As filed with the Securities and Exchange Commission on February 3, 1997
Registration Statement No. 33-63761
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
____________________
DATATREND SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware 5961 13-3006788
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation) Classification Code Number) Identification
No.)
Datatrend Services, Inc. Mark A. Hanson
1515 Washington Street Datatrend Services, Inc.
Braintree, MA 02184 1515 Washington Street
(617) 691-1200 Braintree, MA 02184
(617) 691-1200
(Address, including zip code, and (Name, address, including zip code,
telephone number, including area and telephone number, including
code, of registrant's principal area code, of agent for service)
executive offices)
Copies To:
Oscar D. Folger, Esq.
521 Fifth Avenue
New York, New York 10175
Approximate date of commencement of proposed sale to public:
From time to time after the effective date of this Registration
Statement depending on market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection
with dividend or interest reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount Being Offering Price Aggregate Offering Amount of
Securities Being Registered Registered per Unit Price Registration Fee
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Warrants 183,200 $1.21875 (1) $ 223,275 $ 67.66
Common Stock 4,069,100 $4.0625 (2) $16,530,718 $5,009.31
- --------------------------------------------------------------------------------------------------------
Total $16,753,993 $5,076.97 (3)
<F1> Estimated for purposes of computing the registration fee pursuant to
Rule 457(c) at $1.21875 per Warrant based upon the average of the bid
and asked prices of $1.125 and $1.3125, respectively, on January 27,
1997.
<F2> Estimated for purposes of computing the registration fee pursuant to
Rule 457(c) at $4.0625 per Share based upon the average of the bid and
asked prices of $4.00 and $4.125, respectively, on January 27, 1997.
<F3> Of which $2,693.18 has been previously paid.
</TABLE>
_______________________
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.
______________________
PROSPECTUS
DATATREND SERVICES, INC.
4,069,100 Shares of Common Stock
183,200 Warrants
______________________
This Prospectus relates to 4,069,100 shares of Common Stock of
Datatrend Services, Inc. (the "Company"), par value $.01 per share (the
"Common Stock") and 183,200 warrants each to purchase one share of Common
Stock at $4.69 ("Warrants", together with the Common Stock, the
"Securities"), all of which Securities may be offered from time to time by
the selling security holders ("Selling Security Holders"). See "Selling
Security Holders." This Prospectus does not relate to the sale or issuance
by the Company of any securities. Any Securities will be offered for the
respective accounts of the Selling Security Holders, who either currently
own Common Stock or Warrants or who will acquire Common Stock upon exercise
of options or warrants which are owned by them. The Company will receive the
exercise prices payable upon such exercises. However, the Company will not
receive any proceeds from the sale of the Securities by the Selling Security
Holders. The Company has been advised by the Selling Security Holders that
there are no underwriting arrangements with respect to the sale of the
Securities, that the Securities will be sold from time to time in the over-
the-counter market at then prevailing prices and in private transactions at
negotiated prices, and that usual and customary brokerage fees, if any, will
be paid by the Selling Security Holders in connection therewith.
The Company's Common Stock and Redeemable Warrants are traded on the
NASDAQ over-the-counter market under the symbols DATA, and DATAW,
respectively. As reported by NASDAQ for January 27, 1997, the closing bid
price for the Company's Common Stock and Redeemable Warrants were $4.00 and
$1.125, respectively.
---------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
===========================================================================
Price to Underwriting Discounts Proceeds to Selling
Public (1) and Commissions Security Holders(1)
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share -0-
Per Warrant -0-
Total -0-
===========================================================================
<F1> Not determinable at present time.
</TABLE>
The date of this Prospectus is February __, 1997.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 and in accordance therewith files reports
and other information with the Securities and Exchange Commission (the
"Commission"). Reports, registration statements, proxy statements and other
information filed by the Company with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C., and at the Commission's
Regional Offices: Suite 1400, Northwestern Atrium Center, 500 West Madison
Street, Chicago, Illinois 60601; 7 World Trade Center, New York, New York,
and Suite 500, 5757 Wilshire Boulevard, Los Angeles, California, and with
respect to registration statements, Suite 788, 1375 Peachtree Street,
Atlanta, Georgia. Copies of such materials can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates.
