As filed with the Securities and Exchange Commission on May 21, 1998
Registration No. 33-32476
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
PRE-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3
REGISTRATION STATEMENT NO. 33-32476
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------
Celerity Solutions, Inc.
(Exact name of registrant as specified in its charter)
Delaware 52-1283993
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
200 Baker Avenue, Suite 300
Concord, MA 01742
(Address, Including Zip Code of Registrant's Principal Executive Offices)
----------
Edward Terino
Chief Financial Officer
Celerity Solutions, Inc.
200 Baker Avenue, Suite 300
Concord, MA 01742
978/287-5888
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this registration statement.
If any of the securities are 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.
[ ]
1
<PAGE>
Calculation of Registration Fee
Proposed Proposed
Title of Maximum Maximum
Securities Amount to Offering Aggregate Amount of
to be be Regis- Price Per Offering Registra-
Registered tered(1) Share (2) Price (2) tion Fee
- ---------- --------- ---------- ----------- --------
Common 254,930 $2.563 $653,385.59 $192.75
Stock, $.10 shares
Par Value
Series A Warrants
(1) Pursuant to Rule 416, there are also being registered an indeterminate
number of shares of Common Stock as may become issuable pursuant to
anti-dilution provisions of the Series A Warrants.
(2) Pursuant to Rule 457 under the Securities Act of 1933, as amended, the
proposed maximum offering price per share and the proposed maximum aggregate
offering price are estimated solely for purposes of calculating the registration
fee and are based upon the closing price of the Common Stock of the Registrant
on the Nasdaq National Market System on May 15, 1998.
2
<PAGE>
Pursuant to Rule 429 under the Securities Act of 1933, as amended, the
prospectus included herein constitutes a combined a prospectus relating to
254,930 shares of Common Stock included in the Registrant's Post Effective
Amendment No. 6 on Form S-3 to Form S-18 as filed with the Securities and
Exchange Commission on Registration Statement number 33-45725-A, and constitutes
Pre-Effective Amendment No. 1 to Form S-3 as filed with the Securities and
Exchange Commission on Registration Statement number 33-32476.
3
<PAGE>
PROSPECTUS
Celerity Solutions, Inc.
254,930 Shares Common Stock
($0.10 par value per share)
This Prospectus relates to the sale of up to 254,930 shares (the "Shares")
of Common Stock, par value $0.10 per share (the "Common Stock"), of Celerity
Solutions, Inc. (the "Company"), issuable upon exercise of the Series A Warrants
(the "Warrants") of the Company which were sold to the public as part of the
Company's initial public offering which commenced on March 31, 1992.
Each Warrant entitles the holder thereof to purchase 1.74 Shares of Common
Stock at an exercise price of $3.57 per share during the period commencing on
March 31, 1993, and ending on March 31, 1999, subject to extension by the
Company. The Warrants are redeemable by the Company on an all or nothing basis
at a redemption price of $0.01 per Warrant, upon 30 days written notice,
commencing on June 30, 1993, at such time as the market price of the Common
Stock has exceeded the Warrant exercise price by 10% for a period of 20
consecutive business days, provided, however, that the holder may exercise the
Warrant at any time prior to the expiration of the 30-day redemption notice
period. As of the date of this Prospectus, 344,500 Warrants were outstanding.
The Company's Common Stock and Series A Warrants are quoted on the NASDAQ
Small Cap Market under the symbols "CLTY" and "CLTYW," respectively. The last
reported sales price of the Company's Common Stock and Series A Warrants as
reported on The NASDAQ Stock Market on May 15, 1998 was $2.563 and $0.938,
respectively.
See "Risk Factors" on pages 6 to 10 for a description of certain risks
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 COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SUBJECT TO COMPLETION; DATED May 21, 1998
Information contained here in is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
4
<PAGE>
----------
This Prospectus contains forward-looking statements that involve risks and
uncertainties. The Company's actual results may differ significantly from the
results discussed in the forward-looking statements. Factors that might cause
such differences include, but are not limited to, those discussed in "Risk
Factors" and the Company's periodic reports incorporated by reference herein.
The date of this Prospectus is May 21, 1998.
