Common
Stock outstanding. The Selling Shareholder is a former holder of shares of
Capricorn Capital Group, Inc. ("Capricorn") who acquired the Shares in
January, 1998, pursuant to an Agreement and Plan of Merger dated January 30,
1998, between Capricorn, the Company and TechTeam Acquisition No. 1, Inc., a
wholly-owned subsidiary of the Company, pursuant to which TechTeam
Acquisition No. 1, Inc. acquired all of the outstanding shares of capital
stock of Capricorn.
The following table sets forth certain information regarding the
Common Stock owned by the Selling Shareholder as of May 27, 1998, and after
the sale of all of the Shares offered by him hereby. The Selling Shareholder
has sole voting and investment power with respect to the shares of Common
Stock. The Selling Shareholder holds less than one percent of the Company's
outstanding Common Stock. Assuming the sale of all shares being offered, the
Selling Shareholder will hold less than one percent of the Company's
outstanding Common Stock after the offering.
=============================================================================
Name of Beneficial Shares Owned Shares Shares Owned Percentage Owned
Owner Prior to Being After After
Offering Offered Offering(1) Offering (1)
- -----------------------------------------------------------------------------
David M. Sachs 500,000 350,000 150,000 Less than 1%
------- ------- ------- ------------
- -----------------------------------------------------------------------------
Totals 500,000 350,000 150,000 Less than 1%
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(1) Assumes the sale of all of the Shares offered by the Selling Shareholder.
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholder that such
Selling Shareholder may sell all or a portion of the Shares offered by such
Selling Shareholder hereby from time to time through the NASDAQ National
Market. The Selling Shareholder may also make private sales to purchasers
directly or to or through a broker or brokers. Alternatively, the Selling
Shareholder may from time to
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time offer the Shares through underwriters, brokers, dealers or agents, who
may receive compensation in the form of underwriting discounts, commissions
or concessions from the Selling Shareholder and/or the purchasers of the
Shares for whom they act as agent. From time to time the Selling Shareholder
may engage in short sales, short sales versus the box, puts and calls and
other transactions in securities of the Company, or derivatives thereof, and
may sell and deliver the Shares in connection therewith. The distribution of
the Shares may be effected from time to time in one or more transactions that
may take place through the NASDAQ National Market, including block trades or
ordinary broker's transactions, or through privately negotiated transactions,
or through a combination of any such methods of sale, at the market prices
prevailing at the time of sale, at prices related to such prevailing market
prices or at negotiated prices. To the extent required, the number of Shares
to be sold, the purchase price, the name of any such agent, broker, dealer or
underwriters and any applicable commissions with respect to a particular
offer will be set forth in an accompanying Prospectus Supplement. The
aggregate net proceeds to the Selling Shareholder from the sale of the Shares
offered by the Selling Shareholder hereby will be the purchase price of such
Shares, less any commissions, if any, and other expenses of issuance and
distribution not borne by the Company.
The Selling Shareholder and any brokers, dealers, agents or
underwriters that participate with the Selling Shareholder in the
distribution of Shares may be deemed to be "underwriters" within the meaning
of the Securities Act, in which event any discounts, concessions and
commissions received by such brokers, dealers, agents or underwriters and any
profit on the resale of the Shares purchased by them may be deemed to be
underwriting discounts and commissions under the Securities Act.
The Company has agreed to bear all expenses (other than any
commissions or discounts of underwriters, dealers or agents or brokers' fees
and the fees and expenses of their counsel) in connection with the
registration of the Shares being offered by the Selling Shareholder hereby.
No underwriter, broker, dealer or agent has been engaged by the
Company in connection with the distribution of the Shares to which this
Prospectus relates.
Any shares covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus. There is no assurance that the
Selling Shareholder will sell any or all of the Shares. The Selling
Shareholder may transfer, devise or gift such shares by other means not
described herein.
In order to comply with certain states' securities laws, if
applicable, the Common Stock will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold unless the Common Stock has been registered or
qualified for sale in such state or an exemption from registration or
qualification is available and is complied with.
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<PAGE>
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance
of the Common Stock offered hereby will be passed upon for the Company by
Berry Moorman P.C., of Detroit, Michigan. Robert A. Hudson, a stockholder of
Berry Moorman P.C., beneficially owns 17,700 shares of Common Stock.
EXPERTS
The consolidated financial statements of National TechTeam, Inc. for
the year ended December 31, 1997 appearing in National TechTeam Inc.'s Annual
Report (Form 10-K) dated March 31, 1998, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
-11-
<PAGE>
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION 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 ANY SECURITY OTHER THAN THE SHARES OF COMMON
STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY TO ANY
PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR
SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
SALES OR EXCHANGES MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF.
