<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 4, 2000
REGISTRATION NO. 333-93451
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
4FRONT TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 840675510
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
------------------------
6300 SOUTH SYRACUSE WAY
SUITE 293
ENGLEWOOD, COLORADO 80111
(303) 721-7341
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------------
CRAIG KLEINMAN
6300 SOUTH SYRACUSE WAY
SUITE 293
ENGLEWOOD, COLORADO 80111
(303) 721-7341
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------------
Copies of all communications, including all communications sent to the agent for
service, should be sent to:
PAUL JACOBS, ESQ.
GREGG BERMAN, ESQ
FULBRIGHT & JAWORSKI L.L.P.
666 FIFTH AVENUE
NEW YORK, NEW YORK 10103
(212) 318-3000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time
to time after the effective date of this Registration Statement.
--------------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), 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 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE AGGREGATE PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT (1) PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common stock, $.001 par value per share..... 1,114,457 $14.63 $16,304,505.91 $4,304.39(2)
</TABLE>
(1) The price is estimated in accordance with Rule 457(c) under the Securities
Act of 1933, as amended, solely for the purpose of calculating the
registration fee and is $14.63, the average of the high and low prices of
the common stock of 4Front Technologies, Inc. as reported by The Nasdaq
Stock Market on December 20, 1999.
(2) Previously paid.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, 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 WE ARE NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
SUBJECT TO COMPLETION, DATED MAY 4, 2000
4FRONT TECHNOLOGIES, INC.
1,114,457 SHARES OF COMMON STOCK
------------------
4Front Technologies, Inc.'s common stock trades on the Nasdaq National
Market under the ticker symbol "FFTI," On May 2, 2000, the closing sale price of
one share of 4Front's common stock was $17.81.
------------------------
The stockholders of 4Front Technologies, Inc. listed in this prospectus are
offering and selling an aggregate of 1,114,457 shares of 4Front's common stock
under this prospectus. These selling stockholders will obtain their common stock
upon the exercise of currently outstanding warrants to purchase common stock
issued to them in connection with 4Front's public offering in 1996 or other
earlier financings. 4Front will not receive any part of the proceeds from the
sale of common stock by the selling stockholders although it may receive
proceeds from the exercise of warrants.
------------------------
Upon exercise of their warrants, the selling stockholders may sell their
4Front common stock through public or private transactions, on or off the United
States exchanges, at prevailing market prices, or at privately negotiated
prices.
------------------------
SEE "RISK FACTORS"BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN FACTORS
THAT YOU SHOULD CONSIDER BEFORE YOU INVEST IN THE SHARES BEING SOLD WITH THIS
PROSPECTUS.
------------------------
THE STOCK OFFERED OR SOLD UNDER THIS PROSPECTUS HAS NOT BEEN APPROVED BY THE
SEC OR ANY STATE SECURITIES COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED
THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
------------------------
The date of this prospectus is , 2000.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
Where You Can Find More Information......................... 2
The Company................................................. 3
Risk Factors................................................ 4
Use of Proceeds............................................. 8
Dividend Policy............................................. 8
Price Range of Common stock................................. 8
Selling Stockholders........................................ 9
Plan of Distribution........................................ 10
Legal Matters............................................... 10
Experts..................................................... 10
Index to Combined Financial Statements......................
</TABLE>
------------------------
NO PERSON IS AUTHORIZED IN CONNECTION WITH ANY OFFERING MADE HEREBY TO GIVE
ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY 4FRONT TECHNOLOGIES, INC. OR ANY SELLING
STOCKHOLDER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE COMMON STOCK OFFERED
HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE DELIVERY OF THE PROSPECTUS NOR
ANY SALE MADE HEREBY SHALL UNDER ANY CIRCUMSTANCES IMPLY THAT THE INFORMATION
HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
NO ACTION HAS BEEN OR WILL BE TAKEN IN ANY JURISDICTION BY 4FRONT
TECHNOLOGIES, INC. OR ANY SELLING STOCKHOLDER THAT WOULD PERMIT A PUBLIC
OFFERING OF THE COMMON STOCK OR POSSESSION OR DISTRIBUTION OF THIS PROSPECTUS IN
ANY JURISDICTION WHERE ACTION FOR THAT PURPOSE IS REQUIRED, OTHER THAN IN THE
UNITED STATES. PERSONS INTO WHOSE POSSESSION THIS PROSPECTUS COMES ARE REQUIRED
BY US AND THE SELLING STOCKHOLDERS TO INFORM THEMSELVES ABOUT, AND TO OBSERVE
ANY RESTRICTIONS AS TO, THE OFFERING OF THE COMMON STOCK AND THE DISTRIBUTION OF
THIS PROSPECTUS.
