<PAGE> 1
As Filed with the Securities and Exchange Commission on June 30, 1999
Registration No. 333-77239
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
OSAGE SYSTEMS GROUP, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
<TABLE>
<CAPTION>
Delaware 95-4374983
- ----------------------------------- ------------------------------
<S> <C>
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
</TABLE>
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(602) 274-1299
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(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.
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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
<TABLE>
<CAPTION>
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CALCULATION OF REGISTRATION FEE
======================================================================================================================
Proposed
Amount Maximum Proposed Maximum Amount Of
Title of shares To Be Aggregate Price Aggregate Offering Registration
To Be Registered Registered Per Share(1) Price Fee
- ----------------------------- ------------------ ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
common stock,
$.01 par value......... 4,606,306 $5.0625 $23,319,424 $6,483(2)
======================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c). The price represents the average of the high and
low prices per share of common stock of Osage Systems Group, Inc. as
reported on the American Stock Exchange on June 29, 1999.
(2) Previously paid on April 28, 1999.
OSAGE SYSTEMS GROUP, INC. HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL OSAGE
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 SEC, 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 JUNE 30, 1999
PRELIMINARY PROSPECTUS
OSAGE SYSTEMS GROUP, INC.
4,606,306 SHARES OF COMMON STOCK
The selling security holders identified on page 11 of this prospectus,
may offer and sell, from time to time, up to 4,606,306 shares of the common
stock of Osage Systems Group, Inc. The selling security holders may sell all or
some 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 June 29, 1999
on the American Stock Exchange was $5.00 per share.
----------------------------------------
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 1.
----------------------------------------
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.
The date of this prospectus is June 30, 1999
<PAGE> 4
OSAGE SYSTEMS GROUP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
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<S> <C>
ABOUT OSAGE SYSTEMS GROUP, INC. 1
RISK FACTORS 1
FORWARD-LOOKING STATEMENTS 8
USE OF PROCEEDS 8
SELLING SECURITY HOLDERS 10
DESCRIPTION OF SECURITIES 14
PLAN OF DISTRIBUTION 21
LEGAL MATTERS 22
EXPERTS 22
INDEMNIFICATION OF DIRECTORS AND OFFICERS 24
WHERE YOU CAN FIND MORE INFORMATION 25
</TABLE>
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.
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ABOUT OSAGE SYSTEMS GROUP, INC.
Osage Systems Group, Inc. provides products, solutions and services
nation-wide to integrate and manage computer network systems. As a total
solutions provider, we integrate hardware, software and technical resources to
solve critical data management problems. We assist our customers in all phases
of their information technology needs. This involves analyzing their business
needs, designing and implementing systems for them and providing ongoing systems
management support. Our technical consultants 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 from
industry-leading vendors.
During 1998, we implemented a business strategy focusing on growth
through acquisition and development of the higher margin professional consulting
segment of our operations. We acquired six companies that have significantly
contributed to our revenue base since the beginning of 1998. During 1998, our
revenues increased to $61 million from $14.2 million during 1997. If each of the
acquisitions been completed as of January 1, 1998, our revenues during 1998
would have increased to $83 million.
Osage was originally incorporated as "Pacific Rim Entertainment, Inc."
under the laws of Delaware in 1992. After several years of losses, Pacific Rim
suspended operations in 1996. Pacific Rim acquired and 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 you should invest only after you have
carefully gathered and reviewed information about Osage. This prospectus has
been filed as part of a registration statement on Form S-3, and only contains a
summary of information which may be relevant to you in making an investment
decision. Accordingly, prior to making an investment decision, you should
carefully evaluate, among other materials, the following risk factors, the
remainder of the information set forth in this prospectus and the reports we
have filed with the SEC, and other information about us incorporated by
reference into this document.
1. IF LOSSES CONTINUE, OUR OPERATIONS WILL SUFFER AND WE WILL HAVE TO DELAY OR
LIMIT OUR ACQUISITION PROGRAM.
