As filed with the Securities and Exchange Commission on July 31, 2002
Registration No. 333-91240
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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STONEPATH GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 4731 65-0867684
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(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
Two Penn Center Plaza, Suite 605
Philadelphia, Pennsylvania 19102
(215) 564-9193
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
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Stephen M. Cohen, Esquire
Senior Vice President and General Counsel
Stonepath Group, Inc.
Two Penn Center Plaza, Suite 605
Philadelphia, Pennsylvania 19102
(215) 564-9193
Fax (215) 564-3133
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Please Address a Copy of All Communications to:
Brian S. North, Esquire
Buchanan Ingersoll Professional Corporation
11 Penn Center, 14th Floor
1835 Market Street
Philadelphia, Pennsylvania 19103
(412) 665-8700
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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 being 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. [ ]
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 delivery of the preliminary prospectus is expected to be made pursuant
to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
==============================================================================================================================
Proposed Proposed
Amount maximum maximum Amount
Title of each class of to be offering price aggregate of
Securities to be registered registered (1) per share (2) offering price (2) Registration fee
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Common Stock, $.001 par value per share 4,992,513(3) $1.06 $5,292,064 $487(4)
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(1) Represents shares of common stock which may be sold by certain selling
security holders.
(2) Estimated solely for the purpose of determining the registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended.
The price per share information is based upon the average of the high and
low sale prices of Stonepath Group, Inc. Common Stock, $.001 par value per
share, as reported on the American Stock Exchange on July 30, 2002.
(3) Pursuant to Rule 416 of the Securities Act of 1933, as amended, this
registration statement also includes additional shares of common stock
issuable upon stock splits, stock dividends or similar transactions.
(4) $332 of this amount was paid upon the initial filing of this registration
statement on June 26, 2002. The balance of this amount, $155, is paid
herewith.
Pursuant to Rule 429 under the Securities Act, the prospectus filed as part of
this registration statement also relates to the following registration
statements we previously filed with the Securities and Exchange Commission:
Registration No. 333-38716 and Registration No. 333-64452. The registration fee
applicable to Registration No. 333-38716 was paid on June 6, 2000. The
registration fee applicable to Registration No. 333-64452 was paid on July 2,
2001 and August 9, 2001. Accordingly, the registration fee calculated above does
not include the amount payable in connection with Registration No. 333-38716 or
Registration No. 333-64452.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information in this preliminary prospectus is not complete and may be
changed. The selling shareholders may not sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This preliminary 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 July 31, 2002
Preliminary Prospectus
STONEPATH GROUP, INC.
7,061,932 shares of common stock
The selling shareholders identified in this preliminary prospectus may
offer and sell up to 7,061,932 shares of our common stock. These shares include
1,911,071 shares of common stock issuable upon the conversion of our series C
preferred stock, 1,543,413 shares of common stock issuable upon exercise of
common stock purchase warrants which were issued in conjunction with the
conversion of our series C preferred stock and 3,607,448 shares of common stock
issuable upon the conversion of our series D preferred stock. The selling
shareholders may sell all or a portion of their 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
by the selling shareholders, although we may receive the exercise price of the
warrants.
Our common stock is listed on the American Stock Exchange under the
symbol "STG." On July 30, 2002, the last sale price of our common stock reported
on the American Stock Exchange was $1.06.
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INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 2 OF THIS PRELIMINARY PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PRELIMINARY PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
------------------
The date of this preliminary prospectus is July 31, 2002.
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS................................................. 1
STONEPATH GROUP, INC.................................................. 1
RISK FACTORS.......................................................... 2
FORWARD-LOOKING STATEMENTS............................................ 8
USE OF PROCEEDS....................................................... 8
THE OFFERING.......................................................... 9
SELLING SHAREHOLDERS.................................................. 10
PLAN OF DISTRIBUTION.................................................. 12
WHERE YOU CAN FIND MORE INFORMATION................................... 15
LEGAL MATTERS......................................................... 16
EXPERTS............................................................... 16
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information
provided in this prospectus or incorporated by reference into this prospectus.
We have not authorized anyone to provide you with information different from
that contained or incorporated by reference into this prospectus. The selling
shareholders are offering to sell, and seeking offers to buy, shares of common
stock only in jurisdictions where offers and sales are permitted. The
information in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or of any sale
of common stock. The rules of the Securities and Exchange Commission may require
us to update this prospectus in the future.
STONEPATH GROUP, INC.
We are a non-asset based provider of third-party logistics services,
offering a full range of time-definite transportation and distribution
solutions. We manage and arrange the domestic and international movement of raw
materials, supplies, components and finished goods for our customers as their
outsourced logistics solution. These services are offered through our domestic
and international air, ocean and ground freight forwarding business.
In addition to our time-definite transportation services, we also
provide a broad range of value added supply chain management services including:
o customs brokerage and documentation services
o order fulfillment
o warehousing
o inventory management
Through our subsidiaries, Air Plus Limited and United American Freight
Services, Inc., we serve a customer base of manufacturers, distributors and
national retail chains through a network of logistics centers in 18 major
metropolitan areas in North America and Puerto Rico and an extensive network of
over 200 independent carriers. Through our subsidiary, Global Transportation
Services, Inc., we manage our customers' international supply chains. Global
serves customers through its headquarters in Seattle, logistics centers in New
York, Los Angeles, Miami, Chicago, St. Louis and Minneapolis, and an array of
international agent partners.
