As Filed with the Securities and Exchange Commission on May 12, 2000
Registration No. 333-77239
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2
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)
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)
PHIL CARTER
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:
JOSEPH P. GALDA, 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>
<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......... 23,535,145 $4.4375 $104,437,206 $29,034(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 May 10, 2000.
(2) Of this amount, $6,569 was 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>
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 May 12, 2000
Preliminary Prospectus
Osage Systems Group, Inc.
23,535,145 shares of common stock
The selling security holders identified on pages 10 and 11 of this
prospectus, may offer and sell, from time to time, up to 23,535,145 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 May 10, 2000 on the
American Stock Exchange was $4.125 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 May 12, 2000
<PAGE>
Osage Systems Group, Inc.
Table of Contents
Page No.
About Osage Systems Group, Inc. 1
Risk factors 1
Forward-looking statements 8
Use of proceeds 9
Selling security holders 9
Description of securities 12
Plan of distribution 14
Legal matters 16
Experts 16
Indemnification of directors and officers 16
Where you can find more information 17
i
<PAGE>
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.
ii
<PAGE>
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 and 1999, 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 had been completed as of January 1, 1998, our revenues during 1998
would have increased to $83 million. Additionally, in August 1999, we acquired
the business intelligence and data warehousing business of Leveraged Solutions,
Inc.
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. This could hinder our growth in the computer
industry and slow our generation of revenues.
We have recently incurred material losses. If we continue to suffer
material losses, our
1
<PAGE>
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 $6.4 million for the year
ended December 31, 1999, of which $4.4 million represented restructuring and
impairment charges incurred during the third quarter of 1999. We believe that
our losses will subside if we achieve greater operating efficiencies from the
recent restructuring of operations.
2. Our future profitability is likely to depend upon the successful
implementation of our growth strategy.
We are implementing a business strategy focusing on growth through
development of our operations providing services with higher profit margins,
particularly services and products that allow businesses to engage in commerce
over the Internet. We will need to hire significant numbers of technical
personnel to further develop our higher margin services. We may not be able to
attract and retain those personnel. In addition, we will invest substantially in
the development of our e-commerce products, but cannot guarantee that those
products will be successful in the marketplace.
3. We will need to secure additional financing or use our cash resources
to pursue our acquisition strategy. Financing our strategy by issuing
securities could lower the value of the shares, while using cash
resources for acquisitions will divert those resources from the
development of our business.
During 1998 and 1999, our business grew through acquisitions. 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, but the issuance of securities could dilute our stock,
thereby reducing its value. If the market price of our common stock does not
stay the same or increase, or potential acquisition candidates do not 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 12,193,924 are outstanding as of the date of this prospectus. As detailed
below, we expect to issue at least 5,000,000 more shares in the future due to
business decisions of our board of directors and meeting our contractual
obligations. Further, we will likely issue an additional 20,000,000 shares under
outstanding convertible debentures and warrants if we obtain stockholder
approval for those instruments. Issuance of these shares is likely to have an
extremely dilutive effect upon the existing stockholders and may reduce the
value of their investment.
2
<PAGE>
We may issue additional shares for valid business purposes within the
discretion of our board of directors, such as:
o the acquisition of other companies; and
o compensation of our officers, employees and directors.
In addition, we are contractually obligated to issue shares for the
following reasons:
o if holders of our outstanding options and warrants exercise their
rights to purchase shares, we must issue up to 4,933,189 shares of
common stock;
o 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; and
o if stockholders approve the ability of holders of outstanding
debentures and warrants to acquire shares thereunder, we expect to
issue approximately 20,000,000 more shares.
5. If stockholders do not approve the conversion and exercise features of
securities that we issued in exchange for a $6 million short-term loan,
we will have to repay the loan. Since we currently do not have
sufficient cash to repay the loan, we may incur significant interest
expense on the loan and be caused to obtain alternative financing to
repay the loan.
