As filed with the Securities and Exchange Commission on December 29, 1998
Registration No. 333-________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
ATEC GROUP, INC.
(Name of Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
5045
(Primary Standard Industrial Classification Code Number)
13-367969
(I.R.S. Employee Identification No.)
--------------------
90 Adams Avenue
Hauppauge, New York 11788
(516) 231-2832
(Address and telephone number of principal executive offices and principal
place of business)
--------------------
Surinder Rametra, Chief Executive Officer
ATEC Group, Inc.
90 Adams Avenue
Hauppauge, New York 11788
(516) 231-2832
(Name, address and telephone number of agent for service)
Copies of all communications to:
Michael H. Freedman, Esq.
Silverman, Collura, Chernis & Balzano, P.C.
381 Park Avenue South, Suite 1601
New York, New York 10016
(212) 779-8600
<PAGE>
Approximate date of proposed sale to the public: From time to time or at
one time after the effective date of this Registration Statement as determined
by the Selling Securityholders.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, as amended ("Securities Act"), other than securities offered only in
connection with dividend or reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
================================================================================================
Proposed Proposed
Amount to Maximum Maximum
Title of Each Class of Be Registered Offering Price Aggregate Amount of
Securities to be Registered (1) Per Share(2) Offering Price Registration Fee
================================================================================================
<S> <C> <C> <C> <C>
Common Stock(3) 639,916 $6.25 $3,999,475 $1,211.96
- ------------------------------------------------------------------------------------------------
Common Stock(4) 5,946,000 $6.25 $37,162,500 $11,261.36
- ------------------------------------------------------------------------------------------------
Total 6,585,916 $6.25 $41,161,975 $12,473.32
================================================================================================
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, there are
also being registered such indeterminate number of additional shares of
Common Stock as may become issuable upon exercise of stock options to
prevent dilution resulting from stock splits, stock dividends or similar
transactions.
(2) Common Stock price per share calculated in accordance with Rule 457(c) of
the Securities Act using the last sale price for the Common Stock on
December 21, 1998.
(3) Represents shares of Common Stock held by Selling Securityholders.
(4) Represents shares of Common Stock underlying stock options held by Selling
Securityholders.
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 ("Securities Act"), 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 any 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 State.
DATED DECEMBER 29, 1998 SUBJECT TO COMPLETION
ATEC GROUP, INC.
639,916 SHARES OF COMMON STOCK AND
5,946,000 SHARES OF COMMON STOCK UNDERLYING STOCK OPTIONS
This Prospectus relates to the offer and sale from time to time by certain
selling securityholders ("Selling Securityholders") of up to (i) 639,916 shares
of ATEC Group, Inc. common stock, $.01 par value ("Common Stock"); and (ii)
5,946,000 shares of Common Stock upon the exercise of certain stock options
("Options"). See "Selling Securityholders" and "Plan of Distribution". The
Common Stock and the Options are collectively referred to herein as the
"Securities".
The Company will not receive any proceeds from possible resales by the
Selling Securityholders of their respective shares of Common Stock of the
Company. However, the Company will receive proceeds of $48,283,440 from the
exercise of the Options, of which there can be no assurance.
The Selling Securityholders or pledgees, donees, transferees or other
successors in interest that receive such shares as a gift, partnership
distribution or other non-sale related transfer, may sell their shares of Common
Stock from time to time, in market transactions, in negotiated transactions,
through the writing of options, or a combination of such methods of sale, at
fixed prices which may be changed, at market prices prevailing at the time of
sale, at prices related to such prevailing market prices or at negotiated
prices. The Selling Securityholders may effect such transactions by selling
their shares of Common Stock to or through broker-dealers, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of such
shares of Common Stock for whom such broker-dealer may act as agents or to whom
they may sell as principals, or both (which compensation as to a particular
broker-dealer might be in excess of customary commissions.) The Company has
agreed to bear all expenses in connection with the registration of the shares of
Common Stock to which this Prospectus relates.
The Common Stock and the Company's Common Stock Purchase Warrants are
quoted on the NASDAQ SmallCap Market System ("Nasdaq") under the symbols ATEC
and ATECW, respectively. On December 21, 1998 the last sale price of the Common
Stock and Warrants as reported on Nasdaq was $6.25 and $.21875, respectively.
THESE SECURITIES ARE HIGHLY SPECULATIVE. THEY INVOLVE A HIGH DEGREE OF RISK.
THEY SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN A TOTAL LOSS
OF THEIR ENTIRE INVESTMENT (SEE "RISK FACTORS" - PAGE 5)
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 December ___, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 ("Exchange Act") and in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission ("Commission"). Such reports, proxy statements and other information
can be inspected and copied at the Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Room 1204, Everett McKinley Dirksen Building, 219 South Dearborn
Street, Chicago, Illinois 60604; and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can also be obtained at prescribed rates
from the Public Reference Section of the Commission at its principal office at
450 Fifth Street, N.W., Washington, D.C. 20549.
This Prospectus does not contain all of the information set forth in the
Registration Statements of which this Prospectus is a part and which the Company
has filed with the Commission. For further information with respect to the
Company and the securities offered hereby, reference is made to the Registration
Statement, including the exhibits filed as a part thereof, copies of which can
be inspected at, or obtained at prescribed rates from the Public Reference
Section of the Commission at the address set forth above. Additional updating
information with respect to the Company may be provided in the future by means
of appendices or supplements to the Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus is delivered, upon written or oral request of
such person, a copy of any and all of the information that has been or may be
incorporated herein by reference (other than exhibits to such documents unless
such exhibits are specifically incorporated by reference into such documents).
