As filed with the Securities and Exchange Commission on September , 1998
Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
MENTORTECH INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3260705
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ROY MACHNES, PRESIDENT
MENTORTECH INC.
462 Seventh Avenue
New York, New York 10018
(212) 736-5870
(Name, address, including zip code, and telephone number,
including area code, of agent for service; address, including zip code,
and telephone number, including area code, of registrant's principal
executive offices)
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Copies to:
STEVEN J. GLUSBAND
Carter, Ledyard & Milburn
2 Wall Street
New York, New York 10005
TEL: (212) 732-3200
FAX: (212) 732-3232
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Approximate date of commencement of proposed sale to the public: As soon as
possible after this registration statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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|
<PAGE>
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
============================================================================================================================
Proposed
Title of Each Class of Maximum Proposed Amount of
Securities Amount to be Offering Price per Maximum Aggregate Registration
to be Registered Registered Share(1) Offering Price Fee
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<S> <C> <C> <C> <C>
Number of shares of Common
Stock, par value $.01 per share..... 1,818,430 $4.50 $8,182,935 $2,413.97
- ----------------------------------------------------------------------------------------------------------------------------
Number of shares of Common
Stock, par value $.01 per share
being carried forward............... 1,444,276 $4.80 $6,932,525 $2,021.99(2)
- ----------------------------------------------------------------------------------------------------------------------------
Number of shares of Common
Stock, par value $.01 per share
being carried forward............... 361,396 $2.64 $954,085 $289.11(3)
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Number of shares of Common
Stock, par value $.01 per share
being carried forward............... 48,395 $20.00 $433,950.00 $2,068.97(4)
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Total.................................................................................................... $2,413.97
=========
============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the amount of the
registration fee pursuant to Rule 457.
(2) Paid with the filing of Registration Statement on Form SB-2, File No.
333-45173.
(3) Paid with the filing of Registration Statement on Form SB-2, File No.
333-3677.
(4) Paid with the filing of Registration Statement on Form S-2, File No.
33-93482.
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Pursuant to Rule 429 under the Securities Act of 1933 the combined
Prospectus contained in this Registration Statement applies and shall be used in
connection with the Registrant's Registration Statement on Form S-3, Commission
File No. 333-45173.
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THIS PROSPECTUS SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE
OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD
BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.
Subject to Completion: Dated September 29, 1998
PROSPECTUS
MENTORTECH INC.
3,672,497 Shares of
Common Stock
$.01 Par Value Per Share
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This Prospectus relates to the resale (the "Offering") of up to 3,672,497
shares (the "Shares") of common stock, $.01 par value per share (the "Common
Stock"), of Mentortech Inc. (the "Company") by certain stockholders of the
Company (the "Selling Stockholders"). See "Principal and Selling Stockholders."
The Shares may be offered from time to time in transactions effected through the
over-the-counter market on the National Association of Securities Dealers,
Inc.'s OTC Bulletin Board, in negotiated transactions, or a combination of such
methods of sale, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. In addition, one of the Selling Stockholders,
Mashov Computers Marketing Ltd. ("MCM"), a publicly traded company in Israel,
has notified the Company that it intends to distribute 2,082,520 Shares to its
shareholders by way of a dividend. The Selling Stockholders and certain persons
who purchase shares from them, including broker-dealers acting as principals who
may resell the Shares, may be deemed "underwriters," as that term is defined in
the Securities Act of 1933, as amended (the "Securities Act"). See "Plan of
Distribution."
The Selling Stockholders acquired the Shares through (i) a March 1995
private placement of Convertible Preferred Stock and warrants to purchase Common
Stock (the "1995 Warrants") of the Company (the "1995 Private Placement"); (ii)
the issuance of warrants as a result of the Company's noncompliance with the
terms of the 1995 Private Placement which required that a Registration Statement
on Form S-2 be declared effective on a specific date (the "Penalty Securities");
(iii) the issuance of warrants pursuant to antidilution provisions of prior
offerings (the "Antidilution Securities"); (iv) the conversion of bridge loans
made to the Company in December 1995 (the "1995 Bridge Loans") and October 1996
(the "1996 Bridge Loans" and together with the 1995 Bridge Loans, sometimes
collectively referred to as the "Bridge Loans"); (v) the issuance of 1,818,430
shares of Common Stock to MCM in consideration of the sale of two of its
subsidiaries to the Company in February 1997; (vi) a December 1997 private
placement (the "1997 Private Placement") of units consisting of 511,364 shares
of Common Stock and warrants to purchase 255,682 shares of Common Stock at $4.40
per share (the "1997 Warrants"); and (vii) the conversion by MCM of $1,162,000
of debt into 264,090 shares of Common Stock and 132,045 1997 Warrants. This
Prospectus also relates to 387,727 Shares issuable upon exercise of two-year
warrants issued in December 1997 that are exercisable at a price of $4.40 per
share and 153,356 shares of Common Stock issuable upon exercise of warrants sold
to the Company's financial consultant, Brean Murray & Co., Inc. in January 1998
(the "Brean Murray Warrants") having exercise prices ranging from $4.40 to $8.56
per share. The above-mentioned Convertible Preferred Stock, 1995 Warrants,
<PAGE>
Penalty Securities, Antidilution Securities and Bridge Loans were converted into
42,552 shares of Common Stock pursuant to a Conversion and Waiver Agreement
dated February 6, 1997 and effective February 13, 1997 (the "Conversion
Agreement").
The Company will not receive any of the proceeds from the sale of any of
the Shares. MCM has agreed to bear the expenses in connection with the
registration of the Shares being offered hereby, which are estimated to be
$30,000. The Company has agreed to indemnify the Selling Stockholders against
certain liabilities, including liabilities under the Securities Act.
The Company's Common Stock is quoted on the over-the-counter market on the
National Association of Securities Dealers, Inc.'s OTC Bulletin Board, under the
symbol "MNTK." The last reported trade of the Common Stock was on September 15,
1998 at $4.50 per share.
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors" beginning on page 9.
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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.
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The date of this Prospectus is September , 1998.
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<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy and information statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy and information statements and other information can be inspected and
copied at the Public Reference Section of the Commission at Room 124, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and the following regional
offices: Northeast Regional Office, Suite 1300, Seven World Trade Center, 13th
Floor, New York, New York 10048, and Midwest Regional Office, Northwestern
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and copies of such material may also be obtained from the Public
Reference Section of the Commission at prescribed rates. The Commission
maintains a Web site at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. The Company intends to furnish its
shareholders with annual reports containing audited financial statements and
such other periodic reports as the Company deems appropriate or as may be
required by law.
A Registration Statement on Form S-3 relating to this offering (the
"Registration Statement") has been filed with the Commission under the
Securities Act of 1933, as amended (the "Securities Act"). As permitted by the
rules and regulations of the Commission, this Prospectus omits certain
information contained in the Registration Statement. For further information
pertaining to this offering, reference is made to the Registration Statement,
including the exhibits filed as a part thereof.
FORWARD LOOKING STATEMENTS
Certain non-historical statements contained in this Prospectus and the
Reports incorporated herein by reference are forward-looking statements, which
involve known and unknown risks and uncertainties. The Company is including this
statement for the express purpose of availing itself of the protections of the
safe harbor provided by the Private Securities Litigation Reform Act of 1995
with respect to all such forward looking statements. Examples of forward looking
statements include, but are not limited to: (i) projections of capital
expenditures, revenues, growth, prospects, financial resources and other
financial matters; (ii) statements of plans or objectives of the Company; and
(iii) statements using the words "anticipate," "expect," "may," "intend" or
similar expressions.
The Company's ability to predict projected results or the effects of
certain events on the Company's operating results is inherently uncertain.
Therefore, the Company wishes to caution readers of this Prospectus to carefully
consider the matters set forth under the caption "Risk Factors" and certain
other matters discussed herein and in other publicly available information. Such
factors and many other factors beyond the control of the Company's management
could cause the actual results, performance or achievements of the Company to be
materially different from any future
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<PAGE>
results, performance or achievements that may be expressed or implied by such
forward-looking statements. See "Risk Factors."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-KSB for the year ended December 31,
1997 and its quarterly report on Form 10-QSB for the three and six months ended
June 30, 1998 as filed with the Commission are incorporated herein by reference
in this Prospectus.