5
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities and
Exchange Act of 1934, as amended (the "Exchange Act"), and has filed reports,
proxy statements, and other information with the Securities and Exchange
Commission (the "Commission") in accordance therewith. Such reports, proxy
statements, and other information filed by the Company are available for
inspection and copying at the public reference facilities of the Commission at
Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 10549 or at
the Commission's Regional Offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048, and at Citicorp Center, 500 West Madison
Street, 14th Floor, Chicago, Illinois 6066l. Copies of such material may be
obtained by mail from the Public Reference Section of the Commission at 450
Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, at prescribed
rates. The Commission maintains a Website that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission. This information can be obtained at
http://www.sec.gov.
The Company filed with the Commission a registration statement on Form S-18
(together with all amendments and exhibits, the "Registration Statement") under
the Securities Act of 1933, as amended ("Securities Act"), with respect to the
shares of Common Stock offered hereby. This Prospectus (the "Prospectus"), which
constitutes a part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information, reference is made to such
Registration Statement and exhibits. Statements made in this Prospectus as to
the content of any contract, agreement, or other document referred to are not
necessarily complete. With respect to each such contract, agreement or other
document filed as an exhibit to the Registration Statement, reference is made to
the Registration Statement, each such statement being qualified in all respects
by such reference, which may be inspected and copied in the manner and at the
sources described above.
RISK FACTORS
Limited Operating History in the Supply Chain Management Software
Industry: Starting in April 1997, the Company shifted its focus from consumer to
business software and is in the process of transitioning business operations
into a new industry. Somerset Automation, Inc. ("SAI") and Client Server
Technology, Inc. ("CSTI") which were recently acquired by the Company, have
combined, more than 20 years of experience in this industry, however, the
Company itself has a limited operating history in the supply chain management
software industry. There can be no assurance that the Company will be successful
in managing the transition and identifying acquisition candidates to expand
operations and add product offerings.
Lack of Profitability: The Company has had a history of losses. With the
exception of the fiscal years ended March 31, 1996, the Company has not had a
profitable year since its inception in 1982. With the acquisitions of SAI and
CSTI, management believes it has repositioned the Company for growth in an
expanding industry. However, there can be no assurance that the Company will be
able to achieve and sustain any level of profitability.
6
<PAGE>
Sustaining a Public Trading Market: The publicly traded stock of the
Company is thinly traded there can be no assurance that an active trading market
for the Company's stock will develop in the near future, or if developed, that
such a market will be sustained. In the absence of an active public market, an
investor may be unable to liquidate his investment in the Company. The market
price of the Company's Stock may be adversely affected by factors that may or
may not relate to the Company's performance. Such factors may include the
announcement or introduction of new hardware platforms or software products by
the Company's competitors, as well as conditions in the supply chain management
software industry, the stock market and the economy in general.
Dependence on New Products and Rapid Technological Change: The market for
the Company's products is characterized by rapidly changing technologies,
frequent new product introductions, rapid changes in customer requirements and
evolving industry standards. The Company's success is largely dependent on its
ability to develop new products and to lengthen the life cycle of current
products through upgrades and enhancements. It must continually evaluate and
adapt its products to emerging hardware platforms and technologies. There can be
no assurance that the Company will be able to develop and market new products or
product enhancements that respond to technological change or evolving industry
standards, that new products will be released on schedule, or that released
products will achieve any degree of market acceptance. The inability, for
technological or other reasons, to successfully develop and introduce new
products or product enhancements could have a material adverse effect on the
Company's business and its operating results and financial condition.
Risk of Software Errors or Failures: The Company's software products may
contain undetected errors when first introduced or when new versions are
released. There can be no assurance that, despite testing of the Company's
products, errors will be detected in new products or subsequent releases,
resulting in the loss of or a delay in market acceptance which could have a
material adverse effect on the Company's business and its operating results and
financial condition.
