<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
AMENDMENT NO. 1
-----------------------------------
[MARK ONE]
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to ________
Commission file number 000-30522
----------------------------------------
CEREUS TECHNOLOGY PARTNERS, INC.
(Name of Small Business Issuer in its charter)
DELAWARE 13-3773537
(State of Incorporation) (IRS Employer Identification No.)
- ---------------------------------------- ---------------------------------
1000 Abernathy Road, Suite 1000
Atlanta, GA 30328
- ---------------------------------------- ----------------------------------
(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE: (770) 668-0900
-------------------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE EXCHANGE ACT:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
NONE NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE EXCHANGE ACT:
COMMON STOCK, PAR VALUE $.01 PER SHARE
--------------------------------------
(TITLE OF CLASS)
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year: $1,695,853.
State the aggregate market value of the voting and non-voting common
equity held by non-affiliates computed by reference to the price at which the
common equity was sold, or the average bid and asked price of such common
equity, as of a date specified within the past 60 days. $124,901,177 based upon
the average bid and asked price as of March 31, 2000.
The number of outstanding shares of the Registrant's Common Stock was
8,921,777 as of March 31, 2000.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
-----------------------------------
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE> 2
EXPLANATORY NOTE
This Report on Form 10-KSB/A amends and restates in their entirety the
following items of the Annual Report on Form 10-KSB of Cereus Technology
Partners, Inc. (the "Company") for the year ended December 31, 1999 (the "1999
Form 10-KSB").
Items 9, 10, 11 and 12 of the 1999 Form 10-KSB have been amended to
provide the information which was to be incorporated by reference to the
Company's proxy statement to be filed with the Securities and Exchange
Commission in connection with the 2000 Annual Meeting of Stockholders (the "2000
Proxy Statement").
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The following sets forth information regarding the Company's directors
and executive officers and certain of its significant employees as of March 31,
2000:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Steven A. Odom 46 Chairman of the Board and Chief Executive Officer
James M. Logsdon 53 President, Chief Operating Officer and Director
Juliet M. Reising 49 Executive Vice President, Chief Financial Officer, Secretary,
Treasurer and Director
Timothy J. Amidon 43 Executive Vice President
William Boynes, Jr. 32 Vice President - Consulting Services
L. Joseph Artime 45 Vice President - Business Alliances
Michael D. Griffith 38 Vice President - Sales
Gordon Murray 29 Vice President - Marketing
Peyton H. Park 38 Vice President - Internet Strategy
K. Pramod Reddy 28 Vice President - Technology, Chief Technology Officer
Ronald Roswell, Jr. 37 Vice President - Business Development
Ronald Roswell, Sr. 61 Vice President
Max E. Bobbitt 55 Director
</TABLE>
1
<PAGE> 3
<TABLE>
<S> <C> <C>
Gary H. Heck 55 Director
Amy L. Newmark 42 Director
Joseph R. Wright, Jr. 61 Director
</TABLE>
Steven A. Odom has served as the Chairman of the Board and Chief
Executive Officer of the Company since January 2000. Mr. Odom was Chairman of
the Board of World Access, Inc. (NASDAQ: WAXS) until June 1999. World Access,
Inc. is a leading provider of voice, data and Internet products and services
around the world. He was Chief Executive Officer of World Access, Inc. from 1994
until 1998. From 1990 until 1994, Mr. Odom was a private investor in several
companies, including World Access, Inc. and its predecessor. From 1987 until
1990, he was President of the PCS Division of Executone Information Systems in
Atlanta, a $300 million public company that manufactured and distributed
telephone systems. From 1983 until 1987, Mr. Odom was the founder, Chairman and
CEO of Data Contract Company, Inc., a manufacturer of telephone switching
equipment and intelligent pay telephones. From 1974 until 1983, he was a founder
and Executive Vice President of Instrument Repair Service, a private company
that repaired test instruments for local exchange carriers.
