1
Registration No. 333-74478
As filed with the Securities and Exchange Commission on July 31, 1996.December 19, 2001.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3S-3/A
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
AMENDMENT NO.1
-----------------
DIGITAL SOLUTIONS,TEAMSTAFF, INC.
(Exact name of Registrant as specified in charter)
New Jersey 22-1899798
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
4041 Hadley Road
South Plainfield,
300 Atrium Drive
Somerset, New Jersey 07080
(908) 561-120008873
(732) 748-1700
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
-----------------
George J. EklundDonald W. Kappauf
President and Chief Executive Officer
4041 Hadley Road
South Plainfield,300 Atrium Drive
Somerset, New Jersey 07080
(908) 561-120008873
(732) 748-1700
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
With copies to:
VICTOR J. DiGIOIA, ESQ.
GOLDSTEINBrian C. Daughney, Esq.
Goldstein & DiGIOIA,DiGioia, LLP
369 Lexington Avenue
New York, New York 10017
Telephone (212) 599-3322
Facsimile (212) 557-0295
Approximate date of commencement of proposed sale to the public: As
soon as practicable 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 plan, please check the following
box. / /[ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933 other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. /X/
2[X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /[ ] ___________________.
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering. / /[ ] _______________________
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. / /
3[ ]
CALCULATION OF REGISTRATION FEEFEE*
===================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Securities Offering Aggregate Amount of
Being Registered Amount to be Offering Price Aggregate Registration
Being Registered Registered per Share(1) Offering Registration
Registered Share(1)Fee
Price(1)
Fee
- ------------------------------------------------------------------------------------------------------------------- ---------- ------------ -------- ---
Common Stock, $.001 par
value(2)................... 2,193,929 $4.09375 $8,981,397 $3,097
- ---------------------------------------------------------------------------------------------------6,168,511 $5.80 $35,777,363 $8,551
Common Stock, $.001 par
349,513 $4.09375 $1,419,896 $ 493
value(3)................... - ---------------------------------------------------------------------------------------------------
Common Stock, $.001 par 500,000 $4.09375 $2,031,250 $ 706
value(4)...................
- ---------------------------------------------------------------------------------------------------26,000 $5.80 $150,800 $36.00
Total...................... 3,043,442 $4.09375 $12,432,543 $4,296
===================================================================================================6,194,511 $35,928,163 $8,587*
(1) Estimated solely for the purpose of determining the registration fee,
based on a share price of $4.09375,$5.80, the average of the closing bidhigh and askedlow prices
as quoted by the Nasdaq SmallCapNational Stock Market on July 30, 1996.November 29, 2001. Fee
previously paid with initial filing.
(2) Shares of Common Stock to be sold by certain Selling Security Holders.
(3) Shares of Common Stock issuable upon exercise of outstanding Common
Stock Purchase Warrants held by certain Selling Security Holders.
Pursuant to Rule 416, there are also being registered such additional
number of shares of Common Stock as may become issuable pursuant to the
anti-dilution provisions of the Warrants.
(4) Shares of Common Stock issuable upon exercise of options granted pursuant
to the Company's 1990 Non-Executive Director Stock Option Plan, as
amended. Pursuant to Rule 416, there are also being registered such
additional number of shares of Common Stock as may become issuable
pursuant to the anti-dilution provisions of the Warrants.
---------------------------
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 SECTION 8(a) MAY
DETERMINE.
================================================================================
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DIGITAL SOLUTIONS, INC.
CROSS REFERENCE SHEET
Pursuant to Item 501(b) of Regulation S-K
Between Registration Statement and Form of Prospectus
Item Number and Heading Caption in Prospectus
----------------------- ---------------------
1. Forepart of the Registration Statement
and Outside Front Cover of Prospectus..... Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover
Pages of Prospectus....................... Inside Front and Outside Back Cover Pages of Prospectus
3. Summary Information, Risk Factors,
and Ratio of Earnings to Fixed
Charges.................................... Prospectus Summary; The Company; Risk Factors;
Summary Consolidated Financial Information
4. Use of Proceeds............................ Use of Proceeds
5. Determination of Offering Price......... Outside Front Cover Page of Prospectus
6. Dilution................................... Not Applicable
7. Selling Security Holders................. Selling Security Holders
8. Plan of Distribution....................... Inside Front Cover; Plan of Distribution
9. Description of Securities to be
Registered................................. Description of Securities
10. Interests of Names Experts and
Counsel.................................... Not Applicable
11. Material Changes......................... Recent Developments
12. Incorporation of Certain Information
by Reference............................... Incorporation of Certain Information by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
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Subject to completion, July 31, 1996
P R O S P E C T U S
3,043,4426,194,511 Shares of Common Stock
DIGITAL SOLUTIONS,TEAMSTAFF, INC.
This Prospectus covers 3,043,442We are registering for resale 6,168,511 shares of common stock, $.001
par value (the "Shares") of Digital Solutions,TeamStaff, Inc. (the "Company"), which Sharesshares are presently issued and outstanding
and held by certain of our shareholders (the
"Selling Security Holders") or shall be issued by the Companyand an additional 26,000 shares of
common stock which we will issue upon exercise of
outstanding Common Stock purchase warrants and Non-Executive Director Stock
Options including (i) 2,193,929 Shares issued and outstanding; (ii) 152,013
Shares issuable pursuant to the exercise of outstanding common stock
purchase warrants held by the holders of outstanding warrants.
Our Common Stock purchase
warrants issued to certain selling agents (the "Selling Agent Warrants"); (iii)
197,500 Shares issuable pursuant to the exercise of outstanding Common Stock
purchase warrants issued in connection with a private placement (the "Private
Placement Warrants"); and (vi) up to 500,000 Shares issuable upon exercise of
options granted pursuant to the 1990 Non-Executive Director Stock Option Plan
(the "Directors' Plan").
The Shares areis traded in the over-the-counter market and areis
included in the SmallCapNational Market of the Nasdaq Stock Market ("NASDAQ") under the symbol
"DGSI""TSTF". On July 30, 1996,December 14, 2001, the closing bidhigh and askedlow prices for the Common Stock as
reported by NASDAQNasdaq were $4.0625$5.79 and 4.125,$5.32, respectively. See "Price RangeThe closing price of the
Common Stock and Certain Market Information."
The Shares may be issuedon December 14, 2001 was $5.79.
We will not receive any proceeds from the sale of the shares by the
Company upon exercise of the Selling
Agent Warrants and the Private Placement Warrants and upon exercise of options
granted under the Directors' Plan.selling security holders.
The Sharesshares may be sold from time to time by the Selling Security Holders,selling security
holders, or by their transferees. No underwriting arrangements have been entered
into by the Selling Security Holders.selling security holders. The distribution of the Sharesshares by the
Selling Security Holdersselling security holders may be effected in one or more transactions that may
take place on the over the counter market, including ordinary brokers
transactions, privately negotiated transactions or through sales to one or more
dealers for resale of the Sharesshares as principals, at market prices prevailing at
the time of sale, at prices related to such prevailing market prices or at
negotiated prices. Usual and customary or specifically negotiated brokerage fees
or commissions may be paid by the Selling
Security Holdersselling security holders in connection with
such sales. The Selling Security Holdersselling security holders and intermediaries through whom such
Sharesshares are sold may be deemed "underwriters"underwriters within the meaning of the Act, with
respect to the Shares offered.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK.shares offered by them.
PLEASE SEE "RISK FACTORS."FACTORS" BEGINNING ON PAGE 11 TO READ ABOUT CERTAIN
FACTORS YOU SHOULD CONSIDER BEFORE BUYING SHARES OF COMMON STOCK.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is July __, 1996December ___, 2001
6TABLE OF CONTENTS
PAGE
----
AVAILABLE INFORMATION .............................................. 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .................... 1
PROSPECTUS SUMMARY ................................................. 3
THE COMPANY ........................................................ 3
THE OFFERING ....................................................... 9
SELECTED FINANCIAL DATA ............................................ 11
RISK FACTORS ....................................................... 12
SELLING SECURITY HOLDERS ........................................... 22
PLAN OF DISTRIBUTION ............................................... 24
REPORTS TO SHAREHOLDERS ............................................ 24
LEGAL MATTERS ...................................................... 25
EXPERTS ............................................................ 25
ADDITIONAL INFORMATION ............................................. 25
FORWARD LOOKING STATEMENTS ......................................... 25
AVAILABLE INFORMATION
The CompanyOur company is subject to the informational reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Reports, proxy and information
statements and other information filed by the Companyour company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copiescopied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional
Offices of the Commission: New York Regional Office, 7 World Trade Center, 13th
Floor, New York, New York 10048; and Chicago Regional Office, Everett McKinley
Dirkson Building, 210 South Dearborn500 West Madison
Street, Room 1204,1400, Chicago, Illinois 60604.60661. Copies of such material may be
obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. You may obtain
information on the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The SEC maintain an Internet site, http://www.sec.gov, that
contains reports, proxy and information statements and other information that we
file electronically with the SEC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the CompanyTeamStaff with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference,
except as superseded or modified herein:
1. The Company'sOur Annual Report on Form 10-K for the fiscal year ended
September 30, 1995.2000, including information specifically
incorporated by reference into our Form 10-K from our
definitive Proxy Statement.
2. The Company's Registration StatementA description of our common stock contained in our
registration statement on Form 8-A filed April 27, 1990.
3. The Company'sOur Form 8-K dated November 28, 1994.filed on September 7, 2001 and Amendment No.1 to
Form 8-K filed on October 2, 2001.
4. The Company's FormsOur Form 10-Q for the quartersquarter ended December 31, 1995 and2000.
5. Our Form 10-Q for the quarter ended March 31, 1996.2001.
6. Our Form 10-Q for the quarter ended June 30, 2001.
Each document filed subsequent to the date of this Prospectus pursuant
to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering shall be deemed to be incorporated by reference in
this Prospectus and shall be part hereof from the date of filing of such
document.
The CompanyAll documents filed by the registrant after the date of filing the
initial registration statement
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on Form S-3 of which this prospectus forms a part and prior to the effectiveness
of such registration statement pursuant to Section 13(a), 13(c), 14 and 15(d) of
the Securities Exchange Act of 1934 shall be deemed to be incorporated by
reference into this prospectus and to be part hereof from the date of filing of
such documents.
We will provide without charge to each person to whom a copy of this
Prospectus is delivered, upon the written or oral request of any such person, a
copy of any document described above (other than exhibits). Requests for such
copies should be directed to Digital Solutions,TeamStaff, Inc., 4041 Hadley Road,
South Plainfield,300 Atrium Drive, Somerset, New
Jersey 07080,08873, telephone (908) 561-1200.(732) 748-1700, attention Donald Kelly.
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PROSPECTUS SUMMARY
The following summary is intended to set forth certain pertinent facts
and highlights from material contained in the body of this Prospectus. The
summary is qualified in its entirety by the detailed information and financial
statements appearing elsewhere in this Prospectus, the Company'sour company's annual report on
Form 10-K for the Fiscalfiscal year ended September 30, 19952000 (the "Form 10-K") and
the Company'sour
quarterly reports on Form 10-Q for the quarters ended December 31, 1995 and2000, March
31, 19962001 and June 30, 2001 (the "Forms 10Q"10-Q")., and our other reports as filed
with the Securities and Exchange Commission, all of which are incorporated by
reference into this prospectus.
THE COMPANY
Digital Solutions,TeamStaff, Inc. ("DSI" or "the Company"(referred to as the "Company"), a New Jersey
Corporation, was founded in 1969 as a payroll service company and has evolved
into a leading provider of human resource management servicesand professional employer
organization ("PEO") to a wide variety of industries in 4050 states. TeamStaff's
wholly-owned subsidiaries include TeamStaff Solutions, Inc., DSI Staff
ConnXions-Northeast, DSI Staff ConnXions-Southwest, TeamStaff Rx, Inc.,
TeamStaff I, Inc., TeamStaff II, Inc., TeamStaff III, Inc., TeamStaff IV, Inc.,
TeamStaff V, Inc., TeamStaff VI, Inc., TeamStaff Insurance Services, Inc.,
TeamStaff VIII, Inc., Employee Support Services, Inc., TeamStaff IX, Inc.,
Digital Insurance Services, Inc., HR2, Inc. and BrightLane.com, Inc.
(collectively referred to, with TeamStaff, as the "Company").
The Company currently offersprovides three general categoriestypes of services:services related to the
employee leasing, temporary staffing and payroll service businesses: (1)
professional employer organization ("PEO") services, also known as employee
leasing (2) employer administrative services, such as payroll processing,
personnel and administration, benefits administration, workers' compensation
administration and tax filing; (2) employer administrative services, such as
payroll processing and tax filing; and (3) contract staffing, or the placement
of temporary and permanent employees. DSITeamStaff currently furnishes PEO
employees, payroll employee leasing and contract staffing services to over 1,3004,300 client
organizations with approximately 5,10021,800 worksite leasingemployees, 2,600 staffing
employees and staffingprocessing for approximately 30,000 payroll service employees and
believes that it currently ranks, in terms of revenues and worksite employee base,employees,
as one of the largesttop professional employer organizations in the United States. In addition, DSIThe
Company's contract staffing business mainly places temporary help in hospitals
and clinics throughout the United States through its Clearwater, Florida and
Houston, Texas
and Clearwater, Florida offices. The Company has three hubs operatingsix regional offices located in
South
Plainfield,Somerset, New Jersey; Houston and El Paso, Texas; Woburn, Massachusetts; and
Delray and Clearwater, Florida and seven sales service centers in New York, New
York; Ridgedale, Mississippi; Dallas, El Paso and Houston, Texas; Delray, and Clearwater, Florida; Woburn,
Massachusetts; and South Plainfield,Somerset, New Jersey.
Essentially, the Company provideswe provide services that function as the personnel
department for small to medium sized companies. The Company believesWe believe that by offering
services whichthat relieve small and medium size businesses of the ever increasing
administrative burden of employee related record keeping, payroll processing,
benefits administration, employment of temporary and permanent specialized
employees
3
and other human resource functions, the Company will position itselfwe have positioned our company to take
advantage of a major growth opportunity during this decade and the next.
