As filed with the Securities and Exchange Commission on July 18, 2003
Registration No. 333-104565
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3/A
Amendment No. 2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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NETSMART TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3680154
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
146 Nassau Avenue, Islip, NY 11751 - (631) 968-2000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
James L. Conway, CEO
Netsmart Technologies, Inc.
146 Nassau Avenue
Islip, New York 11751
(631) 968-2000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copy to:
Nancy D. Lieberman, Esq.
Kramer, Coleman, Wactlar & Lieberman, P.C.
100 Jericho Quadrangle
Jericho, New York 11753
(516) 822-4820
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Approximate date of commencement of proposed sale to the public: As soon
as practicable after this registration statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of Shares Amount to be Aggregate Offering Registration
to be Registered Registered Price per Unit Price Fee
Common Stock,
Par value $ 01 per share (1) 30,000 $ 4.45(3) $133,500 $ 10.80
Common Stock,
Par value $ 01 per share (1) 30,000 $ 5.00(4) $150,000 $ 12.14
Common Stock,
Par value $ 01 per share (2) 60,000 $ 4.45(3) $267,000 $ 21.60
Total Registration Fee $ 44.54(5)
(1) Issuable upon exercise of Series E Common Stock Purchase Warrants
described in the Selling Securityholders section of this registration
statement.
(2) 50,000 Shares issued upon exercise of Series E Common Stock Purchase
Warrants and 10,000 Shares issued upon exercise of the non-qualified
option described in the Selling Securityholders section of this
registration statement.
(3) Estimated solely for purposes of calculating the registration fee
pursuant to Rule 457(g) promulgated under the Securities Act of 1933,
based upon the average of the high and low sale prices of the common
stock on April 11, 2003.
(4) The registration fee for such securities has been calculated based on
the respective exercise price of such warrants in accordance with Rule
457(g) promulgated under the Securities Act of 1933.
(5) Previously paid.
Pursuant to Rule 416 of the Securities Act of 1933, this registration
statement also relates to such additional indeterminate number of shares of
common stock as may become issuable by reason of stock splits, dividends and
similar adjustments, in accordance with the antidilution provisions of the
Series E Common Stock Purchase Warrants.
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The information contained in this preliminary prospectus is not complete and may
be changed. These securities may not be sold until the registration statement
filed with the Securities and Exchange Commission is declared effective. This
preliminary prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or sale
is not permitted.
SUBJECT TO COMPLETION, DATED JULY 18, 2003
PRELIMINARY PROSPECTUS
NETSMART TECHNOLOGIES, INC.
120,000 Shares of Common Stock
This prospectus covers 60,000 shares issued upon the exercise of previously
issued warrants and options issued to the selling stockholders and 60,000 shares
of our common stock underlying warrants issued to one of the selling
stockholders.
We will not receive any of the proceeds from the sale of the shares. We
have or will receive the exercise price upon exercise of the warrants and the
options. We have agreed to bear one-half of the expenses in connection with the
registration and sale of the shares, except for commissions. We estimate these
expenses to be $20,500.
Our common stock is currently traded on the NASDAQ SmallCap Market under
the symbol "NTST." On June 15, 2003, the closing price for our common stock, as
reported by NASDAQ, was $5.88 per share.
The securities offered in this prospectus involve a high degree of risk.
You should carefully read and consider the "Risk Factors," commencing on
Page 3, for information that should be considered in determining
whether to purchase any of the securities.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this prospectus is July 18, 2003
TABLE OF CONTENTS
Risk Factors.................................................................3
Forward-looking Statements...................................................5
Use of Proceeds..............................................................5
Price Range of Our Common Stock .............................................6
Dividend Policy .............................................................6
Selling Securityholders......................................................6
Plan of Distribution.........................................................8
Experts......................................................................8
Legal Matters................................................................8
Where You Can Find More Information..........................................8
2
RISK FACTORS
The securities offered in this prospectus are speculative and involve a
high degree of risk. Only those persons able to lose their entire investment
should purchase any of the securities. Prior to making an investment decision,
you should carefully read this prospectus and consider, along with other matters
referred to herein, the following risk factors.