The Company undertakes to provide without charge to each person to
whom this Prospectus is delivered, upon the written or oral request of such
person, a copy of any and all of the information that has been incorporated
by reference in the Prospectus (not including exhibits to the information
that is incorporated by reference unless such exhibits are specifically
incorporated by reference into the information that the Prospectus
incorporates). Such request should be directed to the Secretary, Datatrend
Services, Inc., 1515 Washington Street, Braintree, Massachusetts 02184.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFERING DESCRIBED HEREIN AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN
ANY JURISDICTION TO ANY PERSON TO WHOM SUCH OFFER WOULD BE UNLAWFUL OR
AN OFFERING OF ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO
WHICH IT RELATES. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY
OFFER OR SALE MADE HEREUNDER AT ANY TIME SHALL IMPLY THAT THE
INFORMATION PROVIDED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
ITS DATE.
THE COMPANY
Datatrend Services, Inc. (the "Company"), through its wholly-owned
subsidiary Datatrend, Inc. ("DTI"), purchases and sells microcomputers,
peripherals, components and accessories. The Company sells new, used and
refurbished products. The Company purchases completed new and used products
from numerous sources, including manufacturers and other re-sellers. New
products include end of life models, excess inventories, close outs and
other items which manufacturers wish to dispose of at discounted prices. The
Company also purchases incomplete, defective and returned products which
require refurbishing or remanufacture in order to be resold. The Company
performs limited assembly, remanufacturing, and refurbishing activities at
its facilities in Braintree, Massachusetts, Memphis, Tennessee, and Fort
Worth, Texas and through certain subcontractors. In addition, the Company
provides return management services to manufacturers and resellers of
computer products.
Sale of Travel Safety Children's Products, Inc. The Company was
previously engaged in the business of marketing a juvenile car seat for
children through its wholly-owned subsidiary Travel Safety Children's
Products, Inc. ("Travel"). Due to engineering challenges with the Company's
car seat product, the Company ceased production and in November 1994 the
Company sold Travel to Travel Safety Corp.
Acquisition of DTI. Effective on February 1, 1995, the Company
acquired all of the capital stock of DTI by merging a wholly owned
subsidiary of the Company into DTI. DTI is a corporation incorporated under
the laws of the Commonwealth of Massachusetts in 1993. Unless otherwise
indicated, all references herein to the business of the Company include the
business of DTI.
The Company was incorporated in New York in 1985 under the name E & C
Video Productions, Inc. The Company's name was changed to Star Classics,
Inc. in 1987, and then to Star Mark, Inc. in 1991. Effective in March of
1993, the Company changed its name to Babystar Inc. and was reincorporated
in the state of Delaware. In November 1995 the Company's name was changed to
Datatrend Services, Inc. The executive offices of the Company are located at
1515 Washington Street, Braintree, Massachusetts 02184 and its telephone
number at that address is 617-691-1200.
RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE HIGHLY SPECULATIVE IN NATURE AND INVOLVE A
HIGH DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE
FOLLOWING FACTORS IN ANALYZING THIS OFFERING:
Technological Changes; Profit Margins
The Company purchases completed new and used products from numerous
sources, including manufacturers and other re-sellers. New products include
end of life models, excess inventories, close outs and other items which
manufacturers wish to dispose of at discounted prices. The availability to
the Company of these products is dependent in large part on the pace of
technological change in the computer industry. In general, the faster the
changes, the greater the supply of computer equipment at discounted prices.
However, it is critical that the Company time the purchase of its products
precisely in order to take maximum advantage of the resale value of the
products. An early purchase and/or a late resale of a product may cause the
product to become obsolete and, therefore, the Company's profit margins to
fall. The faster the technological changes in the computer industry, the
harder it will be for the Company to time its purchases and resales and to
maintain an optimum return on its inventory.