Our strategic objective is to build a leading global logistics services
organization that integrates established operating businesses and innovative
technologies. We plan to achieve this objective by broadening our platform of
service offerings through a combination of synergistic acquisitions and the
organic expansion of our existing base of operations.
Our executive offices are located at Two Penn Center Plaza, Suite 605,
Philadelphia, Pennsylvania 19102 and our telephone number is (215) 564-9193. Our
Internet address is www.stonepath.com. Information contained on our website
should not be considered part of this prospectus.
1
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK,
INCLUDING THE RISKS DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK
FACTORS AND THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE MAKING AN INVESTMENT
DECISION. THE RISKS DESCRIBED BELOW ARE NOT THE ONLY ONES THAT MAY EXIST. IF ANY
OF THE FOLLOWING EVENTS DO OCCUR, OUR BUSINESS, OPERATING RESULTS AND FINANCIAL
CONDITION COULD BE ADVERSELY AFFECTED. THIS PROSPECTUS ALSO CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING
STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, INCLUDING THE RISKS DESCRIBED
BELOW AND ELSEWHERE IN THIS PROSPECTUS. YOU SHOULD READ THE SECTION ENTITLED
'FORWARD-LOOKING STATEMENTS" FOR A FURTHER DISCUSSION OF THESE FACTORS.
We have a very limited operating history upon which you can evaluate
our prospects.
During 2001 we discontinued our former business model of developing
early-stage technology businesses, and adopted a new model of delivering
non-asset based third-party logistics services. The first acquisition under our
new business model occurred on October 5, 2001. Subsequent acquisitions were
completed on April 4, 2002 and May 30, 2002. As a result, we have a very limited
operating history under our current business model. Even though we are managed
by senior executives with significant experience in the industry, our limited
operating history makes it difficult to predict the longer-term success of our
business model.
If we are unable to profitably manage and integrate the companies we
acquire or are unable to acquire additional companies, we will not achieve our
growth and profit objectives.
We intend to grow primarily through the acquisition of additional
logistics businesses. Increased competition for acquisition candidates may
develop in which event there may be fewer acquisition opportunities available to
us as well as higher acquisition prices. There can be no assurance that we will
be able to identify, acquire or profitably manage additional businesses or
successfully integrate acquired businesses into the Company without substantial
costs, delays or other operational or financial problems. Further, acquisitions
involve a number of risks, including possible adverse effects on our operating
results, diversion of management resources, failure to retain key personnel, and
risks associated with unanticipated liabilities, some or all of which could have
a material adverse effect on our business, financial condition and results of
operations.
2
We may not have enough capital to implement our business strategy which
will have an adverse effect on our growth and ability to generate profits.
The objective of our business strategy is to build a global logistics
services organization. Critical to this strategy is an aggressive acquisition
program which will require the acquisition of a number of diverse companies in
the logistics industry covering a variety of geographic regions and specialized
service offerings. We have acquired three operating companies for upfront cash
payments plus earn-out arrangements. As a result, we have a limited amount of
cash and our ability to make additional cash acquisitions without securing
additional financing from outside sources will be limited. This may limit or
slow our ability to achieve the critical mass we may need to achieve our
strategic objectives.
Our credit facility places certain limits on the type and number of
acquisitions we may make.
We have obtained a $15 million credit facility from LaSalle Business
Credit, Inc. to provide additional funding for acquisitions and for our on-going
working capital requirements. Under the terms of the credit facility, we are
permitted to make additional acquisitions without the lender's consent only if
certain conditions are satisfied. The credit facility also limits the number of
those acquisitions to four per year after the date of the facility (excluding
any acquisitions made only with our stock). In the event that we were not able
to satisfy the conditions of the credit facility in connection with a proposed
acquisition, we would have to forego the acquisition unless we either obtained
the lender's consent or retired the credit facility. This may limit or slow our
ability to achieve the critical mass we may need to achieve our strategic
objectives.
Additional financing may not be available to pursue our acquisition
strategy.
We believe we have sufficient capital to implement our acquisition
strategy in the short term. However, we will need additional financing to pursue
our acquisition strategy in the longer term. We intend to obtain the additional
financing through a combination of additional commercial debt financing or the
placement of debt and equity securities. We may finance some portion of our
future acquisitions by using shares of our common stock for all or a substantial
portion of the purchase price. In the event that our common stock does not
attain or maintain a sufficient market value, or potential acquisition
candidates are otherwise unwilling to accept common stock as part of the
consideration for the sale of their businesses, we may be required to use more
cash to maintain our acquisition program. If we do not have sufficient cash
resources, our growth could be limited unless we are able to obtain additional
capital through debt or equity financings.
Since we are not obligated to follow any particular criteria or
standards for acquisition candidates, shareholders must rely solely on our
ability to identify, evaluate and complete acquisitions.
