As filed with the Securities and Exchange Commission on December 15, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
STRATEGIC SOLUTIONS GROUP, INC.
(Exact name of Registrant as specified in its charter)
Delaware 7371 11-2964894
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number)Identification No.)
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
John J. Cadigan
President and Chief Executive Officer
Strategic Solutions Group, Inc.
326 First Street, Suite 100
Annapolis, MD 21403
(410) 263-7761
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
Linda K. Rosenthal, Esquire
Dyer Ellis & Joseph
600 New Hampshire Ave., NW
Washington, D.C. 20037
(202) 944-3000
Approximate date of commencement of proposed sale to the public: As
soon as practicable after the Registration Statement becomes effective.
If any 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|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Proposed Maximum Proposed Maximum
Title of Each Class of Amount To Be Offering Price Aggregate
Securities To Be Registered Registered(1) Per Share(1) Offering Price Registration Fee
<S> <C> <C> <C> <C>
Common Stock, par value 1,382,248(3) $1.656 $2,289,003 $675.26
$0.0001 per share (2)..........
=============================== ===================== ====================== ====================== ==================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c), based on the average of the high
and low prices of the Common Stock on the Nasdaq SmallCap Market on
December 12, 1997.
(2) Registered for resale by the selling stockholder. See "Selling Stockholder."
(3) The amount to be registered consists of (i) a presently indeterminate
number of shares issuable to the Selling Stockholder upon the conversion of
the Registrant's 6% Convertible Subordinated Debentures, including an
indeterminate number of shares to cover accrued interest on the debentures,
and (ii) 40,000 shares of Common Stock issuable to the Selling Stockholder
upon the exercise of warrants, as such numbers may be adjusted in
accordance with Rule 416. The number of shares of Common Stock calculated
to be issuable in connection with the conversion of the debentures is based
on a price of $1.21 per share, which price is less than the average of the
high and low prices of the Common Stock on the Nasdaq SmallCap Market on
December 12, 1997 ($1.656).
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a)
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED DECEMBER , 1997
PROSPECTUS
STRATEGIC SOLUTIONS GROUP, INC.
1,382,248 Shares
Common Stock
This Prospectus relates to 1,382,248 shares of common stock, par value
$0.0001 per share (the "Common Stock"), of Strategic Solutions Group, Inc., a
Delaware corporation (the "Company"), that are issuable to the Selling
Stockholder (as defined herein) in connection with the conversion of $1,600,000
aggregate principal amount of the Company's 6% Convertible Subordinated
Debentures (the "Debentures") into a presently indeterminate number of shares
and the exercise of warrants to purchase 40,000 shares of Common Stock (the
"Warrants") (all of the Common Stock covered by this Prospectus being
hereinafter referred to as the "Shares"). All of the Shares offered hereby are
being offered on a continuous basis by the Selling Stockholder. See "Selling
Stockholder." The Company will receive none of the proceeds from the sale of the
Shares. Any proceeds received from the exercise of the Warrants, aggregating
$181,500 if all of the Warrants are exercised for cash, will be used by the
Company for general corporate purposes.
The number of shares issuable by the Company in connection with the
conversion of the Debentures is based upon the market price of the Common Stock
at the time of conversion. The 1,342,248 Shares calculated to be issuable in
connection with the conversion of the Debentures is based on a price of $1.21
per share of Common Stock, which is less than the average of the high and low
prices of the Common Stock on the Nasdaq SmallCap Market on December 12, 1997
($1.656), and includes the payment in Common Stock of interest due upon
conversion. See "Selling Stockholder." The number of shares available for
resale is subject to adjustment and could be materially greater or fewer than
such estimated amount depending on factors that cannot be predicted by the
Company at this time, including among others, the future market price of the
Common Stock. This presentation is not intended, and should not be construed,
to constitute a prediction as to the future market price of the Common Stock.