All reports and other documents subsequently filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act
after the date of this Prospectus and prior to the termination of the offering
of the Shares hereby shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document 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 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.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY
BENEFICIAL OWNER, TO WHOM A COPY OF THIS PROSPECTUS IS DELIVERED, UPON THE
WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY DOCUMENT INCORPORATED
BY REFERENCE IN THIS PROSPECTUS (OTHER THAN EXHIBITS). REQUESTS SHOULD BE
DIRECTED TO THE COMPANY, 462 SEVENTH AVENUE, NEW YORK, NEW YORK 10018,
212-736-5870, ATTENTION: TERRY I. STEINBERG, SECRETARY.
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<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and notes thereto appearing elsewhere in
this Prospectus.
General
Mentortech Inc. (the "Company") develops and offers instructor-led training
("ILT") and technology-based training ("TBT") courses for information technology
professionals and end-users and also provides consulting services in both the
State of Israel and the New York tri-state area, primarily to large business and
public sector organizations. The Company's ILT programs include a wide range of
introductory and advanced classes in operating systems (including Windows 95,
Windows NT, UNIX and Netware), programming languages (including C, C++ and
COBOL), databases (including Oracle and MS SQL Server), communication software,
integrated software packages, computer graphics, desktop publishing, and
groupware products, (including Outlook clients, Exchange Server and Lotus
Notes). In Israel, the Company offers an extensive curriculum, including courses
in IT professional training which provide full change of career opportunities
for individuals seeking to become IT professionals. The Company's TBT software
line includes offerings on Lotus Notes, cc: Mail, Microsoft Office, and other
end-user titles. The Company's Consulting Services Division ("CSD") provides
short to medium term technical consulting and staff augmentation to large and
mid-sized organizations in the Northeast region of the United States.
The Company has been authorized as a training center by a number of
software developers, including Microsoft (in both the United States and Israel),
Novell, Autocad (in Israel only), Corel, Borland, Apple, Lotus (in the United
States only) and Magic. The Company offers an extensive curriculum of Microsoft
courses under its Microsoft Advanced Technical & Education Center Authorization,
and Lotus Notes courses under the Company's Lotus Premium Partner and Lotus
Authorized Education Center ("LAEC") Status. The authorization status allows the
Company to purchase training manuals from the software publishers and offer
official vendor courses.
The Company develops and offers TBT programs for use in conjunction with
some of its ILT classes. The Company supplies TBT programs on floppy disks and
compact disks for stand-alone PC's, as well as LANs, WANs, Intranets, and the
Internet via InterTrainer. InterTrainer is Mentortech's platform for delivering
just-in-time, continuous learning directly to the desktop through web browsers.
In addition to end-user applications, the Company also develops custom TBT
projects for large organizations. These custom TBT titles assist corporations in
the training and integration of internal applications and other non-IT related
training topics.
The Company's CSD is responsible for identifying and providing computer
personnel, on a temporary basis, to the Company's client base for special
projects. The Company provides its clients with its own full-time employees, as
well as with independent contractors. Consultants' projects include (i)
development of computer programs in accordance with the client's specifications;
(ii)
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<PAGE>
installation of network operating systems, and networking and communications
software tools; (iii) troubleshooting software problems; and (iv) staffing
end-user help desk support.
Demand for training in information technology products is generated by the
rapid pace of technology's product cycles. The pace of emerging technologies has
increased dramatically and this has fueled a demand for IT training and
consulting. The business community continues to adopt the technologies, thus
absorbing the continuing introduction of new products. Publishers of tools,
operating systems and applications produce new versions, on average, once a year
and some even maintain a pace of twice a year or more. For example, the
emergence of the Internet has created an urgent need to develop appropriate
tools and also train programmers in the platform languages and environment.
Following the initial implementation, new technologies have emerged, including
HTML, Java, ActiveX, audio and video support. The need to master new versions
and products creates continued demand for training and consulting services.
Background
Effective February 13, 1997, the Company's predecessor, PC Etcetera, Inc.
("PCE U.S.") underwent a change in control pursuant to a Stock Purchase
Agreement (the "Stock Purchase Agreement") between it and MCM, whereby MCM
acquired 68.5% of the common stock of PCE U.S. on a fully diluted basis, in
consideration for which PCE U.S. acquired Sivan Computers Training Center (1994)
Ltd. ("Sivan") and Mashov Computer Based Training (C.B.T.) Ltd. ("Mashov CBT"),
both of which corporations are incorporated under the laws of the State of
Israel. The stock purchase transaction was accounted for as a reverse
acquisition such that Sivan and Mashov CBT were considered the surviving entity,
although Mentortech remained the Registrant for purposes of filing periodic
reports with the Commission. On March 3, 1998 a one-for-eight reverse split of
the Company's Common Stock was effected. All references to the Company's Common
Stock in this Prospectus reflect the reverse split.
The Company was incorporated in New York in March 1985 as PC Executive
Center, Inc. It changed its corporate domicile to Delaware in December 1987, at
which time it assumed the name PC Etcetera, Inc. The Company changed its name to
Mentortech Inc. on August 4, 1997. The Company's executive offices are located
at 462 Seventh Avenue, New York, New York 10018 (telephone number: (212)
736-5870).
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<PAGE>
The Offering
Common Stock offered by the Selling Stockholders........ 3,672,497 Shares (1)
Common Stock to be outstanding after the Offering....... 3,987,245 Shares (1)(2)
Use of proceeds......................................... The Company will not
receive any of the
proceeds from the
Offering (3)
Nasdaq Bulletin Board symbol............................ MNTK
__________
(1) Includes 387,727 shares of Common Stock issuable upon exercise of the 1997
Warrants at $4.40 per share and 153,356 shares of Common Stock issuable
upon exercise of warrants issued to Brean Murray & Co., Inc. exercisable at
$4.40, $5.68 and $8.56 per share.
(2) Excludes (i) 218,625 shares of Common Stock issuable upon exercise of
outstanding options and (ii) 529,375 shares of Common Stock reserved for
issuance pursuant to the Company's 1997 Stock Option Plan.
(3) The Company will receive the proceeds from any exercise of the 1997
Warrants or the Brean Murray Warrants, except for those Brean Murray
Warrants exercised on a cashless basis.
Risk Factors
The Common Stock offered hereby involves a high degree of risk. See "Risk
Factors."
-7-
<PAGE>
Selected Consolidated Statements of
Operations and Balance Sheet
(in thousands, except per share data)
<TABLE>
<CAPTION>
Six Months
Year Ended December 31, Ended June 30,
----------------------------- --------------
1995 1996 1997 1997 1998
---- ---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C> <C>
Statement of Operations Data:
Revenues......................................... $6,651 $9,400 $17,560 $8,687 $10,132
Cost of revenues................................. 3,849 4,713 10,859 5,375 6,343
------ ------ ------ ----- -------
Gross profit..................................... 2,802 4,687 6,701 3,312 3,789
Operating expenses:
General and administrative.................... 1,816 3,359 4,171 1,789 2,080
Sales and marketing........................... 921 1,446 2,698 1,205 1,716
Research and development...................... -- 248 450 230 --
------- ------- ------ ------ ------
Income (loss) from operations.................... 65 (366) (618) 88 (7)
Interest expense, (net).......................... (433) (455) (233) (97) (123)
(Loss) before income taxes....................... (368) (821) (851) 18 (130)
Equity in earnings of affiliate.................. 61 68 --
Gain on sale of subsidiary....................... -- -- -- 27 --
Income taxes..................................... -- (45) -- -- --
------ ------ --------- ----- ----
Net income (loss)................................ $(307) $(798) $(851) $.18 $(130)
====== ====== ======= ===== =====
Net income (loss) per share
Basic......................................... $(0.16) $(0.43) $(0.40) $.005 $(.04)
====== ====== ======= ===== =====
Diluted....................................... $(0.16) $(0.43) $(0.40) $.005 $(.04)
====== ====== ======= ===== =====
Number of shares used in computing net
income (loss) per share
Basic......................................... 1,875 1,875 2,124 3,446 3,446
===== ===== ===== ===== =====
Diluted....................................... 1,875 1,875 2,124 3,834 3,446
===== ===== ===== ===== =====
Dividends........................................ -- -- -- -- --
</TABLE>
December 31, 1997 June 30, 1998
----------------- -------------
Balance Sheet Data: (Unaudited)
Working capital (deficiency) ......... $ (147) $ (200)
Total assets.......................... 13,497 13,191
Total debt............................ 737 592
Stockholders' equity.................. 6,840 6,567
-8-
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following
factors should be considered carefully in evaluating an investment in the shares
of Common Stock offered by this Prospectus.
