This Prospectus is filed pursuant to Rule 424(b)(3) and
relates to Registration Statement No. 333-45663
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PROSPECTUS
COMPUTER OUTSOURCING SERVICES, INC.
612,740 Shares Common Stock, par value $.01 per share
This prospectus constitutes a prospectus of Computer Outsourcing Services,
Inc., a New York corporation (the "Company"), with respect to the registration
for resale under the Securities Act of 1933, as amended (the "1933 Act"), of an
aggregate of 612,740 shares of the Common Stock, par value $.01 per share of the
Company (the "Common Stock"), consisting in part of shares to be issued by the
Company upon the exercise of warrants by certain of the selling shareholders
described herein.
The shares of Common Stock of the Company offered hereby (the "Shares") may
be sold from time to time by the holders thereof (the "Selling Shareholders") in
brokers' transactions at prices prevailing at the time of sale or as otherwise
described in "Plan of Distribution." The Company will not receive any of the
proceeds from the sale of the Shares. Expenses of the registration of the
Shares, including legal and accounting fees of the Company, will be paid by the
Company. The Selling Shareholders may pay usual and customary brokers'
commissions.
This Prospectus has been prepared for the purpose of registering the Shares
under the 1933 Act to allow future sales by the Selling Shareholders without
restriction. To the knowledge of the Company, the Selling Shareholders have made
no arrangement with any brokerage firm for the sale of the Shares. A Selling
Shareholder may be deemed to be an "underwriter" within the meaning of the 1933
Act. Any commissions received by a broker or dealer in connection with sales of
the Shares may be deemed to be underwriting commissions or discounts under the
1933 Act.
The Shares have not been registered for sale under the securities laws of
any state or jurisdiction as of the date of this Prospectus. Brokers or dealers
effecting transactions in the Shares should confirm the registration thereof
under the securities laws of the states in which such transactions occur, or the
existence of an exemption from registration.
The Common Stock of the Company, including the Shares, is listed on the
NASDAQ National Market (the "NASDAQ"). The last reported sale price on the
NASDAQ on January 29, 1998, was $8.00 per share.
_________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is February 12, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "1934 Act"), and, in accordance therewith,
files, reports, proxy statements and other information with the Securities and
Exchange Commission ( the "Commission"). Such reports, proxy statements and
other information filed by the Company may be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Room 1024, Washington, D.C. 20549, and at the following Regional Office of the
Commission: New York Regional Office, 7 World Trade Center, Suite 1300, New
York, New York 10048. Copies of such material may also be obtained at prescribed
rates from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington D.C. 20549. The Company files its reports, proxy statements and
other information with the Commission electronically. The Commission maintains a
Web site that contains reports, proxy and information statements and other
information on issuers that file electronically with the Commission. The address
of such Web site is "http://www.sec.gov". The Company's Common Stock is listed
on the NASDAQ. Reports and other information concerning the Company can be
inspected and copied at the NASDAQ office at 1735 K Street N.W., Washington D.C.
20008.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, filed by the Company with the Commission pursuant
to the 1934 Act, are hereby incorporated by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
October 31, 1997; and
2. The description of the Company's Common Stock contained in the
Registration Statement on Form 8-A of the Company, dated November 19,
1992, filed pursuant to Section 12 of the 1934 Act (Commission File
No. 0-20824).
Each document filed subsequent to the date of this Prospectus pursuant to
Section 13(a), 13(c), 14 or 15(d) of the 1934 Act prior to the termination of
the offering made by this Prospectus shall be deemed to be incorporated by
reference in this Prospectus and shall be part hereof from the date of filing of
such document; provided, however, that the documents enumerated above or
subsequently filed by the Company pursuant to Section 13 of the 1934 Act prior
to the filing with the Commission of the Company's most recent Annual Report on
Form 10-KSB shall not be incorporated by reference in this Prospectus or be a
part from and after the filing of such Annual Report on Form 10-KSB.
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 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 has filed with the Commission a Registration Statement
(together with any amendments thereto, the "Registration Statement") under the
1933 Act, with respect to the shares of Common Stock offered hereby. This
prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto. Such additional information
may be obtained from the Commission's principal office in Washington, D.C.