The Shares may be offered from time to time by the Selling Stockholder,
or by its pledgees, donees, transferees or other successors in interest, in
transactions (which may include block transactions) on the Nasdaq SmallCap
Market, the Boston Stock Exchange, the over-the-counter market, in private sales
or negotiated transactions, through the writing of options on Shares, 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. The Selling Stockholder may
effect such transactions by selling Shares to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the Selling Stockholder and the purchasers of
Shares for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions). The Company has agreed to indemnify the
Selling Stockholder against certain liabilities, including liabilities arising
under the Securities Act of 1933, as amended (the "Securities Act").
1
<PAGE>
The Common Stock is quoted on the Nasdaq SmallCap Market and listed on
the Boston Stock Exchange. On December 12, 1997, the average of the high and
low prices of the Common Stock on the Nasdaq SmallCap Market was $1.656 per
share.
See "Risk Factors" beginning on page 5 for certain
information that should be considered by
prospective investors.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January , 1998.
2
<PAGE>
NO DEALER, SALESMAN, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS IN CONNECTION WITH THE OFFERING CONTAINED HEREIN, AND, IF GIVEN
OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDER. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
TABLE OF CONTENTS
Summary of Offering..............................................4
Risk Factors.....................................................5
Incorporation of Certain Documents by Reference.................10
The Company.....................................................11
Use of Proceeds.................................................11
Selling Stockholder.............................................11
Experts.........................................................12
Legal Matters...................................................12
Available Information...........................................12
3
<PAGE>
SUMMARY OF THE OFFERING
The following summary information is qualified in its entirety by the
more detailed information appearing elsewhere in this Prospectus or which is
incorporated herein by reference.
Securities Offered................. 1,382,248 shares of Common Stock
consisting of (i) an indeterminate
number of shares of Common Stock
issuable upon conversion of the
Company's 6% Convertible Subordinated
Debentures, including interest due on
the Debentures, which is payable in
Common Stock at the Company's option,
and (ii) 40,000 shares issuable upon the
exercise of Warrants held by the Selling
Stockholder.
Shares of Common Stock
Outstanding...................... As of September 30, 1997, there were
1,733,839 shares of Common Stock issued
and outstanding.
Use of Proceeds.................... The Company will not receive any of the
proceeds from the sale of Common Stock
by the Selling Stockholder. The Company
will receive proceeds from the sale of
Common Stock to the Selling Stockholder
upon the exercise of the Warrants,
provided such exercise is not effected
pursuant to the cashless exercise provi-
sions of the Warrants. Such proceeds
will aggregate $181,500 if all of the
Warrants are exercised for cash and will
be used by the Company for general
corporate purposes. See "Use of
Proceeds."
Risk Factors....................... The Common Stock offered hereby is highly
speculative and involves a high degree
of risk. See "Risk Factors."
Nasdaq Symbol...................... SSGI
4
<PAGE>
RISK FACTORS
The Common Stock offered hereby is highly speculative in nature and
involves a high degree of risk. Prospective investors should carefully consider
the following risks and speculative factors inherent in and affecting the
business of the Company and the Common Stock prior to making an investment in
the Company. The Common Stock should not be purchased by investors who do not
have sufficient financial means to sustain the loss of their entire investment.
History of Operating Losses and Accumulated Deficits; Uncertainty
Regarding Achievement of Profitability; Going Concern Opinion. The Company has
incurred net losses in each of its reported fiscal years since inception. The
Company reported net losses of $3.8 million for the year ended December 31, 1996
and $1.6 million for the nine months ended September 30, 1997. The Company's
accumulated deficit through September 30, 1997 was $12.3 million. There is no
assurance the Company will ever achieve profitable operations. The Company's
independent accountants, in their report regarding the Company's financial
statements for the year ended December 31, 1996, indicated that, since the
Company has a history of recurring losses from operations, an accumulated
deficit and insufficient cash resources to fund planned operations, substantial
doubt exists as to the Company's ability to continue as a going concern.
Need for Additional Capital. The Company believes, based upon current
projections, that cash currently on hand should be sufficient to sustain current
operations and finance planned expansion through approximately June 1998. The
Company in all likelihood will be required to obtain additional financing in
order to sustain operations beyond that date. There can be no assurance that
such additional financing will be available or, if available, that it will be on
terms acceptable to the Company.