Requests should be directed to the ATEC Group, Inc., 90 Adams Avenue, Hauppague,
New York 11788 (516) 231-2832.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Commission and are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-K/A1 for its fiscal year
ended June 30, 1998;
(b) The Company's Quarterly Report on Form 10-Q for the three month
period ended September 30, 1998;
(c) The Company's 1998 Proxy Statement dated November 15, 1998;
2
<PAGE>
(d) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1, Registration No. 33-2070 and
on Form SB-2, Registration No. 33-54356;
(e) All other reports filed by the Company pursuant to Section 13(a)
and 15(d) of the Exchange Act since the Company's fiscal year ended June
30, 1998.
All documents filed by the Company with the Commission pursuant to
sections 13, 14 or 15(d) of the Exchange Act subsequent hereto, but prior to the
termination of the offering of securities made by this Prospectus shall be
deemed to be incorporated by reference herein and to be part hereof from their
respective dates of filing.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus, to
the extent that a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
3
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and the Consolidated Financial Statements and Notes thereto
appearing elsewhere or incorporated by reference elsewhere in this Prospectus,
including information under "Risk Factors". All references to shares of common
stock of the Company in this Prospectus have been adjusted to give effect to the
Company's one for five reverse stock split effective November 18, 1997.
THE COMPANY
ATEC Group, Inc. (the "Company" or "ATEC"), is a leading system integrator
and provider of a full line of computer and information technology products and
services to business, professionals, government agencies and educational
institutions. The Company has experienced rapid growth over the past few years
on core competencies including system design, high speed data transmission,
LAN/WAN, video conferencing, Year 2000 solution, telecommunications, and
Internet/Intranet technology. Some projects currently under review are Year 2000
modifications and ATM re-engineering of fiber-optic backbone networks.
ATEC offers a full spectrum of services and support which, it believes is
of critical importance in the current market environment to the Company's
customers. The integration of networks, multimedia, video conferencing, high
volume storage information and communication systems, has, in the Company's
opinion, necessitated technical support and continued client relations after the
initial purchase. In today's market, ATEC believes that most consumers and
business users do not possess the time to investigate and locate the various
computer components necessary to establish an integrated computer system. The
Company therefore strives to service all of its clients' technology needs in a
cost effective manner.
ATEC's marketing strategy is to educate business clients as to the
Company's ability to provide a "one-stop solution" to all computer needs from
the initial purchase and installation processes through required service and
maintenance and future expansion requirements. The Company's subsidiaries are
authorized sales and service dealers for all major manufacturers. The Company
sells to its customers an extensive selection of computer products at a
competitive combination of price and service. The Company offers over 10,000
computer products from over 500 manufactures including IBM, Compaq, Hewlett
Packard, Apple, DEC, Hughes Networks, Microsoft, Novell, Oracle, Sybase, Toshiba
and many more.
The Company's corporate headquarters are located at 90 Adams Avenue,
Hauppauge, New York 11788. The Company's telephone number is (516) 231-2832.
4
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk, including, but not necessarily limited to, the risk factors described
below. Prospective investors must carefully consider, among other things, the
following factors in evaluating an investment in the Company's securities.
1. Microcomputer Industry Conditions. The microcomputer industry has been
characterized by intense price cutting among the major hardware and software
vendors which could materially adversely affect the Company's future operating
results. Given the Company's limited financial resources, its anticipated
expenses and the highly competitive environment in which the Company operates,
there can be no assurance that the Company's current rate of revenue growth will
continue in the future or that the Company's future operations will remain
profitable. The Company's future results of operations are dependent upon
continued demand for microcomputer products. This industry experienced rapid
growth until 1988 and thereafter has grown at a substantially slower rate.
Distributors in the microcomputer industry currently face a number of adverse
business conditions, including price and gross profit margin pressures and
market consolidation. During the past six years all major hardware vendors have
instituted extremely aggressive price reductions in response to lower component
costs and discount pricing by certain microcomputer manufacturers. The increased
price competition among major hardware vendors had resulted in declining gross
margins for many microcomputer distributors and may result in a reduction in
existing vendor subsidies. Management of the Company believes, however, that
these current conditions, which are forcing certain of the Company's direct
competitors out of business, may present the Company with opportunities to
expand its business. There can be no assurance that the Company will be able to
continue to compete effectively in this industry given the intense price
reductions and competition currently existing in the microcomputer industry.
