As filed with the Securities and Exchange Commission on February 24, 2004
Registration No. 333-_____
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------
STONEPATH GROUP, INC.
Delaware 65-0867684
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1600 Market Street, Suite 1515
Philadelphia, Pennsylvania 19103
(215) 979-8370
(Address of Principal Executive Offices)
--------------------------
STONEPATH GROUP, INC.
AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN
NON-PLAN STOCK OPTION AND WARRANT AGREEMENTS
(Full titles of the plans)
----------------------
Stephen M. Cohen With a copy to:
Senior Vice President and General Counsel Brian S. North, Esquire
1600 Market Street, Suite 1515 Buchanan Ingersoll PC
Philadelphia, Pennsylvania 19103 1835 Market Street, 14th Floor
Phone: (215) 979-8370 Philadelphia, PA 19102
Facsimile: (215) 979-8399 Phone: (215) 665-3828
(Name, address and telephone number, Facsimile: (215) 665-8760
including area code,
of agent for service)
----------------------
CALCULATION OF REGISTRATION FEE
====================================================================================================================================
Title of Class of Securities to be Amount to be Proposed Maximum Proposed Maximum Amount of
Registered Registered (1) Offering Price Per Share Aggregate Offering Price Registration Fee
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Common Stock, $.001 par value per 8,075,000 shares (2) $3.235(3) $26,122,625(3) $3,310
share: Reserved for issuance for
future grants under the Amended and
Restated 2000 Stock Incentive Plan
(the "Plan")
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Total 8,075,000 shares $26,122,625 $3,310
====================================================================================================================================
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(1) The shares of common stock, $.001 par value per share (the "Common
Stock"), set forth in the Calculation of Registration Fee table and which
may be offered pursuant to this registration statement include, pursuant
to Rule 416 under the Securities Act of 1933, as amended (the "Securities
Act"), such additional number of shares of the Registrant's Common Stock
as may be offered or issued as a result of any stock splits, stock
dividends or similar transactions.
(2) Established in accordance with General Instruction E of Form S-8 and in
connection with shares registered on such form of the Registrant
(Registration No. 333-74918) with respect to the additional 8,075,000
shares of Common Stock for issuance under the Plan.
(3) Estimated in accordance with Rule 457(c) and (h) of the Securities Act
solely for the purpose of calculating the registration fee based on the
average of the high and low sales prices of the Common Stock as reported
on the American Stock Exchange on February 19, 2004.
Explanatory Note
The Registrant previously registered an aggregate of 4,925,000 shares of
Common Stock issuable upon exercise of awards granted or to be granted under the
Amended and Restated 2000 Stock Incentive Plan (the "Plan"), and an aggregate of
5,437,081 shares of Common Stock issuable upon the exercise of certain
then-outstanding non-Plan options and Common Stock purchase warrants for an
aggregate registration of 10,362,081 shares of Common Stock. On May 31, 2002 and
May 30, 2003, stockholders of the Registrant approved amendments and
restatements to the Plan increasing the number of shares authorized for issuance
under the Plan from 5,000,000 to 10,000,000 shares and from 10,000,000 to
13,000,000 shares, respectively. The contents of the registration statement upon
which the initial 10,362,081 shares were registered (Registration No. 333-74918)
are incorporated herein by reference pursuant to General Instruction E of Form
S-8.
This registration statement is being filed (1) to register an additional
8,075,000 shares of Common Stock for issuance pursuant to future grants under
the Plan and (2) to establish a reoffer prospectus, filed as part of this
registration statement, in accordance with the requirements of Part I of Form
S-3 and pursuant to General Instruction C of Form S-8 with respect to (a) shares
registered herein and (b) shares registered on Registration No. 333-74918, as a
post-effective amendment thereto.
REOFFER PROSPECTUS
STONEPATH GROUP, INC.
7,903,300 Shares of
Common Stock
This Reoffer Prospectus is being filed to register 7,903,300 shares of
Common Stock, $.001 par value per share (the "Shares"), of Stonepath Group, Inc.
(the "Company" or "we") to provide future flexibility to certain Selling
Stockholders identified below (the "Selling Stockholders") in the section
entitled "Selling Stockholders" if they decide to sell any of the Shares. The
Selling Stockholders have acquired or may acquire the Shares pursuant to grants
under the Stonepath Group, Inc. Amended and Restated 2000 Stock Incentive Plan
(the "Plan") and certain non-Plan option grants. Our Common Stock is listed on
the American Stock Exchange under the symbol "STG." On February 19, 2004, the
last reported sale of our Common Stock on the American Stock Exchange was $3.20
per share.
The Selling Stockholders may sell their Shares from time to time in the
future, directly or indirectly in one or more transactions on the American Stock
Exchange, in privately negotiated transactions or through a combination of such
methods. These sales may be at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
We will not receive any part of the proceeds from sales of these Shares
by the Selling Stockholders, although we may receive the exercise price from the
exercise of the options.
Our executive offices are located at 1600 Market Street, Suite 1515,
Philadelphia, Pennsylvania 19103 and our telephone number is (215) 979-8370.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 1 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS REOFFER PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Reoffer Prospectus is February 24, 2004.
TABLE OF CONTENTS
Page
ABOUT THIS PROSPECTUS.......................................................1
RISK FACTORS................................................................1
WHERE YOU CAN FIND MORE INFORMATION........................................10
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................11
FORWARD-LOOKING STATEMENTS.................................................12
STONEPATH GROUP, INC.......................................................12
SELLING STOCKHOLDERS.......................................................13
USE OF PROCEEDS............................................................16
PLAN OF DISTRIBUTION.......................................................16
LEGAL MATTERS..............................................................18
EXPERTS....................................................................18
DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES..........................................................19
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we filed with the
Securities and Exchange Commission (the "SEC" or the "Commission"). You should
rely only on the information provided in this prospectus or incorporated by
reference into this prospectus. We have not authorized anyone to provide you
with information different from that contained or incorporated by reference into
this prospectus. The Selling Stockholders are offering to sell, and seeking
offers to buy, shares of Common Stock only in jurisdictions where offers and
sales are permitted. The information in this prospectus is accurate only as of
the date of this prospectus, regardless of the time of delivery of this
prospectus or of any sale of Common Stock. The rules of the SEC may require us
to update this prospectus in the future.
RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK,
INCLUDING THE RISKS DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK
FACTORS AND THE OTHER INFORMATION IN THIS PROSPECTUS BEFORE MAKING AN INVESTMENT
DECISION. THE RISKS DESCRIBED BELOW ARE THE MATERIAL RISKS WE BELIEVE ARE
ASSOCIATED WITH AN INVESTMENT IN OUR SECURITIES BUT ARE NOT THE ONLY RISKS WE
FACE. ADDITIONAL RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE
CURRENTLY DEEM IMMATERIAL MAY ALSO AFFECT OUR BUSINESS OPERATIONS. IF ANY OF
THESE RISKS DO OCCUR, OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION
COULD BE ADVERSELY AFFECTED. THIS PROSPECTUS ALSO CONTAINS FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A
RESULT OF A NUMBER OF FACTORS, INCLUDING THE RISKS DESCRIBED BELOW AND ELSEWHERE
IN THIS PROSPECTUS. YOU SHOULD READ THE SECTION ENTITLED "FORWARD-LOOKING
STATEMENTS" FOR A FURTHER DISCUSSION OF THESE FACTORS.
If we are unable to profitably manage and integrate the companies we
acquire or are unable to acquire additional companies, we will not achieve our
growth and profit objectives.
Our goal is to build a global logistics services organization.