Possible Delisting of Common Stock from Nasdaq System. The Company's
Common Stock has been listed on the Nasdaq SmallCap Market since November 1993.
In order to continue to be listed on Nasdaq, the Company is required to maintain
$2 million in total assets ($2 million in net tangible assets under new listing
requirements that will go into effect in February 1998) and $1 million in total
capital and surplus. As of September 30, 1997, the Company's total assets were
approximately $2.8 million and its total capital and surplus and net tangible
assets were both approximately $1.6 million. The Company's net tangible assets
are likely to be less than the $2 million required by the new listing
requirements unless the Debentures are converted, and the Company cannot require
holders of the Debentures to convert the Debentures until October 1999. In
addition, continued listing currently requires two market markers, a minimum bid
price of $1.00 per share and a public float of 100,000 shares. The new listing
requirements will increase the public-float requirement to 500,000 shares having
a minimum market value of $1 million. The failure to meet the maintenance
criteria in the future may result in the delisting of the Common Stock from
Nasdaq, and trading, if any, in the Common Stock would thereafter be conducted
in the non-Nasdaq over-the-counter market. As a result of such delisting,
investors could find it more difficult to dispose of, or to obtain accurate
quotations as to the market value of, the Common Stock.
Risk Relating to Penny Stocks. If the Common Stock were to become
delisted from trading on the Nasdaq SmallCap Market, trading in the Common Stock
would become subject to the requirements of certain rules promulgated under the
Exchange Act that require additional disclosure by broker-dealers in connection
with any trades involving a stock defined as a penny stock (generally, any
non-Nasdaq equity security that has a market price of less than $5.00 per share,
subject to certain
5
<PAGE>
exceptions). Such rules require the delivery, prior to any penny stock
transaction, of a disclosure schedule explaining the penny stock market and the
risks associated therewith, and impose various sales practice requirements on
broker-dealers who sell penny stocks to persons other than established customers
and accredited investors (generally institutions). For these types of
transactions, the broker-dealer must make a special suitability determination
for the purchase and have received the purchaser's written consent to the
transaction prior to sale. If the Common Stock were delisted from Nasdaq, the
additional burdens imposed upon broker-dealers by such requirements may
discourage broker-dealers from effecting transactions in the Common Stock, which
could severely limit the market liquidity of the Common Stock and the ability of
holders to sell the Common Stock in the secondary market.
Uncertainty of Market Acceptance for Custom Software; Length and
Uncertainty of Software Marketing Efforts. The Company's custom software
products are designed to replace more traditional forms of written and
audiovisual materials used for training in the workplace. Although there is a
substantial market for workplace training materials and products, there is no
assurance that computer-based training materials such as those developed by the
Company will replace the more traditional forms on a large scale. In order to
operate on a profitable basis, the Company will be required to increase
substantially the number and size of new custom software development contracts.
Because the Company's custom software products usually replace existing
methods of doing business, marketing of its products is normally a costly,
time-consuming process. The Company frequently experiences a significant delay
(in some cases up to one year) between the time of initial sales contact and the
signing of a contract and, in many instances, the Company fails to obtain a
contract notwithstanding its marketing efforts. The substantial time and expense
required to procure contracts and the failure to obtain contracts from potential
customers that have been solicited may adversely affect the Company's cash flow
and create other operational problems. Procurement and retention of contracts is
also subject to the risk that customers may decide to develop their own custom
software internally or may cancel their contracts with the Company.
Competition. The markets for both the Company's custom software and its
systems integration and consulting services are highly competitive. The Company
competes with other companies that produce interactive training software and
other third-party suppliers of training and marketing materials, as well as
internal training departments of potential customers. In addition, the Company
expects competition from existing software companies and book publishers seeking
to broaden their product lines, and the continued improvement in computer
programming tools may enable businesses to develop their own training software
internally. There are also numerous providers of systems integration and
consulting services, as well as computer hardware resellers, in the markets in
which the Company currently operates and is likely to operate in the future.