We have recently incurred material losses. If we continue to suffer
material losses, our operations will be adversely affected and we will have to
cease or significantly delay our strategy of growing by acquiring other
companies. Specifically, we incurred a net loss of $3.02 million
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for the year ended December 31, 1998, of which $2.37 million was incurred during
the fourth quarter of 1998. We believe that our losses will subside if we
achieve greater operating efficiencies and address problems with availability of
products from our suppliers and other nonrecurring factors. After taking initial
steps to address these problems, our net loss for the first quarter of 1999 was
reduced to $266,000.
2. OUR FUTURE PROFITABILITY IS LIKELY TO DEPEND UPON THE SUCCESSFUL
IMPLEMENTATION OF OUR ACQUISITION STRATEGY.
During 1998 we implemented a business strategy focusing on growth
through acquisitions and development of segments of our operations providing
services with higher profit margins. We do not know what the long-term impact of
our acquisition strategy will be on our profitability. We believe that
acquisitions contributed towards our net losses in the following respects:
- Several of the acquired companies continued to incur losses from
operations, or required significant cash advances from us.
- Our acquisition efforts significantly increased our selling, general
and administrative expenses.
However, we believe that our results of operations will improve as our
overhead is absorbed over a larger revenue base.
We anticipate that our future profitability is likely to depend upon a
combination of many factors, including:
- Continued growth of Osage's business through acquisitions, for which
we must have adequate capital resources.
- Management of the growth through the integration of the businesses
acquired.
- Continued expansion of services with a higher profit margin, which
requires an adequate supply of acquisition targets at reasonable purchase
prices.
Our recent losses and lack of available financing currently limit our
ability to finance cash acquisitions. Increased competition for acquisition
candidates reduces the pool of available targets and increases acquisition
prices.
3. WE WILL NEED TO SECURE ADDITIONAL FINANCING OR USE OUR CASH RESOURCES TO
PURSUE OUR ACQUISITION STRATEGY.
We will need additional financing to pursue our acquisition strategy in
the long term. We intend to obtain additional financing through a combination of
traditional debt financing, issuing our shares and selling debt and equity
securities. If we are able to finance our acquisitions by issuing our
securities, we will not need as much additional cash. If the market price of our
common stock does not stay the same or increase, or potential acquisition
candidates do not
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want shares of common stock as part of the consideration for the sale of their
businesses, we may be required to use more of our cash resources, if available,
in order to continue to make acquisitions. 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. THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF COMMON STOCK COULD DECREASE THE
VALUE OF THE SHARES.
We are presently authorized to issue 50,000,000 shares of common stock,
of which 9,594,621 are outstanding as of the date of this prospectus. As
detailed below, we expect to issue at least 4,860,935 more shares in the future
due to business decisions of our board of directors and meeting our contractual
obligations. Issuance of these shares is likely to have an extremely dilutive
effect upon the existing stockholders and may reduce the value of their
investment.
We may issue additional shares for valid business purposes within the
discretion of our board of directors, such as:
- the acquisition of other companies; and
- compensation of our officers, employees and directors.
In addition, we are contractually obligated to issue shares for the
following reasons:
- if holders of our outstanding preferred stock convert their shares,
we must issue 505,767 shares of common stock, which may adjust upwards;
- if holders of our outstanding options and warrants exercise their
rights to purchase shares, we must issue up to 4,355,168 shares of common stock;
- we may need to issue warrants to purchase shares of common stock as
compensation for services rendered under investment banking agreements; and
- we must issue shares under the earn-out provisions of our prior
acquisitions if the financial and performance criteria described in the
acquisition agreements are satisfied.
5. COMPLETION OF THIS OFFERING WILL SIGNIFICANTLY INCREASE THE NUMBER OF
SHARES OF OUR COMMON STOCK THAT MAY BE SOLD INTO THE MARKET. THIS COULD
CAUSE THE MARKET PRICE OF OUR COMMON STOCK TO DROP SIGNIFICANTLY, EVEN IF
OUR BUSINESS IS DOING WELL.