Because we are particularly dependent upon government contracts, any decrease in
funding for entitlement programs could result in decreased revenue.
We market our health information systems principally to behavioral
health facilities, many of which are operated by government entities and include
entitlement programs. During 2002, we generated 52% of our revenue from
contracts that are directly or indirectly with government agencies, as compared
with 40% in 2001 and 51% in 2000. Government agencies generally have the right
to cancel contracts at their convenience. Our ability to generate business from
government agencies is affected by funding for entitlement programs, and our
revenue would decline if state agencies reduce this funding.
Changes in government regulation of the health care industry may adversely
affect our revenue, operating expenses and profitability.
Our business is based on providing systems for behavioral and public
health organizations in both the public and private sectors. The federal and
state governments have adopted numerous regulations relating to the health care
industry, including regulations relating to the payments to health care
providers for various services, and our systems are designed to provide
information based on these requirements. The adoption of new regulations can
have a significant effect upon the operations of health care providers,
particularly those operated by state agencies. Furthermore, changes in
regulations in the health care field may force us to modify our health
information systems to meet any new record-keeping or other requirements and may
impose added costs on our business. If that happens, we may not be able to
generate revenues sufficient to cover the costs of developing the modifications.
In addition, any failure of our systems to comply with new or amended
regulations could result in reductions in our revenue and profitability.
If we are not able to take advantage of technological advances, we may not be
able to remain competitive and our revenue may decline.
Our customers require software which enables them to store, retrieve and
process very large quantities of data and to provide them with instantaneous
communications among the various data bases. Our business requires us to take
advantage of recent advances in software, computer and communications
technology. This technology has been developing at rapid rates in recent years,
and our future may be dependent upon our ability to use and develop or obtain
rights to products utilizing such technology. New technology may develop in a
manner which may make our software obsolete. Our inability to use new technology
would have a significant adverse effect upon our business.
Because of our size, we may have difficulty competing with larger companies that
offer similar services, which may result in decreased revenue.
Our customers in the human services market include entitlement programs,
managed care organizations and specialty care facilities which have a need for
access to information over a distributed data network. The software industry in
general, and the health information software business in particular, are highly
competitive. Other companies have the staff and resources to develop competitive
systems. We may not be able to compete successfully with such competitors. The
health information systems business is served by a number of major companies and
a larger number of smaller companies. We believe that price competition is a
significant factor in our ability to market our health information systems and
services, and our inability to offer competitive pricing may impair our ability
to market our system.
Because we are dependent on our management, the loss of key executive officers
could disrupt our business and our financial performance could suffer.
Our business is largely dependent upon our senior executive officers,
Messrs. James L. Conway, our chief executive officer, Gerald O. Koop, our
president, and Anthony F. Grisanti, our chief financial officer. Although we
have employment agreements with these officers, the employment agreements do not
guarantee that the officers will continue with us, and each of these officers
has the right to terminate his employment with us on 90 days notice.
3
Our agreements with Messrs. Conway and Grisanti are scheduled to expire on
December 31, 2003, although each of Messrs. Conway and Grisanti has the right on
ninety, days notice to extend his agreement for successive additional one year
periods. In addition, Mr. Koop's employment agreement is scheduled to expire on
December 31, 2003, following which he is expected to continue to work with us
for a five-year period pursuant to a consulting agreement between us dated
January 1, 2001. Our business may be adversely affected if any of our key
management personnel or other key employees left our employ.
If we are unable to protect our intellectual property, our competitors may gain
access to our technology, which could harm our ability to successfully compete
in our market.
We have no patent protection for our proprietary software, and we rely
on non-disclosure agreements with our employees. In addition, this protection
does not prevent our competitors from independently developing products similar
or superior to our products and technologies. To further develop our services or
products, we may need to acquire licenses for intellectual property. These
licenses may not be available on commercially reasonable terms, if at all. Our
failure to protect our proprietary technology or to obtain appropriate licenses
could have a material adverse effect on our business, operating results or
financial condition. Since our business is dependent upon our proprietary
products, the unauthorized use or disclosure of this information could harm our
business.