Recognizing the desire by many small businesses to be relieved not only
of the
human resource administrative functions, but also of the responsibility
to manage employees and oversee operational tasks ancillary to their core
business, the Company has formulated a strategy
of emphasizing PEO ("employee
leasing") and "outsourcing" services. In employee leasing,PEO, a service provider
becomes an employera co-employer of the client company's employees and leasesassigns these
employees to the client to perform their intended functions at the worksite.
In
outsourcing,Management has determined to emphasize the service provider is not only responsible for human resource
administration but also assumes ultimate responsibility for management of the
employees and their job functions. For example, a provider of outsourcing
services could be engaged
3
8
by a hospital or clinic to manage the maintenance and operation of the facility.
The medical staff would still be responsible for the medical functions but the
physical plant would be managed by the provider.
Over the period 1990-1992, the PEO industry grew at an annual rate of
16.2%, according to an industry report, and has produced a relatively high
growth path since 1984. DSI is focusing itsCompany's future growth onin
the PEO and outsourcing industry. The Company's expansion program will focus on
internal growth through the cross marketing of its PEO services to its entire
client base and the acquisition of compatible businesses strategically situated
in new areas or with a client base serviceable from existing facilities. As part
of its effort to expand its PEO business, management has expanded the services
of TeamStaff Rx, Inc., the Company's medical contract staffing subsidiary, to
include PEO, outsourcing and facilities management. While DSITeamStaff continues to
sell stand-alone employer services, such as payroll and tax filing, it will
emphasize the PEO component of its service offerings. In addition,offerings with a goal of becoming the
leading provider of PEO industryservices in the United States. A major component of the
Company's growth strategy is characterized by relatively small and regionalized providers which
offer a limited range of services to their clients. Accordingly, the Company
believes opportunities exist for the acquisition of well situatedwell-situated, independent PEO
companies whose business maycan be integrated into the CompanyCompany's operations.
DuringHowever, there can be no assurance any such acquisition will be consummated by
the fiscal year ending September 30, 1995, the Company acquired
Staff Rx,Company.
TeamStaff, Inc. ("Staff Rx") and Turnkey Services, Inc. ("Turnkey"). Staff Rx is
engaged in the contract staffing business and places permanent and temporary
medical personnel in hospitals, clinics and other medical facilities. Staff Rx
has offices in Houston, Texas; Clearwater, Florida; and Dallas, Texas and
conducts business in approximately 35 states. The Company believes that the
Staff Rx customer base is well suited for employee leasing and intends to
vigorously pursue this area. Turnkey has operations in Texas and is engaged in
employee leasing.
The Company was organized under the laws of the State of New Jersey
on November 25, 1969 and maintains its executive offices at 4041 Hadley Road, South
Plainfield,300 Atrium Drive,
Somerset, New Jersey 0708008873 where its telephone number is (908) 561-1200.(732) 748-1700.
OUR SERVICES
Professional Employer Organization (PEO)
Our company's core business, and the area management will continue to
emphasize, is our PEO services. When a client utilizes our services, the client
administratively transfers all or some of its employees to us and we in turn
provide them back to the client. Our company thereby becomes a co-employer and
is responsible for all human resource functions, including payroll, benefits
administration, tax reporting and personnel record keeping. The client still
manages the employees and determines salary and duties in the same fashion as
any employer. The client is, however, relieved of reporting and tax filing
requirements and other administrative tasks. Moreover, because of economies of
scale, our company is able to negotiate favorable terms on workers' compensation
insurance, health benefits, retirement programs, and other valuable services.
The client company benefits because it can then offer its employees the same or
similar benefits as larger companies, enabling it to successfully compete in
recruiting highly qualified personnel, as well as build the morale and loyalty
of its staff.
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THE OFFERINGAs a PEO service provider, we can offer the following benefits to
employees:
COMPREHENSIVE MAJOR MEDICAL PLANS - Management believes that medical
insurance costs have forced small employers to reduce coverage provided to its
employees and to increase employee contributions. We are able to leverage our
large employee base and offer the employees assigned to their clients a variety
of health coverage plans from traditional indemnity plans to Health Maintenance
Organizations (HMO), Preferred Provider Organizations (PPO), or a Point of
Service Plan (POS).
DENTAL AND VISION COVERAGE - These types of benefits are generally
beyond the reach of most small groups. As a result of economies of scale
available, a client of our company can obtain these benefits for the assigned
employees.
LIFE INSURANCE -- Affordable basic coverage is available.
SECTION 125 PREMIUM CONVERSION PLAN -- Employees can pay for benefits
with pre-tax earnings, reduce their taxable income and FICA payments, and
increase their take-home pay.
401(K) RETIREMENT PLANS -- Management believes that most small
employers do not provide any significant retirement benefits due to the
administrative and regulatory requirements associated with the establishment and
maintenance of retirement plans. The company enables small business owners to
offer the assigned employees retirement programs comparable to those of major
corporations. Such plans can be used to increase morale, productivity and
promote employee loyalty.
CREDIT UNION - Our company provides an opportunity for employees to
borrow money at lower interest than offered at most banks.
PAYROLL SERVICES -- Although ancillary to the PEO services, clients no
longer incur the expense of payroll processing either through in-house staff or
outside service. Our company's PEO services include all payroll and payroll tax
processing.
UNEMPLOYMENT COMPENSATION COST CONTROL - Our company provides an
unemployment compensation cost control program to aggressively manage
unemployment claims.
HUMAN RESOURCES MANAGEMENT SERVICES - Our company can provide clients
with expertise in areas such as personnel policies and procedures, hiring and
firing, training, compensation and performance evaluation.
WORKERS' COMPENSATION PROGRAM - Our company has a national workers'
compensation policy which can provide our company with a significant advantage
in marketing its services, particularly in jurisdictions where workers'
compensation policies are difficult to obtain at reasonable costs. We also
provide our clients where applicable with independent safety analyses and risk
management services to reduce workers' injuries and claims.
5
Relieved of personnel administrative tasks, the client is able to focus
on its core business. The client is also offered a broader benefits package for
its assigned employees, a competitive rate in workers' compensation insurance,
and savings in time and paperwork previously required in connection with
personnel administration.
PAYROLL SERVICES
We were established as a payroll service firm in 1969, and continue to
provide basic payroll services to our clients. Historically, the payroll
division provided these services primarily to the construction industry and
currently 70% of our company's approximately 750 payroll service clients are in
the construction industry. Our company offers most, if not all, of what other
payroll services provide, including the preparation of checks, government
reports, W-2's (including magnetic tape filings), remote processing (via modem)
directly to the clients offices, and certified payrolls.
In addition, our company offers a wide array of tax reporting services
including timely deposit of taxes, impounding of tax payments, filing of
returns, distribution of quarterly and year-end statements and responding to
agency inquiries.
TEMPORARY STAFFING SERVICES
We provide temporary staffing services through two subsidiaries which
have, in the aggregate, more than 30 years of experience in placing permanent
and temporary employees with specialized skills and talents with regional,
national and international employers. Temporary staffing enables clients to
attain management and productivity goals by matching highly trained
professionals and technical personnel to specific project requirements.
TeamStaff focuses its temporary staffing services in two specific markets where
it places people on a temporary long term assignment, or on a permanent basis:
(1) radiologic technologist, diagnostic sonographers, cardiovascular
technologists, radiation therapist and other medical professionals with
hospitals, clinics and therapy centers throughout the 50 states and (2)
technical employees such as engineers, information systems specialists and
project managers primarily with Fortune 100 companies for specific projects.
Clients whose staffing requirements vary depending on the level of current
projects or business are able to secure the services of highly qualified
individuals on an interim basis.
Our company's temporary staffing services provide clients with the
ability to "rightsize"; that is, expand or reduce its workforce in response to
changing business conditions. Management believes that these services provide
numerous benefits to the client, such as saving the costs of salary and benefits
of a permanent employee whose services are not needed throughout the year. The
client also avoids the costs, uncertainty and delays associated with searches
for qualified interim employees. Our company also provides insurance bonding
where necessary and assumes all responsibility for payroll tax filing and
reporting functions, thereby saving the client administrative responsibility for
all payroll, workers' compensation, unemployment and medical benefits.
6
Management believes that its temporary staffing services provides an
employer with an increased pool of qualified applicants, since temporary
staffing employees have access to a wide array of benefits such as health and
life insurance, Section 125 premium conversion plans, and 401(k) retirement
plans. These benefits provide interim employees with the motivation of full-time
workers without additional benefit costs to the client. A client is also able to
temporarily rehire a retired employee for short-term or specialized projects
without jeopardizing their pension plan. We believe that we have attained the
position of being number one or two in the terms of gross revenues for firms
specializing in the placement of temporary medical imaging personnel.
RECENT EVENTS
BrightLane Acquisition.
Effective August 31, 2001, TeamStaff, Inc. completed its acquisition of
BrightLane.com, Inc. As a result of a reverse subsidiary merger with a
subsidiary of TeamStaff, BrightLane is now a wholly-owned subsidiary of
TeamStaff.
Other than payments for fractional shares, the shareholders of
BrightLane received an aggregate of 8,066,631 shares (less fractional shares) of
TeamStaff's Common Stock Outstandingin exchange for their BrightLane Common Stock, Series A
Preferred, Series B Preferred and Series C Preferred stock. The exchange ratios
(rounded) and aggregate shares for the classes of BrightLane capital stock were
as follows:
Title of BrightLane Aggregate
Capital Stock Exchange Ratio TeamStaff Shares
--------------- -------------- ----------------
Common Stock 0.2314549 1,601,731
(less fractional shares)
Series A Preferred Stock 22.7740000 874,295
Series B Preferred Stock 1.9410000 3,334,117
Series C Preferred Stock 4.2050000 2,256,488
---------
TOTAL 8,066,631
(less fractional shares)
As a result of issuance to the BrightLane shareholders in the
transaction, the former BrightLane shareholders will receive 8,066, 631 shares
(prior to reduction for fractional shares) and, assuming all such shares are
issued as of December 14, 2001, TeamStaff has approximately 16,156,184 shares
outstanding.
7
In connection with the transaction, persons holding BrightLane options
to acquire approximately 2,078,000 BrightLane shares (the equivalent of
approximately 481,000 TeamStaff shares ) exercised their options. TeamStaff made
recourse loans of approximately $1,150,000 principal amount to the holders of
these options to assist them in payment of tax obligations incurred with
exercise of the options. The loans are repayable upon the earlier of (i) sale of
the TeamStaff shares or (ii) three years.
First Union Corporation, through an affiliate held all of the
BrightLane Series B Preferred stock, and therefore owns 3,334,117 shares of
TeamStaff's Common Stock (approximately 20%). In addition, Nationwide Financial
Services, Inc. held all of the BrightLane Series C Preferred stock, and
therefore owns 2,256,488 shares of TeamStaff's Common Stock (approximately 14%).
The Registration Statement of which this Prospectus forms a part includes the
shares held by First Union Corporation, Nationwide Financial Services and Mr.
Stephen Johnson (including Mr. Johnson's spouse, Mary Johnson).
Under the terms governing the transaction, certain option holders were
restricted from selling TeamStaff shares acquired from the exercise of their
BrightLane options for a period of up to two years. T. Stephen Johnson and his
spouse, Mary Johnson, also a former director of BrightLane, were the only option
holders who exercised their options and who were subject to these lockup
provisions. Due to the recent significant rise in the Company's stock price and
the significant increase in the amount of the tax loans to be made to T. Stephen
Johnson and Mary Johnson, the Board of Directors of TeamStaff concluded it would
be more appropriate to allow Mr. and Mrs. Johnson to sell a portion of their
TeamStaff shares to cover their tax liability rather than carry a large loan
receivable on the Company's financial statements. The Board therefore agreed to
allow the sale of up to 40% of Mr. and Mrs. Johnson's option shares
(approximately 56,230 TeamStaff shares) as an exempt transaction under SEC Rule
16(b)(3).
In addition, three persons who served as directors of TeamStaff, namely
John H. Ewing, Rocco J. Marano and Charles R. Dees, Jr. agreed to step down as
directors upon consummation of the transaction with BrightLane. Effective
September 4, 2001, these persons resigned as directors. In connection with the
termination of their services, these individuals received 1,000 warrants for
each year of service on the TeamStaff Board of Directors ( an aggregate of
26,000 warrants). The registration statement of which this Prospectus forms a
part includes the shares of common stock underlying these warrants. The grant of
the warrants was approved by the Board of Directors as an exempt transaction
under SEC Rule 16(b)(3).
Under the terms of the agreements governing the BrightLane transaction,
TeamStaff agreed to register for resale shares obtained by former BrightLane
shareholders who would be deemed "affiliates" under SEC rules and regulations.
The registration statement of which this prospectus forms a part includes
6,096,946 shares of common stock owned by these persons. Certain former
shareholders of BrightLane, who are selling security holders, including First
Union Corporation, Nationwide Financial Services and T Stephen Johnson agreed to
the terms of a "lockup" agreement whereby they have agreed that the shares of
TeamStaff obtained by them may only be sold as
8
follows: commencing on the first anniversary of the transaction (August 31,
2002) 50% of the acquired shares may be sold and commencing on the second
anniversary the remaining shares may be sold. The Board of Directors has
reserved the right to release all of part of the shares from the lockup prior to
Offering (1)............................... 18,761,166
Risk Factors .............................. This Offering involvesits expiration.
Future Potential Acquisitions and Acquisition Strategy.
TeamStaff has previously announced a high
degreecorporate policy to expand through
acquisitions of risk. See "Risk Factors."
Usesimilar businesses. A key component of Proceeds ........................... AllTeamStaff's growth
strategy has been, and will continue to be, the acquisition of compatible
businesses to expand its operations and customer base. These acquisitions may be
acquisitions of entire entities or asset transactions related to our businesses.