A principal stockholder bought convertible debentures and warrants from us
in 1999 for $3 million. The debentures may be converted into approximately
10,000,000 shares of our common stock if our stockholders approve the conversion
feature of the debentures. In addition, the warrants may be exercised to
purchase up to 10,000,000 shares of our common stock at $.30 per share if our
stockholders approve the exercise feature of the warrants. During the first
quarter of 2000, the holders of the warrants advanced us $3 million of the
warrant exercise price . Our stockholders are scheduled to vote on the
conversion and exercise features of the debentures and warrants on May 31, 2000.
If they do not approve these features, we must repay a total of $6 million, plus
interest at the rate of up to 18% per year until repayment. We will not be
required to repay the $6 million until we obtain alternate financing or January
2, 2001, whichever occurs first. Since we do not have enough cash to repay the
loan, we may incur approximately $725,000 in interest expense in 2000 under the
loan. We may try to obtain financing from another source to repay the loan, but
we may incur significant expenses and issue additional securities under the
alternate financing. As a result, our cash resources may be further limited and
our stock may be diluted.
6. 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.
3
<PAGE>
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 8 million shares of our common stock are eligible for
resale into the market under applicable securities laws. After this offering,
the 23,535,145 shares covered by this prospectus may be resold into the public
market immediately. This includes approximately 21,035,730 shares that may be
resold upon the exercise of warrants and conversion of debentures 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.
7. A former preferred stockholder recently sued us. We may be forced to
issue additional shares of our common stock or pay a large amount of
money to the stockholder in the lawsuit. If that happens, our stock may
be diluted and we may not have enough cash to operate our business.
Halifax Fund, L.P., formerly a preferred stockholder of Osage, sued us for
allegedly failing to offer Halifax the right to participate in a financing
consummated in November 1999. Halifax is suing for the right to purchase
below-market securities from us, as well as monetary damages. If Halifax is
successful in the lawsuit, we may be forced to issue preferred stock convertible
into approximately 13.3 million shares of our common stock or pay a large sum of
money as damages to Halifax.
8. 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 our stockholders and us. These factors
could prevent our stockholders from recognizing a premium on our stock.
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 our stockholders and us. At the next annual meeting of our
stockholders, which is scheduled for May 31, 2000, the stockholders will vote on
the elimination of the classified board of directors.
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
4
<PAGE>
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. At the next annual meeting of our
stockholders, the stockholders will vote on the elimination of the supermajority
voting provisions in our bylaws. If the stockholders approve the elimination of
the classified board of directors and the supermajority voting provisions, we
could be more vulnerable to hostile takeovers. In addition, if the stockholders
approve the conversion and exercise features of the debentures and warrants
described in Risk Factor 5, a principal stockholder will be able to elect all of
our directors and control our management and policies. If that happened, Section
203 of the Delaware General Corporation Law would not apply to the principal
stockholder because our board of directors approved the transaction that
resulted in the principal stockholder becoming an "interested stockholder."
9. 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. Motorola, Inc., our largest
customer which, in 1997 accounted for 64.8% of net sales, accounted for only
16.7% and 15.4% of net sales in 1998 and 1999, respectively. No other customer
accounted for more than 3.0% of our net sales for the year ended December 31,
1999.
10. It may be difficult to judge our financial performance since our
quarterly operating results vary substantially. Accordingly, our past
operating results should not be relied upon to predict our future
performance.
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:
o the timing, size and stage of projects;
o new service introductions by us or our competitors;
o information technology outsourcing trends;
o the hiring of additional staff and increased selling and administrative
expenses associated with our growth;
o changes in our billing and employee utilization rates; and
o 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
5
<PAGE>
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.
11. 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. This could inhibit our growth
and profitability.
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:
o quality of service and products;
o development of new products and services;
o price;
o project management capability; and
o technical and business expertise.
12. We may not be able to attract enough qualified technical personnel
because they are in short supply. If this happens, our ability to
compete in our industry would likely be curtailed.
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.
13. Our success is dependent upon retaining key management personnel,
especially our Chief Executive Officer. If key personnel leave us, our
business may not be successful.