Realizing this goal will require the acquisition of a number of diverse
companies in the logistics industry covering a variety of geographic regions and
specialized service offerings. There can be no assurance that we will be able to
identify, acquire or profitably manage additional businesses or successfully
integrate any acquired businesses without substantial costs, delays or other
operational or financial problems. Further, acquisitions involve a number of
risks, including possible adverse effects on our operating results, diversion of
management resources, failure to retain key personnel, and risks associated with
unanticipated liabilities, some or all of which could have a material adverse
effect on our business, financial condition and results of operations.
1
Additional financing will be required to implement our business
strategy.
We believe that our current working capital and anticipated cash flow
from operations are adequate to fund existing operations. Our ability to
complete further acquisitions, however, is limited until we raise additional
capital, primarily due to limitations under our existing credit facility and in
view of anticipated expenditures that will be required to satisfy acquisition
related earn-out payments that will be due in April 2004 and beyond. We may
finance acquisitions, however, using our securities for all or some portion of
the consideration. In the event that our common stock does not attain or
maintain a sufficient market value or potential acquisition candidates are
otherwise unwilling to accept our securities as part of the purchase price for
the sale of their businesses, we may be required to utilize more of our cash
resources, if available, in order to continue our acquisition program. If we do
not have sufficient cash resources through either operations or from debt
facilities, our growth could be limited unless we are able to obtain such
additional capital.
Earn-out payments due in connection with our acquisitions could require
us to incur additional indebtedness or issue additional equity securities.
We are required to make significant cash payments in the future when
and if the earn-out installments for our acquisitions become due. While we
believe that some portion of the required cash will be generated by each of the
acquired subsidiaries, we most likely will have to secure additional sources of
capital to fund some portion of the earn-out payments as they become due. This
may require us to incur additional indebtedness or issue additional equity
securities. We cannot be certain that we will be able to borrow any funds for
this purpose on terms acceptable to us, if at all, or that once we incur such
indebtedness, that we will be able to operate profitably. Additional
indebtedness could negatively impact our cash flow and ability to make further
acquisitions. Issuing additional shares of common stock or common stock
equivalents to generate the required financing would increase the number of
shares outstanding and further dilute the interests of our existing
shareholders.
Our credit facility places limitations on the type and number of
acquisitions we may make.
We have obtained a $20 million credit facility from LaSalle Business
Credit, Inc. to provide additional funding for acquisitions and for our on-going
working capital requirements. Under the terms of the credit facility, we are
permitted to make additional acquisitions without the lender's consent only if
certain conditions are satisfied. The conditions imposed by the credit facility
include the following: (1) the absence of an event of default under the credit
facility; (2) the company to be acquired must be in the transportation and
logistics industry; (3) the purchase price to be paid must be consistent with
our historical business and acquisition model; (4) the undrawn availability
under the credit facility must average $5 million for the 60 days preceding the
acquisition and must be at least $5 million after giving effect to the
acquisition; (5) the lender must be reasonably satisfied with projected
financial statements we provide covering a 12 month period following the
acquisition; (6) the acquisition documents must be provided to the lender and
must be consistent with the description of the transaction provided to the
lender; (7) through May 2005, the aggregate cash consideration paid at the
2
closing for foreign acquisitions must not exceed $11.3 million (such amount may
be increased up to $20.0 million based on the results of subsequent equity
offerings); and (8) the number of such permitted acquisitions is limited to four
per year (excluding any acquisitions for which the purchase price is payable
solely in stock). In the event that we were not able to satisfy the conditions
of the credit facility in connection with a proposed acquisition, we would have
to forego the acquisition unless we either obtained the lender's consent or
retired the credit facility. This may limit or slow our ability to achieve the
critical mass we may need to achieve our strategic objectives.
Our credit facility contains financial covenants that may limit its
current availability.
The terms of our credit facility are subject to certain financial
covenants which may limit the amount otherwise available under that facility.
Principal among these are financial covenants that limit availability based upon
measures of our cash flow, as well as a covenant that limits funded debt (the
"Funded Debt Covenant") to a multiple of consolidated earnings before interest,
taxes, depreciation and amortization generated from the operations of our United
States subsidiaries ("Domestic EBITDA"). Under the Funded Debt Covenant, our
funded debt is limited to a multiple of 2.75 of our Domestic EBITDA measured on
a rolling four quarter basis. For example, based on our rolling four quarter
Domestic EBITDA of approximately $6.9 million, the availability under our credit
facility was approximately $18.975 million as of the end of our third quarter of
2003, even though our facility is $20 million. As our rolling four quarter
Domestic EBITDA increases or decreases, the availability under our credit
facility will increase or decrease.
Due to our acquisition strategy, our earnings will be adversely
affected by non-cash charges relating to amortization of intangibles.
Under applicable accounting standards, purchasers are required to
allocate the total consideration paid in a business combination to the
identified acquired assets and liabilities based on their fair values at the
time of acquisition. The excess of the consideration paid in a business
combination over the fair value of the identifiable tangible assets acquired is
to be allocated among identifiable intangible assets and goodwill. The amount
allocated to goodwill is not subject to amortization; however, it is tested at
least annually for impairment. The amount allocated to identifiable intangibles,
such as customer relationships and the like, is to be amortized over the life of
the intangible assets; thus, subjecting the purchaser to periodic charges
against its earnings to the extent of the amortization incurred for that period.
Because our business strategy focuses on growth through acquisitions, our future
earnings will be subject to greater non-cash amortization charges than a company
whose earnings are derived organically. As a result, we will experience an
increase in non-cash charges related to the amortization of intangible assets
acquired in our acquisitions. This will create the appearance, based on our
financial statements, that our intangible assets are diminishing in value, when
in fact they may be increasing because we are growing the value of our
intangible assets (e.g., customer relationships). Because of this discrepancy,
we believe EBITDA provides a meaningful measure of our financial performance.
However, the investment community generally measures a public company's
performance by its net income. Thus, while we believe EBITDA provides a
meaningful measure of our financial performance, should the investment community
elect to place more emphasis on our net income, the future price of our common
stock could be adversely affected.
3
Since we are not obligated to follow any particular criteria or
standards for acquisition candidates, shareholders must rely solely on our
ability to identify, evaluate and complete acquisitions.
Even though we have developed general acquisition guidelines, we are
not obligated to follow any particular operating, financial, geographic or other
criteria in evaluating candidates for potential acquisitions or business
combinations. We target companies which we believe will provide the best
potential long-term financial return for our shareholders and we determine the
purchase price and other terms and conditions of acquisitions. Our shareholders
will not have the opportunity to evaluate the relevant economic, financial and
other information that we will use and consider in deciding whether or not to
enter into a particular transaction.
The scarcity of, and competition for, acquisition opportunities makes
it more difficult to complete acquisitions.
There are a limited number of operating companies available for
acquisition which we consider desirable. In addition, there is a high level of
competition among companies seeking to acquire these operating companies. A
large number of established and well-financed entities are active in acquiring
the type of companies we believe are desirable. Many of these entities have
significantly greater financial resources than we have. Consequently, we are at
a competitive disadvantage in negotiating and executing possible acquisitions of
these businesses. Even if we are able to successfully compete with these
entities, this competition may affect the terms of completed transactions and,
as a result, we may pay more than we expected for potential acquisitions. We may
find it difficult to identify operating companies that complement our strategy,
and even if we identify a company that complements our strategy, we may be
unable to complete an acquisition of such a company for many reasons, including:
o a failure to agree on the terms necessary for a transaction,
such as purchase price;
o incompatibility of operating strategies and management
philosophies;
o competition from other acquirers of operating companies;
o insufficient capital to acquire a profitable logistics
company; and
o the unwillingness of a potential acquiree to work with our
management or our affiliated companies.
