As filed with the Securities and Exchange Commission on November 27, 1996
Registration No. 333-16423
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE NETPLEX GROUP, INC. (F/K/A COMPLINK, LTD.)
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(Exact name of Registrant as specified in its charter)
NEW YORK 7372 11-2824578
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(State or other (Primary Standard Industrial (I.R.S. Employer
jurisdiction of Classification Code Number) Identification Number)
incorporation or
organization)
8260 GREENSBORO DRIVE, 5TH FLOOR
MCLEAN, VIRGINIA 22101
(703) 356-3001
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(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
GENE ZAINO
PRESIDENT & CHIEF EXECUTIVE OFFICER
THE NETPLEX GROUP, INC.
8260 GREENSBORO DRIVE, 5TH FLOOR
MCLEAN, VIRGINIA 22101
(703) 356-3001
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(Name, address, including zip code, and telephone number,
including area code, of agent of service)
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Copies to:
STEVEN WOLOSKY, ESQ.
KENNETH SCHLESINGER, ESQ.
OLSHAN GRUNDMAN FROME & ROSENZWEIG LLP
505 PARK AVENUE
NEW YORK, NEW YORK 10022
(212) 753-7200
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
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CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Title of Each Class Maximum Aggregate
of Securities Amount To Be Offering Price Offering Amount of
To Be Registered Registered Per Security Price(1) Registration Fee
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<S> <C> <C> <C> <C>
Common Stock, $.001 par value 3,321,213 3.625(1) $12,039,397.12 $3,648.30
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Common Stock, $.001 par value, issuable upon the
exercise of certain options (the "Options")(2) 170,000(2) $4.00(3) $680,000 $206.06
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Common Stock, $.001 par value, issuable upon 220,000(2)
exercise of certain Warrants (the "1992 Warrants")(2) $3.00(3) $660,000 $200.00
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Common Stock, $.001 par value, issuable upon
exercise of certain Unit Purchase Options (the
"Purchase Options")(2) 100,000(2) $2.40(3) $240,000 $72.73
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Common Stock, $.001 par value, issuable upon
exercise of certain warrants (the "Purchase Option
Warrants"), which warrants are issuable upon
exercise of the Purchase Options(2) 100,000(2) $5.25(3) $525,000 $159.09
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
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<S> <C> <C> <C> <C>
Purchase Option Warrants 100,000 $ -- $ -- $ --
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Common Stock, $.001 par value, issuable upon
conversion of certain shares of Class A Convertible
Preferred Stock (the "Convertible Preferred Stock")(2) 1,750,000 $3.625(1) $6,343,750 $1,922.35
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Common Stock, $.001 par value, issuable upon 1,750,000
exercise of certain warrants (the "1996 Warrants")(2) $2.50(3) $4,375,000 $1,325.76
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Common Stock, $.001 par value, issuable upon
conversion of certain shares of
Convertible Preferred Stock, which shares
of Convertible Preferred Stock are
issuable upon exercise of certain Unit Purchase
Options (the "1996 Purchase Options")(2) 87,500 $3.625(1)(2) $317,187.5 $96.12
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Common Stock, $.001 par value, issuable upon
exercise of certain warrants, which
warrants are issuable upon exercise of the 1996
Purchase Options (the "1996 Purchase Option Warrants")(2) 87,500 $2.50(2)(3) $218,750 $66.29
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Common Stock, $.001 par value, issuable upon
exercise of certain warrants (the "Netplex
Warrants")(2) 150,000 $2.50(3) $375,000 $113.64
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Common Stock, $.001 par value, issuable upon
exercise of certain warrants (the "Kirlin Warrants")(2) 125,000 $3.50(3) $437,500 $132.58
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Total...................................................................................................$7,942.92
=============================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee based
upon the average of the high and low price of the Common Stock on the OTC
Electronic Bulletin Board on November 18, 1996.
(2) Pursuant to Rule 416, additional securities are being registered as may be
required for issuance pursuant to the anti-dilution provisions of the
Options, the 1992 Warrants, the Purchase Options, the Purchase Option
Warrants, the Convertible Preferred Stock, the 1996 Warrants, the 1996
Purchase Options, the 1996 Purchase Option Warrants, the Purchase Option
Warrants, the Netplex Warrants and the Kirlin Warrants.
(3) Pursuant to Rule 457(g), the registration fee for the Common Stock
underlying such option or warrant is calculated on the basis of the
exercise price of such option or warrant.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the Registration Statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a) may determine.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED NOVEMBER 27, 1996
PRELIMINARY PROSPECTUS
7,861,213 SHARES OF COMMON STOCK
100,000 WARRANTS
THE NETPLEX GROUP, INC.
COMMON STOCK ($.001 PAR VALUE)
This Prospectus relates to the reoffer and resale by certain selling
shareholders (the "Selling Shareholders") of an aggregate of 7,861,213 shares
(the "Shares") of the Common Stock, $.001 par value per share (the "Common
Stock"), of The Netplex Group, Inc., a New York corporation (the "Company") of
which (i) 170,000 shares of Common Stock (the "Option Shares") are issuable upon
exercise of certain options (the "Options") which were granted by the Company in
connection with consulting services; (ii) 220,000 shares of Common Stock (the
"Warrant Shares") are issuable by the Company upon exercise of certain warrants
(the "Warrants") which were issued in exchange for warrants previously issued in
connection with the Company's March 1992 Private Placement (the "1992 Private
Placement"); (iii) 100,000 shares of Common Stock (the "Purchase Option Shares")
are issuable by the Company upon the exercise of certain Unit Purchase Options
(the "Purchase Options") previously issued by the Company to GKN Securities
Corp., or its designees, the underwriter of the Company's Initial Public
Offering (the "Underwriter"); (iv) 100,000 shares of Common Stock (the "Purchase
Option Warrant Shares") are issuable to the Underwriter upon exercise of the
Purchase Option Warrants (hereinafter defined), which Purchase Option Warrants
are issuable upon exercise of the Purchase Options; (v) 1,750,000 shares of
Common Stock (the "Conversion Shares") are issuable by the Company upon
conversion of certain shares of Class A Convertible Preferred Stock (the
"Convertible Preferred Stock") which were issued by the Company to holders (the
"Preferred Stockholders") in connection with the Company's August 1996 Private
Placement (the "1996 Private Placement"); (vi) 1,750,000 shares of Common Stock
(the "1996 Warrant Shares") are issuable by the Company upon exercise of certain
warrants (the "1996 Warrants") granted by the Company to the Preferred
Stockholders in connection with the 1996 Private Placement; (vii) 87,500 shares
of Common Stock (the "Purchase Option Conversion Shares") are issuable by the
Company upon conversion of certain shares of Convertible Preferred Stock (the
"Purchase Option Preferred Stock"), which shares of Convertible Preferred Stock
are issuable by the Company upon exercise of certain Unit Purchase Options (the
"1996 Purchase Options") previously granted by the Company to the Underwriter in
connection with the 1996 Private Placement; (viii) 87,500 shares of Common Stock
(the "1996 Purchase Option Warrant Shares") are issuable by the Company upon
exercise of certain warrants (the "1996 Purchase Option Warrants") which
warrants are issuable to the Underwriter upon exercise of the 1996 Purchase
Options; (ix) 150,000 shares of Common Stock (the "Netplex Shares") issuable to
the former stockholders of Netplex Virginia (as hereinafter defined) and AWE (as
hereinafter defined) upon the exercise of certain warrants (the "Netplex
Warrants") (x) 125,000 shares of Common Stock (the "Kirlin Shares") upon the
exercise of certain warrants (the "Kirlin Warrants") and (xi) 3,321,213 shares
of Common Stock (the "Merger Shares") which were previously issued by the
Company to certain of the Selling Shareholders in connection with the Mergers
(as hereinafter defined) or pursuant to an asset purchase agreement. This
Prospectus also relates to 100,000 warrants (the "Purchase Option Warrants")
which are issuable to the Underwriter by the Company upon exercise of the
Purchase Options. See "Principal and Selling Stockholders," "Plan of
Distribution" and "Description of Securities."
The Option Shares, the Warrant Shares, the Purchase Option Shares, the
Purchase Option Warrant Shares, the Conversion Shares, the 1996 Warrant Shares,
the 1996 Purchase Option Conversion Shares, the 1996 Purchase Option Warrant
Shares, the Netplex Shares and the Kirlin Shares will be issued if, as and when
<PAGE>
the Options, the Warrants, the Purchase Options, the Purchase Option Warrants,
the Convertible Preferred Stock, the 1996 Warrants, the Purchase Option
Preferred Stock, the 1996 Purchase Option Warrants, the Netplex Warrants, or the
Kirlin Warrants (which such Option Shares, Warrant Shares, Purchase Option
Shares, Purchase Option Warrant Shares, Conversion Shares, 1996 Warrant Shares,
Purchase Option Conversion Shares, 1996 Purchase Option Warrant Shares, Netplex
Shares or the Kirlin Shares underlie, respectively), are exercised or converted,
as the case may be, by the holders thereof. The Company will receive the
proceeds from the exercise of the Options, the Warrants, the Purchase Options,
the Purchase Option Warrants, the 1996 Warrants, the 1996 Purchase Option
Warrants, the Netplex Warrants, and the Kirlin Warrants, the net proceeds of
which will amount to $7,686,250 if all Warrants, Purchase Options, Purchase
Option Warrants, 1996 Warrants, 1996 Purchase Option Warrants, the Netplex
Warrants and Kirlin Warrants are exercised, after deducting the estimated
expenses of this offering. The Company will not receive any proceeds from the
resale of the Shares by the Selling Shareholders.
The Company's Common Stock is publicly traded on the OTC Electronic
Bulletin Board (the "Bulletin Board") under the symbol ("NTPL") and on the
Boston Stock exchange under the symbol ("NPL"). On November 18, 1996, the
average of the high and low price was $3.625 closing bid price for the Common
Stock on the Bulletin Board was $3.625.
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AN INVESTMENT IN THE SECURITIES OFFERED HEREBY
INVOLVES A HIGH DEGREE OF RISK AND SHOULD ONLY BE
MADE BY INVESTORS WHO CAN AFFORD THE RISK OF LOSS OF
THEIR ENTIRE INVESTMENT.
SEE "RISK FACTORS" AND "DILUTION" ON PAGES 8 AND 13
OF THIS PROSPECTUS.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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This offering is self-underwritten; neither the Company nor any Selling
Shareholder has employed an underwriter for the resale of any of the Shares or
the Purchase Option Warrants. The Company will bear all expenses of this
Offering other than discounts, concessions or commissions on the resale of the
Shares and the Purchase Option Warrants.
The Selling Shareholders have advised the Company that the resale of
their Shares may be effected from time to time in one or more transactions in
the over-the-counter market or the Boston Stock Exchange, in negotiated
transactions or otherwise at market prices prevailing at the time of the sale or
at prices otherwise negotiated. The Selling Shareholders may effect such
transactions by selling the Shares to or through broker-dealers who may receive
compensation in the form of discounts, concessions or commissions from the
Selling Shareholders and/or the purchasers of the 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). Any broker-dealer acquiring the Shares from the Selling
Shareholders may sell such securities in its normal market making activities,
through other brokers on a principal or agency basis, in negotiated
transactions, to its customers or through a combination of such methods. The
Purchase Option Warrants will not be publicly traded and may be acquired in
negotiated transactions. See "Plan of Distribution."
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The date of this Prospectus is , 1996
-2-
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") are incorporated in this Prospectus by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal
year ended July 31, 1995.