Sales of substantial amounts of common stock in the public market
following this offering could reduce the market price of our common stock and
make it more difficult for us to sell equity securities in the future. As of the
date of this prospectus, approximately 4 million shares of our common stock are
eligible for resale into the market under applicable securities laws. After this
offering, the 4,606,306 shares covered by this prospectus may be resold into the
public market immediately. This includes approximately 1,500,000 shares that may
be resold
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upon the exercise of warrants and conversion of preferred stock instruments
covered by this prospectus. Sales of these shares in the public market, or the
perception that future sales of these shares could occur, could have the effect
of lowering the market price of our common stock below current levels.
6. OUR CLASSIFIED BOARD OF DIRECTORS AND DELAWARE STATUTORY PROVISIONS AGAINST
TAKEOVERS MAY MAKE A CHANGE IN CONTROL OF OSAGE MORE DIFFICULT, EVEN IF A
TAKEOVER WOULD BENEFIT US AND OUR STOCKHOLDERS.
Our board of directors has three classes, with the members of one class
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. 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.
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. A takeover
transaction frequently affords stockholders the opportunity to sell their shares
at a premium over current market price.
The supermajority voting provisions in our bylaws and these provisions
regarding certain business combinations could delay, defer or prevent a change
in control of Osage or the removal of existing management. Our certificate of
incorporation also 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. OUR DEPENDENCE ON OUR KEY CUSTOMERS MEANS OUR NET SALES ARE VULNERABLE IF
WE LOSE A KEY CUSTOMER.
Although dependence on our largest customers has diminished as revenues
have increased and the geographic scope of our business has expanded, a
substantial portion of our net sales and gross profits will continue to be
derived from sales to our largest customers. Our 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.
Possible risks associated with our customer relationships include:
- lack of ongoing written commitments by customers to purchase products
and services from us;
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<PAGE> 9
- failure by large customers to renew service contracts or termination
of existing contracts; and
- a significant reduction in purchase orders from large customers.
8. IT MAY BE DIFFICULT TO JUDGE OUR FINANCIAL PERFORMANCE SINCE OUR QUARTERLY
OPERATING RESULTS VARY SUBSTANTIALLY.
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 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 you
should not rely on our past operating results and period-to-period comparisons
or to predict our future performance.
9. BECAUSE WE ARE SMALLER THAN MANY OF OUR COMPETITORS, WE MAY LACK THE
FINANCIAL RESOURCES NEEDED TO CAPTURE INCREASED MARKET SHARE IN THE
INFORMATION TECHNOLOGY SERVICES INDUSTRY.
Many of our competitors have longer operating histories, possess
greater industry and name recognition and have significantly greater financial,
technical and marketing resources than Osage. If we compete with them for the
same markets, their financial strength could prevent us from capturing those
markets. For example, our larger competitors could launch extensive advertising
campaigns and discount services to attract or maintain customers. We may not
have the financial resources needed to effectively compete with them on that
level. 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
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- 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.
10. WE MAY NOT BE ABLE TO ATTRACT ENOUGH QUALIFIED TECHNICAL PERSONNEL BECAUSE
THEY ARE IN SHORT SUPPLY.
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. Qualified personnel are
in great demand. There is significant competition for good employees and it is
likely that access to qualified personnel will remain limited for the
foreseeable future. Many of our competitors are in a better financial position
than Osage to offer higher compensation to qualified personnel. We may not be
successful in attracting a sufficient number of such personnel in the future, or
in retaining, training and motivating the employees we are able to attract.
11. WE MAY NOT SUCCESSFULLY OR TIMELY DEVELOP NEW INFORMATION TECHNOLOGY
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.
We cannot be certain 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. OUR RESULTS OF OPERATIONS COULD BE ADVERSELY AFFECTED IF OUR SUPPLIERS DO
NOT MEET OUR DEMAND FOR COMPUTER PRODUCTS AT COMPETITIVE PRICES.
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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 reduce 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, we cannot be certain that these 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
negative effect on our results of operations. These issues were short-term and
during 1999 the supply of product resumed to its historic levels.