Many of the Company's current and potential competitors have substantially
greater financial, technical, sales, marketing, and other resources, as well as
greater name recognition, than that of the Company.
Rapidly Changing Technology and Obsolescence. The markets for the
systems integration hardware, software and services provided by the Company are
characterized by rapid change, evolving industry standards and frequent
introduction of new products and services. New products generally are
characterized by improved function and frequently are offered at lower prices
than the products they are intended to replace. The introduction of products
including new technology may render the Company's products and services obsolete
and unmarketable. The ability of the
6
<PAGE>
Company's systems integration to remain competitive will depend upon the
Company's ability to maintain and develop relationships with providers of new
products and services that include new technology and that achieve levels of
quality, functionality and price acceptable to the market.
Relationship of U.S. Technologies, Inc. with Lotus Development
Corporation. The Company's wholly owned systems integration subsidiary, U.S.
Technologies, Inc. ("UST"), has been a Lotus Premium Partner since December
1994. Following the Company's acquisition of UST in July 1996, for the year
ended December 31, 1996, and the nine months ended September 30, 1997,
approximately 57% and 36%, respectively, of the Company's revenue was
attributable to UST sales of systems integration and support services provided
in connection with the implementation of Lotus related products by Lotus
products users. UST's status as a Premium Business Partner is reviewed on an
annual basis, and is subject to termination by Lotus Development Corporation at
any time. UST has been able to satisfy the requirement for maintaining such
status for the last two years and management believes that UST's relationship
with Lotus Development Corporation is satisfactory. Although UST intends to
continue to satisfy such requirements, there can be no assurance that it will be
able to do so. Termination of the Company's status as a Lotus Premium Business
Partner could have a material adverse effect on UST and consequently the
Company's results of operations.
Dependence on Limited Number of Customers. For the year ended December
31, 1996, and the nine months ended September 30, 1997, the Company's largest
customers in the aggregate accounted for approximately 10% (one) and 20% (two),
respectively, of the Company's total revenue. The loss of any of the Company's
major customers, or the inability to collect accounts receivable from one or
more of them, could adversely effect the Company's business, operating results,
and financial condition.
Limited Intellectual Property and Proprietary Rights. Under most of its
contracts, the Company regards its software as proprietary, in that title to and
ownership of its software generally reside with the Company. The Company grants
nonexclusive licenses to customers for software developed by the Company for
such customers. Like many software firms, the Company has no patents. The
Company attempts to protect its rights with a combination of copyright and trade
secret laws, and employee and third-party nondisclosure agreements. Despite
these precautions, it may be possible for unauthorized third parties to copy
certain portions of the Company's products or obtain and use information that
the Company regards as proprietary, such as source codes or programming
techniques that generate high-quality animation on low-end platforms.
As the number of software products increases and their functionality
further overlaps, the Company believes that software programs increasingly will
become the subject of infringement claims. Although the Company's products have
never been the subject of an infringement claim, there can be no assurance that
third parties will not assert infringement claims against the Company in the
future or that any such assertion may not require the Company to enter into
royalty arrangements or result in costly litigation.
Dependence on Key Personnel; Need for Additional Personnel. The Company
has employment agreements with John Cadigan, its chief executive officer, and
Peter Steele, president of UST, that expire on August 31, 1998 and July 14,
1999, respectively. The loss of their services or those of other key personnel
could have a material adverse effect on the Company. The Company also will be
required to attract and retain additional managerial, sales and marketing,
financial, and
7
<PAGE>
technical personnel in order to expand its business. There is no assurance the
Company can attract and retain qualified employees.
Fluctuations in Quarterly Operating Results. The Company's quarterly
operating results are subject to significant fluctuations, since sales of custom
commercial software products and services and systems integration services are
to a limited number of customers for individual projects and because of the
unpredictability of contract awards and timing of payment thereunder. Such
fluctuations may increase in the future as the Company attempts to secure larger
contracts.
No Product Liability Insurance. The Company could be subject to product
liability claims in connection with the use of its products. There can be no
assurance that the Company would have sufficient resources to satisfy any
liability resulting from these claims or would be able to have its customers
indemnify or insure the Company against such claims. The Company currently does
not carry product liability insurance and there can be no assurance that such
coverage, if obtainable, would be adequate in terms and scope to protect the
Company against material adverse effects in the event of a successful product
liability claim.