(b) The Company's Quarterly Reports on Form 10-QSB for the
fiscal quarters ended October 31, 1995, December 31, 1995, March 31,
1996, June 30, 1996 and September 30, 1996.
(c) The Company's Current Reports on Form 8-K filed on January
9, 1994 and on June 7, 1996, as amended.
(d) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form 8-A filed with the
Commission on March 8, 1993.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of this Offering of the Shares of Common Stock or the
Purchase Option Warrants offered hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained 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 which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will 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 or all of the documents incorporated herein by reference (other than
exhibits to such documents which are not specifically incorporated by reference
in such documents). Written requests for such copies should be directed to Mr.
Matthew Jones, Chief Financial Officer, 8260 Greensboro Drive, 5th Floor,
McLean, Virginia 22101, telephone number (703) 356-3001.
The Company intends to furnish its shareholders with annual reports
containing financial statements audited and reported upon by its independent
accounting firm, quarterly reports containing unaudited interim financial
information and such other periodic reports as the Company may determine to be
appropriate or as may be required by law.
This Prospectus includes references to trademarks of entities other
than the Company which have reserved all rights with respect to their respective
trademarks.
-3-
<PAGE>
SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, AND
SHOULD BE READ IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND THE
CONSOLIDATED FINANCIAL STATEMENTS (INCLUDING THE NOTES THERETO) APPEARING
ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY REFERENCE. EACH
PROSPECTIVE INVESTOR IS URGED TO READ THIS PROSPECTUS IN ITS ENTIRETY.
THE COMPANY
The Netplex Group, Inc., a New York corporation (the "Company"),
headquartered in McLean, Virginia, is an information technology solutions
provider. Its address is 8260 Greensboro Drive, 5th Floor, McLean, Virginia
22101 and its telephone number is (703) 356-3001. Its Worldwide Web site address
is www.netplexgroup.com.
The Company's core business involves the offering of professional
technical services to large organizations (generally Fortune 2,000 type
companies) who require assistance integrating information technology into their
businesses. The Company's customers include large banks, pharmaceutical
companies and financial services institutions. The Company employs approximately
300 full-time professional technical employees and has access to a database of
an additional 15,000 technical consultants who may be contracted for hire on an
as needed basis. The Company's services focus on the design, implementation, and
management of large network-based systems. Occasionally, the Company may resell
certain technology products in order to deliver customers fully integrated
system-solutions. The Company's specific areas of expertise include Network and
System Management, Database Integration, Help Desk Automation, Disaster Recovery
Planning, Information Systems Security, Local Area Network Integration, Intranet
Deployment, Remote and Mobile Workforce Automation, and Law Firm Office
Automation.
The Company engages in project assignments throughout North America and
has offices in the New York City, Central New Jersey, Chicago and Washington
D.C. metropolitan markets.
CORPORATE HISTORY
The Company is a New York corporation incorporated in 1986 under the
name CompLink, Ltd. In March 1993 the Company consummated an initial public
offering and received net proceeds of approximately $4,700,000 and received an
additional approximately $6,000,000 in October 1993 through the exercise of
warrants issued in connection with the initial public offering. The Company's
initial public offering was underwritten by the Underwriter. In December 1993,
the Company consummated a merger with Technology Development Systems, Inc., an
Illinois corporation ("TDS") which became a wholly-owned subsidiary of the
Company. On June 7, 1996, a wholly-owned subsidiary of the Company merged with
and into The Netplex Group, Inc. ("Netplex Virginia"), a Virginia corporation,
and a second wholly-owned subsidiary of the Company merged with and into
America's Work Exchange, Inc. ("AWE"), a New York corporation. Upon consummation
of the mergers, Netplex Virginia and AWE became wholly-owned subsidiaries of the
Company (the "Mergers"). As consideration for the Mergers, the Company issued an
aggregate of 3,245,295 shares of Common Stock to the shareholders of Netplex and
AWE, including an aggregate of 1,263,930 shares to Gene Zaino, who was a
Director of the Company and is now the President and Chief Executive Officer of
the Company. Netplex Virginia changed its name to The Netplex System Integration
Group, Inc. and the Company changed its name to The Netplex Group, Inc.
As a result of the Mergers, there was a change of control of the
Company in that, as of the consummation of the Mergers, approximately 50.4% of
the outstanding shares of the Company are now held by the former shareholders of
-4-
<PAGE>
Netplex Virginia and AWE (60.7% of the outstanding shares of the Company's
Common Stock if all of the Company options issuable in exchange for Netplex
Virginia options and AWE options are exercised). The Mergers have been accounted
for under the purchase method of accounting as a reverse merger, since the
shareholders of the acquirees, which have common control, received the larger
percentage of the voting rights of the combined entity. The Mergers resulted in
a recapitalization of the accounting of CompLink, Ltd. so that the resulting
capitalization of the Company after the Mergers were that of CompLink, Ltd.'s
(the Company prior to Mergers) after giving effect to the new share issuance and
the elimination of CompLink, Ltd.'s accumulated deficit. The acquisition of the
assets and liabilities of CompLink, Ltd. have been accounted for at book value,
which approximates fair value. For a further discussion of the Mergers, see the
Company's (i) Proxy Statement for Special Meeting of Shareholders held on May
24, 1996, (ii) Form 10-QSB for the six-months ended June 30, 1996 and (iii) Form
8-K, dated June 7, 1996, as amended. Unless otherwise indicated herein,
references to the Company include its wholly-owned subsidiaries, Netplex
Virginia, AWE and TDS.
RECENT DEVELOPMENTS
In September 1996, the Company received approximately $3,000,000 in net
proceeds from the consummation of the 1996 Private Placement whereby the Company
issued the Convertible Preferred Stock and granted the 1996 Warrants.
On October 21, 1996 the Company filed an application for the relisting
of its Common Stock on the Nasdaq Small Cap Market ("Nasdaq"). While the Company
believes that it meets the requirements for listing its Common Stock on Nasdaq,
there can be no assurance that such listing will be approved by Nasdaq. If the
Company's listing is not approved by Nasdaq the Company will continue to have a
limited trading market for its securities.
On November 5, 1996 the Company reached an agreement for the sale of
its WorldLink(TM) Remote and Mobile Workforce automation software (the
"Product") developed and distributed by its wholly-owned subsidiary Technology
Development Systems, Inc. ("TDS"). The sale price is $3.5 million payable in
cash at closing, originally expected to be November 15, 1996. On November 19,
1996, the Company expected to close a portion of the sale with the buyer for a
purchase price of $2.0 million in cash. The Company and the buyer agreed to
continue negotiations for the remaining portion of the transaction. Finalization
of the sale of the Product is expected by year end, but, there can be no
assurances that the remaining portion of this transaction will be completed.
The Company will continue to support WorldLink's(TM) existing customers
and has formed a practice unit to provide Remote and Mobile Workforce Automation
services.
-5-
<PAGE>
THE OFFERING
Securities Offered by the Company...........100,000 Purchase Option Warrants
issuable upon exercise of the
Purchase Options. 170,000 Option
Shares; 220,000 Warrant Shares;
100,000 Purchase Option Shares;
100,000 Purchase Option Warrant
Shares; 1,750,000 Conversion Shares;
1,750,000 1996 Warrant Shares;
87,500 Purchase Option Conversion
Shares; 87,500 1996 Purchase Option
Shares; 150,000 Netplex Shares; and
125,000 Kirlin Shares.
Securities Offered for resale
by the Selling Shareholders.................3,321,213 Merger Shares.
Common Stock Outstanding....................6,442,9031/ shares of Common Stock
before the exercise or conversion,
as the case may be, of the Options,
the Warrants, the Purchase Options,
the Purchase Option Warrants, the
Convertible Preferred Stock, the
1996 Warrants, the Purchase Option
Preferred Stock and the 1996
Purchase Option Warrants and
[10,982,903] shares of Common Stock
assuming the exercise or conversion,
as the case may be, of the Options,
the Warrants, the Purchase Options,
the Purchase Option Warrants, the
Convertible Preferred Stock, the
1996 Warrants, the Purchase Option
Preferred Stock and the 1996
Purchase Option Warrants.
Bulletin Board Symbol.......................Common Stock: NTPL
Boston Stock Exchange Symbol................Common Stock: NPL
USE OF PROCEEDS
The Company will not receive any proceeds from the resale of the Common
Stock offered by the Selling Shareholders hereby. The Company will receive the
proceeds from the exercise of each of the Options, the Warrants, the Purchase
Options, the Purchase Option Warrants, the 1996 Warrants, the 1996 Purchase
Option Warrants, the Netplex Warrants or the Kirlin Warrants. The net proceeds
of which will amount to $7,686,250 if all such securities are exercised, after
deducting the estimated expenses of this offering. The Company intends to apply
any net proceeds from such exercises for product development, marketing and
working capital and other general corporate purposes.
- --------------
1/ UNLESS OTHERWISE INDICATED, THE INFORMATION IN THIS PROSPECTUS DOES
NOT GIVE EFFECT TO (I) 220,000 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THE WARRANTS AT $3.00 PER SHARE; (II) 100,000 SHARES OF COMMON STOCK ISSUABLE TO
THE UNDERWRITER UPON EXERCISE OF THE PURCHASE OPTIONS, EACH PURCHASE OPTION
CONSISTS OF ONE SHARE OF COMMON STOCK AND ONE PURCHASE OPTION WARRANT; (III)
100,000 SHARES OF COMMON STOCK ISSUABLE TO THE UNDERWRITER UPON EXERCISE OF THE
PURCHASE OPTION WARRANTS; (V) 1,750,000 SHARES OF COMMON STOCK ISSUABLE UPON
CONVERSION OF THE CONVERTIBLE PREFERRED STOCK; (VI) 1,750,000 SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF THE 1996 WARRANTS; (VII) 87,500 SHARES OF COMMON
STOCK ISSUABLE UPON CONVERSION OF THE PURCHASE OPTION PREFERRED STOCK; (VIII)
87,500 SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF THE 1996 PURCHASE OPTION
WARRANTS (IX) 3,000,000 SHARES OF THE COMMON STOCK ISSUABLE UPON EXERCISE OF
-6-
<PAGE>
STOCK OPTIONS WHICH MAY BE GRANTED UNDER THE COMPANY'S 1992 INCENTIVE AND
NON-QUALIFIED STOCK OPTION PLAN (THE "1992 PLAN"), OF WHICH OPTIONS TO PURCHASE
2,363,000 SHARES OF COMMON STOCK AT AN AVERAGE EXERCISE PRICE OF APPROXIMATELY
$2.85 PER SHARE HAVE BEEN ISSUED; (X) 100,000 SHARES OF COMMON STOCK ISSUABLE
UPON EXERCISE OF STOCK OPTIONS WHICH MAY BE ISSUED UNDER THE COMPANY'S 1995
DIRECTORS' STOCK OPTION PLAN (THE "DIRECTORS' PLAN"), OF WHICH OPTIONS TO
PURCHASE 60,000 SHARES OF COMMON STOCK AT EXERCISE PRICES RANGING FROM $2.50 PER
SHARE TO $3.5625 PER SHARE HAVE BEEN GRANTED; (XI) 800,000 SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE OF STOCK OPTIONS WHICH MAY BE GRANTED UNDER THE
1995 CONSULTANT'S STOCK OPTION PLAN (THE "CONSULTANT'S PLAN"), OF WHICH NO STOCK
OPTIONS HAVE BEEN ISSUED; (XII) 170,000 SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE OF THE OPTIONS AT AN EXERCISE PRICE OF $4.00 PER SHARE; AND (XIII)
150,000 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF THE NETPLEX
WARRANTS AND (IX) 125,000 SHARES OF COMMON STOCK ISSUABLE UPON THE EXERCISE OF
THE KIRLIN WARRANTS AT AN EXERCISE PRICE OF $3.50 PER SHARE.