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, including 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, we cannot be certain that year 2000 problems will not result in negative
consequences, such as:
- interruptions of operations; or
- disputes with our 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 those 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. WE DO NOT ANTICIPATE PAYING DIVIDENDS ON OUR COMMON STOCK.
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No dividends have been paid by us since inception and we do not plan on
paying dividends on our common stock 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. OUR STOCK PRICE MAY BE VOLATILE DUE TO FACTORS UNDER, AS WELL AS OUT OF,
OUR CONTROL.
The market price of our common stock could in the future be highly
volatile. 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;
- general market conditions in the computer software and hardware
industries; and
- changes in recommendations or earnings estimates by securities
analysts.
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.
FORWARD-LOOKING STATEMENTS
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 us to be reasonable, we cannot be certain that these statements
will prove to be correct. These statements are subject to 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.
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
The selling security holders identified in the following table are
offering for sale 4,606,306 shares of common stock. These shares include:
- 3,105,658 shares of common stock;
- 842,500 shares of common stock which may be issued upon the exercise
of warrants;
- 201,005 shares of common stock, subject to adjustment, which may be
issued upon the conversion of our shares of Series D Convertible Preferred
Stock; and
- 457,143 shares of common stock, subject to adjustment, which may be
issued upon the conversion of our outstanding shares of Series E Convertible
Preferred Stock.
We previously issued these shares of common stock, warrants, Series D
Shares and Series E Shares in private placement transactions. 1,500,000 of these
shares are being offered by principal stockholders.
The following table sets forth as of June 29, 1999 the number of shares
being held of record or beneficially by the selling security holders and
provides by footnote reference any material relationship between Osage and the
selling security holder, all of which is based upon information currently
available to Osage.
The selling security holders may offer their shares of common stock 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.
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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>
Anderson, O. Jack 333,334 3.5% 333,334 0 0%
Aspen Partners, Inc. 7,500(3) * 7,500 0 0%
Caruso, Steven 3,208(4) * 3,208 0 0%
Clarke, Bud 3,209(5) * 3,209 0 0%
Cohen, Peter 3,208(4) * 3,208 0 0%
Cook, Scott D. 40,000(6) * 40,000 0 0%
Durbin, David R.(7) 90,582 * 90,582 0 0%
Durbin, E. Michael(7) 90,583 * 90,583 0 0%
FAC Enterprises, Inc. 120,000(8) 1.3% 120,000 0 0%
Founders Partners IV, L.L.C. 235,294 2.5% 235,294 0 0%
Gaare, Maureen(9) 296 * 296 0 0%
Grube, Daniel(9) 296 * 296 0 0%
Gwin, Gary 3,111 * 3,111 0 0%
Halifax Fund, L.P. 404,762(10) 4.0% 557,143(11) 0 0%
IP Services, Inc. 112,500(12) 1.2% 112,500 0 0%
Lancer Offshore, Inc. 820,000(13) 8.5% 820,000 0 0%
Lancer Partners, L.P. 470,000(13) 4.9% 470,000 0 0%
Lancer Voyager Fund 170,000(13) 1.8% 170,000 0 0%
Lauer, Michael 1,500,000(14) 15.6% 40,000 0 0%
Leatherwood, Robb L. (15) 29,042 * 29,042 0 0%
Lowery, Michael P. (15) 50,748 * 50,748 0 0%
Lowery, Robert S. (15) 50,598 * 50,598 0 0%
Moorehead, Donald F. 30,000(6) * 30,000 0 0%
Moorehead, George O. 10,000(6) * 10,000 0 0%
Rosen, Paul 5,000 * 5,000 0 0%
Sands Bros. 200,000(16) 2.0% 200,000 0 0%
Schoffman, Stephen 6,437(17) * 6,437 0 0%
Siegel, Jonathan 6,438(18) * 6,438 0 0%
SPH Equities, Inc. 368,388 3.7% 275,000(19) 93,388 *
Spackman, Thomas J. 20,000(6) * 20,000 0 0%
The Cuttyhunk Fund Limited 301,005(20) 3.0% 301,005 0 0%
Udelhofen, John(7) 90,583 * 90,583 0 0%
Vahalla, Trust of Daniel J. and 146,297 1.5% 146,297 0 0%
Mary(21)
Westmark, Cary T. (15) 19,312 * 19,312 0 0%
Will's Wei Corp. 341,660 3.5% 175,000(22) 166,660 1.7%
Wolfe, Brian(7) 90,582 * 90,582 0 0%
Total 4,606,306
</TABLE>
- --------------------------
* Less than 1%
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(1) Applicable percentage of ownership is based on 9,594,621 shares of common
stock outstanding as of June 29, 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, we cannot estimate the
aggregate number of shares that will be sold in 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) Includes 7,500 shares issuable upon the exercise of warrants.