Currently, the human resource service industry includes numerous small companies
seeking to develop services, operations and customer base similar to those
developed by TeamStaff. TeamStaff has acquired companies in the human resource
industry in the past. However, with the business and strategy of TeamStaff
further developed, acquisitions in the future will be concentrated in the PEO
and outsourcing business. TeamStaff believes that with a limited number of key
acquisitions of regional PEO companies, who possess a strong customer base and
regional reputation, TeamStaff will be able to grow into an industry leader in
revenue size and scope of services offered.
A prospective acquisition candidate may be either a public or private
company, but will be required to meet certain financial criteria and growth
potential established by TeamStaff. In addition, as the market and industry
evolves, TeamStaff may also consider non-PEO entities for strategic acquisitions
or mergers, in an effort to expand the potential client base. TeamStaff
management evaluates acquisition candidates by analyzing the target company's
management, operations and customer base, which must complement or expand
TeamStaff's operations and financial stability, including our profitability and
cash flow. Our long-term plan is to expand sales and income potential by
achieving economies of scale as it expands and regionalizes its revenue base.
There can be no assurance, however, that TeamStaff will be able to successfully
identify, acquire and integrate into TeamStaff's operations compatible PEO
companies.
Effective December 14, 2001, TeamStaff has executed an agreement to
acquire accounts and related assets of Corporate Staffing Concepts LLC., a PEO
entity operating primarily in western Massachusetts and Connecticut. The
agreement provides that TeamStaff will acquire the PEO related accounts of
Corporate Staffing Concepts for a combination of cash paid at closing and stock
through an earnout payable in one year which is based upon the number of
worksite employees retained from the accounts being acquired. Closing of the
proceedstransaction is subject to approval of this
offeringthe Board of Directors of the parties,
consent of a certain minimum number of the accounts proposed to be sold and
other customary closing conditions. The parties anticipate closing to occur on
or about January 1, 2002.
In addition, in December 2001 TeamStaff entered into a non-binding
letter of intent to acquire a nationally operating PEO business. The parties are
continuing to negotiate
9
definitive terms of the transaction, including the price and the final
structure. TeamStaff anticipates that the transaction will include payment by it
of cash and shares of its Common Stock. There can be no assurance that the
transaction will be paid to the
respective Selling Security Holdersconsummated.
10
THE OFFERING
Common Stock outstanding prior to
offering(1) 16,156,184
Shares being offered for
sale by selling security holders 6,168,511 (2)
Shares underlying warrants being
offered for sale by selling security holders 26,000
Common Stock outstanding after the
offering 16,182,184 (2)
Risk Factors This offering involves a high degree of risk. See "Risk
Factors."
Use of Proceeds (3) All of the proceeds of this offering will be paid to the
respective selling security holders and none of the
proceeds will be received by our company. We
anticipate that proceeds received from exercise of any
warrants will be used for working capital purposes.
See "Use of Proceeds."
Nasdaq Market Symbol TSTF
- ----------------
(1) As of the proceeds will be
received by the Company.
Nasdaq SmallCap
Market Symbol.......................... DGSI
(1)November 29, 2001. Does not include:
(i) 1,000,000- - Options to purchase 1,714,286 Shares reserved for issuance under the Company'sour
2000 Employee Stock Option Plan (ii) 5,000,000of which 635,000 are issued and
outstanding and options to purchase 21,550 Shares reservedissued and
outstanding under the Company'sour 1990 Employee Stock Option Plan, which expired in
April, 2000.
- - Options to purchase 207,290 Shares issued and outstanding under our
1990 Senior Management Plan, (iii) 500,000which expired in April, 2000.
- - Options to purchase 22,134 Shares reservedissued and outstanding under the
Company'sour 1990
Non-Executive Director Plan, which expired in April, 2000 and (iv) upoptions
to acquire 60,000 shares issuable and outstanding under our 2000
Non-Executive Director Stock Option Plan.
- - Up to approximately 1,225,524109,569 Shares reserved for issuance upon exercise
of outstanding warrants.
5warrants of which 26,000 warrants are being included in
the registration statement of which this Prospectus forms a part.
11
10(2) The 6,096,946 shares being offered by the Selling Security Holders have
been issued by TeamStaff in connection with the acquisition of
BrightLane.com, Inc., and therefore are included in the 16,156,184
shares outstanding as of November 16, 2001.
(3) We will receive approximately $114,496 in proceeds if all of the
warrants being registered in this prospectus are exercised.
12
SELECTED FINANCIAL DATA
(amounts in thousands, except per share data)
The following table sets forth selected consolidated financial data of
our historical operations for each of the five years in the period ended
September 30, 2000 and for each of the nine month periods ended June 30, 2000
and 2001, respectively. The selected financial data related to (Loss) earnings
per share and weighted average shares outstanding have been restated for all
periods presented to consider the 3.5 for 1 reverse stock split that went into
effect on June 2, 2000.
Fiscal Year Ended September 30, Nine Months Ended June 30,
--------------------------------------------------------------- --------------------------
1996 1997 1998 1999 2000 2000 2001
Revenues $ 100,927 $ 122,559 $ 139,435 $ 244,830 $ 447,743 $ 299,140 $ 487,497
Direct Expenses 92,490 113,894 129,747 228,294 426,987 284,134 466,891
Gross Profit 8,437 8,665 9,688 16,536 20,756 15,006 20,606
Selling, General and
Administrative Expenses
(includes Depreciation
and Amortization) 8,801 11,316 8,050 13,305 18,338 12,973 17,513
(Loss) Income From
Operations (364) (2,651) 1,638 3,231 2,418 2,033 3,093
Net (Loss) Income $ (597) $ (2,832) $ 2,703 $ 1,776 $ 951 936 1,360
(Loss) Earnings per share(1)
Basic $ (0.12) $ (0.52) $ 0.49 $ 0.25 $ 0.12 $ 0.12 $ 0.17
Diluted $ (0.12) $ (0.52) $ 0.49 $ 0.25 $ 0.12 $ 0.12 $ 0.17
Weighted average shares
outstanding (1)
Basic 4,812 5,449 5,506 7,128 7,954 7,956 8,011
Diluted 4,812 5,449 5,544 7,145 7,991 8,008 8,171
As of September 30, As of June 30,
--------------------------------------------------------------- ----------------------
BALANCE SHEET DATA: 1996 1997 1998 1999 2000 1999 2000
Assets $ 14,800 $ 14,163 $ 16,648 $ 36,382 $ 49,514 $ 44,829 $ 54,737
Liabilities 7,632 9,291 8,774 19,417 31,455 26,722 31,640
Long-Term Debt 100 89 2,981 4,502 6,222 6,703 3,487
Working Capital
(Deficiency) 286 (1,401) 3,319 2,968 3,065 3,616 5,038
Shareholders' Equity $ 7,168 $ 4,872 $ 7,874 $ 16,965 $ 18,059 $ 18,107 $ 23,097
- -----------------
1. In accordance with Statement of Accounting Standards 128, basic and
diluted earnings (loss) per share have replaced primary and diluted
earnings (loss) per share.
13
RISK FACTORS
An investment in the securities offered hereby involves a high degree
of risk. The following factors, in addition to those discussed elsewhere, in this
memorandum, should
be considered carefully in evaluating the Companyus and itsour business. An investment in the
Securitiessecurities is suitable only for those investors who can bear the risk of loss of
their entire investment.
1. Recent Losses. The Company experienced a net loss of $695,000 for
the fiscal year ending September 30, 1992. The Company realized a net profit for
the fiscal year ended September 30, 1993 of $301,000 and a net profit of
$720,000 for the fiscal year ended September 30, 1994. However, due to fourth
quarter charges in excess of $3,500,000, the Company incurred a net loss for the
fiscal year ended September 30, 1995 of $3,316,000. The Company realized a net
profit of $392,000 and $319,000 for the quarters ended December 31, 1995 and
March 31, 1996, respectively. There can be no assurance the Company will be able
to operate profitably in the future. See also "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" in the Form 10-K and
the Forms 10-Q incorporated by reference herein.
2. Need for Additional Funds. There can be no assurance that the
Company's current financial resources will be sufficient to maintain its
operations or finance further Company development. Historically, the Company's
cash flow from operations has been insufficient to maintain and/or expand
operations. No assurance can be given that funds for the Company's requirements
will be available or, if available, will be on commercially reasonable terms
satisfactory to the Company. The final terms of such offering may result in
additional dilution to the shareholders of the Company.
3. Security Interests; Restrictive Covenants. The Company has granted
security interests with respect to substantially all of its assets to secure
certain of its indebtedness. In the event of a default by the Company on its
secured obligations, a secured creditor could declare the Company's indebtedness
to be immediately due and payable and foreclose on the assets securing the
defaulted indebtedness. Moreover, to the extent that all of the Company's assets
continue to be pledged to secure outstanding indebtedness, such assets will not
be available to secure additional indebtedness. The Company's loan agreement
with its institutional lender restricts the ability of the Company to incur
additional indebtedness. The terms of such agreement may limit the ability of
the Company to obtain additional financing on terms favorable to the Company or
at all. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS" in the Form 10-K and the Forms 10-Q incorporated herein
by reference.
4. Potential Acquisitions. The CompanyWE MAY ACQUIRE ADDITIONAL COMPANIES WHICH MAY RESULT IN ADVERSE EFFECTS ON OUR
EARNINGS.
We may at times become involved in discussions with potential
acquisition candidates. However, there can be no
assuranceAny acquisition that the Company will identify and/orwe may consummate an acquisition, or
that such acquisitions, if completed, will be profitable. In addition, should
the Company consummate an acquisition, such acquisition could
6
11may have an
adverse effect on the Company'sour liquidity and earnings. Further, there
canearnings and may be no assurance that any financing received by the Company, if any, together
with cash flow, will be sufficientdilutive to finance such acquisitions.our
earnings. In the event the Company consummatesthat we consummate an acquisition or obtainsobtain additional
capital through the sale of debt or equity to finance suchan acquisition, currentour
shareholders may experience dilution in their shareholder'sshareholders' equity.
5. ManagementOUR FINANCIAL CONDITION MAY BE AFFECTED BY INCREASES IN HEALTH CARE AND WORKERS'
COMPENSATION INSURANCE COSTS.
Health care insurance premiums and workers' compensation insurance
coverage comprise a significant part of Growth. The Companyour operating expenses. Accordingly, we
use managed care procedures in an attempt to control these costs. Changes in
health care and workers' compensation laws or regulations may result in an
increase in our costs and we may not be able to immediately incorporate such
increases into the fees charged to clients because of our existing contractual
arrangements with clients. As a result, any such increases in these costs could
have a material adverse effect on our financial condition, results of operations
and liquidity.
OUR FINANCIAL CONDITION MAY BE AFFECTED BY RISKS ASSOCIATED WITH THE HEALTH AND
WORKERS' COMPENSATION CLAIMS EXPERIENCE OF OUR CLIENTS.
Although we utilize only fully-insured plans of health care and incur
no direct risk of loss under those plans, the premiums that we pay for health
care insurance are directly affected by the claims experience of our clients. If
the experience of the clients is unfavorable, the premiums that are payable by
us will increase. We may not be able to pass such increases onto our clients,
which may reduce our profit margin. Increasing health care premiums could also
place us at a disadvantage in competing for new clients. In addition, periodic
reassessments of workers' compensation claims of prior periods may require an
increase or decrease to our reserves, and therefore may also affect our present
and future financial condition.
OUR FINANCIAL CONDITION MAY BE AFFECTED BY INCREASES IN HEALTH INSURANCE
PREMIUMS, UNEMPLOYMENT TAXES AND WORKERS' COMPENSATION RATES.
Health insurance premiums, state unemployment taxes and workers'
compensation rates are in part determined by our claims experience and comprise
a significant portion of our direct costs.
14
If we experience a large increase in claim activity, our unemployment taxes,
health insurance premiums or workers' compensation insurance rates could
increase. Although we employ internal risk management procedures in an attempt
to manage our claims incidence, estimate claims expenses and structure our
benefits contracts to provide as much cost stability as possible, we may not be
able to prevent increases in claim activity, accurately estimate our claims
expenses or pass the cost of such increases on to our clients. Since our ability
to incorporate such increases into service fees to our clients is constrained by
contractual arrangements with clients, a delay could result before such
increases could be reflected in service fees. As a result, such increases could
have a material adverse effect on our financial condition or results of
operations.
SIGNIFICANT GROWTH THROUGH ACQUISITIONS MAY ADVERSELY AFFECT OUR MANAGEMENT AND
OPERATING SYSTEMS.
We completed twothree significant acquisitions during the past fiscal yeartwo
calendar years and intendsintend to continue to pursue a strategy of acquiring
compatible businesses in the future, although it does not believe it is solely
dependent upon acquisitions for future growth. The Company'sfuture. Our growth is making significant demands on
the Company'sour management, operations and resources, including working capital. If we are
not able to effectively manage our growth, our business and operations will be
materially harmed. To manage growth effectively, the Companywe will be required to continue
to improve itsour operational, financial and managerial systems, procedures and
controls, hire and train new employees while managing itsour current operations and
employees. Historically, the Company'sour cash flow from operations has been insufficient to
maintain and/or expand operations and there
can be no assurance sufficient capital willmay not be available in the future.
Further,
there can be no assurance the Company will be able to effectively manage its
growth and the failure to do so wouldOUR PAYROLL BUSINESS MAY BE ADVERSELY AFFECTED IF THERE IS AN ECONOMIC DOWNTURN
IN THE CONSTRUCTION BUSINESS.
Although we have a material adverse effect on the
Company.
6. Concentration of Customer Base. Although the Company has expanded itsour services to a number of industries, the Company'sour
payroll service business continues to rely to a material extent on the
construction industry. During the last fiscal year, construction related
business accounted for approximately 18%70% of the Company'sour payroll service business' total
gross margin.customers. Accordingly, the continuedif there is a slowdown in construction activities, has affected, and may continue toit
will affect the Company'sour revenues and profitability. The CompanyManagement believes its reliance on
the construction business will continue to decline as its customer base expands
and becomes more diversified.
OUR BUSINESS MAY BE ADVERSELY AFFECTED TO DUE ECONOMIC CONDITIONS IN SPECIFIC
GEOGRAPHIC MARKETS.