Competition: The supply chain management software industry is intensely
competitive. The Company's competitors in the supply chain management software
industry include small and large companies, which offer various solutions in
different segments of the supply chain. Many competitors have substantially
greater financial, technical, marketing and distribution resources, greater name
recognition and a larger base of customers than the Company. Existing
competitors may continue to broaden their product lines and potential
competitors, including computer manufacturers or software developers, may enter
the market or increase their focus and resources on products and product lines
which compete with the Company's products. An increasing number of competitive
products may result in an inability to distribute or sell products, increased
development, marketing and distribution costs, and additional pricing pressures,
any of which could have a material adverse effect on the Company's operating
results. Furthermore, current and potential competitors may make acquisitions of
other competitors or may establish cooperative relationships among themselves or
with third parties to increase the ability of their products to address the
needs of the Company's prospective customers. Therefore, it is possible that new
competitors may emerge and acquire significant market share. This
7
<PAGE>
could have a material adverse effect on the Company's business and its operating
results and financial condition.
Lack of Product Diversification: The Company's future results depend on
continued market acceptance of supply chain management software, as well as, the
Company's ability to adapt and modify such software to meet the evolving needs
of its customers. Any reduction in demand or increase in competition could have
a material adverse effect on the Company's business and its operating results
and financial condition.
Dependence on Certain Distribution Channels: The Company's future success
in the supply chain management software industry depends upon the successful
expansion of the Company's marketing, sales, support and service organizations,
as well as its ability to establish alternative distribution channels, including
resellers, systems integrators and application software vendors. The Company has
formal and informal relationships with a number of third-party software and
hardware vendors and consulting and system integration firms. Such firms include
Hewlett Packard, Microsoft, Digital Equipment Corp., COGNOS, Business Forecast
Systems, The Orion Group Software Engineers, Inc., Oracle Corporation,
Information Industries, Inc., Telxon Corporation, and Sqribe Technologies. There
can be no assurance that the Company will be able to expand its marketing,
sales, support and service organizations or develop additional distribution
channels on a timely basis. In addition, the Company's arrangements with these
firms are not exclusive and, in many cases, may be terminated by either party
without cause, and many of these firms also distribute products, which compete
with those offered by the Company. Therefore, there can be no assurance that any
firm will continue its involvement with the Company and its products, and the
loss of important firms could have a material adverse effect on the Company's
business and its operating results and financial condition.
Proprietary Intellectual Property Rights: The Company regards the software
it owns as proprietary and relies primarily on a combination of copyrights,
trademarks, trade secret laws, employee and third party nondisclosure agreements
and other methods to protect its proprietary intellectual property rights. There
can be no assurances that the Company's competitors will not independently
develop products that are substantially equivalent or superior to the Company's
products. Most of the Company's products do not include any mechanisms to
prevent or inhibit unauthorized copying, nor does the Company rely on
shrink-wrap licenses which restrict copying and use of the products. The Company
is aware that unauthorized copying occurs within the software industry and that
if a significant amount of unauthorized copying of the Company's products were
to occur, the Company's business and operating results could be adversely
affected. As the number of software products increase and the functionality of
these products further overlaps, software developers may become increasingly
subject to infringement claims. Although there are currently no infringement
claims against the Company, there can be no assurance that third parties will
not assert infringement claims against the Company with respect to current or
future products, or that any such assertion will not require the Company to
enter into royalty arrangements or incur significant litigation costs.
8
<PAGE>
Integration of Acquisitions: The Company acquired CSTI and SAI in 1997. The
Company may pursue acquisitions of other companies with potentially
complementary product lines, technologies and businesses in the future. The
current management of the Company and several members of CSTI's and SAI's
management had a history of successful integrations of software companies and
successful development and integration of supply chain management software.
However, acquisitions involve a number of risks and difficulties, including
technology acceptance, expansion into new geographic markets and business areas,
the diversion of management's attention, the assimilation of the operations and
personnel of the acquired companies and the integration of the acquired
companies' business and financial processes with those of the Company. There can
be no assurance that the Company will successfully integrate the operation of
CSTI or SAI or other acquired businesses, which could have a material adverse
effect on the Company' business, operating results and financial condition.