James M. Logsdon has served as the President and Chief Operating
Officer and a director of the Company since January 2000. From January 1998 to
January 2000, Mr. Logsdon served as the Vice President and General Manager of
Branch Operations - East for the Network Services division of GTE, a global
telecommunications company. From January 1991 to December 1999, he served as the
Vice President, Sales & Marketing - Commercial Markets for GTE Supply.
Juliet M. Reising has served as the Executive Vice President, Chief
Financial Officer and a director of the Company since March 2000. From January
1999 to March 2000, Ms. Reising served as the Chief Financial Officer of
MindSpring Enterprises, Inc., an Internet service provider that merged with
EarthLink, Inc. in February 2000. From September 1998 to February 1999, Ms.
Reising was the Chief Financial Officer of AvData, Inc., a network management
services company acquired by ITC DeltaCom, Inc. in 1999. From September 1997 to
September 1998, Ms. Reising was Chief Financial Officer for Composit
Communications International, Inc., an international software development
company, whose operations are now primarily in Israel. From August 1995 to
September 1997 she was Chief Financial Officer of InterServ Services
Corporation, which was merged with Aegis Communications, Inc. in 1997. From
September 1994 to August 1995, she was Chief Financial Officer and director of
Media Marketing Services, Inc., a promotional travel incentive company. Ms.
Reising started her career with Ernst & Young LLP in Atlanta, Georgia, where she
received her certified public accountant license.
2
<PAGE> 4
Timothy J. Amidon has served as the Executive Vice President of the
Company since January 2000. Mr. Amidon was an independent merger and acquisition
consultant and private investor from 1990 until his service with Cereus. From
1983 until 1990, Mr. Amidon served with Mr. Odom at Data Contract Company, Inc.
as Executive Vice President and at the PCS Division of Executone as Director of
Operations and Administration. Mr. Amidon was a practicing CPA from 1983 through
1997.
William Boynes, Jr. has served as the Vice President - Consulting
Services of the Company since the Company's acquisition of Client Server
Solutions, Inc. ("CSS") in November 1999. Mr. Boynes also served as a director
and the Chief Operating Officer of the Company from November 1999 to January
2000. Previously, he had served as the Chief Operating Officer and a founder of
CSS that began operations in January 1996. Mr. Boynes was formerly a Regional
Consulting Manager for Platinum Software Corporation from August 1993 to
December 1995. From May 1986 to July 1993 he was a business systems consulting
manager for Arthur Andersen & Co.
L. Joseph Artime has been the Vice President - Business Alliances of
the Company since November 1999. Previously, he had served as the Vice President
- - Latin American Business Development and a partner of CSS since September 1996.
Prior thereto, Mr. Artime was an account executive for Dun & Bradstreet software
from May 1995 to June 1996 and before that held several positions during his
tenure with ADP, Inc. which included: Director National Accounts from June 1993
to April 1995; Major Accounts Sales Executive from July 1989 to June 1993;
National Accounts Manager from July 1988 to June 1989; Regional Sales Executive
from July 1987 to June 1988 and; District Manager from July 1985 to June 1987.
Mr. Artime was a Key Account Representative for Motorola from June 1981 to May
1985.
Michael D. Griffith has been the Vice President - Sales of the Company
since its acquisition of CSS in November 1999. Previously, he had served as the
President and one of the founders of CSS, which began operations in January
1996. Prior thereto, he was the Eastern Region Channel Business Manager for
Platinum Software Corporation from January 1995 until January 1996. From
February 1994 until January 1995 he served as Product Director and was
responsible for all reseller product initiatives for Collier Consulting, Inc.
Gordon Murray has served as Vice President of Marketing for the Company
since March 2000. Mr. Murray was previously Director of Marketing for World
Access, Inc., and has developed and raised capital for several internet
companies in Atlanta, GA and Austin, TX. From 1995 through 1997 he held
management positions
3
<PAGE> 5
with SunGard Data Systems and Invesco. He received his M.B.A. following receipt
of a B.S. in Economics and Finance from Southern Methodist University.