While we have offices located in seven markets in five different
states, the majority of our revenues are derived through our Florida and Texas
operations. While we believe that our market diversification will eventually
lessen this risk in addition to generating significant revenue growth, we may
not be able to duplicate in other markets the revenue growth and operating
results experienced in our Florida and Texas markets.
15
UNFAVORABLE INTERPRETATIONS OF GOVERNMENT LAWS MAY HARM OUR OPERATIONS.
Our operations are affected by many federal, state and local laws
relating to labor, tax, insurance and employment matters and the provision of
managed care services. Many of the laws related to the employment relationship
were enacted before the development of alternative employment arrangements, such
as those that we provide, and do not specifically address the obligations and
responsibilities of non-traditional employers. The unfavorable resolution of
unsettled interpretive issues concerning our relationship could have a material
adverse effect on our results of operations, financial condition and liquidity.
Uncertainties arising under the Internal Revenue Code of 1986 include, but are
not limited to, the qualified tax status and favorable tax status of certain
benefit plans we and other alternative employers provide. In addition, substantiallynew laws
and regulations may be enacted with respect to its activities which may also
have a material adverse effect on our business, financial condition, results of
operations and liquidity.
IF GOVERNMENT REGULATIONS REGARDING PEOS ARE IMPLEMENTED, OR IF CURRENT
REGULATIONS ARE CHANGED, OUR BUSINESS COULD BE HARMED.
Because many of the laws related to the employment relationship were
enacted prior to the development of professional employer organizations and
other staffing businesses, many of these laws do not specifically address the
obligations and responsibilities of non-traditional employers. Our operations
are affected by numerous federal, state and local laws and regulations relating
to labor, tax, insurance and employment matters. By entering into an employment
relationship with employees who work at client locations, we assume obligations
and responsibilities of an employer under these laws. Uncertainties arising
under the Internal Revenue Code of 1986, include, but are not limited to, the
qualified tax status and favorable tax status of certain benefit plans provided
by our company and other alternative employers. The unfavorable resolution of
these unsettled issues could have a material adverse effect on results of
operations and financial condition. While many states do not explicitly regulate
PEOs, approximately one-third of the states have enacted laws that have
licensing or registration requirements for PEOs, and several additional states
are considering such laws. Such laws vary from state to state but generally
provide for the monitoring of the fiscal responsibility of PEOs and specify the
employer responsibilities assumed by PEOS. There can be no assurance that we
will be able to comply with any such regulations which may be imposed upon us in
the future, and our inability to comply with any such regulations could have a
material adverse effect on our results of operations and financial condition. In
addition, there can be no assurance that existing laws and regulations which are
not currently applicable to us will not be interpreted more broadly in the
future to apply to our existing activities or that new laws and regulations will
not be enacted with respect to our activities. Either of these changes could
have a material adverse effect on our business, financial condition, results of
operations and liquidity.
WE MAY NOT BE ABLE TO OBTAIN ALL OF THE LICENSES AND CERTIFICATIONS THAT WE NEED
TO OPERATE.
State and federal authorities extensively regulate the managed health
care industry and some of our arrangements relating to specialty managed care
services or the maintenance or operation of
16
health care provider networks require us to satisfy operating, licensing or
certification requirements. Any further expansion of the range of specialty
managed care services that we offer is likely to require that we satisfy
additional licensing and regulatory requirements. In addition, certain states
require entities operating in the PEO business to be licensed. If we are unable
to obtain or maintain all of the Staff-Rx
customer base isrequired licenses or certifications that we
need, we could experience material adverse effects to our results of operations,
financial condition and liquidity.
HEALTH CARE OR WORKERS' COMPENSATION REFORM COULD IMPOSE UNEXPECTED BURDENS ON
OUR ABILITY TO CONDUCT OUR BUSINESS.
Regulation in the healthcare business. See "BUSINESS - Customers"health care and workers' compensation fields
continues to evolve, and we cannot predict what additional government
regulations affecting our business may be adopted in the Form 10-K incorporated hereinfuture. Changes in any
of these laws or regulations may adversely impact the demand for our services,
require that we develop new or modified services to meet the demands of the
marketplace, or require that we modify the fees that we charge for our services.
Any such changes may adversely impact our competitiveness and financial
condition.
IF WE LOSE OUR QUALIFIED STATUS FOR CERTAIN TAX PURPOSES, OUR BUSINESS WOULD BE
ADVERSELY AFFECTED.
The Internal Revenue Service established an Employee Leasing Market
Segment Group for the purpose of identifying specific compliance issues
prevalent in certain segments of the PEO industry. One issue that arose in the
course of these audits is whether PEOs should be considered the employers of
worksite employees under Internal Revenue Code provisions applicable to employee
benefit plans, which would permit PEOs to offer benefit plans that qualify for
favorable tax treatment to worksite employees. If the IRS concludes that PEOs
are not employers of worksite employees for purposes of the Internal Revenue
Code, we would need to respond to the following adverse implications:
- - the tax qualified status of our 401(k) plan could be revoked and our
cafeteria plan may lose its favorable tax status;
- - worksite employees would not be able to continue to participate in such
plans or in other employee benefit plans;
- - we may no longer be able to assume the client company's federal
employment tax withholding obligations;
- - if such a conclusion were applied retroactively, then employees' vested
account balances in the 401(k) plan would become taxable immediately,
we would lose our tax deduction to the extent contributions were not
vested, the plan trust would become a taxable trust and penalties, and
additional taxes for prior periods could be assessed.
17
In such a circumstance, we would face the risk of client
dissatisfaction as well as potential litigation, and our financial condition,
results of operations and liquidity could be materially adversely affected.
WE ARE LIABLE FOR THE COSTS OF WORKSITE EMPLOYEE PAYROLL AND BENEFITS AND BEAR
THE RISK IF SUCH COSTS EXCEED THE FEES PAYABLE TO US BY OUR CLIENTS.
Under our standard client service agreement, we become a co-employer of
worksite employees and assume the obligations to pay the salaries, wages and
related benefit costs and payroll taxes of such worksite employees. We assume
these obligations as a principal, not merely as an agent of the client company.
If a client company does not pay us or if the costs of benefits provided to
worksite employees exceeds the fees paid by reference.
7. Competition.a client company, our ultimate
liability for worksite employee payroll and benefits costs could have a material
adverse effect on our financial condition or results of operations. Our
obligations include responsibility for
- - payment of the salaries and wages for work performed by worksite
employees, regardless of whether the client company makes timely
payment to us of the associated service fee; and
- - providing benefits to worksite employees even if the costs we incur to
provide those benefits exceed the fees paid by the client company.
WE BEAR THE RISK OF NONPAYMENT FROM OUR CLIENTS.
To the extent that any client experiences financial difficulty, or is
otherwise unable to meet its obligations as they become due, our financial
condition and results of operations could be adversely affected. For work
performed prior to the termination of a client agreement, we may be obligated,
as an employer, to pay the gross salaries and wages of the client's worksite
employees and the related employment taxes and workers' compensation costs,
whether or not our client pays us on a timely basis, or at all. We have in the
past incurred bad debt expense in connection with our contract staffing
business. In addition, in each payroll period we have a nominal number of
clients who fail to make timely payment prior to delivery of the payroll. A
significant increase in our uncollected account receivables may have a material
adverse effect on our earnings and financial condition.
WE MAY BE HELD LIABLE FOR THE ACTIONS OF OUR CLIENTS AND EMPLOYEES AND THEREFORE
INCUR UNFORESEEN LIABILITIES.
18
A number of legal issues with respect to the co-employment arrangements
among PEOs, their clients and worksite employees remain unresolved. These issues
include who bears the ultimate liability for violations of employment and
discrimination laws. As a result of our status as a co- employer, we may be
liable for violations of these or other laws despite contractual protections.
While our client service agreements generally provide that the client is to
indemnify us for any liability caused by the client's failure to comply with our
contractual obligations and the requirements imposed by law, we may not be able
to collect on such a contractual indemnification claim and may then be
responsible for satisfying such liabilities. In addition, worksite employees may
be deemed to be our agents, which could make us liable for their actions.
OUR STAFFING OF HEALTHCARE PROFESSIONALS EXPOSES US TO POTENTIAL MALPRACTICE
LIABILITY.
Through our TeamStaff Rx subsidiary, we engage in the business of
contract staffing of temporary and permanent healthcare professionals. The
placement of such employees increases our potential liability for negligence and
professional malpractice of those employees. Although we are covered by
liability insurance which we deem reasonable under the circumstances, not all of
the potential liability we face will be fully covered by insurance. Any
significant adverse claim which is not covered by insurance may have a material
adverse effect on us.
WE MAY BE LIABLE FOR THE ACTIONS OF WORKSITE EMPLOYEES OR CLIENTS AND OUR
INSURANCE POLICIES MAY NOT BE SUFFICIENT TO COVER SUCH LIABILITIES.
Our client agreement establishes a contractual division of
responsibilities between our company and each client for various human resource
matters, including compliance with and liability under various governmental laws
and regulations. However, we may be subject to liability for violations of these
or other laws despite these contractual provisions, even if we do not
participate in such violations. Although such client agreements generally
provide that the client indemnify us for any liability attributable to the
client's failure to comply with its contractual obligations and to the
requirements imposed by law, we may not be able to collect on such a contractual
indemnification claim, and thus may be responsible for satisfying such
liabilities. In addition, worksite employees may be deemed to be our agents,
subjecting us to liability for the actions of such worksite employees. As an
employer, we, from time to time, may be subject in the ordinary course of our
business to a wide variety of employment-related claims such as claims for
injuries, wrongful death, harassment, discrimination, wage and hours violations
and other matters. Although we carry $3 million of general liability insurance,
with a $10,000 deductible, and carry employment practices liability insurance in
the amount of $1 million, with a $25,000 deductible, there can be no assurance
that any such insurance we carry will be sufficient to cover any judgments,
settlements or costs relating to any present or future claims, suits or
complaints. There also can be no assurance that sufficient insurance will be
available to us in the future and, if available, on satisfactory terms. If the
insurance we carry is not sufficient to cover any judgments, settlements or
costs relating to any present or future claims, suits or complaints, then our
business and financial condition could be materially adversely affected.
19
OUR CLIENTS MAY BE HELD LIABLE FOR EMPLOYMENT TAXES, WHICH COULD DISCOURAGE SOME
COMPANIES FROM TRANSACTING BUSINESS WITH US.
Pursuant to the client service agreement, we assume sole responsibility
and liability for the payment of federal employment taxes imposed under the
Internal Revenue Code with respect to wages and salaries paid to our worksite
employees. While the client service agreement provides that we have the sole
legal responsibility for making these tax contributions, the Internal Revenue
Service or applicable state taxing authority could conclude that such liability
cannot be completely transferred to us. Accordingly, in the event that we fail
to meet our tax withholding and payment obligations, the client company may be
held jointly and severally liable therefor. There are essentially three types of
federal employment tax obligations:
- - income tax withholding requirements;
- - obligations under the Federal Income Contribution Act; and
- - obligations under the Federal Unemployment Tax Act.
While this interpretive issue has not, to our knowledge, discouraged clients
from enrolling with us, it is possible that a definitive adverse resolution of
this issue would not do so in the future.
WE MAY NOT BE FULLY COVERED BY THE INSURANCE WE PROCURE.
Although we carry liability insurance, the insurance we purchase may
not be sufficient to cover any judgments, settlements or costs relating to any
present or future claims, suits or complaints. In addition, sufficient insurance
may not be available to us in the future on satisfactory terms or at all. If the
insurance we carry is not sufficient to cover any judgments, settlements or
costs relating to any present or future claims, suits or complaints, our
business, financial condition, results of operations and liquidity could be
materially adversely affected.
IF WE ARE NOT ABLE TO RENEW ALL OF THE INSURANCE PLANS WHICH COVER WORKSITE
EMPLOYEES, OUR BUSINESS WOULD BE ADVERSELY IMPACTED.
The maintenance of health and workers' compensation insurance plans
that cover worksite employees is a significant part of our business. If we are
unable to secure such renewal contracts, our business would be adversely
affected. The current health and workers' compensation contracts are provided by
vendors with whom we have an established relationship, and on terms that we
believe to be favorable. While we believe that renewal contracts could be
secured on competitive terms without causing significant disruption to our
business, there can be no assurance in this regard.
OUR BUSINESS WILL SUFFER IF OUR SERVICES ARE NOT COMPETITIVE.
20
Each of the payroll, temporary employee placement and the employee
leasing industries are characterized by vigorous competition. The
principalSince we compete
with numerous entities that have greater resources than us in each of our
business lines, our business will suffer if we are not competitive factors are price and service. The Company believeswith respect
to each of the services we provide. We believe that itsour major competitors with
respect to itsour payroll and accountingtax services are Automatic Data Processing, Inc.,
Ceridian Corp. and Paychex, Inc., and with respect to employee placement
(including temporary placements and employee leasing), Butler Arde, Tech Aid,
Inc., Comp Health, Staff Leasing, Inc. and Administaff, Inc. These companies
have greater financial and marketing resources than the Company. The Company competes with numerous companies in the employee
leasing area. The Companyus. We also competescompete with
manual payroll systems and computerized payroll services includingprovided by banks, and
smaller independent companies.
There are no assurances that the Company in its existing or future
linesIF WE CANNOT OBTAIN SUFFICIENT LEVELS OF TEMPORARY EMPLOYEES, OUR BUSINESS MAY
BE AFFECTED.
Two of business will be able to compete effectively against its competitors in
these industries.
7
12
8. Need for Temporary Personnel. The Company'sour subsidiaries, DSI
Contract Staffing, Inc.,TeamStaff Solutions and StaffTeamStaff Rx, are
temporary employment agencies which depend on a pool of qualified temporary
employees willing to accept assignments for the Company'sour clients. The business of these
subsidiaries is materially dependent upon the continued availability of such
qualified temporary personnel,
but there can be no assurance that such personnel will be available to the
Company in the future. Thepersonnel. Our inability of the Company to secure temporary personnel would
have a material adverse effect on our business.
