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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 12, 1997
REGISTRATION NO. 333-******
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
COMPUTER INTEGRATION CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 65-0506623
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
165 UNIVERSITY AVENUE
WESTWOOD, MASSACHUSETTS 02090
(617) 320-8300
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------------
SAMUEL C. McELHANEY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
COMPUTER INTEGRATION CORP.
2425 CROWN POINT EXECUTIVE DRIVE
CHARLOTTE, NORTH CAROLINA 28227
(704) 847-7800
(NAME, ADDRESS INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
COPIES TO:
DONN A. BELOFF, ESQ.
HOLLAND & KNIGHT LLP
1 EAST BROWARD BOULEVARD
FORT LAUDERDALE, FL 33301
(954) 468-7823
TELECOPIER NO. (954) 463-2030
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement and from
time to time thereafter.
If the only securities being registered on this form are 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, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Each Class to be Offering Price Per Aggregate Registration
of Securities to be Registered Registered Unit Offering Price (2) Fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value 7,250,000 $1.50 $10,875,000 $3,295.45
====================================================================================================================================
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee on the
basis of the average of the high and low sale prices for the Common Stock of
the Registrant on August 7, 1997, as reported by the National Association
of Securities Dealers Automated Quotation System.
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, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE> 2
SUBJECT TO COMPLETION DATED AUGUST 12, 1997
PROSPECTUS
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 statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of 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.
7,250,000 SHARES
COMPUTER INTEGRATION CORP.
COMMON STOCK
This Prospectus relates to the public offering and sale by certain
selling stockholders (collectively, the "Selling Stockholders"), of an aggregate
of 7,250,000 Shares (the "Shares") of the common stock, $.001 par value per
share (the "Common Stock"), of Computer Integration Corp. (the "Company")
including 300,000 shares issuable upon the exercise of 300,000 warrants (the
"Warrants"). Except for the proceeds from the exercise of the Warrants, the
Company will not receive any of the proceeds of sales of Common Stock offered
hereby. See "Use of Proceeds."
The Common Stock is traded in the over-the-counter market, and price
quotations therefor are reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ") under the symbol "CICC." The last
reported sale price of the Common Stock on August 8, 1997 was $1.625 per share.
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS." 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.
It is anticipated that the Shares may be offered for sale by one or
more of the Selling Stockholders, in their discretion, on a delayed or
continuous basis from time to time in transactions in the open market at prices
prevailing at the time of sale on the Nasdaq SmallCap Market or in negotiated
transactions pursuant to a separate prospectus. Such transactions may be
effected directly by the Selling Stockholders, each acting as principal for his
own account. Alternatively, such transactions may be effected through brokers,
dealers or other agents designated from time to time by the Selling
Stockholders, and such brokers, dealers or other agents may receive compensation
in the form of customary brokerage commissions or concessions from the Selling
Stockholders or the purchasers of the Shares. The Selling Stockholders, brokers
who execute orders on their behalf, and other persons who participate in the
offering of the Shares on their behalf may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and a portion of the
proceeds of sales and commissions or concessions therefore may be deemed
underwriting compensation for purposes of the Securities Act (see "Plan of
Distribution"). The aggregate proceeds to the Selling Stockholders from the sale
of the Shares will be the purchase price of the Shares sold less all applicable
commissions and underwriters discounts, if any, and other expenses of issuance
and distribution not borne by the Company. By agreement, the Company will pay
fees and expenses related to the offering of the Shares by the Selling
Stockholders, other than underwriting discounts, broker commissions and
applicable transfer taxes, if any, and certain counsel fees (see "Plan of
Distribution").
THE DATE OF THIS PROSPECTUS IS ________, 1997.
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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"). Copies of such
reports, proxy statements and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Room 1024,
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 can be obtained at
prescribed rates from the Public Reference Section of the Commission, 450 Fifth
Street, N.W., Washington, D.C. 20549. The Commission also maintains a Worldwide
Web site at http://www.sec.gov which contains reports, proxy statements and
other information regarding registrants, such as the Company, that file
electronically with the Commission. The Common Stock of the Company is quoted on
the Nasdaq SmallCap Market. Reports, proxy statements and other information
concerning the Company may be inspected at the offices of Nasdaq Operations at
1735 K Street, N.W., Washington, D.C. 20006.
This Prospectus constitutes a part of a Registration Statement on Form
S-3 (the "Registration Statement") filed by the Company with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"). This
Prospectus omits certain of the information contained in the Registration
Statement and the exhibits and schedules thereto, as certain items are omitted
in accordance with the rules and regulations of the Commission. For further
information concerning the Company and the Common Stock offered hereby,
reference is hereby made to the Registration Statement and the exhibits and
schedules filed therewith, which may be inspected without charge at the office
of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549 and copies
of which may be obtained from the Commission at prescribed rates. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such documents
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INFORMATION INCORPORATED BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus: (a) the
Annual Report of Computer Integration Corp. on Form 10-K for the fiscal year
ended June 30, 1996; (b) the Quarterly Reports of Computer Integration Corp. on
Form 10-Q for the fiscal quarters ended September 30, 1996, December 31, 1996
and March 31, 1997; (c) the Report on Form 8-K of Computer Integration Corp.
filed with the Commission on August 5, 1997; (d) the Report on Form 8-K of
Computer Integration Corp. filed with the Commission on July 11, 1995 as amended
on September 11, 1995; and (e) the description of the Common Stock contained in
the Company's Registration Statement on Form 8-A as filed with the Commission on
January 13, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock offered hereby shall be
deemed to be incorporated by reference in this Prospectus and to be a part
hereof from the respective dates of filing such documents. Any statement or
information contained in a document incorporated or deemed to be incorporated by
reference herein shall be deemed modified or superseded for the purposes of this
Prospectus to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference 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.
