As filed with the Securities and Exchange Commission on August 30, 1999
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-8
REGISTRATION STATEMENT
Under the Securities Act of 1933
MAGNITUDE INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 75-2228828
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
50 Tannery Road
Branchburg, New Jersey 08876
(908) 534-6400
(Address and Telephone Number of Registrant's Principal Executive Office)
(Zip Code)
Agreement with Isidor D. Friedenberg dated March 12, 1999
(50,000 stock options)
Agreement with Michael G. Martin dated August 26, 1999
(150,000 shares of common stock)
(full title of the plans)
Steven Rudnik, President
50 Tannery Road
Branchburg, New Jersey 08876
(908) 534-6400
(Name, Address and Telephone number, including area code, of agent for service)
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Copies to:
Michael H. Freedman, Esq.
Silverman, Collura & Chernis, P.C.
381 Park Avenue South - Suite 1601
New York, New York 10016
(212) 779-8600
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CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Proposed Proposed
Title of Amount maximum maximum Amount of
securities to to be offering price aggregate registration
be registered registered per share (1) offering price (1) fee
- --------------------------------------------------------------------------------
Common Stock(1) 200,000 $.847 $169,400.62 $47.27
- --------------------------------------------------------------------------------
(1) Calculated in accordance with 457(c) using the closing price for the
common stock on August 25, 1999.
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Part I - Information Required in the Section 10(a) Prospectus
The documents containing information specified in Part 1 (plan information
and registrant information) will be sent or given to the consultants as
specified by Rule 428(b)(1). Such documents need not be filed with the
Securities and Exchange Commission either as part of this registration statement
or as prospectuses or prospectus supplements pursuant to Rule 424. These
documents and the documents incorporated by reference in this registration
statement pursuant to Item 3 of Part II of this form taken together constitute a
prospectus that meets the requirements of Section 10(a) of the Securities Act of
1933.
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MAGNITUDE INFORMATION SYSTEMS, INC.
200,000 shares of common stock
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Certain officers, employees and consultants of Magnitude may sell up to
200,000 shares of common stock.
Magnitude will not receive any proceeds from this offering.
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Please see the risk factors beginning on page 7 to read about certain
factors you should consider before buying shares of common stock.
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Magnitude Information Systems's common stock is quoted on the OTC Bulletin
Board under the symbol MAGY. On August 25, 1999 the last sale price of the
common stock as reported on the Bulletin Board was $.847.
The mailing address of our principal executive offices is 50 Tannery Road,
Branchburg, New Jersey 08876.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is August 30, 1999.
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TABLE OF CONTENTS
Page
The Company....................................................................6
Risk Factors...................................................................7
Available Information.........................................................10
Incorporation of Certain Documents by Reference...............................10
Selling Securityholders.......................................................12
Plan of Distribution..........................................................13
Description of Securities.....................................................14
Transfer Agent and Registrar..................................................14
Legal Matters.................................................................15
Experts.......................................................................15
Indemnification of Directors and Officers.....................................15
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The Company
Magnitude Information Systems, Inc., f/k/a Proformix Systems, Inc., was
incorporated as a Delaware corporation on April 19, 1988 under the name
Fortunistics Inc. In 1993, we changed our name to Whitestone Industries, Inc. In
June 1997, we acquired approximately 90% of Proformix, Inc., a private Delaware
company, and changed our name to Proformix Systems, Inc. In December 1998, after
the sale of certain of our assets and a reorganization of our product lines, we
changed our name to Magnitude Information Systems, Inc.
We are a research based software company, delivering the science of
ergonomics to the computerized workplace. Computer ergonomics focuses on
optimizing the design of technology that allows people to successfully interact
with computers. A successful technology delivery system improves the comfort,
productivity, job satisfaction and safety of the computer user, while reducing
the costs of absenteeism and work related disability. Through scientifically
testing, evaluating and verifying new design concepts and systems, we marry
human biology and computer technology to provide both financial and workplace
health benefits to our clients.
We have researched, developed, patented and marketed a variety of
ergonomic hardware products including keyboard tray systems. Starting in
February 1998, we acquired two ergonomic software companies, including Rolina
Corporation (formerly Magnitude LLC) and Vanity Software. Later in November
1998, we entered into a strategic alliance with Office Specialty, a Canadian
corporation, whereby Office Specialty acquired all of our hardware product
rights and related assets.
