<PAGE> 1
As Filed with the Securities and Exchange Commission on April 28, 1999
Registration No. 333-______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OSAGE SYSTEMS GROUP, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 95-4374983
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(602) 274-1299
(Address, including zip code, and telephone number,
including area code, of Registrant's principal
executive offices)
JACK R. LEADBEATER
Chief Executive Officer
Osage Systems Group, Inc.
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(602) 274-1299
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPY TO:
STEPHEN M. COHEN, ESQ.
Buchanan Ingersoll Professional Corporation
Eleven Penn Center
1835 Market Street, 14th Floor
Philadelphia, Pennsylvania 19103
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From
time to time after this Registration Statement becomes effective.
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, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. |X|
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. |_|
<PAGE> 2
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Common Stock,
<S> <C> <C> <C> <C>
$.01 par value......... 3,706,776(1) $6.375 $23,630,697 $6,569
</TABLE>
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, this
Registration Statement is also deemed to include additional shares of
Common Stock which may be issued as: (i) payment of dividends on
Registrant's Series D Convertible Preferred Stock (the "Series D
Shares") and Series E Convertible Preferred Stock (the "Series E
Shares"); and (ii) upon conversion of the Series D Shares and Series E
Shares at a conversion price less than $4.975 and $6.5625,
respectively. The aggregate number of shares of Common Stock issuable
upon exercise of all of the outstanding Series D Shares is determined
by dividing $1,000,000 by the lesser of (i) $4.975 or (ii) in the event
that the Company fails to comply with certain obligations to redeem the
Series D Shares, 80% of the average of the three lowest closing bid
prices of the Company's Common Stock during the five trading days
immediately preceding the conversion date. The aggregate number of
shares of Common Stock issuable upon exercise of all of the outstanding
Series E Shares is determined by dividing $2,000,000 by the lesser of
(i) $6.5625 or (ii) in the event that the Company fails to comply with
certain obligations to redeem the Series E Shares, 80% of the average
of the three lowest closing bid prices of the Company's Common Stock
during the five trading days immediately preceding the conversion date.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). Such price is based upon the average of the
high and low prices per share of the Registrant's Common Stock as
reported on the American Stock Exchange on April 23, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
<PAGE> 3
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED APRIL 23, 1999
PROSPECTUS
OSAGE SYSTEMS GROUP, INC.
1661 EAST CAMELBACK ROAD, SUITE 245
PHOENIX, ARIZONA 85016
3,706,776 SHARES OF COMMON STOCK,
SUBJECT TO ADJUSTMENT
The selling stockholders identified as "Selling Security Holders" in
this Prospectus, may offer and sell, from time to time, up to an aggregate of
3,706,776 Shares of the Common Stock of Osage Systems Group, Inc. The Shares
were issued, or are issuable upon the conversion or exercise of securities
issued, by us in private placement transactions. The Selling Security Holders
may sell all or a portion of their respective Shares through public or private
transactions, at prevailing market prices, or at privately negotiated prices. We
will not receive any part of the proceeds from sales of these Shares.
Our Common Stock is listed on the American Stock Exchange under the
symbol "OSE". The last reported sale price of our Common Stock on April 23, 1999
on the American Stock Exchange was $6.50 per share.
INVESTING IN THE COMMON STOCK INVOLVES CERTAIN RISKS. SEE "RISK
FACTORS" BEGINNING ON PAGE 2.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
April 23, 1999
<PAGE> 4
OSAGE SYSTEMS GROUP, INC.
TABLE OF CONTENTS
Page No.
ABOUT OSAGE SYSTEMS GROUP, INC. 1
RISK FACTORS 2
USE OF PROCEEDS 9
SELLING SECURITY HOLDERS 10
DESCRIPTION OF SECURITIES 14
PLAN OF DISTRIBUTION 22
LEGAL MATTERS 23
EXPERTS 23
WHERE YOU CAN FIND MORE INFORMATION 25
INDEMNIFICATION OF DIRECTORS AND OFFICERS 27
SIGNATURES II-4
POWER OF ATTORNEY II-4
EXHIBIT INDEX II-5
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ABOUT OSAGE SYSTEMS GROUP, INC.
Osage Systems Group, Inc. ("Osage") is a multi-regional provider of
network computing solutions through its twelve (12) offices located in nine (9)
states. We provide these solutions by deploying a life-cycle methodology which
addresses all phases of a customer's information technology needs. This includes
business needs analysis, systems architecture design, systems implementation and
ongoing systems management support. Solutions are developed and delivered by our
technical consultants, who are skilled in specialized practice areas such as
enterprise infrastructure, enterprise resource planning, electronic commerce,
java application development, web solutions, electronic publishing and network
support services. Our solutions integrate products that feature state of the art
technology from industry-leading vendors of information technology products,
such as Sun Microsystems, Inc., Cisco Systems, Inc., Oracle Corporation,
Netscape Communications Corporation, Hewlett Packard Company, Microsoft, Fore
Systems, Inc., Lawson Software, Check Point Software Technologies, Ltd., Inktomi
Corporation and Veritas Software Corporation.
During 1998, we implemented an aggressive growth strategy based on our
belief in two fundamental concepts. First, the expanding market demand for
companies with the expertise to design, integrate and implement a customer's
information technology needs. Second, the competitive advantages offered by our
blend of specialized professional services and products. A key element of this
strategy is to identify acquisition candidates that have a proven record of
delivering high-quality technical services and a customer base of large and
mid-sized companies which may benefit from the synergies offered by our growth
strategy. An additional factor is to identify acquisition candidates with
expertise in higher margin professional consulting services that can be
cross-sold through our offices. One of the principal objectives of this strategy
is to develop a greater focus upon the delivery of professional consulting
services, thereby offering the potential for higher profit margins and greater
growth opportunities than generally available to traditional product resellers.
Through implementation of this strategy, we intend to expand our market presence
in selected regions throughout the country. This will enable us to further
establish the "Osage" brand name, provide a greater opportunity for cross
selling and maximize operating efficiencies through the integration of certain
centralized functions.
Since the adoption of our growth strategy in the beginning of 1998, we
have acquired six (6) companies that have significantly contributed to our
revenue base. During 1998, our revenues increased to $61 million, as compared to
$14.2 million during 1997. On a pro forma basis, had each of the acquisitions
been completed as of January 1, 1998, our revenues during 1998 would have
increased to $83 million.
Our objective is to be recognized as one of the leading solutions
providers of a customer's networking and internet computing needs. We intend to
fulfill this objective by, among other things, continuing our growth strategy
and shifting the focus of our product and service offerings to the development
of specialized practice areas.
Osage was originally incorporated as "Pacific Rim Entertainment, Inc."
under the laws of Delaware in 1992. From 1992 through 1996, Pacific Rim
principally engaged in the animated film production business. After several
years of losses following Pacific Rim's initial public offering in
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1993, the company suspended its business operations in 1996 and remained
inactive while it sought to identify a strategic business combination with a
private operating company. Pacific Rim acquired, and thereafter, assumed the
historic business of Osage Computer Group, Inc. in a merger transaction that
became effective on December 22, 1997. Osage Computer Group, Inc. had been a
provider of network computing solutions since 1989. On March 10, 1998, Pacific
Rim changed its name to "Osage Systems Group, Inc."
The executive offices of Osage are located at 1661 East Camelback Road,
Suite 245, Phoenix, Arizona, and our telephone number is (602) 274-1299.
RISK FACTORS
An investment in the shares of Common Stock offered by this Prospectus
involves a high degree of risk and should only be made by purchasers who have
carefully gathered and reviewed information about Osage. This would normally
include information about our finances, results of operations, business
description, prospects, management, capitalization, share ownership and
transactions involving management and principal stockholders. This Prospectus,
however, has been filed as part of a Registration Statement on Form S-3, and as
such, only contains a summary of certain information which may be relevant to a
purchaser in making an investment decision. Accordingly, prospective purchasers
of the Shares should, prior to making an investment decision, carefully
evaluate, among other materials: (i) the following risk factors; (ii) the
remainder of the information set forth within this Prospectus; and (iii) the SEC
Reports and other information about us incorporated by reference into this
document.
The section of this Prospectus entitled "WHERE YOU CAN FIND MORE
INFORMATION" provides a list of the SEC Reports and other information that is
incorporated by reference into this Prospectus.
This Prospectus contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Although
forward-looking statements are based on assumptions made, and information
believed, by management to be reasonable, no assurance can be given that such
statements will prove to be correct. Such statements are subject to certain
risks, uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those anticipated, estimated, projected
or expected.