Dependence Upon Suppliers
The Company sells new, used and refurbished products. The Company
purchases completed new and used products from numerous sources, including
manufacturers and other re-sellers. The Company has developed relationships
with certain manufacturers whereby the Company purchases large quantities of
goods returned to the manufacturer by customers. The Company refurbishes
and remanufactures these products and markets the products through its
distribution channels. These relationships with manufacturers are typically
not pursuant to any long term written agreements and there is no assurance
that they will continue in the future. Although the Company is in the
process of building long term relationships with a number of its suppliers,
the discontinuance of any of these arrangements may have a material adverse
impact on the Company's results of operations.
No Product Liability Insurance; Warranties
The Company conducts its business through DTI, which currently has no
product liability insurance in place. In the event that any of the products
sold by DTI were to show a defect which resulted in damage, a customer could
file suit against DTI. There can be no assurance that DTI will be able to
successfully defend itself in any such suit or that it will be able to shift
liability, if any, to the manufacturer of such product. Although the
Company is investigating the possibility of obtaining product liability
insurance for DTI, there can be no assurance that such insurance will be
available on terms acceptable to the Company.
In addition, the Company provides limited warranties to its customers.
If any of the products sold by the Company were to show a defect requiring
repair or replacement at the Company's expense, such repairs or replacement
will be paid from the Company's financial reserves set aside for such
events. However, there can be no assurance that the expenses incurred in
connection with repairs or replacements covered by warranties will not
exceed the Company's projected costs.
Dependence Upon Major Customers
During 1994, Computer City and Damark International, Inc. accounted
for approximately 21% and 12% of the Company's sales, respectively. The
Company has significantly broadened and is continuing to expand its customer
base through telemarketing, retail sales and other methods to increase
profitability and eliminate dependency on individual large volume accounts.
During fiscal 1995 sales to Computer City and Damark accounted in the
aggregate for less than 11% of the Company's total sales. In addition,
the profit derived from bulk sales to such mass merchants is generally much
lower than profit derived from sales to other re-sellers and retail
customers. Nevertheless, the loss of either of these customers could
adversely affect the Company's results of operations.
With respect to the Company's service revenues, during fiscal 1995,
approximately 84% of the Company's service revenues were derived from a
single customer. The Company has no long-term relationship with this
entity. As this part of the Company's business expands, the loss of this
customer could adversely affect the Company's results of operations.
Dependence on Management
Although the Company has a sales force consisting of approximately 11
employees, Mark A. Hanson, the President, CEO and a director of the Company
has been responsible for in excess of approximately 28% of the dollar volume
of sales of the Company in fiscal 1995. In addition, the majority of the
products purchased by the Company from computer manufacturers are purchased
from such manufacturers by Mr. Hanson on behalf of the Company and the
Company's ability to purchase products effectively is largely dependant upon
relationships developed and maintained by Mr. Hanson. The Company has a
five year employment contract with Mark A. Hanson which contains substantial
non-compete provisions. However, the loss of Mr. Hanson would, in the
opinion of the Company, significantly adversely impact on the Company's
results of operations. The Company maintains key-man life insurance on the
life of Mr. Hanson in the amount of $4 million with the Company named as the
sole beneficiary.
State Sales Tax Collection
The Company collects sales tax only on sales of products to residents
of the states in which it maintains a physical facility. Various states
have tried to impose on direct marketers the burden of collecting state
sales taxes on the sale of products shipped to that state's residents. The
United States Supreme Court has ruled that it is unconstitutional to impose
tax collection obligations on an out of state mail order company whose only
contacts with the taxing state are the distribution of catalogs and other
advertising materials through the mail and whose subsequent delivery of
goods is by U.S. mail or interstate common carriers. In the event of a
change in the present law, the imposition of a tax collection on the Company
in states to which it ships products may result in reduced demand for its
products via direct marketing and additional administrative expenses which
could have a material adverse effect on the Company's results of operations.
Dividends
The Company has paid no dividends to date. There can be no assurance
that the operations of the Company will result in sufficient revenues to
enable the Company to pay dividends. For the foreseeable future it is
anticipated that any earnings which may be generated from operations of the
Company will be used to finance the growth of the Company and that cash
dividends will not be paid to shareholders.