The Company markets a unique, proprietary, windows-compatible software
suite under the name Proformix EMS(TM)("EMS"). EMS is composed of several
software products which provide a system for evaluation and management of
ergonomic risk factors in the workplace. The software assists in training people
working on computers, monitors computer-use related activities and evaluates a
user's risk exposure and propensity towards injury or loss of effectiveness in
connection with his/her day-to-day work.
In late 1998, Magnitude Information Systems and Aon Ergonomic Services,
a division of Aon Worldwide Resources, entered into a joint venture agreement to
market and sell our EMS software product. Aon Worldwide Resources is a division
of Aon Group, the worldwide insurance brokerage and consulting arm of Aon
Corporation.
Currently, approximately 100 prospective corporate, government,
educational and military organizations are evaluating EMS for organization-wide
use.
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Risk Factors
Substantial Competition.
The computer software industry and products developed for the computer
workplace face intense competition. We will be at a competitive disadvantage in
seeking to compete with other companies having more assets, larger technical
staffs, established market shares and greater financial and operational
resources than us. There can be no assurance that we will be able to meet the
competition and operate profitably.
Possible Loss of Entire Investment.
The commons stock offered hereby is highly speculative, involves a high
degree of risk and should not be purchased by any person who cannot afford the
loss of his entire investment. A purchase of our common stock in this offering
would be unsuitable for a person who cannot afford to sustain such a loss.
Dependence Upon Key Personnel.
We are substantially dependent upon the continued services of Steven
Rudnik, our President and Chief Executive Officer. The loss of the services of
Mr. Rudnik through incapacity or otherwise would have a material adverse effect
upon our business and prospects. To the extent that his services become
unavailable, we will be required to retain other qualified personnel, and there
can be no assurance that we will be able to recruit and hire qualified persons
upon acceptable terms. We do not maintain key person life and disability
insurance on the life of Mr. Rudnik.
Possible Volatility of Stock Price.
There can be no assurance that a public market price for the common
stock will continue. The market prices of the common stock may be significantly
affected by factors such as announcements by us or our competitors, as well as
variations in our results of operations and market conditions in general. The
market price may also be affected by movements in prices of stocks in general.
The relatively limited amount of publicly trading shares (float) renders our
securities especially susceptible to sharp price fluctuations.
Penny Stock Regulations
The Securities Enforcement Penny Stock Act of 1990 requires specific
disclosure to be made available in connection with trades in the stock of
companies defined as "penny stocks. The Commission has adopted regulations that
generally define a penny stock to be any equity security that has a market price
of less than $5.00 per share, subject to certain exceptions. Such exceptions
include any equity security listed on NASDAQ and any equity security issued by
an issuer that has (i) net tangible assets of at least $2,000,000, if such
issuer has been in continuous operation for three years; (ii) net tangible
assets of at least $5,000,000, if such issuer has been in continuous
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operation for less than three years; or (iii) average annual revenue of at least
$6,000,000, if such issuer has been in continuous operation for less than three
years. Unless an exception is available, the regulations require the delivery,
prior to any transaction involving a penny stock, of a disclosure schedule
explaining the penny stock market and the risk associated therewith as well as
the written consent of the purchaser of such security prior to engaging in a
penny stock transaction. The regulations on penny stocks may limit the ability
of the purchasers of our securities to sell their securities in the secondary
marketplace. Our common stock is currently considered a penny stock.
The Year 2000.
State of Readiness
We are dependent upon computers to operate our business and therefore
are exposed to Year 2000 ("Y2K") problems. In the fall of 1998, we initiated a
Y2K compliance program with the following objectives: (i) updating and/or
replacing aging hardware; and (iii) assuring company-wide Y2K compliance.
With the assistance of outside consultants, we have identified that the
computer systems used for accounting purposes are not Y2K compliant. In order to
make these systems compliant, we elected to replace the software utilized. The
new software will be installed during the third quarter of 1999.
The total costs for achieving Y2K compliance are estimated to be less
than $10,000. Most of the cost is due to the acquisition of Y2K compliant
software and replacement of certain computer hardware.
Risks
The failure to correct a material Y2K problem could result in an
interruption in, or failure of, certain normal business activities or
operations. Such failures could affect our operations, however, management
believes that any such interruptions would not have a material impact on our
liquidity or financial condition.