Outstanding Options and Warrants, Convertible Debentures--Potential
Further Dilution to Stockholders. As of the date of this Prospectus, there
are outstanding options and warrants to purchase an aggregate of 343,522
shares of Common Stock with exercise prices ranging from $4.4375 to $39.20 per
share, not including the Warrants. The terms upon which the Company may
be able to obtain additional equity capital may be adversely affected by such
options and warrants, because the holders thereof can be expected to exercise
them at a time when the Company would, in all likelihood, be able to obtain
any needed capital on terms more favorable to the Company than those provided
by the terms of such warrants or options. In connection with the acquisition of
UST, the Company has reserved for issuance to the former 100% owner of UST
and UST's key employees up to an aggregate of 51,780 shares of Common
Stock, provided certain financial milestones are met by UST.
The exact number of shares of Common Stock issuable upon conversion of
the Debentures cannot be estimated with certainty because, generally, such
issuances of Common Stock will vary inversely with the market price of the
Common Stock at the time of such conversion and there is no cap on the number of
shares of Common Stock that may issuable. The number of shares of Common Stock
issuable upon conversion of Debentures is also subject to various adjustments to
prevent dilution resulting from stock splits, stock dividends or similar trans-
actions.
Anti-Takeover Provisions. The Certificate of Incorporation and By-Laws
of the Company contain provisions which provide for up to three-year terms for
the directors of the Company and the election of such directors on a staggered
basis. In addition, in certain circumstances, Delaware law requires the approval
of two-thirds of all shares eligible to vote for certain business combinations
involving a stockholder owning 15% or more of the Company's voting securities,
excluding the voting power held by such stockholder. Furthermore, Mr. Cadigan's
employment contract provides for a lump sum payment of 299% of his base salary
in the event of a change in control of the Company and his subsequent
termination without cause. In addition to the potential impact on future
takeover attempts and the possible perpetuation of management, the existence of
each of the above provisions and employment agreement could have an adverse
effect on the market price of the Common Stock.
No Dividends and None Anticipated. The payment by the Company of
dividends, if any, in the future rests within the discretion of its Board of
Directors and will depend, among other things, upon the Company's earnings, its
capital requirements and its financial condition, as well as other relevant
factors. The Company has not paid or declared any dividends upon its Common
Stock since its inception and does not contemplate or anticipate making any
distributions with respect to its Common Stock in the foreseeable future.
8
<PAGE>
Possible Volatility of Stock Prices. Although the Common Stock has been
traded on the Nasdaq SmallCap Market and Boston Stock Exchange since November
1993, the Common Stock has generally been traded on a limited basis and in small
volumes. The trading price for the Common Stock may be significantly affected by
such factors as the operating results of the Company, the United States and
global economic conditions, and various other factors generally affecting the
computer software industry. Furthermore, the stock market has from time to time
experienced extreme price and volume fluctuations that have particularly
affected the market prices of the stocks of small and emerging growth companies
traded on the Nasdaq SmallCap market. These extreme fluctuations, which often
have been unrelated to the operating performance of any particular company or to
any group of companies, may adversely affect the market price of the Common
Stock.
9
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission by the Company
are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996.
2. The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, June 30, and September 30, 1997.
3. The Company's Current Report on Form 8-K dated November 17, 1997.
4. The description of the Company's Common Stock contained in the
Prospectus included in the Company's Registration Statement on
Form SB-2 under the Securities Act (File No. 33-97776),
incorporated by reference into the Company's Registration
Statement on Form 8-A under the Securities Exchange Act of
1934, as amended (the "Exchange Act").
All documents filed by the Company pursuant to Sections 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 shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of filing
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document that also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company hereby undertakes to provide without charge to each person
to whom this Prospectus is delivered, on the written or oral request of any such
person, a copy of any and all of the documents described above, other than
exhibits to such documents, unless such exhibits are specifically incorporated
by reference therein. Requests should be directed to: Strategic Solutions Group,
Inc., Suite 100, 326 First Street, Annapolis, Maryland 21403, telephone (410)
263-7761.