1
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
at the SEC's website at HTTP://WWW.SEC.GOV.
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we 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 information that we file later with the SEC
will automatically update and supersede this information. We incorporate by
reference the documents listed below and any future filings we will make with
the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act
of 1934 until the selling stockholders sell all their shares of 4Front stock.
This prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-93451).
(i) Our Annual Report on Form 10-K for the fiscal year ended January 31,
2000.
(ii) The description of our common stock contained in Item 1 of our
Registration Statement on Form 8-A/A, dated May 21, 1997.
You may request a copy of these filings, at no cost, by writing or telephoning
us at the following address:
4Front Technologies, Inc.
6300 South Syracuse Way
Suite 293
Englewood, Colorado 80111
Attention: Craig Kleinman
Phone No. (303) 721-7341
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The selling stockholders will
not make an offer of these shares in any state where the offer is not permitted.
You should not assume that information in this prospectus or any supplement is
accurate as of any date other than the date on the front of the these documents.
2
<PAGE>
THE COMPANY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS AND THE NOTES TO THOSE FINANCIAL STATEMENTS
APPEARING ELSEWHERE IN THIS PROSPECTUS.
OUR OPERATING SUBSIDIARIES CONDUCT THEIR OPERATIONS IN U.S. DOLLARS, POUNDS
STERLING, JAPANESE YEN AND EUROZONE CURRENCIES SUCH AS FRENCH FRANCS, ITALIAN
LIRA, GERMAN MARKS AND DUTCH GUILDERS. FOR FINANCIAL REPORTING PURPOSES, FOREIGN
CURRENCIES ARE CONVERTED INTO U.S. DOLLARS AT THE PREVAILING RATE AS OF THE DATE
OR AT THE WEIGHTED AVERAGE FOR THE PERIOD COVERED. UNLESS SPECIFICALLY STATED
OTHERWISE HEREIN, ALL CONVERSIONS OF FOREIGN CURRENCIES INTO U.S. DOLLARS
REFERENCED HEREIN HAVE BEEN CONVERTED USING CONVERSION RATES AS FOLLOWS:
<TABLE>
<CAPTION>
YEAR ENDED JANUARY 31,
---------------------------------------------------------------
STATEMENT OF OPERATIONS BALANCE SHEETS
------------------------------ ------------------------------
1998 1999 2000 1998 1999 2000
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
POUNDS STERLING........ 1.643 1.66 1.62 1.633 1.646 1.62
FRENCH FRANC........... 5.90 5.86 6.2 5.94 5.66 6.4
BELGIUM FRANC.......... 36.52 36.08 38.2 36.52 34.78 39.8
ITALIAN LIRA........... -- 1652 1838 -- 1669 1912
GERMAN MARK............ -- -- 1.85 -- -- 1.93
SWEDISH KRONE.......... -- -- 8.40 -- -- 8.85
JAPANESE YEN........... -- -- 104.16 -- -- 107.38
DUTCH GUILDER.......... -- -- 2.12 -- -- 2.18
CZECH KRONA............ -- -- 34.9 -- -- 35.5
</TABLE>
We provide information technology, known as IT, and outsourcing solutions,
which consist of a range of specialized computer services and complementary
products. We sell these services and products primarily to blue chip
corporations and government authorities in the United Kingdom, continental
Europe, the United States, and Japan. Our services and solutions include
hardware maintenance, help desk support, training, network services and
specialized software solutions. Our customers include British Petroleum, British
Telecom, Telcom Italia, Computer Sciences Corporation, Dupont, IBM, Cegedim,
Renault, Energis, Pfizer, Cariplo, JP Morgan and the UK Ministry of Defense.