Risks Associated with Forward Looking Statements.
This prospectus contains "forward-looking statements" which can be
identified by the use of words such as "intend," "anticipate," "believe,"
"estimate," "project," or "expect" or similar statements. The statements in
"Risk Factors" are cautionary statements. They identify important factors, with
respect to forward-looking statements, that could cause actual results to differ
materially from those forecasted in such statements. All forward-looking
statements in this prospectus are expressly qualified in their entirety by the
cautionary statements in this paragraph.
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Available Information
We are subject to the informational requirements of the Securities
Exchange Act of 1934 and in accordance therewith, files reports, proxy
statements and other information with the Securities and Exchange Commission.
Such reports, proxy statements and other information can be inspected and copied
at the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the Commission's regional offices at Room 1204,
Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago, Illinois
60604; and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at its principal office at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Information on the operation of the Public Reference
Room can be obtained by calling the Commission at 1-800-SEC-0330. Such reports
and other information may also be inspected without charge at a website
maintained by the Commission. The address of the website is http://www.sec.gov.
This prospectus does not contain all of the information set forth in
the registration statement of which this prospectus is a part and which we have
filed with the Commission. For further information with respect to us and the
securities offered hereby, reference is made to the registration statement,
including the exhibits filed as a part thereof, copies of which can be inspected
at, or obtained at prescribed rates from the Public Reference Section of the
Commission at the address set forth above. Additional updating information with
respect to us may be provided in the future by means of appendices or
supplements to the prospectus.
We hereby undertake to provide without charge to each person to whom a
copy of this prospectus is delivered, upon written or oral request of such
person, a copy of any and all of the information that has been or may be
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to Magnitude Information Systems, Inc., 50 Tannery
Road, Branchburg, New Jersey 08876 (908) 534-6400.
Incorporation of Certain Documents by Reference
We hereby refer to the following documents previously filed by
Magnitude Information Systems with the Securities and Exchange Commission, and
incorporate these documents in this prospectus:
(a) Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1998;
(b) Quarterly Report on Form 10-QSB for the periods ended June 30,
1999; and
(c) All other reports filed pursuant to Section 13(a) and 15(d) of
the Exchange Act since our fiscal year ended December 31,
1998.
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All documents filed by us with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent hereto, but prior to
the termination of the offering of securities made by this prospectus shall be
deemed to be incorporated by reference herein and to be part hereof from their
respective dates of filing.
Any statement contained 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 or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
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Selling Securityholders
This prospectus covers common stock that has been issued to the selling
securityholders, or may be acquired upon exercise of stock options held by the
selling securityholders, named herein or to be supplementally named, as of
August 26, 1999. The following table sets forth as of August 26, 1999 certain
information with respect to the selling securityholders. Magnitude Information
Systems will not receive any of the proceeds from the sale of the common stock.
Securities Securities
Owned Prior Securities Owned
to Offering(1) Offered Herein After Offering(2)
-------------- -------------- -----------------
Name of Selling
Securityholder Common Stock Common Stock Amount %
- -------------- ------------ ------------ ------ -
Isidor D. Friedenberg 138,833(3) 50,000 88,833 **
Consultant
Michael G. Martin, 900,000(4) 150,000 750,000 1.6%
Chairman
- --------------------
** less than 1%
(1) For purposes of this table, each person listed above is deemed to own
shares of common stock if he has the right to acquire the common stock
within 60 days of August 26, 1999. For purposes of computing the
percentage of outstanding shares of common stock held by each selling
securityholder, any security which they have the right to acquire within
such date is deemed to be outstanding. Except as indicated in the
footnotes to this table and pursuant to applicable community property
laws, we believe, based on information supplied by selling securityholder,
that they have sole voting and investment power with respect to all the
shares of common stock which they own.
(2) For purposes of this table, the number and percentage of common stock
owned after the offering presumes the sale of all the common stock offered
herein.
(3) Represents 83,333 shares of common stock and stock options to purchase
50,000 shares of common stock.
(4) Represents 150,000 shares of common stock and stock options to purchase
750,000 shares of common stock.