1. RECENT NET LOSSES.
We incurred a net loss of $3.02 million for the year ended December 31,
1998 of which $2.37 million was incurred during the fourth quarter of 1998. The
loss for the fourth quarter follows a net loss for the third quarter ended
September 30, 1998 of $56,000. Although we are confident that our losses will
subside as we achieve greater operating efficiencies and address other
nonrecurring factors, there can be no assurances to this effect. Notwithstanding
our expectations, if material losses continue, our operations would be adversely
affected and continued implementation of our acquisition program would be
significantly delayed.
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2. RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY.
One of the central elements of our business strategy is to achieve
growth through acquisitions and to focus future growth on the higher margin
services segment of our operations. Due to the early stages of our acquisition
program, there can be no assurances as to the long-term impact of our
acquisition strategy on our gross profits or net income. During 1998, the
acquisition strategy may have contributed towards net losses in several
respects. First, certain of the acquired companies continued to incur losses
from operations, or required significant cash advances from Osage, which, in
turn, adversely effected our results of operations. Second, the acquisition
strategy resulted in a significant increase in our selling, general and
administrative expenses, which also had a negative impact on our results of
operations. As net sales continue to increase, however, our overhead will be
spread over a larger revenue base, which we expect will have a positive impact
on our results of operations.
We anticipate that future profitability is likely to depend upon a
combination of many factors. First, the continued growth of Osage's business
through acquisitions. Second, the management of the growth through the
integration of the businesses acquired. Third, the continued expansion of our
higher margin service business. Continuation of our growth strategy, however,
depends upon a number of factors. First, we must continue to have adequate
capital resources to continue to finance the acquisitions. In view of our recent
losses and limited available financing, our ability to finance cash acquisitions
is presently limited. Second, the continued availability of an adequate supply
of acquisition targets at reasonable purchase prices. Increased completion for
acquisition candidates could reduce the pool of available targets and could
increase acquisition prices.
3. NEED FOR ADDITIONAL FINANCING; RISKS RELATED TO ACQUISITION FINANCING.
In order to pursue our acquisition strategy in the long term, we will
require additional financing, which we intend to obtain through a combination of
traditional debt financing, the issuance of our shares and the placement of debt
and equity securities. To the extent that acquisitions can be financed through
the issuance of our securities, the need for cash resources is mitigated. In the
event that our Common Stock does not attain or maintain a sufficient market
value, or potential acquisition candidates are otherwise unwilling to accept
Common Stock as part of the consideration for the sale of their businesses, we
may be required to utilize more of our cash resources, if available, in order to
maintain our acquisition program. If we do not have sufficient cash resources,
our growth could be limited unless we are able to obtain additional capital
through debt or equity financing.
4. ADDITIONAL DILUTION ASSOCIATED WITH EXISTING CONVERTIBLE SECURITIES AND
POSSIBLE FUTURE ACQUISITIONS.
We are presently authorized to issue 50,000,000 shares of Common Stock,
of which 9,465,643 are outstanding as of the date of this Prospectus. We may in
the future issue up to 605,767 shares of Common Stock (subject to potential
upward adjustment) upon the conversion of outstanding preferred stock. We may
also issue in the future up to 4,212,268 shares of Common Stock upon the
exercise of outstanding stock options and warrants. Together with the
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conversion of outstanding shares of preferred stock, the exercise of outstanding
options and warrants could conceivably result in an increase in the number of
outstanding shares of Osage's Common Stock from 9,465,643 to 14,283,678 or more.
Issuance of this many shares is likely to have an extremely dilutive effect upon
the existing stockholders.
We may also issue additional shares of Common Stock in the future in
connection with the following:
- - earn-out provisions of certain prior acquisitions;
- - pending or future acquisitions; or
- - other valid business purposes within the discretion of the Board of
Directors.
5. INFLUX OF SHARES ELIGIBLE FOR SALE.
Sales of substantial amounts of Common Stock in the public market
following this offering could adversely affect the market price of the Common
Stock and make it more difficult for us to sell equity securities in the future
at prices we deem appropriate. As of the date of this Prospectus, Osage had
9,465,643 shares of Common Stock outstanding, of which approximately 4.4 million
were eligible for public resale. Upon completion of this offering (assuming the
conversion or exercise of certain securities held by the Selling Security
Holders), there will be an increase in the shares of outstanding Common Stock to
approximately 10,591,410. As a result of the lapse of the holding period for
restricted securities under Rule 144 of the Securities Act of 1933 and the
registration for resale of the 2,428,628 shares covered by this Prospectus,
there will be an aggregate of approximately 8.3 million shares eligible for
public resale without restriction by the summer of 1999. Up to approximately 2.9
million additional shares will become eligible for public resale periodically
during the remainder of 1999. Sales of these shares in the public market, or the
perception that such future sales could occur, may adversely affect the market
price of the Common Stock and could impair our ability to obtain capital through
offerings of equity securities.
6. CLASSIFIED BOARD; DELAWARE ANTI-TAKEOVER LAW
Our Board of Directors is classified into three classes, with the
members of one class (or approximately one-third of the Board) elected each year
to serve a three-year term. A director may be removed only for cause by a vote
of the holders of two-thirds of our outstanding securities. The classified Board
of Directors makes it more difficult to change majority control of the Board,
which may discourage attempts by third parties to make a tender offer or
otherwise obtain control of Osage, even if such attempt would be beneficial to
us and our stockholders.
Osage is governed by the provisions of Section 203 of the General
Corporation Law of the State of Delaware, an anti-takeover law (the "GCL"). In
general, the law prohibits a public Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
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interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the stockholder. An
"interested stockholder" is a person who, together with its affiliates and
associates, owns (or, within three years, did own) 15% or more of the
corporation's voting stock. The supermajority voting provisions in our bylaws
and the provisions regarding certain business combinations under the GCL could
have the effect of delaying, deferring or preventing a change in control of
Osage or the removal of existing management. A takeover transaction frequently
affords stockholders the opportunity to sell their shares at a premium over
current market prices. Our Certificate of Incorporation includes undesignated
Preferred Stock, which may enable the Board to discourage an attempt to obtain
control of Osage by means of a tender offer, proxy contest, merger or otherwise.
7. SUBSTANTIAL RELIANCE ON KEY CUSTOMERS.
Dependence on our largest customers has diminished as revenues have
increased and the geographic scope of our business has expanded. The largest
customer which in 1996 and 1997 accounted for 43.9% and 64.8% of net sales,
respectively, accounted for only 16.7% of net sales in 1998. Two other customers
accounted for 6.0% and 10.1% of our net sales for the year ended December 31,
1998. Based upon historical and recent results and existing relationships with
customers, although we are less dependent on our largest customers, we believe
that a substantial portion of our net sales and gross profits will continue to
be derived from sales to our largest customers.
Possible risks associated with our customer relationships include:
- - lack of ongoing written commitments by customers to purchase products
and services from us;
- - failure by large customers to renew service contracts or termination of
existing contracts; and
- - a significant reduction in purchase orders from large customers.
8. SUBSTANTIAL VARIABILITY OF QUARTERLY OPERATING RESULTS.
In the past, our operating results have varied substantially from
quarter to quarter, and we expect that they will continue to do so. Our
quarterly operating results are influenced by, among others:
- - the timing, size and stage of projects;
- - new service introductions by us or our competitors;
- - information technology outsourcing trends;
- - the hiring of additional staff and increased selling and administrative
expenses
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associated with our growth;
- - changes in our billing and employee utilization rates; and
- - incurring costs for projects in periods prior to recognizing revenues
for such contracts.
We must plan our operating expenditures based on revenue forecasts, and
a revenue shortfall below such forecast in any quarter would likely adversely
affect our operating results for the quarter. We believe, therefore, that past
operating results and period-to-period comparisons should not be relied upon as
an indication of future performance.
9. HIGHLY COMPETITIVE INFORMATION TECHNOLOGY SERVICES INDUSTRY.
Our business is highly competitive. Many of our competitors have longer
operating histories, possess greater industry and name recognition and have
significantly greater financial, technical and marketing resources.
Additionally, we have faced, and expect to continue to face, additional
competition from new entrants into our markets.
We believe that competitive factors in our markets include:
Principal Factors
- - quality of service and products;
- - development of new products and services;
- - price;
- - project management capability; and
- - technical and business expertise.
Outside Factors
- - employment terms and conditions offered by our competitors; and
- - the development by competitors of new products and services
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10. COMPETITIVE MARKET FOR TECHNICAL PERSONNEL.
We believe that our success will depend in large part upon our ability
to attract, retain, train and motivate highly-skilled employees, particularly
project managers and other senior technical personnel. Such qualified personnel
are in great demand, there is significant competition for such employees and it
is likely that access to such personnel will remain limited for the foreseeable
future. There can be no assurance that we will be successful in attracting a
sufficient number of such personnel in the future, or that we will be successful
in retaining, training and motivating the employees we are able to attract.
11. RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SOLUTIONS.
Our success depends in part on our ability to develop solutions that
keep pace with:
- - continuing changes in information technology;
- - evolving industry standards; and
- - changing customer objectives and preferences.
There can be no assurance that we will be successful in adequately
addressing these developments on a timely basis. Even if these developments are
addressed, we may not be successful in the marketplace. In addition,
competitors' products or technologies may make our services non-competitive or
obsolete. Our failure to address these developments could have a material
adverse effect on our business.
12. DEPENDENCE ON SUPPLIERS.
Our business depends upon an adequate supply of hardware, software
products and computer systems at competitive prices and on reasonable terms.
Consequently, our results of operations are dependent, in part, upon the demand
for, price of, technical capabilities of and quality of the products available
for resale. Our principal supplier is Sun Microsystems, Inc. We are also
supplied by Oracle Corporation, Netscape Communications Corporation, Cisco
Systems, Inc. and Hewlett Packard Company.
To mitigate the risk of product shortage, we attempt, when possible, to
procure some hardware and software products from multiple sources. Some products
are available from only a single source, as manufacturers elect to provide a
direct relationship with system integrators. We have supply contracts with
vendors and purchase hardware and software products and computer systems on a
purchase order basis. As a result, there can be no assurance that such products
will continue to be available as required by us at prices or on terms acceptable
to us.
During the fourth quarter of 1998, shortages of products from our
principal vendor significantly disrupted the orderly flow of products and had a
material adverse effect on our results of operations. These issues were
short-term and during 1999 the supply of product resumed to its historic levels.
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13. EFFECTS OF YEAR 2000 ISSUE.
Year 2000 issues are the result of computer programs utilizing two
digits rather than four to define the applicable year associated with the
program or computations made by it. This could result in a systems failure or
miscalculation causing disruptions of operations, such as the temporary
inability to process transactions, send invoices or engage in normal business
activities. Although we do not believe that year 2000 issues will have a
significant impact on our internal operations or on solutions developed for
clients where we have provided an express warranty regarding the year 2000
issue, there can be no assurance that we will not experience interruptions of
operations because of year 2000 problems or become involved in disputes with
clients regarding year 2000 problems involving solutions that we developed or
implemented or the interaction of such solutions with other applications. Year
2000 problems could require us to incur unanticipated expenses, and such
expenses could have a material adverse effect on our business, financial
condition and results of operations. Furthermore, Year 2000 issues may affect
the purchasing patterns of our clients or potential clients as companies expend
significant resources to ensure that their current systems are year 2000
compliant. These expenditures may result in fewer funds available to purchase
our services, which in turn could have a material adverse effect on our
business, financial condition and results of operations.
14. DIVIDENDS.
No dividends have been paid by us since inception and the payment of
dividends on our Common Stock is not contemplated in the foreseeable future. The
payment of future dividends on our Common Stock will be directly dependent upon
our earnings, our financial needs and other similarly unpredictable factors.
Earnings, if any, are expected to be retained to finance and develop our
business.
15. POTENTIAL VOLATILITY OF STOCK PRICE.
The market price of the shares of our Common Stock could in the future
be subject to high volatility. Some factors that may affect the market
price include:
- - actual or anticipated fluctuations in our operating results;
- - announcements of technological innovations or new commercial products
or services by us or our competitors;
- - market conditions in the computer software and hardware industries
generally;
- - changes in recommendations or earnings estimates by securities
analysts; and
- - actual or anticipated quarterly fluctuations in financial results.
Furthermore, the stock market has historically experienced volatility
which has particularly affected the market prices of securities of many
technology companies and which sometimes has been unrelated to the operating
performances of such companies.
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16. NO LEGAL OR TAX ADVICE.
Any purchasers of the Shares should consult with their respective
counsel, accountant or business adviser as to legal, tax and related matters
concerning investment in the Shares offered hereby. An investment in the Shares
may involve certain material federal and state tax consequences.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the Shares
offered by this Prospectus.
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SELLING SECURITY HOLDERS
All of the shares of Common Stock of the Company offered hereby are
being sold for the account of the selling security holders identified in the
following table (the "Selling Security Holders").
The Selling Security Holders are offering for sale an aggregate of
3,706,776 shares of Common Stock which include: (i) 2,428,628 shares of Common
Stock; (ii) 620,000 shares of Common Stock which may be issued upon the exercise
of warrants; (iii) 201,005 shares of Common Stock, subject to adjustment, which
may be issued upon the conversion of the Series D Shares; and (iv) 457,143
shares of Common Stock, subject to adjustment, which may be issued upon the
conversion of the Company's outstanding Series E Shares. The shares of Common
Stock, warrants to purchase shares of Common Stock, Series D Shares and Series E
Shares were previously issued by the Company in private placement transactions.
1,500,000 of the Shares covered by this Prospectus are being offered by the
Company's principal stockholders.
Pursuant to Rule 416 of the Securities Act of 1933, as amended (the
"Act"), this Prospectus is deemed to include additional Shares which may be
issued as: (i) payment of dividends on the Series D Shares and Series E Shares;
and (ii) upon conversion of the Series D Shares and Series E Shares at a
conversion price less than $4.975 and $6.5625, respectively. SEE "ADJUSTMENT
FEATURES OF THE SERIES D CONVERTIBLE PREFERRED STOCK AND SERIES E CONVERTIBLE
PREFERRED STOCK."
The following table sets forth as of April 23, 1999 the number of
Shares being held of record or beneficially (to the extent known by the Company)
by such Selling Security Holders and provides (by footnote reference) any
material relationship between the Company and such Selling Security Holder, all
of which is based upon information currently available to the Company.
The shares of Common Stock offered by the Selling Security Holders may
be offered for sale from time to time at market prices prevailing at the time of
sale or at negotiated prices, and without payment of any underwriting discounts
or commissions except for usual and customary selling commissions paid to
brokers or dealers.
<TABLE>
<CAPTION>
Number of
Beneficial Ownership of Shares Beneficial
Name of Selling Security Holder Offered Ownership of Shares
Selling Security Holder Prior to Offering(1) Hereby(2) After Offering(2)
Number Percent Number Percent
<S> <C> <C> <C> <C> <C>
Anderson, O. Jack 333,334 3.5% 333,334 0 0%
Cook, Scott D 40,000(3) * 40,000 0 0%
FAC Enterprises, Inc. 120,000(4) 1.2% 120,000 0 0%
Founders Partners IV, L.L.C 235,294 2.5% 235,294 0 0%
</TABLE>
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<TABLE>
<CAPTION>
Number of
Beneficial Ownership of Shares Beneficial
Name of Selling Security Holder Offered Ownership of Shares
Selling Security Holder Prior to Offering(1) Hereby(2) After Offering(2)
Number Percent Number Percent
<S> <C> <C> <C> <C> <C>
Gaare, Maureen 296 * 296 0 0%
Grube, Daniel 296 * 296 0 0%
Gwin, Gary 3,111 * 3,111 0 0%
Halifax Fund, L.P. 404,762(5,7) 4.1% 557,143(6,7) 0 0%
IP Services, Inc. 130,000(8) * 130,000 0 0%
Lancer Offshore, Inc. 820,000(9) 8.7% 820,000 0 0%
Lancer Partners, L.P. 470,000(9) 5.0% 470,000 0 0%
Lancer Voyager Fund 170,000(9) 1.8% 170,000 0 0%
Lauer, Michael 1,500,000(10) 15.8% 40,000 0 0%
Moorhead, Donald F 30,000(3) * 30,000 0 0%
Moorhead, George O 10,000(3) * 10,000 0 0%
Rosen, Paul 5,000 * 5,000 0 0%
SPH Equities, Inc. 368,388(11) 3.8% 275,000(12) 93,388 *
Spackman, Thomas J 20,000(3) * 20,000 0 0%
The Cuttyhunk Fund Limited 301,005(13) 3.1% 301,005 0 0%
Vahalla, Trust of Daniel J. and Mary 146,297 1.5% 146,297 0 0%
Total 3,706,776
</TABLE>
- ---------------------
* Less than 1%
(1) Applicable percentage of ownership is based on 9,465,643 shares of
Common Stock outstanding as of April 23, 1999, plus any Common Stock
equivalents held by such holder.
(2) Assumes that all Shares are sold pursuant to this offering and that no
other shares of Common Stock are acquired or disposed of by the Selling
Security Holders prior to the termination of this offering. Because the
Selling Security Holders may sell all, some or none of their Shares or
may acquire or dispose of other shares of Common Stock, no reliable
estimate can be made of the aggregate number of Shares that will be
11
<PAGE> 16
sold pursuant to this offering or the number or percentage of shares of
Common Stock that each Selling Security Holder will own upon completion
of this offering.