Key Employees: The Company believes its future success will depend, in
part, upon continued service of a small number of key technical and senior
management personnel and on its continued ability to recruit and retain
highly-skilled management and technical personnel. Competition for such
employees is intense and the loss of services of key personnel could have a
material adverse effect on the Company's operating results and financial
condition. There can be no assurance that the Company will retain its key
managerial and technical employees or that it will be successful in attracting
and retaining other highly-skilled managerial and technical resources.
Quarterly Fluctuations And Seasonality: The Company's software products
revenues are difficult to forecast because the market for business application
software products is evolving rapidly, and the Company's sales cycles vary
substantially from customer to customer. The Company's revenues, in general, are
relatively difficult to forecast due to a number of reasons, including, but not
limited to, the following: (i) the relatively long sales cycle for the Company's
products, (ii) the size and timing of individual licensing transactions, (iii)
the timing of the introduction of new products or product enhancements by the
Company or its competitors, (iv) the potential for delay or deferral of customer
implementations of the Company's software, (v) changes in customer budgets, and
(vi) the seasonality of technology purchases and other general economic
conditions. The level of net sales realized by the Company in any quarter is
principally dependent on the number of new Continuum software licenses sold and
the number of titles shipped for published consumer software titles. The
purchase of supply chain management solutions requires a significant commitment
of capital and resources on the part of the customer, the sales cycles are long
and average from six to nine months. As a result, revenue recognition is subject
to many risks such as budgetary cycles, changes in the business of a customer
and overall economic trends that are not controllable by the Company. Quarterly
results have varied significantly in the past and are likely to fluctuate in the
future as a result of new orders timing, product development expenditures, the
number and timing of new product completions, and multimedia product shipments
and returns. A significant portion of the Company's operating expenses are fixed
and planned expenditures in any given quarter are based on sales and revenue
forecasts. Accordingly, if net sales do not meet the Company's expectations in
any given quarter, operating results and financial condition could be adversely
and disproportionately affected because a significant portion of the Company's
expenses do not vary with revenues. As a result of
9
<PAGE>
these and other factors, the Company's results of operations and financial
condition for any period are inherently difficult to predict. Any significant
change from levels expected by securities analysts or shareholders could result
in substantial volatility in the trading price of the Company's common stock.
Absence of Dividends: It is unlikely that the Company will declare or pay
cash dividends in the foreseeable future. The Company intends to retain
earnings, if any, to expand its business operations.
International Operations: The Company's international operations are
subject to risks inherent in international business activities, including
management and staffing of an organization spread over various countries, longer
account receivable payments abroad, compliance with foreign law, unexpected
changes in regulatory requirements, different tax structures, foreign currency
exchange rate fluctuations and general economic and political conditions.
RECENT DEVELOPMENTS - THE COMPANY
The Company has been in existence since 1982, going public in 1992, as
Capitol Multimedia, Inc. In 1997, the Company changed its name to Celerity
Solutions, Inc., and transformed itself from a multimedia publisher to a supply
chain management software provider. Supply chain management encompasses the
planning and control of material and resources from customer order entry through
warehousing and logistics to customer delivery.
In March 1997, the Company acquired CSTI, a privately held developer and
integrator of supply chain management software. This acquisition provided the
Company an entry into the supply chain management sector of the business
software market.
In April 1997, the Company sold selected multimedia assets to Davidson, a
division of Cendant, Inc. The Company retained all rights to its fourteen(14)
multimedia CD-ROM products currently on the market, three (3) new CD-ROM titles,
all software tools and engines, and software development capabilities in the
United States and Russia.
In August 1997, the Company established Paragon, a limited liability
company in St. Petersburg Russia as a wholly owned subsidiary. Paragon develops
software for the Company. Paragon has retained the services of 10 technical
personnel some of whom were employed by the Company's subsidiary AMI, which was
sold in April 1997.
On December 8, 1997, the Company acquired all of the outstanding stock of
SAI, a privately held warehouse management software company based in Irvine,
California by means of a merger between SAI and Somerset Solutions, Inc. a
wholly owned subsidiary of the Company. SAI is a profitable technology leader in
the warehouse management software market. SAI had approximately $4.5 million in
annual revenue in 1997. Somerset's warehousing product, combined with the
Company's existing supply chain management product, creates a more powerful
product line which
10
<PAGE>
enables control of inventory and resources not only between locations in the
supply chain but through warehouses as well. This capability positions the
Company to provide integrated warehouse and supply chain management software for
the middle market. Somerset's warehouse management software, WMS 4.0, is
client-server based, highly flexible, user configurable, and supports single and
multiple facility enterprises. Modules include Inventory Control, Inventory
Management, Inbound Processing, and Workload Management.