The Company will provide without charge to any person to whom a
Prospectus is delivered, upon written or oral request, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits
and schedules to such documents). Requests should be directed to: Computer
Integration Corp., 165 University Avenue, Westwood, Massachusetts 02090,
Attention: Investor Relations, telephone number (617) 320-8300.
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PROSPECTUS SUMMARY
THE COMPANY
The Company is one of the largest volume resellers in the United States
of microcomputers, workstations and related products to large and medium-sized
corporations, federal, state and local governmental entities and colleges and
universities. The Company distributes a broad range of microcomputer-related
products from major hardware manufacturers and software developers such as
Hewlett-Packard Company ("HP"), Compaq Computer Corporation ("Compaq"), Sun
Microsystems Computer Corporation ("Sun"), Toshiba America Information Systems,
Inc. ("Toshiba"), International Business Machines ("IBM"), Lexmark International
("Lexmark"), Epson America, Inc. ("Epson"), NEC Technologies, Inc. ("NEC"),
3COM, Inc. ("3COM"), Novell, Inc. ("Novell") and Microsoft Corporation
("Microsoft"). The Company is one of the largest resellers of computer products
manufactured by HP in the United States, and during the year ended June 30, 1996
("Fiscal 1996") and the nine months ended March 31, 1997 (the "1997 Period"),
sales of HP products accounted for approximately 65% and 70% of the Company's
net sales, respectively.
The Company has experienced rapid growth. On March 30, 1993, the
Company acquired Copley Systems Corporation ("Copley") of Westwood,
Massachusetts. Effective July 1, 1994, the Company acquired Dataprint, Inc.
("Dataprint") of Charlotte, North Carolina, and effective July 1, 1995, the
Company acquired substantially all of the assets of Cedar Computer Center, Inc.
("Cedar") of Des Moines, Iowa (the "Cedar Acquisition"). At the time of their
acquisitions, Copley and Dataprint were two of the largest dealers of HP
computer products in the northeastern and southeastern United States,
respectively. Cedar was one of the largest dealers of HP computer products in
the midwestern and western United States. Net sales of the Company have
increased from $103.9 million for the fiscal year ended June 30, 1993 to $450.0
million in Fiscal 1996.
The microcomputer industry has grown dramatically over the past several
years as a result of equipment price reductions, significant improvements in
hardware performance and software applications, increased use of microcomputers
by governments and businesses and increased product familiarity by end users.
The microcomputer distribution industry has experienced related growth in the
use of wholesale distribution channels by manufacturers for the distribution of
their products. The Company has distinguished itself from its competitors by
focusing primarily on the direct delivery of personal computer ("PC") hardware,
peripherals and software from selected manufacturers to a broad range of
customers through a low-cost, efficient method of distribution. The Company
configures Pcs and printers with memory, operating systems and software at its
two distribution centers. Management believes that the Company's focus on a
limited number of manufacturers, its expertise with their product lines,
commitment to servicing of its customers and efficient distribution and delivery
of products provide the Company a competitive advantage and enable it to operate
with relatively low operating costs.
The Company's operating strategy is to (i) increase its market share of
products of selected manufacturers such as HP, Compaq, IBM and Sun, (ii)
increase customer loyalty through the offering of a full array of services and
excellent product delivery, (iii) grow its nationwide sales and distribution
network, (iv) expand its systems integration and support services, and (v)
strengthen its professional, and solution services. The Company may acquire
other companies whose products and services complement the Company's existing
products and services, including both resellers and providers of systems
integration and other support services.
The Company has approximately 13,000 active customers.
The Company's principal executive offices are located at 165 University
Avenue, Westwood, Massachusetts, 02090, and its telephone number is (617)
320-8300.
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RISK FACTORS
INVESTMENT IN THE SHARES OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS AND
INCORPORATED HEREIN BY REFERENCE, PROSPECTIVE INVESTORS SHOULD CONSIDER
CAREFULLY THE FOLLOWING RISK FACTORS BEFORE PURCHASING ANY SHARES OFFERED
HEREBY.
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A "SAFE
HARBOR" FOR FORWARD-LOOKING STATEMENTS. CERTAIN STATEMENTS INCLUDED IN THIS
PROSPECTUS ARE FORWARD-LOOKING, SUCH AS STATEMENTS REGARDING THE COMPANY'S
GROWTH STRATEGY AND ANTICIPATED RESULTS FOR THE YEAR ENDED JUNE 30, 1997. SUCH
FORWARD-LOOKING STATEMENTS ARE BASED ON THE COMPANY'S CURRENT EXPECTATIONS AND
ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS IN THE FUTURE TO DIFFER SIGNIFICANTLY FROM RESULTS EXPRESSED OR IMPLIED
IN ANY FORWARD-LOOKING STATEMENTS MADE BY, OR ON BEHALF OF, THE COMPANY. THESE
RISKS AND UNCERTAINTIES INCLUDE, BUT ARE NOT LIMITED TO, UNCERTAINTIES RELATING
TO THE COMPANY'S RELATIONSHIPS WITH KEY CUSTOMERS AND IMPLEMENTATION OF THE
COMPANY'S GROWTH STRATEGY. THESE AND OTHER RISKS ARE DETAILED BELOW AS WELL AS
IN OTHER DOCUMENTS FILED BY THE COMPANY WITH THE COMMISSION.
DEPENDENCE ON KEY SUPPLIERS
Products from HP accounted for 70% and 60%, respectively, of the
Company's net sales for the 1997 Period and Fiscal 1996. The Company purchases
its other products from a number of distributors. For the 1997 Period, products
from one distributor accounted for 13% of the Company's sales (the "Primary
Distributor"). The Company's business is dependent upon terms provided by its
major vendors, including pricing and related provisions, product availability,
credit terms and cooperative advertising and marketing allowances. The Company
operates under authorized dealer agreements with its suppliers, which agreements
are typically non-exclusive, short-term in duration, subject to periodic
renewal, and may be terminated by either party without cause on short notice.