-7-
<PAGE>
RISK FACTORS
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. PROSPECTIVE
INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, AS WELL AS
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS.
OPERATING LOSSES. The Company had a net loss of $1,783,326 for the nine
months ended September 30, 1996. The Company anticipates that losses, on a
consolidated basis, will continue until such time, if ever, that it can generate
sufficient revenues from the sales of its products and services to cover
operating costs. There can be no assurance that the Company's operations, on a
consolidated basis, will become profitable or that the Company, on a
consolidated basis, will ever be able to generate cash flows sufficient to meet
its operating costs and sustain its operations.
LIMITED WORKING CAPITAL; POSSIBLE NEED FOR ADDITIONAL FINANCING;
UNCERTAINTY OF CAPITAL FUNDING. As of September 30, 1996, the Company had
working capital of $2,614,910. Management believes that its existing resources
will be adequate for the Company's cash needs through December 31, 1997. Beyond
such period, the Company may need to raise substantial additional capital to
fund its operations. There can be no assurance that additional financing will be
available on acceptable terms or available at all. If additional funds are
raised by issuing equity securities, further dilution to shareholders will
result. If adequate funds are not available, the Company may be required to
delay, curtail, reduce the scope of or eliminate (i) the expansion of its
operations and/or (ii) its marketing and sales efforts which could materially
adversely affect the financial and business operations of the Company.
CONTROL OF THE COMPANY BY FORMER NETPLEX VIRGINIA AND AWE SHAREHOLDERS.
The former shareholders of Netplex Virginia and AWE currently own a majority of
the outstanding shares of the Common Stock, with Gene Zaino, currently the
President and Chief Executive Officer of the Company, owning 19.6%, and Michael
O'Connor, John Thompson, Stanley Fischer and Scott Pogoda owning collectively
approximately 28.2%, and together with Mr. Zaino, approximately, 47.8%, of the
outstanding shares of the Common Stock. Accordingly, the former shareholders of
Netplex Virginia and AWE as a group, and Mr. Zaino and the other individuals
named above in particular, will be in a position to control the election of
directors and other corporate matters that require the vote of the Company's
shareholders.
RELIANCE ON MAJOR CUSTOMER. Two customers of Netplex Virginia accounted
for approximately 33% and 22% of Netplex Virginia's revenues for the year ended
December 31, 1995. The contract with one such customer is terminable at will and
the Company completed its obligations under the other contract. No customer
accounted for more than 10% of the Company's revenues for the nine-months ended
September 30, 1996.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS. Variations in the
Company's revenues and operating results could occur from time to time as a
result of a number of factors, such as the number and dollar value of client
engagements commenced and completed during a quarter, the number of working days
in a quarter and employee hiring and utilization rates. The timing of revenues
is difficult to forecast because the Company's sales cycle is relatively long in
the case of new clients and may depend on factors such as the size and scope of
assignments and general economic conditions. Because a high percentage of the
Company's expenses are relatively fixed, a variation in the timing of the
initiation or the completion of client assignments, particularly at or near the
end of any quarter, can cause significant variations in operating results from
quarter to quarter and could result in reported losses for that quarter. The
Company's engagements generally are terminable at will and at the discretion of
the client. An unanticipated termination of a major project could require the
Company to maintain or terminate under-utilized employees, resulting in a higher
than expected number of unassigned persons or higher severance expenses. While
professional staff must be adjusted to reflect active projects, the Company must
-8-
<PAGE>
maintain a sufficient number of senior professionals to oversee existing client
projects and participate with its sales force in securing new client
assignments. Because some of the Company's engagements are performed on a
fixed-price basis, the Company also bears the risk of cost overruns and
inflation. The Company's operating results may also vary depending on factors
such as new product introductions by the Company and others, and market
acceptance of new and enhanced versions of the Company's products.
DEPENDENCE UPON KEY PERSONNEL. The Company's future success will depend
in large part on the continued services of Gene Zaino, the Company's President
and Chief Executive Officer, and of the Company's technical, marketing, sales
and management personnel, as well as on its ability to continue to attract,
motivate and retain highly qualified employees. The Company has applied for a
$1,000,000 key man insurance policy on the life of Mr. Zaino. The Company's
employees may voluntarily terminate their employment at any time. Competition
for such employees is intense, and the process of locating technical, marketing,
sales and management personnel with the combination of skills and attributes
required to execute the Company's strategy is often lengthy. The Company
believes that it will need to hire additional technical personnel in order to
enhance existing products and to develop new products and to hire new sales
personnel in order to sell their products. If the Company is unable to hire
additional technical personnel, the development of new products and enhancements
will likely be delayed. If the Company is unable to hire additional sales
personnel, the sale of existing and new products will likely be adversely
impacted. The inability to attract new personnel could have a material adverse
effect upon the Company's results of operations and research and development
efforts. In particular, the Company's success will depend in large part upon its
ability to attract and retain qualified project managers. While to date the
Company has had no difficulty in attracting and retaining qualified employees,
qualified project managers are in particularly great demand and are likely to
remain a limited resource for the foreseeable future and, accordingly, there can
be no assurance that the Company will be able to retain and attract qualified
project management.
COMPETITION. The Company provides information technology services. The
information technology services market comprises a large number of participants,
is subject to rapid changes, and is highly competitive. The market includes
participants from a variety of market segments, including systems consulting and
integration firms, contract programming companies, the professional service
groups of computer equipment companies such as Hewlett-Packard Company, IBM,
Unisys Corporation and Digital Equipment Corporation, facilities management and
MIS outsourcing companies, "Big Six" accounting firms, and general management
consulting firms. The Company's competitors in this area also include companies
such as Andersen Consulting, Technology Solutions Corporation, SHL Systemhouse,
Inc., Innovative Information Systems, Inc., Cap Gemini America, Business System
Group, Computer Sciences Corporation, Electronic Data Systems Corporation and
Keane, Inc. Many participants in the information technology services market have
significantly greater financial, technical and marketing resources and greater
name recognition than the Company and generate greater systems consulting and
integration revenues than does the Company. In addition, the information
technology services market is highly fragmented and served by numerous firms,
many of which serve only their respective local markets. The Company believes
that the principal competitive factors in the information technology services
industry include responsiveness to client needs, speed of project
implementation, quality of service, price, project management capability and
technical expertise. The Company believes that its ability to compete also
depends in part on a number of competitive factors outside its control,
including the ability of its competitors to hire, retain and motivate senior
project managers, the Company's products and services, the price at which others
offer comparable services, and the extent of their competitors' responsiveness
to customer needs.
LEGAL UNCERTAINTIES. There are many legal uncertainties concerning
technical services firms, including the extent of such a company's liability for
violations of employment and discrimination laws. Such liability can include
violations of employment and discrimination laws committed by consultants the
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<PAGE>
Company provides to its customers. Accordingly, the Company may be subject to
liability for violations of these or other laws even if it does not participate
in the commission of such violations. The Company believes it is in compliance
in all material respects with all applicable rules, regulations and licensing
requirements.
PROJECT RISKS. Occasionally, the Company is required to guarantee to
its customers that the integrated system on which it is consulting will operate
properly when completed. Rapid changes in technology or other unforeseen
developments can make any such guarantee difficult to meet and can expose the
Company to loss of the costs incurred by it and revenue anticipated to be
derived, in connection with any such project.
NASDAQ LISTING. The Company's Common Stock currently is quoted or
traded on the OTC Bulletin Board and The Boston Stock Exchange, respectively.
The Company has applied to list its Common Stock on the Nasdaq SmallCap Market
("Nasdaq") which has several requirements for listing, including that the
Company have at least $4,000,000 in total assets and the Company have at least
$2,000,000 in shareholders' equity. While the Company believes that it is in
compliance with these requirements, there can be no assurance that Nasdaq will
be satisfied that the Company will be able to meet these requirements for an
extended period of time and, accordingly, Nasdaq may not approve the Company's
listing application. In addition, Nasdaq requires that the Company's Common
Stock have a trading price of at least $3.00 per share to be approved for
listing. While the Company's Common Stock currently trades above $3.00 per share
and while the Company has agreed to use its best efforts, including undertaking
a reverse stock split to increase the trading price of the Common Stock so that
the Common Stock can be listed on Nasdaq, there can be no assurance the
Company's Common Stock will continue to trade above $3.00 per share.
LIMITED PUBLIC MARKET TRADING; POTENTIAL EFFECT OF "PENNY STOCK" RULES.
There can be no assurance that an active market will exist for the reoffer and
resale of the Common Stock even after the shares are registered, or that such
stock could be sold without a significant negative impact on the publicly quoted
stock price per share. Furthermore, if the Company's Common Stock is not listed
on Nasdaq or the Boston Stock Exchange, it is subject to the "penny stock" rules
adopted pursuant to Section 15(g) of the Securities Exchange Act of 1934. The
penny stock rules apply to non-Nasdaq or exchange listed companies whose common
stock trades at less than $5.00 per share or which have tangible net worth of
less than $5,000,000 ($2,000,000 if the company has been operating for three or
more years). Such rules require, among other things, that brokers who trade
"penny stock" to persons other than "established customers" complete certain
documentation, make suitability inquiries of investors and provide investors
with certain information concerning trading the security, including a risk
disclosure document and quote information under certain circumstances. Many
brokers have decided not to trade "penny stock" because of the requirements of
the penny stock rules and, as a result, the number of broker-dealers willing to
act as market makers in such securities is limited.
OUTSTANDING OPTIONS AND WARRANTS. There are currently outstanding
options and warrants to purchase 5,125,500 shares (including the Purchase Option
Warrants and the 1996 Purchase Option Warrant) in the aggregate at exercise
prices ranging between $2.00 to $6.00 per share. In addition, there are
currently 1,750,000 shares of Convertible Preferred Stock outstanding. The
exercise of such options and warrants or the conversion of the Convertible
Preferred Stock will have a dilutive effect on the ownership interests of the
Company's existing shareholders.
SHARES ELIGIBLE FOR FUTURE SALE. Currently, 3,321,213 shares of the
Common Stock held by shareholders are "restricted securities", as that term is
defined in Rule 144 under the Securities Act of 1933, as amended. All of such
shares are being registered hereby. Of such shares, 75,918 may currently be sold
under Rule 144. In addition, commencing June 7, 1998 (or June 7, 1997 if the
Securities and Exchange Commission reduces the holding period under Rule 144 to
one year), the
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<PAGE>
balance of such shares (or 3,245,295 shares) may be sold under Rule 144. Such
sales may tend to depress the price of the Company's securities. Of such
3,245,295 shares, 2,303,053 shares are subject to lock-up periods which will
terminate either on June 7, 1997 or December 7, 1997.
NO DIVIDENDS. The Company has paid no dividends on its outstanding
Common Stock and anticipates that income, if any, received from operations will
be devoted to the Company's future operations. In addition, dividends on Common
Stock are subject to the preferences for dividends on the Convertible Preferred
Stock. Accordingly, the Company does not anticipate the payment of cash
dividends on its Common Stock in the foreseeable future. Any future dividends
will depend upon earnings, if any, of the Company, its financial requirements,
and other factors.
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<PAGE>
USE OF PROCEEDS
EXERCISE OF OPTIONS, WARRANTS, PURCHASE OPTIONS, PURCHASE OPTION WARRANTS, 1996
WARRANTS, 1996 PURCHASE OPTION WARRANTS, NETPLEX WARRANTS AND KIRLIN WARRANTS.