Peyton H. Park, P.E. has served as Vice President - Internet Strategy
for the Company since August 1999. He previously served as the Executive Vice
President and Director of Operations of Reddy Group, Inc. and Cereus Bandwidth
from June 1997 until their acquisition by the Company in July 1999. Mr. Park was
formerly a Manager and Senior Engineer with the consulting engineering firm,
LawGibb (formerly Law Companies) from September 1987 to June 1997.
K. Pramod Reddy has served as the Vice President and Chief Technology
Officer of the Company since August 1999. Mr. Reddy also served as a director of
the Company from August 1999 to January 2000. He had previously served as the
President of Reddy Group, Inc. and Cereus Bandwidth from June 1997 until their
acquisition by the Company in July 1999. From February 1993 to August 1996, Mr.
Reddy was a Project Engineer and Manager for LawGibb Group (formerly Law
Companies).
Ronald Roswell, Jr. has been the Vice President - Business Development
of the Company since August 1999 and was formerly President and founder of
Enterprise Solutions Group, Inc. ("ESG"), which was formed in March 1996 and
which was acquired by the Company in July 1999. Mr. Roswell also served as a
director of the Company from August 1999 to January 2000. In May 1993, Mr.
Roswell formed Accounting Systems Consultants, Inc., which was the predecessor
company to ESG. Prior thereto, Mr. Roswell was a controller for L'Angel
Products, Inc. from July 1991 to May 1993 and he was an audit and tax specialist
for Arthur Andersen & Co. from May 1985 to May 1991. He is a Certified Public
Accountant and a Microsoft Certified Professional.
Ronald Roswell, Sr. has been the Vice President of the Company since
August 1999. Since 1986, Mr. Roswell has been the President and owner of
Shenhill Enterprises, a financial consulting firm. From 1978 to 1986, Mr.
Roswell was the President and owner of BTU Insulation Co. and from 1969-1978 he
held the positions of Vice President, Treasurer and General Manager of Cox
Enterprises, Inc., a media company. Prior thereto, he was a Senior Accountant at
the accounting firm of Haskins and Sells from 1961 to 1969. He is a Certified
Public Accountant.
Max E. Bobbitt has served as a director of the Company since January
2000. Mr. Bobbitt has served as a director of MCI WorldCom, Inc. since 1992. Mr.
Bobbitt was a director of Advanced Telecommunications Corporation until its
merger with MCI WorldCom, Inc. in December 1992. From July 1998 until the
present, Mr. Bobbitt has been a telecommunications consultant. Mr. Bobbitt is
also currently a director of Metromedia China Corporation ("MCC"), a
telecommunications company. From March 1997 until July 1998, Mr. Bobbitt served
as President and Chief Executive
4
<PAGE> 6
Officer of MCC. From January 1996 until March 1997, Mr. Bobbitt was President
and Chief Executive Officer of Asian American Telecommunications Corporation,
which was acquired by MCC in February 1997. From January 1995 until January
1996, Mr. Bobbitt was a telecommunications consultant.
Gary H. Heck has served as a director of the Company since January
2000. Mr. Heck has been a consultant since 1989; most recently, as a Managing
Partner and co-founder of PacifiCom, a consulting services company. From 1987
until 1989, he was President and Chief Executive Officer of Telematics Products,
Inc., a telecommunications products company. From 1983 until 1987, he held
various executive positions at Pacific Telesis Corporation, one of the nation's
largest Regional Bell Operating Companies and completed his tenure as a
corporate officer of several subsidiaries of Pacific Telesis and Chief Executive
Officer of PacTel products Corporation. From 1977 until 1983, Mr. Heck was a
Division Manager and District Manager at AT&T where he was responsible for sales
and marketing programs. From 1967 until 1977, Mr. Heck held various positions at
Pacific Telephone & Telegraph.