We also cannot guarantee that in the future, third parties will not
claim that we infringed on their intellectual property. Asserting our rights or
defending against third party claims could involve substantial costs and
diversion of resources, which could materially and adversely affect us.
The covenants in our loan agreement restrict our financial and
operational flexibility, including our ability to complete additional
acquisitions, invest in new business opportunities, or pay down certain
indebtedness.
Our revolving credit and term loan agreement contains covenants that
restrict, among other things, our ability to borrow money, make particular types
of investments, including investments in our subsidiaries, make other restricted
payments, swap or sell assets, merge or consolidate, or make acquisitions. An
event of default under our loan agreement could allow the lender to declare all
amounts outstanding to be immediately due and payable. We have pledged
substantially all of our consolidated assets to secure the debt under our loan
agreement. If the amounts outstanding under the loan agreement were accelerated,
the lender could proceed against those consolidated assets. Any event of
default, therefore, could have a material adverse effect on our business. Our
loan agreement also requires us to maintain specified financial ratios. Our
ability to meet these financial ratios can be affected by events beyond our
control, and we cannot assure you that we will meet those ratios. We also may
incur future debt obligations that might subject us to restrictive covenants
that could affect our financial and operational flexibility or subject us to
other events of default.
Our growth may be limited if we cannot make acquisitions.
A part of our growth strategy is to acquire other businesses that are
related to our current business. Such acquisitions may be made with cash or our
securities or a combination of cash and securities. To the extent that we
require cash, we may have to borrow the funds or issue equity, which could
dilute our earnings or the book value per share of our common stock. Our stock
price may adversely affect our ability to make acquisitions for equity or to
raise funds for acquisitions through the issuance of equity securities. If we
fail to make any acquisitions, our future growth may be limited. As of the date
of this prospectus, we do not have any agreement or understanding, either formal
or informal, as to any acquisition.
If we make any acquisitions, they may disrupt or have a negative impact on our
business.
If we make acquisitions, we could have difficulty integrating the
acquired company's personnel and operations with our own. In addition, the key
personnel of the acquired business may not be willing to work for us, and our
officers may exercise their rights to terminate their employment with us. We
cannot predict the affect expansion may have on our core business. Regardless of
whether we are successful in making an acquisition, the negotiations could
disrupt our ongoing business, distract our management and employees and increase
our expenses.
We do not anticipate, and our loan agreement prohibits, the payment of dividends
on our common stock, therefore, investors cannot rely on dividends to increase
the value of their investment in Netsmart.
4
We have never paid a cash dividend and we do not anticipate paying cash
dividends on our common stock in the foreseeable future. We presently intend to
retain future earnings, if any, in order to provide funds for use in the
operation and expansion of our business. Consequently, investors cannot rely on
the payment of dividends to increase the value of their investment on Netsmart.
In addition, we are a party to a loan agreement which prohibits us from paying
cash dividends without the prior consent of our lender.
The employment contracts with our executive officers and provisions of Delaware
law may deter or prevent a takeover attempt and may reduce the price investors
might be willing to pay for our common stock.
The employment contracts between us and each of James Conway, Gerald
Koop and Anthony Grisanti provide that in the event there is a change in control
of Netsmart, the employee has the option to terminate his employment agreement.
Upon such termination, each of Messrs. Conway, Koop and Grisanti has the right
to receive a lump sum payment equal to the sum of
[X] his compensation for a twelve-month period plus
[X] an amount equal to his monthly compensation multiplied by
o the greater of 30 and
o 1.5 times the number of years the employee has
been employed by Netsmart, but not more than 36.
In addition, Delaware law restricts business combinations with
stockholders who acquire 15% or more of a company's common stock without the
consent of the company's board of directors.
These provisions could deter or prevent a takeover attempt and may also
reduce the price that certain investors might be willing to pay in the future
for shares of our common stock
Any issuance of preferred stock may dilute the voting power and equity interest
of our common stock.