Assuming that all of the Options, the Warrants, Purchase Options,
Purchase Option Warrants, 1996 Warrants, 1996 Purchase Options, 1996 Purchase
Option Warrants, Netplex Warrants and Kirlin Warrants are exercised, the net
proceeds to the Company the issuance of shares of Common Stock upon the exercise
of such warrants and options are estimated to be approximately $7,686,250. The
Company intends to apply any net proceeds from such exercises for the
development of additional core competency practice units, geographic expansion,
marketing, working capital and general corporate purposes.
CONVERSION OF PREFERRED STOCK
The Company will not receive any proceeds from the conversion of the
Convertible Preferred Stock.
OFFERING BY SELLING SHAREHOLDERS
The Company will not receive any of the proceeds from the sale of any
of the Merger Shares.
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<PAGE>
DILUTION
As of September 30, 1996, the unaudited net tangible book value of the
outstanding shares of the Company's Common Stock was $3,532,370, or
approximately $.55 per share based on 6,442,903 shares of Common Stock
outstanding. Assuming the issuance of an additional 1,750,000 shares of Common
Stock upon the conversion of the Convertible Preferred Stock, the Pro Forma net
tangible book value of the Company's Common Stock at September 30, 1996 would
have been $3,532,370 or approximately $.43 per share based on 8,192,903 shares
of Common Stock outstanding. Net tangible book value per share represents the
tangible assets of the Company less all liabilities, divided by the number of
shares outstanding. Dilution represents the difference between the price per
share of Common Stock paid by the holders of the Options, the Warrants, the
Purchase Options, the Purchase Option Warrants, the Convertible Preferred Stock,
the 1996 Warrants, the Purchase Option Preferred Stock, the 1996 Purchase Option
Warrants and the Netplex Warrants exercising or converting, as the case may be,
of all such securities pursuant to this Offering and the pro forma net tangible
book value per share of Common Stock after this Offering. After giving effect to
the sale of the shares of Common Stock by the Company hereby (assuming the
exercise or conversion, as the case may be, of all the Options, the Warrants,
Purchase Options, Purchase Option Warrants, 1996 Warrants, Purchase Option
Preferred Stock, 1996 Purchase Option Warrants, Netplex Warrants and Kirlin
Warrants), the adjusted net tangible book value of the Company at September 30,
1996, would have been $11,209,870 or $1.02 per share. This represents an
immediate increase in net tangible book value of $.47 per share to existing
shareholders and an immediate dilution of (i) $2.98 per share to holders of the
Options exercising their Options at $4.00; (ii) $1.98 per share to holders of
the Warrants exercising their Warrants at $3.00; (iii) $1.38 per share to
holders of the Purchase Options exercising their Purchase Options at the
equivalent of $2.40 per share (assuming no amount of the exercise price is
attributed to the purchase of the underlying Warrants) in this Offering; (iv)
$4.23 per share to holders of the Purchase Option Warrants exercising their
Purchase Option Warrants at the equivalent of $5.25 per share; (v) $1.48 per
share to holders of the 1996 Warrants exercising their 1996 Warrants at the
equivalent of $2.50 per share; (vi) $.98 per share to holders of the Purchase
Option Preferred Stock converting their Purchase Option Preferred Stock at the
equivalent of $2.00 per share; (vii) $1.48 per share to holders of the 1996
Purchase Option Warrants exercising their 1996 Purchase Option Warrants at the
equivalent of $2.50 per share; (viii) $1.48 per share to holders of the Netplex
Warrants exercising their Netplex Warrants at the equivalent of $2.50 per share
and (ix) $2.48 per share to holders of Kirlin Warrants exercising their Kirlin
Warrants at the equivalent of $3.50 per share. The following table illustrates
this dilution on a per share basis:
<TABLE>
<CAPTION>
Exercise or conversion price, as
the case may be, of Options,
Warrants, Purchase Options,
Purchase Option Warrants, 1996
Warrants, Purchase Option
Preferred Stock, 1996 Purchase
Option Warrants, Netplex Warrants
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
and Kirlin Warrants (per share)....... $4.00 $3.00 $2.40 $5.25 $2.50 $2.00 $2.50 $2.50 $3.50
Pro forma net tangible book value
per share before offering(1).......... $ .43 $ .43 $ .43 $ .43 $ .43 $ .43 $ .43 $ .43 $ .43
</TABLE>
-13-
<PAGE>
<TABLE>
<CAPTION>
Net tangible book value immediately
after the exercise or conversion of
the Options, the Warrants, the
Purchase Options, the Purchase
Option Warrants, the 1996 Warrants,
the Purchase Option Preferred Stock,
the 1996 Purchase Option Warrants
and Netplex Warrants upon exercise
or conversion, as the case may be,
of Options, Warrants, Purchase
Options, Purchase Option Warrants,
Convertible Preferred Stock, 1996
Warrants, Purchase Option Preferred
Stock, 1996 Purchase Option
Warrants, Netplex Warrants
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
and Kirlin Warrants(2)................ $ .98 $ .90 $.49 $1.02 $ .86 $.45 $ .86 $ .86 $ .94
Adjusted net tangible book value
after this Offering................... $1.02 $1.02 $1.02 $1.02 $1.02 $1.02 $1.02 $1.02 $1.02
Dilution of net tangible book value
to purchasers or converters, as the
case may be, of Common Stock
underlying Warrants, Purchase
Options, Purchase Option Warrants,
1996 Warrants, Purchase Option
Preferred Stock, 1996 Purchase
Option
Warrants, Netplex
Warrants and Kirlin Warrants.......... $2.98 $1.98 $1.38 $4.23 $1.48 $.98 $1.48 $1.48 $2.48
===== ===== ===== ===== ===== ==== ===== ===== =====
</TABLE>
(1) Reflects the receipt of the Net Proceeds from the August 1996 Private
Placement and the conversion of 1,750,000 shares of Convertible
Preferred Stock into 1,750,000 shares of Common Stock.
(2) Assumes that all options and warrants (excluding options granted under
the 1992 Plan and the Directors' Plan) which have an exercise price
which is less than or equal to the exercise price of the warrant or
option have been exercised.
-14-
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The directors and executive officers of the Company are as follows:
Name Age Position
- ---- --- --------
Gene Zaino 39 President, Chief Executive Officer &
Director
Howard Landis 42 Director
Richard Goldstein 50 Director
Kathryn C. Eggleston 32 Secretary & Treasurer
Neil Luden 41 Director
Deborah Schondorf- 32 Director
Novick
SELLING SHAREHOLDERS
The following table sets forth (i) the number of shares of Common Stock
owned by each Selling Shareholder at September 30, 1996; (ii) the number of
shares being offered for resale hereby by each Selling Shareholder; and (iii)
the number and percentage of shares of Common Stock to be held by each Selling
Shareholder after the completion of this Offering. Except as otherwise indicated
in the Footnotes to such table, none of such Selling Shareholders has been an
officer, director or employee of the Company for the past three years.
-15-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Common Shares to be
Stock Beneficially Owned Sold in Shares Beneficially Owned
Name Prior To Offering(1) Offering After Offering
---- -------------------- -------- --------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Harvey B. Adams 25,000(2) * 50,000 0 0
Ronald J. Adams 12,500(2) * 25,000 0 0
Larry Altman 25,000(2) * 50,000 0 0
Jan Arnett, M.D. 25,000(2) * 50,000 0 0
B&B Trading Corp. Retirement 25,000(2) * 50,000 0 0
Plan
Neil Bellet 25,000(2) * 50,000 0 0
Kenneth Cole 37,500(2) * 75,000 0 0
Craig W. Effron 12,500(2) * 25,000 0 0
Drew Effron 12,500(2) * 25,000 0 0
Richard Etra 12,500(2) * 25,000 0 0
Steven Etra 50,000(2) * 100,000 0 0
F&T Planning Centers, Inc. 12,500(2) * 25,000 0 0
Ernest Gottdiener 25,000(2) * 50,000 0 0
Scott & Lee Havens, JTWROS 25,000(2) * 50,000 0 0
Gloria Hindes 12,500(2) * 25,000 0 0
Frank & Charlotte Joy, JTWROS 12,500(2) * 25,000 0 0
Stuart Kahn & Company 12,500(2) * 25,000 0 0
Daniel Kaplan 12,500(2) * 25,000 0 0
Richard Kaufman & Elaine J. 25,000(2) * 50,000 0 0
Leanaut, JTWROS
Norman Kurtz 25,000(2) * 50,000 0 0
Howard Landis 50,000(2)(3) * 100,000 0 0
Dr. Steven B. Landman 6,250(2) * 12,500 0 0
Mariwood Investments 25,000(2) * 50,000 0 0
Jonathan & Patricia Meyers, 25,000(2) * 50,000 0 0
JTWROS
The Northern Union Club 50,000(2) * 100,000 0 0
Russell D. Pollock & Susan K. 6,250(2) * 12,500 0 0
Waldman, JTWROS
Mark H. Rachesky 50,000(2) * 100,000 0 0
RJB Partners 12,500(2) * 25,000 0 0
Steven Rosen 12,500(2) * 25,000 0 0
Alan J. Rubin 25,000(2) * 50,000 0 0
Jeffrey Rubinstein 25,000(2) * 50,000 0 0
Curtis Schenker 12,500(2) * 25,000 0 0
Leonard M. Schiller 12,500(2) * 25,000 0 0
Phillip J. Schiller 12,500(2) * 25,000 0 0
Dean Spellman 6,250(2) * 12,500 0 0
David Thalheim Revocable Living 37,500(2) * 75,000 0 0
Trust DTD 3/5/96
</TABLE>
-16-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Common Shares to be
Stock Beneficially Owned Sold in Shares Beneficially Owned
Name Prior To Offering(1) Offering After Offering
---- -------------------- -------- --------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Greg Trubowitsch 6,250(2) * 12,500 0 0
Vanwood 72nd Street Assoc. LP 100,000(2) 1.5% 200,000 0 0
Richard Warren 12,500(2) * 25,000 0 0
Charles Warshaw 25,000(2) * 50,000 0 0
Michael Weissman 25,000(2) * 50,000 0 0
Woodland Partners 125,000(2) 1.9% 250,000 0 0
William Wolfson 12,500(2) * 25,000 0 0
Mel Atlas 12,500(2) * 25,000 0 0
Marvin Baron 37,500(2) * 75,000 0 0
Norman Basner 12,500(2) * 25,000 0 0
Arthur Birnbaum 12,500(2) * 25,000 0 0
Edward Cohen 12,500(2) * 25,000 0 0
Michael Cohen 12,500(2) * 25,000 0 0
Bruce Frankel 12,500(2) * 25,000 0 0
Morris Goldfarb 25,000(2) * 50,000 0 0
Stuart Goldstein 12,500(2) * 25,000 0 0
Gertrude Gordon 12,500(2) * 25,000 0 0
Jeffrey Greenstein 12,500(2) * 25,000 0 0
Jeffrey Herdan 25,000(2) * 50,000 0 0
James Jannello 12,500(2) * 25,000 0 0
Harry Karten 12,500(2) * 25,000 0 0
Joel Katz Profit Sharing Plan 12,500(2) * 25,000 0 0
Steven Kess 12,500(2) * 25,000 0 0
Anton & Margie Kirincic, JTWROS 12,500(2) * 25,000 0 0
Abraham Klein 50,000(2) * 100,000 0 0
Susan Lary 25,000(2) * 50,000 0 0
Zena Lary Trust 12,500(2) * 25,000 0 0
Monis Lev 12,500(2) * 25,000 0 0
Ruben Levitin & Jamie Walter 12,500(2) * 25,000 0 0
Cordoba, JTWROS
Miguel Lieber 12,500(2) * 25,000 0 0
Charles Lindner 12,500(2) * 25,000 0 0
Peter Lontai, M.D. 12,500(2) * 25,000 0 0
Eva Low 25,000(2) * 50,000 0 0