Amy L. Newmark has served as a director of the Company since January
2000. Ms. Newmark is a private investor in the technology, Internet and
telecommunications fields. She was Executive Vice President of Strategic
Planning at WinStar Communications, Inc., from 1995 to 1997. Before joining
WinStar, she was the general partner of Information Age Partners, LP, a hedge
fund investing primarily in technology and emerging growth companies. Prior to
that, she was a securities analyst specializing in telecommunications and
technology companies. Ms. Newmark is also a director of U. S. Wireless Data,
Inc., ParkerVision, Inc., QueryObject Systems Corp., and iQO.com.
Joseph R. Wright, Jr. has served as a director of the Company since
January 2000. Mr. Wright is Chairman, CEO and Director of AmTec, Inc., a public
company providing telecommunications and Internet services to and from the Far
East. After AmTec merges with Terremark Holdings, Inc. in May, 2000, Mr. Wright
will be President and Director of Terremark Communications Group, Inc. Mr.
Wright was also Chairman and Director of GRC International, Inc., a public
company which provides advanced computer, engineering and scientific
technologies to government and commercial customers for information technology,
Internet and software systems. GRC was acquired by AT&T in March, 2000 and Mr.
Wright has joined the AT&T Government Advisory Board. He is also Vice Chairman
and Director of Jefferson Consulting Group, LLC, a Washington, DC consulting
firm, and Co-Chairman and Director of Baker & Taylor Holdings, Inc., an
international book and video distribution company. Mr. Wright was Vice Chairman,
EVP and Director of W. R. Grace & Company, a specialty chemicals and healthcare
company, Chairman of Grace Energy Company, and President of Grace Environmental
Company from 1989 to 1994. He
5
<PAGE> 7
was Deputy Director then Director of the Federal Office of Management and Budget
(OMB) under President Reagan, serving in the Cabinet and the Executive Office of
the President from 1982 to 1989. He was also Deputy Secretary of the Department
of Commerce from 1981 to 1982. Prior to that, Mr. Wright spent five years as
President and COO of Citicorp Retail Services and Retail Consumer Services,
following five years in the Departments of Commerce and Agriculture, including
Assistant Secretary.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") requires the Company's directors, executive officers, and
persons who own beneficially more than ten-percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
(the "SEC") initial reports of ownership and reports of changes in ownership of
such securities of the Company. Directors, executive officers and greater than
ten percent stockholders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) reports they file.
The Company's common stock was registered under Section 12(g) of the
Exchange Act on January 19, 2000. As such, the Company's directors, executive
officers and greater than ten-percent beneficial owners had no Section 16(a)
filing requirements during the 1999 fiscal year.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth information concerning the compensation
paid or awarded to the executive officers of the Company required to be included
therein during each of the years ended December 31, 1997, 1998 and 1999.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
-------------------------------------- ----------------------
Awards Payouts
-----------------------------------------------------
Securities
Other Restricted Underlying All
Annual Stock Options/ LTIP Other
Salary Bonus Compensation Award(s) SARs Payouts Compensation
Name and Year ($) ($) ($) ($) (#) ($) ($)
Principal Position (b) (c) (d) (e) (f) (g) (h) (i)
- ------------------ ---- -------- ------ ------------ ---------- ---------- ------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Paul R. Arena 1999 $160,400 $ 0 $0 None N/A None None
Chairman, CEO & 1998 $110,000 $8,000 $0 None N/A None None
President(1) 1997 $ 97,200 $ 0 $0 None N/A None None
</TABLE>
6
<PAGE> 8
- --------
(1) Mr. Arena was appointed Vice Chairman in January 2000. Previously, Mr.
Arena served as Chairman, CEO and President from March 1997 until
January 2000. Mr. Arena resigned as Vice Chairman in March 2000.
STOCK OPTION GRANTS
The following table sets forth, for the executive officer named in the
Summary Compensation table above, information regarding the grant of stock
options during the year ended December 31, 1999.