(3) Reflects Shares issuable upon the exercise, if at all, of common stock
purchase warrants at an exercise price of $4.25 per share. The warrants
were issued in a private placement transaction as of May 13, 1998.
(4) Through common ownership, FAC Enterprises, Inc. is an affiliate of IP
Services, Inc., also a Selling Security Holder.
(5) Calculated in accordance with Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended. Includes (i) 304,762
Shares issuable upon the conversion, if at all, of 2,000 shares of
Series E Convertible Preferred Stock at a conversion price of $6.5625
per share of Common Stock, subject to adjustment; and (ii) 100,000
Shares issuable upon the exercise of common stock purchase warrants at
an exercise price of $7.875 per share. The Series E Shares and warrants
were issued in a private placement transaction as of February 9, 1999.
Pursuant to Rule 416 of the Act, this Prospectus shall also be deemed
to include additional Shares which may be issued: (i) as payment of
dividends on the Series E Shares; and (ii) upon conversion of the
Series E Shares at a conversion price less than $6.5625 per share of
Common Stock. See "ADJUSTMENT FEATURES OF THE SERIES D CONVERTIBLE
PREFERRED STOCK AND SERIES E CONVERTIBLE PREFERRED STOCK."
(6) Represents (i) Shares issuable upon the conversion, if at all, of 2,000
shares of Series E Convertible Preferred Stock at a conversion price,
subject to adjustment, of $6.5625 per share of Common Stock and (ii)
100,000 Shares issuable upon the exercise of common stock purchase
warrants. Pursuant to the Registration Rights Agreement dated as of
February 9, 1999 between the Company and Halifax Fund, L.P., the
Company agreed to register herein 150% of the number of Shares issuable
had all of the Series E Shares been converted on the trading day
immediately preceding the filing of this Registration Statement. See
"ADJUSTMENT FEATURES OF THE SERIES D CONVERTIBLE PREFERRED STOCK AND
SERIES E CONVERTIBLE PREFERRED STOCK."
(7) Pursuant to the terms of the Series E Shares and warrants issued to
Halifax Fund, L.P., such Selling Security Holder cannot convert the
Series E Shares or exercise warrants to the extent such conversion
and/or exercise would cause the number of shares of Common Stock
beneficially owned by such Selling Security Holder and its affiliates
(other than shares deemed beneficially owned through ownership of
unconverted Series E Shares and unexercised warrants) to exceed 4.9%
(subject to adjustment) of the then issued and outstanding shares of
Common Stock following such conversion and/or exercise.
(8) Includes 85,000 Shares of common stock, as well as 45,000 Shares
issuable upon the exercise, if at all, of common stock purchase
warrants at an exercise price of $5.25 per share issued in private
placement transactions during 1998. Through common ownership, IP
Services, Inc. is an affiliate of FAC Enterprises, Inc., also a Selling
Security Holder.
(9) The beneficial ownership of these shares is also attributed to Michael
Lauer. See Footnote No. 10.
(10) Includes direct ownership of 40,000 shares and investment control of
1,460,000 shares through Mr. Lauer's role as Managing Member of Lancer
Management Group LLC which is the Manager of Lancer Offshore, Inc.
(820,000 shares) and Lancer Voyager Fund (170,000 shares), and Lancer
Management Group, II, which is the Manager of Lancer Partners, L.P.
(470,000 shares). Mr. Lauer acts as Investment Manager of each of these
funds.
(11) Includes 275,000 Shares issuable upon the exercise of common stock
purchase warrants issued in private placement transactions (200,000 at
an exercise price of $3.50 per share and 75,000 at an exercise price of
$4.75 per share).
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<PAGE> 17
(12) Only includes the reoffer of the Shares issuable upon exercise of the
warrants.
(13) Includes (i) 201,005 Shares issuable upon the conversion, if at all, of
1,000 shares of Series D Convertible Preferred Stock at a conversion
price of $4.975 per share of Common Stock, subject to adjustment; and
(ii) 100,000 Shares issuable upon the exercise of common stock purchase
warrants at an exercise price of $5.97 per share. The Series D Shares
and warrants were issued in a private placement transaction as of
December 31, 1998. Pursuant to Rule 416 of the Act, this Prospectus
shall also be deemed to include additional Shares which may be issued:
(i) as payment of dividends on the Series D Shares; and (ii) upon
conversion of the Series D Shares at a conversion price less than
$4.975 per share of Common Stock. See "ADJUSTMENT FEATURES OF THE
SERIES D CONVERTIBLE PREFERRED STOCK AND SERIES E CONVERTIBLE PREFERRED
STOCK."
Under agreements with the Selling Security Holders, all offering
expenses are borne by Osage except the fees and expenses of any counsel and
other advisors that the Selling Security Holder may employ to represent them in
connection with the offering and all brokerage or underwriting discounts or
commissions paid to broker-dealers in connection with the sale of the Shares.
ADJUSTMENT FEATURES OF THE SERIES D CONVERTIBLE PREFERRED STOCK AND SERIES E
CONVERTIBLE PREFERRED STOCK
The shares of Series D Convertible Preferred Stock are subject to
certain adjustment features which may result in the issuance of additional
securities. This may occur in the event Osage fails to timely satisfy its
obligation to redeem the Series D Shares in which event the conversion price of
the Series D Shares may be decreased. A reduction in the conversion price would
result in an increase in the number of shares issuable upon conversion of the
Series D Shares. An adjustment event could also occur in the event Osage chooses
to pay dividends earned on the Series D Shares in the form of additional shares
of Osage Stock. For a further description of these provisions, your attention is
directed to the "DESCRIPTION OF SECURITIES - SERIES D CONVERTIBLE PREFERRED
STOCK" section of this Prospectus.
The shares of Series E Convertible Preferred Stock are subject to
certain adjustment features which may result in the issuance of additional
securities. This may occur in the event Osage fails to timely satisfy its
obligation to redeem the Series E Shares in which event the conversion price of
the Series E Shares may be decreased. A reduction in the conversion price would
result in an increase in the number of shares issuable upon conversion of the
Series E Shares. An adjustment event could also occur in the event Osage chooses
to pay dividends earned on the Series E Shares in the form of additional shares
of Osage Stock. For a further description of these provisions, your attention is
directed to the "DESCRIPTION OF SECURITIES - SERIES E CONVERTIBLE PREFERRED
STOCK" section of this Prospectus.
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<PAGE> 18
DESCRIPTION OF SECURITIES
COMMON STOCK
We are authorized to issue 50,000,000 shares of Common Stock, $.01 par
value per share, of which 9,465,643 are currently outstanding as of April 23,
1999.
Holders of Common Stock have equal rights to receive dividends when, as
and if declared by the Board of Directors, out of funds legally available
therefor. Holders of Common Stock have one vote for each share held of record
and do not have cumulative voting rights.
Holders of Common Stock are entitled upon liquidation of the Company to
share ratably in the net assets available for distribution, subject to the
rights, if any, of holders of any preferred stock then outstanding. Shares of
Common Stock are not redeemable and have no pre-emptive or similar rights. All
outstanding shares of Common Stock are fully paid and non-assessable.
PREFERRED STOCK
Within the limits and restrictions contained in the Certificate of
Incorporation, the Board of Directors has the authority, without further action
by the stockholders, to issue up to 10,000,000 shares of Preferred Stock, $.01
par value per share, in one or more series, and to fix, as to any such series,
the dividend rate, redemption prices, preferences on liquidation or dissolution,
sinking fund terms, if any, conversion rights, voting rights, and any other
preference or special rights and qualifications.
SERIES A $3.00 CONVERTIBLE PREFERRED STOCK
The Board of Directors has authorized the designation of a series of
preferred stock as Series A $3.00 Convertible Preferred Stock, with such rights
and preferences as are described in the following summary. 122 Series A Shares
were issued during December 1997 in conjunction with a private placement
transaction. As of April 23, 1999, 8 Series A Shares with a stated value of
$240,000 remain outstanding.
- - Liquidation Preference
The Series A Shares have a liquidation preference of $30,000 per Series
A Share, plus any accrued dividends thereon. The holders of the Series A Shares
shall share ratably in all liquidation preferences. Accordingly, if we liquidate
or dissolve, after payment to all creditors, no distribution shall be made to
holders of Common Stock, unless prior thereto holders of the Series A Shares
have received $30,000 per share.
- - Dividends
The holders of the Series A Shares shall not be entitled to receive
dividends.
14
<PAGE> 19
- - Conversion
The holders of the Series A Shares have the right at any time to
convert the stated value of the purchase price of the Series A Shares into
shares of Common Stock at a conversion rate of $3.00 per share of Common Stock.
The number of shares of Common Stock into which each Series A Share
shall be convertible shall be subject to adjustment to protect against dilution
in the event we declare a stock dividend, make a distribution on the Common
Stock, divide or reclassify the outstanding shares of Common Stock.