Business and Market Risks
Operating Results May Fluctuate. The Company has experienced and may in the
future experience significant fluctuations in revenues and operating results
from quarter to quarter due to a combination of factors, many of which are
beyond the Company's control. These factors include: the timing of significant
revenues for the Company's services; new services introductions by the Company
or its competitors; changes in the Company's product or service mix that may
affect revenues, prices, margins or both; further expansion of the Company's
marketing and service operations; disruptions in sources of personnel; changes
in personnel costs; regulatory changes; general economic conditions and other
factors. The Company's operating expenses are based on anticipated revenue
levels, and a high percentage of such expenses are relatively fixed. The Company
believes that its quarterly operating results will continue to be subject to
significant fluctuations.
History of Unprofitable Operations; Accumulated Deficit; Working Capital
Deficiency. During the fiscal years ended December 31, 1995, 1996 and 1997 and
the six months ended June 30, 1998, the Company's operations were unprofitable.
No assurance can be given that it will operate on a profitable basis in the
future. The ability of the Company to continue its operations successfully is
materially dependent upon the marketing of its services and products in a
profitable manner and the raising of any additional capital which it may
require.
Company Depends upon Major Customers. There can be no assurance that the
Company's current customers will continue to retain the Company or that the
Company will be able to sell services to new customers. The loss of any one or
more of the Company's major customers could materially and adversely affect the
Company's business, operating results and financial condition.
Market for Company's Services is Highly Competitive. The market for the
Company's services is highly competitive and subject to rapid technological
change. The Company faces competition from a number of entities which presently
provide computer training and consulting services, or market TBT products,
similar to those furnished by the Company. The Company also encounters
competition from educational institutions providing personal computer training
programs, including universities, colleges and adult education centers, and
customers' in-house training staffs. Many of the entities which provide ILT and
consulting services, and market TBT products, have greater financial and
marketing resources than the Company. Increased competition could materially and
adversely effect the Company's results of operations through price reductions
and loss of market share. There can be no assurance that the Company will be
able to continue to compete successfully against its existing competitors or
that it will be able to compete successfully against new competitors.
-9-
<PAGE>
Cancellation of Software Manufacturers' Authorizations. The Company is
authorized to act as a training center by various software manufacturers.
Management believes that such authorizations have several advantages, including
referrals from the software manufacturers and free listings in the advertising
literature published or distributed by such manufacturers. No assurance can be
given that the Company will continue to maintain its authorizations or that it
will be successful in obtaining new authorizations in the future. The inability
to maintain such authorization or obtain new ones could make the Company's
training courses and consulting services less attractive to its clients and thus
materially adversely effecting its financial results and financial condition.
The Loss of Key Employees Could Have a Material Adverse Effect on the
Company's Business. The Company's success depends to a significant degree upon
its executive officers. The loss of any of Roy Machnes, Chairman and Chief
Executive Officer, Terry I. Steinberg, Executive Vice President for North
American Sales and Marketing, or Elan Penn, Chief Financial Officer, could have
a material adverse effect on the Company's business. The Company's success also
depends upon its ability to attract and retain highly skilled technical,
management and other personnel. Competition for such personnel is intense, and
the inability to attract and retain additional qualified employees or the loss
of current key employees could materially and adversely affect the Company's
business, operating results and financial condition.
Company's Proprietary Technology Has Limited Protection. The Company
possesses limited patent or registered intellectual property rights with respect
to its TBT technology. The Company depends in part upon its proprietary
technology and know-how to differentiate its products and service from those of
its competitors. The Company relies on a combination of contractual rights and
trade secret laws to protect its proprietary technology. There can be no
assurance that the Company will be able to protect its technology or that third
parties will not be able to develop similar technology independently.
Risks Associated with Allegations of Patent Infringement in the Software
Industry. The software industry is characterized by the existence of a large
number of patents and frequent litigation based on allegations of patent
infringement. There can be no assurance that third parties will not assert
infringement claims against the Company in connection with its products, that
any such assertion of infringement will not result in litigation, or that the
Company would prevail in such litigation or be able to license any valid and
infringed patents of third parties on commercially reasonable terms.
Furthermore, litigation, regardless of its outcome, could result in substantial
cost to and diversion of effort by the Company. Any infringement claims or
litigation against the Company could materially and adversely affect the
Company's business, results of operations and financial condition.
Company Will Continue to be Controlled by a Principal Stockholder. MCM
currently owns approximately 60.4% of the Company's outstanding shares of Common
Stock. The Company has been informed by MCM that it intends to distribute
2,082,820 shares of Common Stock to its stockholders. As a result of such
distribution, MCM's parent, Mashov Computers Ltd. ("Mashov") also a publicly
traded company in Israel, will be the owner of approximately 49% of the
Company's Common Stock. As a result, Mashov Computers Ltd. may be able to exert
controlling influence over the outcome of actions requiring stockholder
approval, such as the election of the Company's directors, amendments to the
Company's Certificate of Incorporation and mergers. Roy Machnes, Chairman of the
Board of
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<PAGE>
Directors and the Company's Chief Executive Officer is also a Director of
Mashov, and Elan Penn, a Director and the Company's Chief Financial Officer is
also the Chief Financial Officer of Mashov. In addition, David Assia and Jack
Dunietz are both Directors of the Company and of MCM. Messrs. Machnes, Penn,
Assia, and Dunietz own 1.5%, 1.2%, 0.56% and 3.15% of voting equity of Mashov,
respectively.
Illiquidity of Trading Market; Sales of Shares Eligible for Future Sale
Could Adversely Affect Market Prices for the Company's Common Stock. The Company
does not currently meet the initial listing requirements for the Nasdaq SmallCap
Market. Accordingly, trading in the Company's Common Stock is conducted in the
over-the-counter market on the Nasdaq Bulletin Board where there is presently
only a limited trading market for such securities. As a consequence, purchasers
of the Shares could find it difficult to dispose of, or obtain accurate
quotations as to the market value of such Shares. Sales of substantial amounts
of Common Stock of the Company in the public market following the effective date
of the Registration Statement of which this Prospectus forms a part could
adversely affect the market price for such Common Stock.
Anti-takeover Provisions of the Company's Certificate of Incorporation and
By-Laws May Adversely Affect Holders of Common Stock or Delay or Prevent
Corporate Takeovers. Certain provisions of the Company's Certificate of
Incorporation and By-Laws could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, control of the Company. Certain of such provisions allow the Company to
issue preferred stock with rights senior to those of the Common Stock and impose
various procedural and other requirements which could make it more difficult for
stockholders to effect certain corporate actions. The issuance of preferred
stock and certain of the provisions in the Company's Certificate of
Incorporation and By-Laws may delay, defer or prevent a change in control of the
Company. The mere existence of these provisions could limit the price that
certain investors might be willing to pay in the future for shares of the Common
Stock and therefore may have a depressive effect on the market price of the
Common Stock.
Delaware Anti-takeover Provisions May Adversely Affect Holders of Common
Stock or Delay or Prevent Corporate Takeovers. Section 203 of the Delaware
General Corporation Law restricts certain business combinations with any
"interested stockholder" as defined in such law. This statute may delay, defer
or prevent a change in control of the Company.
Risks Relating to the Company's Operations in Israel
Operations in Israel. The Company's two Israeli-based subsidiaries were
responsible for approximately 67% of the Company revenues in 1997. Accordingly,
the Company's operations are directly affected by economic, political and
military conditions in Israel. Some of the Company's employees are currently
obligated to perform annual reserve duty in the Israeli Defense Forces and are
subject to being called for active duty at any time upon the outbreak of
hostilities. While the Company has operated effectively under these
requirements, no shareholder prediction can be made as to the effect on the
Company of any expansion of such obligation.
-11-
<PAGE>
Impact of Inflation and Currency Fluctuations. Substantially all of the
Company's Israeli operations' expenses were in unlinked New Israeli Shekels
("NIS") and all of the expenses of the Company's Israeli subsidiaries continued
to be denominated in unlinked NIS. The Company's results are influenced by the
extent to which any inflation in Israel is not offset (or is offset on a lagging
basis) by the devaluation of the NIS in relation to the dollar. The inflation
rate in Israel was 10.6% in 1996 and 10.7% in 1997. At the same time, the
devaluation of the NIS against the dollar was limited to 3.7% in 1996 and 3.7%
in 1997. The Company could be adversely affected in the future as a result of
currency fluctuations.