(4) Includes 3,208 shares issuable upon the exercise of warrants.
(5) Includes 3,209 shares issuable upon the exercise of warrants.
(6) Reflects shares issuable upon the exercise of warrants issued in a private
placement transaction on May 13, 1998.
(7) An employee of Open Business Systems, Inc., a wholly owned subsidiary of
Osage.
(8) Through common ownership, FAC Enterprises, Inc. is an affiliate of IP
Services, Inc., also a selling security holder.
(9) An employee of Solsource Computers, Inc., a wholly owned subsidiary of
Osage.
(10) Includes 304,762 shares issuable upon the conversion of 2,000 Series E
Shares at a conversion price of $6.5625 per share of common stock, subject
to adjustment, and 100,000 shares issuable upon the exercise of 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 the terms of these Series E Shares and warrants, Halifax Fund,
L.P. cannot convert the Series E Shares or exercise warrants to the extent
conversion and/or exercise would result in Halifax and its affiliates
beneficially owning more than 4.99% of the common stock outstanding after
the conversion and/or exercise.
(11) Pursuant to applicable registration rights, Osage has agreed to register
150% of the shares owed to Halifax in order to cover any increases in the
number of shares to be issued by virtue of adjustment provisions for the
Series E Shares.
(12) Includes 75,000 outstanding shares, as well as 37,500 shares issuable upon
the exercise of warrants 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.
(13) The beneficial ownership of these shares is also attributed to Michael
Lauer.
(14) 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.
(15) An employee of Osage Computer Group, Inc., a wholly owned subsidiary of
Osage.
(16) Includes 200,000 shares issuable upon the exercise of warrants.
(17) Includes 6,437 shares issuable upon the exercise of warrants.
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<PAGE> 16
(18) Includes 6,438 shares issuable upon the exercise of warrants.
(19) Includes 275,000 shares issuable upon exercise of warrants issued in
private placement transactions.
(20) Includes 201,005 shares issuable upon the conversion, if at all, of 1,000
Series D Shares at a conversion price of $4.975 per share of common stock,
subject to adjustment, and 100,000 shares issuable upon the exercise of
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.
(21) Mr. Vahalla is a former employee of Solsource Computers, Inc., a
wholly-owned subsidiary of Osage.
(22) Includes 175,000 shares issued in a private placement transaction.
Under agreements with the selling security holders, we will pay all
offering expenses 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.
DESCRIPTION OF SECURITIES
The authorized capital stock of Osage consists of 50,000,000 shares of
common stock, $.01 par value per share and 10,000,000 shares of preferred stock,
par value $.01 per share.
COMMON STOCK
As of June 29, 1999 there were 9,594,621 shares outstanding.
Holders of common stock have equal rights to receive dividends when, as
and if declared by Osage's board of directors, out of legally available funds.
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 Osage 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
Subject to any limitations contained in Osage's certificate of
incorporation, the board of directors may, without further action by the
stockholders, issue up to 10,000,000 shares of preferred stock, $.01 par value
per share, in one or more series. The board may set, as to any 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 D CONVERTIBLE PREFERRED STOCK
The board of directors authorized a series of preferred stock as Series
D Convertible
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<PAGE> 17
Preferred Stock, with the rights and preferences described in the following
summary. The certificate of designation filed with the Delaware Secretary of
State contains the full terms of the Series D shares. As of June 29, 1999, all
of the 1,000 Series D Shares issued during December 1998 in a private placement
transaction are outstanding.
