Registration No. 333-112555
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As Filed With The Securities And Exchange Commission
On October 22, 2004
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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POST-EFFECTIVE AMENDMENT NO. 1 TO
FORM S-1 REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
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DYNTEK, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 7372 95-4228470
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation) Industrial Classification Identification No.)
Code Number)
Steven J. Ross
President And Chief Executive Officer
DynTek, Inc.
18881 Von Karman Avenue, Suite 250
Irvine, California 92612
(949) 955-0078
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
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Copies To:
Peter W. Rothberg
Nixon Peabody LLP
437 Madison Avenue
New York, New York 10022
Telephone (212) 940-3106
Facsimile (212) 940-3111
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement, as determined by
the selling stockholders.
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, 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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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. |X| Registration Statement on Form S-1 (File No.
333-112555).
If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |_|
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Maximum Proposed Maximum
Class of Securities Amount to be Offering Price Per Aggregate Offering Amount of
to be Registered Registered Share Price Registration Fee
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Class A Common Stock,
$.0001 par value per
share (the common stock) 8,744,084 (1)() (1)(2) (1)(2) $931 (1)
(1) This Registration Statement constitutes a post-effective amendment to
Registration Statement File No. 333-112555, declared effective by the
Securities and Exchange Commission on April 2, 2004, and on which
aggregate filing fees aggregating $931 have previously been paid.
(2) Pursuant to Rule 416 under the Securities Act of 1933, as amended (the
Act), in addition, such undeterminable number of shares of common stock as
may be issued on exercise of warrants by reason of adjustments in the
number of shares of common stock issuable
pursuant to anti-dilution provisions contained in the warrants. Such
additional common stock, if issued, will be issued for no additional
consideration.
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 Act or until this Registration Statement shall become effective on such date
as the Securities and Exchange Commission, acting pursuant to said Section 8(a),
may determine.
The information in this prospectus is not complete and may be changed
without notice. We and the selling shareholder may not sell these securities
until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities, and we and the selling shareholder are not soliciting offers to buy
these securities, in any state where the offer or sale of these securities is
not permitted.
PROSPECTUS
Subject To Completion, Dated October 22, 2004
8,744,084 SHARES
DYNTEK, INC.
COMMON STOCK
This prospectus relates to 8,744,084 shares of the Common Stock of DynTek,
Inc. (the common stock) that may be offered for resale by certain of our
stockholders referred to in this prospectus as selling stockholders, or their
transferees, pledges, donees or successors. The selling stockholders may sell
the shares at fixed prices, prevailing market prices at the time of sale,
varying prices determined at the time of sale or at negotiated prices.
Certain of the shares of our common stock covered by this prospectus may
be issued by us upon the exercise of outstanding warrants to purchase our common
stock held by the selling stockholders. We will not receive any of the proceeds
from the resale of shares by the selling stockholders, but we may receive
proceeds from the selling stockholders when and if they exercise their warrants.
The 6,501,659 shares of common stock and the 2,242,425 shares of common
stock underlying the warrants were issued in private placements pursuant to
which the selling stockholders were granted the right to have registered the
common stock and the common stock underlying the warrants.
Our common stock trades on the Nasdaq SmallCap Market under the symbol
"DYTK." The last reported sale price for our common stock on October 18, 2004
was $0.56 per share.
Investment in the common stock offered by this prospectus involves a high
degree of risk. You may lose your entire investment. Consider carefully the
"risk factors" beginning on page 4 of this prospectus before investing.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is October _, 2004.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY............................................................ 1
THE OFFERING.................................................................. 2
SUMMARY FINANCIAL INFORMATION................................................. 3
RISK FACTORS.................................................................. 3
USE OF PROCEEDS.............................................................. 11
DIVIDEND POLICY.............................................................. 11
SHARES ELIGIBLE FOR RESALE................................................... 11
PLAN OF DISTRIBUTION......................................................... 16
LEGAL MATTERS................................................................ 18
DOCUMENTS INCORPORATED BY REFERENCE.......................................... 18
WHERE YOU CAN FIND ADDITIONAL INFORMATION.................................... 19
IMPORTANT NOTICE TO READERS
You should rely only on the information contained in this prospectus. We
have not, and the selling stockholders have not, authorized anyone to provide
you with different information. If anyone provides you with different
information, you should not rely on it. We are not, and the selling stockholders
are not, making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information contained
in this prospectus is accurate only as of the date on the front cover of this
prospectus. Our business, financial condition, results of operations and
prospects may have changed since that date.
SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS
When used in this prospectus and in our future filings with the Securities
and Exchange Commission, the words or phrases "will likely result," "we expect,"
"will continue," "is anticipated," "estimated," "project," or "outlook" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. We wish to
caution readers not to place undue reliance on any such forward-looking
statements, each of which speaks only as of the date made. Such statements are
subject to certain risks and uncertainties that could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. Such risks and uncertainties include, among others, success in
reaching target markets for services and products in a highly competitive market
and the ability to attract future customers, the size and timing of additional
significant orders and their fulfillment, the success of our business emphasis,
the ability to finance and sustain operations, including the ability either to
maintain and extend the Textron Financial Corporation credit agreement when it
becomes due or to replace it with alternative financing, the ability to raise
equity capital in the future despite historical losses from operations, the
ability to fulfill our obligations to third parties, the size and timing of
additional significant orders and their fulfillment, the ability to turn
contract backlog into revenue and net income, the continuing desire of state and
local governments to outsource to private contractors and our ability to obtain
extensions of the remaining profitable contracts of certain of our subsidiaries
at their maturity, the performance of governmental services, the ability to
develop and upgrade our technology, and the continuation of general economic and
business conditions that are conducive to governmental outsourcing of service
performance. We have no obligation to publicly release the results of any
revisions, which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
PROSPECTUS SUMMARY
This summary is not complete and does not contain all of the information
that you should consider before investing in our common stock. You should read
the entire prospectus carefully, including the more detailed information
regarding our company, the risks of purchasing our common stock discussed under
"Risk Factors," and our financial statements and the accompanying notes.
DynTek, Inc.
DynTek, Inc. is a professional services firm specializing in information
technology (IT) solutions and business process outsource services for state and
local government agencies. We operate our business through our active
subsidiary, DynTek Services, Inc. Depending upon the context, the term DynTek,
or "we," refers to either DynTek alone, or DynTek and its subsidiary.
We provide information technology support services and enabling
technologies, as well as related products, to state and local government
customers which are used to increase efficiency in operations and improve access
to government functions. Our comprehensive information technology services
include security consulting, infrastructure planning and deployment, information
technology application development, legacy systems integration, information
technology system support, and business process outsourcing services for state
and local government agencies.
The following wholly owned subsidiaries of DynTek are inactive: Physicians
Support Services, Inc., a California corporation; Clinishare Diabetes Centers,
Inc. d/b/a SugarFree Centers, Inc., a California corporation; USC-Michigan,
Inc., a Michigan corporation; PCS, Inc.-West, a Michigan Corporation; TekInsight
e-Government Services, Inc., a Delaware corporation; TekInsight Research, Inc.,
a New York corporation; and BugSolver.com, Inc., a Delaware corporation.
Industry Overview
Government agencies are under continuing pressure to improve data
management and information technology services. This requirement is driven by
the broadening impact of the Internet, the increasing need for real-time
information, regulatory changes, and the speed and complexity of technology and
operating system advancements. According to the Gartner Group, Inc. "Trends in
U.S. State and Local Governments Market Trends" report, published in March 2002,
state and local government information technology, or IT, spending is forecast
to increase over the next four years at a rate of 8 percent annually from
approximately $44 billion in 2000, to reach over $56 billion by 2005.
Fiscal and service delivery pressures have led state and local governments
increasingly to seek non-governmental business partners who can assume and
ensure the delivery of high quality services at less cost and greater quality
than traditional government service offerings. State and local government
agencies are also finding that certain business processes can be better operated
and managed by private sector companies. We believe that this reliance will
continue to intensify in many government agencies due to the difficulties faced
in recruiting and retaining
highly skilled professionals in a labor market that, despite current national
unemployment rates, is competitive for persons with specialized information
technology expertise.
We believe that the markets we serve increasingly require a comprehensive
business solution from service providers, grounded in specific and relevant
business knowledge and proven experience, rather than simply the provision of
limited or generic services. We typically engage in large-scale systems
development projects involving full-service solutions that combine hardware,
legacy systems integration, systems engineering and systems support operations,
and high-end consulting, where appropriate. We integrate services with the right
products to provide efficient and low-cost business processes.
THE OFFERING
Securities offered by
selling stockholders...... Up to 8,744,084 shares of common stock, of which
6,501,659 were issued and outstanding and
2,242,425 which underlie the warrants may be
offered and sold by the selling stockholders.
These shares were issued to the selling
stockholders in recent private placements or may
be issued to the selling stockholders upon
exercise of warrants issued in connection with
those private placements.
Use of Proceeds............. We will not receive any proceeds from the sale of
shares by the selling stockholders. We may receive
proceeds from the issuance of shares upon the
exercise of the warrants. We expect any such
proceeds to be used for working capital and for
other general corporate purposes.
Risk Factors................ An investment in our common stock involves a high
degree of risk and could result in a loss of your
entire investment.
Nasdaq SmallCap
Market Symbol............. DYTK
Executive Offices
Our executive offices are located at 18881 Von Karman Ave., Suite 250,
Irvine, California 92612. Our telephone number is (949) 955-0078, and our
website is www.dyntek.com. The information on our website is not part of this
prospectus.