- - Voting Rights
Prior to the conversion of the Series A Shares, the holders thereof
shall have no voting rights.
- - Redemption
All, but not less than all, of the Series A Shares may be redeemed at
any time at our sole discretion at $30,000 per Series A Share upon thirty (30)
days' written notice to the holders, provided that at the time of the redemption
notice: (i) the average of the closing bid and ask prices of the Common Stock
shall have exceeded $5.00 for the twenty (20) trading days preceding the date of
the redemption notice; (ii) the shares of Common Stock issued or issuable upon
conversion of the Series A Shares are subject to an effective Registration
Statement; and (iii) the placement agent engaged to offer the Series A Shares
shall have waived any restrictions upon the resale of such shares. The holders
of the Series A Shares shall be entitled to exercise their conversion option
during said thirty (30) day notice period.
- - Certificate of Designation
The terms described above are merely summaries of the salient features
of the Series A Shares. The actual terms are contained within a definitive
Certificate of Designation on file with the Delaware Secretary of State.
SERIES D CONVERTIBLE PREFERRED STOCK
The Board of Directors has authorized the designation of a series of
Preferred Stock as Series D Convertible Preferred Stock, with such rights and
preferences as are described in the following summary. 1,000 Series D Shares
were issued during December 1998 in conjunction with a private placement
transaction, all of which are outstanding.
- - Liquidation Preference
Subject to and after making provision for the rights and preferences of
the Series A Shares, the holders of the Series D shall be entitled to a
liquidation preference equal to $1,000 per share plus any accrued but unpaid
dividends thereon. Accordingly, if we liquidate or dissolve, after payment to
all creditors and payment of the liquidation preference to holders of Series A
15
<PAGE> 20
Shares, no distribution shall be made to the holders of Common Stock, unless
prior thereto, holders of the Series D Shares shall have received a liquidation
preference of $1,000 plus all accrued but unpaid dividends thereon.
- - Dividends
The holder of the Series D Shares shall be entitled to dividends in
preference to any dividend on Common Stock payable upon conversion at a per
share rate of eight percent per annum accruing from the date of issuance. We may
elect to pay the dividends in the form of shares of Common Stock.
- - Conversion
Upon the earlier to occur of: (i) the 90th calendar day after the date
of issuance; or (ii) the date on which a registration statement registering the
resale of the Common Stock issuable upon conversion of the Series D Shares is
declared effective, the holders of the Series D Shares thereafter have the right
at any time to convert the $1,000,000 stated value of the shares, into shares of
Common Stock at the Series D conversion rate of $4.975 per share. The Series D
conversion rate is subject to adjustment if we fail to comply with certain
redemption provisions described below under the caption, "Redemption." As so
adjusted the conversion rate shall be equal to the lesser of (i) $4.975 or (ii)
80% of the average of the three lowest closing bid prices of the Common Stock
(as reported by Bloomberg, LP or if not so reported as set forth in the
definition of closing bid price within the Certificate of Designation of the
Series D Shares) during the five trading days immediately preceding the
conversion date.
Commencing on the effective date of a registration statement covering
the shares of Common Stock issuable upon conversion of the Series D Shares, and
provided the registration statement then remains effective, we have the right to
force conversion by the holders of the Series D Shares, provided that the
closing bid price (as set forth in the Certificate of Designation) as calculated
on the date set forth in the forced conversion notice is equal to or greater
than 150% of the conversion price. We may not initiate a forced conversion more
than once every 30 calendar days and no single forced conversion shall exceed
50% of the total number of shares of Series D Shares issued. In addition, we may
force conversion on a holder of only that number of shares which would result in
the holder beneficially owning 4.99% or less of the shares of our Common Stock
then outstanding.
The number of shares of Common Stock into which each Series D Share
shall be convertible shall be subject to adjustment to protect against dilution
in the event we shall declare a stock dividend, make a distribution on the
Common Stock, divide or reclassify the outstanding shares of Common Stock.
16
<PAGE> 21
- - Voting Rights
Prior to the conversion of the Series D Shares, the holder thereof
shall have no voting rights except as expressly required under Delaware law;
provided, however, that the affirmative vote of two thirds of the holders of the
Series D Shares shall be necessary for the taking of any action that is
inconsistent or conflicts with the rights, preferences or privileges of the
Series D Shares.
- - Redemption
The Series D Shares may be redeemed at the option of a holder upon
written notice delivered within ten business days after the first anniversary of
the issuance date if the closing bid price (as set forth in the Certificate of
Designation) calculated as of the first anniversary of the issuance date is less
than the conversion price as of the issuance date. The redemption price shall be
120% of the stated value ($1,000 per share) plus accrued and unpaid dividends.
Failure to comply with these redemption provisions would result in an adjustment
to the conversion price.
- - Certificate of Designation
The terms described above are merely summaries of the salient features
of the Series D Shares. The actual terms are described within the definitive
Certificate of Designation, as corrected by a Certificate of Correction, on file
with the Delaware Secretary of State.
SERIES E CONVERTIBLE PREFERRED STOCK
The Board of Directors has authorized the designation of a series of
Preferred Stock as Series E Convertible Preferred Stock, with such rights and
preferences as are described in the following summary. 2,000 Series E Shares
were issued during February 1999 in conjunction with a private placement
transaction, all of which are outstanding.
- - Liquidation Preference
Subject to and after making provision for the rights and preferences of
the Series A Shares and Series D Shares, the holders of the Series E Shares
shall be entitled to a liquidation preference equal to $1,000 per share, plus
all accrued but unpaid dividends thereon. Accordingly, if we liquidate or
dissolve, after payment to all creditors and payment of the liquidation
preference to holders of Series A Shares and Series D Shares, no distribution
shall be made to the holders of Common Stock, unless prior thereto, holders of
the Series E Shares shall have received a liquidation preference of $1,000 plus
all accrued but unpaid dividends thereon.
- - Dividends
The holder of the Series E Shares shall be entitled to dividends in
preference to any dividend on Common Stock, but not in preference to any
dividend on the Series D Shares, payable upon conversion at a per share rate of
eight percent per annum on $1,000, accruing from
17
<PAGE> 22
the date of issuance. We may elect to pay the dividends in the form of shares of
Common Stock.
- - Conversion
Upon the earlier to occur of: (i) the 90th calendar day after the date
of issuance; or (ii) the date on which a registration statement registering the
resale of the Common Stock issuable upon conversion of the Series E Shares is
declared effective, the holders of the Series E Shares thereafter have the right
to convert at any time all or any portion of the $2,000,000 stated value of the
shares, into shares of Common Stock at the conversion rate then in effect. The
conversion rate for the Series E Shares is $6.5625 per share. The Series E
conversion rate is subject to adjustment if we fail to comply with certain
redemption provisions described below under the caption, "Redemption." As so
adjusted the conversion rate shall be equal to the lesser of: (i) $6.5625; or
(ii) 80% of the average of three lowest closing bid prices of the Common Stock
(as reported by Bloomberg, LP or if not so reported as set forth in the
definition of closing bid price within the definitive Certificate of Designation
of the Series E Shares) during the five trading days immediately preceding the
conversion date.
Commencing on the effective date of a registration statement covering
the shares of Common Stock issuable upon conversion of the Series E Shares, and
provided the registration statement then remains effective, we have the right to
force conversion by the holders of the Series E Shares, provided that the
closing bid price (as set forth in the Certificate of Designation) as calculated
on each of the five trading days set forth in the forced conversion notice is
equal to or greater than 150% of the conversion price. We may not initiate a
forced conversion more than once every 30 calendar days and no single forced
conversion shall exceed 50% of the total number of shares of Series E Shares
issued. In addition, we may force conversion on a holder of only that number of
shares which would result in the holder beneficially owning 4.99% or less of the
shares of our Common Stock then outstanding.
Any Series E Shares that are outstanding on February 9, 2001 shall
automatically convert into Common Stock, provided that the holders of the
outstanding shares may elect to defer the date of automatic conversion by the
number of days equal to 1.5 times the number of days (A) there is not an
effective registration statement covering the resale of the Common Stock
issuable upon conversion (exclusive of the first 90 days following the issuance
date of the Series E Shares); (B) there is not a sufficient number of shares of
Common Stock available for conversion of all outstanding Series E Shares; (C)
for any other reason we refuse or announce our refusal to honor conversion of
Series E Shares; or (D) there is a suspension, restriction or limitation on the
ability of holders of Series E Shares to sell shares of Common Stock received
upon conversion. Notwithstanding the preceding sentence, no holder of Series E
Shares shall be obligated to convert on the automatic conversion date unless (A)
there is no material default under the securities purchase documents pursuant to
which the Series E Shares were privately purchased; (B) a registration statement
registering the resale of the Common Stock issuable upon conversion of the
Series E Shares and exercise of warrants to purchase 100,000 shares of Common
Stock issued in connection therewith is effective and was effective for the 60
consecutive trading days prior to such automatic conversion date; (C) we and our
subsidiaries on a consolidated basis have tangible and intangible assets
exceeding liabilities, we are able to pay our debts as they become due in the
ordinary course of business and we are not subject to any liquidation or
dissolution
18
<PAGE> 23
proceeding; and (D) the holder of the Series E Shares has received a certificate
from an executive officer of Osage certifying that each of the foregoing
conditions has been satisfied.