If we are unable to successfully compete with other entities in
acquiring the companies we target, we will not be able to successfully implement
our business plan.
4
The issuance of additional securities may cause additional dilution to
the interests of our existing shareholders.
The additional financing required to fund our acquisition strategy may
require us to issue additional shares of common stock or common stock
equivalents to generate the required financing. For example, we issued 6,024,908
shares of our common stock in a private placement transaction that closed in
October 2003. Any subsequent issuances of securities, including those in this
offering, will further increase the number of shares outstanding and further
dilute the interests of our existing shareholders. We may issue more shares of
common stock for this purpose without prior notice to our shareholders.
We may also issue securities to, among other things, facilitate a
business combination, acquire assets or stock of another business, compensate
employees or consultants or for other valid business reasons at the discretion
of our Board of Directors, which could further dilute the interests of our
existing shareholders.
The exercise or conversion of our outstanding options, warrants or
other convertible securities or any derivative securities we issue in the future
will result in the dilution of the ownership interests of our existing
shareholders and may create downward pressure on the trading price of our common
stock.
We are currently authorized to issue 100,000,000 shares of common
stock. As of January 31, 2004, we had 38,461,611 outstanding shares of common
stock. We may in the future issue up to 16,611,300 additional shares of our
common stock upon exercise or conversion of existing outstanding convertible
securities in accordance with the following schedule:
Number of Shares Proceeds
Upon conversion of our Series D Preferred Stock 3,104,770 $ -
Options granted under our Stock Option Plan 10,023,434 14,563,250
Non-Plan Options 1,774,700 3,222,250
Warrants 1,708,396 1,768,406
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Total 16,611,300 $19,553,906
========== ===========
Even though the aggregate exercise of these securities could generate
material proceeds for us, the issuance of these additional shares would result
in the dilution of the ownership interests of our existing common shareholders
and the market price of our common stock could be adversely affected.
We rely on a small number of key customers, the loss of any of which
would have a negative effect on our results of operations.
5
Even though our customer base will likely diversify as we grow through
acquisitions, our customer base has been highly concentrated. For the year ended
December 31, 2002 our largest customer, Best Buy Co., Inc., a national retail
chain, accounted for approximately 33% of our total revenues. Our next largest
customer accounted for approximately 11% of our total revenues and our next four
largest customers accounted for approximately 13% of our total revenues, with
none of these four customers accounting for 10% or more of our total revenues.
We believe the risk posed by this concentration is mitigated by our longstanding
and continuing relationships with these customers and we are confident that
these relationships will remain ongoing for the foreseeable future. We intend to
continue to provide superior service to all of our customers and have no
expectation that revenues from any of these customers will be reduced as a
result of any factors within our control. However, adverse conditions in the
industries of our customers could cause us to lose a significant customer or
experience a decrease in shipment volume. Either of these events could
negatively impact us. Our immediate plans, however, are to reduce our dependence
on any particular customer or customers by increasing our sales and customer
base by, among other things, diversifying our service offerings and continuing
with our growth strategy.
The risks associated with international operations could adversely
affect our operations and ability to grow outside of the United States.
A significant portion of our revenues is derived from our international
operations and the growth of those operations is an important part of our
business strategy. Our current international operations are focused on the
shipment of goods into and out of the United States and are dependent on the
volume of international trade with the United States. Our strategic plan
contemplates the growth of those operations as well as expanding into the
transportation of goods wholly outside of the United States. The following
factors could adversely affect our current international operations as well as
the growth of those operations:
o the political and economic systems in certain international
markets are less stable than in the United States;
o wars, civil unrest, acts of terrorism and other conflicts
exist in certain international markets;
o export restrictions, tariffs, licenses and other trade
barriers can adversely affect the international trade
serviced by our international operations;
o managing distant operations with different local market
conditions and practices is more difficult than managing
domestic operations;
o differing technology standards in other countries present
difficulties and incremental expense in integrating our
services across international markets;
o complex foreign laws and treaties can adversely affect our
ability to compete; and
o our ability to repatriate funds may be limited by tax
ramifications and foreign exchange controls.
6
Terrorist attacks and other acts of violence or war may affect any
market on which our shares trade, the markets in which we operate, our
operations and our profitability.
Terrorist acts or acts of war or armed conflict could negatively affect
our operations in a number of ways. Any of these acts could result in increased
volatility in or damage to the United States and worldwide financial markets and
economy. They could also result in a continuation of the current economic
uncertainty in the United States and abroad. Acts of terrorism or armed
conflict, and the uncertainty caused by such conflicts, could cause an overall
reduction in worldwide sales of goods and corresponding shipments of goods. This
would have a negative effect on our operations. Also, terrorist activities
similar to the type experienced on September 11, 2001 could result in another
halt of trading of securities on the American Stock Exchange, which could also
have an adverse effect on the trading price of our shares and overall market
capitalization.
We depend on the continued service of certain executive officers. We
can not assure you that we will be able to retain these persons.
For the foreseeable future, our success will depend largely on the
continued services of our Chief Executive Officer, Dennis L. Pelino, as well as
the heads of our domestic and international service organizations, Gary Koch and
Jason Totah, because of their collective industry knowledge, marketing skills
and relationships with major vendors and customers. We have employment
agreements with each of these individuals which contain a non-competition
covenant which survives their actual term of employment. Nevertheless, should
any of these individuals leave the Company, it could have a material adverse
effect on our future results of operations.
We face intense competition in our industry.
The freight forwarding, logistics and supply chain management industry
is intensely competitive and is expected to remain so for the foreseeable
future. We face competition from a number of companies, including many that have
significantly greater financial, technical and marketing resources. There are a
large number of companies competing in one or more segments of the industry,
although the number of firms with a global network that offer a full complement
of freight forwarding and supply chain management services is more limited.
Depending on the location of the customer and the scope of services requested,
we must compete against both the niche players and larger entities. In addition,
customers increasingly are turning to competitive bidding situations involving
bids from a number of competitors, including competitors that are larger than we
are.
Our stock price may be volatile due to factors under, as well as out
of, our control.
7
The market price of our common stock has been highly volatile. Some
factors that may affect the market price in the future include:
o actual or anticipated fluctuations in our operating results;
o announcements of technological innovations or new commercial
products or services by us or our competitors;
o a continued weakening of general market conditions which in
turn could have a depressive effect on the volume of goods
shipped and shipments that we manage or arrange;
o acts of global terrorism or armed conflicts; and
o changes in recommendations or earnings estimates by us or by
securities analysts.
Furthermore, the stock market has historically experienced volatility
which has particularly affected the market prices of securities of many
companies with a small market capitalization and which sometimes has been
unrelated to the operating performances of such companies.
Our cash flow will be adversely affected in the future once we fully
utilize our consolidated net operating loss carryforward.
Due to losses we incurred in our former business model, we have
accumulated a net operating loss carryforward for federal income tax purposes.
As of December 31, 2002, approximately $21.7 million of these losses were
available to offset our taxable income until the losses are fully utilized. Once
these losses have been fully utilized, our cash flows will be affected
accordingly.
If we fail to improve our management information and financial
reporting systems, we may experience an adverse effect on our operations and
financial condition.
Our management information and financial reporting systems need to be
improved.
In January 2004, we restated our consolidated statements of operations
for the last three quarters of fiscal 2002, the first three quarters of fiscal
2003, and for the year ended December 31, 2002 to correct a process error
discovered in the legacy accounting processes of Stonepath Logistics
International Services, Inc. (f/k/a Global Transportation Systems, Inc.) and
Global Container Line, Inc., its wholly owned subsidiary. The error resulted in
the failure to eliminate certain intercompany transactions in consolidation.