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Transfer Agent
The transfer agent for our common stock is American Stock Transfer & Trust
Company, 59 Maiden Lane, New York, NY 10038 (Tel No. 800-937-5449).
SUMMARY FINANCIAL INFORMATION
The following summary financial information as of and for the years ended
June 30, 2004, 2003 and 2002 for DynTek and its Subsidiaries on a consolidated
basis has been derived from the audited consolidated financial statements of
DynTek. The audited consolidated financial statements of DynTek have been
incorporated by reference, and the following summary financial information
should be read in conjunction with those financial statements.
(in thousands, except share data)
For the Fiscal Year Ended June 30,
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Continuing Operations Data: 2004 2003 2002
- ----------------------------------- ---------- ---------- ----------
Revenue ......................... 49,947 52,647 60,077
Gross Profit .................... 8,936 9,559 11,488
General & administrative
expenses ...................... 5,050 3,759 5,279
Total operating expenses ........ 26,760 14,531 20,458
Net income/(loss) ............... (18,935) (4,203) (12,379)
Net income(loss) per share ...... (.40) (.12) (.43)
Weighted average shares
outstanding ................... 47,301,707 36,639,261 29,103,092
(in thousands, except share data)
As of June 30,
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Balance Sheet Data: 2004 2003
- ----------------------------------------------- -------- ---------
Current assets .............................. 16,875 10,914
Total assets ................................ 45,649 53,127
Current liabilities ......................... 16,450 22,187
Long-term liabilities ....................... 3,596 5,317
Stockholder' equity ......................... 25,603 25,623
Working capital (deficiency) ................ 425 (11,273)
RISK FACTORS
Please consider the following risks and uncertainties together with the
other information presented in this prospectus, and including any information
incorporated herein by reference, before investing in our common stock. The
trading price of our common stock could decline due
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to any of the following risks, and you might lose all or part of your
investment. The risks and uncertainties we have described are not the only ones
our company faces. Additional risks and uncertainties not presently known to us
or that we currently deem immaterial may also affect our business. There are
also a number of risks related to our business that are continuously disclosed
in our Securities and Exchange Commission filings, which are incorporated in
this prospectus by reference. Please read them all carefully.
Risks Related to Our Business
We may need to obtain additional financing.
We have had recurring losses from continuing operations and negative cash
flows from operations. Such losses have been funded primarily from cash received
from the sales of our stock and from debt financings, as well as cash received
from the sale of discontinued operations. We have implemented and will continue
to implement cost reductions designed to minimize such losses. However, if our
existing cash balances are not sufficient to meet our liquidity needs, support
our future expansion needs and achieve our strategic goals, we may require
additional funds. Funds raised through equity financing would likely result in
dilution to our existing shareholders and funds raised through debt financing
may result in the imposition of restrictive covenants. If adequate funds are not
available on acceptable terms, we may be required to divest certain contracts or
other assets that are not central to our business strategy. We will continue to
pursue a number of initiatives intended to minimize our losses in the event that
gross margins from sales do not occur as planned, however, we cannot assure you
that we will not require additional working capital for our operations.
We have a dependence on contracts with government agencies, which, if terminated
or reduced, would have a material adverse effect on our company.
The majority of our revenues are derived from sales to government
agencies. Such government agencies may be subject to budget cuts or budgetary
constraints or a reduction or discontinuation of funding. A significant
reduction in funds available for government agencies to purchase professional
services and related products would have a material adverse effect on our
business, financial condition and results of operations.
We may not be able to attract and retain professional staff necessary for
existing and future projects.
Our success depends in large part upon our ability to attract, retain,
train, manage and motivate skilled employees, particularly project managers and
other senior technical personnel. Despite current high unemployment rates, there
is significant competition for employees with the skills required to perform the
services we offer. In particular, qualified project managers and senior
technical and professional staff are in great demand and competition for such
persons is likely to increase. If we are unable to attract, retain and train
skilled employees, it could impair our ability to adequately manage and staff
our existing projects and to bid for or obtain new projects, which would have a
material adverse effect on our business, financial condition and results of
operations. In addition, the failure of our employees to achieve expected levels
of performance could adversely affect our business. There can be no assurance
that a sufficient
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number of skilled employees will continue to be available, or that we will be
successful in training, retaining and motivating current or future employees.
We may not be able to compete successfully in the information technology and
consulting services markets.
The information technology products and related services markets are
highly competitive and are served by numerous international, national and local
firms. There can be no assurance that we will be able to compete effectively in
these markets. Market participants include systems consulting and integration
firms, including national accounting firms and related entities, the internal
information systems groups of our prospective clients, professional services
companies, hardware and application software vendors, and divisions of both
large integrated technology companies and outsourcing companies. Many of these
competitors have significantly greater financial, technical and marketing
resources, generate greater revenues and have greater name recognition than we
do. In addition, there are relatively low barriers to entry into the IT products
and related services markets, and we have faced, and expect to continue to face,
additional competition from new entrants into the IT products and related
services markets.