Our certificate of incorporation gives our board of directors the right
to create new series of preferred stock. As a result, the board of directors
may, without stockholder approval, issue preferred stock with voting, dividend,
conversion, liquidation or other rights which could adversely affect the voting
power and equity interest of the holders of common stock. The preferred stock,
which could be issued with the right to more than one vote per share, could be
utilized as a method of discouraging, delaying or preventing a change of
control. The possible impact on takeover attempts could adversely affect the
price of our common stock. Although we have no present intention to issue any
additional shares of preferred stock or to create any series of preferred stock,
we may issue such shares in the future. If we issue preferred stock in a manner
which dilutes the voting rights of the holders of the common stock, our listing
on The Nasdaq SmallCap Market may be impaired.
5
Shares may be issued pursuant to options and warrants which may adversely affect
the market price of our common stock.
We may issue stock upon the exercise of options to purchase shares of
our common stock pursuant to our long term incentive plans, of which options to
purchase 882,202 shares were outstanding at April 8, 2003. The exercise of these
options and the sale of the underlying shares of common stock may have an
adverse effect upon the price of our stock.
In addition, we may issue stock upon the exercise of warrants to
purchase shares of our common stock pursuant to various agreements, of which
warrants to purchase 718,544 shares were outstanding at April 8, 2003. The
exercise of these warrants and the sale of the underlying shares of common stock
may have an adverse effect upon the price of our stock.
FORWARD-LOOKING STATEMENTS
Statements in this prospectus contain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, statements that
express our intentions, beliefs, expectations, strategies, predictions or any
other statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may, and probably will, differ materially
from what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those described above and those risks discussed from
time to time in this prospectus, including the risks described in this
prospectus under "Risk Factors," and those described under "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
other documents which we file with the Securities and Exchange Commission. In
addition, such statements could be affected by risks and uncertainties related
to product demand, market and customer acceptance, competition, government
regulations and requirements, pricing and development difficulties, as well as
general industry and market conditions and growth rates, and general economic
conditions. Any forward-looking statements speak only as of the date on which
they are made, and we do not undertake any obligation to update any
forward-looking statement to reflect events or circumstances after the date of
this prospectus.
USE OF PROCEEDS
The proceeds from the sale of the shares underlying the warrants by the
selling securityholder will belong to the individual selling securityholder. We
will not receive any of the proceeds from the sale of the shares. We received
proceeds of $162,000 in respect of the exercise price of the options and certain
of the warrants upon their exercise. We will receive the exercise price of the
remaining warrants upon their exercise. We cannot assure you that any warrants
will be exercised. If all of the remaining warrants are exercised in full, we
would receive gross proceed of $270,000. We expect to utilize any such amounts
received upon the exercise of the warrants and options for general corporate and
working capital purposes. Our management will have broad discretion to determine
the use of any proceeds.
6
PRICE RANGE OF OUR COMMON STOCK
Our common stock is traded on The Nasdaq SmallCap Market under the
symbol NTST. Set forth below is the reported high and low sales prices of our
common stock for each quarterly period set forth below:
Quarter Ended High Low
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June 30, 2003 5.53 4.00
March 31, 2003 6.00 3.53
December 31, 2002 7.03 4.10
September 30, 2002 4.60 1.70
June 30, 2002 2.89 2.08
March 31, 2002 3.45 2.40
December 31, 2001 3.06 1.69
September 30, 2001 2.11 1.68
June 30, 2001 2.27 2.06
March 31, 2001 2.84 2.08
As of December 31, 2002, there were approximately 2,310 beneficial owners of our
common stock. The closing price of our common stock was $5.88 per share on July
15, 2003. These quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commission and may not represent actual transactions.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common stock.
We intend to retain any future earnings for the development and expansion of our
business and for acquisitions and so do not intend to declare or pay any cash
dividends in the foreseeable future. In addition, we are a party to a loan
agreement which prohibits us from paying cash dividends without the prior
consent of our lender.