The Company's current reseller's agreement with HP has a one-year term expiring
on February 28, 1998. The agreement allows either party to terminate the
agreement without cause upon 30 days written notice, or with cause upon 15 days
written notice. The Company's current agreement with its Primary Distributor has
a one-year term expiring April 4, 1998. The agreement allows either party to
terminate with or without cause on 30 days' notice.
The Company's total purchases of products from HP have qualified the
Company for HP's maximum reseller's volume discount (presently known as the
"Level II Discount") since August 1, 1994. As of the date of this Prospectus,
the Level II Discount is available to resellers who have attained gross
purchases of HP products of at least $135.0 million during a contract year.
Qualification for the Level II discount enables the Company to decrease its cost
of HP products by an incremental 2.0%. There can be no assurance that HP will
not, in the future, increase the sales level necessary to qualify for the Level
II Discount or create other more favorable discount categories for which the
Company may not qualify. The Company's total purchases of HP products for the
contract year ending February 28, 1998 are expected to substantially exceed
$135.0 million.
Although the Company considers its relations with HP and its Primary
Distributor to be excellent, there can be no assurance that such relationships
will continue as presently in effect. The deterioration of the Company's
relationship with HP or the Primary Distributor, or the termination or
cancellation of the Company's agreements with HP or the Primary Distributor,
would have a material adverse effect on the Company's business, operations,
financial condition and prospects.
MANAGING RAPID GROWTH; NO ASSURANCE OF ADDITIONAL FINANCING
Since its inception, the Company's cash flow from operations has been
insufficient to finance the Company's operations and rapid growth. The Company
has relied upon the private sale of equity securities, borrowings under its
revolving credit facility, and, during certain periods, cash flow from
operations, to finance working capital requirements. During Fiscal 1996 and
Fiscal 1995, the Company used $4.9 million and $2.1 million, respectively, in
operating activities. The Company believes that cash flow from operations and
borrowings under its revolving credit facility will provide sufficient cash to
fund the Company's operations and current obligations for the next 12 months.
See "--High Level of Indebtedness; Ability to Service Indebtedness", and
"--Restrictions Contained in Loan Agreements". As part of its growth strategy,
the Company may acquire other companies whose product lines, markets or services
would complement the Company's existing products, markets or services, create
new marketing programs, hire additional personnel and increase sales to business
customers. Should the Company expand its operations or make acquisitions that
would require funds in addition to its existing liquid assets and cash flows, it
may have to seek additional debt or equity financing. There can be no assurance
that the Company could obtain such financing or that such financing would be
available on terms acceptable to the Company.
Although the Company continuously reviews potential acquisition
targets, it has not entered into any agreement, understanding or commitment with
respect to any additional acquisitions at this time. Furthermore, there can be
no assurance that the Company will complete any acquisitions, obtain sufficient
funds to finance any
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acquisitions or that it will be able to successfully integrate any acquired
business into its existing operations and expand such operations.
HIGH LEVEL OF INDEBTEDNESS; ABILITY TO SERVICE INDEBTEDNESS
The Company is highly leveraged. At March 31, 1997, the Company had
$38.2 million of total debt. On July 24, 1997, the Company repaid $7.4 million
of such debt from the proceeds obtained from a private placement of Common
Stock. The Company may incur additional indebtedness from time-to-time to
finance additional acquisitions, capital expenditures or for other corporate
purposes. Interest expense for the 1997 Period, Fiscal 1996 and Fiscal 1995 was
$3.6 million, $4.8 million and $2.6 million, respectively.
The level of the Company's indebtedness could have important
consequences to stockholders, including that a substantial part of the Company's
cash flow from operations must be dedicated to debt service and will not be
available for other purposes; that the Company's ability to obtain financing in
the future, if needed, may be limited; that the Company's leveraged position and
the covenants contained in the Company's Credit Facility, as defined below, or
any replacements thereof, could limit its ability to expand and make capital
improvements and acquisitions, and that the Company's level of indebtedness
could make it more vulnerable to economic downturns, limit its ability to
withstand competitive pressures and limit its flexibility in reacting to changes
in its industry and economic conditions generally. The Credit Facility is
secured by all of the assets of the Company, and, should the Company default in
its obligations to its lender, the Company's assets could be used by the lender
to satisfy the Company's obligations pursuant to that facility. In addition, the
covenants made by the Company to its lender as conditions to obtaining the
Credit Facility may effect the Company's operations. Most of the Company's
competitors currently operate on a less leveraged basis and may have
significantly greater operating and financing flexibility than the Company.
RECENT LOSSES; ACCUMULATED DEFICIT; POTENTIAL NEED FOR ADDITIONAL FINANCING
The Company experienced losses in each of Fiscal 1996 and the 1997
Period. For Fiscal 1996, the Company had a net loss of $403,209, for the 1997
Period had a net loss of $4.1 million and expects to have a net loss for the
fiscal year ended June 30, 1997 ("Fiscal 1997"). At March 31, 1997, the Company
had an accumulated deficit of $3.4 million and expects to have an accumulated
deficit as of June 30, 1997. There can be no assurance that the Company will be
able to achieve or maintain profitability on a quarterly or annual basis or that
it will be able to achieve revenue growth. If the Company requires additional
funds, there can be no assurance that additional financing can be obtained on
acceptable terms, if at all. The inability to obtain such financing, if
necessary, could have a material adverse effect on the Company. If additional
funds are raised by issuing equity securities, such as the sale of 6,950,000
shares of Common Stock in a private placement in July 1997, dilution to existing
shareholders would result.
GUARANTEE OF SHARE PRICE OF CERTAIN SHARES OF COMMON STOCK
A stockholder of the Company, the Current Exchange, Inc., has a
contractual right (the "Price Guarantee") pursuant to which it can require the
Company to pay to such stockholder, with respect to 515,000 shares of Common
Stock, the difference between $10.00 per share and the closing market price for
the Common Stock on July 2, 1998. The closing market price for the Common Stock
on August 8, 1997 was $1.625. Should the Company be called upon to satisfy the
Price Guarantee, and should such obligation require funds in excess of its then
existing liquid assets or cash flows, the Company will have to seek additional
debt or equity financing. There can be no assurance that the Company could
obtain such financing or that such financing would be available on terms
acceptable to the Company.