Accelerating technological advancement, migration of organizations toward
multivendor distributed networks, and globalization of IT needs have contributed
to a significant increase in the sophistication and interdependency of corporate
computing systems. We believe that the desire by corporations to focus upon
their core activities while enjoying the benefits of such multivendor
distributed networks, together with increasing skill shortages within the IT
industry, have led them increasingly to rely upon specialist outsourcing service
organizations such as us to support the development and maintenance of their IT
strategy.
Our objective is to leverage our position in the UK to become a leading
independent provider of IT products and services throughout Europe. The key
elements of our strategy are to (i) leverage and promote the 4Front brand,
(ii) increase market penetration, (iii) continue to build our market position in
continental Europe, (iv) further expand the range of services and products we
provide and (v) pursue strategic acquisitions and alliances.
Our principal corporate offices are located at 6300 South Syracuse Way,
Suite 293, Englewood, Colorado 80111, telephone (303) 721-7341. Our principal
operational offices are located at 57A Hatton Garden, London, EC1N 8JG, England,
telephone 44 20 7269 5800.
3
<PAGE>
RISK FACTORS
BEFORE YOU INVEST IN OUR COMMON STOCK, YOU SHOULD CAREFULLY CONSIDER THE
FOLLOWING FACTORS AND CAUTIONARY STATEMENTS, AS WELL AS THE OTHER INFORMATION
SET FORTH HEREIN. IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS,
FINANCIAL CONDITION OR RESULTS OF OPERATIONS MAY SUFFER. AS A RESULT, THE
TRADING PRICE OF OUR COMMON STOCK COULD DECLINE, AND YOU COULD LOSE ALL OR PART
OF THE MONEY YOU PAID TO BUY OUR COMMON STOCK.
OUR FUTURE OPERATING RESULTS ARE UNPREDICTABLE AND OUR FINANCIAL RESULTS MAY
FLUCTUATE. We had net income of $5,822,000 and $48,000 in the fiscal years
ended January 31, 1999 and 2000, respectively. The decline in net income for
fiscal 2000 was primarily due to non-recurring write-offs. We plan to continue
to expand our operations, which will result in increased fixed costs and
operating expenses. Our operating results and net income will be adversely
affected to the extent that our net sales and gross profits do not increase
sufficiently to offset such increased expenses. We cannot assure you that our
net sales or our gross profits will increase sufficiently to offset any
increased expenses.
OUR QUARTERLY AND ANNUAL OPERATING RESULTS MAY FLUCTUATE AND THE PRICE OF
OUR COMMON STOCK MAY CHANGE IN RESPONSE TO THOSE FLUCTUATIONS. Our quarterly
and annual operating results have varied in the past and may in the future vary
significantly depending on factors such as:
- the effect of our acquisitions;
- the size, timing and recognition of revenue from significant orders;
- increased competition;
- the timing of new product releases by us or our competitors;
- market acceptance of our products;
- changes in our and our competitors' pricing policies;
- budgeting cycles of our customers;
- changes in operating expenses and personnel changes;
- changes in our business strategy;
- foreign currency exchange rates; and
- and general economic factors.
It is also possible that in some future quarter, our revenues or operating
results will be below the expectations of public market analysts and investors.
In this event, the price of our common stock could be materially adversely
affected.
OUR GROWTH STRATEGY INCLUDES THE ACQUISITION OF COMPLEMENTARY BUSINESSES
WHICH MAY NOT BE AVAILABLE TO ACQUIRE OR, IF ACQUIRED, MIGHT NOT IMPROVE OUR
BUSINESS AND RESULTS. A significant component of our growth strategy depends on
our ability to acquire complementary businesses. We face increasing competition
from other potential purchasers when seeking to acquire computer services
companies. Although we have been able to acquire computer services companies in
the past, we cannot assure you that we will be able to identify additional
suitable acquisitions, or that we will be able to consummate these acquisitions
or successfully integrate those other businesses into our operations. To date,
we have used a combination of cash and common stock for our acquisitions. In the
event that potential acquisition candidates are unwilling to accept our
securities as consideration, we will be required to use more cash resources to
continue our acquisition program and, thus, deplete our working capital. In
addition, we may need additional financing to fund these acquisitions. If
sufficient
4
<PAGE>
financing is not available as needed on terms acceptable to us, our acquisition
program could be adversely affected.