-12-
<PAGE>
USE OF PROCEEDS
The Company will receive no part of the proceeds from the sale of any of
the Shares by any of the Selling Stockholders. Any proceeds from the exercise of
the 1997 Warrants or the Brean Murray Warrants will be added to working capital.
PRICE RANGE OF COMMON STOCK
The Common Stock is traded in the over-the-counter market on the National
Association of Securities Dealers' Bulletin Board under the symbol "MNTK". The
following table sets forth the range of the closing high and low bid prices for
the Company's Common Stock as reported by the National Quotation Bureau, Inc.
The quotations below reflect inter-dealer prices without retail markup, markdown
or commission and may not necessarily represent actual transactions.
1998 High Low
- ---- ---- ---
First Quarter..................................... $4-3/4 $4-1/2
Second Quarter.................................... 4-3/4 4-1/2
Third Quarter through September 25,............... 4-1/2 3
1997
- ----
First Quarter..................................... 3 2
Second Quarter.................................... 2-1/2 2
Third Quarter..................................... 1-3/4 1-1/2
Fourth Quarter.................................... 4 3/4
1996
- ----
First Quarter..................................... 2-1/4 2-1/4
Second Quarter.................................... 4 4
Third Quarter..................................... 4 2
Fourth Quarter.................................... 2 2
-13-
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the ownership
of shares of Common Stock by the Selling Stockholders as of September 15, 1998,
and as adjusted to reflect the sale of the shares. The information in the table
concerning the Selling Stockholders who may offer any stock from time to time is
based on information provided to the Company by such stockholders. Information
concerning the Selling Stockholders may change from time to time and any changes
of which the Company is advised will be set forth in a Prospectus Supplement to
the extent required. See "Plan of Distribution".
<TABLE>
<CAPTION>
Beneficial
Ownership
Prior to Beneficial Ownership
Offering (1) After Offering (1)
------------ ---------------------------
Number of Percentage of
Number of Shares Number of Shares
Name and Address Shares to be Sold Shares Outstanding
---------------- ------ ---------- ------ -----------
<S> <C> <C> <C> <C>
Mashov Computers
Marketing Ltd. ................(2) 2,214,565 2,214,565(3)
Elron Electronic Industries Ltd. ..(4) 253,801 253,801(3) -- --
Special Situations Private Equity
Fund, L.P......................(5) 170,454 170,454(3) -- --
Brean Murray & Co., Inc............ 153,356 153,356(3) -- --
Rho Management Trust I............ (6) 145,833 104,167 41,666 --
SIL Nominees....................... 140,965 140,965(3) -- --
Gilbert H. Steinberg............... 100,901 69,969 30,932 --
Star Group ........................(7) 100,578 58,912 41,666 --
Helix Capital II, LLC.............. 96,422 96,422(3) -- --
Special Situations
Fund III, L.P...................(5) 56,899 56,899 -- --
Jan Mitchell ...................... 33,750 33,750(3) -- --
Uzi Zucker......................... 26,250 26,250(3) -- --
Guy Jester, executor, Estate of
Joram D. Rosenfeld................. 24,643 24,643 -- --
Special Situations Cayman Fund,
L.P...............................(5) 18,966 18,966(3) -- --
</TABLE>
-14-
<PAGE>
<TABLE>
<CAPTION>
Beneficial
Ownership
Prior to Beneficial Ownership
Offering (1) After Offering (1)
------------ ---------------------------
Number of Percentage of
Number of Shares Number of Shares
Name and Address Shares to be Sold Shares Outstanding
---------------- ------ ---------- ------ -----------
<S> <C> <C> <C> <C>
Awad & Associates L.P ............. 18,750 18,750(3) -- --
FM Multi-Strategy Investment
Fund L.P. ..................... 18,750 18,750(3) -- --
A. Brean Murray ................... 18,750 18,750(3) -- --
Brean Murray Profit Sharing
Trust.............................. 18,750 18,750(3) -- --
Dorothy Finsilver Trust............ 18,750 18,750(3) -- --
Joan M. Finsilver.................. 18,750 18,750(3) -- --
Michael R. Bruce................... 15,000 15,000(3) -- --
Norman C. Fields................... 11,250 11,250(3) -- --
James F. Joy....................... 8,625 8,625(3) -- --
Daniel B. Katz and Gail P. Katz
JTTEN.............................. 8,625 8,625(3) -- --
David J. Mitchell.................. 8,625 8,625(3) -- --
Delaware Charter TTEE
Retirement Plan DTD-1-1-78 FBO
Robert S. Anderson............... 7,125 7,125(3) -- --
Chester A. Barrand................. 6,250 6,250(3) -- --
James R. Tesone and Nancy
Barrand JTTEN...................... 4,625 4,625(3) -- --
Steven Margulies................... 4,500 4,500(3) -- --
Hilltop Offshore Limited........... 3,750 3,750(3) -- --
Hilltop Partners, L.P.............. 3,750 3,750(3) -- --
The R Trust........................ 3,750 3,750(3) -- --
Wolfson Equities................... 3,750 3,750(3) -- --
Wolfson Family Trust............... 3,750 3,750(3) -- --
GR&SA Beachley..................... 3,750 3,750(3) -- --
</TABLE>
-15-
<PAGE>
<TABLE>
<CAPTION>
Beneficial
Ownership
Prior to Beneficial Ownership
Offering (1) After Offering (1)
------------ ---------------------------
Number of Percentage of
Number of Shares Number of Shares
Name and Address Shares to be Sold Shares Outstanding
---------------- ------ ---------- ------ -----------
<S> <C> <C> <C> <C>
Elizabeth A. Clements, Trustee
u/w J. A. Clements................. 3,750 3,750(3) -- --
Peter Coolidge IRA................. 3,750 3,750(3) -- --
Margaret H. Duckworth.............. 3,750 3,750(3) -- --
Brian Harra IRA Rollover........... 3,750 3,750(3) -- --
David M. Holzer.................... 3,750 3,750(3) -- --
Gordon W. McCoun IRA............... 3,750 3,750(3) -- --
Joseph A. Vafi and Roxanne M.
Vafi (JTTEN)................... 3,750 3,750(3) -- --
Lance Zipper....................... 3,750 3,750(3) -- --
Steven Slawson..................... 2,875 2,875(3) -- --
Craig Kornreich.................... 1,250 1,250(3) -- --
Joseph Kornreich................... 1,250 1,250(3) -- --
Stacey Kornreich................... 1,250 1,250(3) -- --
Christopher D. Illick.............. 1,250 1,250(3) -- --
John C. Moore, III................. 1,250 1,250(3) -- --
Neal M. Richard.................... 625 625(3) -- --
</TABLE>
- ----------------------
(1) Calculated pursuant to Rule 13d-3 promulgated under the Exchange Act.
Accordingly, with respect to each particular beneficial owner, the number
of shares of Common Stock gives effect to the deemed exercise of such
owner's options and warrants (which are currently exercisable or
exercisable within 60 days). Except as otherwise disclosed in the footnotes
below, the shares listed in this column for a person named in this table
are directly held by such person, with sole voting and dispositive power.
-16-
<PAGE>
(2) Address is 5 HaPlada Street, Or-Yehuda, Israel. MCM is an 80% owned
subsidiary of Mashov Computers Ltd., which is also located at 5 HaPlada
Street, Or-Yehuda, Israel. Mashov Computers Ltd. may be deemed the
beneficial owner of the shares registered in the name of MCM.