The number of shares of Common Stock into which each Series E Share
shall be convertible shall be subject to adjustment to protect against dilution
in the event we shall declare a stock dividend, make a distribution on the
Common Stock, divide or reclassify the outstanding shares of Common Stock, or
transfer our assets in a "spin off" such that one of our subsidiaries or
divisions becomes an independent company.
- - Voting Rights
Prior to the conversion of the Series E Shares, the holder thereof
shall have no voting rights other than those required under Delaware law;
provided, however, that the affirmative vote of 75% in interest of the
outstanding Series E Shares shall be necessary for (i) any amendment or repeal
of the Certificate of Designation of Series E Shares and (ii) any amendment to
our Certificate of Incorporation or By-laws that may amend or adversely affect
any of the rights, privileges or preferences of the Series E Shares.
- - Redemption
The Series E Shares may be redeemed at the option of a holder upon
written notice delivered within ten business days after the first anniversary of
the issuance date if the closing bid price (as set forth in the Certificate of
Designation) calculated as of the first anniversary of the issuance date is less
than the conversion price as of the issuance date. The redemption price shall be
120% of the stated value ($1,000 per share). Failure to comply with these
redemption provisions would result in an adjustment to the conversion price.
- - Mandatory Repurchase
A holder of Series E Shares may at its option compel us to repurchase all
or a portion of the shares at the redemption price in the event that any of the
following events involving Osage occurs or is announced as pending:
(i) a change of control transaction resulting in either (a) a
consolidation, merger or tender offer of Osage with or into another entity in
which 50% of Osage's voting power is transferred, (y) any person, together with
its affiliates and associates, beneficially owns in excess of 50% of Osage's
voting power or (z) a replacement of more than one-half of the members of our
Board of Directors without approval of those individuals who are members of the
Board of Directors on the date of such replacement;
(ii) insolvency, inability to pay debts as they become due, an assignment
for the benefit of creditors, commencement of proceedings for dissolution or an
application for or consent to the appointment of a trustee, liquidator or
receiver for Osage or for a substantial part of its property or business;
(iii) the filing of bankruptcy, reorganization, insolvency or liquidation
proceedings by
19
<PAGE> 24
or instituted against Osage; or
(iv) a going private transaction.
- - Certificate of Designation
The terms described above are merely summaries of the salient features
of the Series E Shares. The actual terms are described within the definitive
Certificate of Designation on file with the Delaware Secretary of State.
PRIVATELY ISSUED OPTIONS AND WARRANTS
We have issued, in private transactions or pursuant to our stock option
plan, options to purchase 3,352,268 shares of Common Stock. 1,600,000 of these
options were issued to the former Osage shareholders in connection with the
merger with Pacific Rim and the remaining options were issued during the fourth
quarter of 1997 and during 1998 to management, employees and other consultants
at exercise prices ranging from $3.00 to $6.625, subject to varying vesting
periods.
We have also agreed to issue warrants to purchase 860,000 shares of
Common Stock. These warrants include warrants issued to investors and certain
placement agents and investment bankers in connection with approximately $9.6
million in private placement financing completed by the Company during 1998 and
the first quarter of 1999. The warrants were issued at exercise prices ranging
from $3.50 to $7.875.
REGISTRATION RIGHTS
This Prospectus has been prepared pursuant to registration rights
granted in connection with the transactions in which the Shares or securities
convertible or exercisable for the Shares, were sold to the Selling Security
Holders. We have also granted registration rights in connection with recent
acquisitions of business and private placement transactions. Based upon such
registration rights, and as a result of the lapse of the holding period for
restricted securities under Rule 144 of the Securities Act of 1933,
approximately 2.9 million shares of Common Stock will become eligible for public
resale periodically during the remainder of 1999.
PROVISIONS HAVING A POSSIBLE ANTI-TAKEOVER EFFECT
DELAWARE GENERAL CORPORATION LAW
We are governed by the provisions of Section 203 of the Delaware
General Corporation Law, an anti-takeover law. In general, the law prohibits a
public Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. "Business combination"
includes mergers, asset sales and other transactions resulting in a financial
benefit to the stockholder. An "interested stockholder" is a person who,
together with its affiliates and associates, owns (or
20
<PAGE> 25
within three years, did own) 15% or more of the corporation's voting stock.
The provisions regarding certain business combinations under the GCL
could have the effect of delaying, deferring or preventing a change in control
of Osage or the removal of existing management. A takeover transaction
frequently affords stockholders the opportunity to sell their shares at a
premium over current market prices.
The provisions described above, together with the ability of the Board
of Directors to issue Preferred Stock as described under "Preferred Stock," may
have the effect of delaying or deterring a change in the control or management
of Osage.
CERTIFICATE OF INCORPORATION
One of the effects of undesignated preferred stock may be to enable the
Board of Directors to render more difficult or to discourage an attempt to
obtain control of Osage by means of a tender offer, proxy contest, merger or
otherwise, and thereby to protect the continuity of our management. The issuance
of shares of the preferred stock pursuant to the Board of Directors' authority
described above may adversely affect the rights of the holders of Common Stock.
For example, preferred stock issued by the Company may rank prior to the Common
Stock as to dividend rights, liquidation preference or both, may have full or
limited voting rights and may be convertible into shares of Common Stock.
Accordingly, the issuance of shares of preferred stock may discourage bids for
the Common Stock or may otherwise adversely affect the market price of the
Common Stock.
The Certificate of Incorporation provides that the Board of Directors
is divided into three classes, that directors shall only be removed for cause
and by a supermajority vote of stockholders, and that the consent of the Board
of Directors is required to amend the Certificate of Incorporation. These
provisions could delay or frustrate the removal of incumbent directors and could
make more difficult a change in control transaction.
21
<PAGE> 26
PLAN OF DISTRIBUTION
The Selling Security Holders have not advised us of any specific plan
for distribution of the Shares offered hereby, but it is anticipated that the
Shares will be sold from time to time by the Selling Security Holders or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made on the American Stock Exchange, any other exchange upon which our Shares
may trade in the future, over-the-counter, or otherwise, at prices and at terms
then prevailing or at prices related to the then current market price, or in
negotiated transactions. The Shares may be sold by one or more of the following:
(i) a block trade in which the broker or dealer so engaged will attempt to sell
the Shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction; (ii) purchases by a broker or dealer as
principal and resale by such broker or dealer for its account pursuant to this
Prospectus; (iii) ordinary brokerage transactions and transactions in which the
broker solicits purchases; (iv) through options, swaps or derivatives; (v) in
privately negotiated transactions; (vi) in transactions to cover short sales; or
(vii) through a combination of any such methods of sale. The Selling Security
Holders may also sell the shares in accordance with Rule 144 under the
Securities Act, rather than pursuant to this Prospectus.
The Selling Security Holders may sell their Shares directly to
purchasers or may use brokers, dealers, underwriters or agents to sell their
Shares. In effecting sales, brokers or dealers engaged by the Selling Security
Holders may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions, discounts or concessions from the Selling
Security Holders, or, if any such broker-dealer acts as agent for the purchaser
of such Shares, from such purchaser in amounts to be negotiated immediately
prior to the sale. Such compensation may, but is not expected to, exceed that
which is customary for the types of transactions involved. Broker-dealers may
agree with a Selling Security Holder to sell a specified number of such Shares
at a stipulated price per share, and, to the extent such broker-dealer is unable
to do so acting as agent for a Selling Security Holder, to purchase as principal
any unsold Shares at the price required to fulfill the broker-dealer commitment
to the Selling Security Holder. Broker-dealers who acquire Shares as principal
may thereafter resell such Shares from time to time in transactions, which may
involve block transactions and sales to and through other broker-dealers,
including transactions of the nature described above, in the over-the counter
market or otherwise at prices and on terms then prevailing at the time of sale,
at prices then related to the then-current market price or in negotiated
transactions. In connection with such resales, broker-dealers may pay to or
receive from the purchasers of such Shares commissions as described above.