OUR CLIENT AGREEMENTS ARE SHORT TERM IN NATURE AND IF A SIGNIFICANT NUMBER OF
CLIENTS DO NOT RENEW THEIR CONTRACTS, OUR BUSINESS MAY SUFFER.
Our standard client agreement provides for successive one-year terms,
subject to termination by us or by the Company's business.
9. Potential Liability. Through its Staff Rx subsidiary, the Company
engages in the businessclient upon 60 days' prior written
notice. A significant number of contract staffing of temporary and permanent
healthcare professionals. The placement of such employees increases potential
liability of the Company for negligence and professional malpractice of such
employees. Although Staff Rx is coveredterminations by such liability insurance as the
Company deems reasonable under the circumstances, there can be no assurance that
any potential liability will be fully covered by insurance. Any significant
adverse claim which is not covered by insurance mayclients could have a material
adverse effect on our financial condition, results of operations and liquidity.
IF WE ARE UNABLE TO RENEW OR REPLACE CLIENT COMPANIES, OUR FINANCIAL CONDITION
AND RESULTS OF OPERATIONS WILL BE ADVERSELY AFFECTED.
Our standard client service agreement is subject to cancellation on 30
days notice by either us or the Company.
10. Effectclient. Accordingly, the short-term nature of
Healthcare Proposal. The Clinton Administrationthe client service agreement makes us vulnerable to potential cancellations by
existing clients, which could materially and Congress have proposed certain changesadversely affect our financial
condition and results of operations. In addition, our results of operations are
dependent in part upon our ability to retain or replace our client companies
upon the nation's healthcare system. Sincetermination or cancellation of the form of proposal whichclient service agreement. Clients
may be eventually adopted, if any,determine to cancel their relationship with us for numerous reasons,
including economic factors. It is not known at
this time, there can be no assurancepossible that the proposal adopted would notnumber of contract
cancellations will increase in the future.
SINCE WE HAVE NOT PAID DIVIDENDS ON OUR COMMON STOCK, YOU CANNOT EXPECT DIVIDEND
INCOME FROM AN INVESTMENT IN OUR COMMON STOCK.
21
We have a
material adverse effect on the business of the Company.
11. Restrictions on Payment of Dividends. The Company has not paid any dividends on its Common Stockour common stock since itsour inception
and doesdo not contemplate or anticipate paying any dividends on its Common Stockour common stock in
the foreseeable future. Our lender prohibits us from paying dividends without
its prior consent. Therefore, holders of our common stock may not receive any
dividends on their investment in us. Earnings, if any, will be retained and used
to finance the development and expansion of the Company'sour business.
The Company may not pay dividends on its
Common Stock unless the Company has earnings or capital surplus. Therefore,
there can be no assurance whether or to what extent dividends will be paid on
the Shares. See "DIVIDEND POLICY" and the financial statements and notes
contained in the Form 10-K and Forms 10-Q incorporated herein by reference.
12. Rule 144 Sales; Selling Security Holders Registration.WE HAVE SOLD RESTRICTED SHARES OF COMMON STOCK WHICH MAY DILUTE OUR STOCK PRICE
WHEN THEY ARE SELLABLE UNDER RULE 144.
Of the 18,761,166approximately 16,156,184 issued and outstanding shares (assuming
surrender of all shares held by former BrightLane shareholders and the issuance
of the Company's Common Stock prior to8,066,631 shares as contemplated in the transaction) of our common stock
as of the date of this Offering,prospectus, approximately 4,679,481207,000 shares may be deemed
"restricted shares" (excluding the shares being registered in this projection)
and, in the future, may be sold in compliance with Rule 144 under the Act.
Possible or actual sales of our common stock by our present shareholders under
Rule 144 may, in the future, have a depressing effect on the price of our common
stock in the open market. Rule 144 provides that a person holding restricted
securities which have been outstanding for a period of two yearsone year after the later
of the issuance by the
Companyour company or sale by an affiliate of the Company,our company, may sell
in brokerage transactions an amount equal to 1% of the Company'sour outstanding Common Stockcommon stock
every three months. A person who is a "non-affiliate" of the Companyour company and who has
held restricted securities for over threetwo years is not subject to the aforesaid
volume limitations as long as the other conditions of the Rule are met. Possible
or actual sales of the Company's Common Stock by certain of the Company's
present shareholders under Rule 144 may, in the future, have a depressing effect
on the price of the Company's Common Stock in the open market. In
addition, the
Company has previouslyduring fiscal 2000, we registered 6,500,000 shares reserved under its stock
option plans and approximately 6,700,0002,570,000 shares on behalf of
selling stockholders.stockholders and have outstanding approximately 577,821 previously
registered shares under our stock option plans. The sale of any of these shares
may have a
8
13
depressive effect ondepress the market for the Company's Common Stock. See "DESCRIPTIONtrading price of our common stock.
WE MAY ISSUE PREFERRED STOCK WITH RIGHTS SENIOR TO OUR COMMON STOCK WHICH MAY
ADVERSELY IMPACT THE VOTING AND OTHER RIGHTS OF SECURITIES."
13. Authorization and Discretionary IssuanceTHE HOLDERS OF OUR COMMON STOCK.
Our certificate of Preferred Stock;
Possible Anti-takeover Effects. The Company's Certificate of Incorporationincorporation authorizes the issuance of "blank
check" preferred stock with such designations, rights and preferences as may be
determined from time to time by the Boardour board of Directorsdirectors up to an aggregate of
5,000,000 shares of Preferred Stock.preferred stock. Accordingly, the Boardour board of Directorsdirectors is
empowered, without stockholder approval, to issue preferred stock with dividend,
liquidation, conversion, voting or other rights which would adversely affect the
voting power or other rights of the holders of the Company's Common Stock.our common stock. In the event of
issuance, the preferred stock could be utilized, under certain circumstances, as
a method of discouraging, delaying or preventing a change in control of the Company,our
company, which could have the effect of discouraging bids for the Companyour company and
thereby prevent stockholders from receiving the maximum value for their shares.
The Company hasAlthough we have no present intention to issue any additional shares of itsour preferred
stock, in order to discourage or delay a change of control of the Company. However, there
can be no assurance that preferred stock of the Company will not be issued at
some timeour company, we
may do so in the future. See "DESCRIPTIONIn addition, we may determine to issue preferred stock
in connection with capital raising efforts.
22
ANTI-TAKEOVER PROVISIONS IN OUR ARTICLES OF SECURITIES--Preferred Stock."
14. Possible VolatilityINCORPORATION MAKE A CHANGE IN
CONTROL OF OUR COMPANY MORE DIFFICULT.
The provisions of Stock Price. The market price for the
Company's Common Stock has experienced wide fluctuations which have not
necessarily been related to the performanceour articles of the Company. Factors such as the
Company's operating results, announcements of material events by the Company or
its competitors, as well as the general state of the securities marketsincorporation and the economy, may have a significant impact on the market price of the Company's
Common Stock. See "Market Information" in the Form 10-K.
RECENT DEVELOPMENTS
PRIVATE PLACEMENT
The Company offered and sold, in a private placement to "accredited
investors", 2,193,929 Shares, at prices ranging from $1.20 to 4.00 per Share,
for aggregate gross proceeds of approximately $5,100,000 during the period
commencing November 1995 to June 15, 1996 (the "Offering"). The Company paid
selling commissions of 8% of the purchase price of the Shares sold in the
Offering and issued Selling Agent Warrants equal to 10% of the Shares sold by
all selling agents authorized to accept such commissions. The Company issued
152,013 Selling Agent Warrants in the Offering. In addition, the Company paid
the selling agents a nonaccountable expense allowance of 1% of the aggregate
offering price of the Shares sold by such selling agent. This Prospectus covers
the Shares sold in the Offering and the Shares issuable upon exercise of the
Selling Agent Warrants.
9
14
TERMINATION OF FLORIDA ACQUISITION
On March 4, 1996, the Company announced that it had terminated, by
mutual agreement, its agreement in principal to purchase the assets of a Florida
based PEO. The decision to terminate theNew Jersey
Business Corporation Act, together or separately, could discourage potential
acquisition does not reflectproposals, delay or prevent a change in control and limit the Company's business strategy. The Company will continueprice
that certain investors might be willing to pursue a
strategypay in the future for our common
stock. Among other things, these provisions:
- - require certain supermajority votes;
- - establish certain advance notice procedures for nomination of
expansion based oncandidates for election as directors and for shareholders' proposals to
be considered at shareholders' meetings; and
- - divide the acquisitionboard of other PEOs.
MANAGEMENT CHANGES
The Company's Boarddirectors into three classes of Directors, at its regularly scheduled meeting
followingdirectors serving
staggered three-year terms.
Pursuant to our articles of incorporation, the Company's annual meetingboard of Shareholders, elected George J.
Eklund, the Company's President, as Chief Executive Officer. Mr. Eklund will
continuedirectors has
authority to serve as President. Raymond J. Skiptunis, the Company's former Chief
Executive Officer, was elected to serve as Corporate Development Officer, a
newly created office, where he will concentrate on financing and acquisition
activities.
AMENDMENT OF DIRECTORS' PLAN
The 1990 Non-Executive Director Stock Option Plan was amended by the
Board of Directors and approved by the shareholders at the Company's 1996 annual
meeting. The proposal (i) reduced the number of options granted to non-executive
directors upon joining the Board to 5,000 options (ii) reduced the number of
options granted for each year of service to 5,000 options and (iii) authorized
each non-executive director to purchase shares of the Company's Common Stock
during the initial year of service at an exercise price equal to 80% of the
current market of the stock the time of purchaseissue up to an aggregate purchase
price of $50,000. The5,000,000 preferred shares of Common Stock reserved for issuance under the
Directors' Plan are covered by this Prospectus.
10
15
SELLING SECURITY HOLDERS AND
TRANSACTIONS WITH SELLING SECURITY HOLDERS (1)
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
Dominick & Joan Quartiere
159-32 91 St.
Howard Beach, NY 11414 36,667
John J. Marcello
16 Rockne Street
Staten Island, NY 10314 28,333
Susan Athwal
521 Hemlock Hill Dr.
Toms River, NJ 08753 61,000
Ed & Sara Braunstein JTWS
74 RT 9 North
Englishtown, NJ 07726 49,119
Russell Cender
271 Graybar Drive
Bridgewater, NJ 08807 20,000
Mark Quartiere
159-32 91st Street
Howard Beach, NY 11414 44,440
Louis Sansalone
708 Pine Street
Roselle Park, NJ 07204 130,797
Alan Rosengarten
1 Patricia Street
Plainview, NY 11803 83,928
Theodore Schwartz
620 Lower Landing Rd.
Blackwood, NJ 08012 20,000
11
16
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
Mark Scott
2485 Oldfield Road
Atlanta, GA 30327 30,000
Gilbert Bachman
129 Valley Road
Atlanta, GA 30305 5,000
Anthony B. Fair
P.O. Box 39
Statesboro, GA 30459 15,288
Nanji K. Singadia
155 Shadow Lake Dr.
Lilburn, GA 30247 12,500
Charles L. Strickland
9550 Red Bird Lane
Alpharetta, GA 30202 12,500
Harris Foundation
2 North LaSalle Street
Suite 400
Chicago, IL 60602 35,000
Irving Harris Foundation A
2 North LaSalle Street
Suite 400
Chicago, IL 60602 20,000
Irving Harris
Foundation B
2 North LaSalle Street
Suite 400
Chicago, IL 60602 20,000
Steve Barnes MD
P.O. Box 190
Juliette, GA 31046 10,000
12
17
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
Robert W. Slade
116 Turner Drive
Mahomet, IL 61853 15,000
Donohue Bunch
486 Countryside
Naples, FL 33942 24,000
Sean Flanagan (2)
7 Edward Avenue
Spotswood, NJ 08884 13,334
Carlos Vrrutia
10 The Bishops Ave.
London N2 OAN UK 25,000
Peter G. King
P.O. Box 2191
Rancho Sante Fe, CA
92067 10,000
Thaddeus Kabat Jr.
1105 Hidden Oaks Dr.
Bedford, TX 76022 25,000
Preston Phillips
5507 Moss Glenn Lane
Houston, TX 77088 10,000
Leanne Pitman
3017 Glenridge
Stratford Dr
Atlanta, GA 30342 10,000
Daryl Leehaug
9425 Fox Run Court
Frankfurt, IL 60423 10,000
Donald W. Kappauf (2)
1044 Tullo Farm Road
Bridgewater, NJ 44,000
13
18
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
Michael Gernant
4014 Farhills Drive
Champaign, IL 61821 20,000
Central Illinois
Tile Co. Profit Sharing Plan
FBO/ William L. Schlueter
3302 N. Maltis
Champaign, IL 61821 43,333
The Infinity Fund, L.P.
3 Piedmont Center
Ste 210
Atlanta, GA 30305 600,000
Lyonshare Venture
Capital
P.O. Box 247
2521 Vestal Parkway E.
Vestal, NY 13851 16,000
Richard M. Wilson
1140 Tennyson Place
Atlanta, GA 30319-1985 5,000
Larry Winter
28 Bayowski Road
W. Orange, NJ 07052 7,500
Debra G. Orr
7675 Ball Mill Road
Dunwoody, GA 30350 10,000
James P. Lister
13 Greenhill Drive
Simpsonville, SC
29681 10,000
14
19
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
Jack T. Hammer
7133 Bay Drive
Penthouse, #4
Miami Beach, FL 35,000
Kenneth P. DePersio
2306 Brian Hill
Champaign, IL 61821 10,000
Milton Koffman
c/o Public Loan Co., Inc.