- Liquidation Preference
The holders of the Series D Shares are entitled to a liquidation
preference equal to $1,000 per share plus any accrued but unpaid dividends.
Accordingly, if we liquidate or dissolve, after payment to all creditors and
payment of the liquidation preference to holders of Series A shares, no
distribution will be made to the holders of common stock, unless the holders of
the Series D shares have previously received a liquidation preference of $1,000
plus all accrued but unpaid dividends.
- Dividends
The holder of the Series D Shares is entitled to dividends in
preference to any dividend on common stock. The dividends are 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
The holder of the Series D Shares has 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 then in effect. The current conversion rate for the
Series D Shares is $4.975 per share. The Series D conversion rate may be reduced
if we fail to comply with the redemption provisions described below. If the
conversion rate is adjusted, it will be reduced to 80% of the average of the
three lowest closing bid prices of the common stock during the five trading days
immediately preceding the conversion date. The reduction in conversion rate will
increase the number of shares issued to the holder upon conversion.
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 the holder of the Series D Shares to convert, if the closing bid price 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
can 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 then outstanding common stock.
Any Series D Shares that are outstanding on December 31, 2000 will
automatically convert into common stock.
The number of shares of common stock into which each Series D Share is
convertible is
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<PAGE> 18
subject to adjustment to protect against dilution if we declare a stock
dividend, make a distribution on the common stock, divide or reclassify our
outstanding shares of common stock.
- Voting Rights
Prior to the conversion of the Series D Shares, the holder has no
voting rights. However, the affirmative vote of the holders of 66-2/3% of the
Series D Shares is necessary to take any action that is inconsistent or
conflicts with the rights, preferences or privileges of the Series D Shares.
- Redemption
If the closing bid price of our common stock calculated as of December
31, 1999 is less than $4.975 per share, the holder of the Series D Shares may
redeem its Series D Shares by giving us written notice within ten business days
after December 31, 1999. The redemption price will be $1,200 per share, plus
accrued and unpaid dividends. If we fail to comply with these redemption
provisions, the conversion price of the Series D Shares would be reduced as
described under the heading "Conversion" above.
SERIES E CONVERTIBLE PREFERRED STOCK
The board of directors authorized a series of preferred stock as Series
E Convertible Preferred Stock, with the rights and preferences described in the
following summary. The Certificate of Designation filed with the Delaware
Secretary of State contains the full term of the Series E shares. As of June 29,
1999, all of the 2,000 Series E Shares issued during February 1999 in a private
placement transaction are outstanding.
- Liquidation Preference
Subject to the rights and preferences of the Series D Shares, the
holders of the Series E Shares are entitled to a liquidation preference equal to
$1,000 per share, plus all accrued but unpaid dividends. Accordingly, if we
liquidate or dissolve, after payment to all creditors and payment of the
liquidation preference to holders of Series D Shares, no distribution will be
made to the holders of common stock, unless the holders of the Series E Shares
have previously received a liquidation preference of $1,000 plus all accrued but
unpaid dividends.
- Dividends
The holder of the Series E Shares is entitled to dividends in
preference to any dividend on common stock, but not in preference to any
dividend on the Series D Shares. The dividends are 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
The holder of the Series E Shares has the right to convert at any time
all or any portion of the $2,000,000 stated value of the Series E Shares into
shares of common stock at the conversion
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rate then in effect. The current conversion rate for the Series E Shares is
$6.5625 per share. The Series E conversion rate may be reduced if we fail to
comply with the redemption provisions described below. If the conversion rate is
adjusted, it will be reduced to 80% of the average of three lowest closing bid
prices of the common stock during the five trading days immediately preceding
the conversion date. The reduction in the conversion rate will increase the
number of shares issued to the holder upon conversion.