This resulted in an overstatement of total revenue and a corresponding
overstatement of the cost of transportation, with no resulting impact on net
revenue, EBITDA or net income. This process error had been embedded within the
legacy accounting processes of Global Transportation Systems, Inc. for a period
which began substantially before its acquisition by the Company in April 2002.
8
We believe that the presence of this error, in and of itself,
constitutes a reportable condition as defined under standards established by the
American Institute of Certified Public Accountants. A reportable condition is a
significant deficiency in the design or operation of internal controls, which
could adversely affect an organization's ability to initiate, record, process
and report financial data consistent with the assertions of management in the
financial statements. To specifically respond to this matter, and in general to
meet our obligations under Section 404 of the Sarbanes-Oxley Act of 2002, we
have commenced an overall review of our internal controls over financial
reporting. As part of the assessment of our internal controls over financial
reporting, we will focus on our recent growth in terms of both size and
complexity, coupled with the fact that our finance and accounting functions are
largely decentralized. Although this review is not yet completed, we have
initiated an immediate change in process to correct the process error that
occurred and to reduce the likelihood that a similar error could occur in the
future.
While we believe we have a plan that, when completed, will eliminate
the reportable condition described above, we may experience delays, disruptions
and unanticipated expenses in completing that plan and in otherwise
implementing, integrating and operating our consolidated management information
and financial reporting systems. Failure to enhance these systems could delay
our receipt of management and financial information at the consolidated level
which could disrupt our operations or impair our ability to monitor our
operations and have a negative effect on our financial condition.
Because we are a holding company, we depend on receiving distributions
from our subsidiaries and we could be harmed if such distributions could not be
made in the future.
We are a holding company and all of our operations are conducted
through subsidiaries. Consequently, we rely on dividends or advances from our
subsidiaries. The ability of such subsidiaries to pay dividends and our ability
to receive distributions from those subsidiaries are subject to applicable local
law and other restrictions including, but not limited to, applicable tax laws.
Such laws and restrictions could limit the payment of dividends and
distributions to us which would restrict our ability to continue operations.
We believe our industry is consolidating and if we cannot gain
sufficient market presence, we may not be able to compete successfully against
larger global companies.
We believe the market trend within our industry is towards
consolidation of the niche players into larger companies which are attempting to
increase global operations through the acquisition of regional and local freight
forwarders. If we cannot gain sufficient market presence or otherwise establish
a successful strategy in our industry, we may not be able to compete
successfully against larger companies in our industry with global operations.
We may be required to incur material expenses in defending or resolving
outstanding lawsuits which would adversely affect our results of operations.
We are a defendant in a number of legal proceedings, including one
particular matter that we have identified as material in our periodic SEC
filings. Although we believe that the claims asserted in these proceedings are
without merit, and we intend to vigorously defend these matters, we could incur
material expenses in the defense and resolution of these matters. Since we have
not established any reserves in connection with these claims, any such liability
would be recorded as an expense in the period incurred or estimated. This
amount, even if not material to our overall financial condition, could adversely
affect our results of operations in the period recorded.
9
We have a very limited operating history upon which you can evaluate
our prospects.
During 2001, we discontinued our former business model of developing
early-stage technology businesses, and adopted a new model of delivering
non-asset based third-party logistics services. The first acquisition under our
new business model occurred on October 5, 2001. Subsequent acquisitions were
completed during 2002, 2003, and 2004. As a result, we have a very limited
operating history under our current business model. Even though we are managed
by senior executives with significant experience in the industry, our limited
operating history makes it difficult to predict the longer-term success of our
business model.
Provisions of our charter and applicable Delaware law may make it more
difficult to complete a contested takeover of our Company.
Certain provisions of our certificate of incorporation and the General
Corporation Law of the State of Delaware (the "GCL") could deter a change in our
management or render more difficult an attempt to obtain control of us, even if
such a proposal is favored by a majority of our shareholders. For example, we
are subject to the provisions of the GCL that prohibit a public Delaware
corporation from engaging in a broad range of business combinations with a
person who, together with affiliates and associates, owns 15% or more of the
corporation's outstanding voting shares (an "interested shareholder") for three
years after the person became an interested shareholder, unless the business
combination is approved in a prescribed manner. Finally, our certificate of
incorporation includes undesignated preferred stock, which may enable our Board
of Directors to discourage an attempt to obtain control of us by means of a
tender offer, proxy contest, merger or otherwise.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, as well as proxy
statements and other information with the SEC. You may read and copy any
document we file with the SEC at the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain further information about
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.
Our SEC filings are also available to the public over the Internet at the SEC's
web site at http://www.sec.gov, which contains reports, proxy statements and
other information regarding registrants like us that file electronically with
the SEC.
This prospectus is part of a registration statement on Form S-8 filed
by us and also is part of a registration statement on Form S-8 (Registration No.
333-74918) previously filed with the SEC under the Securities Act. As permitted
by SEC rules, this prospectus does not contain all of the information included
in those registration statements and the accompanying exhibits filed with the
SEC. You may refer to those registration statements and exhibits for more
information.
10
The SEC allows us to "incorporate by reference" into this prospectus
the information we file with the SEC. This means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be part of this prospectus. If we
subsequently file updating or superseding information in a document that is
incorporated by reference into this prospectus, the subsequent information will
also become part of this prospectus and will supersede the earlier information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We are incorporating by reference the following documents that we have
filed with the SEC:
o our Annual Report on Form 10-K for the year ended December
31, 2002, as amended by the Forms 10-K/A filed with the SEC
on August 28, 2003 and January 20, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended
March 31, 2003, as amended by the Form 10-Q/A filed with the
SEC on January 20, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended June
30, 2003, as amended by the Form 10-Q/A filed with the SEC
on January 20, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended
September 30, 2003, as amended by the Form 10-Q/A filed with
the SEC on January 20, 2004;
o our Current Reports on Form 8-K and 8-K/A as filed with the
SEC on July 7, 2003, August 7, 2003, August 13, 2003, August
28, 2003, and September 9, 2003; and
o the description of our common stock, $.001 par value per
share, contained in our registration statement on our
amended Form 8-A filed pursuant to Section 12(b) of the
Securities Exchange Act of 1934, dated June 29, 2001, and
any subsequent amendments or reports filed for the purpose
of updating such description.
We are also incorporating by reference into this prospectus all of our
future filings with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act until this offering has been completed.
You may obtain a copy of any of our filings that are incorporated by
reference, at no cost, by contacting us at:
Stonepath Group, Inc.
1600 Market Street, Suite 1515
Philadelphia, PA 19103
Attention: Stephen M. Cohen,
Senior Vice President and General Counsel
Telephone: (215) 979-8370
11
You should rely only on the information contained in or incorporated by
reference in this prospectus. We have not authorized anyone to provide you with
different information. We are not making an offer of these securities in any
state where the offer is not permitted. You should not assume that the
information provided by this prospectus is accurate as of any date other than
the date on the front of this prospectus. If we subsequently file updating or
superseding information in a document that is incorporated by reference into
this prospectus, the subsequent information will also become part of this
prospectus and will supersede the earlier information.