10
<PAGE>
THE COMPANY
The Company is a full-service provider of technology-based solutions
and computer systems integration and support services, including the sale of
hardware and software products, specializing in the development and marketing of
software applications related to work group and work flow computing solutions
and custom interactive multimedia software. The Company's software is intended
to replace or supplement technical manuals and operating documentation for
equipment, machinery, and industrial processes and to provide alternative
methods of delivering employee training and sales and marketing presentations.
Engaged in the development of software since 1989, the Company, through two
acquisitions in 1996, expanded its operations, first into the development and
marketing of interactive multi-media software for business communications and
consumer publishing, and thereafter into the provision of computer systems
integration and consulting services and remarketing of computer hardware.
Recent Developments. In September 1997, the Company's Board of
Directors announced tentative plans to distribute all or a portion of the shares
of stock of the Company's wholly owned subsidiary, UST, to the Company's
stockholders. It is anticipated that UST would become an independent,
stand-alone company that eventually would qualify for listing on the Nasdaq
SmallCap Market. This plan is dependent upon completion of final negotiations
between management of UST and the Company, and approval by the Boards of
Directors of both companies.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Shares by
the Selling Stockholder. The aggregate cash exercise price of all of the
Warrants is $181,500. Provided the exercise of the Warrants is effected for
cash, any proceeds received by the Company from such exercise will be used for
general corporate purposes.
SELLING STOCKHOLDER
The Selling Stockholder will have acquired the Shares offered hereby
upon conversion of the Debentures and exercise of the Warrants. As described
below, an indeterminate number of shares of Common Stock are issuable upon
conversion of the Debentures and 40,000 shares of Common Stock are issuable upon
exercise of the Warrants. The Debentures and the Warrants were issued to the
Selling Stockholder, effective October 31, 1997. The Warrants are exercisable by
the Selling Stockholder at any time through October 31, 2002 at an exercise
price of $4.5375 per share of Common Stock.
The following table shows the name of the Selling Stockholder, the
number of shares of Common Stock owned by the Selling Stockholder as of the date
of this Prospectus (consisting of shares that may be acquired upon conversion of
the Debentures and exercise of the Warrants), the number of shares to be sold by
such Selling Stockholder, and the number of shares to be owned by the Selling
Stockholder after the Offering (assuming the sale of all of the Shares offered
hereby).
11
<PAGE>
SHARES
SHARES SHARES TO BE OWNED
NAME OWNED TO BE SOLD AFTER OFFERING
Supermex Trading 1,382,248 1,382,248 0
Company, Ltd.
The shares owned and to be sold consist of (i) an indeterminate number of shares
of Common Stock issuable upon conversion of the Debentures, and (ii) 40,000
shares issuable upon the exercise of Warrants. The number of shares issuable by
the Company in connection with the conversion of the Debentures is based upon
the lesser of (i) $4.125 per share, which was the average market price of the
Company's Common Stock on the five trading days immediately preceding the date
the Debentures were issued, and (ii) 80% of the average market price of the
Common Stock on the five trading days immediately preceding the date of
conversion, but not less than the applicable floor price as set forth in the
Debenture. The 1,342,248 Shares calculated to be issuable in connection with the
conversion of the Debentures is based on a price of $1.21 per share of Common
Stock, which is less than the average of the high and low prices of the Common
Stock on December 12, 1997 ($1.656), and includes the payment in Common Stock
of interest due upon conversion. Such interest is payable in Common Stock at
the option of the Company.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1995 and 1996 and for the years then ended included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996, which are
incorporated herein by reference, have been incorporated herein in reliance upon
the report, which includes an explanatory paragraph regarding the Company's
ability to continue as a going concern, of Coopers & Lybrand L.L.P., independent
accountants, upon the authority of said firm as experts in accounting and
auditing.