3
Even though we have developed general acquisition guidelines, we are
not obligated to follow any particular operating, financial, geographic or other
criteria in evaluating candidates for potential acquisitions or business
combinations. We will target companies which we believe will provide the best
potential long-term financial return for our shareholders and we will determine
the purchase price and other terms and conditions of acquisitions. Our
shareholders will not have the opportunity to evaluate the relevant economic,
financial and other information that we will use and consider in deciding
whether or not to enter into a particular transaction.
The scarcity of and competition for acquisition opportunities makes it
more difficult to complete acquisitions.
There are a limited number of operating companies available for
acquisition which we consider desirable. In addition, there is a high level of
competition among companies seeking to acquire these operating companies. A
large number of established and well-financed entities are active in acquiring
the type of companies we believe are desirable. Many of these entities have
significantly greater financial resources than we have. Consequently, we will be
at a competitive disadvantage in negotiating and executing possible acquisitions
of these businesses. Even if we are able to successfully compete with these
entities, this competition may affect the terms of completed transactions and,
as a result, we may pay more than we expected for potential acquisitions. We may
not be able to identify operating companies that complement our strategy, and
even if we identify a company that complements our strategy, we may be unable to
complete an acquisition of such a company for many reasons, including:
o a failure to agree on the terms necessary for a transaction, such as
purchase price;
o incompatibility of operating strategies and management philosophies;
o competition from other acquirers of operating companies;
o insufficient capital to acquire a profitable logistics company; and
o the unwillingness of a potential acquiree to work with our
management or our affiliated companies.
If we are unable to successfully compete with other entities in
acquiring the companies we target, we will not be able to successfully implement
our business plan.
We may incur a significant amount of indebtedness to implement our
acquisition strategy which may negatively impact our cash flow and ability to
make additional acquisitions.
We may be required to incur a significant amount of indebtedness in
order to complete one or more acquisitions necessary for us to implement our
business strategy. If we are not able to generate sufficient cash flow from the
operations of acquired companies to make scheduled payments of principal and
interest on any indebtedness, then we will be required to use our capital for
such payments. This will restrict our ability to make additional acquisitions.
We may also be forced to sell an acquired company in order to satisfy
indebtedness. We cannot be certain that we will be able to operate profitably
once we incur this indebtedness or that we will be able to generate a sufficient
amount of proceeds from the ultimate disposition of such acquired companies to
repay the indebtedness incurred to make these acquisitions.
4
Our acquisition strategy may cause additional dilution to the interests
of our existing shareholders.
The additional financing required to fund our acquisition strategy may
require us to issue additional shares of common stock or common stock
equivalents to generate the required financing. Any such issuances would further
increase the number of shares outstanding and further dilute the interests of
our existing shareholders. We may issue more shares of common stock for this
purpose without notice to our then existing shareholders.
Earn-out payments due in connection with our acquisitions could require
us to incur additional indebtedness or issue additional equity securities.
We are required to make significant cash payments in the future if the
earn-out installments for our acquisitions become due. While we believe that a
significant portion of the required cash will be generated by the acquired
subsidiaries, we may have to secure additional sources of capital to fund some
portion of the earn-out payments as they become due. This may require us to
incur additional indebtedness or issue additional equity securities. We cannot
be certain that we will be able to borrow any funds for this purpose on terms
acceptable to us, if at all, or that once we incur such indebtedness, that we
will be able to operate profitably. Issuing additional shares of common stock or
common stock equivalents to generate the required financing would increase the
number of shares outstanding and further dilute the interests of our existing
shareholders.
The exercise or conversion of our outstanding options, warrants or
other convertible securities or any derivative securities we issue in the future
will result in the dilution of the ownership interests of our existing
shareholders and may create downward pressure on the trading price of our common
stock.
We are currently authorized to issue 100,000,000 shares of common
stock. As of the date of this prospectus, we expect to have 23,380,289
outstanding shares. An additional 1,543,413 shares of our common stock may also
be issued upon the exercise of warrants issued to the former holders of our
series C preferred stock and 3,607,448 shares of our common stock may also be
issued upon conversion of our series D preferred stock. This will result in the
dilution of the ownership interests of our existing common shareholders. The
ability of the selling shareholders to resell these shares of common stock
pursuant to this prospectus could adversely affect the market price of our
common stock.
In addition, we may be required to issue 2,252,947 additional shares of
common stock upon the exercise of outstanding warrants and 8,800,550 shares of
common stock upon the exercise of options granted to employees, consultants and
advisors. If these warrants and options are exercised, the ownership interests
of our existing common shareholders would be further diluted and the market
price of our common stock could be adversely affected.
In the future we may issue additional securities. We may do this to,
among other things, facilitate a business combination, acquire assets or stock
of another business, compensate employees or consultants or for other valid
business reasons in the discretion of our Board of Directors, which could
further dilute the interests of our existing shareholders.
5
We substantially rely on a small number of key customers, the loss of
any of which would have a negative effect on our results of operations.
Even though our customer base will likely diversify as we grow through
acquisitions, our customer base has been highly concentrated. For the full
fiscal year ended December 31, 2001 (computed on a pro forma basis as if the
acquisitions of our operating companies occurred on January 1, 2001), our
largest customer, a national retail chain, accounted for 25% of our net sales.