TABLE OF CONTENTS Page
Available Information 2
Incorporation of Certain Documents by Reference 2
Forward-Looking Information 3
The Company 4
Use of Proceeds 4
Selling Shareholder 4
Plan of Distribution 5
Legal Matters 6
Experts 6
-12-
<PAGE>
350,000 Shares
NATIONAL TECHTEAM, INC.
Common Stock
PROSPECTUS
May 28, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Legal Proceedings
From time to time, the Company is involved in litigation incidental
to its business.
The Company and two of its officers, William F. Coyro Jr. and
Lawrence A. Mills, have been named as defendants in a putative consolidated
class action filed in the United States District Court for the Eastern
District of Michigan. On January 22, 1998 four original actions, all filed
between August 27 and October 24, 1997, were consolidated into a single
action. Plaintiffs in the underlying actions purport to represent various
classes consisting of all persons who purchased shares of the Company's
common stock during certain class periods, the longest of which was from
September 27, 1996 through July 18, 1997. Plaintiffs allege in their
complaints that the Company and the individual defendants engaged in a scheme
to artificially inflate the price of the Company's common stock by improperly
accelerating the recognition of revenue from the licensing of the Company's
proprietary software. Plaintiffs assert claims against all defendants for
alleged violation of Section 10(b) of the Securities Exchange Act of 1934 and
Rule 10b-5 promulgated thereunder, as well as claims against the individual
defendants for alleged "controlling person" liability under Section 20(a) of
the Securities Exchange Act. The Company and the individual defendants
believe that they have meritorious defenses to plaintiffs' claims, and they
intend to defend the action vigorously. However, because of the early stage
of this litigation, it is impossible to predict the outcome of the litigation
or a range of possible recovery, if any, by the plaintiffs. Accordingly, no
provision for any such liability or the costs of defense has been made in the
accompanying financial statements. The Company believes that these costs will
be covered, at least in part, by insurance.
In addition, the Company is the subject of a related investigation
initiated on September 9, 1997 by the United States Securities and Exchange
Commission ("SEC"). The SEC has stated that the purpose of investigation is
to determine whether the Company may have violated certain provisions of the
Securities Act of 1933 and the Securities Exchange Act of 1934 in connection
with its recognition of revenue from the licensing of its proprietary
software. This investigation is ongoing and the outcome cannot be predicted
at this time, although the Company believes it has complied fully with all
applicable provisions of the federal securities laws.
Item 14. Other Expenses of Issuance and Distribution
SEC Registration Fee $ 891.05
Printing expenses $ 0.00 *
Legal fees and expenses $ 2,500.00 *
Blue Sky fees and expenses $ 0.00
Accounting fees and expenses $ 2,250.00 *
Miscellaneous $ 0.00 *
Total $ 5,641.05
=============
*Estimated
The Company will pay all expenses of the offering other than any
brokerage commissions and transfer taxes.
II-1
<PAGE>
Item 15. Indemnification of Directors and Officers
Under Delaware law, a corporation may indemnify any person who was
or is a party or is threatened to be made a party to an action (other than an
action by or in the right of the corporation) by reason of such person's
service, at the corporation's request, as a director, officer, employee or
agent of another corporation or other enterprise, against expenses (including
attorneys' fees) that are actually and reasonably incurred by such person
("Expenses"), and judgments, fines and amounts paid in settlement that are
actually and reasonably incurred by such person, in connection with the
defense or settlement of such action; provided that such person acted in good
faith and in a manner such person reasonably believed to be in or not opposed
to the corporation's best interests and, with respect to any criminal action
or proceeding, had no reasonable cause to believe that such person's conduct
was unlawful. Although Delaware law permits a corporation to indemnify any
person referred to above against Expenses in connection with the defense or
settlement of an action by or in the right of the corporation, provided that
such person acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the corporation's best interests, if such
person has been judged liable to the corporation, indemnification is only
permitted to the extent that the adjudicating court (or the court in which
the action was brought) determines that, despite the adjudication of
liability, such person is entitled to indemnity for such Expenses as the
court deems proper. The determination as to whether a person seeking
indemnification has met the required standard of conduct is to be made (1) by
a majority vote of a quorum of disinterested members of the board of
directors, or (2) by independent legal counsel in a written opinion, if such
a quorum does not exist or if the disinterested directors so direct, or (3)
by the stockholders. The General Corporation Law of Delaware also provides
for mandatory indemnification of any director, officer, employee or agent
against Expenses to the extent such person has been successful in any
proceeding covered by the statute. In addition, the General Corporation Law
of Delaware provides for the general authorization of advancement of a
director's or officer's litigation expenses in lieu of requiring the
authorization of such advancement by the board of directors in specific
cases, and that indemnification and advancement of expenses provided by the
statute shall not be deemed exclusive of any other rights to which those
seeking indemnification or advancement of expenses may be entitled under any
bylaw, agreement or otherwise.