We may not be able to identify, acquire or integrate new businesses, which could
adversely impact our business.
A component of our business strategy is to expand our presence in new or
existing markets by acquiring additional businesses. There can be no assurance
that we will be able to identify, acquire or profitably manage additional
businesses or integrate successfully any acquired businesses without substantial
expense, delay or other operational or financial problems. Acquisitions involve
a number of special risks, including the diversion of management's attention,
failure to retain key personnel, increased general and administrative expenses,
client dissatisfaction or performance problems with an acquired firm, assumption
of unknown liabilities, and other unanticipated events or circumstances. Any of
these risks could have a material adverse effect on our business, financial
condition and results of operations.
We anticipate that our revenue and operating results will fluctuate, which could
adversely affect the price of our common stock.
Our operating results have fluctuated and will fluctuate in the future as
a result of many factors, including:
o general economic conditions and weakness in IT spending;
o the loss or consolidation of one or more of our significant
suppliers or customers;
o market acceptance and product life of the products we
distribute;
o competitive conditions in our industry, which may impact our
margins;
o pricing, margin and other terms with our suppliers; and
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o changes in our costs and operating expenses.
Although we attempt to control our expense levels, these levels are based,
in part, on anticipated revenue. Therefore, we may not be able to control
spending in a timely manner to compensate for any unexpected revenue shortfall.
We depend on a small number of vendors to supply the IT products that we sell
and the loss of, or a material change in, our business relationship with a major
supplier could adversely affect our business, financial position and operating
results.
Our future success is highly dependent on our relationships with a small number
of manufacturers and distributors.
Product sales are dependent on our ability to maintain reseller status
with several major technology manufacturers including Hewlett Packard, McAfee,
Cisco and Novell. We are also high dependant on distributors such as Ingram
Micro, GE Access, and Tech Data for the manufactured products. Although, we are
currently an authorized reseller of various products the loss of authorization
could have an adverse material effect on our product sales and results of
operations. We rely upon the manufacturers and distributors supply of products
to fulfill customer orders on a timely basis, and any supply shortages or delays
could cause us to be unable to fulfill orders on a timely basis, which, in turn
could harm our business, financial position and operating results. Our ability
to obtain particular products in the required quantities and to fulfill customer
orders on a timely basis is critical to our success. In most cases, we have no
guaranteed price or delivery agreements with our third-party suppliers. We
occasionally experience a supply shortage of certain products as a result of
strong demand or problems experienced by our third-party suppliers. If shortages
or delays persist, the price of those products may increase, or the products may
not be available at all. In addition, our third-party suppliers may decide to
distribute, or to substantially increase their existing distribution business,
through other distributors, their own dealer networks, or directly to our
customers. Accordingly, if we are not able to secure and maintain an adequate
supply of products to fulfill our customer orders on a timely basis, our
business, financial position and operating results may be adversely affected.
Our Revenue and Operating Results may Fluctuate in the Future.
Our operating results have fluctuated and will fluctuate in the future as
a result of many factors, including; general economic conditions and weakness in
IT spending; the loss or consolidation of one or more of our significant
suppliers or customers; market acceptance and product life of the products we
distribute; competitive conditions in our industry which may impact our margins;
pricing, margin and other terms with our supplies; and changes in our costs and
operating expenses. Although we attempt to control our expense levels, these
levels are based in part, on anticipated revenue. Therefore, we may not be able
to control spending in a timely manner to compensate for any unexpected revenue
shortfall.
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We may Be Involved in Future Litigation.
We are from time to time involved in litigation in the ordinary course of
business. We may not be successful in defending these or other claims.
Regardless of the outcome, litigation can result in substantial expense and
could divert the efforts of our management.
Our gross margins are low, which magnifies the impact of variations in revenue,
operating costs, bad debts and interest expense on our operating results.
As a result of intense price competition in the IT products industry, our
gross margins are low, and we expect them to continue to be low in the future.
Increased competition arising from industry consolidation and low demand for
certain IT products may hinder our ability to maintain or improve our gross
margins. These low gross margins magnify the impact of variations in revenue,
operating costs, bad debts and interest expense on our operating results. A
portion of our operating expenses is relatively fixed, and planned expenditures
are based in part on anticipated orders that are forecasted with limited
visibility of future demand. As a result, we may not be able to reduce our
operating expenses as a percentage of revenue to mitigate any further reductions
in gross margins in the future. If we cannot proportionately decrease our cost
structure in response to competitive price pressures, our business and operating
results could suffer.
We receive purchase discounts and rebates from third-party suppliers based
on various factors, including sales or purchase volume and breadth of customers.