On February 1, 1998 the Company sold the rights to six juvenile multimedia
software programs, collectively known as the "Magic Tales" titles to Davidson &
Associates, Inc., a subsidiary of Cendant, Inc.
Marketed under the name "Continuum," the Company's applications are grouped
into three primary modules: Planning (demand planning, supply chain planning,
and finite capacity scheduling), Distribution/Financial Execution (sales order
management, purchase order management, inventory control, accounts payable,
accounts receivable, and general ledger), and Warehousing. The client/server
applications run on Windows NT and UNIX platforms and support relational
database systems including Oracle, CA-OpenIngres, and Sybase.
Since the Company's April 1997 sale of select multimedia assets to
Davidson, the March 1997 acquisition of CSTI, and the December 1997 acquisition
of SAI, the Company has focused principally on the business software market.
Existing multimedia software titles continue to be sold through its distribution
channels that were established prior to the divestiture. However multimedia
revenue represents a small fraction of the Company's revenues.
At December 31, 1997, the Company had outstanding Series A Warrants to
purchase 599,621 shares of Common Stock at $3.57 per share. In a press release,
dated March 4, 1998, the Company extended the expiration of the exercise of the
warrants through March 31, 1999. Pursuant to the Warrant Agreement, the Company
has the option of redeeming the warrants on an all or nothing basis at a
redemption price of $0.01 per Warrant, upon 30 days written notice. Holders may
exercise Warrants at any time prior to the expiration of the 30-day redemption
notice period. Exercise of the warrants would generate approximately $2,141,000
in cash.
The principal offices of the Company are located at 200 Baker Avenue, Suite
300, Concord, Massachusetts 01742. Telephone (978) 287-5800.
USE OF PROCEEDS
The Company will not receive any proceeds from the offering unless and
until the Warrants, or any portion thereof, are duly exercised and paid for by
the holders of the Warrants. There can be no assurance that all or any portion
of the Warrants will be exercised. In the event that any or all of the Warrants
are exercised, the Company will receive $3.57 for each share of Common Stock
issuable upon exercise of the Warrants for an aggregate of approximately
$2,141,000. The Company currently
11
<PAGE>
plans to use any proceeds received upon exercise of the Warrants to fund working
capital requirements and to fund future acquisitions.
The use of proceeds set forth above represents the Company's present
intention on the basis of circumstances as the date of this Prospectus. The
Company may find it necessary or advisable to reallocate the net proceeds or to
use portions thereof for other purposes, if assumptions regarding present plans
and future events are modified, or if new, attractive opportunities present
themselves.
PLAN OF DISTRIBUTION
Series A Warrants to purchase shares of Common Stock were issued pursuant
to the Company's initial public offering. The Shares of Common Stock underlying
these Series A Warrants and covered by this Prospectus are issuable by the
Company upon exercise of the Warrants.
In order to comply with the securities laws of certain states, if
applicable, the Warrants may be exercised in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable states, or an exemption from the registration or qualification
requirement is available and is complied with.
The Shares are being offered on a delayed and continuous basis and may be
sold during the period beginning on the effective date of the registration of
the Shares and ending upon the expiration date of the Warrants. There can be no
assurance that all or any portion of the Warrants will be exercised.
DESCRIPTION OF SECURITIES TO BE REGISTERED
The following summary of the terms and provisions of the Series A Warrants
is qualified in its entirety to the detailed provisions of the Warrant Agreement
between the Company and its Warrant Agent (the "Warrant Agreement").