THE EXPANSION OF OUR BUSINESS HAS AND WILL STRAIN OUR MANAGEMENT, PERSONNEL
AND OTHER SYSTEMS. We are experiencing a period of rapid growth and expansion
because of both acquisitions and internal growth. Our growth and expansion has
placed, and could continue to place, a significant strain on our management,
personnel and other resources.
To accommodate our recent growth and to compete effectively and manage
future growth, if any, we will be required to continue to implement and improve
our operational, financial and management information systems, procedures and
controls on a timely basis and to expand, train, motivate and manage our
workforce. Our inability to satisfy increased customer orders in a timely
fashion, or at all, could result in termination of customer relationships or
cause customers to seek alternative sources for their products. In addition, our
financial control systems and infrastructure may not be adequate to maintain and
effectively monitor our future growth. We cannot assure you that our personnel,
systems, procedures and controls will be adequate to support our existing and
future operations. The failure to implement and improve our operational,
financial and management systems or to expand, train, motivate or manage
employees could have a material adverse effect on our business, operating
results and financial condition.
WE MAY BE UNABLE TO EFFECTIVELY INTEGRATE NEW ACQUISITIONS. We expect to
continue to grow primarily by acquiring service companies that are complementary
to our existing business operations. Acquisitions involve numerous risks,
including
- difficulties in the assimilation of the operations of the acquired
companies;
- the diversion of management's attention from other business concerns;
- risks of entering markets in which we have limited or no direct
experience; and
- the potential loss of key employees of the acquired companies.
We cannot assure you that any acquisition will result in long-term benefits to
us or that our management will be able to effectively manage the acquired
businesses. In addition, our future success will depend in part on our ability
to manage the rapid growth associated with these acquisitions. We cannot give
assurances that we will be able to make the combination of our business with the
businesses of acquired companies work or be successful.
On November 2, 1999, we purchased all of the capital stock of CVSI, Inc., a
leading provider of IT services on a worldwide basis. The purchase of CVSI is
our largest acquisition to date. We believe that an important benefit to be
realized from the CVSI acquisition will be the integration of our respective
management personnel, strategies and operations. Upon consummation of the CVSI
acquisition, we also retained a large portion of CVSI's workforce. However, some
or all of these benefits may not be achieved unless integration is successful
and achieved in a timely manner. Integration may be more difficult to achieve in
this transaction because of the need to coordinate geographically separated
organizations and integrate personnel with diverse business backgrounds and
corporate cultures. We cannot give assurances that the integration of our
business with the business of CVSI will be successful or that we will be able to
achieve the synergies we anticipate. Failure to successfully do so could have a
material adverse effect on our business and operations.
WE MAY BE UNABLE TO RESPOND EFFECTIVELY TO TECHNOLOGICAL CHANGE. The market
for computer systems and products is characterized by constant technological
change, frequent new product introductions and evolving industry standards. Our
future success is dependent upon the continuation of the move by IT end-users to
multivendor and multisystem operating environments. We believe this trend, along
with an emphasis on efficiency, has resulted in a movement by both end-users and
original
5
<PAGE>
equipment manufacturers toward outsourcing some of their services and an
increased demand for product and support services providers that have the
ability to provide a broad range of multivendor product and support services. We
can give no assurance that this trend will continue into the future. If we fail
to anticipate or respond adequately to technological developments and customer
requirements, that failure could have a material adverse effect on our business
and financial condition.