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Plan of Distribution
Each selling securityholder may offer and sell the shares of common
stock from time to time at their discretion on the OTC Bulletin Board, or
otherwise, at prices and at terms then prevailing or at prices related to the
then current market price, or at negotiated prices. The distribution of the
shares of common stock may be effected from time to time in one or more
transactions including, without limitation: (a) a block trade in which the
broker-dealer so engaged will attempt to sell the common stock as agent, but may
position and resell a portion of the block as principal to facilitate the
transaction; (b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus; (c) ordinary
brokerage transactions and transactions in which the broker solicits purchasers;
and (d) face-to-face or other direct transactions between the selling
securityholder and purchasers without a broker-dealer or other intermediary. In
effecting sales, broker-dealers or agents engaged by a selling securityholder
may arrange for other broker-dealers or agents to participate. From time to
time, the selling securityholder may pledge, hypothecate or grant a security
interest in some or all of the common stock owned by him, and the pledgees,
secured parties or persons to whom such securities have been hypothecated shall,
upon foreclosure in the event of default, be deemed to be selling
securityholders hereunder. In addition, the selling securityholder may from time
to time sell short the common stock, and in such instances, this prospectus may
be delivered in connection with such short sale and the common stock offered
hereby may be used to cover such short sale.
Sales of the common stock may also be made pursuant to Rule 144 under
the Securities Act of 1933, as amended, where applicable. The selling
securityholders' shares may also be offered in one or more underwritten
offerings, on a firm commitment or best efforts basis. Magnitude Information
Systems will not receive proceeds from the sale of the selling securityholders'
common stock.
From time to time, the selling securityholder may transfer, pledge,
donate or assign its common stock to lenders, family members and others and each
of such persons will be deemed to be a selling securityholder for purposes of
this prospectus. The plan of distribution for the selling securityholders'
shares of common stock sold hereunder will otherwise remain unchanged, except
that the transferees, pledgees, donees or other successors will be selling
securityholders hereunder.
Including, and without limiting the foregoing, in connection with
distributions of the common stock, selling securityholders may enter into
hedging transactions with broker-dealers and the broker-dealers may engage in
short sales of the common stock in the course of hedging the positions he
assumes. They may also enter into option or other transactions with
broker-dealers that involve the delivery of the common stock to the
broker-dealers, who may then resell or otherwise transfer such common stock. The
selling securityholder may also loan or pledge the common stock to a
broker-dealer and the broker-dealer may sell the common stock so loaned or upon
default may sell or otherwise transfer the pledged common stock.
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Under applicable rule and regulations under the Exchange Act, any
person engaged in the distribution of the common stock may not bid for or
purchase shares of common stock during a period which commences one business day
(5 business days, if Magnitude Information Systems' float is less than $25
million or its average daily trading volume is less than $100,000) prior to the
selling securityholder's participation in the distribution, subject to
exceptions for certain passive market making activities. In addition and without
limiting the foregoing, the selling securityholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Regulation M which provisions may
limit the timing of purchases and sales of shares of the common stock by them.
Magnitude Information Systems is bearing all costs relating to the
registration of the shares of common stock (other than fees and expenses, if
any, of counsel or other advisors to the selling securityholders). Any
commissions, discounts or other fees payable to broker-dealers in connection
with any sale of the shares of common stock will be borne by them.
Description of Securities
Our authorized capital stock consists of (i) 30,000,000 shares of
common stock, $.0001 par value per share; (ii) 3,000,000 shares of preferred
stock, $.001 par value, of which 2,500 shares have been designated as cumulative
preferred stock, $.001 par value.
Common Stock
Holders of common stock are entitled to one vote per share on each
matter submitted to vote at any meeting of shareholders. Shares of common stock
do not carry cumulative voting rights and therefore, holders of a majority of
the outstanding shares of common stock will be able to elect our entire board of
directors. Our board of directors have authority, without action by our
shareholders, to issue all or any portion of the authorized but unissued shares
of common stock, which would have the effect of reducing our shareholders
percentage of ownership and diluting the book value of the common stock.
Shareholders have no preemptive rights to acquire additional shares of
common stock. The common stock is not subject to redemption and carries no
subscription or conversion rights. In the event of our liquidation, the holders
of common stock are entitled to share equally in corporate assets after the
holders, if any, of preferred stock and after satisfaction of liabilities.
Holders of common stock are entitled to receive such dividends as our board of
directors may from time to time declare out of funds legally available for such
payment and after the cumulative dividend rights of the cumulative preferred
stock have been satisfied. We have never paid cash dividends on our common stock
and do not anticipate that we will pay dividends in the future.