Statements contained in this prospectus or in any document incorporated by
reference in this prospectus as to the contents of any contract or other
document referred to herein or therein are not necessarily complete, and in each
instance reference is made to the copy of such contract or other document filed
as an exhibit to the Registration Statement or such other document, each such
statement being qualified in all respects by such references.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any document referred to
above which has been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents (unless such exhibits are specifically
incorporated by reference into such documents). Requests for such copies should
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be directed to: Secretary, Computer Outsourcing Services, Inc., 360 West 31st
Street, New York, New York 10001, (212) 564-3730.
THE COMPANY
Computer Outsourcing Services, Inc. (the "Company") provides information
technology solutions which include comprehensive information processing services
to many industries, including publishing, transportation, financial services and
apparel throughout the United States. The Company has grown through a number of
strategically located information processing companies.
The Company's services, known as outsourcing, provide all or a portion of a
client's data processing functions. These services consist of managing all of a
client's data processing requirements, including on-line order entry, order
processing, inventory, accounts receivable, accounts payable, sales history and
analysis and general ledger. Clients' computer systems can be linked by leased
data circuits to the Company's main frame computer center, from which the
Company's support staff can provide service on an on-line, real-time basis.
On December 19, 1997, the Company consummated the sale of all of the
outstanding capital stock of Daton Pay USA, Inc., Pay USA of New Jersey, Inc.,
NEDS, Inc. and Key-ACA, Inc., all wholly-owned subsidiaries of the Company
comprising its payroll processing division, to Zurich Payroll Operations Limited
for a purchase price of $14,400,000. The Company plans to use the proceeds from
the sale to expand its information processing services business and to repay
outstanding debt.
The Company's principal executive office is at 360 West 31st Street, New
York, New York 10001; and its telephone number is (212) 564-3730.
SELLING SHAREHOLDERS
The following table lists the Selling Shareholders, the number of shares of
Common Stock of the Company beneficially owned by such Selling Shareholders as
of the date of this Prospectus, the number of shares to be offered by such
Selling Shareholders and the number of outstanding shares to be owned by such
Selling Shareholders after the sale.
<PAGE>
Shares Shares Shares to be
Selling Owned to be Owned After
Shareholder Prior to Offered Hereby Offering (1)
Offering
Whitehall 33,275 33,275 (2) 0
Financial
Group, Inc.
Corporate 1,500 1,500 (2) 0
Securities
Group, Inc.
James D. Gerson 49,000 19,000 (2) 30,000
(3)
Allen Sacharow 10,000 10,000(2) 0
Rodd Macklin 3,000 3,000 (2) 0
George 2,500 2,500(2) 0
McGoldrick
Michael Stango 2,225 2,225 (2) 0
J.W. Charles 18,500 18,500 (2) 0
Securities,
Inc.
Steven C. 6,000 6,000 (2) 0
Jacobs
Coletta Dorado 3,000 3,000 (2) 0
Vincent Chiera 1,000 1,000 (2) 0
J.W. Charles 75,240 75,240 (2) 0
Financial
Services, Inc.
Anton and Detta 308,864(5) 248,864 60,000
Donde Trust (4)
Eugene B. 22,649 22,649 0
Monosson
Eugene B. 5,967 5,967 0
Monosson IRA
Earle G. 14,497 14,497 0
Phillips, Jr.
Earle G. 7,708 7,708 0
Philipps, Jr.
IRA
Charles J. Wolf 18,431 18,431 0
II
Robert J. Keyes 14,781 14,781 0
Mary Ann Dalton 25,579 25,579 0
Charles J. Wolf 4,024 4,024 0
II, IRA
Vincent Mongno 75,000 75,000 (2) 0
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(1) Assumes the sale of all of the Shares covered by this
Prospectus.
(2) Represents shares issued or to be issued by the Company upon
exercise of warrants.
(3) Mr. Gerson is a director of the Company.