2. Competition. The microcomputer market is highly competitive. The
Company is in direct competition with local, regional and national distributors
of microcomputer products and related services. Several of these competitors
offer most of the same basic products as the Company. In addition, the tri-state
Metropolitan New York area, to which the Company markets its products and
services, is particularly characterized by highly discounted pricing on
microcomputer products from various sources of competition. The Company faces
competition from microcomputer vendors that sell their products through direct
sales forces and from manufacturers and distributors that emphasize mail order
and telemarketing. The Company has an insignificant market share of sales in the
microcomputer industry and the service markets which the Company serves. Certain
of the Company's competitors on the regional and national level are
substantially larger, have more personnel and have materially greater financial
and marketing resources than the Company and operate within a larger geographic
area than does the Company. Accordingly, there can be no assurance the Company
will be able to continue to compete effectively in the marketplace.
5
<PAGE>
3. Dependence on Suppliers. The Company is an authorized dealer for
microcomputers and related products of more than twenty five manufacturers. The
Company's authorized dealer agreements with suppliers are typically subject to
periodic renewal and to termination on short notice or immediately upon the
occurrence of certain events. The dealer agreements also provide for periodic
audits by the supplier. A supplier could also terminate an authorized dealer
agreement for reasons unrelated to the Company's performance. In addition, the
Company competes with other suppliers to obtain products on the most favorable
contract terms, which are often available only to companies substantially larger
than the Company. The loss of a major supplier or the deterioration of the
Company's relationship with those major suppliers whose products are in demand,
or a change in current terms of its dealer agreements could have a material
adverse effect on the Company's business.
4. Proposed Expansion. The Company intends to continue to seek to expand
its current level of operations through acquisitions. While the Company has
grown during the last several years, there can be no assurance that the Company
will be able to further expand its operations successfully. Expansion of the
Company's operations will depend on, among other things, the continued growth of
the microcomputer industry, the Company's ability to withstand intense price
competition, its ability to obtain new clients, retain skilled technicians,
engineers, sales and other personnel in order to expand its technical and
marketing capabilities, secure adequate sources of products which are then in
demand on commercially reasonable terms, successfully manage growth (including
monitoring an expanded level of operations and controlling costs) and the
availability of adequate financing.
The Company seeks to expand its operations through potential acquisitions.
The Company previously reviewed various potential acquisitions and believes
there are numerous opportunities presently available. In June 1996, the Company
acquired Innovative Business Micros, Inc. ("Innovative") and in April 1998,
Logix Solutions, Inc. There can be no assurance that the Company will be able to
effect any other acquisitions or that, if the Company is able to effect any
acquisitions, it will be able to successfully integrate into its operations any
acquired business and expand the Company's operations. Moreover, the Innovative
acquisition is a related party transaction which was not negotiated on an
arms-length basis. There can be no assurance that the consideration paid by the
Company for Innovative would not have been at a more beneficial rate had the
Company and Innovative not been affiliated parties. The Company may use
authorized but unissued Common Shares to purchase businesses or assets of
companies. In the event that the Company makes an acquisition through a
leveraged transaction, of which it has no present intention, there can be no
assurance that the Company will have sufficient income to satisfy the interest
payments. If the Company enters into a leveraged transaction and does not have
sufficient income to meet interest payments they would have to be paid from
proceeds of this offering.
5. Technological Change. The microcomputer products market is
characterized by rapid technological change and frequent introduction of new
products and product enhancements. The Company's ability to compete successfully
depends, in large part, on its ability to obtain products when needed and on
favorable terms from those suppliers and vendors which are able
6
<PAGE>
to adapt to technological changes and advances in the microcomputer industry.
The Company has access to state-of-the-art technical databases which provide it
with information concerning technological advances from major vendors as soon as
it is published. While this allows the Company the flexibility to shift rapidly
from one vendor to another, there can be no assurance that the Company's current
vendors and suppliers will be able to achieve the technological advances
necessary to remain competitive or that the Company will be able to obtain
authorizations from new vendors or for new products that gain market acceptance.
There can be no assurance that the Company will be able to continue to keep pace
with the technological demands of the marketplace to successfully enhance its
outsourced support services to be compatible with new microcomputer products.
6. Dependence on Certain Vendors. The Company has two customers which
together accounted for 25% of the Company's sales in fiscal 1998. The Company
also has two suppliers which together accounted for 50% of the Company's
purchases in fiscal 1998. The loss of a major vendor could be expected to have a
material adverse effect on the Company's operations during the short-term until
the Company was able to generate replacement sources, although there can be no
assurance of obtaining such sources.
7. Possible Need for Additional Financing. Depending upon the Company's
then current level of sales, the Company may require additional funds in order
to expand its activities. The Company anticipates, based on currently proposed
plans and assumptions relating to this operation, that projected cash flow from
operations and currently available financing arrangements, will be sufficient to
satisfy its contemplated cash requirements for at least the next 12 months. In
the event that the Company's plans change or its assumptions change or prove to
be inaccurate, or if the projected cash flow proves to be insufficient to fund
operations (due to unanticipated expenses, possible acquisitions, technical
problems or difficulties or otherwise), the Company may find it necessary or
advisable to seek additional funding and/or to reallocate some of the proceeds
or to use portions thereof for other purposes. There can be no assurance that
additional financing, whether debt or equity, will be available to the Company
on commercially reasonable terms, or at all.