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 the holder of the Series E Shares to convert, if the closing bid price 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 then outstanding common stock.
Any Series E Shares that are outstanding on February 9, 2001 will
automatically convert into common stock. However, 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 that:
- 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;
- there is not a sufficient number of shares of common stock available
for conversion of all outstanding Series E Shares;
- for any other reason we refuse or announce our refusal to honor
conversion of Series E Shares; or
- there is a suspension, restriction or limitation on the ability of
the holder of Series E Shares to sell shares of common stock received upon
conversion.
Notwithstanding the preceding information regarding automatic
conversion, no holder of Series E Shares shall be obligated to convert on the
automatic conversion date unless the following conditions are met:
- there is no material default under the securities purchase documents
pursuant to which the Series E Shares were privately purchased;
- 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 with the Series E
Shares is effective and was effective for the 60 consecutive trading days prior
to such automatic conversion date;
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<PAGE> 20
- 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 proceeding; and
- 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 is
convertible is subject to adjustment to protect against dilution if we declare a
stock dividend, make a distribution on the common stock, divide or reclassify
our outstanding shares of common stock, or transfer our assets in a "spin off,"
which means that one of our subsidiaries or divisions becomes an independent
company.
- Voting Rights
Prior to the conversion of the Series E Shares, the holder has no
voting rights. However, the affirmative vote of the holders of 75% of the
outstanding Series E Shares is necessary for any amendment or repeal of the
Certificate of Designation of Series E Shares, and 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
If the closing bid price of our common stock calculated as of February
9, 2000 is less than $6.5625 per share, holder of the Series E Shares may redeem
its Series E Shares by giving us written notice within ten business days after
February 9, 2000. The redemption price will be $1,200 per share, plus accrued
and unpaid dividends . If we fail to comply with these redemption provisions,
the conversion price of the Series E Shares would be reduced as described under
the heading "Conversion" above.
- Mandatory Repurchase
A holder of Series E Shares may at its option compel us to repurchase all
or a portion of the Series E Shares at the redemption price in the event that
any of the following events involving Osage occurs or is announced as pending:
- a consolidation, merger or tender offer of Osage with or into another
entity in which 50% of Osage's voting power is transferred;
- any person, together with its affiliates and associates, beneficially
owns in excess of 50% of Osage's voting power;
- more than one-half of the members of our board of directors is
replaced without approval of those individuals who are members of the board of
directors on the date of the replacement;
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- 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;
- the filing of bankruptcy, reorganization, insolvency or liquidation
proceedings by or instituted against Osage; or
- a transaction where Osage becomes a private company.
PRIVATELY ISSUED OPTIONS AND WARRANTS
We have issued options to purchase 3,362,668 shares of common stock in
private transactions or pursuant to our stock option plan. 1,600,000 of these
options were issued to the former Osage shareholders in connection with the
merger with Pacific Rim. The remaining options were issued to management,
employees and other consultants at exercise prices ranging from $3.00 to $7.25,
subject to varying vesting periods.
We have also agreed to issue warrants to purchase 992,500 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 Osage during 1998 and the
first and second quarters of 1999. The warrants were issued at exercise prices
ranging from $3.50 to $7.875.
REGISTRATION RIGHTS
We prepared this prospectus pursuant to registration rights granted in
connection with the transactions where we sold the selling security holders
shares of common stock and securities convertible into or exercisable for common
stock. We have also granted registration rights in connection with recent
acquisitions of businesses, private placement transactions and contracts for
financial advisory services.
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 within three years, did
own) 15% or more of the corporation's voting stock.
The provisions regarding certain business combinations could delay,
defer or prevent a
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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, may delay or deter a change in the
control or management of Osage.
CERTIFICATE OF INCORPORATION
Undesignated preferred stock may enable the board of directors 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 Osage 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 reduce the market price of
the common stock.
Our certificate of incorporation provides that our 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 a change in control transaction more difficult.