WE FACE INTENSE COMPETITION AND MAY BE UNABLE TO COMPETE SUCCESSFULLY. The
computer services industry is intensely competitive and is composed of hundreds
of companies, many of which have capital, marketing expertise and personnel
resources superior to ours. We cannot give assurance that we will be able to
compete successfully in the future or that competitive pressures will not result
in price reductions or other developments in our market which could have a
material adverse effect on our business and our ability to attract and retain
customers. In addition, because there are relatively low barriers to entry in
the markets in which we operate, we expect additional competition from other
established and emerging companies as the market for computer services continues
to develop and expand. Existing or new competitors may develop products or
provide services that are superior to our products or services or achieve
greater market acceptance.
WE DEPEND ON THE AVAILABILITY, RECRUITMENT AND RETENTION OF TECHNICAL
PERSONNEL. Our success depends upon our ability to attract, hire and retain
technical personnel who possess the skills and experience necessary to meet our
own personnel needs and the staffing requirements of our customers. Competition
for individuals with proven technical skills is intense. The IT industry in
general experiences a high rate of attrition of such personnel. We compete for
such individuals with systems integrators, providers of outsourcing services,
temporary personnel agencies, computer systems consultants, clients and
potential clients. Many large competitors have recently announced extensive
campaigns to hire additional technical personnel. Competition for quality
technical personnel has continued to intensify, resulting in increased personnel
costs for many IT service providers. Our failure to attract and retain
sufficient technical personnel would have a material adverse effect on our
ability to provide the most effective services and would harm our business.
FOREIGN EXCHANGE AND RELATED RISKS. We market our products to European and
other foreign countries, but we conduct our business primarily in U.S. dollars,
pounds sterling, French francs, Italian lira, German marks, Dutch guilders and
Japanese yen. Foreign exchange rate fluctuations will affect the purchase prices
we receive for our products. Changes in the exchange rates between the local
currencies that we conduct our business in and U.S. dollars, the currency used
in our financial statements, may significantly affect our results of operations
and other financial information as presented in our financial statements. Any
measures we take to protect us from exchange rate fluctuations may not
adequately protect us from their potential harm.
FOREIGN TAX RATES MAY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS. We are
subject to taxation in a number of different jurisdictions, including the United
States, the United Kingdom, France, Italy, Germany and Japan and, if we are
successful in further expanding our market in Europe, we may become subject to
taxation in additional jurisdictions. Additionally, transactions between our
company and our foreign subsidiaries may become subject to United States and
foreign withholding taxes. Applicable tax rates in foreign jurisdictions differ
from those of the United States and are subject to periodic change. The extent,
if any, to which we will receive credit in the United States for taxes paid in
foreign jurisdictions will depend upon the application of limitations set forth
in the Internal Revenue Code of 1986, as amended, as well as provisions of any
tax treaties which may exist between the United States. and such foreign
jurisdictions. To the extent that we expand further into continental Europe, our
effective tax rate on income may increase due to many European jurisdictions'
higher tax rates.
WE MAY NOT BE ABLE TO SUCCESSFULLY PROTECT OUR INTELLECTUAL PROPERTY. Some
of our operations are dependent in part upon our software development
methodology and other proprietary intellectual property rights. We rely upon a
combination of trade secret, non-disclosure, and other contractual
6
<PAGE>
arrangements, technical measures, and copyright and trademark laws to protect
our intellectual property rights. We hold no patents or registered copyrights.
We generally enter into confidentiality agreements with our employees,
consultants, clients, and potential clients, and limit access to and
distribution of our proprietary information. However, these safeguards may not
adequately deter the misappropriation of our proprietary information. We also
may be unable to detect unauthorized use and take appropriate steps to enforce
our intellectual property rights.
IF OUR PRODUCTS INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF THIRD
PARTIES, OUR BUSINESS MAY SUFFER IF WE ARE SUED FOR INFRINGEMENT OR CANNOT
OBTAIN LICENSES TO THESE RIGHTS ON COMMERCIALLY ACCEPTABLE TERMS. We are
subject to the risk of adverse claims and litigation alleging infringement by us
of the intellectual property rights of others. Although we believe our services
and products do not infringe the intellectual property rights of others, it is
possible that claims could be asserted against us in the future. Many
participants in the technology industry in general have an increasing number of
patents and patent applications and have frequently demonstrated a readiness to
take legal action based on allegations of patent and other intellectual property
infringement. If we become the subject of a claim for infringement we would have
to expend potentially high funds and resources to defend these the claim and, if
we were to be deemed to infringe the intellectual property rights of others, we
could be forced to pay significant license fees or damages for infringement.