Even if additional financing were available, the Company may not be able
to obtain any additional financing, since all of the Company's assets are
pledged as collateral pursuant to a credit facility. Any inability to obtain
additional financing could have a material adverse effect on the Company,
including possibly requiring the Company to significantly curtail its planned
expansion.
8. Marketing Capability. Substantially all of the Company's marketing
activities are being conducted by its officers, directors and limited number of
salespersons. Management will continue to devote a substantial amount of time
developing and maintaining continuing personal relationships with the Company's
customers. The Company's growth prospects, however, will be largely dependent
upon the Company's ability to achieve greater penetration of the Microcomputer
industry. Achieving market penetration will require the Company to be able to
attract skilled marketing personnel.
7
<PAGE>
9. Lack of Patents and Proprietary Protection. The Company holds no
patents and has no trademarks or copyrights registered in the United States
Patent and Trademark Office or in any state. While such protection may become
important to the Company, it is not considered essential to the success of its
business. The Company relies on the know-how, experience and capabilities of its
management personnel. Without trademark and copyright protection, however, the
Company has no protection from other parties attempting to offer similar
services. The Company has access to state-of-the-art technical databases of
various leading vendors, which enables it to learn of technical breakthroughs as
soon as they are published; however, the Company has no proprietary right to
these databases.
10. Control by Current Management. The Company's officers and directors
currently possess voting rights representing approximately 34% of the Company's
outstanding voting securities. Accordingly, the Company's current management is
able to exercise substantial control over the Company including influencing the
election of the Company's directors, and generally directing the affairs of the
Company.
11. Dependence on Key Personnel. The success of the Company is largely
dependent on the personal efforts of Surinder Rametra and Ashok Rametra.
Although the Company has entered into employment agreements with Messrs. Rametra
and Rametra, the loss of their services could have a material adverse effect on
the Company's business and prospects. The Company does not maintain "key man"
life insurance on the lives of Messrs. Rametra and Rametra. The success of the
Company is also dependent upon its ability to hire and retain additional
qualified engineering, technical and marketing personnel. There can be no
assurance that the Company will be able to hire or retain such necessary
personnel in the future.
12. No Dividends. The Company has not paid any cash dividends on its
Common Shares and does not expect to declare or pay any cash or other dividends
in the foreseeable future.
13. Possible Volatility of Common Share Price. The market price for the
Company's securities has been and may at times continue to be highly volatile.
Factors such as the Company's financial results, introduction of new products in
the marketplace, status of compliance with certain regulations governing the
sale of its products and various factors affecting the computer industry
generally may have a significant impact on the market price of the Company's
securities. Additionally, in the last several years, the stock market has
experienced a high level of price and volume volatility and market prices for
many companies, particularly small and emerging growth companies, the common
stock of which trades in the over-the-counter-market, have experienced wide
price fluctuations which have not necessarily been related to the operating
performance of such companies.
14. Future Sales of Common Shares Under Rule 144 or Otherwise. Of the
approximately 6,764,460 shares of Common Stock issued and outstanding as of the
date of this Prospectus a significant number of such shares are "restricted
securities" as that term is defined under Rule 144 promulgated under the
Securities Act of 1933, as amended ("Securities Act").
8
<PAGE>
However, all restricted shares are currently eligible for sale under Rule 144.
In general, under Rule 144, a person (or persons whose shares are aggregate) who
has satisfied a one-year holding period may sell "restricted securities" within
any three-month period limited to a number of shares which does not exceed the
greater of one percent of the then outstanding shares or the average weekly
trading volume during the four calendar weeks prior to such sale. Rule 144 also
permits the sale (without any quantity limitation) of "restricted securities" by
a person who is not an affiliate of the issuer and who has satisfied a two-year
holding period. The Company cannot predict the effect that sales made under Rule
144, sales made pursuant to other exemptions under the securities laws or under
registration statements may have on any then prevailing market price.
Nevertheless, the possibility exists that the sale of any of these shares may
have a depressive effect on the price of the Company's securities in any public
trading market. See "Shares Eligible for Future Sale" and "Principal
Shareholders."
9
<PAGE>
USE OF PROCEEDS
The Company will not receive proceeds from any resale of the Common Stock.
The proceeds to be received by the Company from the exercise of the Options
(assuming all of such securities are exercised), will be $48,283,440. The
Company intends to use such proceeds for general corporate purposes. Pending use
of the proceeds, they will be invested in short term, interest bearing
securities or money market funds.
DILUTION
The following discussion is based on the issuance of the Common Stock and
assumes that all of the Options are exercised:
As of September 30, 1998, the net tangible book value of the Common Stock,
based on the balance sheet at September 30, 1998, was $9,168,215 or $1.37 per
share. Net tangible book value per share represents the amount of the assets,
$21,310,153, less intangible assets of $4,116,188 and liabilities of $8,025,750,
divided by the number of shares outstanding, 6,700,664. Without taking into
account any other changes in the net tangible book value of the Company after
September 30, 1998, upon the issuance of the Common Stock and the exercise of
the Options, and the receipt of the net proceeds therefrom ($48,283,440), the
pro forma net tangible book value of the Common Stock, would be $57,451,655.