Possible Delisting of Securities from Nasdaq System
The Company's Common Stock and Redeemable Warrants are quoted on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ") for the Small-Cap Market. To maintain its listing on the NASDAQ
Small-Cap Market, the Company must continue to be registered under Section
12(g) of the Securities Exchange Act of 1934 (the "Exchange Act") and have
total assets of at least $2,000,000, total stockholders' equity of at least
$1,000,000, a public float of at least 100,000 shares with a market value of
at least $200,000, at least 300 holders, a minimum bid price of $1.00 per
share and at least two market makers. In addition, NASDAQ has proposed
increasing the requirements for maintaining a NASDAQ Small-Cap listing to
require either: (1) net tangible assets of at least $2,000,000, (2) a market
capitalization of $35,000,000 or (3) net income in at least two of the last
three years of $500,000 and a public float of at least 500,000 shares with a
market value of at least $1,000,000. There can be no assurance that the
Company in the future will meet the requirements for continued listing on
the NASDAQ Small-Cap Market with respect to the Common Stock or Warrants.
If the Company's securities fail to maintain NASDAQ Small-Cap Market
listing, the market value of the Common Stock and Warrants likely would
decline and purchasers likely would find it more difficult to dispose of, or
to obtain accurate quotations as to the market value of, the Common Stock
and Warrants.
In addition, if the Company fails to maintain NASDAQ Small-Cap Market
listing for its securities, and no other exclusion from the definition of a
"penny stock" under the Exchange Act is available, then any broker engaging
in a transaction in the Company's securities would be required to provide
any customer with a risk disclosure document, disclosure of market
quotations, if any, disclosure of the compensation of the broker-dealer and
its salesperson in the transaction and monthly account statements showing
the market values of the Company's securities held in the customer's
accounts. The bid and offer quotation and compensation information must be
provided prior to effecting the transaction and must be contained on the
customer's confirmation. If brokers become subject to the "penny stock"
rules when engaging in transactions in the Company's securities, they would
become less willing to engage in such transactions, thereby limiting the
market liquidity of the Common Stock and making it more difficult for
purchasers in this offering to dispose of their shares.
Current Prospectus and State Blue Sky Registration in
Connection with Exercise of Warrants
The Company will be able to issue shares of its Common Stock upon
exercise of the Warrants only if there is a then current prospectus relating
to the Common Stock issuable upon the exercise of the Warrants under an
effective registration statement filed with the Securities and Exchange
Commission (the "Commission"), and only if such Common Stock is then
qualified for sale or exempt from qualification under applicable state
securities laws of the jurisdictions in which the various holders of
Warrants reside. The failure of the Company to meet such requirements may
deprive the Warrants of any value and cause the resale or other disposition
of Common Stock issued upon the exercise of the Warrants to become unlawful.
Possible Future Issuance of Additional Shares
Effective on February 1, 1995, the Company acquired all of the capital
stock of DTI by merging a wholly owned subsidiary of the Company into DTI.
In connection with this transaction, the Company agreed to issue to former
DTI shareholders, up to 1,200,000 shares of Common Stock on April 30, 1997,
if after tax earnings for the fiscal year ending December 31, 1996 are equal
to or more than $3,000,000. Investors should be aware that the issuance of
additional Common Stock in connection with the acquisition of DTI will
dilute the proportionate ownership of the then current stockholders of the
Company.