FORWARD-LOOKING STATEMENTS
This prospectus includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended (the "Securities Act")
and Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). We have based these forward-looking statements on our current
expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions
about us and our subsidiaries that may cause our actual results, levels of
activity, performance or achievements to be materially different from any future
results, levels of activity, performance or achievements expressed or implied by
such forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "could," "would,"
"expect," "plan," "anticipate," "believe," "continue," "estimate," "project,"
"intend" or the negative of such terms or other similar expressions. You should
not place undue reliance on these forward-looking statements, which speak only
as of the date made. We undertake no obligation to publicly release the result
of any revision of these forward-looking statements to reflect events or
circumstances after the date they are made or to reflect the occurrence of
unanticipated events. You should also know that such statements are not
guarantees of future performance and are subject to risks, uncertainties and
assumptions. Many of these risks and uncertainties are set forth in the "Risk
Factors" section of this prospectus and in our other filings with the SEC.
Should any of these risks or uncertainties materialize, or should any of our
assumptions prove incorrect, actual results may differ materially from those
included within the forward-looking statements.
STONEPATH GROUP, INC.
We are a non-asset based third-party logistics services company
providing supply chain solutions on a global basis. We offer a full range of
time-definite transportation and distribution solutions through our Domestic
Services platform where we manage and arrange the movement of raw materials,
supplies, components and finished goods for our customers. These services are
offered through our domestic air and ground freight forwarding business. We
offer a full range of international logistics services, including international
air and ocean transportation, as well as customs house brokerage services,
through our International Services platform. In addition to these core service
offerings, we also provide a broad range of value added supply chain management
services, including warehousing, order fulfillment and inventory management. We
service a customer base of manufacturers, distributors and national retail
chains through a network of offices in 21 major metropolitan areas in North
America, plus eight international locations, and an extensive network of over
200 independent carriers and over 150 service partners strategically located
around the world.
12
Our strategic objective is to build a leading global logistics services
organization that integrates established logistics companies with innovative
technologies. To that end, we are extending our network through a combination of
synergistic acquisitions and the organic expansion of our existing base of
logistics operations.
Our acquisition strategy focuses on acquiring and integrating logistics
businesses that will enhance our position in current markets as well as extend
our network to targeted locations in Asia, South America and Europe. We select
acquisition targets based upon their ability to demonstrate: (1) historic levels
of profitability; (2) a proven record of delivering superior time-definite
distribution and other value added services; (3) an established customer base of
large and mid-sized companies; and (4) opportunities for significant growth
within strategic segments of our business.
As we integrate these companies, we intend to create additional
stockholder value by: (1) improving productivity through adoption of common
technologies and business processes; (2) improving transportation margins by
leveraging our growing purchasing power; and (3) enhancing the opportunity for
organic growth through cross-selling and offering expanded services.
Our strategy is designed to take advantage of shifting market dynamics.
The third-party logistics industry continues to grow as an increasing number of
businesses outsource their logistics functions to more cost effectively manage
and extract value from their supply chains. Also, we believe that the industry
is positioned for further consolidation since it remains highly fragmented, and
since customers are demanding the types of sophisticated and broad reaching
service offerings that can more effectively be handled by larger and more
diverse organizations.
There are a variety of risks associated with our ability to achieve our
strategic objectives, including our ability to acquire and profitably manage
additional businesses, our current reliance on a small number of key customers,
the risks inherent in international operations, and the intense competition in
our industry for customers and for the acquisition of additional businesses. For
a more detailed discussion of these risks and the risks associated with an
investment in our securities, see the discussion under the "Risk Factors"
section of this Prospectus beginning on page 1.
Our executive offices are located at 1600 Market Street, Suite 1515,
Philadelphia, Pennsylvania 19103 and our telephone number is (215) 979-8370. Our
Internet address is www.stonepath.com. Information contained on our website
should not be considered part of this prospectus.
SELLING STOCKHOLDERS
This prospectus relates to the resale of Shares that have been or may
be acquired by the Selling Stockholders pursuant to grants under the Plan and
pursuant to certain non-Plan options to purchase Common Stock. The following
table sets forth (1) the name of the Selling Stockholders, (2) any material
relationship between the Company and each Selling Stockholder within the past
three years based upon information currently available to the Company, (3) the
number of shares of Common Stock beneficially owned by each Selling Stockholder
prior to the offering as of the date of this prospectus, (4) the number of
Shares that may be offered by each Selling Stockholder under this prospectus,
(5) the number of shares of Common Stock that will be owned by each Selling
Stockholder assuming the sale of all the Shares upon completion of the offering,
and (6) the percentage of Common Stock outstanding that such remaining shares
will represent assuming a sale of all Shares offered under this prospectus. The
number of Shares offered for sale by such individuals, or by individuals not
named herein, may be updated or added, as the case may be, in supplements to
this prospectus.
13
Because the Selling Stockholders may sell all, some or none of the
Shares of Common Stock that they hold and because the number of shares of Common
Stock outstanding may increase or decrease, we have estimated the amounts and
percentages of shares of Common Stock that they will hold after completion of
the offering by assuming that (1) the Selling Stockholders will not acquire
beneficial ownership of any additional shares of Common Stock, (2) they will
dispose of only Shares offered under this prospectus prior to completion of the
offering, (3) all options to acquire Common Stock that they beneficially own
have become fully vested and have been exercised, and (4) they will sell all of
the Shares offered by this prospectus.
This table has been prepared based on the assumption that 38,461,611
shares of Common Stock were issued and outstanding as of January 31, 2004.
-----------------------------------------------------------------------------------------------------------------------------
Percentage of Number of Percentage of
Number of Outstanding Shares of Outstanding
Shares of Common Stock Common Stock Common Stock
Common Stock Prior to Number of After After
Prior to Completion of Shares Offered Completion of Completion of
Name Relationship Offering(1) Offering(1) Herein(2) Offering(1)(2)(3) Offering(2) (3)
-----------------------------------------------------------------------------------------------------------------------------
Dennis L. Pelino Chairman of 3,456,224(4) 8.3% 4,950,000 406,222 *
the Board of
Directors
and Chief
Executive
Officer
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Stephen M. Cohen Senior Vice 822,685(5) 2.1% 1,010,000 11,850 *
President,
General Counsel
and Secretary
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Bohn H. Crain Chief 342,599(6) * 775,000 17,600 *
Financial
Officer and
Treasurer
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Thomas L. Scully Vice President 39,534(7) * 108,300 - *
and Principal
Accounting
Officer
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Gary Koch (8) 591,412(9) 1.5% 350,000 458,079 1.2%
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Jason Totah (10) 139,167(11) * 330,000 - *
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
J. Douglass Coates Director 50,000(12) * 50,000 - *
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
David R. Jones Director 142,500(13) * 90,000 85,000 *
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Aloysius T. Lawn, IV Director 57,500(14) * 90,000 - *
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
Robert McCord Director 100,000(15) * 100,000 - *
------------------------ ---------------- --------------- --------------- ---------------- ----------------- ----------------
John Springer Director (16) * 50,000 - *
-----------------------------------------------------------------------------------------------------------------------------
* indicates less than 1%
14
(1) The securities "beneficially owned" by an individual are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the SEC under the Exchange Act. They may include securities owned
by or for, among others, the spouse and/or minor children of an individual and
any other relative who has the same home as such individual, as well as, other
securities as to which the individual has or shares voting or investment power.
The number of shares beneficially owned by the Selling Stockholders includes
options to purchase shares of our Common Stock exercisable as of, or within 60
days of, the date of this prospectus. Beneficial ownership may be disclaimed as
to certain of the securities.
(2) The amounts for each Selling Shareholder assume full vesting and exercise of
all outstanding options to purchase Common Stock held by that Selling
Stockholder.
(3) Assuming the sale of all Shares covered by this prospectus and that the
number of shares of Common Stock issued and outstanding upon the completion of
the offering will include only such Shares together with all other shares issued
and outstanding on the date hereof. For a more recent statement of issued and
outstanding shares of Common Stock after the date of this prospectus, please see
our more recent filings with the SEC, which are referred to in the section of
this prospectus entitled "Where You Can Find More Information."