SELLING SECURITYHOLDERS
We have agreed to register all of the shares of common stock issuable
upon exercise of certain warrants to purchase 60,000 shares of common stock
issued to Newbridge Securities Corporation at exercise prices of $4.00 and $5.00
per share, as more fully described below. Guy S. Amico, President of Newbridge
and Scott H. Goldstein, Chief Executive Officer of Newbridge have disposition
power regarding the warrants owned by Newbridge and the shares of common stock
issuable upon exercise of the warrants. Newbridge Securities Corporation
received the warrants pursuant to a business advisory and consulting agreement
pursuant to which Newbridge agreed to study and review our business, operations,
historical financial performance and projections so as to enable Newbridge to
provide advice to us, including an independent research report, for a two-year
period commencing April 10, 2002. Pursuant to the business advisory and
consulting agreement, we agreed to pay Newbridge during the two-year consulting
period, a business advisory fee of $4,000 per month, payable as follows:
* $4,000 non-refundable retainer due upon the effective date and
* $4,000 payable on the tenth day of each month thereafter during the
term; provided, that if the agreement is terminated before the end of
the two-year term, we are not required to pay the monthly consulting fee
for any period after the termination date.
7
We paid fees to Newbridge under the agreement of $32,000 for our fiscal
year ended December 31, 2002 and $24,000 for our six months ended June 30, 2003.
In addition, under the terms of the agreement we agreed to issue to
Newbridge the warrants to acquire 200,000 shares of common stock. We also agreed
that, if Newbridge introduces us to a party which consummates a private
placement of debt or equity securities we will pay Newbridge, upon the closing
of the private placement a separate and additional fee based on the successful
completion of the private placement, but not greater than that fee that would be
derived by applying a formula to the amount of the proceeds received by us in
the private placement, as follows:
* five percent (5%) of the first million dollars or part thereof,
* four percent (4%) of the next million dollars or part thereof,
* three percent (3%) of the next million dollars or part thereof,
* two percent (2%) of the next million dollars or part thereof, and
* one percent (1%) of the amount by which the gross proceeds from the
private placement exceed four million dollars.
The terms of the warrants issued to Newbridge are as follows:
Exercise Date Expiration Date Number of Shares Exercise Price
-------------- --------------- ---------------- --------------
April 10, 2002 April 9, 2003 50,000 shares $2.69 per share
June 1, 2002 May 21, 2003 30,000 shares $4.00 per share
September 1, 2002 February 28, 2004 30,000 shares $5.00 per share
November 1, 2002 May 31, 2004 30,000 shares $6.00 per share
January 1, 2003 December 31, 2005 30,000 shares $7.00 per share
February 28, 2003 February 27, 2005 30,000 shares $8.00 per share
We are not registering the shares of common stock underlying the
warrants which become exercisable on each of November 1, 2002, January 1, 2003
and February 28, 2003.
The warrants to purchase 50,000 shares of common stock were sold by
Newbridge Securities Corporation to First Mirage, Inc., which warrants were
exercised in April 2003. We are registering the 50,000 shares issued to First
Mirage. David A. Rappaport, President of First Mirage, has the power to direct
the vote and the disposition of the shares owned by First Mirage.
We have also agreed to register all of the shares of common stock issued
upon exercise of certain options to purchase 10,000 shares of common stock
issued to Dr. Beny Primm at an exercise price of $2.75. Dr. Primm exercised the
options in December 2002. Dr. Primm received the options pursuant to a
consulting agreement pursuant to which Dr. Primm agreed to provide behavioral
health and smart card technology consulting services, commencing February 16,
2002, for a two-year period as extended. The agreement expired on April 22,
2003. Pursuant to the terms of the consulting agreement we were required to pay
Dr. Primm $1,000 for each day for which he provides us consulting services,
together with commissions in an amount equal to 5% of our net sales to new drug
treatment programs to which Dr. Primm introduced or assisted us with in the
course of performing the consulting services, as well as on net sales to our
current clients drug treatment clients to whom he was instrumental in helping us
sell our smart card technology. We paid Dr. Primm $1,000 in consulting fees and
no amounts in respect of commissions for our fiscal year ended December 31,
2002.
None of the selling stockholders, nor any of their respective officers
or directors, has had any position, office or other material relationship with
us or our predecessors or affiliates within the past three years, except as
described in the preceding paragraphs.