SELLING SECURITY HOLDERS
The securities being offered hereby are for the accounts of the
following persons:
<TABLE>
<CAPTION>
Securities
Securities Owned Securities to be Owned
Name Before Offering to be Sold (1) after Offering
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
A.S. Goldmen & Co., Inc. 183,200 Warrants 183,200 Warrants -0-
366,400 Shares 366,400 Shares -0-
Robin Azar (2) 12,500 12,500 -0-
Denise Barb 100 100 -0-
Shawn Barrett 5,000 5,000 -0-
Bodywell Inc. 300,000 300,000 -0-
John Bulman 176,250 176,250 -0-
Laura Cavanagh 2,000 2,000 -0-
Churchill Consulting &
Development Corp. 400,000 400,000 -0-
Ed Clark 250 250 -0-
John Corbett 65,000 65,000 -0-
Henry Drummond 100 100 -0-
Rich Donahue 5,000 5,000 -0-
Kevin Donovan (3) 75,000 75,000 -0-
Don Dugan 100,000 100,000 -0-
Oscar Folger 50,000 50,000 -0-
Yitz Grossman (4) 420,800 420,800 -0-
Werner Haase (5) 75,000 75,000 -0-
Mark Hanson (6) 1,155,000 1,155,000 -0-
Jim Hendricks 25,000 25,000 -0-
Howard Johnson 15,000 15,000 -0-
Joseph Stevens & Company, L.P. 250,000 250,000 -0-
Kevin Joyce 15,000 15,000 -0-
Chava Mamoka 100,000 100,000 -0-
Nancy Polito 200 200 -0-
Jennifer Quayle 10,000 10,000 -0-
Nick Sacco 10,000 10,000 -0-
Phil Sills 10,000 10,000 -0-
Mario Silva 200 200 -0-
Lori Terr 100 100 -0-
Helen Vess 15,000 15,000 -0-
Ken Wang 10,000 10,000 -0-
Heather White 200 200 -0-
West End Capital Corp. Pty Ltd. 400,000 400,000 -0-
___________________
<F1> Unless otherwise indicated, all securities to be sold consist of shares
of Common Stock held directly or shares of Common Stock issuable upon
exercise of options and warrants.
<F2> Ms. Azar is a Director of the Company.
<F3> Mr. Donovan is a Director of the Company.
<F4> Mr. Grossman is a Director and the Secretary of the Company.
<F5> Mr. Haase is a Director of the Company.
<F6> Mr. Hanson is the Company's President and Chief Executive Officer and a
Director.
</TABLE>
PLAN OF DISTRIBUTION
The Securities are being offered for the respective accounts of the
Selling Security Holders. The Company will not receive any proceeds from the
sale of any Securities by the Selling Security Holders, although it will
receive proceeds from the exercise of options and warrants by the Selling
Security Holders. The sale of Securities by the Selling Security Holders may
be effected from time to time in transactions in the over-the-counter
market, in negotiated transactions, or through a combination of such methods
of sale, at fixed prices, which may be charged at market prices prevailing
at the time of sale, at prices related to such prevailing market prices or
at negotiated prices. The Selling Security Holders may effect such
transactions by selling the Securities to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the Selling Security Holders and/or the
purchasers of the Securities for which such broker-dealers may act as agent
or to whom they sell as principal, or both (which compensation as to a
particular broker-dealer may be in excess of customary compensation).
The Selling Security Holders and any broker-dealers who act in
connection with the sale of the securities hereunder may be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act,
and any commissions received by them and profit on any sale of the
Securities as principal might be deemed to be underwriting discounts and
commissions under the Securities Act.
DESCRIPTION OF SECURITIES
Each of the Warrants offered hereby entitles the registered holder
thereof to purchase one share of Common Stock at a price of $4.69 per share,
subject to adjustment. The Warrants expire on June 22, 1998. The Warrants
are issuable to the underwriter of the Company's initial public offering in
1993 and are in all respects identical to the warrants issued to the public
in the Company's initial public offering except that the underwriter's
Warrants offered hereby are not redeemable.
EXPERTS
Financial statements have been incorporated in this Prospectus by
reference from the Company's report on Form 10-KSB for the year ended
December 31, 1995. The financial statements for the year ended December 31,
1995 have been audited by Richard A. Eisner & Company, LLP, independent
auditors, as stated in their report, and are included in reliance upon such
report and upon the authority of said firm as experts in accounting and
auditing. The financial statements of Datatrend, Inc. for the year ended
December 31, 1994 have been audited by Kennedy & Lehan P.C., independent
auditors, as stated in their report, and are included in reliance upon such
report and upon their authority as experts in accounting and auditing.
LEGAL MATTERS
Certain legal matters in connection with this offering are being
passed upon for the Company by Oscar D. Folger, Esq., New York, New York.
Mr. Folger is the owner of options to purchase 50,000 shares of Common Stock
which are included in this registration statement.
MATERIAL CHANGES
In July 1996, John Bulman resigned as a director and officer of the
Company and the Board appointed Robin Azar as a Director. Ms. Azar it the
sister of Mark Hanson, the Company's President and Chief Executive Officer
and a Director.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents are incorporated in this Prospectus and made a
part hereof by reference:
1. The Company's annual report on Form 10-KSB for the year ended
December 31, 1995, as filed with the Commission pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act").