(4) Includes 406,222 shares of Common Stock held by the Dennis L. Pelino and
Meredith L. Pelino Declaration of Trust, of which Dennis L. Pelino and his
spouse are trustees and beneficiaries, though beneficial ownership of which may
be disclaimed. Also includes 3,050,002 shares of Common Stock issuable upon
exercise of vested options. Does not include 1,899,998 shares of Common Stock
issuable pursuant to options not presently exercisable and not exercisable
within 60 days of January 31, 2004.
(5) Includes 11,850 shares of Common Stock. Also includes 810,835 shares of
Common Stock issuable upon exercise of vested options and options which vest
within 60 days of January 31, 2004. Does not include 199,165 shares of Common
Stock issuable pursuant to options not presently exercisable and not exercisable
within 60 days of January 31, 2004.
(6) Includes 17,600 shares of Common Stock. Also includes 324,999 shares of
Common Stock issuable upon exercise of vested options and options which vest
within 60 days of January 31, 2004. Does not include 450,001 shares of Common
Stock issuable pursuant to options not presently exercisable and not exercisable
within 60 days of January 31, 2004.
(7) Includes 39,534 shares of Common Stock issuable upon exercise of vested
options and options which vest within 60 days of January 31, 2004. Does not
include 68,766 shares of Common Stock issuable pursuant to options not presently
exercisable and not exercisable within 60 days of January 31, 2004.
(8) Chief Executive Officer of Stonepath Logistics Domestic Services, Inc., a
wholly owned subsidiary of the Company.
(9) Includes 458,079 shares of Common Stock held by the Revocable Trust of Gary
A. Koch, of which Gary A. Koch is the trustee and a beneficiary, beneficial
ownership of which may be disclaimed. Also includes 133,333 shares of Common
Stock issuable upon exercise of vested options and options which vest within 60
days of January 31, 2004. Does not include 216,667 shares of Common Stock
issuable pursuant to options not presently exercisable and not exercisable
within 60 days of January 31, 2004.
(10) Chief Executive Officer of Stonepath Logistics International Services,
Inc., a wholly owned subsidiary of the Company.
(11) Includes 139,167 shares of Common Stock issuable upon the exercise of
vested options and options which vest within 60 days of January 31, 2004. Does
not include 190,833 shares of Common Stock issuable pursuant to options not
presently exercisable and not exercisable within 60 days of January 31, 2004.
(12) Includes 50,000 shares of Common Stock issuable upon the exercise of vested
options and options which vest within 60 days of January 31, 2004.
15
(13) Includes 85,000 shares of Common Stock. Also includes 57,500 shares of
Common Stock issuable upon exercise of vested options and options which vest
within 60 days of January 31, 2004. Does not include 32,500 shares of Common
Stock issuable pursuant to options not presently exercisable and not exercisable
within 60 days of January 31, 2004.
(14) Includes 57,500 shares of Common Stock issuable upon the exercise of vested
options and options which vest within 60 days of January 31, 2004. Does not
include 32,500 shares of Common Stock issuable pursuant to options not presently
exercisable and not exercisable within 60 days of January 31, 2004.
(15) Includes 100,000 shares of Common Stock issuable upon the exercise of
vested options and options which vest within 60 days of January 31, 2004.
(16) Does not include 50,000 shares of Common Stock issuable pursuant to options
not presently exercisable and not exercisable within 60 days of January 31,
2004.
USE OF PROCEEDS
We will not receive any proceeds from the sale of Shares by the Selling
Stockholders. We will receive proceeds from the exercise of the options by the
Selling Stockholders, except for any options exercised using a cashless exercise
provision.
PLAN OF DISTRIBUTION
The Selling Stockholders, or their respective pledgees, donees,
transferees, or any of their successors in interest selling shares received from
a named Selling Stockholder as a gift, partnership distribution or other
non-sale related transfer after the date of this prospectus (all of whom may be
Selling Stockholders), may sell the securities from time to time on any stock
exchange or quotation system on which the securities may be listed or quoted, in
the over-the-counter market, in privately negotiated transactions or otherwise,
at fixed prices that may be changed, at market prices prevailing at the time of
sale, at prices related to prevailing market prices or at prices otherwise
negotiated.
The Selling Stockholders may sell the securities by one or more of the
following methods, without limitation:
o block trades in which the broker or dealer so engaged will attempt
to sell the securities as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
o purchases by a broker or dealer as principal and resale by the
broker or dealer for its own account pursuant to this prospectus,
including resale to another broker or dealer;
o an exchange distribution in accordance with the rules of any stock
exchange on which the securities are listed;
o ordinary brokerage transactions and transactions in which the
broker solicits purchases;
o through dealers or agents or to dealers acting as market makers;
o privately negotiated transactions;
16
o short sales;
o through the writing of options on the securities, whether or not
the options are listed on an options exchange;
o through the distribution of the securities by any Selling
Stockholder to its partners, members or stockholders;
o one or more underwritten offerings on a firm commitment or best
efforts basis; and
o any combination of any of these methods of sale.
The distribution of the shares may be effected from time to time in one
or more transactions at a fixed price or prices, which may be changed, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. We do not know of any arrangements by the
Selling Stockholders for the sale of any of the securities.
The Selling Stockholders may engage brokers and dealers, and any
brokers or dealers may arrange for other brokers or dealers to participate in
effecting sales of the securities. These brokers, dealers or underwriters may
act as principals, or as an agent of a Selling Stockholder. Broker-dealers may
agree with a Selling Stockholder to sell a specified number of the securities at
a stipulated price per security. If the broker-dealer is unable to sell
securities acting as agent for a Selling Stockholder, it may purchase as
principal any unsold securities at the stipulated price. Broker-dealers who
acquire securities as principals may thereafter resell the securities from time
to time in transactions in any stock exchange or automated interdealer quotation
system on which the securities are then listed or quoted, at prices and on terms
then prevailing at the time of sale, at prices related to the then-current
market price or in negotiated transactions. Broker-dealers may use block
transactions and sales to and through broker-dealers, including transactions of
the nature described above. Assuming that required holding periods and other
criteria are satisfied, the Selling Stockholders may also sell the securities in
accordance with Rule 144 under the Securities Act rather than pursuant to this
prospectus, regardless of whether the securities are covered by this prospectus.
To the extent required under the Securities Act, the aggregate amount
of any Selling Stockholder's securities being offered and the terms of the
offering, the names of any agents, brokers, dealers or underwriters and any
applicable commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a
Selling Stockholder and/or purchasers of Selling Stockholders' securities, for
whom they may act (which compensation as to a particular broker-dealer might be
in excess of customary commissions).
The Selling Stockholders and any underwriters, brokers, dealers or
agents that participate in the distribution of the securities may be deemed to
be "underwriters" within the meaning of the Securities Act, and any discounts,
concessions, commissions or fees received by them and any profit on the resale
of the securities sold by them may be deemed to be underwriting discounts and
commissions.
17
The Selling Stockholders may enter into hedging transactions with third
parties, which may in turn engage in short sales of the securities in the course
of hedging the position they assume. Such third parties may receive compensation
in the form of underwriting discounts, concessions or commissions from the
Selling Stockholders or the purchasers of the securities for whom they may act
as agents. The Selling Stockholders may also enter into short positions or other
derivative transactions relating to the securities, or interests in the
securities, and deliver the securities, or interests in the securities, to close
out their short or other positions or otherwise settle short sales or other
transactions, or loan or pledge the securities, or interests in the securities,
to third parties that in turn may dispose of these securities.