RESTRICTIONS CONTAINED IN LOAN AGREEMENTS
Effective June 30, 1996, the Company amended its financing agreement
(the "Credit Facility") with its primary lender, Congress Financial Corporation
("Congress"), to increase the maximum available credit from $70 million to $77
million and to modify certain financial covenants. The Credit Facility's
financial covenants were amended again in
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May 1997. The Credit Facility is collateralized by the Company's accounts
receivable and inventory and requires that the Company maintain, at all times,
certain net worth and working capital ratios and restricts the payment of
dividends by the Company. These financial ratios and restrictions may affect the
flexibility of the Company to pursue further acquisitions and incur further
indebtedness. In addition, the failure to comply with the terms and conditions
of the Credit Facility, including those described herein, could result in a
default and permit Congress to accelerate the maturity of the indebtedness and
to foreclose on the assets pledged as collateral.
MARKETS FOR PRODUCTS AND SERVICES
The Company's sales efforts are focused primarily on a defined market
segment, consisting of large and medium-sized corporations, federal, state and
local governments ("government") and colleges and universities ("education")
throughout the United States. The Company's future financial performance will
depend upon continued demand for the computer products which it distributes and
related technical services which it provides within such markets, as well as
general economic conditions. In recent years, fiscal pressures have severely
affected the budgets of many of these organizations and in many instances
imposed mandatory spending restraints. The Company's revenues and operating
income could be adversely affected by a general slowdown or other adverse
economic conditions affecting any of its customers or any additional fiscal
limitations which may lead to a decline in public sector purchasing.
INDUSTRY CONDITIONS
Resellers in the microcomputer industry, including the Company, face a
number of potentially adverse business conditions, including declining gross
profit margins. Although increased price competition among hardware
manufacturers has generally reduced the cost of products purchased by resellers,
gross profit margins for many resellers have declined since the costs of
products for resellers has not declined proportionately with decreases in prices
to the ultimate consumer.
For the 1997 Period, Fiscal 1996 and Fiscal 1995, the Company's gross
profit margin was 10.1%, 9.5% and 9.8%, respectively. Because the Company's
gross profit margins are relatively small, small increases in expenses or other
charges to income could have a material adverse effect on the Company's results
of operations. In addition, increased price competition among hardware
manufacturers has resulted in a reduction in existing vendor-sponsored market
development programs. There can be no assurance that the Company will be able to
continue to compete successfully in the microcomputer industry.
The computer industry is characterized by rapid product improvement and
technological change resulting in relatively short product life cycles and rapid
product obsolescence. The Company's policy is to minimize levels of inventory
and to resell such inventory as quickly as possible to minimize its risk of
being adversely affected by obsolescence. All of the Company's major suppliers
employ practices intended to reduce the risk of product obsolescence by
permitting exchanges of slow-selling or obsolete products for more popular
products and providing advance notice to the Company of new product
developments. If the Company's suppliers do not continue such policies or a
significant amount of the Company's inventory is rendered obsolete as a result
of unforeseen new product developments, the Company's business and operating
results would be adversely affected. Furthermore, there can be no assurance that
the Company's current and future vendors and suppliers will be able to achieve
the technological advances necessary to remain competitive or that the Company
will be able to obtain authorizations from new vendors to sell new products that
gain market acceptance.
COMPETITION
The Company's product lines of computers, peripherals and related
services compete with products and services of a large number of other industry
participants on local, regional and national levels. The Company competes with
national and regional dealers, integrators, computer superstores, mass
merchants, mail-order resellers, manufacturers' direct sales organizations, and
other value-added resellers on the basis of price, post-sales technical support
and service, speed of delivery and breadth of product lines.
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Direct telemarketing and mail-order organizations have developed as
important alternative distribution channels. In addition, computer "superstores"
and mail-order distributors offer purchasers a relatively low cost, minimal
service alternative to traditional supply sources. These distribution channels
benefit from heightened product awareness and price sensitivity on the part of
users, the emergence of standardization within the industry, and increased
interchangeability of peripherals. As microcomputer users have become more
computer literate, their dependence on local dealers for basic information and
demonstrations has diminished.
Many of the Company's competitors have significantly greater financial,
technical and marketing resources than the Company and many of such competitors
market their products principally on the basis of price rather than valued-added
service. There can be no assurance that the Company will be able to continue to
compete successfully.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent upon several key executives and operating
personnel, including Samuel C. McElhaney, President and Chief Executive Officer
of the Company; Stephen Wright, Chief Operating Officer of the Company's wholly
owned subsidiary; and Edward Meltzer, Chief Financial Officer of the Company.
The Company has signed an employment agreement with John Paget to become the
Company's President and Chief Executive Officer, effective August 16, 1997. Mr.
McElhaney will continue to serve on the Company's Board of Directors and has
entered into an employment agreement to serve as the Director of Strategic
Planning and Development. The loss of any of these individuals could have an
adverse effect on the Company. Although the Company has entered into employment
agreements with each of these individuals, there is no assurance that the
Company will be able to retain their respective services or attract new
qualified personnel, if required.
CONTROLLING STOCKHOLDERS
Three stockholders and one group of stockholders control an aggregate
of approximately 74% of the voting stock of the Company. In May 1997, the
Company agreed to sell 6,950,000 shares of its Common Stock, and an additional
300,000 shares of Common Stock issuable upon the exercise of the Warrants, to
Chartwell Group, Inc. ("Chartwell"). Chartwell assigned its right to purchase
6,950,000 shares to third parties: the right to purchase 4,672,897 shares was
assigned to Codinvest Limited ("Codinvest") and the right to purchase 2,277,103
shares was assigned to seven other investors (the "Other Assignees"). As of the
date of this Prospectus, Codinvest owns approximately 33%, the Other Assignees,
collectively, own approximately 16% and one of the Other Assignees individually
owns approximately 7% of the Company's issued and outstanding Common Stock.