2. The Company's quarterly report on Form 10-QSB for the quarter
ended September 30, 1996 filed with the Commission pursuant
to Section 13 of the Exchange Act.
3. The section entitled "Description of Securities" in the
Company's Registration Statement on Form SB-2 (Registration
No. 33-58196) declared effective on June 23, 1993.
The Commission file number for the foregoing filings under the
Exchange Act is 0-15929. In addition, any amendments to the foregoing
documents and all other reports, proxy statements and other documents of the
Company hereafter filed with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act, prior to the termination of the
offering of the securities covered by this Prospectus, shall be deemed to be
incorporated in this Prospectus and made a part hereof by reference from the
date of filing each such document. Any statement contained in an earlier
document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other subsequently
filed document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement
so modified or superseded shall not be deemed, except as so modified or
superseded to constitute a part of this Prospectus.
INDEMNIFICATION
The Company's Certificate of Incorporation includes a provision that
eliminates or limits the personal financial liability of the Company's
directors, except in situations where there has been a breach of the
director's duty of loyalty to the Company or its stockholders, acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, liability under Section 174 of the Delaware
General Corporation Law relative to unlawful payment of dividends stock
purchases or redemptions, or any transaction from which the director derived
an improper personal benefit. In addition, under its Certificate of
Incorporation and By-laws as well as under separate agreements, the Company
is required to indemnify its officers and directors to the fullest extent
permitted by law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, or
otherwise, the Company 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.
ADDITIONAL INFORMATION
This Prospectus contains certain information concerning the Company
and its securities, but does not contain all the information set forth in
the Registration Statement and the Exhibits thereto filed with the
Commission under the Securities Act of 1933, as amended, to which reference
is made. Any summary from the Exhibits contained in this Prospectus is
necessarily incomplete and must not be considered as a full statement of the
provisions of such instruments.
DATATREND SERVICES, INC.
4,069,100 Shares of Common Stock
183,200 Warrants
______________________
PROSPECTUS
______________________
__________, 1997
No dealer, salesman or any other person has been authorized to give
any information or to make any representations other than those contained in
this Prospectus, and 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 any
offer to buy any securities in any jurisdiction in which such an offer or
solicitation would be unlawful. Neither the delivery of this Prospectus nor
any sale 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.
PART II
Information Not Required in Prospectus
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered under this Registration Statement are estimated
as follows:
<TABLE>
<S> <C>
Securities and Exchange Commission fee.... $ 5,077
Blue sky qualification fees and expenses.. 3,000
Photocopying.............................. 500
Legal Fees and expenses................... 25,000
Accountant's fees and expenses............ 20,000
Miscellaneous............................. 423
-------
Total............................... $54,000
</TABLE>
Item 15. Indemnification of Directors and Officers.
The Company's by-laws provides that the Company will indemnify its
directors and officers to the fullest extent permitted by law. They also
provide that the Company will pay such director or officer's expenses
provided that such expenses shall be reimbursed to the Company if it is
ultimately determined that the director or officer is not entitled to
indemnification. The Certificate of Incorporation also provides as follows:
A director or former director shall not be liable to the corporation
or any of its stockholders for monetary damages for breach of fiduciary duty
as a director, provided that this provision shall not eliminate or limit the
liability of a director: (1) for any breach of the director's duty of
loyalty to the corporation or its stockholders, (2) acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law, (3) under Section 174 of the Delaware General Corporation Law
pertaining to the liability of directors for unlawful payment of dividends
or unlawful payment of dividends or unlawful stock purchase or redemption;
or (4) a transaction from which the director derived an improper personal
benefit.
Section 145 of the Delaware General Corporation Law concerning
indemnification of officers, directors, employees and agents is set forth
below.
Section 145. Indemnification of officers, directors, employees and
agents; insurance.
(a) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation)
by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with such
action, suit or proceeding if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of
any action, suit or proceeding by judgment, order, settlement, conviction,
or upon a plea of nolo contendere or its equivalent, shall not, of itself,
create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had reasonable cause to believe that his conduct was unlawful.