Alvin Margulies 12,500(2) * 25,000 0 0
John Milcetich 50,000(2) * 100,000 0 0
Mel Paikoff 12,500(2) * 25,000 0 0
Jaques Palombo 12,500(2) * 25,000 0 0
Bertram Podell 12,500(2) * 25,000 0 0
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Common Shares to be
Stock Beneficially Owned Sold in Shares Beneficially Owned
Name Prior To Offering(1) Offering After Offering
---- -------------------- -------- --------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Milton & Blanche Prane, JTWROS 12,500(2) * 25,000 0 0
Mark Rubin 25,000(2) * 50,000 0 0
Stanley Spielman Profit Sharing 25,000(2) * 50,000 0 0
Plan
Stanley Spielman 45,000(4) * 70,000 0 *
Ted Tashlik 12,500(2) * 25,000 0 0
Saul Victor Profit Sharing Plan 12,500(2) * 25,000 0 0
Ben Bazian(6) 43,587 * 36,920 6,667 *
Michael C. Buchner(6) 13,949 * 615 13,333 *
Eden Cowans(6) 3,179 * 1,846 1,333 *
Dale A. Dillow(6) 3,910 * 3,077 833 *
Kathryn C. Eggleston(6) 17,025 * 3,692 13,333 *
Stan W. Fischer(6) 481,713 7.4% 448,380(21) 33,333 *
Elizabeth Fleischer(6) 31,569 * 26,903 4,667 *
Aimee Harabes(6) 18,785 * 13,451 5,333 *
Frank D. Henderson(6) 37,946 * 24,612 13,333 *
David Koehler(6) 31,793 * 18,460 13,333 *
Leo Komorowski(6) 949 * 615 333 *
Don L. Lehman(6) 9,744 * 3,077 6,667 *
Michelle Love(6) 949 * 615 333 *
Joseph McCoy(6) 31,793 * 18,460 13,333 *
Diane E. Moore(6) 949 * 615 333 *
Michael O'Connor(6) 483,026 7.4% 408,026(21) 75,000 *
James L. Patterson(6) 4,410 * 3,077 1,333 *
Azita L. Rutti(6) 641 * 308 333 *
Andrew W. Schug(6) 308 * 308 0 0
John & Elizabeth Ann Thompson, 355,746 5.2% 230,746(21) 125,000 *
JTWROS(6)
Ann M. Utt(6) 3,512 * 1,846 1,667 *
John P. Williams(5)(6) 1,141 * 308 833 *
Gene F. Zaino(5)(6) 1,529,850 23% 1,322,350 207,500 1.9%
Scott Pogoda 649,778 10.6% 649,778 0 0
Ayudh Athakravi-Soonthorn 177,212 2.8% 177,212 0 0
GKN Securities Corp. 70,468(7) 1.1% 96,936 0 0
David M. Nussbaum 25,219(8) * 32,438 0 0
Roger Gladstone 25,219(8) * 32,438 0 0
Robert Gladstone 25,219(8) * 32,438 0 0
Richard Buonocore 2,000(9) * 2,000 0 0
Wien Securities Corp. 100,000(10) 1.5% 100,000 0 0
</TABLE>
-18-
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Common Shares to be
Stock Beneficially Owned Sold in Shares Beneficially Owned
Name Prior To Offering(1) Offering After Offering
---- -------------------- -------- --------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Kirlin Securities, Inc. 69,375(11) * 108,750 0 0
Applewood Associates, L.P. 50,000(12) 4.3% 50,000 0 0
Eli Oxenhorn 50,000(13) * 50,000 0 0
Irwin Lieber 175,000(14) 2.6% 300,000 0 0
Barry Rubenstein 275,000(15) 3.4% 500,000 0 0
Anthony DeFrances 202,959(16) 3.1% 37,959 165,000 1.5
Eileen DeFrances 37,959 * 37,959 0 0
Ronald Birnbaum 90,000(17) 1.0% 70,000 20,000 *
Seymour Cohen 170,000(18) 2.2% 130,000 40,000 *
David O. Lindner 15,000(19) * 15,000 0 0
Anthony J. Kirincig 15,000(19) * 15,000 0 0
Robert A. Paduano 15,000(19) * 15,000 0 0
Steven Wolosky 10,000(20) * 10,000 0 0
James P. McNiel 10,000(20) * 10,000 0 0
</TABLE>
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Commission and generally includes voting or investment power with respect
to securities. Shares of the Company's Common Stock subject to options,
warrants and convertible preferred stock currently exercisable or
convertible, or exercisable or convertible within sixty (60) days, are
deemed outstanding for computing the percentage of the person holding
such options or warrants but are not deemed outstanding for computing the
percentage of any other person.
(2) Consists of presently issuable Conversion Shares underlying Convertible
Preferred Stock. Does not include a like number of 1996 Warrant Shares
issuable upon exercise of the 1996 Warrants, which 1996 Warrants are
exercisable at any time during the period commencing March 19, 1997 and
ending September 19, 2001. All of such Conversion Shares and 1996 Warrant
Shares are being offered for resale pursuant to this Prospectus. All of
such Shares may not be sold until September 1997 without the consent of
the Underwriter.
(3) Mr. Landis has been a Director of the Company since June 1996.
(4) Includes (i) 25,000 presently issuable Conversion Shares underlying
Convertible Preferred Stock; and (ii) 20,000 presently issuable Warrant
Shares underlying the Warrants. Does not include 25,000 1996 Warrant
Shares issuable upon exercise of the 1996 Warrants, which 1996 Warrants
are exercisable at any time during the period commencing March 19, 1997
and ending September 19, 2001. All of such Conversion Shares, Warrant
Shares and 1996 Warrant Shares are being offered for resale pursuant to
this Prospectus.
(5) Mr. Zaino has been a Director of the Company since August 1995 and the
President and Chief Executive Officer of the Company since June 1996.
Includes presently exercisable options to purchase 207,500 shares of
Common Stock which are presently exercisable or exercisable within 60
days. Mr. Zaino may not sell any of the shares being offered by him for
resale until December 7, 1997 without the consent of the Underwriter.
(6) Has been an employee of the Company or a subsidiary of the Company since
June 1996. The amount beneficially owned by such person includes options
exercisable within 60 days.
(7) Consists of (i) 22,000 presently issuable Purchase Option Shares
underlying Purchase Options; (ii) 22,000 presently issuable Purchase
Option Warrant Shares underlying Purchase Option Warrants, which
presently issuable Purchase Option Warrants underlie Purchase Options;
and (iii) 26,468 presently issuable Purchase Option Conversion Shares
underlying shares of Convertible Preferred Stock. Does not include 26,468
1996 Purchase Option Warrant Shares. The Purchase Options are presently
exercisable until March 8, 1998 and the Purchase Option Warrants, upon
grant, would be presently exercisable until March 10, 2000. The 1996
Purchase Options are presently exercisable until September 19, 2001 and
the 1996 Purchase Option Warrants, upon grant, would be exercisable at
any time during the period commencing March 19, 1997 and ending September
19, 2001. All of such Purchase Option Shares, Purchase Option Warrant
Shares, Purchase Option Conversion Shares and 1996 Purchase Option
Warrant Shares are being offered for resale pursuant to this Prospectus.
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(8) Consists of (i) 9,000 presently issuable Purchase Option Shares
underlying Purchase Options; (ii) 9,000 presently exercisable Purchase
Option Warrant Shares underlying Purchase Option Warrants, which
presently issuable Purchase Option Warrants underlie Purchase Options;
and (iii) 7,219 presently issuable Purchase Option Conversion Shares
underlying shares of Convertible Preferred Stock. Does not include 7,219
1996 Purchase Option Warrant Shares. The Purchase Options are presently
exercisable until March 8, 1998 and the Purchase Option Warrants, upon
grant, would be presently exercisable until March 10, 2000. The 1996
Purchase Options are presently exercisable until September 19, 2001 and
the 1996 Purchase Option Warrants, upon grant, would be exercisable at
any time during the period commencing March 19, 1997 and ending September
19, 2001. All of such Purchase Option Shares, Purchase Option Warrant
Shares, Purchase Option Conversion Shares and 1996 Purchase Option
Warrant Shares are being offered for resale pursuant to this Prospectus.
(9) Consists of (i) 1,000 presently issuable Purchase Option Shares
underlying Purchase Options; and (ii) 1,000 presently exercisable
Purchase Option Warrant Shares underlying Purchase Option Warrants, which
presently issuable Purchase Option Warrants underlie Purchase Options.
The Purchase Options are presently exercisable until March 8, 1998 and
the Purchase Option Warrants, upon grant, would be presently exercisable
until March 10, 2000. All of such Purchase Option Shares and Purchase
Option Warrant Shares are being offered for resale pursuant to this
Prospectus.
(10) Consists of (i) 50,000 presently issuable Purchase Option Shares
underlying Purchase Options; and (ii) 50,000 presently exercisable
Purchase Option Warrant Shares underlying Purchase Option Warrants, which
presently issuable Purchase Option Warrants underlie Purchase Options.
The Purchase Options are presently exercisable until March 8, 1998 and
the Purchase Option Warrants, upon grant, would be presently exercisable
until March 10, 2000. All of such Purchase Option Shares and Purchase
Option Warrant Shares are being offered for resale pursuant to this
Prospectus.
(11) Consists of 39,375 presently issuable Purchase Option Conversion Shares
underlying 1996 Purchase Options. Does not include 39,375 1996 Purchase
Option Warrant Shares underlying 1996 Purchase Option Warrants, which
presently issuable Purchase Option Warrants underlie 1996 Purchase
Options or 30,000 Kirlin Shares. The 1996 Purchase Options are presently
exercisable until September 19, 2001 and the 1996 Purchase Option
Warrants, upon grant, would be exercisable at any time during the period
commencing March 19, 1997 and ending September 19, 2001. All of such 1996
Purchase Option Shares, 1996 Purchase Option Warrant Shares and Kirlin
Shares are being offered for resale pursuant to this Prospectus.
(12) Includes 50,000 Warrant Shares issuable upon exercise of the Warrants,
which Warrants are presently exercisable until March 1997. All of such
Warrant Shares are being offered for resale pursuant to this Prospectus.
(13) Consists of 50,000 Option Shares issuable upon exercise of the Options,
which Options are presently exercisable. All of such Option shares are
being offered for resale pursuant to this Prospectus. Mr. Oxenhorn is a
limited partner of Applewood Associates, L.P. ("Applewood"), but as a
limited partner he is not deemed to have beneficial ownership of any of
the shares held by Applewood. Mr. Oxenhorn was a Director of the Company
for more than 2 years prior to August 1995.
(14) Consists of 50,000 Option Shares and securities held by Applewood and
Woodland Partners ("Woodland"). Mr. Lieber may be deemed a beneficial
owner of such securities. Mr. Lieber disclaims beneficial ownership of
such securities. Mr. Lieber was a Director of the Company for more than
two years prior to August 1995.
(15) Consists of 50,000 Option Shares and securities held by Woodland,
Applewood and Vanwood 72nd Street Assoc. LP. Mr. Rubenstein may be deemed
to be a beneficial owner of such securities. Mr. Rubenstein disclaims
beneficial ownership of all such securities. Mr. Rubenstein was a
Director of the Company for more than 2 years prior to August 1995.