A decrease in net sales could negatively affect the level of volume rebates
received from our third-party suppliers and thus, our gross margins. A decrease
or elimination of purchase discounts and rebates from our third-party suppliers
could adversely affect our business and operating results.
We rely upon third-party vendors for the provision of a significant
portion of the IT services that we provide to our customers. The deterioration
of our relationship with a major third-party service provider could have an
adverse impact on our business.
Our professional workforce is partially comprised of individuals under
contract from third-party professional staffing firms. We currently employ
approximately 90 professionals from such firms for the provision of services to
our customers, representing approximately 60 percent of our total professional
services workforce. If professional staff that we are utilizing become
unavailable from a significant vendor, we would be required to find alternative
sources of such professional staffing services. Interruptions in services
provided to our customers could have an adverse impact on our business.
We depend on third-party suppliers to maintain an adequate supply of products to
fulfill customer orders on a timely basis, and any supply shortages or delays
could cause us to be unable to fulfill orders on a timely basis, which, in turn,
could harm our business, financial position and operating results.
Our ability to obtain particular products in the required quantities and
to fulfill customer orders on a timely basis is critical to our success. In most
cases, we have no guaranteed price or delivery agreements with our third-party
suppliers. We occasionally experience a supply shortage of certain products as a
result of strong demand or problems experienced by our third-
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party suppliers. If shortages or delays persist, the price of those products may
increase, or the products may not be available at all. In addition, our
third-party suppliers may decide to distribute, or to substantially increase
their existing distribution business, through other distributors, their own
dealer networks, or directly to our customers. Accordingly, if we are not able
to secure and maintain an adequate supply of products to fulfill our customer
orders on a timely basis, our business, financial position and operating results
may be adversely affected.
We rely upon a limited number of significant personnel.
Our success depends in large part upon the continued services of a number
of significant employees. Although we have entered into employment agreements
with certain significant employees, these employees and other significant
employees who have not entered into employment agreements may terminate their
employment at any time. The loss of the services of any significant employee
could have a material adverse effect on our business. In addition, if one or
more of our significant employees resigns to join a competitor or to form a
competing company, the loss of such personnel and any resulting loss of existing
or potential clients to any such competitor could have a material adverse effect
on our business, financial condition and results of operations.
We may become involved in intellectual property or other disputes that could
cause us to incur substantial costs, divert the efforts of our management,
require us to pay substantial damages or require us to obtain a license, which
may not be available on commercially reasonable terms, if at all.
We may from time to time receive notifications alleging infringements of
intellectual property rights allegedly held by others relating to our business
or the products we sell or resell. Litigation with respect to patents or other
intellectual property matters could result in substantial costs and diversion of
management and other resources and could have an adverse effect on our business.
Although we generally have various levels of indemnification protection from our
suppliers, in many cases any indemnification to which we may be entitled is
subject to maximum limits or other restrictions. If any infringement claim is
successful against us and if indemnification is not available or sufficient, we
may be required to pay substantial damages or we may need to seek and obtain a
license of the other party's intellectual property rights. We may be unable to
obtain such a license on commercially reasonable terms, if at all.
We are from time to time involved in other litigation in the ordinary
course of business. We may not be successful in defending these or other claims.
Regardless of the outcome, litigation can result in substantial expense and
could divert the efforts of our management.
The intellectual technology industry is subject to rapidly changing technologies
and process developments, and we may not be able to adequately adjust our
business to these changes, which, in turn, would harm our business and operating
results.
Dynamic changes in the intellectual technology industry have resulted in
new and increased responsibilities for management personnel and have placed, and
continue to place, a significant strain upon our management, operating and
financial systems and other resources. We may be unable to successfully respond
to and manage our business in light of industry
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developments and trends. Also crucial to our success in managing our operations
will be our ability to achieve additional economies of scale. Our failure to
achieve these additional economies of scale or to respond to changes in the
intellectual technology industry could adversely affect our business and
operating results.
Risks Related to Our Offering
Significant fluctuations in the market price of our common stock could result in
securities class action claims against us, which could seriously harm our
business.
Securities class action claims have been brought against companies in the
past where volatility in the market price of that company's securities has taken
place. This kind of litigation could be very costly and divert our management's
attention and resources, and any adverse determination in this litigation could
also subject us to significant liabilities, any or all of which could adversely
affect our business and operating results.
You may suffer dilution in your ownership of our shares from the exercise or
conversion of options, warrants, and convertible securities issued to other
persons.
There are outstanding options, warrants, and convertible securities to
acquire shares of our common stock and we may grant additional rights in the
future. If any of the outstanding options, warrants, or convertible securities
are exercised or converted, your percentage ownership in the common stock will
be reduced. So long as these options, warrants, and convertible securities are
exercisable, the holders will have the opportunity to profit from a rise in the
price of our common stock. The existence of such options, warrants, and
convertible securities may adversely affect the terms on which we can obtain
additional financing. The holders of such options, warrants, and convertible
securities can be expected to exercise them at a time when we would probably be
able to obtain additional capital by an offering of our common stock at a price
higher than the exercise price of these outstanding options, warrants, and
convertible securities.