(b) A corporation may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that he is or was a director, officer,
employee or agent of the corporation, or is or was serving at the request of
the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him
in connection with the defense or settlement of such action or suit if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue or matter as to
which such person shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to the corporation unless and only
to the extent that the Court of Chancery or the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper.
(c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection therewith.
(d) Any indemnification under subsections (a) and (b) of this section
(unless ordered by a court) shall be made by the corporation only as
authorized in the specific case upon a determination that indemnification of
the director, officer, employee or agent is proper in the circumstances
because he has met the applicable standard of conduct set forth in
subsections (a) and (b) of this section. Such determination shall be made
(1) by the board of directors by a majority vote of a quorum consisting of
directors who were not parties to such action, suit or proceeding, or (2) if
such a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so directs, by independent legal counsel in a
written opinion, or (3) by the stockholders.
(e) Expenses incurred by an officer or director in defending a civil
or criminal action, suit or proceeding may be paid by the corporation in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such director or officer, to
repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the corporation as authorized in this section.
Such expenses incurred by other employees and agents may be so paid upon
such terms and conditions, if any, as the board of directors deems
appropriate.
(f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section 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, vote
of stockholders or disinterested directors or otherwise, both as to action
in his official capacity and as to action in another capacity while holding
such office.
(g) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the corporation would have the
power to indemnify him against such liability under this section.
(h) For purposes of this section, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued,
would have had power and authority to indemnify its directors, officers, and
employees or agents, so that any person who is or was a director, officer
employee or agent of such constituent corporation, or is or was serving at
the request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this section with respect
to the resulting or surviving corporation as he would have with respect to
such constituent corporation if its separate existence had continued.
(i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit
plan; and references to "serving at the request of the corporation" shall
include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to
in this section.
The By-Laws contain provisions for directors, officers and employees
of the Corporation to be indemnified against reasonable expenses, including
attorney's fees incurred in connection with the defense of an action, suit
or proceeding, except in the case of negligence or misconduct.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers,
and controlling persons of the Company pursuant to the foregoing provisions,
or otherwise, the Company 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 Company of expenses incurred or paid by a director,
officer or controlling person of the Company 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
Company will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to the 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.
Item 16. Exhibits.
Exhibit No. Description
- ----------- -----------
3.1 Certificate of Incorporation (incorporated by reference to
the exhibit of the same number filed with the Company's
Registration Statement on Form SB-2, No. 33-58196)
3.2 By-Laws (incorporated by reference to the exhibit of the same
number filed with the Company's Registration Statement on
Form SB-2, No. 33-58196)
5 Opinion of Oscar D. Folger re: legality
10.2 Copy of 1986 Employees' Stock Option Plan of the Company
(filed as Exhibit 28.1 to Company's Form S-18 and
incorporated herein by reference)
10.3 Copy of 1989 Non-Qualified Stock Option Plan (filed as
Exhibit 10.6 to Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1989 and incorporated herein
by reference)
10.4 1993 Stock Option Plan (incorporated by reference to the
exhibit of the same number filed with the Company's
Registration Statement on Form SB-2, No. 33-58196)
10.5 Form of indemnity agreements with directors (incorporated by
reference to the exhibit of the same number filed with the
Company's Registration Statement on Form SB-2, No. 33-58196)
10.6 Stock Purchase Agreement dated as of November 17, 1994, by
and among the Company, Travel Safety Children's Products,
Inc. ("Travel") and Travel Safety Corp. ("Purchaser")
(incorporated by reference from the Company's Current Report
on Form 8-K filed December 1, 1994.)
10.7 License Agreement, dated as of November 17, 1994, by and
among the Company and Travel. (incorporated by reference from
the Company's Current Report on Form 8-K filed December 1,
1994.)
10.8 Promissory Note, dated as of November 17, 1994 (incorporated
by reference from the Company's Current Report on Form 8-K
filed December 1, 1994.)
10.9 Agreement and Plan of Merger dated January 31, 1995, by and
among the Company, DTI, BSI Acquisition Corporation and Mark
Hanson. (incorporated by reference from the Company's Current
Report on Form 8-K filed February 14, 1995.)