The Selling Security Holders and any broker-dealers or agents that
participate with the Selling Security Holders in the sale of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act. In such
event, any commissions received by such broker-dealers or agents and any profit
on the resale of the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
From time to time the Selling Security Holders may engage in short
sales, short sales against the box, puts and calls and other hedging
transactions in our securities, and may sell and deliver the Shares in
connection with such transactions or in settlement of securities loans. These
transactions may be entered into with broker-dealers or other financial
institutions. In addition, from time to time, a Selling Security Holder may
pledge its Shares pursuant to the margin provisions of its customer agreements
with its broker-dealer. Upon delivery of the Shares or a default by a Selling
Security Holder, the broker-dealer or financial institution may offer and sell
22
<PAGE> 27
the pledged Shares from time to time.
We will not receive any proceeds from the sale of the Shares. We will
pay the expenses of preparing this Prospectus and the related Registration
Statement. Shares of Common Stock covered by this Prospectus also may qualify to
be sold pursuant to Rule 144 under the Securities Act, rather than pursuant to
this Prospectus. The Selling Security Holders have been advised that they are
subject to the applicable provisions of the Exchange Act, including without
limitation, Rules 10b-5 and Regulation M thereunder.
LEGAL MATTERS
The validity of the issuance of the Shares of Common Stock offered
hereby will be passed upon for us by Buchanan Ingersoll Professional
Corporation, Eleven Penn Center, 1835 Market Street, 14th Floor, Philadelphia,
Pennsylvania 19103.
EXPERTS
The financial statements for the years ended December 31, 1998 and 1997
incorporated in this Prospectus by reference from the Annual Report on Form
10-KSB for the Company for the year ended December 31, 1998 have been audited by
Deloitte & Touche LLP, independent public accountants, 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. The financial statements for the year ended December
31, 1996 included in this Prospectus by reference from the Annual Report on Form
10-KSB for the Company for the year ended December 31, 1998 have been audited by
Pearce, Gray & Rudd, independent public accountants, as stated in their report
herein by reference and have been so incorporated in reliance upon the authority
of said firm as experts in accounting and auditing.
The financial statements of H.V. Jones, Inc. for the years ended
December 31, 1997 and December 31, 1996 incorporated in this Prospectus by
reference from the Current Report on Form 8-K/A dated March 17, 1998, 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.
The financial statements of Solsource Computers, Inc. for the years
ended January 31, 1998 and January 31, 1997 incorporated in this Prospectus by
reference from the Current Report on Form 8-K/A dated March 17, 1998, 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.
The financial statements of Open System Technologies, Inc. (formerly
known as Computer Health and Safety, Inc.) as of December 31, 1997 and for the
year then ended incorporated in this Prospectus by reference from the Current
Report on Form 8-K/A dated April 24, 1998, have been so audited by Clark,
Schaefer, Hackett & Co., independent certified public
23
<PAGE> 28
accountants, as stated in their report, which is incorporated in reliance upon
the report of such firm, given upon their authority as experts in accounting and
auditing.
The financial statements of Open System Technologies, Inc. (formerly
known as Computer Health and Safety, Inc.) as of December 31, 1996, and for the
year then ended included in the Current Report on Form 8-K/A dated April 24,
1998, have been incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent certified public
accountants, included in the Current Report on Form 8-K/A dated April 24, 1998
and incorporated by reference herein, and upon the authority of said firm as
experts in accounting and auditing.
The financial statements of Open Business Systems, Inc. for the years
ended December 31, 1997 and December 31, 1996 incorporated in this Prospectus by
reference from the Current Report on Form 8-K/A dated June 22, 1998, 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.
24
<PAGE> 29
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document Osage files at the SEC's public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the public reference room. Our SEC
filings are also available to the public from the SEC's web site at
http://www.sec.gov and at the Commission's regional offices at 7 World Trade
Center, Suite 1300, New York, New York 10048 and Northwest Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such
materials may be obtained upon written request addressed to the Commission at
the Public Reference Section, at 450 Fifth Street, N.W., Washington, D.C. 20549,
at prescribed rates. Our SEC filings are also available at the office of the
American Stock Exchange. For further information on obtaining copies of our
public filings at the American Stock Exchange, you should call 212-306-1484.
The SEC allows Osage to "incorporate by reference" the information
Osage files with them, which means that Osage can disclose important information
to you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus, and later information
that Osage files with the SEC will automatically update and supersede this
information. Osage incorporates by reference the documents listed below and any
future filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 until the Selling Security Holders sell all
the Shares.
1. Annual Report on Form 10-KSB for the year ended December 31,
1997;
2. Quarterly Report on Form 10-QSB for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998;
3. Current Reports on Form 8-K and 8-K/A filed with the Securities
and Exchange Commission on January 6, 1998, February 17, 1998,
March 5, 1998, March 11, 1998, March 27, 1998, May 8, 1998, May
26, 1998, June 9, 1998, July 7, 1998 and September 4, 1998;
4. The description of Osage's Common Stock, $.01 par value, which is
contained in Osage's Registration Statement on Form 8-A filed
pursuant to Section 12(b) of the Securities Exchange Act of 1934,
as amended, dated November 18, 1998, including any subsequent
amendments or reports filed for the purpose of updating such
description; and
5. Annual Report on Form 10-KSB for the year ended December 31,
1998.
Osage 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 such person, a copy of any or all of the information
incorporated herein by reference. Exhibits to any of such documents, however,
will not be provided unless such exhibits are specifically incorporated by
reference into such documents. The requests should be made to:
25
<PAGE> 30
John Iorillo, Chief Financial Officer
Osage Systems Group, Inc.
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(602) 274-1299
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. Osage has authorized no one to provide you with different
information. Osage is not making an offer of these securities in any state where
the offer is not permitted. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
26
<PAGE> 31
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our Certificate of Incorporation and Bylaws reflect the adoption of the
provisions of Section 102(b)(7) of the Delaware General Corporation Law, which
eliminate or limit the personal liability of a director to us or our
stockholders for monetary damages for breach of fiduciary duty under certain
circumstances. If the GCL is amended to authorize corporate action further
eliminating or limiting personal liability of directors, the Certificate of
Incorporation provides that the liability of the director of Osage shall be
eliminated or limited to the fullest extent permitted by the GCL. Our
Certificate of Incorporation and Bylaws also provide that we shall indemnify any
person, who was or is a party to a proceeding by reason of the fact that he is
or was a director, officer, employer or agent of Osage, or is or was serving at
our request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with such proceeding if he acted in good faith and in a manner he
reasonably believed to be or not opposed to our best interests, in accordance
with, and to the full extent permitted by, the GCL. The determination of whether
indemnification is proper under the circumstances, unless made by the Court,
shall be determined by our Board of Directors.
We have liability insurance for the benefit of our directors and
officers. The insurance covers claims against such persons due to any:
- breach of duty; - misleading statement;
- neglect; - omission; or
- error; - act done.
- misstatement;
The insurance covers such claims, except as prohibited by law, or otherwise
excluded by such insurance policy.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of Osage
pursuant to the foregoing provisions, or otherwise, Osage has been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
27
<PAGE> 32
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC registration fee ....................................... $ 6,569
Counsel fees and expenses* ................................. $25,000
Accounting fees and expenses* .............................. $25,000
Miscellaneous expenses* .................................... $ 5,000
Total* ................................................ $61,569
</TABLE>
- ----------
* Estimated
We will bear all expenses of issuance and distribution listed above.
The costs of fees and expenses of legal counsel and other advisors, if any, that
any Selling Security Holder employs in connection with the offering will be
borne by that Selling Security Holder.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Our Certificate of Incorporation and Bylaws reflect the adoption of the
provisions of Section 102(b)(7) of the Delaware General Corporation Law, which
eliminate or limit the personal liability of a director to us or our
stockholders for monetary damages for breach of fiduciary duty under certain
circumstances. If the GCL is amended to authorize corporate action further
eliminating or limiting personal liability of directors, the Certificate of
Incorporation provides that the liability of the director of Osage shall be
eliminated or limited to the fullest extent permitted by the GCL. Our
Certificate of Incorporation and Bylaws also provide that we shall indemnify any
person who was or is a party to a proceeding by reason of the fact that he is or
was a director, officer, employer or agent of Osage, or is or was serving at our
request as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with such proceeding if he acted in good faith and in a manner he
reasonably believed to be or not opposed to our best interests, in accordance
with, and to the full extent permitted by, the GCL. The determination of whether
indemnification is proper under the circumstances, unless made by a court, shall
be determined by the Board of Directors.
We have liability insurance for the benefit of our directors and
officers. The insurance covers claims against such persons due to any:
28
<PAGE> 33
- breach of duty; - misleading statement;
- neglect; - omission; or
- error; - act done.
- misstatement;
The insurance covers such claims, except as prohibited by law, or otherwise
excluded by such insurance policy.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of Osage
pursuant to the foregoing provisions or otherwise, Osage has been advised that
in the opinion of the SEC such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
We refer you to Item 17 for our undertakings with respect to
indemnification of liabilities arising under the Securities Act of 1933, as
amended.