Shares may also be offered and sold, if so indicated in the related
prospectus supplement, in connection with a remarketing upon their purchase or
otherwise, by one or more remarketing firms, acting as principals for their own
accounts or as agents for the Company or the Selling Stockholders. Any
remarketing firm will be identified and the terms of its agreement, if any, with
the Company or the Selling Stockholders and its compensation will be described
in a related prospectus supplement. Remarketing firms may be deemed to be
underwriters, as that term is defined in the Securities Act, in connection with
the shares remarketed by them.
The Selling Stockholders and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Exchange Act, and the rules and regulations thereunder, including Regulation M,
which provisions may limit the timing of the purchase and sale of our securities
by them.
The Selling Stockholders reserve the right to accept and, together with
their agents from time-to-time, to reject, in whole or in part, any proposed
purchase of the securities to be made directly or through agents.
We will not receive any proceeds from the sale of the Shares. We will
pay the expenses of preparing this prospectus and the related registration
statement.
We can not assure you that the Selling Stockholders will sell all or
any portion of the securities offered hereby.
LEGAL MATTERS
The validity of the Shares being offered by this Prospectus has been
passed upon for the Company by Buchanan Ingersoll PC, Eleven Penn Center, 1835
Market Street, 14th Floor, Philadelphia, PA 19103.
EXPERTS
The consolidated financial statements and schedule of the Company as of
December 31, 2002 and 2001, and for each of the years in the three-year period
ended December 31, 2002, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing. The audit report contains an
explanatory paragraph that states that the Company has restated its consolidated
statement of operations for the year ended December 31, 2002.
18
The combined financial statements of M.G.R., Inc. d/b/a Air Plus
Limited, Distribution Services, Inc., and Contract Air, Inc. for the year ended
December 31, 2000 have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
The financial statements of Regroup Express, LLC as of December 31,
2002 and 2001, and for the years then ended, have been incorporated by reference
herein and in the registration statement in reliance upon the report of KPMG
LLP, independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The financial statements of G-Link Express Pte. Ltd. as of and for the
year ended December 31, 2002, have been incorporated by reference herein and in
the registration statement in reliance upon the report of Ho, Sneddon, Chui,
independent accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
The financial statements of G-Link Express (Cambodia) Pte. Ltd. as of
and for the year ended December 31, 2002, have been incorporated by reference
herein and in the registration statement in reliance upon the report of Ho,
Sneddon, Chui, independent accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
DISCLOSURE OF SEC POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our certificate of incorporation and bylaws reflect the adoption of the
provisions of Section 102(b)(7) of the GCL, as amended, which eliminate or limit
the personal liability of a director to our stockholders or us for monetary
damages for breach of fiduciary duty under certain circumstances. If applicable
Delaware law is amended to authorize corporate action further eliminating or
limiting personal liability of directors, our certificate of incorporation
provides that the liability of a director shall be eliminated or limited to the
fullest extent permitted by applicable Delaware law.
Our certificate of incorporation and bylaws also provide that we shall
indemnify any person who was or is a party to a proceeding by reason of the fact
that he is or was a director, officer, employee or agent of ours, or is or was
serving at our request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including judgments, fines, amounts paid in settlement and attorneys'
fees) actually and reasonably incurred by such person in connection with a
proceeding if such person acted in good faith and in a manner he reasonably
believed to be in our best interests, in accordance with, and to the fullest
extent permitted by, applicable Delaware law. The determination of whether
indemnification is proper under the circumstances, unless made by a court, shall
be determined by the board of directors.
We maintain, at our expense, an insurance policy which insures our
directors and officers, subject to certain exclusions and deductions as are
usual in such insurance policies, against certain liabilities which may be
incurred in those capacities.
19
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
20
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference
The following documents filed with the Commission by the Registrant are
incorporated herein by reference:
o our Annual Report on Form 10-K for the year ended December 31,
2002, as amended by the Forms 10-K/A filed with the SEC on August
28, 2003 and January 20, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended March 31,
2003, as amended by the Form 10-Q/A filed with the SEC on January
20, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended June 30,
2003, as amended by the Form 10-Q/A filed with the SEC on January
20, 2004;
o our Quarterly Report on Form 10-Q for the quarter ended September
30, 2003, as amended by the Form 10-Q/A filed with the SEC on
January 20, 2004;
o our Current Reports on Form 8-K and 8-K/A as filed with the SEC on
July 7, 2003, August 7, 2003, August 13, 2003, August 28, 2003,
and September 9, 2003; and
o the description of our common stock, $.001 par value per share,
contained in our registration statement on our amended Form 8-A
filed pursuant to Section 12(b) of the Securities Exchange Act of
1934, dated June 29, 2001, and any subsequent amendments or
reports filed for the purpose of updating such description.
All documents subsequently filed by the Registrant with the Commission
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the filing of a post-effective amendment to this registration statement which
indicates that all securities offered have been sold or which deregisters all
securities then remaining unsold, shall be deemed to be incorporated by
reference in this registration statement and to be a part hereof from the date
of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes hereof to the extent
that a statement contained herein (or in any other subsequently filed document
that is also incorporated by reference herein) modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part hereof.
Item 4. Description of Securities
Not applicable.
II-1
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
Our certificate of incorporation and bylaws reflect the adoption of the
provisions of Section 102(b)(7) of the GCL, which eliminate or limit the
personal liability of a director to our stockholders or us for monetary damages
for breach of fiduciary duty under certain circumstances. If applicable Delaware
law is amended to authorize corporate action further eliminating or limiting
personal liability of directors, our certificate of incorporation provides that
the liability of a director shall be eliminated or limited to the fullest extent
permitted by applicable Delaware law.
Our certificate of incorporation and bylaws also provide that we shall
indemnify any person who was or is a party to a proceeding by reason of the fact
that he is or was a director, officer, employee or agent of ours, or is or was
serving at our request as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses (including judgments, fines, amounts paid in settlement and attorneys'
fees) actually and reasonably incurred by such person in connection with a
proceeding if such person acted in good faith and in a manner he reasonably
believed to be in our best interests, in accordance with, and to the fullest
extent permitted by, applicable Delaware law. The determination of whether
indemnification is proper under the circumstances, unless made by a court, shall
be determined by the board of directors.