300 Plaza Drive
Vestal, NY 13850 5,000
Endrun Investments Limited
P.O. Box N341, 2nd Floor
Charlotte House
Charlotte Street
Nassau N.P. Bahamas 50,000
The Sachs Company
1346 South Third St.
Louisville, KY 40208 75,000
LMWW Custodian
FBO Oscar S. Bryant
Jr. Individual IRA
c/o The Sachs Company
1346 South Third St.
Louisville, KY 40208 10,000
Mary S. Sachs
1346 South Third St.
Louisville, KY 40208 10,000
Wm. M. Schreiber MD
50 River Hill Road
Louisville, KY 40207 5,000
15
20
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
RNS Partners, Ltd.
c/o Riverdale Family Dental
3725 Henry Hudson Pkwy.
Bronx, NY 10463 30,000
Lawrence Antonucci
96 Columbia Turnpike
Convent Station
Morris Township, NJ 07960 15,000
Arden Brown
5761 NW 32 Terrace
Boca Raton, FL 33496 212,857
Mario DeMarchi
122 Old Clinton Road
Flemington, NJ 10,000
Michael Cantor
98 Lake Drive
Palm Beach Shores, Fl 33404 8,333
Mark Lapolla
P.O. Box 576
Jackson, WY 83001 25,000
Jerry Scott
5829 Sky Park Drive
Plano, Texas 75093 10,000
Gilbert Bachman
129 Valley Road
Atlanta, GA 30305 10,000
Franklin Morrow
200 East 61st Street
New York, New York 10021 10,000
16
21
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
Nancy G. Kennedy
35 Northwood Avenue
Atlanta, GA 30309 15,000
Delaware Charter Trust Co.
TTEE for William T.
Kennedy Defined Benefit
Pension Plan DTD 12/5/63
33 Northwood Avenue
Atlanta, GA 30309-1528 10,000
William E. Dudziak
2430 NE 35 Street
Lighthouse Point, FL 33064 10,000
Ira S. Nathan
2550 Palmer Court
Riverwoods, IL 60015 15,000
James M. Albergotti III
1165 Putter Path
Orangeburg, SC 29115 10,000
Stanton Weissenborn
21 Holton Lane
Essex Fells, NJ 07021 10,000
James C. Hellauer
1741 Thomas Road
Wayne, PA 19087 10,000
Robert A. Neff
265 Arreton Road
Princeton, NY 08540 10,000
Paine Webber, Inc. C/F
David J.S. Nicholson
(IRA)
10 E. 50th Street, 22nd Floor
New York, New York 10022 10,000
17
22
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (1) OFFERING OFFERING
DWR C/F
Dan McCarthy
FBO Dan McCarthy
Money Purchase Plan
DTD 3/18/92
78 Lloyd Road
Montclair, NJ 07042-1729 10,000
JMS Inc. Cust. FBO
Anthony A. Anzalone
1801 Market Street
Philadelphia, PA 19103 10,000
John Trevor Colvin &
Gail Suzanne Colvin
909 Pinehurst
Chapel Hill, NC 27514 10,000
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (3) OFFERING OFFERING
Donald & Co. Securities, Inc.
788 Shrewsbury Avenue
Tinton Falls, NJ 07724 45,617
Raymond M. Skiptunis (4)
c/o Donald & Co.
Securities, Inc.
788 Shrewsbury Avenue
Tinton Falls, NJ 07724 34,117
The Volume Investor, Inc.
Three Piedmont Center
Suite 210
Atlanta, GA 30305 41,279
18
23
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (3) OFFERING OFFERING
Warren R. Albergotti
c/o The Volume Invester
Three Piedmont Center
Suite 210 6,000
Atlanta, GA 30307
Argent Securities, Inc.
3340 Peachtree Road
Suite 450
Atlanta, GA 30305 9,000
Steven Mallia
c/o Spelman & Co., Inc.
7373 North Scottsdale Road
Scottsdale, Arizona 85253 7,900
Howard Falco
c/o Spelman & Co., Inc.
7373 North Scottsdale Road
Scottsdale, Arizona 85253 2,100
Janney Montgomery
Scott Inc.
1801 Market Street
Philadelphia, PA 19103-1675 6,000
19
24
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (5) OFFERING OFFERING
Hamilton Bailey
21 Circle Dr.
Plandome Manor, NY 11030 5,000
Arden Brown
5761 NW 32 Terrace
Boca Raton, FL 33496 10,000
Seymour Chanenson Trust
2922 MacHeath Cr.
Flossmoor, IL 60422 2,500
Dr. George B. DeGuire Jr.
35-27 80 St.
Jackson Hts., NY 11372 2,500
Shatha Denno &
Jerjis Denno JTWOS
107 Cobblestone Ct.
San Antonio, TX 78213 10,000
Helen K. Dieckmann
(6)(7)(14)
37 Overlook Trail
Morris Plains, NJ 07950 234,493 10,000
Senator John H. Ewing
(7)(15)
P.O. Box 352
Bedminster, NJ 07921 53,500 2,500
John H. Ewing, Jr. (8)
P.O. Box 37421
Chattanooga, TN 37422 2,500
Marilyn E. Florez Trustee (2)
for Gladys M. Noll
134 Kingsberry Dr.
Somerset, NJ 08873 2,500
20
25
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (5) OFFERING OFFERING
Dr. Joseph Greensher &
Marilyn Greensher
20 Hickory Dr.
Roslyn, NY 11576 2,500
James C. Hellauer
1741 Thomas Road
Wayne, PA 19087 2,500
David R. Hondula
268 White Oak Ridge Rd.
Bridgewater, NJ 08807 2,500
Katie and Adam Bridge
Partners, L.P.
90 Park Avenue
New York, NY 10016(17) 100,000 100,000
Stephen T. Levine (2)
P.O. Box 6425
E. Brunswick, NJ 08816 2,500
Patrick E. Mannion
855 Brown Rd.
Bridgewater, NJ 08807 2,500
Money Purchase 201,
Trustees of Bradford Black
231 E. Milton
Alliance, OH 44601 2,500
Stephen A. Pfouts
4 Brookmere Estates
Greensburg, PA 15601 10,000
Louis Sansalone
708 Pine Street
Roselle Park, NJ 07204 2,500
21
26
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (5) OFFERING OFFERING
J.W. Schaefer
115 Century Ln.
Watchung, NJ 07060 2,500
Warren Siebold
16032 E. Loyola Dr.
Aurora, CO 80013 5,000
Jack W. Wallace
3003 Cascade Dr.
Valparaiso, IN 46383 5,000
Stanton F. Weissenborn IRA
JMS Inc. Custodian FBO
Trust 74002452
21 Holton Ln.
Essex Fells, NJ 07021 5,000
Richard D. Wellbrock (9)
27 Tall Timbers
Watchung, NJ 07060 2,500
Robert M. Wellbrock (9)
Trustee
27 Tall Timbers
Watchung, NJ 07060 2,500
22
27
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (10) OFFERING OFFERING
Karl W. Dieckmann (7)(14) 234,493 5,000
c/o Digital Solutions, Inc.
4041 Hadley Road
South Plainfield, NJ 07080
William J. Marino (7)(16) 41,667 5,000
c/o Blue Cross & Blue Shield
of NJ
3 Penn Plaza E., PP-16A
Newark, NJ 07105
Senator John Ewing (7)(15) 53,500 40,000
P.O. Box 352
Bedminster, NJ 07921
Steven B. Sands (7)(17) 120,000 25,000
c/o Sands Brothers & Co.
90 Park Avenue
New York, New York 10016
23
28
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (11) OFFERING OFFERING
George J. Eklund (12)(18) 158,334 33,334
c/o Digital Solutions, Inc.
4041 Hadley Road
South Plainfield, New Jersey
07080
Louis J. Monari (12)(19) 51,000 10,000
c/o Digital Solutions, Inc.
4041 Hadley Road
South Plainfield, New Jersey
07080
Kenneth P. Brice (12)(20) 55,834 13,334
c/o Digital Solutions, Inc.
4041 Hadley Road
South Plainfield, New Jersey
07080
24
29
SHARES PERCENTAGE
BENEFICIALLY SHARES OF SHARES
OWNED SHARES OWNED OWNED
NAME AND ADDRESS OF PRIOR TO OFFERED AFTER AFTER
SECURITY HOLDER OFFERING (13) OFFERING OFFERING
Victor J. DiGioia, Esq.
369 Lexington Avenue
New York, NY 10017 5,000
Stanley R. Goldstein, Esq.
369 Lexington Avenue
New York, NY 10017 5,000
Charles P. Axelrod, Esq.
369 Lexington Avenue
New York, NY 10017 5,000
- --------------------------
1. Represents Shares issued in the Offering.
2. Sean Flanagan, Donald W. Kappauf, Marilyn E. Florez, and Stephen T.
Levine are employees of the Company.
3. Represents Shares underlying the Selling Agent Warrants.
4. Raymond M. Skiptunis is an employee of Donald & Co. Securities, Inc., and
the son of Raymond J. Skiptunis, an officer and director of the Company.
Mr. Skiptunis disclaims beneficial interest in the Shares held by his son.
5. Represents Shares underlying the Private Placement Warrants.
6. Helen K. Dieckmann is the wife of Karl W. Dieckmann, a Chairman of the
Board of the Company. Includeswithout further shareholder
approval. Such preferred shares held by each of Mr. and Mrs.
Dieckmann, each of whom disclaims beneficial interest in the Shares held by
their spouse.
7. Senator John Ewing, Karl W. Dieckmann, William J. Marino and Steven B.
Sands are directors of the Company. Mr. Dieckmann is the Chairman of the
Board.
8. John H. Ewing is the son of Senator John Ewing, a director of the Company;
Senator Ewing disclaims any beneficial ownership in the Shares held by John
H. Ewing.
25
30
9. Does not include Shares issuable upon the exercise of $25,000 principal
amount of contingent convertible notes held by end of the Wellbrocks. The
holders of the notes and the Company disagree as to the convertibility of
these notes.
10. Represents Shares issuable upon exercise of options granted under the
Directors' Plan, including options whichcould have not yet vested.
11. Represents Shares issued in lieu of a cash bonus which was earned by these
employees.
12. George J. Eklund is President and Chief Executive Officer of the Company.
Louis J. Monari, and Kenneth P. Brice are vice-presidents of the Company.
Mr. Eklund is also a director of the Company.
13. Represents Shares issued in consideration for legal services rendered to
the Company.
14. Excludes a non-vested option to purchase 5,000 Shares.
15. Includes (i) vested options to purchase 35,000 Shares; and (ii) warrants to
purchase 2,500 Shares. Excludes non-vested options to purchase 5,000
Shares.
16. Excludes a non-vested option to purchase 5,000 Shares.
17. Stephen B. Sands, a director of the Company, is an executive officer and
director of the corporate general partner of Katie and Adam Bridge
Partners, L.P. and thus may be deemed a "beneficial owner" of Securities
of the Company held by Katie and Adam Bridge Partners, L.P. Accordingly,
Mr. Sands's beneficial ownership of Shares thus includes warrants to
purchase 100,000 shares of Common Stock held by Katie and Adam Bridge
Partners, L.P. and options to purchase 20,000 Shares held by Mr. Sands
individually. Excludes non-vested options to purchase 5,000 Shares held by
Mr. Sands individually. The number of Shares owned by Katie and Adam
Bridge Partners, L.P. excludes Shares held by Mr. Sands, individually.
18. Includes vested options to purchase 125,000 Shares. Excludes non-vested
options to purchase 75,000 Shares.
19. Includes options to purchase 20,000 Shares. Excludes non-vested options to
purchase 30,000 Shares.
20. Includes vested options to purchase 42,500 Shares. Excludes non-vested
options to purchase 32,500 Shares.
26
31
DESCRIPTION OF SECURITIES
The Company's authorized capitalization consists of 40,000,000
shares of Common Stock, par value $.001 per share and 5,000,000 shares of
Preferred Stock, par value $.10 per share, which may be issued in one or more
series. The following summary description of the Common Stock and Preferred
Stock is qualified in its entirety by reference to the Company's Articles of
Incorporation.
Common Stock
Each share of Common Stock entitles its holder to one
non-cumulative vote per share and, subject to the preferential rights of the
Preferred Stockholders, the holders of more than fifty percent (50%) of the
sharesdividend, liquidation, conversion,
voting for the election of directors can elect all the directors if they
choose to do so, and in such event the holders of the remaining shares will not
be able to elect a single director. Holders of shares of Common Stock are
entitled to receive such dividends as the Board of Directors may, from time to
time, declare out of Company funds legally available for the payment of
dividends. Upon any liquidation, dissolution or winding up of the Company,
holders of shares of Common Stock are entitled to receive pro rata all of the
assets of the Company available for distribution to shareholders after the
satisfaction of the liquidation preference of the Preferred Stockholders.
Shareholders do not have any pre-emptive rights to subscribe
for or purchase any stock, warrants or other securities of the Company. The
Common Stock is not convertible or redeemable. Neither the Company's Certificate
of Incorporation nor its By-laws provide for pre-emptive rights.
Preferred Stock
The Preferred Stock may be issued in one or more series, to be
determined and to bear such title or designation as may be fixed by resolution
of the Board of Directors prior to the issuance of any shares thereof. Each
series of the Preferred Stock will have such voting powers (including, if
determined by the Board of Directors, no voting rights), preferences, and other rights as determined by the Boardand privileges that are superior or senior to our common
stock. Issuance of Directors, with such qualifications,
limitations or restrictions as may be statedpreferred shares could result in the resolutionsdilution of the Boardvoting
power of Directors adopted prior to the issuance of any shares of such series of
Preferred Stock.
Purchasers of the Shares offered hereby should be aware that
theour common stock, adversely affecting holders of any series of the Preferred Stock which may be issuedour common stock in
the future could have voting rights, rights to receive dividendsevent of its liquidation or rights to
distributiondelay, and defer or prevent a change in liquidation superior to those of holders of the Common Stock,
thereby diluting or negating the voting rights, dividend rights or liquidation
rights of the holders of the Common Stock.
27
32
Because the terms of each series of Preferred Stock may be
fixed by the Company's Board of Directors without shareholder action, the
Preferred Stock could be issued with terms calculated to defeat a proposed
takeover of the Company, or to make the removal of the Company's management more
difficult. Undercontrol.