Our future success will depend in large part upon our the continued service
of key
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<PAGE>
management personnel, particularly Phil Carter, Chief Executive Officer. While
Mr. Carter has a two-year employment agreement with us, he can terminate the
agreement and may receive severance payments.
14. We may not successfully or timely develop new information technology
solutions. If our products and services become outdated in the
marketplace of changing technology, our sales revenues will likely
decrease.
Our success depends in part on our ability to develop solutions that
keep pace with:
o continuing changes in information technology;
o evolving industry standards; and
o 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 severely limit our sales revenues.
15. Our sales and revenues will probably decrease if our suppliers do not meet
our demand for computer products at competitive prices.
Our business depends, in part, 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 upon the demand
for, price of, technical capabilities of and quality of the products available
for resale. Our principal supplier is Sun Microsystems, Inc. Additionally, we
obtain the largest part of Sun equipment and other inventory from GE Access
Graphics, Inc., a Sun master reseller.
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.
16. Since we do not anticipate paying dividends on our common stock, investors
in the shares will probably not receive any.
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<PAGE>
We have not paid dividends 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.
17. Our lender may not always loan us the money we need to operate our
business. If we do not have continuous access to credit, we may lose
customers and generate less revenue.
We obtain most of our working capital under a $20 million line of credit
with Coast Business Services. As of May 10, 2000, we had unpaid borrowings of
approximately $10.9 million. Coast has a lien on most of our assets as
collateral for the line of credit. If we do not timely collect our receivables
from customers to pay down the line of credit, or if Coast changes its lending
policies, we may not have sufficient credit available to us to operate our
business. Any decrease or significant limitation on the amount of accessible
credit may limit our ability to fill existing sales orders or expand our sales
levels, thereby resulting in a loss of revenues.
18. Our stock price may be volatile due to factors under, as well as out of,
our control. This volatility may negatively affect the profitability of
investing in the shares.
The market price of our common stock could in the future be highly
volatile. Some factors that may affect the market price include:
o actual or anticipated fluctuations in our operating results;
o announcements of technological innovations or new commercial products or
services by us or our competitors;
o general market conditions in the computer software and hardware
industries; and
o 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.
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<PAGE>
Use of proceeds
We will not receive any of the proceeds from the sale of the shares
offered by this prospectus.
Selling security holders
The selling security holders identified in the following table are offering
for sale 23,535,145 shares of common stock. These shares include:
o 2,499,415 shares of common stock;
o 1,035,730 shares of common stock which may be issued upon the exercise of
warrants;
o 10,000,000 shares of common stock which may be issued upon the exercise
of warrants if these warrants are approved by our stockholders (the
"Contingent Warrants"); and
o approximately 10,000,000 shares of common stock, which may be issued upon
the conversion of 10% Convertible Debentures if these debentures are
approved by our stockholders.
We previously issued these shares of common stock, warrants, Contingent
Warrants and debentures in private placement transactions. 18,500,000 of these
shares are being offered by principal stockholders.
The following table sets forth as of May 11, 2000 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 percentage of ownership for each selling security holder
disclosed in the table is based on 12,193,924 shares of common stock outstanding
as of May 11, 2000, plus any common stock equivalents held by that holder, and
assumes that the Contingent Warrants and debentures have been approved by our
stockholders. Both the number of shares listed as being offered by the selling
security holders in the table and the holders' respective percentage of share
ownership after the offering are based on the assumptions that all of the shares
being offered 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.
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<PAGE>
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.