We maintain, at our expense, an insurance policy which insures our
directors and officers, subject to certain exclusions and deductions as are
usual in such insurance policies, against certain liabilities which may be
incurred in those capacities.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
The following is a list of exhibits filed as part of this Registration
Statement, which are incorporated herein:
4.1 Stonepath Group, Inc. Amended and Restated 2000 Filed as an exhibit to Company's Definitive Proxy
Stock Incentive Plan (the "Plan") Statement on Form 14A filed April 15, 2003 and
incorporated herein by reference
4.2 Form of Stock Option Agreement under the Plan Filed as an exhibit to the Company's registration
statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
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4.3 Form of Non-Plan Option to Purchase Common Stock Filed as an exhibit to the Company's registration
of the Company statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.4 Option Agreement between the Company and Dennis Filed as an exhibit to the Company's Current Report on
L. Pelino dated as of June 21, 2001 ("Pelino Form 8-K dated June 21, 2001 and incorporated herein by
Options") reference
4.5 Amendment No. 1 to Pelino Options effective as of Filed as an exhibit to the Company's registration
October 18, 2001 statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.6 Incentive Stock Option Agreement between the Filed as an exhibit to the Company's registration
Company and Andrew P. Panzo dated April 19, 2001 statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.7 Non-Qualified Stock Option Agreement between Net Filed as an exhibit to the Company's registration
Value Inc. and Andrew P. Panzo dated December 4, statement on Form S-8 (Reg. No. 333-74918) and
1999 incorporated herein by reference
4.8 Option to Purchase Common Stock of the Company Filed as an exhibit to the Company's quarterly report on
granted to Andrew P. Panzo effective as of June Form 10-Q for the period ended June 30, 2001 ("June 2001
1, 1999 10-Q") and incorporated herein by reference
4.9 Incentive Stock Option Agreement between the Filed as an exhibit to the Company's registration
Company and Stephen M. Cohen dated April 19, 2001 statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.10 Amended and Restated Non-Qualified Stock Option Filed as an exhibit to the Company's registration
Agreement between Net Value, Inc. and Michael A. statement on Form S-8 (Reg. No. 333-74918) and
Clark, dated September 19, 1997 incorporated herein by reference
4.11 Option to Purchase Common Stock of the Company Filed as an exhibit to the Company's June 2001 10-Q and
granted to Lee Hansen effective as of October 1, incorporated herein by reference
1999
4.12 Employment Agreement with Tom Aley dated April Filed as an exhibit to the Company's Annual Report on
17, 2000 Form 10-K for its fiscal year ended December 31, 1999
("1999 Annual Report") and incorporated herein by
reference
4.13 Common Stock Purchase Warrant issued to Darr Aley Filed as an exhibit to the Company's 1999 Annual Report
on May 8, 2000 and incorporated herein by reference
II-3
4.14 Common Stock Purchase Warrant issued to Stephen Filed as an exhibit to the Company's 1999 Annual Report
George on May 8, 2000 and incorporated herein by reference
4.15 Common Stock Purchase Warrant issued to Barry Filed as an exhibit to the Company's 1999 Annual Report
Uphoff on May 8, 2000 and incorporated herein by reference
5.1 Opinion of Buchanan Ingersoll PC Filed herewith
23.1 Consent of KPMG LLP Filed herewith
23.2 Consent of KPMG LLP Filed herewith
23.3 Consent of KPMG LLP Filed herewith
23.4 Consent of Ho, Sneddon, Chui Filed herewith
23.5 Consent of Ho, Sneddon, Chui Filed herewith
23.6 Consent of Buchanan Ingersoll PC Contained in opinion filed as Exhibit 5.1
24.1 Power of Attorney (see signature page)
Item 9. Undertakings
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act;
(ii) to reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or
the most recent post-effective amendment thereof) which
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement;
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this
registration statement or any material change to such
information in this registration statement.
Provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if
the information required to be included in a post-effective amendment by the
foregoing paragraphs is contained in periodic reports filed by the Company
pursuant to Section 13 or Section 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the Company's
annual report pursuant to Section 13(a) or Section 15(d) of the Exchange Act
(and, where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the provisions described in Item 6 of this registration statement,
or otherwise, the Company has been advised that in the opinion of the Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company 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 Company 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 Securities Act and will be governed by the final
adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on the
23rd day of February, 2004.
Stonepath Group, Inc.
By: /s/ Dennis L. Pelino
-------------------------------------
Chairman of the Board and
Chief Executive Officer
By: /s/ Bohn H. Crain
-------------------------------------
Chief Financial Officer
By: /s/ Thomas L. Scully
-------------------------------------
Vice President -
(Principal Accounting Officer)
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Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Dennis L. Pelino and Stephen M.
Cohen, 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 all documents in connection therewith, with the
SEC, 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 substitutes, any lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration
statement has been signed by the following persons in the capacities and on the
dates indicated.
Signature Title Date
--------- ----- ----
/s/ Dennis L. Pelino Chairman of the Board and February 23, 2004
--------------------------- Chief Executive Officer
Dennis L. Pelino
/s/ J. Douglass Coates Director February 23, 2004
---------------------------
J. Douglass Coates
/s/ John Springer Director February 23, 2004
---------------------------
John Springer
/s/ Aloysius T. Lawn IV Director February 23, 2004
---------------------------
Aloysius T. Lawn IV
/s/ Robert McCord Director February 23, 2004
---------------------------
Robert McCord
/s/ David R. Jones Director February 23, 2004
---------------------------
David R. Jones
II-6
EXHIBIT INDEX
-------------
4.1 Stonepath Group, Inc. Amended and Restated 2000 Filed as an exhibit to Company's Definitive Proxy
Stock Incentive Plan (the "Plan") Statement on Form 14A filed April 15, 2003 and
incorporated herein by reference
4.2 Form of Stock Option Agreement under the Plan Filed as an exhibit to the Company's registration
statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.3 Form of Non-Plan Option to Purchase Common Stock Filed as an exhibit to the Company's registration
of the Company statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.4 Option Agreement between the Company and Dennis Filed as an exhibit to the Company's Current Report on
L. Pelino dated as of June 21, 2001 ("Pelino Form 8-K dated June 21, 2001 and incorporated herein by
Options") reference
4.5 Amendment No. 1 to Pelino Options effective as of Filed as an exhibit to the Company's registration
October 18, 2001 statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.6 Incentive Stock Option Agreement between the Filed as an exhibit to the Company's registration
Company and Andrew P. Panzo dated April 19, 2001 statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.7 Non-Qualified Stock Option Agreement between Net Filed as an exhibit to the Company's registration
Value Inc. and Andrew P. Panzo dated December 4, statement on Form S-8 (Reg. No. 333-74918) and
1999 incorporated herein by reference
4.8 Option to Purchase Common Stock of the Company Filed as an exhibit to the Company's quarterly report
granted to Andrew P. Panzo effective as of June on Form 10-Q for the period ended June 30, 2001
1, 1999 ("June 2001 10-Q") and incorporated herein by reference
4.9 Incentive Stock Option Agreement between the Filed as an exhibit to the Company's registration
Company and Stephen M. Cohen dated April 19, 2001 statement on Form S-8 (Reg. No. 333-74918) and
incorporated herein by reference
4.10 Amended and Restated Non-Qualified Stock Option Filed as an exhibit to the Company's registration
Agreement between Net Value, Inc. and Michael A. statement on Form S-8 (Reg. No. 333-74918) and
Clark, dated September 19, 1997 incorporated herein by reference
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4.11 Option to Purchase Common Stock of the Company Filed as an exhibit to the Company's June 2001 10-Q and
granted to Lee Hansen effective as of October 1, incorporated herein by reference
1999
4.12 Employment Agreement with Tom Aley dated April Filed as an exhibit to the Company's Annual Report on
17, 2000 Form 10-K for its fiscal year ended December 31, 1999
("1999 Annual Report") and incorporated herein by
reference
4.13 Common Stock Purchase Warrant issued to Darr Aley Filed as an exhibit to the Company's 1999 Annual Report
on May 8, 2000 and incorporated herein by reference
4.14 Common Stock Purchase Warrant issued to Stephen Filed as an exhibit to the Company's 1999 Annual Report
George on May 8, 2000 and incorporated herein by reference
4.15 Common Stock Purchase Warrant issued to Barry Filed as an exhibit to the Company's 1999 Annual Report
Uphoff on May 8, 2000 and incorporated herein by reference
5.1 Opinion of Buchanan Ingersoll PC Filed herewith
23.1 Consent of KPMG LLP Filed herewith
23.2 Consent of KPMG LLP Filed herewith
23.3 Consent of KPMG LLP Filed herewith
23.4 Consent of Ho, Sneddon, Chui Filed herewith
23.5 Consent of Ho, Sneddon, Chui Filed herewith
23.6 Consent of Buchanan Ingersoll PC Contained in opinion filed as Exhibit 5.1
24.1 Power of Attorney (see signature page)
II-8