In certain circumstances, thissuch issuance could have the effect of decreasing the
market price of our common stock. In addition, the Common Stock. ManagementNew Jersey Business
Corporation Act contains provisions that, under certain conditions, prohibit
business combinations with 10% shareholders and any New Jersey corporation for a
period of five years from the time of acquisition of shares by the 10%
shareholder. The New Jersey Business Corporation Act also contains provisions
that restrict certain business combinations and other transactions between a New
Jersey corporation and 10% shareholders.
23
SELLING SECURITY HOLDERS
The following table sets forth certain information as of November 29,
2001 with respect to each selling security holder with respect to which we are
including shares for resale in the registration statement of which this
prospectus forms a part. The percentages reflected below assume the issuance of
8,066,631 shares in connection with the transaction with BrightLane.com, Inc.
and does not take into account (i) a reduction for fractional shares and that
not all BrightLane shareholders have returned their BrightLane shares for
exchange as of November 29, 2001. The transaction with BrightLane was
consummated on August 31, 2001. The common stock is the only voting securities
of TeamStaff.
SHARES PERCENT OF SHARES PERCENTAGE
OWNED PRIOR TEAMSTAFF OWNED OF SHARES
NAME AND ADDRESS OF TO OFFERING SHARES SHARES OWNED AFTER OWNED
SECURITY HOLDER (1)(2) OFFERED PRIOR TO OFFERING OFFERING AFTER
OFFERING
First Union Private 3,334,117 3,334,117 20.6% 0
Capital(3)(4)
Nationwide Financial 2,256,488 2,256,488 13.9% 0
Services(3)(4)
T. Stephen Johnson and 286,785 286,785 1.7% 0 *
Mary Johnson(3)(5)
D. Alan Najjar (3)(6) 117,679 42,679 * 0 *
Vinson A. Brannon (3) 131,698 131,698 * 0 *
William James Stokes (3) 37,032 37,032 * 0 *
D. R. Grimes (3) 18,516 18,516 * 0 *
Thomas Heaps (3) 61,196 61,196 * 0 *
Rocco J. Marano (7) 12,856 2,000 * 10,856 *
John H. Ewing (7) 34,034 11,000 * 23,034 *
Charles R. Dees, Jr. (7) 14,381 3,000 * 11,381 *
Martin J. Delaney (8) 65,448 10,000 * 55,448 *
* denotes less than one percent (1%)
- -------------
1. Unless otherwise indicated in the footnotes, includes all shares as to
which the individual has sole or shared voting power or investment
power and also any shares that the individual has the right to acquire
within 60 days of the Company is not awaredate of this prospectus through the exercise of
any stock option or other right. Unless otherwise indicated in the
footnotes, each individual has sole voting and investment power (or
shares such threatened transactionpowers with his or her spouse) with respect to the shares
shown as beneficially owned).
24
2. See "Plan of Distribution."
3. Represents shares obtain controlin connection with the acquisition of
BrightLane.com, Inc. completed as of August 31, 2001 and as described
in TeamStaff's SEC reports which have ben incorporated by reference.
4. The selling security holder has agreed to the terms of a lockup in
favor of TeamStaff whereby the selling security holder may sell only up
to 50% of the Company.shares held by him, her or it, as the case may be,
commencing on September 1, 2002 and the remaining 50% commencing on
September 1, 2003.
5. T. Stephen Johnson and Mary Johnson are husband and wife. Mr. Johnson
is the Chairman of TeamStaff. Listed shares consists of (a) 111,221
shares owned by Mr. Johnson; (b) 120,016 shares owned by Ms. Johnson;
and (c) an aggregate of 27,774 held in custodial accounts for the
children and a grandchild of the listed holders.
6. Mr. Najjar is employed as President of BrightLane.com, Inc., a
wholly-owned subsidiary of TeamStaff. Shares offered does not include
75,000 options to purchase common stock issued to Mr. Najjar under his
employment agreement.
7. Listed shares include warrants to purchase Common Stock issued in
connection with the termination of the selling security holder's
service as director of TeamStaff effective September 4, 2001. The
warrants are exercisable at $5.1562 per share. The warrants and
underlying securities are intended to be issued in issuances determined
by the Board of Directors as exempt under Rule 16(b)3.
8. Mr. Delaney is a director of TeamStaff. Listed shares include 10,000
warrants issued in December 2000. The warrants haven an exercise price
of $3.20 per share.
25
PLAN OF DISTRIBUTION
The Sharescommon stock covered by this prospectus, including the shares
underlying the warrants which will be issued by TeamStaff upon the exercise by
the holders of the warrants, may be offered and sold from time to time by the
Selling
Security Holders,selling security holders, and pledgees, donees, transferees or by their transferees. No underwriting arrangements have
been entered into byother successors
in interest selling shares received after the Selling Security Holders. The distributiondate of this prospectus from the
Shares by the Selling Security Holders may be effectedselling security holders as a pledge, gift or other non-sale related transfer,
including in one or more of the following transactions:
- on the over the counter market;
- in transactions that may take placeother than on the over the counter market including
ordinary brokerssuch
as private resales;
- in connection with short sales;
- by pledge to secure debts and other obligations;
- in connection with the writing of options, in hedge
transactions, privately negotiatedand in settlement of other transactions in
standardized or through
sales to one or more dealers for resaleover-the-counter options;
- in a combination of any of the Sharesabove transactions; or
- pursuant to Rule 144 under the Securities Act, assuming the
availability of an examination from registration.
First Union Corporation, Nationwide Financial Services and T Stephen
Johnson, who are selling security holders, have agreed to the terms of a
"lockup" agreement whereby they have agreed that the shares of TeamStaff owned
by them only be sold as principals,follows: commencing on the first anniversary of the
transaction (August 31, 2002) 50% of their shares may be sold and commencing on
the second anniversary the remaining shares may be sold. The Board of Directors
has reserved the right to release all of part of the shares from the lockup
prior to its expiration.
The selling security holders may sell their shares at market prices
prevailing at the time of sale, at prices related to such prevailing market prices,
at negotiated prices, or at negotiatedfixed prices.
Usual and customary or specifically
negotiated brokerage feesBroker-dealers that are used to sell shares will either receive
discounts or commissions may be paid byfrom the Selling Security
Holders in connection with such sales.selling shareholders, or will receive
commissions from the purchasers for whom they acted as agents.
The Selling Security Holdersselling security holders and intermediaries through whom such Sharesshares are
sold may be deemed "underwriters"underwriters within the meaning of the Securities Act with
respect to the Sharesshares offered.
26
There can be no assurance that the selling security holders will sell
all or any of the common stock.
We have agreed to keep this prospectus effective for a period expiring
on the earlier of the date on which all of the selling security holders' shares
have been sold or the date on which all such shares are eligible for sale
pursuant to Rule 144 under the Securities Act.
The selling shareholders and us have agreed to customary
indemnification obligations with respect to the sale of common stock by use of
this prospectus.
REPORTS TO SHAREHOLDERS
The CompanyOur company distributes annual reports to its stockholders, including
financial statements examined and reported on by independent public accountants,
and will provide such other reports as management may deem necessary or
appropriate to keep stockholders informed of the Company'sour company's operations.
LEGAL MATTERS
The legality of the offering of the Sharesshares will be passed upon for the Companyus
by Goldstein & DiGioia, LLP, 369 Lexington Avenue, New York, New York l00l7.10017.
EXPERTS
The audited financial statements of the Company for the fiscal years
ending as of September 30, 1995 and 1994 and for each of the three year periods
ending September 30, 1995 have been included in the Company's Form 10-K for the
fiscal year ended September 30, 1995, andschedules incorporated herein and in the
Registration Statement by
reference in reliance uponthis prospectus and elsewhere in the report ofregistration statement
pertaining to TeamStaff, Inc., have been audited by Arthur Andersen LLP,
independent public accountants, appearingas indicated in the Form 10-K,their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
The financial statements of BrightLane.com, Inc. (a development stage
company) as of December 31, 1999 and 2000 and for the periods May 7, 1999 (Date
of Inception) through December 31, 1999 and the year ended December 31, 2000 and
the period May 7, 1999 (Date of Inception) through December 31, 2000,
incorporated by reference in this prospectus have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report with respect
thereto, and have been so incorporated in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
28
33
ADDITIONAL INFORMATION
The CompanyOur company has filed a Registration Statement under the Act with the
Securities and Exchange Commission, (the "Commission"), with respect to the securities offered by
this Prospectus.prospectus. This Prospectusprospectus
27
does not contain all of the information set forth in the Registration Statement.registration statement.
For further information with respect to the Companyour company and such securities,
reference is made to the Registration Statementregistration statement and to the exhibits and
schedules filed therewith. Each statement made in this Prospectusprospectus referring to a
document filed as an exhibit to the Registration Statementregistration statement is qualified by
reference to the exhibit for a complete statement of its terms and conditions.
The Registration
Statement,registration statement, including exhibits thereto, may be inspected without
charge to anyone at the office of the Commission, and copies of all or any part
thereof may be obtained from the Commission's principal office in Washington,
D.C. upon payment of the Commission's charge for copying.
29FORWARD LOOKING STATEMENTS
Certain statements contained herein constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "1995 Reform Act"). TeamStaff, Inc. desires to avail itself of
certain "safe harbor" provisions of the 1995 Reform Act and is therefore
including this special note to enable TeamStaff to do so. Forward-looking
statements included in this report involve known and unknown risks,
uncertainties, and other factors which could cause TeamStaff's actual results,
performance (financial or operating) or achievements to differ from the future
results, performance (financial or operating) achievements expressed or implied
by such forward-looking statements. Such future results are based upon
management's best estimates based upon current conditions and the most recent
results of operations. These risks include, but are not limited to, risks
associated with TeamStaff's risks of current as well as future acquisitions,
risks from potential workers compensation claims and required payments, risks
associated with payroll and employee related taxes which may require
unanticipated payments by TeamStaff, liabilities associated with TeamStaff's
status under certain federal and state employment laws as a co-employer, effects
of competition and technological changes and dependence upon key personnel.
28
34
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of the
securities being registered herein are estimated.
Amount
------
Securities and Exchange Commission
Registration Fee.........................................................................Fee $4,296 8,587
-------
Printing and Engraving Expenses.......................................................... _____Expenses $ 0
-------
Accounting Fees and Expenses.............................................................. _____Expenses $20,000*
-------
Legal Fees and Expenses.................................................................. _____Expenses $25,000*
-------
Blue Sky Fees and Expenses........................................................... ______Expenses $ 0*
-------
Transfer Agent and Registrar Fees................................................. ______Fees $ 500*
-------
Miscellaneous Fees and Expenses...........................................................______
Total..............................Expenses $______ 1,000*
-------
Total $55,087*
=======
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company'sOur company's By-Laws require the Companyus to indemnify, to the full extent
authorized by Section 14A:3-5 of the New Jersey Business Corporation Act, any
person with respect to any civil, criminal, administrative or investigative
action or proceeding instituted or threatened by reason of the fact that he, his
testator or intestate is or was a director, officer or employee of the Companyour company
or any predecessor of the Companyour company is or was serving at the request of the Companyour
company or a predecessor of the Companyour company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.
Section 14A:3-5 of the New Jersey Business Corporation Act authorized
the indemnification of directors and officers against liability incurred by
reason of being a director or officer and against expenses (including attorneys
fees) in connection with defending any action seeking to establish such
liability, in the case of third-party claims, if the officer or director acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and if such officer or director shall not
have been adjudged liable for negligence or misconduct, unless a court otherwise
determines. Indemnification is also authorized with respect to any criminal
action or proceeding where the officer or director had no reasonable cause to
believe his conduct was unlawful.
II-129
35
In accordance with Section 14A:2-7 of the New Jersey Business
Corporation Act, the Company'sour company's Certificate of Incorporation eliminates the
personal liability of officers and directors to the Companyour company and to stockholders
for monetary damage for violation of a director's duty owed to the Companyour company or
its Shareholders,our shareholders, under certain circumstances.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, or persons controlling the
Companyour
company pursuant to the foregoing provisions, the Companyour company has been informed that
in the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in such Act and is therefore unenforceable.
ITEM 16. EXHIBITS
The exhibits designated with an asterisk (*) are filed herewith
and thoseherewith. The exhibits
designated with two asterisks (**) will behave previously been filed by amendment. All
other exhibits have been previously filed with the Commission and, pursuant to l717 C.F.R. Secs.
20l.24 and 240.l2b-32,240.12b-32, are incorporated by reference to the document referenced
in brackets following the descriptions of such exhibits. Exhibit
No. Description
2.1 Asset Purchase Agreement, dated September 1, 1994, as
amended, between DSI Staff ConnXions, Inc.,Those exhibits
designated with (***) will be filed upon amendment.
Exhibit
No. Description
--- -----------
2.1** Plan and Agreement of Merger and Reorganization dated as
of October 29, 1998 among the Company, the Merger
Corporations, the TeamStaff Entities and certain
individuals and trusts as shareholders of the TeamStaff
Entities (filed as Exhibit A to Proxy Statement of
Digital Solutions, Inc, dated November 12, 1998).
2.2** Form of Asset Purchase Agreement dated as of April 7,
2000 by and between TeamStaff Inc., TeamStaff V, Inc.,
Outsource International, Inc. and Synadyne I, Inc.,
Synadyne II, Inc., Synadyne III, Inc., Synadyne IV, Inc.,
Synadyne V, Inc., Guardian Employer East LLC and Guardian
Employer West LLC. (Filed as Exhibit 3.1 to Form 8-K
dated April 19, 2000).
2.3** Agreement and Plan of Merger by and among TeamStaff,
Inc., TeamSub, Inc. and BrightLane.com, Inc., dated as of
March 6, 2001, as amended by Amendment No. 1 dated as of
March 21, 2001 and Amendment No. 2 dated as of April 6,
2001 (filed as Appendix A to the proxy
statement/prospectus filed on August 7, 2001, SEC File
No. 333- 61730, as part of Registrant's Registration
Statement on Form S-4).
3.1** Amended and Restated Certificate of Incorporation of
Registrant (Filed as Exhibit A to Definitive Proxy
Material dated July 20, 1990).