(16) Includes 165,000 shares of Common Stock issuable upon exercise of certain
presently exercisable options. Mr. DeFrances has been a Director of the
Company since August 1995 and has been an officer of TDS for more than
three years. Does not include Shares of Common Stock held by Eileen
DeFrances, the wife of Anthony DeFrances.
(17) Includes 45,000 Warrant Shares issuable upon exercise of the Warrants.
All of such Warrant Shares are being offered for resale pursuant to this
Prospectus. Also includes 25,000 Kirlin Shares, all of which are being
offered for resale pursuant to this Prospectus.
(18) Includes 105,000 Warrant Shares issuable upon exercise of the Warrants.
All of such Warrant Shares are being offered for resale pursuant to this
Prospectus. Also includes 25,000 Kirlin Shares, all of which are being
offered for resale pursuant to this Prospectus.
(19) Consists of Kirlin Shares, all of which are being offered for resale
pursuant to this Prospectus.
(20) Consists of 10,000 Option Shares issuable upon exercise of the Options.
All of such Option Shares are being offered for resale pursuant to this
Prospectus.
(21) The Shares being offered for resale by such person may not be sold until
June 7, 1997 without the consent of the Underwriter.
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DESCRIPTION OF SECURITIES
The Company is authorized to issue 20,000,000 shares of the Company's
Common Stock, par value $.001 per share, and 2,000,000 shares of preferred
stock, par value $.01 per share. As of the date of this Prospectus, [6,442,903]
shares of the Company's Common Stock are currently issued and outstanding
convertible and 1,750,000 shares of Preferred Stock are issued and outstanding,
and after the completion of this Offering, assuming the exercise or conversion,
as the case may be, of all of the Options, the Warrants, the Purchase Options,
the Purchase Option Warrants, the Convertible Preferred Stock, the 1996
Warrants, the Purchase Option Preferred Stock, the 1996 Purchase Option Warrants
or the Netplex Warrants, there will be 10,982,903 shares of the Company's Common
Stock issued and outstanding and no shares of Convertible Preferred Stock issued
and outstanding.
COMMON STOCK
The holders of Common Stock are entitled to one vote for each share
held of record on all matters to be voted on by shareholders. There is no
cumulative voting with respect to the election of directors, with the result
that the holders of more than 50% of the shares voted can elect all of the
directors then being elected at a meeting at which a quorum is present. The
holders of Common Stock are entitled to receive dividends when, as and if
declared by the Board of Directors out of funds legally available therefor. In
the event of liquidation, dissolution or winding up of the Company, the holders
of Common Stock are entitled to share ratably in all assets remaining available
for distribution to them after payment of liabilities and after provision has
been made for the Convertible Preferred Stock and any other class of stock, if
any, having preference over the Common Stock. Holders of shares of Common Stock,
as such, have no redemption, preemptive or other subscription rights, and there
are no conversion provisions applicable to the Common Stock.
CONVERTIBLE PREFERRED STOCK
DIVIDENDS. Each share of Convertible Preferred Stock has a stated value
(the "Stated Value") $2.00 and earn cumulative dividends at 10% per annum
payable in additional shares of Convertible Preferred Stock or in cash, at the
Company's option.
LIQUIDATION PREFERENCES. Upon a liquidation of the Company (including a
merger of the Company where the Company is not the survivor or a sale by the
Company of all or substantially all of its assets), the holders of the
Convertible Preferred Stock shall be entitled to receive, prior to the
distribution to the other securityholders of the Company, an amount per share
equal to the greater of (i) two times the Stated Value plus any accrued and
unpaid dividends, or (ii) the amount they would have received had they converted
the Convertible Preferred Stock into Common Stock on the business day
immediately prior to such liquidation.
RANKING. The Convertible Preferred Stock ranks senior to all other
classes of the capital stock of the Company, whether now existing or hereinafter
created, including, but not limited to, any other series of preferred stock.
CONVERSION. The holders of the Convertible Preferred Stock have the
right, at any time, to convert each share of Preferred Stock into one share of
Common Stock.
REDEMPTION. Subject to this conversion right, the Company may redeem
the Convertible Preferred Stock at its Stated Value plus all accrued and unpaid
dividends if the Registration Statement of which this Prospectus forms a part,
is current and effective, upon 30 days written notice given at any time (i)
during the first two years after September 19, 1996, the closing date of the
1996 Private Placement (the "Closing"), if the last sale price of the Common
Stock has
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been at least $3.75 on all 20 of the trading days ending on the third date prior
to the date on which written notice of redemption is given; (ii) during the
third year after the Closing, if the last price of the Common Stock has been at
least $4.6875 on all 20 of the trading days ending on the third date prior to
the date on which written notice of redemption is given; (iii) during the fourth
year after the Closing, if the last sale price of the Common Stock has been at
least $5.00 on all 20 of the trading days ending on the third date prior to the
date on which written notice of redemption is given; and (iv) after the fourth
year after the Closing, if the last sale price of the Common Stock has been at
least 20 percentage points higher than the prior year's price as such prior
year's price relates to $2.50 per share (i.e., 220% of $2.50 in the fifth year,
240% of $2.50 in the sixth year, etc.) on all 20 of the trading days ending on
the third date prior to the date on which notice of redemption is given.
VOTING. The holders of the Convertible Preferred Stock have no voting
rights until such time as they convert their Convertible Preferred Stock into
Common Stock, except as provided by law.
PURCHASE OPTIONS AND PURCHASE OPTION WARRANTS
The Purchase Options entitle the holders thereof to purchase a unit,
which unit consists of (i) one share of Common Stock; and (ii) one Purchase
Option Warrant at an exercise price of $2.40 per Purchase Option. The Purchase
Option Warrants underlying the Purchase Options are not redeemable by the
Company. The Purchase Options contain anti-dilution provisions providing for
adjustment of the exercise price upon the occurrence of certain events,
including the issuance of shares of Common Stock at a price per share less than
the exercise price or the market price of the Common Stock, or in the event of
any recapitalization, reclassification, stock dividend, stock split, stock
combination or similar transaction. The Purchase Options grant to the holders
thereof certain piggyback and demand rights for periods of seven and five years,
respectively, from March 10, 1993 with respect to the registration under the
Securities Act of the securities directly and indirectly issuable upon exercise
of the Purchase Options.
During the six-year period commencing March 10, 1994, each Purchase
Option Warrant entitles the holder thereof to purchase one share of the
Company's Common Stock at an exercise price of $5.25 per share. The Purchase
Option Warrants are not redeemable by the Company. In the event a holder of the
Purchase Option Warrants fails to exercise the Purchase Option Warrants prior to
their expiration, the Purchase Option Warrants will expire and the holder
thereof will have no further rights with respect to the Purchase Option
Warrants.
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1996 PURCHASE OPTIONS AND 1996 PURCHASE OPTION WARRANTS
The 1996 Purchase Options entitle the holders thereof to purchase, at
an exercise price of $2.00, a unit, which unit consists of (i) one share
Convertible Preferred Stock; and (ii) one 1996 Purchase Option Warrant. The
rights granted by the 1996 Purchase Options, including the exercise price and
the number of shares to be received upon exercise may, upon the occurrence of
certain specified events, be adjusted. The 1996 Purchase Options grant to the
holders thereof certain registration rights with respect to the registration
under the Securities Act of the Common Stock directly and indirectly issuable
upon exercise of the 1996 Purchase Options.
The 1996 Warrants to purchase an aggregate of 1,750,000 shares of
Common Stock at an exercise price of $2.50 per share, all of which are
exercisable at any time during the period commencing March 19, 1997 and ending
September 19, 2001. Notwithstanding any other provision set forth in the 1996
Warrant, at any time and from time to time during the period that the 1996
Warrant is exercisable, the Company in its sole discretion upon appropriate
notice to the Registered Holder may reduce the exercise price of the 1996
Warrant or extend the period during which the 1996 Warrant is exercisable. No
fractional shares of Common Stock will be issued in connection with the exercise
of the 1996 Warrants. Upon exercise, the Company will pay the holder the value
of any such fractional shares in cash, based upon the market value of the Common
Stock at such time. Unless extended by the Company at its discretion, the 1996
Warrants will expire at 5:00 p.m, Eastern Standard time, on the fifth
anniversary date of the Closing. In the event a holder of the 1996 Warrants
fails to exercise his 1996 Warrants prior to their expiration, such 1996
Warrants will expire and the holder thereof will have no further rights with
respect to the 1996 Warrants. A holder of the 1996 Warrants will not have any
rights, privileges or liabilities as a shareholder of the Company prior to
exercise of the 1996 Warrants. The Company is required to keep reserved a
sufficient number of authorized shares of Common Stock to permit the exercise of
the 1996 Warrants. The exercise price of the 1996 Warrants and the number of
shares of Common Stock issuable upon exercise of the 1996 Warrants will be
subject to adjustment to protect against dilution in the event of stock
dividends, stock splits, combinations, subdivisions and reclassifications.
In the event the Company has an effective registration statement
covering the Common Stock issuable upon exercise of the 1996 Warrants, and
provided that notice of redemption of not less than 30 days is given and the
last sale price of the Common Stock has been at least 200% of the Closing Price
on all 20 of the trading days ending on the third business day prior to the day
on which notice is given, the Company shall have the right to call the 1996
Warrants for redemption at a redemption price of $.01 per 1996 Warrant.
DIVIDENDS
To date, the Company has not paid any dividends on its Common Stock.
The payments of dividends, if any, in the future is within the discretion of the
Board of Directors and will depend upon the Company's earnings, its capital
requirements and financial condition, and other relevant factors. The Company
does not intend to declare any dividends in the foreseeable future, but instead
intends to retain all earnings, if any, for use in the Company's business.
WARRANTS
In March 1992, in connection with the 1992 Private Placement, the
Company issued Warrants to purchase an aggregate of 220,000 shares of Common
Stock at an exercise price of $3.00 per share, all of which are exercisable at
any time prior to March 23, 1997.
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NETPLEX WARRANTS
In June 1996, the Company issued the Netplex Warrants to purchase an
aggregate of 150,000 shares of Common Stock at an exercise price of $2.50 per
share, exercisable at any time until June 2001.
KIRLIN WARRANTS
In April 1996, the Company issued the Kirlin Warrants to purchase an
aggregate of 125,000 Shares of Common Stock at an exercise price of $3.50 per
share, exercisable at any time until April 2001.
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PLAN OF DISTRIBUTION
This offering is self-underwritten; the Company has not employed an
underwriter for the resale of Common Stock by the Selling Shareholders or the
issuance of the Common Stock upon the exercise or conversion, as the case may
be, of the Options, the Warrants, the Purchase Options, the Purchase Option
Warrants, the Convertible Preferred Stock, the 1996 Warrants, the Purchase
Option Preferred Stock, the 1996 Purchase Option Warrants or the Netplex
Warrants, or the issuance of the Purchase Option Warrants, as the case may be,
and will bear all expenses of this Offering.
SELLING SHAREHOLDER SHARES
The Common Stock may be reoffered and resold for the account of the
Selling Shareholders from time to time in the over-the-counter market or the
Boston Stock Exchange, or in negotiated transactions, at fixed prices which may
be changed or at negotiated prices. The Selling Shareholders may effect such
transactions by selling shares to or through broker-dealers, and all such
broker-dealers may receive compensation in the form of discounts, concessions,
or commissions from the Selling Shareholders and/or the purchasers of shares for
whom such broker-dealers may act as agent or to whom they sell as principal, or
both (which compensation as to a particular broker-dealer might be in excess of
customary commissions).