LEGAL MATTERS
The legality of the Common Stock offered hereby will be passed upon for
the Company by Palmarella & Sweeney, P.C., 993 Old Eagle School Road, Suite 415,
Wayne, PA 19087.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Exchange
Act, and in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission") and with the National
Association of Securities Dealers, Inc. (the "NASD"). Reports and other
information filed by the Company with the Commission can be inspected and copied
at the Commission's public reference facilities, 450 Fifth Street, N.W., Room
1024, Washington, D.C. 20549, as well as at the Commission's regional offices
located at 7 World Trade Center, New York, New York 10007 and Northwest Atrium
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of
such material may be obtained from the Public Reference Section of the
Commission at prescribed rates. The Commission maintains an Internet web
12
<PAGE>
site that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the Commission that
is located at: http://www.sec.gov. In addition, reports and other information
concerning the Company also may be inspected at the offices of the NASD, 1735 K
Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement under
the Securities Act, with respect to the shares of Common Stock offered hereby.
As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information set forth in the Registration Statement. The omitted
information may be inspected without charge at the offices of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, and copies of such information
may be obtained upon payment of the fees prescribed by the Commission. For
further information pertaining to the shares of Common Stock offered hereby,
reference is made to the Registration Statement, including the exhibits and
schedules filed as a part thereof.
13
<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth all expenses payable in connection with
the registration of the Common Stock that is the subject of this Registration
Statement, all of which shall be borne by the Company. All the amounts shown are
estimates, except for the Securities and Exchange Commission filing fee.
To Be Paid By
Registrant
Securities and Exchange Commission Registration Fee $ 675.26
Printing and engraving expenses 500.00
Legal fees and expenses 20,000.00
Accounting fees and expenses 6,000.00
Miscellaneous 3,500.74
----------------
Total $ 30,176.00
================
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law (the "DGCL")
permits a corporation to indemnify its directors, officers, employees and other
agents under certain circumstances and subject to certain limitations. The
Company's Bylaws provide that the Company shall indemnify its directors and
officers under the circumstances specified in the DGCL and gives authority to
the Company to purchase insurance with respect to such indemnification.
The Company has entered into indemnification agreements (the
"Indemnification Agreements") with certain officers and directors. Each
Indemnification Agreement provides, among other things, for: (i) indemnification
by the Company of such individual to the fullest extent permitted by the law as
of the date of the Indemnification Agreement against any and all expenses,
judgments, fines, and amounts paid in settlement of any claim against an
indemnified party (the "Indemnitee") unless it is determined, as provided in the
Indemnification Agreement, that the indemnification is not permitted under the
law; and (ii) the prompt advancement of expenses to any Indemnitee in connection
with his or her defense against any threatened or pending claim. Similar
indemnification agreements may from time to time be entered into with additional
officers of the Company or certain other employees or agents of the Company.
Item 16. Exhibits.
(a) The following is a list of exhibits furnished:
4.1 Registration Rights Agreement dated as of October 22, 1997 between
the Company and the Selling Stockholder (incorporated by reference to
Exhibit 10.3 of the Company's Form 8-K dated October 31, 1997).
5.1 Opinion of counsel as to legality of securities being registered.
14
<PAGE>
23.1 Consent of counsel (contained in opinion of counsel filed as
Exhibit 5.1).
23.2 Consent of Coopers & Lybrand L.L.P.
Item 17. 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 this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or
any material change to such information in the Registration Statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply
if the information required to be included in a post-effective amendment
by those paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new Registration Statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination
of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer, or controlling
15
<PAGE>
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
16
<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 Annapolis, Maryland on December 15, 1997.
STRATEGIC SOLUTIONS GROUP, INC.