OPTION GRANTS TABLE
(INDIVIDUAL GRANTS)
<TABLE>
<CAPTION>
% of Total Potential Realizable Value ($)
Options at Assumed Annual Rates of
Number of Granted to Stock Price Appreciation for
Shares Directors, Option Term
Underlying Officers, Exercise ------------------------------
Options Employees in Price Expiration
Name Granted (#)(1) Fiscal Year(2) ($/SH)(3) Date 5%(4) 10%(4)
---- -------------- -------------- --------- ---------- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Paul R. Arena 25,000 4% 4.75 7/30/09 $74,750 $189,250
Paul R. Arena 32,133 5% 3.75 12/28/04 $75,834 $192,155
</TABLE>
- ----------------
(1) The options are non-qualified stock options granted on July 30, 1999
and December 28, 1999 under the Company's 1997 Stock Option Plan that
become exercisable cumulatively as to 25%, 50%, 75% and 100% after the
first, second, third and fourth anniversaries, respectively, after the
date of grant.
(2) Based on options for a total of 633,333 shares granted to all
directors, officers and employees.
(3) The exercise price is equal to the fair market value on the date of
grant of the option.
(4) The 5% and 10% appreciation rates are set forth in the Securities and
Exchange Commission rules and no representation is made that the Common
Stock will appreciate at these assumed rates or at all.
7
<PAGE> 9
1999 AGGREGATED OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information concerning the value of
options exercised by the executive officer named in the Summary Compensation
table above during 1999 and the value at December 31, 1999 of unexercised
options held by such officer. The value of unexercised options reflects the
increase in market value of Common Stock from the date of grant through December
31, 1999, when the closing price of Common Stock was $4.125 per share.
<TABLE>
<CAPTION>
Number of Number of Securities Value of Unexercised In-
Shares Underlying Unexercised the-Money(2)
Acquired on Value Options at 12-31-99 Options at 12-31-99
Name Exercise Realized(1) Exercisable/Unexercisable Exercisable/Unexercisable
---- ----------- ----------- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Paul R. Arena None N/A 19,167/91,311 $46,063/$74,992
</TABLE>
- --------
(1) The "value realized" represents the difference between the exercise
price of the option shares and the market price of the option shares on
the date the options were exercised. The value realized was determined
without considering any taxes which may have been owed.
(2) "In-the-Money" options are options with an exercise price less than
$4.125 per share, the closing price of Common Stock at December 31,
1999.
DIRECTORS
Prior to January 2000, directors were not compensated for their
services as directors; however, they are reimbursed for all reasonable expenses
incurred in connection therewith.
In January 2000, in an effort to attract and retain experienced
executives to serve as outside directors for the Company, the Board adopted the
Outside Directors' Warrant Plan (the "Warrant Plan").
The purposes of the Warrant Plan are to attract and retain the best
available personnel for service as directors of the Company, to provide
additional incentive to the persons serving as directors of the Company, to
align director and stockholder long-term interests and to encourage continued
service on the Board. Warrants may be granted under the Warrant Plan only to
directors of the Company who are neither employees of the Company nor of any of
its affiliates. The aggregate number of shares of Common Stock authorized to be
issued pursuant to the Warrant Plan is 1,000,000, subject to adjustment in
certain instances. The Warrant Plan provides that each eligible non-employee
director elected to serve as a director of the Company on or after January
8
<PAGE> 10
1, 2000 may be granted, at the discretion of the Board, warrants to purchase no
more than 250,000 shares of Common Stock in the aggregate. The initial exercise
price of the warrants will be not less than the fair market value of the Common
Stock subject to the warrant on the date of grant.
In January 2000, four new outside directors of the Company, Ms. Newmark
and Messrs. Bobbitt, Heck and Wright, each received warrants entitling them to
purchase 150,000 shares of Common Stock on or prior to January 10, 2005 at an
exercise price of $3.75 per share. These warrants vest at a rate of 50,000
shares per year commencing on the date of grant. At the time these warrants were
granted, the fair market value of the Common Stock was $3.75 per share.