Each Warrant entitles the holder thereof to purchase 1.74 Shares of Common
Stock at an exercise price of $3.57 per share during the period commencing on
March 31, 1993, and ending on March 31, 1999, subject to extension by the
Company. The number of shares of Common Stock issuable upon exercise of Series A
Warrants and the Series A Warrant exercise price per share of Common Stock are
subject to adjustment pursuant to certain anti-dilution provisions contained in
the Warrant Agreement. Pursuant to anti-dilution provisions, the number of
shares of Common Stock issuable upon the exercise of the Series A Warrants
increased from $1.00 to $1.74, and the exercise price of the Series A Warrants
decreased from $6.25 to $3.57 per share. The Warrants are redeemable by the
Company on an all or nothing basis at a redemption price of $0.01 per Warrant,
upon 30 days written notice, at such time as the market price of the Common
Stock has exceeded the Warrant
12
<PAGE>
exercise price by 10% for a period of 20 consecutive business days, provided,
however, that the holder may exercise the Warrant at any time prior to the
expiration of the 30-day redemption notice period.
The Company is required to calculate the number of Shares of Common Stock
issuable upon exercise of the Series A Warrants to the nearest hundredth of a
share. However, the Company is not required to issue fractions of shares on the
exercise of such Warrants and instead, will pay cash equal to the fair market
value thereof as determined by the Board of Directors of the Company with
respect to such fractions of Common Shares.
The Warrants may be exercised by surrendering the Warrant certificate, with
the purchase form duly completed and executed on any business day at the
principal office of American Stock Transfer & Trust Company, 40 Wall Street, New
York, NY, 10005 (telephone 212-936-5100) or its successor, as Warrant Agent and
upon payment therefor of the purchase price in lawful money of the United States
of America to the order of the Warrant Agent.
Warrant holders are not entitled to vote, to receive dividends, to consent
to or to receive notice as shareholders in respect to the meetings of
shareholders or the election of directors of the Company or any other matter, or
any rights whatsoever as shareholders of the Company until the Warrants have
been duly exercised. Warrant holders are entitled to certain anti-dilution
protections as set forth in provisions of the Warrant Agreement.
LEGAL MATTERS
The validity of the shares of Common Stock issuable upon exercise of the
Warrants pursuant to the anti-dilution provisions of the Warrants have been
passed upon for the Company by Baker & McKenzie, Washington, D.C.
EXPERTS
The consolidated financial statements of Celerity Solutions, Inc.
incorporated by reference in the Company's Annual Report on Form 10-KSB for the
year ended March 31, 1997 have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon incorporated by reference therein
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission are
hereby incorporated by reference and made part of this Prospectus:
13
<PAGE>
1. The Company's Annual Report on Form 10-KSB for the year ended March
31, 1997.
2. The Company's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1997.
3. The Company's Current Reports on Form 8-K for the events dated
February 11, 1998; December 8, 1997; April 16, 1997; and Current
Report on Form 8-K/A for the event dated March 3, 1997, as filed with
the Securities and Exchange Commission on April 11, 1997, April 24,
1997 and June 26, 1997, respectively.
4. The description of the Company's Common Stock, par value $0.10 per
share, contained in its Registration Statement on Form S-18 filed on
February 13, 1992 (Registration Statement No. 33-45725), including any
amendment or report filed for the purpose of updating such
description.
All reports and other documents filed by the Company pursuant to Sections
13, 14 and 15(d) of the Exchange Act after the date of this Prospectus and prior
to the termination of this offering shall be deemed to be incorporated by
reference into this Prospectus and to be a part hereof from the respective dates
of filing of such reports and other documents. Any statement contained in a
document incorporated or deemed to be incorporated by reference herein will 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 any such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus has been delivered upon written or oral request of such person, a
copy of any and all documents and information incorporated by reference to this
Prospectus (other than exhibits and schedules to documents). Requests should be
directed to: Celerity Solutions, Inc., Attention: Investor Relations, 200 Baker
Avenue, Concord, Massachusetts 01742, Telephone (978) 287-5800.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware sets
forth the conditions and limitations governing the indemnification of directors,
officers, and other persons. The Company's Certificate of Incorporation provides
that the Company will indemnify, to the fullest extent permitted, any and all
persons whom it shall have power to indemnify under Delaware law. In addition,
the Company's Certificate of Incorporation provides that directors of the
Corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director
except (I) for any breach of the director's duty of loyalty to the Company or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a
14
<PAGE>
knowing violation of law, (iii) under Section 174 of Delaware General
Corporation Law, or (iv) for any transaction from which the director derived an
improper personal benefit.