(3) Includes shares of Common Stock issuable upon exercise of currently
exercisable warrants held by:
Brean Murray Co., Inc. - 153,356 shares
Mashov Computers Marketing Ltd. - 132,045 shares
Elron Electronic Industries Ltd. - 22,500 shares
Special Situations Private Equity Fund, L.P. - 56,818 shares
SIL Nominees - 46,988 shares
Helix Capital II, LLC - 12,500 shares
Jan Mitchell - 11,250 shares
Uzi Zucker - 8,750 shares
Awad & Associates L.P. - 6,250 shares
FM Multi-Strategy Investment Fund L.P. - 6,250 shares
A. Brean Murray - 6,250 shares
Brean Murray Profit Sharing Trust - 6,250 shares
Dorothy Finsilver Trust - 6,250 shares
Chester A. Barrand - 6,250 shares
Joan M. Finsilver - 6,250 shares
Michael R. Bruce - 5,000 shares
James R. Tesone and Nancy Barrand JTTEN - 4,625 shares
Norman C. Fields - 3,750 shares
James F. Joy - 2,875 shares
Daniel B. Katz and Gail P. Katz JTTEN - 2,875 shares
David J. Mitchell - 2,875 shares
Steven Slawson - 2,875 shares
Delaware Charter TTEE Retirement Plan DTD 1-1-78
FBO Robert S. Anderson - 2,375 shares
Steven Margulies - 1,500 shares
Hilltop Offshore Limited - 1,250 shares
Hilltop Partners, L.P. - 1,250 shares
The R Trust - 1,250 shares
Wolfson Equities - 1,250 shares
Wolfson Family Trust - 1,250 shares
GR&SA Beachley - 1,250 shares
Elizabeth A. Clements, Trustee u/w J.A. Clements - 1,250 shares
Peter Coolidge IRA - 1,250 shares
Margaret H. Duckworth - 1,250 shares
Brian Harra IRA Rollover - 1,250 shares
David M. Holzer - 1,250 shares
Christopher D. Illick - 1,250 shares
Craig Kornreich - 1,250 shares
Joseph Kornreich - 1,250 shares
Stacey Kornreich - 1,250 shares
-17-
<PAGE>
Gordon W. McCoun IRA - 1,250 shares
John C. Moore, III - 1,250 shares
Joseph A. Vafi and Roxanne M. Vafi (JTTEN) - 1,250 shares
Lance Zipper - 1,250 shares
Neal M. Richard - 625 shares
(4) Address is Advanced Technology Center, P.O. Box 1573, Haifa, Israel.
(5) Special Situations Fund III, L.P., Special Situations Private Equity Fund,
L.P., and Special Situations Cayman Fund, L.P. are affiliated entities
managed through investment advisers principally owned by Austin W. Marxe
and David Greenhouse, each of whom, according to a Schedule 13D filed with
the Securities and Exchange Commission on December 17, 1997, possesses sole
voting and dispositive power over the shares beneficially owned by the
Special Situations entities. The address of each of the Special Situations
entities is 153 East 53rd Street, 51st Floor, New York, New York 10022.
(6) Rho Management Partners L.P. may be deemed the beneficial owner of shares
registered in the name of Rho Management Trust I, pursuant to an investment
advisory agreement that confers sole voting and dispositive power over such
shares to Rho Management Partners L.P. The 145,833 shares of Common Stock
attributed to Rho Management Trust I includes 41,666 shares held of record
by Gilbraltar Trust.
(7) The "Star Group" includes the following shareholders of the Company: Justy
Ltd. (32,674 shares); SVE Star Ventures Enterprises No. II Gbr (14,076
shares); SVE Star Ventures Enterprises No. III Gbr (37,177 shares); Star
Management of Investments (1993) L.P. (13,449 shares); and SVE Star
Ventures Enterprises No. III AGbr (3,202 shares). To the Company's best
knowledge, Dr. Meir Barel possesses sole voting and dispositive power over
the shares beneficially owned by the Star Group.
DESCRIPTION OF CAPITAL STOCK
At September 25, 1998, there were outstanding an aggregate of 3,446,163
shares of Common Stock, and no shares of Preferred Stock of the Company. At
September 25, 1998, there were 104 holders of record of the Company's Common
Stock.
Common Stock
The Company is authorized to issue up to 20,000,000 shares of Common Stock,
$.01 par value per share. Holders of Common Stock are entitled to one vote for
each share held on all matters submitted to a vote of stockholders and do not
have cumulative voting rights. Accordingly, holders of a majority of the shares
of Common Stock entitled to vote in any election of directors may elect all of
the directors standing for election. Holders of Common Stock are entitled to
receive ratably such dividends, if any, as may be declared by the Board of
Directors out of funds legally available therefor, subject to any preferential
dividend rights of outstanding Preferred Stock. Upon the liquidation,
dissolution or winding up of the Company, the holders of Common Stock are
entitled
-18-
<PAGE>
to receive ratably the net assets of the Company available after the payment of
all debts and other liabilities and subject to the prior rights of any
outstanding Preferred Stock. Holders of Common Stock have no preemptive,
subscription, redemption or conversion rights. The outstanding shares of Common
Stock are, and the shares offered by the Company in this offering will, when
issued and paid for, be fully paid and nonassessable. The rights, preferences
and privileges of holders of Common Stock are subject to, and may be adversely
affected by, the rights of the holders of shares of any series of Preferred
Stock which the Company may designate and issue in the future.
Preferred Stock
The Company is authorized to issue up to 5,000,000 shares of Preferred
Stock, $.001 par value per share. The Board of Directors is authorized, subject
to any limitations prescribed by law, without further stockholder approval, to
issue such shares of Preferred Stock in one or more series. Each such series of
Preferred Stock will have such rights, preferences, privileges and restrictions,
including voting rights, dividend rights, conversion rights, redemption
privileges and liquidation preferences, as are determined by the Board of
Directors.
The purpose of authorizing the Board of Directors to issue Preferred Stock
and determine its rights and preferences is to eliminate delays associated with
a stockholder vote on specific issuances. The issuance of Preferred Stock, while
providing desirable flexibility in connection with possible acquisitions and
other corporate purposes, could have the effect of making it more difficult for
a third party to acquire, or of discouraging a third party from attempting to
acquire, a majority of the outstanding voting stock of the Company. The
existence of the authorized but undesignated Preferred Stock may have a
depressive effect on the market price of the Common Stock. The Company has no
present plans to issue any shares of Preferred Stock.
Delaware Law and Certain Provisions of the Company's Certificate of
Incorporation and By-Laws
The Company is subject to the provisions of Section 203 of the General
Corporation Law of Delaware. In general, this statute prohibits a publicly-held
Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person becomes an interested stockholder, unless the
business combination is approved in a prescribed manner. An "interested
stockholder" is a person who, together with affiliates and associates, owns (or
within the prior three years did own) 15% or more of the corporation's voting
stock.
The Company's By-Laws provide that the Company shall have a single class of
directors. The Company's By-Laws further provide that vacancies on the Board of
Directors may be filled only with the approval of a majority of the Board of
Directors then in office, except vacancies occurring as a result of the removal
of directors by stockholders, without cause, shall be filled by a vote of the
stockholders.
-19-
<PAGE>
The Company's By-Laws provide that, after the closing of this Offering, any
action required or permitted to be taken by the stockholders of the Company may
be taken only at a duly called annual or special meeting of the stockholders.
This provision could have the effect of delaying until the next stockholders'
meeting stockholder actions that are favored by the holders of a majority of the
outstanding voting securities of the Company. This provision may also discourage
another person or entity from making a tender offer for the Common Stock because
such person or entity, even if it acquired a majority of the outstanding voting
securities of the Company, would be able to take action as a stockholder only at
a duly called meeting of stockholders, and not by written consent. The mere
existence of this provision may have a depressive effect on the market price of
the Common Stock. See "Risk Factors - Anti-takeover Provisions."
Transfer Agent and Registrar
The transfer agent and registrar for the Company's Common Stock is
Continental Stock Transfer & Trust Company, 2 Broadway, New York, New York
10004.
1997 Warrants
The 1997 Warrants expire on December 10, 1999, and are subject to extension
as provided in the 1997 Warrant Agreement. The 1997 Warrants are exercisable at
$4.40 per share and are callable at any time after the share price of the Common
Stock, as determined by the closing bid price on the Nasdaq OTC Bulletin Board
(or the closing sale price if listed on the Nasdaq National or Small Cap Market)
has closed at or above $8.00 for any 20 consecutive trading day period preceding
the call date. Such call may only be made by the Company within 15 business days
after the Common Stock has closed at or above $8.00 for any 20 consecutive
trading day period.