In January 2000, the Board also adopted the Directors' Warrant
Incentive Plan (the "Incentive Plan") pursuant to which the Board may grant to
each director on an annual basis warrants to purchase up to 50,000 shares of
Common Stock at an exercise price per share equal to no less than 110% of the
fair market value of the Common Stock at the date of grant. No warrants may be
granted under the Incentive Plan in a given year unless the Company's Common
Stock has appreciated by a compounded annual average rate of return in excess of
35% for the applicable measurement period determined under the Incentive Plan
preceding the year of grant. The aggregate number of shares of Common Stock
authorized to be issued pursuant to the Incentive Plan is 1,000,000 subject to
adjustment in certain instances. No warrants have been granted under the
Incentive Plan.
Warrants granted under the Warrant Plan and the Incentive Plan, once
vested, are exercisable in one or more installments and expire on the fifth
anniversary following the date of grant, provided that if the Director has not
attended at least 75% of the meetings of the Board for the year in which an
installment first becomes exercisable, then such installment may not be
exercised.
Notwithstanding the foregoing, the Warrant Plan and the Incentive Plan
provide that warrants awarded pursuant to these plans will become immediately
exercisable (i) if the Company is to be consolidated with or acquired by another
entity in a merger; (ii) upon the sale of substantially all of the Company's
assets or the sale of at least 90% of the outstanding Common Stock to a third
party; (iii) upon the merger or consolidation of the Company with or into any
other corporation or the merger or consolidation of any corporation with or into
the Company (in which consolidation or merger the stockholders of the Company
receive distributions of cash or securities as a result thereof); or (iv) upon
the liquidation or dissolution of the Company.
9
<PAGE> 11
KEY MAN INSURANCE
During January 1999, a 10 year level term life insurance policy was
issued by The Travelers Companies in the amount of $1,000,000 on the life of Mr.
Arena, who then served as the Company's Chief Executive Officer. The Company
discontinued all key man insurance policies in January 2000.
STOCK OPTION PLANS
In September 1997, the Company's stockholders approved the adoption of
the Company's 1997 Stock Option Plan (the "Plan"), which is administered by the
Company's Board of Directors, and authorized a total of 250,000 shares of Common
Stock for issuance thereunder. The purpose of the Plan is to enable the Company
to attract and retain competent personnel by offering them the opportunity to
acquire a proprietary interest in the Company. On November 30, 1999,
stockholders of the Company approved an increase in the number of shares of
Common Stock authorized for issuance under the Plan from 250,000 to 3,000,000
shares. Additionally, option grants for outside directors are covered by two
separate plans. The Board has also approved option grants for non-employee
advisors. As of December 31, 1999, options for a total of 962,669 shares of
Common Stock, exercisable at prices ranging from $.90 to $4.75 per share were
outstanding.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of March 31,
2000, concerning the beneficial ownership of the Company's Common Stock by (i)
each stockholder known by the Company to be the beneficial owner of more than 5%
of the outstanding shares of Common Stock; (ii) each of the directors of the
Company; (iii) each of the executive officers named in the Summary Compensation
table elsewhere herein; and (iv) all directors and executive officers of the
Company as a group:
10
<PAGE> 12
<TABLE>
<CAPTION>
Number of
Shares of Percent of Common Stock
Common Stock(1) Outstanding
--------------- -----------
<S> <C> <C>
Steven A. Odom + ++(2) ... 675,825 7.1%
Amy L. Newmark+(3) ....... 250,000 2.8
James M. Logsdon+ ++(4) .. 205,000 2.2
Joseph W. Wright, Jr.+(5) 158,414 1.8
Gary H. Heck+(6) ......... 75,000 *
Juliet M. Reising++ +(7) . 55,000 *
Max E. Bobbitt+(8) ....... 50,000 *
Paul R. Arena(9) ......... 286,690 3.2
All executive officers and
directors as a group
(16) persons(10) ....... 3,277,570 34.7
</TABLE>
- ----------------------------
* Less than 1.0%
+ Director
++ Executive Officer. See "Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section 16(a) of the Exchange Act."