Our second largest customer, an automobile manufacturer, accounted for 9% of our
net sales, and our third largest customer, a national retail chain, accounted
for 6% of our net sales. We believe the risk posed by this concentration is
mitigated by our long standing and continuing relationships with these customers
and we are confident that these relationships will remain ongoing for the
foreseeable future. However, a significant reduction in orders from these or any
of our other large customers could have a material adverse effect on our future
results of operations. We intend to continue to provide superior service to all
of our customers and have no expectation that sales to these customers will be
reduced as a result of any factors within our control. Our immediate plans,
however, are to reduce our dependence on any particular customer or customers by
increasing our sales and customer base by, among other things, diversifying our
service offerings and continuing with our growth strategy.
We depend on the continued service of certain executive officers. We
can not assure you that we will be able to retain these persons.
For the foreseeable future, our success will depend largely on the
continued services of our Chief Executive Officer, Dennis L. Pelino, as well as
certain of the other key executives of our operating companies, because of their
collective industry knowledge, marketing skills and relationships with major
vendors and customers. We have employment agreements with each of these
individuals which contain a non-competition covenant which survives their actual
term of employment. Nevertheless, should any of these individuals leave the
Company, it could have a material adverse effect on our future results of
operations.
We face intense competition in our industry.
The freight forwarding, logistics and supply chain management industry
is intensely competitive and is expected to remain so for the foreseeable
future. We face competition from a number of companies, including many that have
significantly greater financial, technical and marketing resources. There are a
large number of companies competing in one or more segments of the industry,
although the number of firms with a global network that offer a full complement
of freight forwarding and supply chain management services is more limited.
Depending on the location of the customer and the scope of services requested,
we must compete against both the niche players and larger entities. In addition,
customers increasingly are turning to competitive bidding situations involving
bids from a number of competitors, including competitors that are larger than we
are.
6
Our cash flow may be adversely affected in the future once we consume
our consolidated net operating loss carryforward.
Due to losses we incurred in our former business model, we have
accumulated a net operating loss carryforward for federal tax purposes of
approximately $43.2 million as of December 31, 2001. We expect that
approximately $26.0 million of these losses will be available to offset our
taxable income until the losses are consumed. Once these losses have been
consumed, our cash flows will be affected accordingly.
If we fail to improve our management information and financial
reporting systems, we may experience an adverse effect on our operations and
financial condition.
We recognize the need to improve our management information and
financial reporting systems at the consolidated level. We may experience delays,
disruptions and unanticipated expenses in implementing, integrating and
operating our consolidated management information and financial reporting
systems. Failure to enhance these systems could delay our receipt of management
and financial information at the consolidated level which could disrupt our
operations or impair our ability to monitor our operations and have a negative
effect on our financial condition.
Because we are a holding company, we depend on receiving distributions
from our subsidiaries and we could be harmed if such distributions could not be
made in the future.
We are a holding company and all of our operations are conducted
through subsidiaries. Consequently, we rely on dividends or advances from our
subsidiaries. The ability of such subsidiaries to pay dividends and our ability
to receive distributions on our investments in other entities is subject to
applicable local law and other restrictions including, but not limited to,
applicable tax laws. Such laws and restrictions could limit the payment of
dividends and distributions to us which would restrict our ability to continue
operations.
Our industry is consolidating and if we cannot gain sufficient market
presence in our industry, we may not be able to compete successfully against
larger global companies in our industry.
The marked trend within our industry is towards consolidation of the
niche players into larger companies which are attempting to increase global
operations through the acquisition of regional and local freight forwarders. If
we cannot gain sufficient market presence or otherwise establish a successful
strategy in our industry, we may not be able to compete successfully against
larger companies in our industry with global operations.
We may be required to incur material expenses in defending or resolving
outstanding lawsuits which would adversely affect our results of operations.
We are a defendant in a number of legal proceedings. Although we
believe that the claims asserted in these proceedings are without merit, and we
intend to vigorously defend these matters, we could incur material expenses in
the defense and resolution of these matters. Since we have not established any
reserves in connection with these claims, any such liability would be recorded
as an expense in the period incurred or estimated. This amount, even if not
material to our overall financial condition, could adversely affect our results
of operations in the period recorded.
7
Provisions of our charter and applicable Delaware law may make it more
difficult to complete a contested takeover of our Company.
Certain provisions of our certificate of incorporation and the General
Corporation Law of the State of Delaware (the "GCL") could deter a change in our
management or render more difficult an attempt to obtain control of us, even if
such a proposal is favored by a majority of our shareholders. For example, we
are subject to the provisions of the GCL that prohibit a public Delaware
corporation from engaging in a broad range of business combinations with a
person who, together with affiliates and associates, owns 15% or more of the
corporation's outstanding voting shares (an "interested shareholder") for three
years after the person became an interested shareholder, unless the business
combination is approved in a prescribed manner. Finally, our certificate of
incorporation includes undesignated preferred stock, which may enable our Board
of Directors to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. We have based these forward-looking statements on our
current expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us and our subsidiaries that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "could," "would,"
"expect," "plan," "anticipate," "believe," "continue," "estimate," "project,"
"intend," or the negative of such terms or other similar expressions. You should
not place undue reliance on these forward-looking statements, which speak only
as of the date made. We undertake no obligation to publicly release the result
of any revision of these forward-looking statements to reflect events or
circumstances after the date they are made or to reflect the occurrence of
unanticipated events. You should also know that such statements are not
guarantees of future performance and are subject to risks, uncertainties and
assumptions. Many of these risks and uncertainties are set forth in the "Risk
Factors" section of this prospectus and in our other filings with the Securities
and Exchange Commission. Should any of these risks or uncertainties materialize,
or should any of our assumptions prove incorrect, actual results may differ
materially from those included within the forward-looking statements.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling shareholders. We may receive the exercise price of certain warrants held
by the selling shareholders. We expect to use the proceeds of any such sales for
general working capital purposes.