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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:
- 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;
- purchases by a broker or dealer for its account pursuant to this
prospectus;
- ordinary brokerage transactions and transactions in which the broker
solicits purchases;
- through options, swaps or derivatives;
- in privately negotiated transactions;
- in transactions to cover short sales;
- through a combination of any such methods of sale; or
- 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 shares, from the purchaser in amounts to be negotiated immediately prior to
the sale. The compensation received by brokers or dealers 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 shares at a stipulated price per share, and, to the extent
the 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 the 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
resales of the shares, broker-
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dealers may pay to or receive from the purchasers of 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 that
event, any commissions received by 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
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. 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 Osage 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 Osage 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 Osage's 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
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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 Osage's 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 Osage's
Current Report on Form 8-K/A dated April 24, 1998, have been so audited by
Clark, Schaefer, Hackett & Co., independent certified public 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 Osage's Current Report on Form 8-K/A filed June 9,
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 Osage's Current Report on Form 8-K/A filed June 9, 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 Osage's 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.
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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 a 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:
<TABLE>
<S> <C>
- breach of duty; - misleading statement;
- neglect; - omission; or
- error; - act done.
- misstatement;
</TABLE>
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.
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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, 1998;
2. Quarterly Report on Form 10-QSB for the quarter ended March 31,
1999;
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; and
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.
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:
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John Iorillo, Chief Financial Officer
Osage Systems Group, Inc.
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(602) 274-1299
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[LOGO]
4,606,306 SHARES
OSAGE SYSTEMS GROUP, INC.
COMMON STOCK
-------------------
P R O S P E C T U S
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JUNE 30, 1999
II-31
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
SEC registration fee $ 6,483
Counsel fees and expenses*.................... $ 25,000
Accounting fees and expenses*................. $ 25,000
Miscellaneous expenses*....................... $ 5,000
-------------------
Total*................................... $ 61,483
</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 a 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.
II-1
<PAGE> 31
We have liability insurance for the benefit of our directors and
officers. The insurance covers claims against such persons due to any:
<TABLE>
<S> <C>
- breach of duty; - misleading statement;
- neglect; - omission; or
- error; - act done.
- misstatement;
</TABLE>
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.
ITEM 16. EXHIBITS.
<TABLE>
<CAPTION>
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> 32
(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> 33
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 29th day of June,
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
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>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Jack. R. Leadbeater Chairman, Chief Executive Officer and June 29, 1999
- ------------------------------ Director
Jack R. Leadbeater
/s/ * President and Director June 29, 1999
- ------------------------------
David S. Olson
/s/ * Chief Operating Officer and Director June 29, 1999
- ------------------------------
Phil Carter
/s/ John Iorillo Chief Financial Officer and Director June 29, 1999
- ------------------------------
John Iorillo
/s/ Mark Weiss Director June 21, 1999
- ------------------------------
Mark Weiss
/s/ * Director June 29, 1999
- ------------------------------
George Knight
*By: /s/ Jack R. Leadbeater
----------------------
Jack R. Leadbeater
Attorney-in-fact
</TABLE>
II-4
<PAGE> 34
EXHIBIT INDEX
<TABLE>
<CAPTION>
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 the
Registrant (contained on the signature page of this Registration
Statement). (1)
</TABLE>
- ----------------
(1) Previously filed with the Registrant's Registration Statement on Form S-3
filed April 28, 1999.
II-5
<PAGE> 1
EXHIBIT 5
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
Attorneys
Eleven Penn Center
1835 Market Street, 14th Floor
Philadelphia, Pennsylvania 19103
June 30, 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 ("Osage"), in connection with the filing by Osage 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
Osage'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. 3,105,658 shares of common stock (the "Shares");
2. 842,500 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 Osage'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 Osage'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
<PAGE> 2
applicable 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 Osage 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 Osage 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
June 25, 1999
<PAGE> 1
EXHIBIT 23.2
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-77329 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
June 30, 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
June 23, 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. (333-77329) 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. filed June 9, 1998.
/s/ KPMG LLP
KPMG LLP
Miami, Florida
June 29, 1999