(1) A person is deemed to be the beneficial owner of Common Stock that can
be acquired by such person within 60 days upon the exercise of options
and convertible securities. Each beneficial owner's percentage
ownership is determined by assuming that options and convertible
securities held by such person (but not those held by any other person)
and which are exercisable within 60 days have been exercised. Unless
otherwise noted, the Company believes that all persons named in the
table have sole voting and investment power with respect to all shares
of Common Stock beneficially owned by them.
(2) Includes options or warrants to acquire 635,825 shares exercisable
within 60 days of March 31, 2000.
(3) Includes options or warrants to acquire 150,000 shares exercisable
within 60 days of March 31, 2000.
(4) Includes options or warrants to acquire 202,500 shares exercisable
within 60 days of March 31, 2000.
(5) Includes options or warrants to acquire 50,000 shares exercisable
within 60 days of March 31, 2000.
(6) Includes options or warrants to acquire 62,500 shares exercisable
within 60 days of March 31, 2000.
(7) Includes options or warrants to acquire 27,500 shares exercisable
within 60 days of March 31, 2000.
(8) Includes options or warrants to acquire 50,000 shares exercisable
within 60 days of March 31, 2000.
(9) Includes options or warrants to acquire 32,500 shares exercisable
within 60 days of March 31, 2000.
(10) Includes options or warrants to acquire 1,400,865 shares exercisable
within 60 days of March 31, 2000.
11
<PAGE> 13
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On March 3, 1999, the Company issued a Promissory Note in the amount of
$100,000 to Dr. Audrey L. Braswell, who when served as a director of the
Company. The loan was ratified by the Board on March 26, 1999 and consisted of
an unsecured note with the principal balance and interest due on May 15, 1999 in
the amount of $106,000. The loan was repaid during the second quarter of the
year.
During the second quarter of 1999, each of the three holders of the
Company's 10% Convertible Promissory Notes exercised an option to convert a
portion of their notes into Common Stock at a conversion price of $2.10 per
share. On June 22, 1999, Dr. Audrey L. Braswell, one of the holders, who then
served as a director of the Company, converted $150,000 principal amount of his
note into Common Stock resulting in the issuance by the Company of 71,429 shares
and a reduction in the principal amount of his note from $300,000 to $150,000.
The effect of the three conversions was to reduce the principal amount of the
outstanding Series A Convertible Promissory Notes from $1,050,000 to $600,000.
On July 30, 1999, the Company acquired all the outstanding capital
stock of ESG for a total purchase price of $3,024,000 (inclusive of acquisition
costs), consisting of $550,000 in cash, a promissory note in the principal
amount of $250,000 which bears interest at 3% per annum and 383,333 shares of
Common Stock valued at $5.06 per share, with 191,666 of those shares being held
in escrow and scheduled to be distributed to the extent of 50% on July 30, 2000
and 50% on July 30, 2001. In the first quarter of 2000, this note was cancelled
and replaced by the issuance of 50,000 shares of Common Stock at $5.00 per
share and 50,000 warrants with an exercise price of $10. Ronald Roswell, Jr.
was the President, founder and a principal stockholder of ESG. Mr. Roswell
now serves as Vice President - Business Development of the Company and
served as a director of the Company from July 1999 to January 2000.
On July 30, 1999, the Company acquired all the outstanding capital
stock of Reddy Group, Inc. and Cereus Bandwidth. The total purchase price was
$3,965,000 (inclusive of acquisition costs), consisting of $1,000,000 in cash
and the issuance of 333,333 shares of Common Stock valued at $5.06 per share,
with such shares held in escrow and scheduled to be distributed to the extent of
50% on July 30, 2000 and 50% on July 30, 2001. K. Pramod Reddy was the
President, founder and a principal stockholder of Cereus Bandwidth. He now
serves as the Chief Technology Officer and Vice President of the Company and
served as a director of the Company from July 1999 to January 2000.