30
3.1.1** Form of Amendment to Amended and Restated Certificate of
Incorporation (filed as Exhibit G to our company's Proxy
Statement dated November 12, 1998 as filed with the
Securities and Exchange Commission).
3.1.2** Amended and Restated Certificate of Incorporation (filed
as Exhibit A to Definitive Proxy Statement dated May 1,
2000 as filed with the Securities and Exchange
Commission).
3.2** Amended By-Laws of Registrant adopted as of January 25,
1999 (filed as Exhibit 3.2 to the Registration Statement
on Form S-4 SEC File No. 333-61730).
3.3** Form of Form of Certificate of Designation of Series A
Preferred Stock (filed as Exhibit 3.1 to Form 8-K dated
April 6, 2001).
3.4** Amended By-Laws of Registrant adopted as of May 15, 2001
(filed as Exhibit 3.4 to the Registration Statement on
Form S-4 SEC File No. 333-61730).
3.5* Amended By-Laws of Registrant adopted as of August 29,
2001.
4.1** Form of Common Stock Certificate (Exhibit 4.1 to
Registration Statement on Form S-18, File No.
33-46246-NY)
4.2** 2000 Employee Stock Option Plan (filed as Exhibit B to
the Proxy Statement dated as of March 8, 2000 with
respect to the Annual meeting of Shareholders held on
April 13, 2000).
4.3** 2000 Non-Executive Director Stock Option Plan (filed as
Exhibit B to the Proxy Statement dated as of March 8,
2000 with respect to the Annual meeting of Shareholders
held on April 13, 2000).
5.1* Opinion of Goldstein & DiGioia, LLP re: Legality of
Shares.
10.1** Form of Employment Agreement between TeamStaff, Inc. and
Donald Kappauf dated as of April 2, 2001.
10.2** Form of Employment Agreement between TeamStaff, Inc. and
Donald Kelly dated as of April 2, 2001.
10.3** Form of Employment agreement between TeamStaff, Inc. and
Kenneth Jankowski dated as of February 16, 2000.
31
10.4** Lease dated May 30, 1997 for office space at 300 Atrium,
Somerset, New Jersey (Exhibit 10.6.1 to Form 10-K for the
fiscal year ended September 30, 1997).
10.5** Seventh Amended Loan Agreement between Registrant and
Summit Bank and sixth amended Promissory Note (Exhibit
10.16.1 to Form 10-K for the fiscal year ended September
30, 1997).
10.6** Loan and Security Agreement dated April 28, 1998 among
Digital Solutions, Inc. and FINOVA Capital Corporation
(Filed as Exhibit 10.17 to Form 10-K filed January 12,
1999).
10.7** Secured Promissory Note in the principal amount of
$2,500,000 dated April 28, 1998 in favor of FINOVA
Capital Corporation (Filed as Exhibit 10.18 to Form 10-K
filed January 12, 1999).
10.8** Stock Pledge Agreement (Security Agreement) dated April
28, 1998 between FINOVA Capital Corporation and Digital
Solutions, Inc. (Filed as Exhibit 10.19 to Form 10-K
filed January 12, 1999).
10.9** Employment Agreement between our company and Kirk
Scoggins dated January 25, 1999 (Filed as Exhibit 10.1 to
Form 8-K dated January 25, 1999).
10.10** Registration Rights Agreement between our company and
certain former shareholders of the TeamStaff Companies
dated as of January 25, 1999 (Filed as Exhibit 10.2 to
Form 8-K dated January 25, 1999).
10.11** Amended and Restated Loan and Security Agreement between
our company and FINOVA Capital Corporation dated January
25, 1999 (Filed as Exhibit 10.3 to Form 8-K dated January
25, 1999).
10.12** Amended and Restated Note in the principal amount of
$2,166,664 dated January 25, 1999 (Filed as Exhibit 10.4
to Form 8-K dated January 25, 1999).
10.13** Secured Note in the amount of $2,500,000 in favor of
FINOVA Capital Corporation dated January 25, 1999 (Filed
as Exhibit 10.5 to Form 8-K dated January 25, 1999).
10.14** Secured Note in the amount of $750,000 in favor of FINOVA
Capital Corporation dated January 25, 1999 (Filed as
Exhibit 10.6 to Form 8-K dated January 25, 1999).
32
10.15** Schedule to Amended and Restated Loan Agreement dated
January 25, 1999 with FINOVA Capital Corporation (Filed
as Exhibit 10.7 to Form 8-K dated January 25, 1999).
10.16** Form of Agreement between TeamStaff and Donald & Co.
Securities, Inc. (Filed as Exhibit 10.27 to Form S-3/A
dated June 28, 2000).
10.17** First Amendment to the Amended and Restated Schedule to
the Amended and Restated Loan and Security Agreement
among TeamStaff, Inc. and its Subsidiaries as
Co-Borrowers and FINOVA Capital Corporation dated April
7, 2000 (Filed as Exhibit 10.1 to Form 8-K dated April
19, 2000).
10.18** Second Amended and Restated Secured Promissory Note A
dated April 7, 2000 in the principal amount of $1,541,659
payable to FINOVA Capital Corporation (Filed as Exhibit
10.2 to Form 8-K dated April 19, 2000).
10.19** Amended and Restated Secured Promissory Note B dated
April 7, 2000 in the principal amount of $1,899,996
payable to FINOVA Capital Corporation (Filed as Exhibit
10.3 to Form 8-K dated April 19, 2000).
10.20** Secured Promissory Note C dated April 7, 2000 in the
principal amount of $4,000,000 payable to FINOVA Capital
Corporation (Filed as Exhibit 10.4 to Form 8-K dated
April 19, 2000).
10.21** Employment Agreement dated October 1, 1999 between our
company and Donald Kappauf (Filed as Exhibit 10.32 to
Form S-3/A dated June 28, 2000).
10.22** Employment Agreement dated October 1, 1999 between our
company and Donald Kelly (Filed as Exhibit 10.33 to Form
S-3/A dated June 28, 2000).
10.23** Form of Stock Purchase Agreement dated as of April 6,
2001 between TeamStaff, Inc. and BrightLane.com, Inc.
with respect to purchase of Series A Preferred Stock
(filed as Exhibit 10.1 to Form 8-K dated April 6, 2001).
10.24** Form of Registration Rights Agreement dated as of April
6, 2001 between TeamStaff, Inc. and BrightLane.com, Inc.
(filed as Exhibit 10.2 to Form 8-K dated April 6, 2001).
10.25** Form of Marketing Agreement dated as of April 11, 2001
between First Union Corporation and TeamStaff, Inc.
and M & B Staff Management, Inc.
2.2 Asset Purchase Agreement dated November 21, 1994, by and
among Registrant, Staff-RX, Inc., RADS Radiography, Inc.,
Skillmaster Management, Inc., Relief Services, Inc., DSI
Staff-Rx, Inc. and DSI Contract Staffing, Inc. (Exhibit 2.2 to
Form 8-K dated November 21, 1994).
2.3 Asset Purchase Agreement between DSI Staff
ConnXions-Southwest, Inc. and The Alternative Source, Inc.
(Exhibit 2.1 to Form 8K dated February 3, 1994).
2.4 Stock Purchase Agreement between MLB Medical Staffing,
Inc. and DSI Contract Staffing, Inc., and Digital Solutions,
Inc. with DBRM Investment Corporation and Rick A. McMinn
(Exhibit 2.2 to Form 8K dated February 3, 1994).
2.5 Stock Purchase Agreement of RAM Technical Services, Inc.,
DSI Contract Staffing, Inc. and Digital Solutions, Inc. with
Rick A. McMinn (Exhibit 2.3 to Form 8K dated February 3,
1994).
4 Form of Common Stock Purchase Warrant (Exhibit 10.9.1 to
Form 10-K for fiscal year ended September 30, 1991).
II-2
33
36
5** Opinion
10.31** Form of Voting Agreement provided by BrightLane
Shareholders as provided in the Agreement and Plan of
Merger by and among TeamStaff, Inc., TeamSub, Inc. and
BrightLane.com, Inc., dated as of March 6, 2001, as
amended by Amendment No. 1 dated as of March 21, 2001 and
Amendment No. 2 dated as of April 6, 2001.
10.32** Form of Escrow Agreement between TeamStaff Inc. and
BrightLane Shareholders with respect to the placement of
150,000 shares into escrow by the BrightLane shareholders
(filed as Appendix B to the proxy statement/prospectus
forming a part of this Registration Statement).
23.1* Consent of Arthur Andersen LLP.
23.2* Consent of Goldstein & DiGioia, LLP, contained in Exhibit
5.1.
23.3* Consent of Deloitte & Touche LLP.
10.1 Agreement between Registrant and First Fidelity Bank, N.A.
10.2 Agreement between Registrant and Midlantic Banks, Inc.
dated October 11, 1991.
10.3 Lease dated 10/15/91 for office space at 4041 Hadley
Road, South Plainfield, New Jersey.
10.4 Form of Loan Agreement, August 1991 (Exhibit 10.9 to form
10-K for fiscal year ended September 30, 1991).
16.1 Letter from M. R. Weiser & Co. LLP changing certified
accountant (Exhibit 16.1 to form 8-K/A Amendment No. 1 dated
October 25, 1993).
21 Subsidiaries (Exhibit 21 to Form 10K for fiscal year ended
September 30, 1995).
23.1* Consent of Arthur Andersen LLP.
23.2** Consent of Goldstein & DiGioia, LLP (contained in
Exhibit 5).
99.1 Term Note in the principal amount of $1,300,000, dated
October 3, 1994, of DSI Staff-RX, Inc. and Digital Solutions,
Inc. (Exhibit 99.1 to Form 8-K dated November 21, 1994).
99.2 Stock Pledge Agreement, dated October 3, 1994, among DSI
Contract Staffing, Inc. and Staff-RX, Inc., Skillmaster
Management, Inc., RADS Radiography Service, Inc., and
Primedical Physician Services, Inc. (Exhibit 99.2 to Form 8-K
dated November 21, 1994).
99.3 Security Agreement, dated October 3, 1994, among DSI
Staff Rx, Inc. and Staff- RX, Inc., Skillmaster Management,
Inc., RADS Radiography Service, Inc., and Primedical Physician
Services, Inc. (Exhibit 99.3 to Form 8-K dated November 21,
1994).
99.4 Registration Rights Letter, dated November 21, 1994,
among Digital Solutions, Inc. and Staff-RX, Inc., Skillmaster
Management, Inc., RADS Radiography Service, Inc., and
Primedical Physician Services, Inc. (Exhibit 99.4 to Form 8-K
dated November 21, 1994).
99.5 Asset Purchase Agreement dated May 3, 1995, among Digital
Solutions, Inc., DSI Staff Connxions-Southwest, Inc. and
Turnkey Services, Inc. (Exhibit 2 to
Form 10Q for quarter ended March 31,1995.
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99.6 Amended and Restated Loan and Security Agreement dated
February 27, 1995 and Promissory Note dated February 27, 1995
among the Company, its subsidiaries and United Jersey Bank
(Exhibit 99 to Form 10Q for quarter ended March 31, 1995).
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
A. (1) To file, during any period in which offers or sales
are being made, a post- effectivepost-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 thereto) 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 (a)(1)(i) -
(a)(1)(iii) do not apply if the information required to be
included in a post-effective amendment by such clauses is
contained in periodic reports filed with and furnished to the
Commission by the Company pursuant to Section 13 or Section
15(d) of the
34
Exchange Act of 1934 that are incorporated by reference in
this Registration Statement.
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(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) (i) For the purpose of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in the form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of the Registration Statement as of the time it was declared effective.
(ii) For the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains a
form of prospectus 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.
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38
(5) For purposes of determining any liability under the
Securities Act of 1933, each filing of the Company'sour company'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.
B. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-535
39
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
the requirements for filing on Form S-3 and has duly caused this Registration
Statement Amendment No. 1 to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of New York, State of New York, on the 30th19th day of July, 1996.
DIGITAL SOLUTIONS,December, 2001.
TEAMSTAFF, INC.
By: /s/George J.Eklund
-------------------------------------
George J. Eklund Donald W. Kappauf
--------------------------------------------
Donald W. Kappauf
President, Chief Executive Officer and Director
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below substitutes and appoints George J. Eklund and Karl W. Dieckmann,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitute, may lawfully do
or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 Amendment No. 1 has been signed below by the
following persons in the capacities and on the dates indicated:
Signature Capacity Date
--------- -------- ----
/s/George J. EklundDonald W. Kappauf President, Chief Executive July 30, 1996December 19, 2001
- --------------------------------------------------
Donald W. Kappauf Officer and Director
George J. Eklund
/s/Raymond J. Skiptunis Corporate Development Officer July 30, 1996
- ------------------------ and Vice-Chairman
Raymond J. Skiptunis
/s/Karl W. Dieckmann * Chairman of the Board July 30, 1996December 19, 2001
- --------------------------------------------------
Karl W. Dieckmann
/s/David Carrol * Director December 19, 2001
- --------------------------
David Carroll
II-636
40
/s/John H. EwingMartin J. Delaney * Director July 30, 1996December 19, 2001
- ------------------------
Senator John H. Ewing--------------------------
Martin J. Delaney
/s/Steven B. SandsT. Stephen Johnson * Director July 31, 1996December 19, 2001
- ------------------------
Steven B. Sands-------------------------
T. Stephen Johnson
/s/Donald MacLeod * Director December 19, 2001
- ---------------------------------
Donald MacLeod
/s/William J. Marino * Director July 30, 1996December 19, 2001
- -------------------------------------------------
William J. Marino
/s/Kenneth P. BriceSusan Wolken * Director December 19, 2001
- ---------------------------
Susan Wolken
/s/Donald T. Kelly Chief Financial Officer and July 30, 1996December 19, 2001
- ----------------------------------------------------
Donald T. Kelly Principal Accounting Officer
Kenneth P. Brice
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EXHIBIT INDEX
-------------
Exhibit 23.1 Consent* Executed by Donald Kappauf by Power of Arthur Andersen LLPAttorney granted previously.
37