<TABLE>
<CAPTION>
Number of Beneficial
Beneficial Ownership of Shares Ownership of
Name of Selling Security Holder Prior Offered Shares
Selling Security Holder to Offering Hereby After Offering
- ----------------------- ---------------------------- --------- ---------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Aspen Partners, Inc. 7,500(1) * 7,500 0 0%
Barsky, Jeffrey & Anne JTTEN 20,000 * 10,000 10,000 *
Bridgewater Partners, L.P. 50,000 * 50,000 0 0%
Burris, Bradley 20,000 * 10,000 10,000 *
Busse, Tom 6,500 * 3,250 3,250 *
Caldwell, Calvin 114,500 * 57,250 57,250 *
Caruso, Steven 3,208(1) * 3,208 0 0%
Casagrande, Dennis 30,000 * 15,000 15,000 *
Chazin, Neal 25,000 * 12,500 12,500 *
Clarke, Bud 3,209(1) * 3,209 0 0%
Coast Business Credit 100,000(1) * 100,000 0 0%
Cohen, Peter 3,208(1) * 3,208 0 0%
Cook, Scott D. 40,000(1) * 40,000 0 0%
Cranbourne Investments, Ltd. 36,500 * 36,500 0 0%
Cuttyhunk Fund Limited, The 388,468(2) 3.2% 100,000 288,468 2.4%
Dorsk, Brian 10,000 * 10,000 0 0%
Durbin, David R. 144,927 1.2% 144,927 0 0%
Durbin, E. Michael 144,928 1.2% 144,928 0 0%
El Paso Holdings, Ltd. 60,000 * 25,000 35,000 *
FAC Enterprises, Inc. 36,500 * 36,500 0 0%
Foreman, Michael 30,000 * 15,000 15,000 *
Founders Partners IV LLC 300,000 2.5% 300,000 0 0%
Gladstone, Debra 10,000 * 10,000 0 0%
Gladstone Equity Fund 10,000 * 10,000 0 0%
Gnaedinge, Donald 25,000 * 12,500 12,500 *
Gray, John 20,000 * 10,000 10,000 *
Griesel, Thomas J. 17,000(1) * 17,000 0 0%
Halifax Fund, L.P. 120,267(3) * 120,267 0 0%
Harbour International, Inc. 15,000 * 15,000 0 0%
I. P. Services Corp 10,000 * 10,000 0 0%
Ibsen Imports 90,000 * 90,000 0 0%
Jaffe, Jack 20,000 * 10,000 10,000 *
KAB Investments Inc. 73,000 * 73,000 0 0%
Lancer Offshore, Inc. 11,153,334(4,5) 49.7% 11,153,334 0 0%
Lancer Partners, L.P. 3,803,332(4,6) 24.7% 3,803,332 0 0%
Lancer Voyager Fund 170,000(4) 1.4% 170,000 0 0%
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Number of Beneficial
Beneficial Ownership of Shares Ownership of
Name of Selling Security Holder Prior Offered Shares
Selling Security Holder to Offering Hereby After Offering
- ----------------------- ---------------------------- --------- ---------------
Number Percent Number Percent
------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Lauer, Michael 18,500,000(7) 63.6% 40,000 0 0%
Lowther, Michael(8) 250,000 2.1% 250,000 0 0%
Manzoor, Khalid 25,000 * 12,500 12,500 *
Mathews, Darell 55,000 * 27,500 27,500 *
McKee, Regina G. 10,000 * 10,000 0 0%
Moorehead, Donald F. 30,000(1) * 30,000 0 0%
Moorehead, George O. 10,000(1) * 10,000 0 0%
Musgrave, Brent 20,000 * 10,000 10,000 *
Orbiter Fund, L.P. 1,666,666(4,9) 12.1% 1,666,666 0 0%
O'Reilly, Sharon(8) 250,000 2.1% 250,000 0 0%
Pelletier, Kevin 1,750(1) * 1,750 0 0%
Ramsey, Lyman 26,000 * 13,000 13,000 *
Richardson, Philip 22,000 * 11,000 11,000 *
Risch + Darlington, Inc. 54,545 * 54,545 0 0%
Rosner, Steven B. 40,000 * 40,000 0 0%
Rozel International Holdings Ltd. 36,500 * 36,500 0 0%
Sands Bros. 200,000(1) 1.6% 200,000 0 0%
Schacter, David 16,625(1) * 16,625 0 0%
Schacter, Robert T. 68,000(1) * 68,000 0 0%
Schoffman, Stephen 17,167(1) * 17,167 0 0%
Shayne, Andrew 16,625(1) * 16,625 0 0%
Siegel, Jonathan 6,438(1) * 6,438 0 0%
SPH Equities, Inc. 275,000(1) 2.2% 275,000 0 0%
SPH Investments 3,416,500(10) 22.1% 3,416,500(10) 0 0%
Spackman, Thomas J. 20,000(1) * 20,000 0 0%
Subramaniam, Chandra 65,000 * 32,500 32,500 *
Udelhofen, John 144,928 1.2% 144,928 0 0%
Vahalla, Trust of Daniel J. and Mary(11) 50,561 * 50,561 0 0%
Weiss, Joseph B. 30,000 * 30,000 0 0%
Wolfe, Brian 144,927 1.2% 144,927 0 0%
Total 23,535,145
</TABLE>
- -----------------
* Less than 1%
(1) Reflects shares issuable upon the exercise of warrants issued in a
private placement transaction.