8
We have agreed to pay one-half of the expenses in connection with such
registration and sale of common stock (other than underwriting discounts and
selling commissions and the fees and expenses of counsel and other advisors to
the selling securityholder). We will not receive any proceeds from the sale of
any of the securities by the selling securityholders, except for the exercise
price paid in connection with any exercise of warrants and options.
The following table sets forth certain information with respect to the
present record and beneficial ownership of our securities owned by the selling
securityholders as of April 7, 2003, based upon information provided to us by
such selling securityholder. Because the selling securityholders may offer all,
some, or none of their shares, the "after sale" column of the table assumes the
sale of all of their shares offered hereby; however, we do not know that this
will actually occur.
Amount and nature of
beneficial ownership
of common stock
Shares owned prior Number of Shares after sale of the
to sale offered hereby securities
------------------ ---------------- ---------------------
Selling Securityholder Number Percent
---------------------- ------ -------
Newbridge Securities
Corporation (1) 160,889 60,000 100,889 *
Dr. Beny Primm (2) 10,000 10,000 0 0
First Mirage, Inc. (3) 50,000 50,000 0 0
---------------------------------------
* Less than 1%.
(1) The shares offered by the selling securityholder are comprised of 60,000
shares of common stock underlying Series E Common Stock Purchase
Warrants issued to Newbridge Securities Corporation pursuant to a
business advisory and consulting agreement. Of such warrants, 30,000
have an exercise price of $4.00 per share and expire on May 31, 2003,
and 30,000 have an exercise price of $5.00 per share and expire on
February 28, 2004. Newbridge owns additional Series E Common Stock
Purchase Warrants to purchase 90,000 shares of common stock which are
not offered hereby.
(2) The shares offered by the selling securityholder are comprised of 10,000
shares underlying a non-qualified stock option issued to Dr. Primm
pursuant to a consulting agreement. The options had an exercise price of
$2.75 per share and were exercised by Dr. Primm on December 23, 2002.
(3) The shares offered by the selling securityholder were received upon the
exercise of a Series E Common Stock Purchase Warrant which had an
exercise price of $2.69 per share and were exercised on April 7, 2003.
PLAN OF DISTRIBUTION
Our shares are traded on the Nasdaq SmallCap Market under the symbol
"NTST". The shares offered hereby may be sold from time to time by the selling
securityholders for their own account. We will receive none of the proceeds from
this offering, except that we have received the exercise price of the options
and will receive the exercise price of the warrants upon their exercise. The
selling securityholders will pay or assume brokerage commissions or other
charges and expenses incurred in the sale of the shares.
9
The distribution of the shares by the selling securityholders are not
subject to any underwriting agreement. The shares covered by this prospectus may
be sold by the selling securityholders or by pledges and donees of the selling
securityholders. The shares offered by the selling securityholders may be sold
from time to time at market prices prevailing at the time of sale, at prices
relating to such prevailing market prices or at negotiated prices. The selling
securityholders may sell their shares covered by this prospectus through
customary brokerage channels, either through broker-dealers acting as agents or
brokers, or through broker-dealers acting as principals, who may then resell the
shares, or at private sale or otherwise, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated
prices. The selling securityholders may effect such transactions by selling the
shares to or through broker-dealers, and such broker-dealers may receive
compensation in the form of underwriting discounts, concessions, commissions, or
fees from the selling securityholders and/or purchasers of the shares for whom
such broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). The selling stockholders and any broker-dealers that
participate with the selling securityholders in the distribution of the shares
may be deemed to be underwriters and any commissions received by them and any
profit on the resale of the shares by them might be deemed to be underwriting
discounts and commissions within the meaning of the Securities Act, in
connection with such sales.
Any shares covered by this prospectus that qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this prospectus.
The shares are not being offered in any jurisdiction where the offer is
not permitted.
EXPERTS
The consolidated financial statements of Netsmart Technologies, Inc.,
and subsidiary appearing in the Company's Annual Report on Form 10-K/A for the
year ended December 31, 2002, have been audited by Marcum & Kliegman LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. The consolidated financial statements as of
December 31, 2001 and for each of the two years in the period ended December 31,
2001 have been audited by Eisner LLP (formerly Richard A. Eisner & Company,
LLP), independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon reports given
upon the authority of such firms as experts in accounting and auditing.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon for us
by Kramer, Coleman, Wactlar & Lieberman, P.C., Jericho, New York.