WE DEPEND ON CONTINUED AUTHORIZATION FROM THIRD PARTIES TO RESELL AND
PROVIDE MANUFACTURER-AUTHORIZED SERVICES. Our future success with IT services
depends in part on our continued authorization as a service provider of various
vendors. Without such authorizations, we would be unable to provide the range of
services that we currently offer. In general, our agreements with such
manufacturers include termination provisions, some of which are immediate. We
have no assurances that such manufacturers will continue to authorize us as an
approved service provider. If we lose a substantial number of these
authorizations, we would be forced to find alternative sources for them. We
cannot assure you that we will be successful in finding these alternative
sources on a timely basis. If we cannot do so on a timely basis, we will
experience delays in the provision of our services. This, in turn, could
seriously harm our business.
RISKS RELATED TO THE PROVISION OF OUR SERVICES, IF REALIZED, COULD ADVERSELY
AFFECT OUR BUSINESS. Many of our engagements involve projects that are critical
to the operations of our customers' businesses. Our failure or inability to meet
a customer's expectations in the performance of our services, or our failure to
meet customer expectations in the required time frame could result in a claim
for substantial damages against us, even if we are not at fault. Because we are
a service provider, we are in the business of employing people and placing them
in the workplace of other businesses. Therefore, we are exposed to liability
with respect to actions taken by our employees while on assignment, such as
damages they may cause due to their errors, omissions, misuse of customer
proprietary information, misappropriation of funds, discrimination and
harassment, theft of customer property, other criminal activity, or torts and
other claims. Although we maintain general liability insurance coverage, we have
no assurances that such coverage will continue to be available on reasonable
terms or in sufficient amounts to cover one or more large claims, or that the
insurer will not disclaim coverage as to any future claim. One or more
successful claims against us that exceeds available insurance coverage could
have a material adverse effect on our business, operating results and financial
condition. Similarly, any changes in our insurance policies, including premium
increases or the imposition of large deductible or co-insurance requirements,
could also have a material adverse effect on our business, operating results and
financial condition.
WE FACE RISKS RELATED TO FIXED PRICE CONTRACTS AND COST OVERRUNS. In
addition, we have a number of fixed price contracts. If we experience cost
overruns without being able to pass along such cost overruns to our customers,
our business, operating results and financial condition could be materially
adversely affected.
7
<PAGE>
USE OF PROCEEDS
All net proceeds from the sale of the shares of the common stock underlying
the warrants will go to the selling stockholders. Accordingly, we will not
receive any of the proceeds from the sale of the shares of our common stock
offered by this prospectus. If the warrants are exercised for cash, we will
receive approximately $7,222,471. The warrants, however, are subject to cashless
exercise provisions. Consequently, we may receive no proceeds from the exercise
of the warrants.
DIVIDEND POLICY
We have never declared or paid any dividends on our common stock. We
currently anticipate that all future earnings will be retained by us to support
our growth strategy. Accordingly, we do not anticipate paying cash dividends on
our common stock in the foreseeable future. The payment of any future dividends
will be at the discretion of our board of directors and will depend upon, among
other things, our future earnings, operations, capital requirements, the general
financial condition, contractual restrictions and general business conditions.