8
THE OFFERING
On or about March 3, 2000, we completed a private placement transaction
in which we issued 4,166,667 shares of our series C preferred stock and warrants
to purchase 416,667 additional shares of common stock for aggregate gross
proceeds of $50,000,000.
The terms of our series C preferred stock initially required us to use
the proceeds from this offering solely for investments in early stage Internet
companies. In February 2001, we received consents from the holders of more than
two-thirds of our issued and outstanding shares of series C preferred stock to
modify this restriction to permit us to use the proceeds to make any investments
in the ordinary course of our business, as from time-to-time determined by our
Board of Directors, or for any other business purpose approved by our Board of
Directors.
In exchange for these consents, we agreed to a private exchange
transaction in which we would issue to the holders of our series C preferred
stock as of July 18, 2002, additional warrants to purchase up to a maximum of
2,692,194 shares of our common stock at an exercise price of $1.00 per share,
and reduce from $26.58 to $1.00, the per share exercise price of 307,806
existing warrants owned by the holders of our Series C Preferred Stock. As a
condition to receiving the additional warrants and having their existing
warrants re-priced, the holders of the series C preferred stock agreed to
convert their shares of preferred stock into shares of our common stock.
At the request of the largest holder of series C preferred stock
(because of legal limitations in its governing instruments which prevent it from
holding our common stock), we expanded the exchange transaction to include an
additional alternative. We provided holders of our series C preferred stock as
of July 18, 2002 with the alternative of exchanging the common stock issuable
upon conversion of the series C preferred stock, the additional warrants and
re-priced warrants for shares of a newly designated series D convertible
preferred stock.
Based upon notices of conversion received from the holders of our
series C preferred stock, on or about the date of this prospectus, we expect to
issue the following securities:
o 1,911,071 shares of our common stock upon conversion of our series C
preferred stock
o warrants to purchase 1,385,065 shares of our common stock at an
exercise price of $1.00 per share
o 360,745 shares of series D preferred stock which are convertible
into 3,607,448 shares of our common stock
We also expect to reduce the exercise price to $1.00 per share on
158,348 warrants held by the holders of our series C preferred stock as of
July 18, 2002. All warrants are immediately exercisable for a term of three (3)
years.
This prospectus covers the public resale of the shares of our common
stock issued upon conversion of our series C preferred stock, issuable upon
exercise of the additional and re-priced warrants we issued to the holders of
our series C preferred stock, and issuable upon conversion of our series D
preferred stock.
9
SELLING SHAREHOLDERS
The following table sets forth the name of the selling shareholders,
the number of shares of common stock which we expect to be beneficially owned by
them as of the date of this prospectus and the number of shares of our common
stock which may be offered for sale pursuant to this prospectus by the selling
shareholders. The table also sets forth any material relationship between the
Company and each selling shareholder based upon information currently available
to the Company and the number of shares beneficially owned and the percentage
ownership of each selling shareholder after the offering.
The number of shares set forth in this table represents an estimate of
the number of shares of common stock to be offered for resale by the selling
shareholders. We expect the selling shareholders to own:
o 1,911,071 shares of common stock upon conversion of our series C
preferred stock
o 3,607,448 shares of common stock upon conversion of our series D
preferred stock
o 1,543,413 shares of common stock upon exercise of the warrants
issued in connection with the conversion of our series C preferred
stock.
We agreed to register the shares of common stock being offered for sale under
this prospectus.
The information in this table assumes that all of the shares held by
each selling shareholder and being offered under this prospectus are sold to
persons who are not affiliates of such selling shareholder, and that each
selling shareholder acquires no additional shares of common stock before the
completion of this offering.
Beneficial Ownership of Beneficial Ownership of
Selling Shareholder Prior to Selling Shareholder After
Offering(1) Offering(1)
Number of Shares of Number of Number of Shares Percentage
Common Stock Before Percentage Shares of Common Stock After
Name Offering Before Offering Offered Hereby After Offering Offering
---- -------- --------------- -------------- -------------- --------
The Altar Rock Fund, L.P.
40 Rowes Wharf, 2nd Fl.
Boston, MA 02110 4,002 * 4,002 0 0
BNY Capital Markets, Inc.
445 Park Avenue
New York, NY 10022 84,424 * 84,424 0 0
Bridgewater Partners, L.P.