Any broker-dealer acquiring shares from the Selling Shareholders may
sell the shares either directly, in its normal market-making activities, through
or to other brokers on a principal or agency basis or to its customers. Any such
sales may be at prices then prevailing in the over-the-counter market or at
prices related to such prevailing market prices or at negotiated prices to its
customers or a combination of such methods. The Selling Shareholders and any
broker-dealers that act in connection with the sale of the Common Stock
hereunder might be deemed to be "underwriters" within the meaning of Section
2(11) of the Securities Act; any commissions received by them and any profit on
the resale of shares as principal might be deemed to be underwriting discounts
and commissions under the Securities Act. Any such commissions, as well as other
expenses incurred by the Selling Shareholders and applicable transfer taxes, are
payable by the Selling Shareholders.
EXERCISE OF OPTIONS, WARRANTS, PURCHASE OPTIONS, PURCHASE OPTION WARRANTS, 1996
WARRANTS, 1996 PURCHASE OPTIONS, 1996 PURCHASE OPTION WARRANTS, NETPLEX WARRANTS
AND KIRLIN WARRANTS.
The Options, the Warrants, the Purchase Options, the Purchase Option
Warrants, the 1996 Warrants, the 1996 Purchase Options, the 1996 Purchase Option
Warrants, the Netplex Warrants and the Kirlin Warrants may be exercised, when
exercisable, at the discretion of the holder thereof, by the delivery to the
Company at its principal executive offices at 8260 Greensboro Drive, 5th Floor,
McLean, Virginia 22101 of a Warrant, Purchase Option, Purchase Option Warrant,
1996 Warrant, 1996 Purchase Option, 1996 Purchase Option Warrant, the Netplex
Warrants and the Kirlin Warrants, accompanied by an election of exercise and
payment of the exercise price for each share of Common Stock purchased in
accordance with the terms of such Warrant, Purchase Option, the Purchase Option
Warrant, 1996 Warrant, 1996 Purchase Warrant, 1996 Purchase Option Warrant, the
Netplex Warrant and the Kirlin Warrants, as the case may be. Payment must be
made in the form of cash or check payable to the order of the Company.
CONVERSION OF CONVERTIBLE PREFERRED STOCK.
The Convertible Preferred Stock may be exercised, when convertible, at
the discretion of the holder thereof, by the surrender to the Company at its
principal executive offices at 8260 Greensboro Drive, 5th Floor, McLean,
Virginia 22101 of the Convertible Preferred Stock share certificate or
certificates, duly endorsed, and shall give written notice to the Company at its
principal corporate
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office, of the election to convert the same and shall state therein the name or
names in which the certificate or certificates for shares of Common Stock are to
be issued. Such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of
Convertible Preferred Stock to be converted, and the person or persons entitled
to receive the shares of Common Stock issuable upon such conversion shall be
treated for all purposes as the record holder or holders of such shares of
Common Stock as of such date.
LEGAL MATTERS
The legality of the shares of Common Stock reoffered hereby has been
passed upon for the Company and the Selling Shareholders by Olshan Grundman
Frome & Rosenzweig LLP, New York, New York. Steven Wolosky, a member of Olshan
Grundman Frome & Rosenzweig LLP, holds options to purchase 10,000 shares of the
Common Stock of the Company.
EXPERTS
The consolidated financial statements of The Netplex Group, Inc. and
subsidiaries (formerly CompLink, Ltd.) as of July 31, 1995, and for each of the
years in the two year period ended July 31, 1995; the financial statements of
The Netplex Group, Inc. (formerly CompuServe Systems Integration Group
Mid-Atlantic, Inc.) as of December 31, 1995, and for the year then ended; the
financial statements of America's Work Exchange, Inc. and subsidiary as of
December 31, 1995, and for the year ended December 31, 1995 and the period from
April 21, 1994 (inception) to December 31, 1994; and the financial statements of
Software Resources of New Jersey, Inc. as of December 31, 1995, and for each of
the year ended December 31, 1995, incorporated by reference herein, have been
incorporated by reference in the registration statement in reliance upon the
report of KPMG Peat Marwick LLP, independent certified public accountants,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
The financial statements of The Netplex Group, Inc. (formerly
CompuServe Systems Integration Group Mid-Atlantic, Inc.) as of December 31,
1994, and for the year then ended incorporated by reference herein, have been
incorporated by reference in the registration statement in reliance upon the
report of Tocci, Goldstein & Company LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Amended and Restated Certificate of Incorporation of the Company
provides that the Company shall indemnify to the fullest extent permitted by New
York law any person whom it may indemnify thereunder, including directors,
officers, employees and agents of the Company. Such indemnification (other than
as ordered by a court) shall be made by the Company only upon a determination
that indemnification is proper in the circumstances because the individual met
the applicable standard of conduct. Advances for such indemnification may be
made pending such determination. In addition, the Amended and Restated
Certificate of Incorporation provides for the elimination, to the extent
permitted by New York law, of personal liability of directors to the Company and
its shareholders for monetary damages for breach of fiduciary duty as directors.
Section 721 through 726 inclusive of the New York Business Corporation
Law (the "New York BCL") also contain provisions relating to the indemnification
of officers and directors. The New York BCL provides that a corporation may (but
is not required to) indemnify a director or officer against judgments, fines,
amounts paid in settlement and reasonable expenses of litigation (other than in
an action brought by the corporation against such person or by shareholders
against such person on behalf of the corporation), even if the director or
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officer is not successful on the merits, if he acted in good faith and for a
purpose he reasonably believed to be in (or not opposed to) the best interests
of the corporation (and, criminal actions or proceedings, had no reason to
believe his conduct was unlawful). In addition, a corporation may (but is not
required to) indemnify a director or officer against amounts paid in settlement
and reasonable expenses of an action brought against him by the corporation or
by shareholders on behalf of the corporation, even if he is not successful on
the merits, if he acted in good faith and for a purpose he reasonably believed
to be in (or not opposed to) the best interests of the corporation. However, no
indemnification is permitted in an action by the corporation, or shareholders on
behalf of the corporation, in connection with the settlement or other
disposition of a threatened or pending action or in connection with any claim,
issue or matter as to which a director or officer is adjudged to be liable to
the corporation, unless a court determines that, in view of all of the
circumstances, he is entitled to indemnity for such portion of the settlement
amount and expenses as the court deems proper. In addition, the New York BCL
provides that a director or officer shall be indemnified if such person is
successful in the litigation on the merits or otherwise.
Permitted indemnification as described above may only be made if it is
authorized by the Board of Directors, in each specific case, based upon a
determination that the applicable standard of conduct has been met or that
indemnification is proper under New York BCL Section 721. Such authorization is
made by the Board of Directors, either acting as a quorum of disinterested
directors or based upon an opinion by independent legal counsel or the
shareholders that indemnification is proper because the applicable standard of
conduct has been met. Upon application of the person seeking indemnification, a
court may also award indemnification upon a determination that the standards
outlined above have been met. A corporation's board of directors may also
authorize the advancement of litigation expenses to a director or officer upon
receipt of an undertaking by him to repay such expenses, if it is ultimately
determined that he is not entitled to be indemnified for them.
The Company has also agreed to indemnify each director and executive
officer pursuant to an Indemnification Agreement with each such director and
executive officer from and against any and all expenses, losses, claims, damages
and liability incurred by such director or executive officer for or as a result
of action taken or not taken while such director or executive officer was acting
in his capacity as a director, officer, employee or agent of the Company.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Company of expenses incurred or paid
by a director, officer or controlling person of the Company in the successful
defense of any action, suit or proceeding) is asserted by such director, officer
or controlling person in connection with the securities being registered, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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No dealer, salesman or any other person is authorized to give any information or
to make any representations in connection with this offering not contained in
this Prospectus and, if given or made, such information or representations must
not be relied upon as having been *authorized by the Company. This Prospectus
does not constitute an offer to sell or solicitation of any offer to buy any
security other than the Securities offered by this Prospectus or an offer by any
person in any jurisdiction where such an offer or solicitation is not authorized
or is unlawful. The delivery of this Prospectus shall not, under any
circumstances, create any implication that information herein is correct as of
any time subsequent to its date.
TABLE OF CONTENTS
Page
Incorporation of Certain Documents
By Reference......................................... 3
Prospectus Summary..................................... 4
Risk Factors........................................... 8
Use of Proceeds........................................ 12
Dilution............................................... 13
Management............................................. 15
Principal and Selling Shareholders..................... 15
Description of Securities.............................. 21
Plan of Distribution................................... 25
Legal Matters.......................................... 26
Experts................................................ 26
Indemnification for Securities Act Liability........... 26
7,861,213 Shares of Common Stock
100,000 Warrants
THE NETPLEX GROUP, INC.
PROSPECTUS
, 1996
<PAGE>
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses in connection with the issuance and distribution of the
securities being registered, all of which, will be paid by the Registrant, are
as follows:
SEC Registration Fee.................... $ 7,942.92
Accounting Fees and Expenses............ 10,000
Legal Fees and Expenses................. 15,000
Blue Sky Fees and Expenses.............. 5,000
Miscellaneous Expenses.................. 12,057.08
-----------
Total................................... $ 50,000
===========
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* To be filed by amendment.
Item 15. Indemnification of Directors and Officers.
Except as hereinafter set forth, there is no statute, charter
provision, by-law, contract or other arrangement under which any controlling
person, director or officer of the Company is insured or indemnified in any
manner against liability which he may incur in his capacity as such.
The Company's authority to indemnify its directors and officers is
governed by the provisions of Article 7 of the New York Business Corporation Law
(the "BCL").
Section 722 of the BCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
judgments, fines, amounts paid in settlement, and reasonable expenses, including
attorneys' fees, in connection with actions or proceedings, whether civil or
criminal (other than an action by or in the right of the corporation--a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except indemnification only
extends to amounts paid in settlement and reasonable expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
actions, and the statute does not apply in respect of a threatened action, or a
pending action that is settled or otherwise disposed of, and requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Section 721 of the BCL
provides that Article 7 of the BCL is not exclusive of other indemnification
that may be granted by a corporation's certificate of incorporation,
disinterested director vote, shareholder vote, agreement or otherwise.
A more specific description of the relevant law is provided below.
ss.721 Nonexclusivity of Statutory Provisions for Indemnification of
Directors and Officers -- The indemnification and advancement of expenses
granted pursuant to, or provided by, this article shall not be deemed exclusive
of any other rights to which a director or officer seeking indemnification or
advancement of expenses may be entitled, whether contained in the certificate of
incorporation or the by-laws or, when authorized by such certificate of
incorporation or by-laws, (i) a resolution of shareholders, (ii) a resolution of
directors, or (iii) an agreement providing for such indemnification, provided
that no indemnification may be made to or on behalf of any director or officer
if a judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause
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of action so adjudicated, or that he personally gained in fact a financial
profit or other advantage to which he was not legally entitled. Nothing
contained in this article shall affect any rights to indemnification to which
corporate personnel other than directors and officers may be entitled by
contract or otherwise under law.
ss.722 Authorization for Indemnification of Directors and Officers--(a)
A corporation may indemnify any person, made, or threatened to be made, a party
to an action or proceeding other than one by or in the right of the corporation
to procure a judgment in its favor, whether civil or criminal, including an
action by or in the right of any other corporation of any type or kind, domestic
or foreign, or any partnership, joint venture, trust, employee benefit plan or
other enterprise, which any director or officer of the corporation served in any
capacity at the request of the corporation, by reason of the fact that he, his
testator or intestate, was a director or officer of the corporation, or served
such other corporation, partnership, joint venture, trust, employee benefit plan
or other enterprise in any capacity, against judgments, fines, amounts paid in
settlement and reasonable expenses, including attorneys' fees actually and
necessarily incurred as a result of such action or proceeding, or any appeal
therein, if such director or officer acted, in good faith, for a purpose which
he reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the corporation and, in
criminal actions or proceedings, in addition, had no reasonable cause to believe
that his conduct was unlawful.