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Preferred Stock
We have authorized 2,500 shares of cumulative preferred stock, of which
10 shares are outstanding. The cumulative preferred stock does not have voting
rights. The cumulative preferred stock ranks above the common stock with respect
to dividend rights, liquidation, dissolution and redemption.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock Securities
Transfer Corp., 16910 Dallas Parkway, Suite 100, Dallas, Texas 75248.
Legal Matters
The legality of the shares offered hereby has been passed upon by
Silverman, Collura & Chernis, P.C. ("SCC"), 381 Park Avenue South, Suite 1601,
New York, New York 10016. Paul Chernis, a partner in SCC, is a one of our
directors and owns 80,000 stock options to acquire common stock.
Experts
Our consolidated financial statements incorporated in this registration
statement by reference to our Annual Report on Form 10-KSB for the year ended
December 31, 1998 have been audited by Rosenberg, Rich, Baker, Berman & Company,
independent auditors, as stated in their report, which is incorporated herein by
reference (which report expresses an unqualified opinion) and have been so
incorporated in reliance upon the report of such firm, given upon their
authority as experts in accounting and auditing.
Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware and
Article 7 of our Certificate of Incorporation contain provisions for
indemnification of our officers, directors, employees and agents. The
Certificate of Incorporation requires us to indemnify such persons to the
fullest extent permitted by Delaware law. Each person will be indemnified in any
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, our best interests. Indemnification would
cover expenses, including attorney's fees, judgments, fines and amounts paid in
settlement.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and
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is, therefore unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by us of expense incurred or
paid by one of our directors, officers, or controlling persons 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, we
will, unless in the opinion of its counsel the matter has been settled by a
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 issues.
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PART II INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference
The documents listed below have been filed by us with the Commission
and are incorporated herein by reference:
(a) Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1998;
(b) Quarterly Report on Form 10-QSB for the periods ended June 30,
1999;
(c) All other reports filed by the Company pursuant to Section
13(a) and 15(d) of the Exchange Act since the Company's fiscal
year ended December 31, 1998.
All documents filed by us with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent hereto, but prior to
the termination of the offering of securities made by this prospectus shall be
deemed to be incorporated by reference herein and to be part hereof from their
respective dates of filing.
Any statement contained 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 or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this prospectus.
Item 4. Description of Securities
Our authorized capital stock consists of (i) 30,000,000 shares of
common stock, $.0001 par value per share; and (ii) 3,000,000 shares of preferred
stock, $.001 par value per share, of which 2,500 shares have been designated as
cumulative preferred stock, $.01 par value.
Common Stock
Holders of common stock are entitled to one vote per share on each
matter submitted to vote at any meeting of shareholders. Shares of common stock
do not carry cumulative voting rights and therefore, holders of a majority of
the outstanding shares of common stock will be able to elect our entire board of
directors. Our board of directors have authority, without action by our
shareholders, to issue all or any portion of the authorized but unissued shares
of common stock, which would have the effect of reducing our shareholders
percentage of ownership and diluting the book value of the common stock.
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Shareholders have no preemptive rights to acquire additional shares of
common stock. The common stock is not subject to redemption and carries no
subscription or conversion rights. In the event of our liquidation, the holders
of common stock are entitled to share equally in corporate assets after the
holders, if any, of preferred stock and after satisfaction of liabilities.
Holders of common stock are entitled to receive such dividends as our board of
directors may from time to time declare out of funds legally available for such
payment and after the cumulative dividend rights of the cumulative preferred
stock have been satisfied. We have never paid cash dividends on our common stock
and do not anticipate that we will pay dividends in the future.
Preferred Stock
We have authorized 2,500 shares of cumulative preferred stock, of which
10 shares are outstanding. The cumulative preferred stock does not have voting
rights. The cumulative preferred stock ranks above the common stock with respect
to dividend rights, liquidation, dissolution and redemption.
Item 5. Interests of Named Experts and Counsel
The legality of the shares offered hereby has been passed upon by
Silverman, Collura & Chernis, P.C. ("SCC"), 381 Park Avenue South, Suite 1601,
New York, New York 10016. Paul Chernis, a partner in SCC, is a director of the
Company and owns stock options to purchase 80,000 shares of common stock.