(2) Includes 288,468 shares of common stock and 100,000 shares issuable upon
the exercise of warrants at an exercise price of $5.97 per share.
(3) Includes 20,267 shares of common stock and 100,000 shares issuable upon
the exercise of warrants at an exercise price of $7.875 per share.
Pursuant to the terms of these warrants, Halifax Fund, L.P. cannot
exercise warrants to the extent exercise would result in Halifax and
its affiliates beneficially owning more than 4.99% of the common stock
outstanding after such exercise.
11
<PAGE>
(4) The beneficial ownership of these shares is also attributed to Michael
Lauer.
(5) Includes 820,000 shares of Common Stock, 3,666,667 shares of Common
Stock issuable upon the exercise of Contingent Warrants, and 6,666,667
shares of Common Stock issuable upon the conversion of Debentures.
(6) Includes 470,000 shares of Common Stock, 1,666,666 shares of Common
Stock issuable upon the exercise of Contingent Warrants, and 1,666,666
shares of Common Stock issuable upon the conversion of Debentures.
(7) 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. Also includes shares of Common Stock issuable upon the
conversion of Debentures and exercise of Contingent Warrants, which
instruments will be owned of record either by Michael Lauer or funds
managed by Mr. Lauer, as follows: Contingent Warrants to purchase an
aggregate 7,000,000 shares (of which 3,666,667 will be in the name of
Lancer Offshore, Inc., 1,666,666 will be in the name of Lancer
Partners, L.P., 833,334 will be in the name of Michael Lauer and
833,333 will be in the name of Orbiter Fund, Ltd.), or Debentures
convertible into 10,000,000 shares (of which 6,666,667 will be in the
name of Lancer Offshore, Inc., 1,666,666 will be in the name of Lancer
Partners, L.P., 833,334 will be in the name of Michael Lauer and
833,333 will be in the name of Orbiter Fund, Ltd.).
(8) An employee of Osage Systems Group Minnesota, Inc., a wholly-owned
subsidiary of Osage.
(9) Reflects 1,666,666 shares issuable upon exercise of Contingent Warrants.
(10) Includes 416,500 shares of common stock and Contingent Warrants to
purchase 3,000,000 shares.
(11) Mr. Vahalla is a former employee of Solsource Computers, Inc., a
wholly-owned subsidiary of Osage.
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 May 11, 2000 there were 12,193,924 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
12
<PAGE>
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.
Convertible debentures
We have issued $3 million of debentures convertible into approximately
10,000,000 shares of our common stock. The debentures convert into shares of
common stock at a conversion rate of $0.30 per share. However, the debentures
are not convertible without the approval of our stockholders. If the
stockholders do not approve the conversion of the debentures, we will have an
obligation to repay the $3 million principal amount of the debentures, together
with interest thereon.
Privately issued options and warrants
We have issued options to purchase 3,685,989 shares of common stock in
private transactions or pursuant to our stock option plan. The remaining options
were issued to directors, management, employees and other consultants at
exercise prices ranging from $3.00 to $4.50, subject to varying vesting periods.