On November 15, 1999, the Company acquired all the outstanding capital
stock of CSS.
12
<PAGE> 14
The purchase price of $5,134,000 (inclusive of acquisition costs, net of notes
receivable issued to the selling shareholders) was comprised of (i) $400,000 in
cash; (ii) 983,333 shares of common stock of the Company, including 150,000
shares held in escrow, valued at $4.50 per share; and (iii) promissory notes in
the amount of $1,325,000 bearing interest at 8% per annum, $1,149,000 of which
are due in six months and $176,000 of which are due in four months. In the first
quarter of 2000, $300,000 of the promissory notes were converted into 60,000
shares of Common Stock at $5.00 per share and warrants to acquire 60,000 shares
of Common Stock at an exercise price of $10.00 per share. Michael Griffith,
William Boynes, Jr. and L. Joseph Artime were the President, Chief Operating
Officer and Vice President, respectively, of CSS and were the principal
shareholders of CSS. Messrs. Griffith, Boynes and Artime are now the Vice
President - Sales, Vice President Consulting Services and Vice President -
Business Alliances, respectively, of the Company.
During January 2000, the Company issued 15% Convertible Subordinated
Notes to Steven A. Odom, Chairman and CEO of the Company, and Timothy J. Amidon,
an officer of the Company, in the amounts of $150,000 and $200,000,
respectively. In February 2000, Mr. Odom's debt was converted into 40,000 shares
of Common Stock, and in January 2000, Mr. Amidon's debt was converted into
53,333 shares of Common Stock in accordance with the terms of the notes.
In February 2000, the Company consummated the private placement of 4
million shares of Common Stock for a purchase price of $5.00 per share, which
shares were sold together with warrants to purchase 4 million shares of Common
Stock with an exercise price of $10 per share. Certain of the Company's
directors and executive officers purchased shares of Common Stock and warrants
in the private placement.
In March 2000, the $600,000 convertible notes still outstanding at
December 31,1999 were converted to common stock pursuant to their original
terms. Paul R. Arena, the Company's former Vice Chairman, held $150,000 of these
notes.
The Company entered into a Stock Purchase Agreement with Arena
Acquisition Corp. ("AAC") dated as of March 31, 2000. AAC is a recently formed
Delaware corporation owned by Paul R. Arena, who served as the Company's
Chairman, President and Chief Executive Officer from March 1997 until January
2000. In connection with the execution of the Stock Purchase Agreement, Mr.
Arena resigned from the Company's Board of Directors effective as of March 31,
2000, and the Company and Mr. Arena agreed to indemnify each other for certain
matters. Pursuant to the Stock Purchase Agreement, the Company will sell to AAC
all of the stock of the subsidiaries comprising the Company's mineral operations
for approximately $1.0 million payable by means of a 180 day promissory note
(the "Note"). The Note is secured by shares of the subsidiaries to be sold to
AAC pursuant to the Stock Purchase Agreement and 84,762 shares of Common Stock
held by Mr. Arena. At the closing of transaction, the
13
<PAGE> 15
Company and Mr. Arena will also enter into a Consulting Agreement pursuant to
which Mr. Arena will provide certain consulting services to the Company up to
eight (8) hours per calendar month at times reasonably requested by the Company
and the Company will grant to Mr. Arena a warrant to purchase an aggregate of
50,000 shares of Common Stock having an exercise price per share equal to the
fair market value of the Common Stock on the day immediately preceding the
execution of the Consulting Agreement and becoming exercisable at the rate of
25% upon each three month anniversary of the closing. The Company expects to
close the transaction in the second quarter of 2000.
14
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Atlanta, State of Georgia, on the 27th day of April, 2000.
CEREUS TECHNOLOGY PARTNERS, INC.
By: /s/ Steven A. Odom
---------------------------------
Steven A. Odom,
Chief Executive Officer, Chairman
and Director (Principal Executive Officer)