If we or our existing stockholders sell additional shares of our common
stock after this offering, the market price of our common stock could decline.
The market price of our common stock could decline as a result of sales of a
large number of shares of common stock in the market after this offering, or the
perception that such sales could occur. These sales, or the possibility that
these sales may occur, also might make it more difficult for us to sell equity
securities in the future at a time and at a price that we deem appropriate. A
limited public market for our common stock may impair your liquidity and/or
return on investment.
There is currently a limited trading market for our shares of common
stock, and there can be no assurance that a more substantial market will ever
develop or be maintained. Any market price for shares of our common stock is
likely to be very volatile, and numerous factors beyond our control may have a
significant adverse effect. In addition, the stock markets generally have
experienced, and continue to experience, extreme price and volume fluctuations
which have affected the market price of many small capital companies and which
have often been unrelated to the operating performance of these companies. The
price for our common stock and the volume of shares traded fluctuate.
Consequently, persons who invest in our common stock may
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not be able to use their shares as collateral for loans and may not be able to
liquidate at a suitable price in the event of an emergency. In addition, holders
may not be able to resell their shares, or may not be able to sell their shares
at or above the price they paid for them.
We do not anticipate that we will pay cash dividends on our common stock.
We have never declared or paid any cash dividends on our common stock and
do not anticipate paying cash dividends on our common stock in the foreseeable
future.
Our governing document and applicable laws discourage takeover attempts even if
doing so might be beneficial to our stockholders.
Our governing documents and applicable laws include provisions that may
discourage a takeover attempt. Provisions contained in our certificate of
incorporation and by-laws, including the following provisions, and Delaware law,
could make it difficult for a third party to acquire us, even if doing so might
be beneficial to our stockholders:
o the ability of our board of directors to issue preferred stock
without a stockholder vote.
Certain of our shares are eligible for future sales and may affect the price of
our common stock.
Sales of unrestricted securities may also have an adverse effect on any
market that may develop in our common stock. Under Rules 144, 144(d) and 701 of
the Securities Act of 1933, if certain conditions are satisfied, a limited
number of these shares, up to 1% of the total of our issued and outstanding
shares, could be sold during any three month period. In addition, for restricted
shares held for more than two years, a stockholder who is not our affiliate and
who has not been our affiliate for 90 days prior to the sale, may resell these
shares pursuant to Rule 144(k) without compliance with many of the conditions
under Rule 144. Once these shares enter the market, their sale may have a
depressive effect on the market price of our stock.
We cannot assure you of the continued listing of our securities on the Nasdaq
SmallCap Market and other securities exchanges and associations.
Our common stock is currently listed on The Nasdaq SmallCap Market under
the symbol "DYTK." For continued inclusion on The Nasdaq SmallCap Market, we
must maintain, among other requirements, a minimum bid price of $1.00 per share.
The last closing sale price of our common stock on October 18, 2004 was $0.56.
On July 22, 2004, we received a notice from Nasdaq stating that our common stock
had closed below the minimum $1.00 per share requirement for 30 consecutive
days. We have until January 18, 2005 to regain compliance. If we are not in
compliance by January 18, 2005, we may continue to be listed on the Nasdaq
SmallCap Market for an additional 180 days if we meet the initial listing
criteria for the Nasdaq SmallCap Market at that time. In the event that we fail
to satisfy the listing standards on a continuous basis, our common stock may be
removed from listing on The Nasdaq SmallCap Market. If our common stock were
delisted from The Nasdaq SmallCap Market, trading of our common stock, if any,
could be conducted in the over-the-counter market in the so-called "pink sheets"
or, if available, the National Association of Securities Dealer's "Electronic
Bulletin
-10-
Board." We cannot guarantee listing for trading on any other trading medium
following a delisting from The Nasdaq SmallCap Market. In addition, delisting
from Nasdaq may subject our common stock to so-called "penny stock" rules. These
rules impose additional sales practice and market making requirements on
broker-dealers who sell and/or make a market in such securities. Consequently,
broker-dealers may be less willing or able to sell and/or make a market in our
common stock. Additionally, an investor would find it more difficult to dispose
of, or to obtain accurate quotations for the price of, our common stock. As a
result of a delisting, it may become more difficult for us to raise funds
through the sale of our securities.
USE OF PROCEEDS
We will not receive any proceeds from the sale by the selling stockholders
of shares in this offering. We may receive proceeds from the issuance of shares
upon the exercise of the warrants by the selling stockholders pursuant to their
warrants. We expect to use such proceeds for working capital and for other
general corporate purposes.