ITEM 16. EXHIBITS.
<TABLE>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
5 Opinion of Buchanan Ingersoll Professional Corporation as to validity
of Common Stock.
23.1 Consent of Pearce, Gray & Rudd.
23.2 Consent of Deloitte & Touche LLP.
23.3 Consent of Buchanan Ingersoll Professional Corporation (contained in
the opinion filed as Exhibit 5 to the Registration Statement).
23.4 Consent of Clark, Schaefer, Hackett & Co.
23.5 Consent of KPMG LLP.
24 Powers of Attorney of certain officers and directors of Osage
(contained on the signature page of this Registration Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes that it will:
(1) File, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement to include any
additional or changed material information on the plan of distribution.
II-2
<PAGE> 34
(2) For determining liability under the Securities Act, treat each
such post-effective amendment as a new registration statement of the securities
offered, and the offering of such securities at that time shall 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) 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 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 and will be governed by the final adjudication of such issue.
II-3
<PAGE> 35
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Phoenix, State of Arizona, on the 28th day of April,
1999.
OSAGE SYSTEMS GROUP, INC.
By:/s/ Jack R. Leadbeater
---------------------------------------
Chairman of the Board and
Chief Executive Officer
By:/s/ John Iorillo
---------------------------------------
Chief Financial Officer/Principal
Accounting Officer and Director
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Jack R. Leadbeater and David S. Olson,
and each of them, his true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in 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 attorneys-in-fact and
agents or any of them, or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack. R. Leadbeater Chairman, Chief Executive Officer and April 28, 1999
- -----------------------
Jack R. Leadbeater Director
/s/ David S. Olson President and Director April 28, 1999
- -----------------------
David S. Olson
/s/ Phil Carter Chief Operating Officer and Director April 28, 1999
- -----------------------
Phil Carter
/s/ John Iorillo Chief Financial Officer and Director April 28, 1999
- -----------------------
John Iorillo
/s/ Andrew P. Panzo Director April 28, 1999
- -----------------------
Andrew P. Panzo
/s/ George Knight Director April 28, 1999
- -----------------------
George Knight
</TABLE>
II-4
<PAGE> 36
EXHIBIT INDEX
<TABLE>
Exhibit No. Description of Exhibit
<S> <C> <C>
5 Opinion of Buchanan Ingersoll Professional Corporation as
to validity of Common Stock. Filed herewith
23.1 Consent of Pearce, Gray & Rudd. Filed herewith
23.2 Consent of Deloitte & Touche LLP. Filed herewith
23.3 Consent of Buchanan Ingersoll Professional
Corporation (contained in the opinion filed
as Exhibit 5 to the Registration Statement).
Filed herewith
23.4 Consent of Clark, Schaefer, Hackett & Co. Filed herewith
23.5 Consent of KPMG LLP. Filed herewith
24 Powers of Attorney of certain officers and
directors of Osage (contained on the
signature page of this Registration
Statement).
Filed herewith
</TABLE>
II-5
<PAGE> 1
EXHIBIT 5
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
Attorneys
Eleven Penn Center
1835 Market Street, 14th Floor
Philadelphia, Pennsylvania 19103
April 27, 1999
Osage Systems Group, Inc.
1661 East Camelback Road, Suite 245
Phoenix, AZ 85016
Gentlemen:
We have acted as counsel to Osage Systems Group, Inc., a Delaware
corporation (the "Company"), in connection with the filing by the Company of a
registration statement on Form S-3 (the "Registration Statement"), under the
Securities Act of 1933, as amended, relating to the registration of the
following shares of the Company's common stock, $0.01 par value per share (the
"Common Stock"), all of which are to be offered by certain Selling Security
Holders as set forth in the Registration Statement:
1. 2,428,628 shares of Common Stock (the "Shares");
2. 620,000 shares of Common Stock which may be issued, if at all, upon
the exercise of warrants (the "Warrants");
3. 201,005 shares of Common Stock, subject to adjustment, which may be
issued, if at all, upon the conversion of the Company's outstanding Series D
Convertible Preferred Stock (the "Series D Shares"); and
4. $2,000,000 conversion value of shares of Common Stock which may be
issued, if at all, upon the conversion of the Company's outstanding Series E
Convertible Preferred Stock (the "Series E Shares").
In connection with the Registration Statement, we have examined such
corporate records and documents, other documents, and such questions of law as
we have deemed necessary or appropriate for purposes of this opinion. On the
basis of such examination, it is our opinion that:
1. The issuance of the Shares has been duly and validly authorized, and
the Shares are legally issued, fully paid and non-assessable;
2. The shares of Common Stock to be issued upon the exercise of the
Warrants have been duly and validly authorized and, when issued in accordance
with the terms of the appropriate instrument evidencing the Warrants, including,
without limitation, payment of the applicable
<PAGE> 2
exercise price with respect to the Warrants, will be legally issued, fully paid
and non-assessable; and
3. Assuming the applicable conversion price (as set forth in the
respective Certificates of Designation of the Series D Shares and the Series E
Shares) in effect at the time of such conversion is such that the Series D
Shares and the Series E Shares are convertible, in the aggregate, into no more
than the authorized number of shares of Common Stock less the number of shares
of Common Stock outstanding and less the number of shares of Common Stock
reserved for issuance at such time, the shares of Common Stock to be issued upon
the conversion of the Series D Shares and Series E Shares have been duly
authorized and, when issued in accordance with the respective terms of the
Series D Convertible Preferred Stock Purchase Agreement dated as of December 31,
1998 between the Company and The Cuttyhunk Fund Limited, the Certificate of
Designation of the Series D Shares, the Series E Convertible Preferred Stock
Purchase Agreement dated as of February 9, 1999 between the Company and Halifax
Fund, L.P. and the Certificate of Designation of the Series E Shares, will be
legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" in the Registration Statement.
Very truly yours,
BUCHANAN INGERSOLL
PROFESSIONAL CORPORATION
/s/ Stephen M. Cohen
--------------------
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in this Registration Statement of Osage Systems Group,
Inc. on Form S-3 of our report dated March 24, 1997. We understand that certain
presentations have been restated for purposes of this Registration Statement to
be consistent with successor auditor's presentation.
We also consent to the reference to us under the heading "Experts" in such
prospectus.
/s/ Pearce, Gray & Rudd
- ------------------------------------
PEARCE, GRAY & RUDD, CPAs
Mesa, Arizona
April 20, 1999
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement of
Osage Systems Group, Inc. on Form S-3 of our report dated March 10, 1999
relating to the consolidated financial statements of Osage Systems Group, Inc.
as of December 31, 1998 and 1997 and for the years then ended, appearing in the
Annual Report on Form 10-KSB of Osage Systems Group, Inc. for the year ended
December 31, 1998, our report dated April 24, 1998 relating to the financial
statements of Solsource Computers, Inc. as of January 31, 1998 and 1997 and for
the years then ended, appearing in the Form 8-K/A dated March 17, 1998, our
report dated April 10, 1998 relating to the financial statements of H.V. Jones,
Inc. as of December 31 ,1997 and 1996 and for the years then ended, appearing in
the Form 8-K/A dated March 17, 1998, our report dated July 10, 1998 relating to
the financial statements of Open Business Systems, Inc. as of December 31, 1997
and 1996 and for the years then ended, appearing in the Form 8-K/A dated June
22, 1998, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of this Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Phoenix, Arizona
April 27, 1999
<PAGE> 1
EXHIBIT 23.4
INDEPENDENT AUDITOR'S CONSENT
We consent to the use in the Registration Statement of Osage Systems Group, Inc.
on Form S-3, of our report dated January 16, 1998 on the financial statements of
Open Systems Technologies, Inc., appearing in such Registration Statement.
We also consent to the reference to us under the heading "Experts" in such
Registration Statement.
/s/ Clark, Schaefer, Hackett & Co.
- --------------------------------------------
CLARK, SCHAEFER, HACKETT & CO.
Cincinnati, Ohio
April 20, 1999
<PAGE> 1
EXHIBIT 23.5
The Board of Directors
Osage System Group, Inc.:
We consent to the incorporation by reference in the registration statement on
Form S-3 of Osage Systems Group, Inc. of our report dated January 24, 1997, with
respect to the balance sheet of Open System Technologies, Inc. (formerly known
as Computer Health and Safety, Inc.) as of December 31, 1996, and the related
statements of income and retained earnings, and cash flows for the year then
ended, which report appears in the Form 8-K/A of Osage Systems Group, Inc. dated
April 24, 1998.
/s/ KPMG LLP
- ------------
KPMG LLP
Miami, Florida
April 27, 1999