Upon dividing the pro forma net tangible book value by the pro forma amount of
Common Stock outstanding (12,646,664), the pro forma net tangible book value per
share is $4.54 per share, representing an immediate increase in the net tangible
book value of $3.17 per share to the present shareholders. Dilution to new
investors, since new investors will purchase shares at varying and fluctuating
prices, represents the difference between the market price of the Common Stock
and the pro forma net tangible book value per share after the issuance of all
the shares of Common Stock issuable upon exercise of the Options.
10
<PAGE>
RESALES BY SELLING SECURITYHOLDERS
This Prospectus relates to the proposed resale by the Selling
Securityholders of up to (i) 639,916 shares of outstanding Common Stock; and
(ii) 5,946,000 shares of Common Stock issuable upon the exercise of Options. The
following table sets forth as of December 2, 1998 certain information with
respect to the persons for whom the Company is registering the Common Stock for
sale to the public. No such persons have had a material relationship with or has
held any position or office with the Company within three years, other than as
footnoted below. The Company will not receive any of the proceeds from the sale
of the Common Stock, but may receive up to $48,283,440 on the exercise of the
Options.
<TABLE>
<CAPTION>
Securities Securities
Owned Prior Securities Owned
to Offering(1) Offered Herein After Offering
Name of Selling ------------------------ -------------- --------------
Securityholders Common Stock Options Common Stock Amount %
- --------------- ------------ ------- ------------ ------ --
<S> <C> <C> <C> <C> <C>
Gary Patterson 10,000 0 10,000 0 0
John R. Serafini, Jr 8,000 0 8,000 0 0
Norton D. Weiner 10,000 0 10,000 0 0
Cheri Housman 4,445 0 4,445 0 0
Carl Jones 110,000 1,474,200 2,718,200(2) 0 0
Carla C. de Baca 7,000 0 7,000 0
Jesse and Dione Lenz JT 1,000 0 1,000 0 0
Michelle O'Mahoney 17,600 163,800 307,400(3) 0 0
James Peterson 12,600 163,800 302,400(3) 0 0
Monica Wright 4,000 0 4,000 0 0
Elwood Jones 2,200 0 2,200 0 0
Eileen Matzen 2,200 0 2,200 0 0
Vimonh Chittarath 2,500 0 2,500 0 0
Keith Backes 1,000 0 1,000 0 0
Jan K. Lorenzo 35 0 35 0 0
Dozal & Associates, Inc. 10,000 0 10,000 0 0
Frank F. Dozal 66,700 737,100 1,370,800(4) 0 0
Rita Dozal 56,700 737,100 1,360,800(4) 0 0
Mark M. Soane and 5,898 0 5,898 0 0
Sarah R. Soane JT
Guardian Ventures, Inc. 11,792 0 11,792 0 0
S.R.T.B., LLC 117,925 0 117,925 0 0
B.A.T.B., LLC 117,925 0 117,925 0 0
Brian Ellis 200 0 200 0 0
Michael Golden 16,041 0 16,041 0 0
Ben Lichtenberg 15,316 0 15,316 0 0
Steven Schwartz 6,220 0 6,220 0 0
John Elwyn 2,073 0 2,073 0 0
Bruce Mahon 829 0 829 0 0
Michael Silverman 1,037 0 1,037 0 0
Craig Samuels 1,037 0 1,037 0 0
Jonathan Rich 11,995 0 11,995 0 0
Anthony Guglieri 706 0 706 0 0
Glen Merendino 706 0 706 0 0
Vincent Chieco 706 0 706 0 0
Bill McCormack 353 0 353 0 0
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Securities Securities
Owned Prior Securities Owned
to Offering(1) Offered Herein After Offering
Name of Selling ------------------------ -------------- --------------
Securityholders Common Stock Options Common Stock Amount %
- --------------- ------------ ------- ------------ ------ --
<S> <C> <C> <C> <C> <C>
Joe Candela 353 0 353 0 0
Joe Spinello 706 0 706 0 0
Agnes Tavoulareas 706 0 706 0 0
Josh Bismuth 706 0 706 0 0
David Rich 706 0 706 0 0
Continental Capital Corp. 150,000 150,000(5) 0 0
</TABLE>
- -----------------
(1) For purposes of this table, a person or group of persons is deemed to have
"beneficial ownership" of any shares of Common Stock which such person has
the right to acquire within 60 days of December 2, 1998. For purposes of
computing the percentage of outstanding shares of Common Stock held by
each person or group of persons named above, any security which such
person or persons has or have the right to acquire within such date is
deemed to be outstanding but is not deemed to be outstanding for the
purpose of computing the percentage ownership of any other person. Except
as indicated in the footnotes to this table and pursuant to applicable
community property laws, the Company believes based on information
supplied by such persons, that the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
which they beneficially own.
(2) Includes presently exercisable (i) Options for the purchase of 340,200
shares of Common Stock exercisable during the eighteen month period
commencing April 10, 1998 and expiring October 10, 1999 at an exercise
price of $4.74 per share; and (ii) Options for the purchase of 1,134,000
shares of Common Stock exercisable during the eighteen month period
commencing April 10, 1998 and expiring October 10, 1999 at an exercise
price of $7.50 per share. Also includes not presently exercisable Options
for the purchase of 1,134,000 shares of Common Stock during the period
commencing March 31, 1999 and expiring December 31, 2000 at an exercise
price of $10.00 per share.