We have also agreed to issue warrants to purchase 11,112,500 shares of
common stock, of which warrants to purchase 10,000,000 cannot be exercised
without the approval of our stockholders. These warrants include warrants issued
to our lender, as well as to investors and certain placement agents and
investment bankers in connection with approximately $12.6 million in private
placement financings completed by Osage during 1998 and 1999. The warrants were
issued at exercise prices ranging from $0.30 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, contracts for
financial advisory services and a lending arrangement.
13
<PAGE>
Provisions having a possible anti-takeover effect
Delaware General Corporation Law
The provisions of Section 203 of the Delaware General Corporation Law, an
anti-takeover law, govern us. 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 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.
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
14
<PAGE>
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:
o 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;
o purchases by a broker or dealer for its account pursuant to this
prospectus;
o ordinary brokerage transactions and transactions in which the broker
solicits purchases;
o through options, swaps or derivatives;
o in privately negotiated transactions;
o in transactions to cover short sales;
o through a combination of any such methods of sale; or
o 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-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.
15
<PAGE>
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 incorporated in this prospectus by reference from
the Company's Report on Form 10-KSB for the year ended December 31, 1999 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.
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 our stockholders or
us 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, employee 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
16
<PAGE>
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:
o breach of duty; o misleading statement;
o neglect; o omission; or
o error; o act done.
o 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.
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, 1999; and
17
<PAGE>
2. 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:
Robert Peterson, Chief Financial Officer
Osage Systems Group, Inc.
1661 East Camelback Road, Suite 245
Phoenix, Arizona 85016
(602) 274-1299
18
<PAGE>
[LOGO]
23,535,145 shares
Osage Systems Group, Inc.
Common Stock
-------------------
P r o s p e c t u s
-------------------
May 12, 2000
<PAGE>
PART II
Item 14. Other Expenses of Issuance and Distribution.
SEC registration fee .......................................... $29,034
Counsel fees and expenses*..................................... $27,000
Accounting fees and expenses*.................................. $27,000
Miscellaneous expenses*........................................ $ 5,000
-------
Total*.................................................... $88,034
- ----------
* 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 our stockholders or
us 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.
We have liability insurance for the benefit of our directors and officers.
The insurance covers claims against such persons due to any:
o breach of duty; o misleading statement;
o neglect; o omission; or
o error; o act done.
o misstatement;
II-1
<PAGE>
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.
Exhibit No. Description of Exhibit
- ----------- ----------------------
5 Opinion of Buchanan Ingersoll Professional Corporation as to
validity of common
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Buchanan Ingersoll Professional Corporation
(contained in the opinion
24 Powers of Attorney of certain officers and directors of Osage
(contained on the signature page of this Registration Statement).
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.
(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
II-2
<PAGE>
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>
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 12th day of May,
2000.
Osage Systems Group, Inc.
By: /s/ Phil Carter
----------------------------------
Chairman of the Board and
Chief Executive Officer
By: /s/ Robert T. Peterson
----------------------------------
Chief Financial Officer/Principal
Accounting Officer
Power of Attorney
KNOW ALL MEN BY THESE PRESENTS, that each of George Knight and Gerald
Harrington constitutes and appoints Phil Carter his true and lawful
attorney-in-fact and agent 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>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Phil Carter Chairman, Chief Executive Officer and May 12, 2000
- ---------------------- and Director
Phil Carter
/s/ Robert T. Peterson Chief Financial Officer May 12, 2000
- ----------------------
Robert T. Peterson
/s/ George Knight Director May 11, 2000
- ------------------
George Knight
/s/ Gerald Harrington Director May 11, 2000
- ----------------------
Gerald Harrington
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
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 Deloitte & Touche LLP. Filed herewith
23.2 Consent of Buchanan Ingersoll Professional Corporation
(contained in the opinion filed as Exhibit 5 to the
Registration Statement). Filed herewith
24.1 Powers of Attorney of certain officers and directors of the Filed herewith
Registrant (contained on the signature page of this
Registration Statement).