DIVIDEND POLICY
We have never paid or declared any cash dividends on our common stock and
do not anticipate paying cash dividends in the foreseeable future. Payment of
future dividends, if any, will be at the discretion of our board of directors
after taking into account various factors, including our financial condition,
operating results, current and anticipated cash needs and plans for expansion.
SHARES ELIGIBLE FOR RESALE
Future sales of a substantial number of shares of our common stock in the
public market could adversely affect market prices prevailing from time to time.
Under the terms of this offering, the shares of common stock offered may be
resold without restriction or further registration under the Securities Act of
1933, except that any shares purchased by our "affiliates," as that term is
defined under the Securities Act, may generally only be sold in compliance with
Rule 144 under the Securities Act.
Sale of Restricted Shares
Certain shares of our outstanding common stock were issued and sold by us
in private transactions in reliance upon exemptions from registration under the
Securities Act and have not been registered for resale. Additional shares may be
issued pursuant to outstanding warrants and options. Such shares may be sold
only pursuant to an effective registration statement filed by us or an
applicable exemption, including the exemption contained in Rule 144 promulgated
under the Securities Act.
In general, under Rule 144 as currently in effect, a stockholder,
including one of our affiliates, may sell shares of common stock after at least
one year has elapsed since such shares were acquired from us or our affiliate.
The number of shares of common stock which may be sold within any three-month
period is limited to the greater of (i) one percent of our then outstanding
common stock or (ii) the average weekly trading volume in our common stock
during the four calendar weeks preceding the date on which notice of such sale
was filed under
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Rule 144. Certain other requirements of Rule 144 concerning availability of
public information, manner of sale and notice of sale must also be satisfied. In
addition, a stockholder who is not our affiliate, who has not been our affiliate
for 90 days prior to the sale, and who has beneficially owned shares acquired
from us or our affiliate for over two years may resell the shares of common
stock without compliance with many of the foregoing requirements under Rule 144.
SELLING STOCKHOLDERS
All of the offered shares are to be sold by persons who are existing
security holders of DynTek. The selling stockholders acquired their shares and
warrants in private placements occurring in June and July 2003, in a private
placement completed on December 9, 2003, and in a private placement completed in
January 2004. In connection with the December 2003 offering of our common stock
and warrants, we delivered to designees of Rockwood, the placement agent for the
offering, warrants to purchase up to 500,000 shares of our common stock and a
cash payment of $188,950 in consideration for its services. For purposes of this
prospectus, we have assumed that the number of shares issuable upon exercise of
warrants, and available for resale hereunder, is subject to adjustment in
connection with the occurrence of a stock split, stock dividend, or similar
transaction resulting in an adjustment in the number of shares subject to
warrants.
Pursuant to securities purchase agreements and registration rights
agreements with each of the selling stockholders, we filed a registration
statement, of which this prospectus forms a part, in order to permit those
stockholders to resell to the public the shares of common stock that they
purchased pursuant to those agreements and that they acquire upon any exercise
of warrants acquired in the same transactions.
Pursuant to piggyback registration rights granted to Rockwood, Inc., the
placement agent for the December 2003 private placement, Rockwood's assignees of
its compensation warrants Duncan Capital LLC, David Fuchs, Robert MacGregor and
Bradford E. Monks, shall also be considered selling stockholders for the
purposes of this prospectus and the registration statement filed as a part of
this prospectus in order to permit Duncan Capital and each of Messrs. Fuchs,
MacGregor and Monks to resell to the public the shares of common stock they may
acquire upon any exercise of the warrants to purchase common shares they
received as compensation for the private placement from Rockwood.
The selling stockholders may sell up to 8,744,084 shares of our common
stock pursuant to this prospectus.
The table that follows sets forth as of March 25, 2004:
o the name of each selling stockholders;
o certain beneficial ownership information with respect to the
selling stockholders;
o the number of shares that may be sold from time to time by
each selling stockholder pursuant to this prospectus; and
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o the amount (and, if one percent or more, the percentage) of
common shares to be owned by each selling stockholder if all
offered shares are sold.
Beneficial ownership is determined in accordance with Securities and
Exchange Commission rules and generally includes voting or investment power with
respect to securities. Common shares that are issuable upon the exercise of
outstanding options, warrants or other purchase rights, to the extent
exercisable within 60 days of March 1, 2004, are treated as outstanding for
purposes of computing each selling stockholder's percentage ownership of
outstanding common shares.