(3) Includes presently exercisable (i) Options for the purchase of 37,800
shares of Common Stock exercisable during the eighteen month period
commencing April 10, 1998 and expiring October 10, 1999 at an exercise
price of $4.74 per share; and (ii) Options for the purchase of 126,000
shares of Common Stock exercisable during the eighteen month period
commencing April 10, 1998 and expiring October 10, 1999 at an exercise
price of $7.50 per share. Also includes not presently exercisable Options
for the purchase of 126,000 shares of Common Stock during the period
commencing March 31, 1999 and expiring December 31, 2000 at an exercise
price of $10.00 per share.
12
<PAGE>
(4) Includes presently exercisable (i) Options for the purchase of 170,100
shares of Common Stock exercisable during the eighteen month period
commencing April 10, 1998 and expiring October 10, 1999 at an exercise
price of $4.74 per share; and (ii) Options for the purchase of 567,000
shares of Common Stock exercisable during the eighteen month period
commencing April 10, 1998 and expiring October 10, 1999 at an exercise
price of $7.50 per share. Also includes not presently exercisable Options
for the purchase of 567,000 shares of Common Stock during the period
commencing March 31, 1999 and expiring December 31, 2000 at an exercise
price of $10.00 per share.
(5) Represents Options for the purchase of 150,000 shares of Common Stock
exercisable during the one year period commencing March 11, 1998 and
expiring March 11, 1999. 100,000 of such Options are exercisable at $4.00
per share, and 50,000 of such Options are exercisable at $5.00 per share.
13
<PAGE>
PLAN OF DISTRIBUTION
The Selling Securityholders may offer and sell shares of Common Stock from
time to time in the discretion of the Selling Securityholders on Nasdaq or in
the over-the-counter market or otherwise at prices and at terms then prevailing
or at prices related to the then current market price, or at negotiated prices.
The distribution of the shares of Common Stock may be effected from time to time
in one or more transactions including, without limitation: (a) a block trade in
which the broker-dealer so engaged will attempt to sell the Common Stock as
agent, but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as principal and
resale by such broker or dealer for its account pursuant to this Prospectus; (c)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers; and (d) face-to-face or other direct transactions between the
Selling Securityholders and purchasers without a broker-dealer or other
intermediary. In effecting sales, broker-dealers or agents engaged by the
Selling Securityholders may arrange for other broker-dealers or agents to
participate. From time to time, one or more of the Selling Securityholders may
pledge, hypothecate or grant a security interest in some or all of the common
Stock owned by them, and the pledgees, secured parties or persons to whom such
securities have been hypothecated shall, upon foreclosure in the event of
default, be deemed to be Selling Securityholders hereunder. In addition, the
Selling Securityholders may from time to time sell short the Common Stock of the
Company, and in such instances, this Prospectus may be delivered in connection
with such short sale and the Common Stock offered hereby may be used to cover
such short sale.
Sales of Selling Securityholders' Common Stock may also be made pursuant
to Rule 144 under the Securities Act, where applicable. The Selling
Securityholders' shares may also be offered in one or more underwritten
offerings, on a firm commitment or best efforts basis. The Company will receive
no proceeds from the sale of Common Stock by the Selling Securityholders.
To the extent required under the Securities Act, the aggregate amount of
Selling Securityholders' Common Stock being offered and the terms of the
offering, the names of any such agents, brokers, dealers or underwriters and any
applicable commission with respect to a particular offer will be set forth in an
accompanying Prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Common Stock may receive compensation
in the form of underwriting discounts, concessions, commissions or fees from a
Selling Securityholder and/or purchasers of Selling Securityholders' shares of
Common Stock, for whom they may act. In addition, sellers of Selling
Securityholders' shares of Common Stock may be deemed to be underwriters under
the Securities Act and any profits on the sale of Selling Securityholders'
shares of Common Stock by them may be deemed to be discounts or commissions
under the Securities Act. Selling Securityholders may have other business
relationships with the Company and its subsidiaries or affiliates in the
ordinary course of business.
14
<PAGE>
From time to time each of the Selling Securityholders may transfer,
pledge, donate or assign Selling Securityholders' shares of Common Stock to
lenders, family members and others and each of such persons will be deemed to be
a "Selling Securityholder" for purposes of this Prospectus. The number of
Selling Securityholders' shares of Common Stock beneficially owned by those
Selling Securityholders who so transfer, pledge, donate or assign Selling
Securityholders' shares of Common Stock will decrease as and when they take such
actions. The plan of distribution for Selling Securityholders' shares of Common
Stock sold hereunder will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be Selling
Securityholders hereunder.
Including, and without limiting the foregoing, in connection with
distributions of the Common Stock, a Selling Securityholder may enter into
hedging transactions with broker-dealers and the broker-dealers may engage in
short sales of the Common Stock in the course of hedging the positions they
assume with such Selling Securityholder. A Selling Securityholder may also enter
into option or other transactions with broker-dealers that involve the delivery
of the Common Stock to the broker-dealers, who may then resell or otherwise
transfer such Common Stock. A Selling Securityholder may also loan or pledge the
Common Stock to a broker-dealer and the broker-dealer may sell the Common Stock
so loaned or upon default may sell or otherwise transfer the pledged Common
Stock.