The Company has entered into Indemnification Agreements ("Agreements") with
its directors and officers. These Agreements provide that directors and officers
will be indemnified to the fullest extent permitted by law, on account of their
service as a director or officer of the Company or any subsidiary of the
Company, against expenses, including attorneys' fees, judgments, fines, and
amounts paid or incurred by them for settlement (if such settlement is approved
in advance by the Company) actually and reasonably incurred in connection with
such action, suit, or proceeding if the director or officer acted in good faith
and a manner he or she believed to be in or not opposed to the best interest of
the Company, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his or her conduct was unlawful.
The Company has purchased insurance on behalf of any person who is or will
be a director or officer of the Company which insures against any liability
asserted against such person and incurred by such person in any such capacity,
or arising out of such person's status as such, whether or not the Company would
have the power or the obligation to indemnify such person against such
liability.
Additionally, the Underwriting Agreement executed in connection with the
Company's initial public offering, in which the Series A Warrants were issued,
further provides for reciprocal indemnification between the Company and the
Underwriter as to certain liabilities, including liabilities under the
Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
15
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
Description of Expense Amount*
Registration fee $ 192.75
Accountant fees 3,000.00
Legal fees 5,000.00
Miscellaneous 500.00
------------
Total Expenses $ 8,692.75
============
* All fees and expenses are estimates and will be paid by the
Company.
Item 15. Indemnification of Directors and Officers
See "Indemnification of Directors and Officers" in Prospectus. The Company
has entered into Indemnification Agreements with its directors and officers, a
form of which is incorporated herein by reference as Exhibit 99.1.
Item 16. Exhibits
Exhibit
Number Description
------- -----------
1.1* Form of Underwriting Agreement
1.2* Form of Selected Dealers Agreement
2.1+ Agreement for the Acquisition of the Outstanding Stock of
Animation Magic, Inc. -- Management Shareholders, dated December
15, 1994 (incorporated by reference herein to the exhibit filed
with the Company's Form 8-K, dated February 13, 1995).
2.2+ Agreement for the Acquisition of the Outstanding Stock of
Animation Magic, Inc. -- Minority Shareholders, dated December
15, 1994 (incorporated by reference herein to the exhibit filed
with the Company's Form 8-K, dated February 13, 1995).
2.3+ Asset Purchase Agreement By and Between Capitol Multimedia, Inc.
(as "Seller" and Philips Media, Inc. (as "Purchaser") dated
August 11, 1995 (incorporated by
II-1
<PAGE>
reference herein to the exhibit filed with the Company's Form
8-K, dated August 11, 1995).
2.4+ Capitol Multimedia, Inc. - CSTI Promissory Notes dated March 31,
1997 (incorporated by reference herein to the exhibits filed with
the Company's Form 8-K, dated April 11, 1997).
2.5+ Acquisition Agreement By and Between Capitol Multimedia, Inc.,
(as "Buyer") and Client Server Technologies, Inc. (as "Seller")
dated March 31, 1997 (incorporated by reference herein to the
exhibit filed with the Company's Form 8-K, dated April 11, 1997).
2.6+ Asset Purchase Agreement By and Between Capitol Multimedia, Inc.
(as "Seller") and Cendant, Inc. (as "Buyer") dated April 16, 1997
(incorporated by reference herein to the exhibit filed with the
Company's Form 8-K, dated April 24, 1997).
2.7+ Acquisition Agreement By and Between Celerity Solutions, Inc. (as
"Buyer") and Somerset Automation, Inc. (as "Seller") dated
December 8, 1997 (incorporated herein to the exhibit filed with
the Company's Form 8-K, dated December 23, 1997).
4.1* Specimen of Stock Certificate - Common Stock
4.2* Specimen of Series A Warrant Certificate
4.3* Form of Underwriter Warrant
4.4* Form of Warrant Agreement with Warrant Agent
4.5+ Amended and Restated 1991 Non-Qualified Celerity Solutions, Inc.