WHERE YOU CAN FIND MORE INFORMATION
Government Filings. We are subject to the information reporting
------------------
requirements of the Securities Exchange Act of 1934, as amended. As such, we
file annual, quarterly and special reports, proxy statements and other documents
with the Securities and Exchange Commission. These reports, proxy statements and
other documents may be inspected and copied at the public reference facilities
maintained by the SEC at 450 Fifth Street, NW, Washington, D.C. 20549. Please
call the SEC at 1-800-SEC-0330 for further information on their public reference
facilities. In addition, the SEC maintains an Internet site that contains
reports, proxy and information statements and other information regarding
companies, including our company, that file electronically with the SEC at the
address "http://www.sec.gov."
10
Stock Market. Our common stock is listed on The Nasdaq SmallCap Market.
------------
Material filed by us can also be inspected and copied at the offices of NASDAQ
at 1735 K Street, N.W., Washington, D.C. 20006.
Netsmart. We will provide you without charge, upon your request, a copy
--------
of any or all reports, proxy statements and other documents filed by us with the
SEC, as well as any or all of the documents incorporated by reference in this
prospectus or the registration statement (other than exhibits to such documents
unless such exhibits are specifically incorporated by reference into such
documents). Requests for such copies should be directed to:
Netsmart Technologies, Inc.
146 Nassau Avenue
Islip, NY 11751
Attn: James L. Conway
Telephone number: (631) 968-2000
We are incorporated under the laws of the state of Delaware. Our
executive offices are located at 146 Nassau Avenue, Islip, New York and our
telephone number is (631) 968-2000.
Information Incorporated by Reference. The SEC allows us to "incorporate
-------------------------------------
by reference" the information we file with the SEC, which means that:
* incorporated documents are considered part of this prospectus,
* we can disclose important information to you by referring you to
those documents, and
* information that we file after the date of this prospectus with the
SEC will automatically update and supersede information contained
in this prospectus and the registration statement.
We incorporate by reference the documents listed below and any future
filings we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act until this offering has been completed:
* Our annual report on Form 10-K for the fiscal year ended December 31,
2002, as amended by the report on Form 10-K/A filed with the SEC on
June 18, 2003;
* Our quarterly report on Form 10-Q for the quarter ended March 31, 2002,
as amended by the report on Form 10-Q/A field on June 18, 2003 with the
SEC; and
* The description of our common stock contained in our registration
statement on Form 8-A, declared effective on August 13, 1996.
You should rely only on the information contained or incorporated by
reference in this prospectus and in any accompanying prospectus supplement. No
one has been authorized to provide you with different information.
You should not assume that the information in this prospectus or any
prospectus supplement is accurate as of any date other than the date on the
front of such documents.
11
No person has been authorized in connection
with the offering made hereby to give any
information or to make any representation
not contained in this prospectus and, if 120,000
given or made, such information or Shares of
representation must not be relied upon as COMMON STOCK
having been authorized by us, any selling
securityholder or any other person. This
prospectus does not constitute an offer to
sell or a solicitation of an offer to buy
any of the securities offered hereby to any
person or by anyone in any jurisdiction in
which it is unlawful to make such offer or NETSMART TECHNOLOGIES, INC.
solicitation. Neither the delivery of this
prospectus nor any sale made hereunder
shall, except as otherwise contemplated by
the rules and regulations of the Securities
and Exchange Commission, create any
implication that the information contained
herein is correct as of any date subsequent PROSPECTUS
to the date hereof.
July 18, 2003
12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses of the distribution, one-half of which are to be
borne by us, are as follows:
SEC Registration Fee............................................ $ 44.54
Accounting Fees and Expenses.................................... $ 4,500.00
Legal Fees and Expenses......................................... $ 13,000.00
Miscellaneous................................................... $ 21,955.46
---------
Total............................................. $ 20,500.00
Item 15. Indemnification of Directors and Officers.