The agreement with Chartwell provides that, until July 24, 1998, the
Company will use its best efforts to cause and maintain the election to the
Company's Board of Directors of up to four nominees of Chartwell reasonably
satisfactory to the Company, and further provides that the Board of Directors
will consist of no more than eight members during such one year period.
Chartwell assigned its right to nominate up to three directors to Codinvest and
the right to nominate one director to the Other Assignees. The Board consisted
of three members and, consequently, Codinvest nominated three members of the
Board of Directors. Codinvest has agreed that, when the Other Assignees have
chosen their director nominee, one of Codinvest's nominees will resign. In
addition, in the agreement with Chartwell, the Company granted to Chartwell, and
Chartwell thereafter assigned to Codinvest, the right to designate the President
and Chief Executive Officer, subject to the approval of the Company's Board of
Directors. This designee, John Paget, has signed an employment agreement with
the Company. See "--Dependence on Key Personnel."
Ronald G. Farrell, a former Director, Chief Executive Officer and
President of the Company currently owns approximately 8% of the Company's
issued and outstanding Common Stock (1,197,085 shares, including currently
exercisable options to purchase 118,000 shares).
Certain other stockholders (some of whom are directors and executive
officers of the Company) have entered into a voting agreement which expires on
December 31, 1997, (the "Voting Agreement"), pursuant to which they have agreed
to vote those shares of Common Stock owned by them during the term of the Voting
Agreement (currently 3,593,506 shares) in the manner directed by Samuel C.
McElhaney, the Company's Chief Executive Officer. The shares covered by the
Voting Agreement represent approximately 26% of the Company's Common Stock, or
approximately 31% of the shares of Common Stock that would be outstanding if all
securities owned by such persons that are convertible into Common Stock
(representing at present 1,167,976 shares of Common Stock) were so converted.
ABSENCE OF ACTIVE PUBLIC MARKET
Prior to this Offering, there has been no active public market for the
Common Stock. Although the Common Stock is listed on the Nasdaq SmallCap Market
under the symbol "CICC," trading in the Common Stock has been sporadic and there
can be no assurance that the Company will be able to maintain such listing or
that an active public trading market will develop for the Common Stock, or if
developed, that such market will be sustained.
NASDAQ SMALLCAP MARKET MAINTENANCE STANDARDS; DISCLOSURE RELATING TO LOW-PRICED
STOCKS
The Common Stock is listed on the Nasdaq SmallCap Market. In order to
continue to be listed on the Nasdaq SmallCap Market, the Company must maintain
$2 million in total assets, a $200,000 market value of the
7
<PAGE> 9
public float and $1 million in total capital and surplus. Continued inclusion
also requires 300 shareholders, two authorized Nasdaq market-makers and a
minimum bid price of $1.00 per share; provided, however, that if the Company
falls below such minimum bid price for a period of ten consecutive business
days, it will remain eligible for continued inclusion on the Nasdaq SmallCap
Market if the market value of the public float is at least $1 million and the
Company has at least $2 million in capital and surplus. On March 3, 1997, the
Nasdaq Stock Market filed with the Commission proposed rule changes which would
strengthen the quantitative standards for listing on the Nasdaq SmallCap Market.
If adopted by the Commission, the alternative test to the $1.00 minimum bid
price described above would be eliminated. In addition, the Company would have
to maintain either: $2 million in net tangible assets (total assets less total
liabilities and goodwill); $500,000 in net income for two of the last three
years; or market capitalization of at least $35 million. As of March 31, 1997
the Company does not meet, and as of June 30, 1997 does not anticipate meeting,
the net tangible assets requirement. If the Company is not able to obtain an
appropriate waiver of the requirement, the failure to maintain the
maintenance standards of the Nasdaq SmallCap Market may result in the delisting
of the Common Stock on such market. In such event, trading, if any, in the
Common Stock may then continue to be conducted on the over-the-counter market in
what are commonly referred to as the "pink sheets," or on the OTC Electronic
Bulletin Board. As a result of trading in the over-the-counter market, an
investor may find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Common Stock.
In addition, delisting could result in the Common Stock being subject
to additional rules adopted by the Commission governing "penny stock," which is
generally defined by such rules as any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions, including an
exception for securities authorized for quotation on the Nasdaq SmallCap Market.
For any transaction involving penny stock, unless exempt, the rules require the
delivery, prior to any transaction in a penny stock, of a disclosure schedule
prepared by the Commission relating to the penny stock market. Disclosure also
has to be made about commissions payable to broker-dealers and registered
representatives, and current quotations for the securities. Monthly account
statements must also be sent to purchasers of penny stock disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. In addition, the penny stock rules require
broker-dealers who sell penny stock to persons other than established customers
or accredited investors to make a special suitability determination of the
proposed purchaser and to obtain the written consent of such prospective
purchaser to the transactions prior to sale. As a result of the foregoing
requirements, the application of the penny stock rules to the Common Stock may
have an adverse effect on the ability of broker-dealers to sell the Common
Stock.
VOLATILITY OF COMMON STOCK PRICE
The stock market has experienced significant price and volume
fluctuations in recent years and there has been significant volatility in the
market prices of securities of computer distributors and manufacturers. The
trading price of the Common Stock may also be subject to significant
fluctuations in response to variations in operating results. Various factors and
events, including announcements by the Company, its suppliers or its
competitors, concerning technological innovations or new commercial products, as
well as public concern about the stability of the economy in general, may have a
significant impact on the trading price of the Common Stock. The sale or
attempted sale of a large amount of the Common Stock into the market may also
have a significant impact on the trading price of the Common Stock.