Employee Stock Option Plan (incorporated by reference herein to
the exhibit filed with the Company's Form 8-K, dated September 2,
1997)
4.6+ Amended and Restated 1992 Non-Qualified Stock Option Plan for
Non-Employee Directors (incorporated by reference herein to the
exhibit filed with the Company's Form 8-K, dated September 2,
1997).
4.7+ First Amendment to the Warrant Agreement Between Capitol
Multimedia, Inc. and North American Transfer Co. (incorporated by
reference herein to the exhibit filed with the Company's Form 8-K
dated February 26, 1996).
4.8+ First Amendment to the Registration Rights Agreement Dated
February 13, 1995 (incorporated by reference herein to the
exhibit filed with the Company's Form 8-K dated February 26,
1996).
II-2
<PAGE>
5.1* Opinion of Schmeltzer, Aptaker & Shepard, P.C.
5.2* Opinion of Baker & McKenzie
23.1* Consent of Schmeltzer, Aptaker & Shepard, P.C. (contained in
Exhibit 5.1)
23.2* Consent of Baker & McKenzie (contained in Exhibit 5.2)
23.3 Consent of Ernst & Young LLP, independent auditors
24.1 Power of Attorney (contained on the signature page hereof)
99.1+ Form of Indemnification Agreement as signed by directors and
officers of the Company (incorporated by reference herein to the
exhibit filed with the Company's Form 10-QSB, dated June 30,
1993).
* Incorporated by reference from the Company's Registration
Statement on Form S-18 (or a Post Effective Amendment thereto),
Registration No. 33-45725-A.
** Previously filed.
+ Incorporated by reference from filing indicated.
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
o To file, during any period in which offers or sales are being made, a
post-effective amendment to the registration statement to include any
material information or change with respect to the plan of
distribution not previously disclosed in the registration statement.
o For determining liability under the Securities Act of 1933 (the
"Act"), to treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
o To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
o Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the
II-3
<PAGE>
foregoing provisions, or otherwise, the small business issuer 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 small business issuer of expenses incurred or paid by a director,
officer or controlling person of the small business issuer 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 small business issuer 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.
II-4
<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 the Town of Concord, State of Massachusetts, on the 21th day of
May, 1998.
CELERITY SOLUTIONS, INC.
By: /s/ Edward Terino
-----------------------
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
thereby constitutes and appoints Luda Kopeikina and Edward Terino and each of
them, his or her true and lawful attorney-in-fact and agent with full power of
substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign any and all amendments or
supplements to this Pre-Effective Amendment No. 1 to Form S-3 Registration
Statement, and to file the same, with all exhibits thereto and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing necessary or appropriate to be done in and about
the foregoing, as fully to all intents and purposes as he or she might or could
do in person, lawfully do, or cause to be done by virtue hereof.
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Luda Kopeikina Chief Executive May 19, 1998
-------------------------- Officer
Luda Kopeikina
/s/ Robert Donaldson Director May 19, 1998
--------------------------
Robert Donaldson
/s/ Nico B.M. Letschert Director May 18, 1998
--------------------------
Nico B.M. Letschert
/s/ Igor Razboff Director May 19, 1998
--------------------------
Igor Razboff
/s/ Philip R. Redmond Director May 20, 1998
--------------------------
Philip R. Redmond
/s/ Richard Santagati Director May 19, 1998
--------------------------
Richard Santagati
/s/ Alan White Director May 18, 1998
--------------------------
Alan White
Exhibit 23.3
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Pre-Effective Amendment No. 1 to Form S-3) and related
Prospectus of Celerity Solutions, Inc. (formerly Capitol Multimedia, Inc.) for
the registration of 254,930 shares of its common stock and to the incorporation
by reference therein of our report dated May 22, 1997, with respect to the
consolidated financial statements of Celerity Solutions, Inc. included in its
Annual Report (Form 10-KSB) for the year ended March 31, 1997, filed with the
Securities and Exchange Commission.
/s/ Ernst & Young LLP
Boston, Massachusetts
May 21, 1998