Under applicable rule and regulations under the Exchange Act, any person
engaged in the distribution of the Common Stock may not bid for or purchase
shares of Common Stock during a period which commences one business day (5
business days, if the Company's public float is less than $25 million or its
average daily trading volume is less than $100,000) prior to such person's
participation in the distribution, subject to exceptions for certain passive
market making activities. In addition and without limiting the foregoing, each
Selling Securityholder will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including, without limitation,
Regulation M which provisions may limit the timing of purchases and sales of
shares of the Company's Common Stock by such Selling Securityholder.
The Company is bearing all costs relating to the registration of the
shares of Common Stock (other than fees and expenses, if any, of counsel or
other advisors to the Selling Securityholders). Any commissions, discounts or
other fees payable to broker-dealers in connection with any sale of the shares
of Common Stock will be borne by the Selling Securityholder selling such shares
of Common Stock.
The Company has agreed to indemnify the Selling Securityholders in certain
circumstances, against certain liabilities, including liabilities arising under
the Securities Act.
15
<PAGE>
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock of the Company is
North American Transfer Company, 147 W. Merrick Road, Freeport, New York 11520.
LEGAL MATTERS
The legality of the shares offered hereby has been passed upon for the
Company by Silverman, Collura, Chernis & Balzano, P.C., 381 Park Avenue South,
Suite 1601, New York, New York 10016.
EXPERTS
The Company's consolidated financial statements incorporated by reference
in this Registration Statement, have been incorporated herein in reliance on the
reports of Weinick Sanders Leventhal & Co., LLP, independent accountants, given
upon the authority of such firm as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
Company, 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 expense
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 of the Company in connection with the
securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by a controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issues.
16
<PAGE>
================================================================================
No dealer, salesman or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer made by this Prospectus and, if given or
made, such information or representations must not be relied upon as having been
authorized by the Company. Neither the delivery of this Prospectus nor any sale
made hereunder shall under any circumstances create any implication that there
has been no change in the affairs of the Company since the date hereof. This
Prospectus does not constitute an offer or solicitation by anyone in any
jurisdiction in which such offer or solicitation is not authorized or in which
the person making such offer or solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or solicitation.
TABLE OF CONTENTS
Page
----
Available Information..........................................................2
Prospectus Summary.............................................................4
Risk Factors...................................................................5
Use of Proceeds...............................................................10
Dilution......................................................................10
Resales by Selling Securityholders............................................11
Plan of Distribution..........................................................14
Transfer Agent and Registrar..................................................16
Legal Matters.................................................................16
Experts.......................................................................16
Disclosure of Commission Position on Indemnification..........................16
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee $12,473.32
Printing Expenses $ 1,000*
Legal Fees and Expenses $ 5,000*
Accounting Fees and Expenses $ 1,000*
Transfer Agent Fees $ 2,000*
Miscellaneous Expenses $ 1,000*
TOTAL $22,473.32*
- ----------
* Estimated
The Selling Security Holders will not be paying any portion of the
foregoing expenses of issuance and distribution.
Item 15. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware and
Article 7 of the Company's Articles of Incorporation contain provisions for
indemnification of officers, directors, employees and agents of the Company. The
Articles of Incorporation require the Company to indemnify such persons to the
full extent permitted by Delaware law. Each person will be indemnified in any
proceeding if he acted in good faith and in a manner which he reasonably
believed to be in, or not opposed to, the best interest of the Company.
Indemnification would cover expenses, including attorney's fees, judgments,
fines and amounts paid in settlement.
The Company's Articles of Incorporation also provided that the Company's
Board of Directors may cause the Company to purchase and maintain insurance on
behalf of any present or past director or officer insuring against any liability
asserted against such person incurred in the capacity of direct or officer or
arising out of such status, whether or not the Company would have the power to
indemnify such person. The Company may seek to obtain directors' and officers'
liability insurance.
Item 16. Exhibits
5 Opinion of Silverman, Collura, Chernis & Balzano, P.C., special counsel
for the Registrant, as to the legality of the securities being registered.
23.1 Consent of Weinick Sanders Leventhal & Co., LLP, Independents Accountants.
23.2 Consent of Silverman, Collura, Chernis & Balzano, P.C. (contained in
Exhibit 5).
II-1
<PAGE>
Item 17. Undertakings.
(a) Rule 415 Offerings.
The undersigned small business issuer hereby undertakes that it will:
(1) File, during the period required by Rule 415, a post-effective
amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and
(iii) Includes any additional or changed material information on the
plan of distribution.
provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and the information required
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) For determining liability under the Securities Act of 1933,
treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) Request for acceleration of effective date.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Act"), may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by the small business issuer of expenses incurred or paid by a
director, officer or controlling person of the small business issuer in the
successful defense of any action, suit or proceedings) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the small business issuer will, unless in the opinion of its counsel
the matter has been
II-2
<PAGE>
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
court.