Other Warrants
The Brean Murray Warrants have a five-year term expiring on January 4,
2003. Such warrants are not callable but may be exercised via a "cashless
exercise." The number of shares to be issued in a cashless exercise which
entails an exchange of Brean Murray Warrants for Common Stock, will be computed
by subtracting the warrant exercise price of such warrant from the closing bid
price of the Common Stock on the date of the cashless exercise and multiplying
that amount by the number of shares represented by the warrants and dividing by
the closing bid price as of that date. Of the 153,356 Brean Murray Warrants,
76,678 warrants are exercisable at $4.40 per share, 38,339 warrants are
exercisable at $5.68 per share and 38,339 warrants are exercisable at $8.56 per
share.
The Company also has outstanding warrants to purchase a total of 15,250
shares of Common Stock. These warrants, which were issued to various investment
banking firms prior to 1997 have exercise prices ranging from $20.00 to $50.00
per share. Of such warrants, 4,500 warrants have an exercise price of $20.00 per
share and expire on December 31, 1998, 7,500 warrants have an exercise price of
$40.00 per share and expire on May 15, 2000 and 3,250 warrants have an exercise
price of $50.00 per share and expire on September 30, 2002.
-20-
<PAGE>
CONDITIONS IN ISRAEL
The Company's operations are conducted primarily in Israel and,
accordingly, the Company is directly affected by economic, political and
military conditions in that country. The operations of the Company could be
materially adversely affected if major hostilities involving Israel should occur
in the Middle East or if trade between Israel and its present trading partners
should be curtailed.
Economic Conditions
During calendar years 1990 through 1997, Israel's gross domestic product
increased by 6.2%, 6.7%, 3.4%, 6.5%, 6.8% and 7.0%, respectively. The Israeli
Government's monetary policy contributed to relative price and exchange rate
stability during most of these years despite fluctuating rates of economic
growth and a high rate of unemployment. However, the slowdown in 1996 in the
peace process had an adverse effect on foreign investment, but it was mostly the
economy's structural problems that led to a dramatic drop in economic growth,
down from 7.1% in 1995 to 2.1% in 1997.
The following table sets forth, for the periods indicated, certain
information with respect to the rate of inflation in Israel, the rate of
devaluation of the NIS against the dollar, and the rate of inflation in Israel
adjusted for such devaluation:
<TABLE>
<CAPTION>
Israeli Israeli Israeli Israeli annual
consumer annual annual inflation
price inflation devaluation adjusted for
Year ended December 31, index (1) rate (2) rate(3) devaluations(4)
- ----------------------- --------------- ---------------- ------------------- -------------------
<S> <C> <C> <C> <C>
1990....................................... 176.3 17.6% 4.3% 12.7%
1991....................................... 208.1 18.0 11.5 5.8
1992....................................... 227.6 9.4 21.1 (9.7)
1993....................................... 253.2 11.2 8.0 3.0
1994....................................... 289.8 14.5 1.1 13.2
1995....................................... 313.3 8.1 3.9 4.0
1996....................................... 346.5 10.6 3.7 6.6
1997....................................... 370.7 7.0 8.8 (1.7)
</TABLE>
______________
(1) For purposes of this table, the Israeli CPI figures use 1987 as a base
equal to 100. These figures are based on reports of the Israel Central
Statistics Bureau.
(2) Annual inflation is the percentage change in the Israeli CPI between
December of the year indicated and December of the preceding year.
(3) Annual devaluation is the percentage increase in the value of the dollar in
relation to the Israeli currency during the year indicated.
(4) Annual inflation adjusted for devaluations is obtained by dividing the
Israeli annual inflation rate (column 2 plus 1.0) by the devaluation rate
(column 3 plus 1.0), minus 1.0.
-21-
<PAGE>
The following table sets forth certain information concerning exchange
rates of the dollar into NIS for the periods indicated, as published by the Bank
of Israel:
<TABLE>
<CAPTION>
Exchange Rate (NIS per $1.00)
- -----------------------------------------------------------------------------------------------------------------
Calendar Year
Ended December 31, Year-End(1) Average(2) High Low
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1992 2.764 2.478 2.764 2.316
1993 2.986 2.284 2.986 1.728
1994 3.018 3.013 3.057 2.969
1995 3.135 3.011 3.135 2.951
1996 3.251 3.194 3.299 3.101
1997 3.536 3.465 3.587 3.314
</TABLE>
_____________
(1) The year-end rate is the representative rate of exchange between the NIS
and the dollar at December 31 of the year indicated as reported by the Bank
of Israel.
(2) Determined by averaging the exchange rate on the last day of each month
during the relevant period.
Trade Agreements
Israel is a member of the United Nations, The International Monetary Fund,
the International Bank for Reconstruction and Development and the International
Finance Corporation. Israel is a signatory to the General Agreement on Tariffs
and Trade, which provides for reciprocal lowering of trade barriers among its
members. In addition, Israel has been granted preferences under the Generalized
System of Preferences from the United States, Australia, Canada and Japan. These
preferences will allow Israel to export the products covered by such programs
either duty-free or at reduced tariffs.
Israel and the EEC (known now as the "European Union") concluded a Free
Trade Agreement in July 1975 which confers certain advantages with respect to
Israeli exports to most European countries and obligates Israel to lower its
tariffs with respect to imports from these countries over a number of years. In
1985, Israel and the United States entered into an agreement to establish a Free
Trade Area ("FTA"). The FTA has eliminated all tariff and certain non-tariff
barriers on most trade between the two countries. On January 1, 1993, an
agreement between Israel and the EFTA, which includes Austria, Norway, Finland,
Sweden, Switzerland, Iceland and Liechtenstein, established a free-trade zone
between Israel and the EFTA nations. In recent years, Israel has established
commercial and trade relations with a number of other nations, including Russia,
China and nations in Eastern Europe, with which Israel had not previously had
such relations.
-22-
<PAGE>
Political Environment
Since the establishment of the State of Israel in 1948, a state of
hostility has existed, varying in degree and intensity, between Israel and the
Arab countries. In addition, Israel and companies doing business with Israel
have been the subject of an economic boycott by the Arab countries since
Israel's establishment. Furthermore, following the Six-Day War in 1967, Israel
commenced administering the territories of the West Bank and the Gaza Strip and,
since December 1987, increased civil unrest has existed in these territories.
Although, as described below, Israel has entered into various agreements with
Arab countries and the Palestine Liberation Organization ("PLO") and various
declarations have been signed in connection with efforts to resolve some of the
aforementioned problems, no prediction can be made as to whether a full
resolution of these problems will be achieved or as to the nature of any such
resolution.
In 1979, a peace agreement between Israel and Egypt was signed under which
full political relations were established, however, economic relations between
those countries have been very limited. In September 1993, a joint
Israeli-Palestinian Declaration of Principles was signed by Israel and the PLO
in Washington, D.C., outlining interim Palestinian self-government arrangements.
Since then, Israel has transferred the civil administration of the Gaza Strip,
Jericho and certain other areas of the West Bank to the Palestinian Authority
and the Israeli army has withdrawn from these areas. In January 1996, elections
were held for the election of representatives to the Palestinian Authority.
Since mid-1997 Israel has limited access to and from the Palestinian Authority
territories in response to a series of terrorist attacks.
In October 1994, Israel and Jordan signed a peace treaty that provides,
among other things, for the commencement of full diplomatic relations between
the two countries, including the exchange of ambassadors and consuls. Although
Israel has entered into various agreements with certain Arab countries and the
PLO, and various declarations have been signed in connection with the efforts to
resolve some of the economic and political problems in the Middle East, no
prediction can be made as to whether a full resolution of these problems will be
achieved or as to the nature of any such resolution. To date, Israel has not
entered into a peace treaty with either Lebanon or Syria. Since 1997 the peace
process has stagnated and there can be no assurance as to how or whether the
peace process will develop or what effect it will have on the Company.
Army Service
Generally, all male adult citizens and permanent residents of Israel under
the age of 54 are, unless exempt, obligated to perform 30 to 60 days of military
service duty annually. Additionally, all such residents are subject to being
called to active duty at any time under emergency circumstances. Some of the
employees of the Company currently are obligated to perform annual reserve duty.
While the Company has operated effectively under these and similar requirements
in the past, no assessment can be made of the full impact of such requirements
on the Company in the future, particularly if emergency circumstances occur, and
no prediction can be made as to the effect on the Company of any expansion or
reduction of such obligations.
-23-
<PAGE>
PLAN OF DISTRIBUTION
The Company is registering the Shares on behalf of the Selling
Shareholders. As used herein, "Selling Shareholders" includes donees and
pledgees selling shares received from a named Selling Shareholder after the date
of this prospectus. Brokerage commissions and similar selling expenses, if any,
attributable to the sale of Shares will be borne by the Selling Shareholders.