PRICE RANGE OF COMMON STOCK
Our common stock is quoted on the Nasdaq National Market under the symbol
"FFTI." The following table sets forth for the periods indicated the high and
low reported sale prices per share for our common stock as reported by the
Nasdaq National Market.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 HIGH LOW
- ---------------------------- ------------ ------------
<S> <C> <C>
First Quarter............................................... $11 7/8 $ 6 5/8
Second Quarter.............................................. $14 5/8 $10 3/8
Third Quarter............................................... $13 $ 5 1/8
Fourth Quarter.............................................. $11 7/8 $ 5 1/2
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1999 HIGH LOW
- ---------------------------- ------------ ------------
<S> <C> <C>
First Quarter............................................... $11 1/2 $ 7 3/4
Second Quarter.............................................. $10 7/8 $ 8 1/4
Third Quarter............................................... $17 $ 9 1/4
Fourth Quarter.............................................. $21 1/4 $12 7/8
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 2000 HIGH LOW
- ---------------------------- -------- --------
<S> <C> <C>
First Quarter............................................... $39.31 $13.13
Second Quarter (through May 2).............................. 22.63 15.63
</TABLE>
The number of stockholders of record of common stock on May 2, 2000 was
approximately 1,589. On May 2, 2000, the last reported sale price of our common
stock as reported by the Nasdaq National Market was $17.81.
8
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information, as of December 20, 1999,
regarding the beneficial ownership of the common stock being sold by the selling
stockholders. These selling stockholders will obtain their common stock upon the
exercise of currently outstanding warrants to purchase common stock.
<TABLE>
<CAPTION>
SHARES OF COMMON SHARES OF COMMON
STOCK BENEFICIALLY STOCK BENEFICIALLY
OWNED PRIOR TO NUMBER OF OWNED AFTER
OFFERING SHARES OF OFFERING(1)
---------------------- COMMON STOCK ----------------------
SELLING STOCKHOLDER NUMBER PERCENT REGISTERED HEREIN NUMBER PERCENT
- ------------------- -------- -------- ----------------- -------- --------
<S> <C> <C> <C> <C> <C>
Roger Atkins.......................... 15,000 * 7,500 7,500 *
David Bampton......................... 28,000 * 28,000 0 *
Bath Street Nominees Limited.......... 20,000 * 10,000 10,000 *
Youssef Bennani....................... 6,000 * 6,000 0 *
Andrew Boardman....................... 3,600 * 1,800 1,800 *
Terry Burt(2)......................... 233,716 2.01 10,000 223,716 1.92
Stephen Chang......................... 3,000 * 3,000 0 *
Credit Agricole Indosuez.............. 15,000 * 15,000 0 *
J. Doshi.............................. 401,500 3.36 365,000 36,500 *
First Albany Corporation.............. 120,000 1.02 120,000 0 *
Sandy Feld............................ 30,000 * 30,000 0 *
Hildara Investment Limited............ 20,000 * 10,000 10,000 *
Philip Holbeche....................... 24,000 * 15,000 9,000 *
Isarco Limited........................ 20,000 * 10,000 10,000 *
Kaufman Bros., LP..................... 145,500 1.24 145,500 0 *
Stephen McDonnell(3).................. 46,147 * 10,000 36,147 *
Mark McVeigh.......................... 75,000 * 75,000 0 *
Christopher Milton.................... 2,000 * 1,000 1,000 *
Neil Pedley........................... 5,000 * 2,500 2,500 *
Louis J. Rich......................... 7,500 * 7,500 0 *
Arthur Keith Ross(4).................. 173,350 1.49 52,500 120,850 1.04
Anil Ruil............................. 200,000 1.71 100,000 100,000 *
Ian Shane............................. 15,000 * 7,500 7,500 *
Bruce Slovin.......................... 136,389 1.17 36,407 99,982 *
Christopher Smith..................... 2,000 * 1,000 1,000 *
The Claudius Trust.................... 6,250 * 6,250 0 *
David Turner.......................... 35,500 * 20,000 15,500 *
Verbier Partners...................... 18,000 * 18,000 0 *
</TABLE>
- --------------------------
* Less than 1%.
(1) Assumes that all shares offered by each selling stockholder are sold in this
offering.
(2) Includes 27,744 shares of Common Stock owned by Mr. Burt's wife and 14,395
shares held by Lex Nominees International as nominee for a Jersey resident
settlement established for the benefit of Mr. Burt and his wife and
children. Also includes 148,050 shares of Common Stock purchasable pursuant
to immediately exercisable options. Mr. Burt disclaims beneficial ownership
of the shares held by his wife.
(3) Includes 36,167 shares purchasable pursuant to immediately exercisable
options.