ABSENCE OF DIVIDENDS
The Company has never paid any dividends on its Common Stock and does
not contemplate or anticipate distributing any cash dividends with respect to
the Common Stock in the foreseeable future. Pursuant to the Credit Facility with
its principal lender, the Company is prohibited from paying any dividends on its
Common Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Assuming conversion of the Series D and Series E Preferred Stock,
defined below, the Company will have 15,296,054 shares of Common Stock
outstanding. The Company has reserved 1,800,000 shares for issuance upon the
exercise of options granted under the Plan, all of which have been granted and
793,037 of which are immediately exercisable or exercisable within 60 days of
the date hereof. In addition, the Company has
8
<PAGE> 10
granted an additional 1,000,000 options, subject to the approval by the
stockholders of the Company at the 1997 annual stockholders' meeting of an
amendment to the Plan (the "Plan Amendment") increasing the number of options
reserved for issuance to 3,000,000. The Company has also reserved 355,000 shares
for issuance upon the exercise of certain warrants. All of shares of Common
Stock to be issued and outstanding upon such exercises, assuming adoption of the
Plan Amendment, will be freely tradeable, without restriction or further
registration under the Securities Act. The owners of the shares of Common Stock
covered by the Voting Agreement have agreed not to sell any such shares without
the prior written consent of Mr. McElhaney during the term of that agreement.
AUTHORIZATION OF PREFERRED STOCK
The Company's Certificate of Incorporation authorizes the issuance of
"blank check" preferred stock with such designations, rights and preferences as
may be determined from time to time by the Board of Directors. Accordingly, the
Board of Directors is empowered, without stockholder approval, to issue
preferred stock with dividend, liquidation, conversion, redemption, voting or
other rights which could adversely affect the voting power or other rights of
the holders of the Company's Common Stock. In the event of issuance, the
preferred stock could be utilized, under certain circumstances, as a method of
discouraging, delaying or preventing a change in control of the Company, making
removal of the present management of the Company more difficult or resulting in
restrictions upon the payment of dividends or other distributions to the holders
of Common Stock. The possible impact on takeover attempts could adversely affect
the price of the Common Stock.
As of the date of this Prospectus, the Company had authorized 40,000
shares of Series A, 9% Cumulative Convertible Redeemable Preferred Stock, none
of which is issued and outstanding; 250 shares of Series B, Convertible
Preferred Stock, none of which is issued and outstanding (125 shares were
converted on July 21, 1994 into 500,000 shares of Common Stock); 250 shares of
Series C, 9% Cumulative Convertible Redeemable Preferred Stock, none of which is
issued and outstanding; 40,000 shares of Series D, 9% Cumulative Convertible
Redeemable Preferred Stock (the "Series D Preferred Stock"), of which 19,035.85
shares (convertible into 761,434 shares of Common Stock) are issued and
outstanding; and 250 shares of Series E, 9% Cumulative Convertible Redeemable
Preferred Stock (the "Series E Preferred Stock"), of which 125 shares
(convertible into 500,000 shares of Common Stock) are issued and outstanding.
Although the Company has no present intention to issue any additional shares of
its preferred stock, there can be no assurance that the Company will not do so
in the future.
9
<PAGE> 11
USE OF PROCEEDS
Except for the proceeds from the exercise of the Warrants, the Company
will not receive any proceeds from the sale of Common Stock offered hereby by
the Selling Stockholders.
Of the shares included in this Prospectus, 300,000 represent shares
underlying the Warrants, which are exercisable at a price of $1.13 per share.
No assurance can be given that any of the Warrants will be exercised.
However, in the event that all of the Warrants are exercised, the Company would
receive proceeds of $339,000. Any proceeds to the Company resulting from the
exercise of any or all of the Warrants may be used for working capital or other
corporate purposes.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of outstanding
Common Stock beneficially owned by the Selling Stockholders as of July 31, 1997.
Other than as described below, none of the Selling Stockholders holds any
position or office with, has been employed by, or has had any material
relationship with the Company during the previous three years, except as a
stockholder of the Company. After completion of the Offering, the Selling
Stockholders are expected to own no securities of the Company.
<TABLE>
<CAPTION>
NAME AND POSITION OF SHARES OF COMMON STOCK PERCENT OF CLASS
SELLING STOCKHOLDER OWNED (ALL OF WHICH ARE OWNED PRIOR TO
OFFERED HEREBY) OFFERING
<S> <C> <C>
Codinvest Limited.................................. 4,672,897 33.3%
Robert W. Johnson IV............................... 1,000,000 7.1%
Arthur DelVesco.................................... 427,103 3.0%
John Perry, III.................................... 300,000 2.1%
Thomas D. McCloskey, Jr............................ 200,000 1.4%
Donald Russell..................................... 200,000 1.4%
Director Designee
David Searles...................................... 100,000 (1)
Michael G. Santry.................................. 90,000(2) (1)
Director
Matthew S. Waller.................................. 90,000(2) (1)
Director
Darryl D. Pounds................................... 90,000(2) (1)
Neil J. Burmeister................................. 50,000 (1)
Frank Mermoud...................................... 30,000(2) (1)
--------- -----
Total.............................................. 7,250,000 50.6%
========= =====
</TABLE>
- ---------------
(1) Less than 1%.
(2) Represents shares of Common Stock issuable upon the exercise of the
Warrants.
10
<PAGE> 12
The Selling Stockholders are assignees of an agreement, dated May 15,
1997 (the "Agreement"), between the Company and Chartwell, pursuant to which
Chartwell agreed to purchase 6,950,000 shares of the Company's Common Stock. The
Selling Stockholders purchased their shares on July 24, 1997.
The Agreement provides that, for one year after the Closing Date, the
Company will use its best efforts to cause and maintain the election to the
Company's Board of Directors of up to four nominees of Chartwell reasonably
satisfactory to the Company, and further provides that the Board of Directors
will consist of no more than eight members during such one year period.