Sales of Shares may be effected by Selling Shareholders from time to time in one
or more types of transactions in the over-the-counter market, in block trades in
which the broker or dealer will attempt to sell the shares as agent but may
position and resell a portion of the block as principal in negotiated
transactions, through put or call options transactions relating to the Shares or
a combination of such methods of sale, at market prices prevailing at the time
of sale, or at negotiated prices. Such transactions may or may not involve
brokers or dealers. In addition, MCM has notified the Company that it intends to
distribute its 2,082,522 Shares (all of its ownership interest in the Company
other than those Shares issuable upon exercise of the 1997 Warrants held by it)
to its shareholders. The Selling Shareholders have advised the Company that they
have not entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their securities, nor is
there an underwriter or coordinating broker acting in connection with the
proposed sale of Shares by the Selling Shareholders. All costs, expenses and
fees in connection with the registration of the Shares offered hereby, estimated
to be $30,000, will be borne by MCM.
The Selling Shareholders may effect such transactions by selling Shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the Selling Shareholders and/or the
purchasers of Shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions).
The Selling Shareholders and any broker-dealers that act in connection with
the sale of Shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the Shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act. The Company has agreed to indemnify each Selling
Shareholder against certain liabilities, including liabilities arising under the
Securities Act. The Selling Shareholders may agree to indemnify any agent,
dealer or broker-dealer that participates in transactions involving sales of the
Shares against certain liabilities, including liabilities arising under the
Securities Act.
Because Selling Shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the Selling Shareholders will be
subject to the prospectus delivery requirements of the Securities Act. The
Company has informed the Selling Shareholders that the anti-manipulative
provisions of Regulation M promulgated under the Exchange act may apply to their
sales in the market.
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<PAGE>
Selling Shareholders also may resell all or a portion of the Shares in open
market transactions in reliance upon Rule 144 under the Securities Act, provided
they meet the criteria and conform to the requirements of such Rule.
There is no assurance that any Selling Stockholder will sell any or all of
the Shares described herein and selling stockholders may transfer, devise or
gift such securities by other means not described herein.
Upon the Company being notified by a Selling Shareholder that any material
arrangement has been entered into with a broker-dealer for the sale of Shares
through a block trade, special offering, exchange distribution or secondary
distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the Act,
disclosing (i) the name of each such selling shareholder and of the
participating broker-dealer(s); (ii) the number of shares involved; (iii) the
price at which such shares were sold; (iv) the commissions paid or discounts or
concessions allowed to such broker-dealer(s) where applicable; (v) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus; and (vi) other facts
material to the transaction. In addition, upon the Company being notified by a
Selling Shareholder that a donee or pledgee intends to sell more than 500
shares, a supplement to this Prospectus will be filed.
The Company is permitted to suspend the use of this Prospectus in
connection with sales of the Shares by holders during periods of time under
certain circumstances relating to pending corporate developments and public
filings with the Commission and similar events.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Under Section 145 of the Delaware General Corporation Law, the Company has
broad powers to indemnify its directors and officers against liabilities that
they may incur in such capacities, including liabilities under the Securities
Act. The Company's By-Laws provide that the Company will indemnify its directors
and officers to the fullest extent permitted by law and require the Company to
advance litigation expenses upon receipt by the Company of an undertaking from
the director or officer to repay such advances if it is ultimately determined
that the director or officer is not entitled to indemnification. The By-Laws
further provide that rights conferred under the By-Laws will not be deemed to be
exclusive of any other right such persons may have or acquire under any by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
The Company's Certificate of Incorporation provides that, pursuant to
Delaware law, its directors will not be liable for monetary damages for breach
of the directors' fiduciary duty to the Company and its stockholders. This
provision in the Certificate of Incorporation does not eliminate the duty of
care, and, in appropriate circumstances, equitable remedies such as injunctive
or other forms of non-monetary relief will remain available under Delaware law.
In addition, each director will continue to be subject to liability for breach
of the director's duty of loyalty to the Company or its stockholders, for acts
or omissions not in good faith or involving intentional misconduct or
-25-
<PAGE>
knowing violations of law, for actions leading to improper personal benefits to
the director, and for payment of dividends or approval of stock repurchases or
redemptions that are unlawful under Delaware law. The provision also does not
affect a director's responsibilities under any other law, such as the federal
securities laws or state or federal environmental laws.
LEGAL MATTERS
Certain legal matters with respect to the Shares offered hereby will be
passed upon for the Company by Carter, Ledyard & Milburn, New York, New York.
EXPERTS
The consolidated financial statements of Mentortech Inc. incorporated by
reference herein from Mentortech Inc.'s Annual Report on Form 10-KSB for the
year ended December 31, 1997 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein, and
incorporated herein by reference in reliance upon said report given upon the
authority of such firm as an expert in accounting and auditing.
-26-
<PAGE>
<TABLE>
<CAPTION>
======================================================= ==================================================
<S> <C>
No person has been authorized in connection with the
offering made hereby to give any information or to make any
representation not contained in this Prospectus, and, if
given or made, such information or representation must not 3,672,497 Shares
be relied upon as having been authorized by the Company or
any Underwriter. This Prospectus does not constitute an of
offer to sell or a solicitation of any offer to buy any of
the securities offered hereby to any person or by anyone in Common Stock
any jurisdiction in which it is unlawful to make such offer
or solicitation. Neither the delivery of this Prospectus nor
any sale made hereunder shall, under any circumstances,
create any implication that the information contained herein
is correct as of any date subsequent to the of date hereof. MENTORTECH INC.
TABLE OF CONTENTS
Page
----
Available Information.................................. 3
Forward Looking Statements............................. 3
Incorporation of Certain Documents by
Reference................................... 4
Prospectus Summary..................................... 5 PROSPECTUS
Risk Factors........................................... 9
Use of Proceeds........................................ 13
Price Range of Common Stock............................ 13
Selling Stockholders................................... 14
Description of Capital Stock........................... 18
Conditions in Israel .................................. 21
Plan of Distribution................................... 24
Indemnification for Securities Act Liabilities......... 25
Legal Matters.......................................... 26 , 1998
Experts................................................ 26
======================================================= ==================================================
</TABLE>
-27-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses of the issuance and distribution of the securities being
registered hereby, other than selling discounts and commissions, are estimated
as follows:
Securities and Exchange Commission registration fee................... $ 2,414
Legal fees and expenses............................................... 15,000
Accountants' fees and expenses........................................ 5,000
Printing and engraving expenses ...................................... 3,000
Blue sky fees and expenses ........................................... 500
Transfer Agent's fees ................................................ 3,500
Miscellaneous......................................................... 586
-------
Total............................................................ $30,000
All of such expenses will be paid by Mashov Computers Ltd.
Item 15. Indemnification of Directors and Officers.
Pursuant to the provisions of Section 145 of the Delaware General
Corporation Law (the "DGCL") the Company has the power to indemnify certain
persons, including its officers and directors, under stated circumstances and
subject to certain limitations, for liabilities incurred in connection with
services performed in good faith for the Company or for other organizations at
the request of the Company.
Article VIII of the Company's Certificate of Incorporation, as amended,
provides that no director of the Company shall be liable for monetary damages
for breach of fiduciary duty, except to the extent that the DGCL prohibits the
elimination of liability of directors for breach of fiduciary duty.
Article IX of the Company's Certificate of Incorporation, as amended,
provides that a director or officer of the Company (a) shall be indemnified by
the Company against all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement incurred in connection with any litigation or
other legal proceeding (other than an action by or in the right of the Company)
II-1
<PAGE>
brought against him by virtue of his position as a director or officer of the
Company 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 Company, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful and (b) shall be indemnified by the Company against all
expenses (including attorneys' fees) and amounts paid in settlement incurred in
connection with any action by or in the right of the Company brought against him
by virtue of his position as a director or officer of the Company 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 Company, except that no indemnification shall be made
with respect to any matter as to which such person shall have been adjudged to
be liable to the Company, unless a court determines that despite such
adjudication but in view of all of the circumstances, he is entitled to
indemnification of such expenses.