(b) The termination of any such civil or criminal action or proceeding
by judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not in itself create a presumption that any such director or
officer did not act, in good faith, for a purpose which he reasonably believed
to be in, or, in the case of service for any other corporation or any
partnership, joint venture, trust, employee benefit plan or other enterprise,
not opposed to, the best interests of the corporation or that he had reasonable
cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate,
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer or any other corporation of
any type or kind, domestic or foreign, of any partnership, joint venture, trust,
employee benefit plan or other enterprise, against amounts paid in settlement
and reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is settled
or otherwise disposed of, or (2) any claim issue or matter as to which such
person shall have been adjudged to be liable to the corporation, unless and only
to the extent that the court in which the action was brought, or, if no action
was brought, any court of competent jurisdiction, determines upon application
that, in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
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<PAGE>
ss.723 Payment of Indemnification Other Than By Court Award--(a) A
person who has been successful, on the merits or otherwise, in the defense of a
civil or criminal action or proceeding of the character described in section 722
shall be entitled to indemnification as authorized in such section.
(b) Except as provided in paragraph (a), any indemnification under
section 722 or otherwise permitted by section 721, unless ordered by a court
under section 724 (Indemnification of directors and officers by a court), shall
be made by the corporation, only if authorized in the specific case:
(1) By the board acting by a quorum consisting of directors
who are not parties to such action or proceeding upon a finding that
the director or officer has met the standard of conduct set forth in
section 722 or established pursuant to section 721, as the case may be,
or,
(2) If a quorum under subparagraph (1) is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs;
(A) By the board upon the opinion in writing of
independent legal counsel that indemnification is proper in
the circumstances because the applicable standard of conduct
set forth in such sections has been met by such director or
officer, or
(B) By the shareholders upon a &ding that the
director or officer has met the applicable standard of conduct
set forth in such sections.
(C) Expenses incurred in defending a civil or
criminal action or proceeding may be paid by the corporation
in advance of the &al disposition of such action or proceeding
upon receipt of an undertaking by or on behalf of such
director or officer to repay such amount as, and to the
extent, required by paragraph (a) of section 725.
ss.724 Indemnification of Directors and Officers by a Court--(a)
Notwithstanding the failure of a corporation to provide indemnification, and
despite any contrary resolution of the board or of the shareholders in the
specific case under section 723 (Payment of indemnification other than by court
award), indemnification shall be awarded by a court to the extent authorized
under section 722 (Authorization for indemnification of directors and officers),
and paragraph (a) of section 723.
Application therefor may be made, in every case, either:
(1) In the civil action or proceeding in which the expenses
were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in which
case the application shall set forth the disposition of any previous
application made to any court for the same or similar relief and also
reasonable cause for the failure to make application for such relief in
action or proceeding in which the expenses were incurred or other
amounts were paid.
(b) The application shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall be upon notice
to the corporation. The court may also direct that notice be given at the
expense of the corporation to the shareholders and such other persons as it may
designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court may
allow a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his
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<PAGE>
defense therein, if the court shall find that the defendant has by his pleadings
or during the course of the litigation raised genuine issues of fact or law.
ss.725 Other Provisions Affecting Indemnification of Directors and
Officers--(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the corporation under paragraph (c) of section
723 (Payment of indemnification other than by court award) or allowed by a court
under paragraph (c) of section 724 (Indemnification of directors and officers by
a court) shall be repaid in case the person receiving such advancement or
allowance is ultimately found, under the-procedure set forth in this article,
not to be entitled to indemnification or, where indemnification is granted, to
the extent the expenses so advanced by the corporation or allowed by the court
exceed the indemnification to which he is entitled:
(b) No indemnification, advancement or allowance shall be made under
this article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with the
law of the jurisdiction of incorporation of a foreign corporation which
prohibits or otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision of the certificate of incorporation, a by-law, a resolution
of the board or of the shareholders, an agreement or other proper
corporate action, in effect at the time of the accrual of the alleged
cause of action asserted in the threatened or pending action or
proceeding in which the expenses were incurred or other amounts were
paid, which prohibits or otherwise limits indemnification; or
(3) If there has been a settlement approved by the court, that
the indemnification would be inconsistent with any condition with
respect to indemnification expressly imposed by the court in approving
the settlement.
(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders,
the corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within three months from the date of such payment,
and in any event, within fifteen months from the date of such payment, mail to
its shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the by-laws, resolution of directors,
or by agreement, then the corporation shall, not later than the next annual
meeting of shareholders, unless such meeting is held within three months from
the date of such action, and, in any event, within fifteen months from the date
of such action, mail to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the action taken.
(e) Any notification required to be made pursuant to the foregoing
paragraph (c) or (d) of this section by any domestic mutual insurer shall be
satisfied by compliance with the corresponding provisions of section one
thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to indemnification of
directors and officers and insurance therefor shall apply to domestic
corporations and foreign corporations doing business in this state, except as
provided in section 1320 (Exemption from certain provisions).
ss.726 Insurance for Indemnification of Directors and Officers--(a)
Subject to paragraph (b), a corporation shall have power to purchase and
maintain insurance:
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<PAGE>
(1) To indemnify the corporation for any obligation which it
incurs as a result of the indemnification of directors and officers
under the provisions of this article, and
(2) To indemnify directors and officers in instances in which
they may be indemnified by the corporation under the provisions of this
article, and
(3) To indemnify directors and officers in instances in which
they may not otherwise be indemnified by the corporation under the
provisions of this article provided the contract of insurance covering
such directors and officers provides, in a manner acceptable to the
superintendent of insurance, for a retention amount and for
co-insurance.
(b) No insurance under paragraph (a) may provide for any payment, other
than cost of defense, to or on behalf of any director or officer.
(1) if a judgment or other final adjudication adverse to the
insured director or officer establishes that his acts of active and
deliberate dishonesty were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or
other advantage to which he was not legally entitled, or
(2) in relation to any risk the insurance of which is
prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.
(d) The corporation shall, within the time and to the persons provided
in paragraph (c) of section .725 (Other provisions affecting indemnification of
directors or officers), mail a statement in respect of any insurance it has
purchased or renewed under this section, specifying the insurance carrier, date
of the contract, cost of the insurance, corporate positions insured, and a
statement explaining all sums, not previously reported in a statement to
shareholders, paid under any indemnification insurance contract.
(e) This section is the public policy of this state to spread the risk
of corporate management, notwithstanding any other general or special law of
this state or of any other jurisdiction including the federal government.
The Company's Amended and Restated Certificate of Incorporation
provides that the personal liability of the directors of the Company to the
Company or its shareholders for damages for any breach of duty as directors, is
eliminated, provided that nothing shall limit the liability of any Director if a
judgment or other final adjudication adverse to him establishes that his acts or
omissions were in bad faith or involved international misconduct.
The Company has also entered into indemnification agreements with each
of its officers and directors.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Company has agreed to indemnify the Underwriters and
the Underwriters have agreed to indemnify the Company and its directors,
officers and controlling persons against certain civil liabilities that may be
incurred in connection with this offering, including certain liabilities under
the Securities Act of 1933, as amended (the "Securities Act").
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<PAGE>
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibit Number
*4(a) -- Form of Common Stock Certificate.
**4(b) -- Form of Warrant granted in exchange for
warrants issued in connection with 1992 Private
Placement.
***4(g) -- Form of 1996 Purchase Option granted in
September 1996.
***4(h) -- Form of Warrant issued in connection with the
1996 Private Placement
***4(i) -- Certificate of Designation for Class A
Convertible Preferred Stock.
***5 -- Opinion of Olshan Grundman Frome & Rosenzweig
*23(a) -- Consent of KPMG Peat Marwick LLP.
*23(b) -- Consent of Tocci Goldstein & Company LLP
***23(c) -- Consent of Olshan Grundman Frome & Rosenzweig
LLP (contained in their opinion included under
Exhibit 5)
*24 -- Power of Attorney, included on Page II-8.
* Filed herewith.
** Incorporated by Reference to the Registrant's Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on January
28, 1993 (Commission File No. 33-57546), as amended.
*** To be filed by amendment.
Item 17. Undertakings.
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 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to 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
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby undertakes:
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<PAGE>
(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 set forth in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) shall 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 Exchange Act 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
this offering.
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<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, 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
report to be signed on its behalf by the undersigned, thereunto duly authorized,
in the Town of McLean, State of Virginia, on the 27th day of November, 1996.
THE NETPLEX GROUP, INC.
By: /s/ Gene Zaino
Gene Zaino, President & Chief
Executive Officer
SIGNATORIES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated. Each of the undersigned
officers and directors of The Netplex Group, Inc. hereby constitutes and
appoints Gene Zaino as true and lawful attorney-in-fact and agent with full
power of substitution and resubstitution, for him in his name in any and all
capacities, to sign any and all amendments (including post-effective amendments)
to this Report and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Securities and Exchange Commission
and to prepare any and all exhibits thereto, and other documents in connection
therewith, granting unto said attorneys-in-fact and agents, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done to enable The Netplex Group, Inc. to comply with the provisions of
the Securities Act of 1933, as amended, and all requirements of the Securities
and Exchange Commission, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Signature Title Date
/s/ Gene Zaino President and Chief November 27, 1996
- ---------------------- Executive Officer,
Gene Zaino Director, Principal
Executive Officer
* (Principal Financial November 27, 1996
- ---------------------- Officer)
Matthew Jones
* Director November 27, 1996
- ----------------------
Howard Landis
* Director November 27, 1996
- ----------------------
Richard Goldstein
* Director November 27, 1996
- ----------------------------
Deborah Schondorf-Novick
* Director November 27, 1996
- ----------------------------
Neil Luden
*/s/ Gene Zaino
- --------------------------------
By: Gene Zaino, Attorney-in-Fact
II-8
The Board of Directors
The Netplex Group, Inc.:
We consent to the use of our reports on: the consolidated financial statements
of The Netplex Group, Inc. and subsidiaries (formerly CompLink, Ltd.) as of July
31, 1995, and for each of the years in the two year period ended July 31, 1995;
the financial statements of The Netplex Group, Inc. (formerly CompuServe Systems
Integration Group Mid-Atlantic, Inc.) as of December 31, 1995, and for the year
then ended; the financial statements of America's Work Exchange, Inc. and
subsidiary as of December 31, 1995, and for the year ended December 31, 1995 and
the period from April 21, 1994 (inception) to December 31, 1994; and the
financial statements of Software Resources of New Jersey, Inc. as of December
31, 1995, and for each of the years in the two year period ended December 31,
1995, incorporated herein by reference, and to the reference to our firm under
the heading "Experts" in the prospectus.
KMPG Peat Marwick
McLean, VA
November 19, 1996
II-9
The Board of Directors
The Netplex Group, Inc.:
We consent to the use of our report on the statements of The Netplex Group, Inc.
(formerly CompuServe Systems Integration Group Mid-Atlantic, Inc.) as of
December 31, 1994, and for the year then ended, incorporated herein by
reference, and to the reference to our firm under the heading "Experts" in the
prospectus.
/s/Tocci, Goldstein & Company LLP
- ---------------------------------
/s/Tocci, Goldstein & Company LLP
New York, NY
November 18, 1996
II-10