Under the Delaware General Corporation Law, a corporation may indemnify
any director, officer, employee or agent against expense (including attorneys'
fees), judgments, fines and amounts paid in settlement in connection with any
specified threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative (other than an action by or in
the right of the corporation) if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal proceeding, had no reasonable
cause to believe that his or her conduct was unlawful.
Article EIGHTH of our Restated Certificate of Incorporation provides for
indemnification of our directors and officers to the fullest extent permitted by
the Delaware General Corporation Law.
We also maintain directors and officers liability insurance. This
insurance covers any person who has been or is an officer or director of us or
any of our subsidiaries for all expense, liability and loss (including
attorneys' fees, investigation costs, judgments, fines, penalties and amounts
paid or to be paid in settlement) actually and reasonably incurred by such
person in connection with such action, suit or proceeding, net of the
deductible.
Item 16. Exhibits.
Number Description
------ -----------
4.1 Specimen Common Stock Certificate. *
4.2 Form of Series E Common Stock Purchase Warrant.*
5 Opinion and consent of Kramer, Coleman, Wactlar & Lieberman, P.C. *
10.1 Business Advisory and Consulting Services Agreement, dated April 10,
2002, between us and Newbridge Securities Corporation.*
10.2 Consulting Agreement between us and Dr. Beny Primm*
10.3 Extension to Consulting Agreement*
23.1 Consent of Marcum & Kliegman LLP.
23.2 Consent of Eisner LLP.
23.3 Consent of Kramer, Coleman, Wactlar & Lieberman, P.C.(included in legal
opinion filed as Exhibit 5)*
24 Powers of Attorney (set forth on the signature page of this registration
statement on Form S-3.)*
*Previously filed.
13
Item 17. Undertakings.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or 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.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a 20%
change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective
registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) above shall not
apply if the information required to be included in a post-effective
amendment by such clauses is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
(2) 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; and
(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.
The undersigned registrant hereby further undertakes that, for purposes
of determining liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or 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.
14
The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to securityholders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 under the Securities Exchange Act of 1934; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report to securityholders that is specifically incorporated by
reference in the prospectus and to provide such interim financial information.
15
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in the city of Islip, State of New York, this 18th day of July,
2003.
NETSMART TECHNOLOGIES INC.
By: /*/
---------------------------
James L. Conway
Chief Executive Officer
By: /*/
----------------------------
Anthony F. Grisanti
Chief Financial Officer,
Treasurer and Secretary (Principal
Financial and Accounting Officer)
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed on July 18, 2003 by the following persons
in the capacities indicated.
/s/*
-------------------- Chief Executive Officer and
James L. Conway Director (Principal Executive Officer)
*
-------------------- President and Director
Gerald O. Koop
/s/
-------------------- Chief Financial Officer, Treasurer
Anthony F. Grisanti and Secretary (Principal Financial Officer)
*
-------------------- Vice President and Director
John F. Phillips
*
-------------------- Director
Joseph C. Sicinski
*
-------------------- Chairman of the Board and Director
Edward D. Bright
*
-------------------- Director
Francis J. Calcagno
*
-------------------- Director
John S.T. Gallagher
*by James L. Conway, Attorney in Fact
16
Exhibit Index
Number Description
------ -----------
4.1 Specimen Common Stock Certificate. *
4.2 Form of Series E Common Stock Purchase Warrant.*
5 Opinion and consent of Kramer, Coleman, Wactlar & Lieberman, P.C.*
10.1 Business Advisory and Consulting Services Agreement, dated April 10,
2002, between us and Newbridge Securities Corporation.*
10.2 Consulting Agreement between us and Dr. Beny Primm*
10.3 Extension to Consulting Agreement*
23.1 Consent of Marcum & Kliegman LLP.
23.2 Consent of Eisner LLP.
23.3 Consent of Kramer, Coleman, Wactlar & Lieberman, P.C.(included in legal
opinion filed as Exhibit 5)*
24 Powers of Attorney (set forth on the signature page of this registration
statement on Form S-3.)
* previously filed.