Item 6. Indemnification of Directors and Officers
Section 145 of the General Corporation Law of the State of Delaware and
Article 7 of our Certificate of Incorporation contain provisions for
indemnification of our officers, directors, employees and agents. The
Certificate of Incorporation requires us to indemnify such persons to the
fullest extent permitted by Delaware law. Each person will be indemnified in any
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, our best interests. Indemnification would
cover expenses, including attorney's fees, judgments, fines and amounts paid in
settlement.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of 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 us of expense incurred or paid by one of
our directors, officers, or controlling persons 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, we will, unless in
the opinion of its counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against
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public policy as expressed in the Securities Act and will be governed by the
final adjudication of such issues.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
5.1 Opinion of Silverman, Collura & Chernis, P.C.
10.1 Agreement with Isidor D. Friedenberg dated March 12, 1999
10.2 Agreement with Michael Martin dated August 26, 1999
23.1 Consent of Silverman, Collura & Chernis, P.C. (included in
Exhibit 5.1)
23.2 Consent of Rosenberg, Rich, Baker, Berman & Company
ITEM 9. UNDERTAKINGS
(a) The undersigned registrant hereby undertakes;
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to the Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933, as amended;
(ii) To 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 the Registration Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change of such information in the
Registration Statement;
Provided however that paragraphs (a)(1)(i) and (a)(1)(ii) shall not
apply to information contained in periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in this Registration Statement.
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(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof
(3) To remove from registration by means of a post effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(b) The undersigned registrant hereby undertakes that, 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 herein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(c) 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 foregoing provisions or otherwise, the
registrant has been advised that in the opinion of 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 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 is against public policy
as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
19
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, therewith duly
authorized, on August 26, 1999.
MAGNITUDE INFORMATION SYSTEMS, INC.
By: s\Steven D. Rudnik
--------------------------------------
Steven D. Rudnik, President
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below, hereby constitutes and appoints Steven D. Rudnik, his true and
lawful attorney-in-fact, with full power of substitution and resubstitution, for
his and in his name, place and stead, in any and all capacities, to sign any or
all amendments or supplements to this Registration Statement and to file the
same with all exhibits thereto and other documents in connection therewith, with
the Commission, granting unto said attorney-in-fact full power and authority to
do and perform each and every act and thing necessary or appropriate to be done
with respect to this Registration Statement or any amendments or supplements
hereto and about the premises, 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, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in their respective
capacities with Magnitude Information Systems, Inc. and on the dates indicated.
Signature Title Date
- --------- ----- ----
s\Steven D. Rudnik President, CEO and Director August 26, 1999
- ------------------------------ (Principal Executive Officer)
Steven D. Rudnik
s\Joerg H. Klaube Chief Financial Officer August 26, 1999
- ------------------------------- (Principal Financial Officer)
Joerg H. Klaube
s\Michael G. Martin Chairman of the Board August 26, 1999
- ------------------------------
Michael G. Martin
s\Paul Chernis Director August 27, 1999
- ------------------------------
Paul Chernis
s\Peter J. Buscetto Director August 26, 1999
- ------------------------------
Peter J. Buscetto
s\Seymour Kroll Director August 26, 1999
- ------------------------------
Seymour Kroll
20
<PAGE>
_______________________ Director August ____, 1999
John Duncan
PROFORM\REGSTATE\PLAN-899
21
EXHIBIT 5.1
[LETTERHEAD OF SILVERMAN, COLLURA 7 CHERNIS, P.C.]
August 30, 1999
Magnitude Information Systems, Inc.
50 Tannery Road
Branchburg, New Jersey 08876
Re: Registration Statement on Form S-8
Gentlemen:
We have acted as counsel to Magnitude Information Systems, Inc.
("Company"), a Delaware corporation, pursuant to a Registration Statement on
Form S-8, as filed with the Securities and Exchange Commission on August 27,
1999 ("Registration Statement"), covering 200,000 shares of the Company's Common
Stock, $.0001 par value ("Common Stock") issued pursuant to certain agreements.
In acting as counsel for the Company and arriving at the opinions as
expressed below, we have examined and relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein.
In connection with our examination we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, the
legal capacity of natural persons and the conformity to original documents of
all documents submitted to us as certified or photostated copies.
Based on the foregoing, and subject to the qualifications and limitations
set forth herein, it is our opinion that:
1. The Company has authority to issue the Common Stock in the manner
and under the terms set forth in the Registration Statement.