880 Third Avenue
New York, NY 10022 243,563 1.0% 201,190 42,373 0
10
Beneficial Ownership of Beneficial Ownership of
Selling Shareholder Prior to Selling Shareholder After
Offering(1) Offering(1)
Number of Shares of Number of Number of Shares Percentage
Common Stock Before Percentage Shares of Common Stock After
Name Offering Before Offering Offered Hereby After Offering Offering
---- -------- --------------- -------------- -------------- --------
Brown Simpson Partners I, Ltd.
Carnegie Hall Tower
152 West 57th Street, 21st Fl. 2,011,844 7.9% 2,011,844 0 0
New York, NY 10019
CSL Associates
880 Third Avenue
New York, NY 10022 243,563 1.0% 201,190 42,373 *
Fisher Partners
Fondkommission, AB
Kundggaten 37 165,839 * 165,839 0 0
11156 Stockholm, SWEDEN
Martin H. Garvey
72 Wootton Road
Essex Fells, NJ 07042 27,143 * 19,643 7,500 *
Gavleborgs Lansforsakingar
Box 206, 80101 Gavle
SWEDEN 181,711 * 181,711 0 0
Gladstone Equity Funds, Inc.
880 Third Avenue
New York, NY 10022 71,463 * 50,290 21,173 *
Halifax Fund, L.P.
195 Maplewood Avenue
Maplewood, NJ 07040 401,976 1.7% 401,976 0 0
Eric Hauser
425 East 58th Street, Apt. 7A
New York, NY 10022 27,143 * 19,643 7,500 *
N. Herrick Irrevocable
Securities Trust, Howard
Herrick, Trustee
20 Community Place, 2nd Fl. 402,018 1.7% 402,018 0 0
Morristown, NJ 07960
Lancer Partners, L.P. (2)
475 Steamboat Road
Greenwich, CT 06830 272,734 1.2% 272,734 0 0
Lancer Offshore, Inc. (2)
Kaya Flamboyan 9, Curacao
Netherland Antilles 440,742 1.9% 440,742 0 0
Michael Lauer
Seven Dwight Lane
Greenwich, CT 06831 218,198 * 157,098 61,100 *
Montrose Investments, Ltd.
300 Crescent Ct., Suite 700
Dallas, TX 75201 1,272,761 5.3% 1,272,761 0 0
The Raptor Global Portfolio,
Ltd.
40 Rowes Wharf, 2nd Fl. 905,119 3.8% 905,119 0 0
Boston, MA 02110
Schottenfeld Associates, L.P.
880 Third Avenue, 16th Floor
New York, NY 10022 254,777 1.1% 254,516 261 *
TGT Capital Partners, LP
375 Park Avenue, Suite 1404
New York, NY 10152 15,919 * 15,192 727 *
------
7,061,932
TOTAL
11
* Less than one percent.
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission under the Securities
Exchange Act of 1934. They may include securities owned by or for, among others,
the spouse and/or minor children of an individual and any other relative who has
the same home as such individual, as well as, other securities as to which the
individual has or shares voting or investment power or which each person has the
right to acquire within 60 days through the exercise of options or otherwise.
Beneficial ownership may be disclaimed as to certain of the securities. This
table has been prepared based on the assumption that 23,380,289 shares of common
stock will be outstanding as of the date of this prospectus.
(2) These shares may be deemed to be beneficially owned by Michael Lauer by
virtue of Mr. Lauer's direct and/or indirect control over these shareholders.
PLAN OF DISTRIBUTION
The selling shareholders, or their respective pledgees, donees,
transferees, or any of their successors in interest selling shares received from
a named selling shareholder as a gift, partnership distribution or other
non-sale related transfer after the date of this prospectus (all of whom may be
selling shareholders), may sell the securities from time to time on any stock
exchange or automated interdealer quotation system on which the securities are
listed or quoted, in the over-the-counter market, in privately negotiated
transactions or otherwise, at fixed prices that may be changed, at market prices
prevailing at the time of sale, at prices related to prevailing market prices or
at prices otherwise negotiated.
The selling shareholders may sell the securities by one or more of the
following methods, without limitation:
o block trades in which the broker or dealer so engaged will attempt
to sell the securities 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 as principal and resale by the
broker or dealer for its own account pursuant to this prospectus,
including resale to another broker or dealer;
o an exchange distribution in accordance with the rules of any stock
exchange on which the securities are listed;
o ordinary brokerage transactions and transactions in which the broker
solicits purchases;
o privately negotiated transactions;
12
o short sales;
o through the writing of options on the securities, whether or not the
options are listed on an options exchange;
o through the distribution of the securities by any selling
shareholders to its partners, members or stockholders;
o one or more underwritten offerings on a firm commitment or best
efforts basis; and
o any combination of any of these methods of sale.
The distribution of the shares may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. We do not know of any arrangements by the
selling shareholders for the sale of any of the securities.