10.10 Employment Agreement, dated as of January 31, 1995, by and
among the Company and Mark Hanson (incorporated by reference
from the Company's Current Report on Form 8-K filed February
14, 1995.)
10.11 Consulting Agreement between the Company and Target Capital
Corp. (incorporated by reference from the Company's Current
Report on Form 8-K filed February 14, 1995.)
22 Subsidiaries of the Company (filed as Exhibit 22 to the
Company's Report on Form 10-K for 1991 and incorporated
herein by reference).
23.1 Consent of Richard A. Eisner & Company, LLP.
23.2 Consent of Kennedy & Lehan P.C.
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 fact or events arising
after the effective date 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 the registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the registration statement is on Form S-3, or Form S-8, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(4) That for purposes of determining any liability under the
Securities Act of 1933, each filing of Registrant's annual report pursuant
to Section 13(a) or 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 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.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers
or persons controlling the Registrant pursuant to the foregoing provisions,
or otherwise, 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 Registrant of expenses paid or incurred by a director,
officer or controlling person of 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,
Registrant will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to the 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.
Signatures
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Braintree, Massachusetts on the 30th day of January 1997.
Datatrend Services, Inc.
By: /s/ Mark Hanson
Mark Hanson, President
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and
appoints Mark Hanson as 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 Statement on Form
S-3 and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission under the
Securities Act of 1933.
--------------------
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
- --------- ----- ----
/s/ Mark Hanson President, Director, January 30,1997
Mark Hanson Chief Executive Officer and
Chief Financial and Accounting
Officer
/s/ Yitz Grossman Director January 30, 1997
Yitz Grossman
/s/ Robin Azar Director January 30, 1997
Robin Azar
___________________ Director 1997
Werner Haase
/s/ Kevin Donovan Director January 30, 1997
Kevin Donovan
Exhibit 5
LAW OFFICES OF OSCAR FOLGER
521 Fifth Avenue
New York, New York 10175
(212) 697-6464
(212) 697-7833 (fax)
January 28, 1997
Datatrend Services, Inc.
1515 Washington Street
Braintree, Massachusetts 02184
Re: Form S-3 Registration Statement
Gentlemen:
We have acted as counsel for Datatrend Services, Inc., a Delaware
corporation (the "Company"), in connection with the registration by the
Company of 4,069,100 shares of Common Stock, par value $0.01 per share and
183,200 Warrants (collectively, the "Securities"), which are the subject of
a Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Act").
As counsel to the Company we have examined and relied upon the
original or copies, certified or otherwise identified to our satisfaction,
of such documents, corporate records and other instruments as we have deemed
necessary in order to render the following opinion.
On the basis of and subject to the foregoing, it is our opinion that
the Securities issued or to be issued and sold or to be sold by the Company
have been duly authorized and are, or, when issued and sold, will be duly
issued and fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Registration Statement. In giving such consent, we do not
thereby admit that we come within the category of persons whose consent is
required under Section 7 of the Act or the Rules and Regulations of the
Securities and Exchange Commission thereunder.
This opinion is to be used only in connection with the offer and sale
of the Securities as variously referred to herein while the Registration
Statement is in effect.
Very truly yours,
/s/ Oscar D. Folger
Oscar D. Folger
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 6, 1996 which appears in the
Annual Report on Form 10-KSB of Datatrend Services, Inc. for the year ended
December 31, 1995, and to the reference to our firm under the caption
"Experts" in the Prospectus.
/s/ Richard A. Eisner & Company, LLP
Richard A. Eisner & Company, LLP
Certified Public Accountants
Cambridge, Massachusetts
January 31, 1997
Consent of Independent Certified Public Accountants
We consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated March 16, 1995 which appears in
the Annual Report on Form 10-KSB of Datatrend Services, Inc. for the year
ended December 31, 1995, and to the reference to our firm under the caption
"Experts" in the Prospectus.
/s/ Kennedy & Lehan P.C.
Kennedy & Lehan P.C.
Certified Public Accountants
Quincy, Massachusetts
January 30, 1997