(c) Reliance upon Rule 430A under the Securities Act.
The undersigned small business issuer hereby undertakes that it will:
(1) For determining any liability under the Securities Act of 1933,
as amended, treat the information omitted from the form of prospectus
filed as part of the registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the small business issuer under
Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this
registration statement as of the time the Commission declared it
effective.
(2) For determining any liability under the Securities Act of 1933,
as amended, treat each post-effective amendment that contains a form of
prospectus as a new registration statement for the securities offered in
the registration statement, and that offering of the securities at that
time as the initial bona fide offering of those securities.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Act, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, therewith duly
authorized, in Hauppauge, New York on December 23, 1998.
ATEC GROUP INC.
By: /s/ Surinder Rametra
------------------------------------
Surinder Rametra, Chairman and CEO
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS,that each person whose signature appears
below, hereby constitutes and appoints Surinder Rametra, his true and lawful
attorney-in-fact, with full power of substitution and resubstitution, for his
and in his name, place and stead, in any and all capacities, to sign any or all
amendments or supplements to this Registration Statement and to file the same
with all exhibits thereto and other documents in connection therewith, with the
Commission, granting unto said attorney-in-fact full power and authority to do
and perform each and every act and thing necessary or appropriate to be done
with respect to this Registration Statement or any amendments or supplements
hereto and about the premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all that said
attorney-in-fact, or his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in their respective
capacities with ATEC Group, Inc. and on the dates indicated.
SIGNATURES
Signature Title Date
/s/ Surinder Rametra Chairman of the Board December 23, 1998
- -------------------- of Directors and CEO
Surinder Rametra (Principal Executive Officer)
/s/ James Charles Chief Financial Officer December 23, 1998
- -------------------- (Principal Financial
James Charles and Accounting Officer)
/s/ Ashok Rametra
- -------------------- Chief Operating Officer December 23, 1998
Ashok Rametra and Director
/s/ George Eagan
- -------------------- Director December 23, 1998
George Eagan
/s/ David Reback Director December 23, 1998
- --------------------
David Reback
II-4
EXHIBIT 5
[LETTERHEAD OF SILVERMAN, COLLURA, CHERNIS & BALZANO P.C.]
December 29, 1998
ATEC Group, Inc.
90 Adams Avenue
Hauppauge, New York 11788
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to ATEC Group, Inc. (the "Company"), a Delaware
corporation, pursuant to the Registration Statement on Form S-3, as filed with
the Securities and Exchange Commission on December 29, 1998 ("Registration
Statement"), covering (i) 639,916 shares of Common Stock; and (ii) 5,946,000
shares of Common Stock underlying warrants.
In acting as counsel for the Company and arriving at the opinions as
expressed below, we have examined and relied upon originals or copies, certified
or otherwise identified to our satisfaction, of such records of the Company,
agreements and other instruments, certificates of officers and representatives
of the Company, certificates of public officials and other documents as we have
deemed necessary or appropriate as a basis for the opinions expressed herein.
In connection with our examination we have assumed the genuineness of all
signatures, the authenticity of all documents tendered to us as originals, the
legal capacity of natural persons and the conformity to original documents of
all documents submitted to us as certified or photostated copies.
Based on the foregoing, and subject to the qualifications and limitations
set forth herein, it is our opinion that:
1. The Company has authority to issue the Common Stock in the manner
and under the terms set forth in the Registration Statement.
2. The Common Stock has been duly authorized and when issued,
delivered and paid for in accordance with their respective terms, will be
validly issued, fully paid and non-assessable.
<PAGE>
We express no opinion with respect to the laws other than those of the
State of New York and Federal Laws of the United States of America, and we
assume no responsibility as to the applicability thereto, or the effect thereon,
of the laws of any other jurisdiction.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and its use as part of the Registration Statement.
We are furnishing this opinion to the Company solely for its benefit in
connection with the Registration Statement. It is not to be used, circulated,
quoted or otherwise referred to for any other purpose. Other than the Company,
no one is entitled to rely on this opinion.
Very truly yours,
/s/ Silverman, Collura, Chernis & Balzano, P.C.
----------------------------------------------
SILVERMAN, COLLURA, CHERNIS
& BALZANO, P.C.
EXHIBIT 23.1
[LETTERHEAD OF WEINICK SANDERS LEVENTHAL & CO., LLP]
Consent of Independent Accountants
We consent to the incorporation by reference in the Registration Statement of
Atec Group, Inc. on Form S-3 of our report dated August 21, 1998, except for
Note 2(c) as to which the date is October 10, 1998, on our audits of the
consolidated financial statements of Atec Group, Inc. and Subsidiaries as of
June 30, 1998 and 1997 and for each of the three years ended June 10, 1998,
which report is included in the Company's Annual Report on Form 10-K/A1 filed
with the Securities and Exchange Commission pursuant to the Securities Exchange
Act of 1934. We also consent to the reference to our firm under the caption
"Experts".
/s/ Weinick Sanders Leventhal & Co., LLP
-------------------------------------
WEINICK SANDERS LEVENTHAL & CO., LLP
New York, N.Y.
December 22, 1998