<PAGE>
Magnitude Information Systems, Inc.
August 27, 1999
Page 2
2. The Common Stock has been duly authorized and when issued,
delivered and paid for by recipients in accordance with their respective
terms, will be validly issued, fully paid and non-assessable.
We express no opinion with respect to the laws other than those of the
State of New York and Federal Laws of the United States of America, and we
assume no responsibility as to the applicability or the effect of the laws of
any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and its use as part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement. It is not to be used, circulated,
quoted or otherwise referred to for any other purpose.
Very truly yours,
SILVERMAN, COLLURA & CHERNIS, P.C.
s\Silverman, Collura & Chernis, P.C.
EXHIBIT 10.1
March 12, 1999
Isidor D. Friedenberg, Esq.
2 Cara Drive
Suffern, New York 10901
Re: Legal Services Agreement
Dear Dore:
This letter will memorialize our agreement regarding the payment to you
for legal services provided and to be provided during calendar year 1999 to
Magnitude Information Systems, Inc., previously known as Proformix Systems,
Inc., (the "Company") in the same manner and scope as you have provided to date
from the beginning of this calendar year.
In consideration of the aforesaid services you shall receive the sum of
$3,000 per month plus a non-accountable expense retainer of $800 per month plus
such additional out of pocket expenses as may be periodically authorized by the
company in advance. All of the foregoing sums shall be due and payable on a
bi-weekly basis.
As consideration for entering into this agreement, you shall receive from
the Company, immediately upon execution of this Agreement, 83,333 shares of the
Company's shares of common stock to be registered by the Company immediately but
no later than 30 days hereafter pursuant to Form S-8 Registration Statement plus
an option to purchase up to 50,000 shares of the Company stock at an exercise
price of $1.00 per share which option shall be exercisable from time to time
during a period of four (4) years from the date hereof and which shares
underlying said option shall be Registered as soon as may be practicable
hereafter either on Form S-8 or such other appropriate registration form or
statement but in no event shall such registration occur any later than 30 days
from the date hereof.
If the foregoing properly reflects our understanding, please so indicate
and date this agreement in the space provided below and return one fully
executed copy for our files. After the counter-execution of this Agreement, we
will issue and forward the necessary Company stock certificates and option form
to you as recited above.
An additional copy of this agreement is enclosed for your convenience.
Very truly yours,
MAGNITUDE INFORMATION SYSTEMS, INC.
BY : /s/ STEVE RUDNIK
-----------------
Steve Rudnik, President
AGREED AND ACCEPTED:
BY: /s/ ISIDOR D. FRIEDENBERG
-------------------------
Isidor D. Friedenberg
Dated: 3/12/99
EXHIBIT 10.2
MIS
MAGNITUDE
INFORMATION
SYSTEMS, INC.
August 26, 1999
Michael G. Martin
12 Tillman Court
Bridgewater, NJ 08807
Re: Agreement for Issuance of Equity in Lieu of Salary
--------------------------------------------------
Dear Michael:
This will confirm the verbal agreement reached between you and the Company
pursuant to which you will be issued 150,000 (one hundred fifty thousand) shares
of the common stock of Magnitude Information Systems, Inc. in lieu of cash
compensation for the period May 1, 1999, to December 31, 1999, wish such shares
to be registered on Form S-8. This transaction has been authorized by the Board
of Directors of the Company on April 1, 1999
Please acknowledge the above by signin and returning to us a copy of this letter
agreement.
MAGNITUDE INFORMATION SYSTEMS, INC.
By: /s/ Steven D.Rudnik
-----------------------------
Steven D.Rudnik, President
50 Tannery Road
Branchburg
New Jersey
08876
Phone:
(908) 534-6400
Fax:
(908) 534-9303
[LETTERHEAD OF ROSENBERG RICH BAKER BERMAN & COMPANY]
Independent Auditors' Consent
We hereby consent to the incorporation by reference of Form 10-KSB of our report
dated April 7, 1999 relating to the consolidated financial statements of
Magnitude Information Systems, Inc. and Subsidiaries (formerly Proformix
Systems, Inc. and Subsidiaries) in this Registration Statement on Form S-8, and
to the reference to our firm under the caption "Experts".
/s/ Rosenberg Rich Baker Berman & Company
-----------------------------------------
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
August 20, 1999