(4) Includes 68,500 shares purchasable pursuant to immediately exercisable
options and warrants.
9
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares at various times in one or
more transactions on the Nasdaq National Market, in special offerings, exchange
distributions, secondary distributions, negotiated transactions or a combination
of these. They may sell at market prices at the time of sale, at prices related
to the market price or at negotiated prices. The selling stockholders may use
broker-dealers to sell their shares. If this happens, broker-dealers will either
receive discounts or commissions from the selling stockholder, or they will
receive commissions from purchasers of shares for whom they acted as agents.
LEGAL MATTERS
For the purpose of this offering, our outside counsel, Fulbright & Jaworski
L.L.P., New York, New York 10103, is giving its opinion on the validity of the
shares. Attorneys of Fulbright & Jaworski L.L.P. beneficially own 5,600 shares
of our common stock.
EXPERTS
The consolidated financial statements and schedule of 4Front
Technologies, Inc. included in this prospectus and in the registration statement
have been audited by KPMG, Chartered Accountants, to the extent and for the
periods set forth in their reports appearing elsewhere in this prospectus and in
the registration statement, and are included in reliance upon such reports given
upon the authority of such firm as experts in auditing and accounting.
10
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by the Registrant in connection with the issuance and
distribution of the securities being registered (other than underwriting
accounts and commissions) are estimated to be as follows:
<TABLE>
<S> <C>
SEC Registration Fee........................................ $ 4,304.39
Accounting fees and expenses................................ $20,000.00
Legal fees and expenses..................................... $20,000.00
Printing fees............................................... 5,722.00
Miscellaneous............................................... $ 9,973.61
----------
Total..................................................... $60,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporate Law of Delaware permits indemnification
of directors, officers and employees of a corporation under certain conditions
and subject to certain limitations. The By-Laws of the Registrant contains
provisions for the indemnification of directors, officers and employees within
the limitations permitted by Section 145. The Company's officers and directors
are insured against losses arising from any claim against them as such for
wrongful acts or omissions, subject to certain limitations.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits.
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<C> <S> <C>
5.1 -- Opinion of Fulbright & Jaworski L.L.P. regarding legality.*
23.1 a. Consent of Fulbright & Jaworski L.L.P. (to be filed as part
of Exhibit 5.1).*
b. Consent of KPMG
24 -- Power of Attorney (included on signature page).*
</TABLE>
- ------------------------
* Previously filed
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof;
II-1
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) 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 Act
and is, therefore, unenforceable. In the event 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 of the Registrant 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 Act and will be governed by the
final adjudication of such issue.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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 New York, State of New York on May 4, 2000.
<TABLE>
<S> <C> <C>
By: /s/ ANIL DOSHI
-----------------------------------------
Name: Anil Doshi
Title: Chairman of the Board
</TABLE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
/s/ ANIL DOSHI Chairman of the Board, Chief Executive
------------------------------------ Officer and Director (principal May 4, 2000
Anil Doshi executive officer)
/s/ MARK ELLIS
------------------------------------ Vice Chairman, President and Director May 4, 2000
Mark Ellis
/s/ STEPHEN MCDONNELL
------------------------------------ Chief Financial Officer (principal May 4, 2000
Stephen McDonnell financial and accounting officer)
*
------------------------------------ Secretary and Director May 4, 2000
Craig Kleinman
*
------------------------------------ Vice President, Chief Operating Officer May 4, 2000
Terence Burt and Director
*
------------------------------------ Director May 4, 2000
Brian V. Murray
*
------------------------------------ Director May 4, 2000
Arthur Keith Ross
</TABLE>
<TABLE>
<S> <C> <C>
*By: /s/ ANIL DOSHI
-------------------------------
Anil Doshi
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
EXHIBIT 23.1B
The Board of Directors
4Front Technologies, Inc.
We hereby consent to the incorporation by reference in the Registration
Statement of our report
dated April 27, 2000 included in 4Front Technologies, Inc. Annual Report on Form
10-K, SEC
File Number 000-08345, and all references to our firm included in the
Registration Statement.
April 28, 2000
KPMG
London, England