Notwithstanding the foregoing, to the extent that a director or officer has
been successful, on the merits or otherwise, including, without limitation, the
dismissal of an action without prejudice, he is required to be indemnified by
the Company against all expenses (including attorneys' fees) incurred in
connection therewith. Expenses shall be advanced to a director or officer at his
request, provided that he undertakes to repay the amount advanced if it is
ultimately determined that he is not entitled to indemnification for such
expenses.
Article IX of the Company's Certificate of Incorporation, as amended,
further provides that the indemnification provided therein is not exclusive and
provides that in the event that the Delaware General Corporation Law is amended
to expand or limit the indemnification permitted to directors or officers, the
Company must indemnify those persons to the fullest extent permitted by such
law, as so amended.
II-2
<PAGE>
Item 16. Exhibits.
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Stock Purchase Agreement dated February 6, 1997 and effective February 13,
1997 by and between the Company and Mashov Computers Marketing Ltd.(1)
3.1 Certificate of Incorporation, as amended (2)
3.2 Certificate of Amendment of Certificate of Incorporation with regard to the
change of the Company's name and the increase in the Company's authorized
capital stock (3)
3.3 Certificate of Amendment of Certificate of Incorporation with regard to a
reverse stock split (4)
3.4 By-Laws (5)
5.1 Opinion of Carter, Ledyard & Milburn
10.1 Lease for premises situated at 462 Seventh Avenue, 4th Floor, New York, New
York (6)
10.2 Lease for premises situated at 462 Seventh Avenue, 18th Floor, New York,
New York (7)
10.3 1997 Stock Option Plan (8)
10.4 Employment Agreement of Roy Machnes (9)
10.5 Employment Agreement of Elan Penn (9)
10.6 Employment Agreement of Terry I. Steinberg (9)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Carter, Ledyard & Milburn (contained in Exhibit 5.1)
24.1 Power of Attorney (contained in the Signature Page II-6)
_______________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K for an
event dated February 13, 1997 and hereby incorporated by reference thereto.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1989 and hereby incorporated by reference thereto,
as amended by document
II-3
<PAGE>
filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1993.
(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1997 and hereby incorporated by reference
thereto.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1997 and hereby incorporated by reference thereto.
(5) Filed as an exhibit to the Company's Form S-18 (File No. 33-19521) and
hereby incorporated by reference thereto.
(6) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1993 and hereby incorporated by reference
thereto.
(7) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1992 and hereby incorporated by reference
thereto.
(8) Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1997 and hereby incorporated by reference
thereto.
(9) Filed as a "Related Agreement" to the Stock Purchase Agreement, which
Related Agreement was filed as an exhibit to the Company's Current Report
on Form 8-K for an event dated February 13, 1997 and hereby incorporated by
reference thereto.
II-4
<PAGE>
Item 17. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(1) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual report pursuant to Section 13(a) or 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.
(2) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in Item 15, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
(3) 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.
(4) 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.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in New York, New York on the 29th day of September, 1998.
MENTORTECH INC.
By:/s/Roy Machnes
--------------
Roy Machnes
President
Each person whose signature appears below hereby constitutes Roy Machnes
his true and lawful attorney-in-fact with full power to sign on behalf of such
person, in the capacities indicated below, such one or more amendments to this
registration statement as the registrant deems appropriate, and generally to do
all such things in the name and on behalf of such person, in the capacities
indicated below, to enable the registrant to comply with the provisions of the
Securities Act of 1933 and all requirements of the Securities and Exchange
Commission thereunder, hereby ratifying and confirming the signature of such
person as it may be signed by said attorney-in-fact, to any and all amendments
to this registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement and the above power of attorney have been signed below by
the following persons in the capacities indicated on September 29, 1998.
Signature Title
- --------- -----
/s/Roy Machnes
- -------------- Chairman and President
Roy Machnes (Principal Executive Officer)
/s/Terry I. Steinberg
- --------------------- Executive Vice President and Director
Terry I. Steinberg
/s/Elan Penn
- ------------ Chief Financial and Accounting Officer
Elan Penn and Director
II-6
<PAGE>
/s/David Assia
- -------------- Director
David Assia
/s/Jack Dunietz
- --------------- Director
Jack Dunietz
/s/Martin Kahn
- -------------- Director
Martin Kahn
II-7
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Stock Purchase Agreement dated February 6, 1997 and effective February 13,
1997 by and between the Company and Mashov Computers Marketing Ltd.(1)
3.1 Certificate of Incorporation, as amended (2)
3.2 Certificate of Amendment of Certificate of Incorporation with regard to the
change of the Company's name and the increase in the Company's authorized
capital stock (3)
3.3 Certificate of Amendment of Certificate of Incorporation with regard to a
reverse stock split (4)
3.4 By-Laws (5)
5.1 Opinion of Carter, Ledyard & Milburn
10.1 Lease for premises situated at 462 Seventh Avenue, 4th Floor, New York, New
York (6)
10.2 Lease for premises situated at 462 Seventh Avenue, 18th Floor, New York,
New York (7)
10.3 1997 Stock Option Plan (8)
10.4 Employment Agreement of Roy Machnes (9)
10.5 Employment Agreement of Elan Penn (9)
10.6 Employment Agreement of Terry I. Steinberg (9)
23.1 Consent of Ernst & Young LLP
23.2 Consent of Carter, Ledyard & Milburn (contained in Exhibit 5.1)
24.1 Power of Attorney (contained in the Signature Page II-6)
_____________
(1) Filed as an exhibit to the Company's Current Report on Form 8-K for an
event dated February 13, 1997 and hereby incorporated by reference thereto.
(2) Filed as an exhibit to the Company's Annual Report on Form 10-K for the
year ended December 31, 1989 and hereby incorporated by reference thereto,
as amended by document
II-8
<PAGE>
filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1993.
(3) Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for
the quarter ended September 30, 1997 and hereby incorporated by reference
thereto.
(4) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1997 and hereby incorporated by reference thereto.
(5) Filed as an exhibit to the Company's Form S-18 (File No. 33-19521) and
hereby incorporated by reference thereto.
(6) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1993 and hereby incorporated by reference
thereto.
(7) Filed as an exhibit to the Company's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1992 and hereby incorporated by reference
thereto.
(8) Filed as an exhibit to the Company's Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1997 and hereby incorporated by reference
thereto.
(9) Filed as a "Related Agreement" to the Stock Purchase Agreement, which
Related Agreement was filed as an exhibit to the Company's Current Report
on Form 8-K for an event dated February 13, 1997 and hereby incorporated by
reference thereto.
II-9
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, N.Y. 10005
-----------
(212) 732-3200
FAX: (212) 732-3232
September 29, 1998
Mentortech Inc.
462 Seventh Avenue
New York, New York 10018
Re: Registration Statement on Form S-3 of Mentortech Inc.
(the "Registration Statement")
-------------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel to Mentortech Inc., a Delaware corporation (the
"Registrant"), in connection with the above-captioned Registration Statement
filed with the Securities and Exchange Commission on the date hereof relating to
the registration under the Securities Act of 1933 of up to 3,672,497 shares of
its common stock, par value $.01 per share (the "Common Stock") offered by
certain selling stockholders (the "Selling Stockholders") of the Registrant.
We have examined originals or copies, certified or otherwise identified to
our satisfaction, of such documents, corporate records, certificates of public
officials and officers of the Registrant and such other instruments as we have
deemed necessary or advisable for the purpose of this opinion.
On the basis of the foregoing, we are of the opinion that the outstanding
shares of Common Stock which may be offered for the account of the Selling
Stockholders are legally issued, fully paid and non-assessable and the shares of
Common Stock issuable upon exercise of certain outstanding warrants when
delivered and paid for pursuant to the terms of such warrants shall be validly
issued, fully paid and non-assessable.
<PAGE>
Mentortech Inc. -2-
We hereby consent to the filing of this opinion as an exhibit to the above
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the Prospectus included therein.
Very truly yours,
/s/Carter, Ledyard & Milburn
SJG/cd
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of Mentortech Inc. for
the registration of 3,672,497 shares of its common stock and to the
incorporation by reference therein of our report dated January 27, 1998, except
for the first paragraph in Note 9, as to which the date was March 3, 1998, with
respect to the consolidated financial statements of Mentortech Inc. included in
its Annual Report (Form 10-KSB) for the year ended December 31, 1997, filed with
the Securities and Exchange Commission.
/s/Ernst & Young LLP
September 28, 1998
New York, New York