The selling shareholders may engage brokers and dealers, and any
brokers or dealers may arrange for other brokers or dealers to participate in
effecting sales of the securities. These brokers, dealers or underwriters may
act as principals, or as an agent of a selling shareholder. Broker-dealers may
agree with a selling shareholder to sell a specified number of the securities at
a stipulated price per security. If the broker-dealer is unable to sell
securities acting as agent for a selling shareholder, it may purchase as
principal any unsold securities at the stipulated price. Broker-dealers who
acquire securities as principals may thereafter resell the securities from time
to time in transactions in any stock exchange or automated interdealer quotation
system on which the securities are then listed or quoted, at prices and on terms
then prevailing at the time of sale, at prices related to the then-current
market price or in negotiated transactions. Broker-dealers may use block
transactions and sales to and through broker-dealers, including transactions of
the nature described above. Assuming that required holding periods and other
criteria are satisfied, the selling shareholders may also sell the securities in
accordance with Rule 144 under the Securities Act of 1933 rather than pursuant
to this prospectus, regardless of whether the securities are covered by this
prospectus.
To the extent required under the Securities Act of 1933, the aggregate
amount of any selling shareholder securities being offered and the terms of the
offering, the names of any agents, brokers, dealers or underwriters and any
applicable commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a
selling shareholder and/or purchasers of selling shareholders' securities, for
whom they may act (which compensation as to a particular broker-dealer might be
in excess of customary commissions).
The selling shareholders and any underwriters, brokers, dealers or
agents that participate in the distribution of the securities may be deemed to
be "underwriters" within the meaning of the Securities Act of 1933, and any
discounts, concessions, commissions or fees received by them and any profit on
the resale of the securities sold by them may be deemed to be underwriting
discounts and commissions.
13
The selling shareholders may enter into hedging transactions with third
parties, which may in turn engage in short sales of the securities in the course
of hedging the position they assume. The selling shareholders may also enter
into short positions or other derivative transactions relating to the
securities, or interests in the securities, and deliver the securities, or
interests in the securities, to close out their short or other positions or
otherwise settle short sales or other transactions, or loan or pledge the
securities, or interests in the securities, to third parties that in turn may
dispose of these securities.
Shares may also be offered and sold, if so indicated in the related
prospectus supplement, in connection with a remarketing upon their purchase, in
accordance with a redemption or repayment in connection with their terms, or
otherwise, by one or more remarketing firms, acting as principals for their own
accounts or as agents for the Company or the selling shareholders. Any
remarketing firm will be identified and the terms of its agreement, if any, with
the Company or the selling shareholders and its compensation will be described
in a related prospectus supplement. Remarketing firms may be deemed to be
underwriters, as that term is defined in the Securities Act, in connection with
the shares remarketed by them.
We have agreed to indemnify in certain circumstances certain of the
selling shareholders against certain liabilities, including liabilities under
the Securities Act of 1933. The selling shareholders have agreed to indemnify us
in certain circumstances against certain liabilities, including liabilities
under the Securities Act of 1933. Insofar as we are permitted to indemnify the
selling shareholders for liabilities arising under the Securities Act of 1933,
we have been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Securities Act of 1933 and is unenforceable.
The selling shareholders and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Securities Exchange Act of 1934, and the rules and regulations thereunder,
including Regulation M. Under those rules and regulations, they
o may not engage in any stabilization activity in connection with our
securities;
o must furnish each broker which offers common stock covered by this
prospectus with the number of copies of this prospectus which are
required by each broker; and
o may not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as
permitted under the Securities Exchange Act of 1934.
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.
14
We can not assure you that the selling shareholders will sell all or
any portion of the securities offered hereby.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy
statements and other information with the Securities and Exchange Commission.
You may read and copy any document we file with the SEC at the SEC's Public
Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain
further information about the operation of the Public Reference Room by calling
the SEC at 1-800-SEC-0330. Our SEC filings are also available to the public over
the Internet at the SEC's web site at http://www.sec.gov, which contains
reports, proxy statements and other information regarding registrants like us
that file electronically with the SEC.
This prospectus is part of a registration statement on Form S-3 filed
by us with the SEC under the Securities Act of 1933. As permitted by SEC rules,
this prospectus does not contain all of the information included in the
registration statement and the accompanying exhibits filed with the SEC. You may
refer to the registration statement and its exhibits for more information.
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with the SEC. This 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. If we
subsequently file updating or superseding information in a document that is
incorporated by reference into this prospectus, the subsequent information will
also become part of this prospectus and will supersede the earlier information.
We are incorporating by reference the following documents that we have
filed with the SEC:
o our Annual Report on Form 10-K for the year ended December 31, 2001;
o our Quarterly Report on Form 10-Q for the quarter ended March 31,
2002;
o our Current Reports on Form 8-K for the events dated January 15,
2002, April 4, 2002, May 15, 2002, May 30, 2002, July 3, 2002 and
July 15, 2002; and
o the description of our common stock, $.001 par value per share,
contained in our registration statement on our amended Form 8-A
filed pursuant to Section 12(b) of the Securities Exchange Act of
1934, dated June 29, 2001, and any subsequent amendments or reports
filed for the purpose of updating such description.
We are also incorporating by reference into this prospectus all of our
future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 until this offering has been completed.
15
You may obtain a copy of any of our filings which are incorporated by
reference, at no cost, by contacting us at:
Stonepath Group, Inc.
Two Penn Center Plaza, Suite 605
Philadelphia, PA 19102
Attention: Stephen M. Cohen,
Senior Vice President and General Counsel
Telephone: (215) 564-9193
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information provided by this prospectus is accurate as of any date other than
the date on the front of this prospectus. If we subsequently file updating or
superseding information in a document that is incorporated by reference into
this prospectus, the subsequent information will also become part of this
prospectus and will supersede the earlier information.