</TABLE>
II-5
EXHIBIT 5
BUCHANAN INGERSOLL PROFESSIONAL CORPORATION
Attorneys
Eleven Penn Center
1835 Market Street, 14th Floor
Philadelphia, Pennsylvania 19103
May 12, 2000
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. 2,499,415 shares of Common Stock (the "Shares");
2. 1,035,730 shares of Common Stock, subject to adjustment, which may be
issued, if at all, upon the exercise of warrants identified on Exhibit A
attached hereto (the "Warrants");
3. 10,000,000 shares of common stock, subject to adjustment, which may be
issued, if at all, upon the conversion of Osage's outstanding 10% Convertible
Debentures (the "Debentures"); and
4. 10,000,000 shares of common stock, subject to adjustment, which may be
issued, if at all, upon the exercise of certain outstanding warrants granted on
November 22, 1999 (the "Contingent Warrants").
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>
applicable exercise price with respect to the Warrants, will be legally issued,
fully paid and non-assessable;
3. Assuming that the stockholders of Osage approve the conversion features
of the Debentures in accordance with the terms thereof and assuming that at the
time of conversion thereof, the Debentures 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 Debentures have been duly authorized and,
when issued in accordance with the respective terms of the Debentures and the
Securities Purchase Agreement dated as of October 8, 1999 among Osage and
Michael Lauer, Lancer Offshore, Inc., Lancer Partners, L.P., and Orbiter Fund,
Ltd. (collectively, "Lancer"), will be legally issued, fully paid and
non-assessable; and
4. Assuming that the stockholders of Osage approve the conversion features
of the Contingent Warrants in accordance with the respective terms thereof and
assuming that at the time of exercise thereof, the Contingent Warrants are
exercisable, 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 exercise of the Contingent Warrants
have been duly authorized and, when issued in accordance with the terms of the
Securities Purchase Agreement dated as of October 8, 1999 among Osage and
Lancer, and in accordance with the terms of the respective Contingent Warrants
including, without limitation, payment of the applicable exercise price with
respect to the Contingent Warrants, 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/ Joseph P. Galda
-------------------
<PAGE>
Exhibit A
---------
<TABLE>
<CAPTION>
Number of
Warrant Holder Warrant Shares Date of Warrant Grant
- -------------- -------------- ---------------------
<S> <C> <C>
Aspen Partners, Inc. 7,500 September 30, 1998
Caruso, Steven 3,208 September 30, 1998
Clarke, Bud 3,209 September 30, 1998
Coast Business Credit 100,000 December 30, 1998
Cohen, Peter 3,208 September 30, 1998
Cook, Scott D. 40,000 April 16, 1999
Cuttyhunk Fund Limited, The 100,000 December 31, 1998
Griesel, Thomas J. 17,000 May 12, 2000
Halifax Fund, L.P. 100,000 February 9, 1999
Moorehead, Donald F. 30,000 April 16, 1999
Moorehead, George O. 10,000 April 16, 1999
Pelletier, Kevin 1,750 May 12, 2000
Sands Bros. 200,000 November 12, 1998
Schacter, David 16,625 May 12, 2000
Schacter, Robert T. 68,000 May 12, 2000
Schoffman, Stephen 17,167 September 30, 1998
Shayne, Andrew 16,625 May 12, 2000
Siegel, Jonathan 6,438 September 30, 1998
Spackman, Thomas J. 20,000 April 16, 1999
SPH Equities, Inc. 200,000 February 10, 1998
SPH Equities, Inc. 25,000 May 8, 1998
SPH Equities, Inc. 50,000 May 18, 1998
---------
Total 1,035,730
=========
</TABLE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 2 to
Registration Statement No. 333-77239 of Osage Systems Group, Inc. on Form S-3 of
our report dated March 31, 2000, appearing in the Annual Report on Form 10-KSB
of Osage Systems Group, Inc. for the year ended December 31, 1999, and to the
reference to us under the heading "Experts" in the Prospectus, which is part of
such Registration Statement.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
Phoenix, Arizona
May 12, 2000