Chartwell assigned its right to nominate up to three directors to Codinvest and
the right to nominate one director to the Other Assignees. The Board consisted
of three members and, consequently, Codinvest nominated three members of the
Board of Directors. Codinvest has agreed that, when the Other Assignees have
chosen their director nominee, one of Codinvest's nominees will resign. In
addition, in the Agreement, the Company granted to Chartwell, and Chartwell
thereafter assigned to Codinvest, the right to designate the President and Chief
Executive Officer, subject to the approval of the Company's Board of Directors.
PLAN OF DISTRIBUTION
The Shares may be sold, from time to time, to purchasers directly by
any of the Selling Stockholders. The Selling Stockholders will act independently
of the Company in making decisions with respect to the timing, manner and size
of each sale. Such sales may be made in the Nasdaq SmallCap Market, in
negotiated transactions, through the writing of options on the Shares, or
through a combination of such methods of sale, at market prices prevailing at
the time of sale, prices related to the then-current market price or at
negotiated prices, including pursuant to an underwritten offering or one or more
of the following methods: (a) purchases by a broker-dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (b)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (c) block trades in which the broker-dealer so engaged will
attempt to sell the shares as an agent, but may position and resell a portion of
the block as a principal to facilitate the transaction. The Selling Stockholders
may also pledge the Shares as collateral for margin accounts and such Shares
could be resold pursuant to the terms of such accounts. The Company has been
advised by the Selling Stockholders that they have not made any arrangement
relating to the distribution of the Shares covered by this Prospectus. In
effecting sales, broker-dealers engaged by the Selling Stockholders may arrange
for other broker-dealers to participate. Such broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
Selling Stockholders and/or the purchasers of the Shares for which such
broker-dealers may act as agent or to whom they may sell as principal, or both
(which compensation shall be negotiated immediately prior to sale and which, as
to a particular broker-dealer, may be in excess of customary compensation). Any
broker-dealer may act as broker-dealer on behalf of one or more of the Selling
Stockholders in connection with the offering of certain of the shares by Selling
Stockholders.
The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended (the "Securities Act"). Additionally, the Company will pay the
expenses, estimated to be approximately $7,500 in connection with this Offering,
other than transfer taxes, discounts, commissions, fees or expenses of
underwriters, selling brokers, dealer managers or similar securities industry
professionals relating to the distribution of the Shares, or legal expenses of
any person other than the Company.
There is no underwriter or coordinating broker acting in connection
with this Offering. In offering the Shares covered hereby, the Selling
Stockholders and any broker-dealers and any other participating broker-dealers
who execute sales for the Selling Stockholders may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales, and any profits realized by the Selling Stockholders and the compensation
of such broker-dealer may be deemed to be underwriting discounts and
commissions. In addition, any Shares covered by this Prospectus which qualify
for sale pursuant to Rule 144 under the Securities Act ("Rule 144") may be sold
under Rule 144 rather than pursuant to this Prospectus. All of the Shares
covered by this Prospectus presently qualify for sale pursuant to Rule 144.
11
<PAGE> 13
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby has
been passed upon for the Company by Holland & Knight LLP, Fort Lauderdale,
Florida.
EXPERTS
The consolidated financial statements and the related financial
statement schedules of Computer Integration Corp. appearing in Computer
Integration Corp.'s Annual Report (Form 10-K) for the year ended June 30, 1996,
have been audited by Ernst & Young LLP, independent certified public
accountants, as set forth in their reports thereon included therein and
incorporated herein by reference. The financial statements and schedules
referred to above are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in accounting and
auditing.
The financial statements of Cedar Computer Center, Inc. incorporated in
this Prospectus by reference from the Company's Form 8-K/A-1 filed with the
Commission on September 11, 1995 have been audited by McGladrey & Pullen, LLP,
independent certified public accountants as stated in their report which is
incorporated herein by reference, and has been so incorporated in reliance upon
the report of such firm given their authority as experts in accounting and
auditing.
12
<PAGE> 14
<TABLE>
<CAPTION>
================================================================ ==============================================================
<S> <C>
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED 7,250,000 SHARES
TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS
OR PROJECTIONS OF FUTURE PERFORMANCE OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND ANY SUCH OTHER
INFORMATION, PROJECTIONS OR REPRESENTATIONS IF GIVEN
OR MADE MUST NOT BE RELIED UPON AS HAVING BEEN SO COMPUTER INTEGRATION CORP.
AUTHORIZED. THE DELIVERY OF THIS PROSPECTUS OF ANY SALE
HEREUNDER AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL COMMON STOCK
OR A SOLICITATION OF ANY OFFER TO BUY ANY OF THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM
IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
------------------------
--------------
PROSPECTUS
TABLE OF CONTENTS
--------------
PAGE
----
Available Information.................................... 2
Incorporation of Certain Information by Reference........ 2
Prospectus Summary....................................... 3
Risk Factors............................................. 4
Use of Proceeds.......................................... 10
Selling Stockholders..................................... 10
Plan of Distribution..................................... 11
Legal Matters............................................ 12
Experts Matters.......................................... 12
_____________ 1997
------------------------
================================================================ =============================================================
</TABLE>
<PAGE> 15
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses and costs expected to be incurred in
connection with the issuance and distribution of the common stock being
registered and payable by the Company. All amounts are estimated except for the
SEC registration fee and the Nasdaq fees.
SEC Registration Fee .................................... $3,295.45
Nasdaq fees.............................................. *
Legal fees and expenses.................................. *
Accounting fees and expenses............................. *
Blue Sky fees and expenses............................... *
Printing expenses........................................ *
Miscellaneous............................................ *
Total............................................... *
- ------------------
* To be supplied by amendment.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
(the "Delaware Law") grants each corporation organized thereunder the power to
indemnify any person who is or was a director, officer, employee or agent of
another corporation or enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement, actually and reasonably
incurred by him in connection with 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 being
or having been in any such capacity, if he acted in good faith in a manner
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. Section 102(b)(7) of the
Delaware Law enables a corporation in its certificate of incorporation, or an
amendment thereto validly approved by its stockholders, to limit or eliminate
the personal liability of the members of its board of directors for violation of
the director's fiduciary duty or care.