LEGAL MATTERS
The validity of the shares being issued will be passed upon for the
Company by Buchanan Ingersoll Professional Corporation, Eleven Penn Center, 1835
Market Street, 14th Floor, Philadelphia, PA 19103.
EXPERTS
Our consolidated financial statements as of December 31, 2001 and 2000
and for each of the years in the three year period ended December 31, 2001 have
been incorporated herein by reference and in the registration statement in
reliance upon the report of KPMG LLP, independent auditors, incorporated herein
by reference, and upon the authority of said firm as experts in accounting and
auditing.
16
Stonepath Group, Inc.
7,061,932 Shares of Common Stock
------------------
PRELIMINARY PROSPECTUS
------------------
We have not authorized any dealer, salesperson or other person to give
any information or represent anything contained in this preliminary prospectus.
You must not rely on any unauthorized information. This preliminary prospectus
does not offer to sell nor does it solicit to buy any shares of common stock in
any jurisdiction where it is unlawful. The information in this preliminary
prospectus is current as of July 31, 2002.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following is an estimate of the expenses which will be incurred by
the Company in connection with the issuance and distribution of the securities
being registered.
SEC filing fee.................................. $ 487
Legal fees and expenses......................... 15,000
Accounting fees and expenses.................... 10,000
Miscellaneous expenses.......................... 1,000
-----
Total................................. 26,487
======
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 applicable Delaware law is amended to authorize corporate
action further eliminating or limiting personal liability of directors, our
certificate of incorporation provides that the liability of a director shall be
eliminated or limited to the fullest extent permitted by applicable Delaware
law.
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 ours, 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 judgments, fines, amounts paid in settlement and attorneys'
fees) actually and reasonably incurred by such person in connection with a
proceeding if such person acted in good faith and in a manner he reasonably
believed to be in or not opposed to our best interests, in accordance with, and
to the full extent permitted by, applicable Delaware law. The determination of
whether indemnification is proper under the circumstances, unless made by a
court, shall be determined by the board of directors.
We maintain, at our expense, an insurance policy which insures our
directors and officers, subject to certain exclusions and deductions as are
usual in such insurance policies, against certain liabilities which may be
incurred in those capacities.
II-2
Item 16. Exhibits and Financial Statement Schedules
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
Exhibit No. Reference
----------- ---------
4.25 Certificate of Designation of Series D Preferred Stock Filed herewith
4.26 Form of Exchange Agreement by and between the Company and certain holders of Filed herewith
the Company's Series C Preferred Stock
5.1 Opinion of Buchanan Ingersoll Professional Corporation Filed herewith
23.1 Consent of KPMG LLP Filed herewith
23.2 Consent of Buchanan Ingersoll Professional Corporation (included in its Filed herewith
opinion on Exhibit 5.1)
24.1 Power of Attorney (included on the signature page of the registration (1)
statement)
Item 17. Undertakings
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:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the Registration Statement;
(iii) 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;
provided, however, that paragraphs (1)(i) and (1)(ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by us pursuant to Section 13
or Section 15(d) of the Exchange Act that are incorporated by reference in the
Registration Statement.
(1) Previously filed with the Registrant's Registration Statement on Form S-3
filed June 26, 2002.
II-2
(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.
(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.
(4) 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.
(5) 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 informed that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act of 1933 and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
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 this registration statement on Form S-3 and has
duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania, on July 31, 2002.
STONEPATH GROUP, INC.
By: /s/ Dennis L. Pelino
----------------------------------------------
Dennis L. Pelino, (Chairman of the
Board of Directors and Chief
Executive Officer)
By: /s/ Bohn H. Crain
----------------------------------------------
Bohn H. Crain (Chief Financial Officer)
By: /s/ Thomas L. Scully
----------------------------------------------
Thomas L. Scully (Principal
Accounting Officer)
II-4
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed by the following persons
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ * Chairman, Chief Executive July 31, 2002
----------------------------------------
Dennis L. Pelino Officer and Director
/s/ * Director July 31, 2002
----------------------------------------
J. Douglas Coates
/s/ * Director July 31, 2002
---------------------------------------
Frank Palma
/s/ * Director July 31, 2002
--------------------------------------
Aloysius T. Lawn IV
/s/ * Director July 31, 2002
---------------------------------------
Robert McCord
/s/ * Director July 31, 2002
--------------------------------------
David Jones
* /s/ Stephen M. Cohen
-------------------------
Stephen M. Cohen
Attorney-in-Fact
II-5
EXHIBIT INDEX
Exhibit No. Reference
----------- ---------
4.25 Certificate of Designation of Series D Preferred Stock Filed herewith
4.26 Form of Exchange Agreement by and between the Company and certain holders of Filed herewith
the Company's Series C Preferred Stock
5.1 Opinion of Buchanan Ingersoll Professional Corporation Filed herewith
23.1 Consent of KPMG LLP Filed herewith
23.2 Consent of Buchanan Ingersoll Professional Corporation (included in its Filed herewith
opinion on Exhibit 5.1)