The Company's Bylaws provide that the Company shall indemnify its
directors, officers, employees and agents to the extent permitted by Delaware
law.
The Company maintains a policy of directors and officers liability
insurance.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act of 1933 and is
therefore unenforceable.
Item 16. Exhibits
5.1 Opinion of Berry Moorman P.C.
23.1 Consent of Ernst & Young LLP.
23.2 Consent of Berry Moorman P.C. (included in Exhibit 5.1).
II-2
<PAGE>
Item 17. Undertakings
The undersigned registrant hereby undertakes that:
(1) The undersigned registrant hereby undertakes to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement to include any material information with respect
to the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the registration
statement.
(2) 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.
(3) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(4) For purposes of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(5) For 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 (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(6) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer
or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against
public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
II-3
<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 of 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 Dearborn, State of Michigan, on the
21st day of May, 1998.
NATIONAL TECHTEAM, INC.,
a Delaware corporation
By: /s/ William F. Coyro, Jr., Chairman
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature
appears below hereby constitutes and appoints William F. Coyro, Jr. and
Lawrence A. Mills, or either of them, his true and lawful attorney-in-fact
and agent, with full power of substitution and resubstitution, for him and in
his name, place and stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to this Registration, and to
file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or would do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. This Power
of Attorney may be signed in several counterparts.
IN WITNESS WHEREOF, each of the undersigned has executed this Power
of Attorney as of the date indicated.
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 dates indicated.
Signature Title Date
- --------- ----- ----
Principal Executive Officer:
/s/ William F. Coyro, Jr. Chairman, Chief Executive May 14, 1998
Officer
II-4
<PAGE>
Principal Financial and
Accounting Officer:
/s/ Lawrence A. Mills Chief Financial Officer, May 14, 1998
Treasurer, Secretary and
Senior Vice President
/s/ Wallace D. Riley Director May 14, 1998
/s/ Richard G. Somerlott Director May 14, 1998
/s/ Leroy H. Wulfmeier, III Director May 21, 1998
/s/ Kim A. Cooper Director May 21, 1998
II-5
<PAGE>
INDEX OF EXHIBITS
Exhibit Page Number
- ------- -----------
5.1 Opinion of Berry Moorman P.C. II-7
23.1 Consent of Ernst & Young LLP. II-8
23.2 Consent of Berry Moorman P.C. (included in Exhibit 5.1)
II-6
Exhibit 5.1
National TechTeam, Inc.
835 Mason Avenue, Suite 200
Dearborn, MI 48124
Ladies and Gentlemen:
We have acted as counsel to National TechTeam, Inc., a Delaware
corporation (the "Company"), in connection with the preparation of the
Registration Statement on Form S3 of the Company, filed with the Securities
and Exchange Commission on May 28, 1998, as amended (the "Registration
Statement"), relating to the registration under the Securities Act of 1933,
as amended, of 350,000 shares of the Company's Common Stock, par value $.01
per share (the "Shares"), to be offered from time to time by certain selling
stockholders in the manner described in the prospectus contained in the
Registration Statement (the "Prospectus"). We have examined the Registration
Statement and originals, or copies certified or otherwise identified to our
satisfaction, of such other documents and corporate records as we have deemed
necessary as a basis for the opinion set forth herein. We have relied as to
factual matters on certificates or other documents furnished by the Company
or its officers and by governmental authorities and upon such other documents
and data that we have deemed appropriate. In such examination, we have
assumed the genuineness of all signatures, the authenticity of all documents
submitted to us as originals, the legal capacity of all persons executing
such documents, the conformity to original documents of all documents
submitted to us as copies and the truth and correctness of any
representations and warranties contained therein.
The opinion expressed below is limited to the General Corporation
Law of Delaware. We express no opinion herein concerning any other law.
Based on such examination and review and subject to the foregoing,
we are of the opinion that the Shares have been duly authorized and are
validly issued, fully paid and nonassessable.
We consent to the use of this opinion as an Exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the Prospectus.
Very truly yours,
/s/Berry Moorman P.C.
May 28, 1998
II-7
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement on Form S-3 and related Prospectus of National
TechTeam, Inc. for the registration of 350,000 shares of its common stock and
to the incorporation by reference therein of our report dated March 26, 1998,
with respect to the consolidated financial statements of National TechTeam,
Inc. for the year ended December 31, 1997 included in its Annual Report (Form
10-K) dated March 31, 1998, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Detroit, Michigan
May 28, 1998