Article Tenth of the Company's Certificate of Incorporation contains
the following provision with respect to the liability of the Company's directors
to the Company:
A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach
of the director's duty of loyalty to the corporation or its
stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii)
under Section 174 of the General Corporation Law of Delaware, or (iv)
for any transaction from which the director derived any improper
personal benefit.
Section 6 of the Company's Bylaws provides that the corporation shall
indemnify its directors, officers, employees and agents to the extent permitted
by the General Corporation Law of Delaware.
II-1
<PAGE> 16
ITEM 16. EXHIBITS
The following documents are filed as exhibits to this registration
statement:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------- -------------------
4.01 Stock Purchase Agreement dated as of May 15, 1997 between the
Registrant and Chartwell Group, Inc., a Texas corporation ("Buyer")*
4.02 Computer Integration Corp. Common Stock Purchase Warrant*
5.01 Opinion of Holland & Knight (to be filed by amendment)
23.01 Consent of Ernst & Young LLP
23.02 Consent of McGladrey & Pullen, LLP
23.03 Consent of Holland & Knight (included in Exhibit 5)
24.01 Power of Attorney (included on signature page of this Registration
Statement)
- ------------------------
* Incorporated by reference to the Company's Current Report on Form 8-K
dated July 24, 1997.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Securities 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 (the "Commission") such indemnification
is against public policy as expressed in the Securities 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 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.
(2) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events arising after the
effective date of this registration statement (or the most recent
post-effective amendment thereof), which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Securities and
II-2
<PAGE> 17
Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in this registration statement.
(iii) Include any material information with respect to the plan of
distribution not previously disclosed in this registration statement or
any material change to such information in this registration statement;
PROVIDED, HOWEVER, that paragraphs (2)(i) and 2(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference
to the registration statement.
(3) That, for purposes of determining any liability under the
Securities Act, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time to be the initial BONA FIDE offering.
(4) To file a post-effective amendment to remove from registration any
of the securities being registered which remain unsold at the termination of the
offering.
(5) For purposes of determining any liability under the Securities Act,
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.
(6) For the purpose of determining any liability under the Securities
Act, 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.
(7) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act that is incorporated by reference in this
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.
II-3
<PAGE> 18
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 Charlotte, North Carolina on August 11, 1997.
COMPUTER INTEGRATION CORP
By: /s/ SAMUEL C. MCELHANEY
-------------------------------------
Samuel C. McElhaney
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints John Paget and Edward A. Meltzer, and
each of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and revocation, 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, and to sign any Registration
Statement (and any and all amendments thereto) related to this Registration
Statement and filed pursuant to Rule 462(b) promulgated by the Securities and
Exchange Commission, 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 could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities and
on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
President and Chief Executive Officer
/s/ SAMUEL C. MCELHANEY and Director (Principal Executive
- ---------------------------------- Officer) August 11, 1997
Samuel C. McElhaney
Chief Financial Officer (Principal
/s/ EDWARD A. MELTZER Financial and Principal Accounting
- ---------------------------------- Officer) August 11, 1997
Edward A. Meltzer
/s/ FRANK J. ZAPPALA
- ---------------------------------- Director August 11, 1997
Frank J. Zappala
/s/ ARALDO COSSUTTA
- ---------------------------------- Director
Araldo Cossutta August 11, 1997
/s/ JOHN PAGET
- ---------------------------------- Director August 11, 1997
John Paget
</TABLE>
<PAGE> 19
<TABLE>
<CAPTION>
<S> <C> <C>
- ---------------------------------- Director August , 1997
Michael Santry
/s/ MATTHEW WALLER
- ---------------------------------- Director August 11, 1997
Matthew Waller
</TABLE>
<PAGE> 20
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
- ------ -------------------
<S> <C>
4.01 Stock Purchase Agreement dated as of May 15, 1997 between the Registrant and Chartwell
Group, Inc., a Texas corporation ("Buyer")*
4.02 Computer Integration Corp. Common Stock Purchase Warrant*
5.01 Opinion of Holland & Knight (to be filed by amendment)
23.01 Consent of Ernst & Young LLP
23.02 Consent of McGladrey & Pullen, LLP
23.03 Consent of Holland & Knight (included in Exhibit 5)
24.01 Power of Attorney (included on signature page of this Registration Statement)
</TABLE>
- ------------------------
* Incorporated by reference to the Company's Current Report on Form 8-K
dated July 24, 1997.
<PAGE> 1
Exhibit 23.01
Consent of Independent Certified Public Accountants
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Computer Integration
Corp. (CIC) for the registration of 7,250,000 shares of its common stock and to
the incorporation by reference therein of our report dated August 22, 1996
(except for Note 12, as to which the date is September 30, 1996), with respect
to the consolidated financial statements and finanfcial statement schedules of
CIC included in its Annual Report (Form 10-K) for the year ended June 30, 1996,
filed with the Securities and Exchange Commission.
Ernst & Young LLP
West Palm Beach, Florida
August 8, 1997
<PAGE> 1
Exhibit 23.02
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of Computer Integration Corp., ("CIC") of our report
dated August 23, 1995 on our audits of the financial statements and financial
statement schedules of Cedar Computer Center, Inc. as of June 30, 1995 and
October 31, 1994, which report is included in CIC's Report on Form 8-K/A-1
filed with the Securities and Exchange Commission on September 11, 1995. We
also consent to the reference to our Firm under the caption "Experts" in the
aforementioned Registration Statement.
McGLADREY & PULLEN, LLP
Des Moines, Iowa
August 11, 1997