By:/s/ JOHN J. CADIGAN
John J. Cadigan
Chief Executive Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Strategic Solutions
Group, Inc., hereby severally constitute and appoint John J. Cadigan and Suzanne
C. Brown, and each of them, our true and lawful attorneys-in-fact and agents,
with full power of substitution and re-substitution, for us and in our stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement and all documents relating thereto,
and to file the same, with all exhibits thereto, and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing necessary or advisable to be done in
and about the premises, as fully as he or she might or could do in person,
hereby ratifying and confirming all that said attorneys-in-fact and agents, or
any of them, or their substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ JOHN J. CADIGAN Chairman of the Board and December 15, 1997
- --------------------------------
John J. Cadigan Chief Executive Officer
/s/ SUZANNE C. BROWN Chief Financial Officer December 15, 1997
- -----------------------------
Suzanne C. Brown
/s/ A. DAVID ROSSIN Director December 15, 1997
A. David Rossin, Ph.D.
</TABLE>
17
Exhibit 5.1
Palmarella & Sweeney, P.C.
993 Old Eagle School Road, Suite 415
Wayne, PA 19087
December 15, 1997
Strategic Solutions Group, Inc.
326 First Street
Annapolis, MD 21403
Ladies and Gentlemen:
We are general counsel to Strategic Solutions Group, Inc., a Delaware
Corporation (the "Company"). We have assisted the Company is preparing and
filing a Registration Statement on Form S-3 under the Securities Act of 1933, as
amended (the "Registration Statement"), relating to the registration of
1,382,248 shares of common stock, par value $0.0001 per share, of the Company
(the "Common Stock"), that are issuable to the Selling Stockholder (as defined
in the Registration Statement) in connection with conversion of $1,600,000
aggregate principal amount of the Company's 6% Convertible Subordinated
Debentures (the "Debentures") into a presently indeterminate number of shares
and the exercise of warrants to purchase 40,000 shares of Common Stock (the
"Warrants") (all of the Common Stock covered by this Prospectus being
hereinafter referred to as the "Shares").
In rendering this opinion, we have examined the Securities Purchase Agreement
and related agreements (including all exhibits and appendices thereto) with the
Selling Stockholder and the Company effective October 31, 1997 (the
"Agreements"), the Company's Certificate of Incorporation, Bylaws, as amended to
date, Certificate of Good Standing in the State of Delaware, Certificates of
Authority and Good Standing in the State of Maryland, oral representations of
the Company's Chief Executive Officer taken in connection with entering into the
Agreements and the preparation and filing of the Registration Statement, and
such of the Company's documents, records, certificates, papers and legal matters
as we deem necessary to form the basis for our opinion as expressed herein.
Based upon the foregoing, we are of the opinion that the Shares have been duly
authorized and, when issued after payment of the entire amount of the
consideration upon exercise of the Warrants, and upon conversion of the
Debentures and payment of interest due thereunder in Common Stock, will be
validly issued, fully-paid, and non-assessable under the laws of the State of
Delaware, provided there is an absence of fraud in the transaction.
The foregoing opinion is limited to matters governed by the business corporation
law of the State of Delaware, in force on the date of this opinion. This opinion
is rendered as of the date hereof and is applicable only the matters
specifically referenced in this opinion. We have no responsibility to update
this opinion and disclaim any continuing responsibility for matters occurring
after the date of this opinion. This opinion is rendered solely for your benefit
in connection with the Registration Statement on Form S-3 respecting the Shares
and may not be relied upon, quoted or used by any other person or entity for any
other purpose without the prior consent of a principal of this firm.
We consent to the filing of this opinion as an Exhibit to the Registration
Statement on Form S-3 relating to the sale of the Shares.
Very truly yours,
PALMARELLA & SWEENEY, P.C.
/s/ Ernest D. Palmarella
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Registration Statement of
Strategic Solutions Group, Inc. on Form S-3 of our report, which includes an
explanatory paragraph regarding the Company's ability to continue as a going
concern, dated March 28, 1997, on our audits of the consolidated financial
statements of Pacific Animated Imaging Corporation (the former name of Strategic
Solutions Group, Inc. under which the herein referenced Form 10-KSB was filed)
as of December 31, 1995 and 1996, and for the years then ended, which report is
included in the Pacific Animated Imaging Corporation Annual Report on Form
10-KSB for the year ended December 31, 1996. We also consent to the reference to
our firm under the caption "Experts".
/s/ Coopers & Lybrand L.L.P.
December 15, 1997
McLean, Virginia