(4) Anton P. Donde is the trustee of the Anton and Detta Donde
Trust. Mr. Donde is a director of the Company and served as
President of the Pay USA Division of the Company from 1994 until
December 19, 1997. After completion of the offering, Mr. Donde
will beneficially own 1.5% of the outstanding shares of Common
Stock of the Company at January 16, 1997.
(5) Includes 60,000 shares of Common Stock of the Company
beneficially owned by Anton Donde.
<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-KSB for the year ended October 31, 1997,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report, which is incorporated herein by reference, and have been so
incorporated in reliance upon the report of such firm given upon their authority
as experts in accounting and auditing.
LEGAL MATTERS
The legality of the Shares has been passed upon for the Company by Robinson
& Cole LLP, Stamford, Connecticut, counsel for the Company.
PLAN OF DISTRIBUTION
The Shares to be offered pursuant to this Prospectus are, and in the case
of Shares to be issued by the Company upon exercise of warrants will be, fully
paid and nonassessable and will be offered and sold by the Selling Shareholders
for their own accounts. The Company will not receive any of the proceeds from
these sales.
The Selling Shareholders may offer and sell the Shares from time to time in
transactions at market prices prevailing at the time of sale, at negotiated
prices or otherwise. Sales may be made 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 Shares for whom such
broker-dealers may act as agents and/or to whom they may sell as principals, or
both (which compensation as to a particular broker-dealer may be in excess of
customary commissions).
If required, this Prospectus will be supplemented to set forth a particular
offering of Shares to be made, the number of Shares so offered for the Selling
Shareholder's account and, if an offering is to be made by or through
underwriters or dealers, the names of the underwriters or dealers and the
principal terms of the arrangements between the underwriters or dealers and the
Selling Shareholders.
The Selling Shareholders and any broker-dealers acting in connection with
the sale of the Shares hereunder may be deemed to be "underwriters" within the
meaning of Section 2(11) of the 1933 Act, and any commissions received by them
and any profit realized by them on the resale of Shares as principals may be
deemed underwriting compensation under the 1933 Act.
INDEMNIFICATION
The Company's Restated Certificate of Incorporation provides that the
Company's directors have the authority to provide in the Company's By-laws for
the indemnification of directors and officers to the fullest extent permitted by
law, including, without limitation to a greater extent than provided in Sections
721 through 726 of the New York Business Corporation Law, as the same may be
amended and supplemented, or any successor provisions thereto.
The Company's By-laws provide that: The Company shall indemnify any present
or former officer or director of the Company or the personal representatives
thereof, made or threatened to be made a party in any civil or criminal action
or proceeding by reason of the fact that he, his testator or intestate is or was
a director or officer of the Company, or served any other corporation,
partnership, joint venture, trust, employee benefit plan, or other enterprise in
any capacity at the request of the Company, against judgments, fines (including
excise tax assessed on such a person in connection with service to an employee
benefit plan), amounts paid in settlement and reasonable expenses, including
without limitation, court costs, attorneys' fees and disbursements and those of
accountants and other experts and consultants incurred as a result of such
action or proceeding or any appeal therein, all of which expenses as incurred
shall be advanced by the Company pending the final disposition of such action or
proceeding. Such required indemnification shall be subject only to the exception
that no indemnification may be made to or on behalf of any director or officer
in the event and to the extent that a judgment or other final adjudication
<PAGE>
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 of action so adjudicated, or that he personally gained in
fact a financial profit or other advantage to which he was not legally entitled
(provided, that indemnification shall be made upon any successful appeal of any
such adverse judgment or final adjudication). For purposes of indemnification,
the Company shall be deemed to have requested such present or former officer or
director to serve an employee benefit plan where the performance by such person
of his duties to the Company also imposes duties on, or otherwise involves
services by, such person to the plan or participants or beneficiaries of the
plan. The foregoing right of indemnification shall not be deemed exclusive of
any and other rights to which any such person, his testator or interstate, may
be entitled apart from this provision.
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 1933 Act and
is, therefore, unenforceable.
TABLE OF CONTENTS
Page
Available Information 2
Incorporation of Certain Documents by Reference 2
The Company 3
Selling Shareholders 3
Experts 4
Legal Matters 5
Plan of Distribution 5
Indemnification 5