Prior to Offering After Offering(1)
------------------------- ----------------------------
Shares
Name Shares Percent (2) Offered Shares Percent (2)
- ------------------------------------------ --------- ----------- -------- -------- -----------
Adkins, M. Douglas (3) 771,600 1.7% 284,091 487,509 1.0%
Alpha Capital AG (4) 681,818 1.4% 681,818 -0- 0%
Boehm, David Phillip 100,000 *% 100,000 -0- 0%
Bridges and PIPES, LLC (5) 681,818 1.4% 681,818 -0- 0%
Bristol Investment Fund, Ltd. (6) 909,091 1.9% 909,091 -0- 0%
Corsair Capital Partners, LP.(7) 720,000 1.5% 720,000 -0- 0%
Corsair Long Short International, Ltd. (8) 60,000 *% 60,000 -0- 0%
Curran Management Company Ltd. 300,000 *% 300,000 -0- 0%
Duncan Capital LLC (9) 375,000 *% 375,000 -0- 0%
Fuchs, David 25,000 *% 25,000 -0- 0%
Gamma Opportunity Capital Partners LP (10) 681,818 1.4% 681,818 -0- 0%
H.T. Ardinger & Sons, Inc. (11) 2,838,423 5.6% 728,174 2,110,249 4.2%
Levine, Douglas 200,000 *% 200,000 -0- 0%
McGregor, Robert 75,000 *% 75,000 -0- 0%
Monks, Bradford E 25,000 *% 25,000 -0- 0%
Neptune Partners LP (12) 220,000 *% 220,000 -0- 0%
PC PS Plan FBO Brian Weiss 100,000 *% 100,000 -0- 0%
Purjes, Dan (13) 113,637 *% 113,637 -0- 0%
Raskas, Stanley 100,000 *% 100,000 -0- 0%
Reichenbaum, Eric 200,000 *% 200,000 -0- 0%
RHP Master Fund, Ltd. (14) 454,546 1.0% 454,546 -0- 0%
Scholl, George 100,000 *% 100,000 -0- 0%
Sitt, David 100,000 *% 100,000 -0- 0%
Strategic Partners Ltd. 50,000 *% 50,000 -0- 0%
Stonestreet LLP (15) 681,818 1.4% 681,818 -0- 0%
WEC Partners, LLC (16) 150,000 *% 150,000 -0- 0%
Whalehaven Fund Limited (17) 227,273 *% 227,273 -0- 0%
Wolf, Carl 100,000 *% 100,000 -0- 0%
Deania Investment 100,000 *% 100,000 -0- 0%
Zoltan, Donald J. 205,000 *% 200,000 5,000 *%
* Represents less than one percent of the outstanding common shares.
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(1) Assuming the sale by each selling stockholder of all of the shares offered
hereunder by such selling stockholder. There can be no assurance that any
of the shares offered hereby will be sold.
(2) The percentages set forth above have been computed assuming the number of
common shares outstanding equals the sum of (a) 46,705,793, which is the
number of common shares actually outstanding on December 19, 2003, and (b)
common shares subject to exercisable warrants and conversion rights held
by each selling stockholder, respectively.
(3) Includes 52,500 shares which may be acquired upon conversion of Series A
Preferred Stock shares.
(4) The person having sole voting and dispositive power over the shares
offered by Alpha Capital AG is Konrad Ackerman, a director of Alpha
Capital AG. Mr. Ackerman disclaims beneficial ownership of the shares held
by Alpha Capital AG
(5) The managing member of Bridges & Pipes, LLC is David Fuchs. Mr. Fuchs has
sole voting and dispositive power over the shares offered by Bridges &
Pipes, LLC. Mr. Fuchs disclaims beneficial ownership of the shares held by
Bridges & Pipes, LLC.
(6) The person having sole voting and dispositive power over the shares
offered by Bristol Investment Fund, Ltd. is Paul Kessler. Mr. Kessler
disclaims beneficial ownership of the shares held by Bristol Investment
Fund, Ltd.
(7) Corsair Capital Advisors, LLC is the general partner to Corsair Capital
Partners, LP, with the power to vote and dispose of the shares offered by
Corsair Capital Partners, LP. As such, Corsair Capital Advisors, LLC may
be deemed to be the beneficial owner of the shares offered. Jay Petschek
and Steven Major are the managing members of Corsair Capital Advisors,
LLC, each possessing the power to act on its behalf. Corsair Capital
Advisors, LLC and Messrs Petschek and Major each disclaim beneficial
ownership of the shares held Corsair Capital Partners, LP.
(8) Corsair Long Short Advisors, LLC is the general partner to Corsair Long
Short International, Ltd., with the power to vote and dispose of the
shares offered by Corsair Long Short International, Ltd. As such, Corsair
Long Short Advisors, LLC may be deemed to be the beneficial owner of the
shares offered. Jay Petschek and Steven Major are the managing members of
Corsair Long Short Advisors, LLC, each possessing the power to act on its
behalf. Corsair Long Short Advisors, LLC and Messrs Petschek and Major
each disclaim beneficial ownership of the shares held Corsair Long Short
International, Ltd.
(9) Michael Crow and Dan Purjes are the managing members of Duncan Capital
LLC, with voting and dispositive power over the shares offered by Duncan
Capital LLC. Messrs. Crow and Purjes disclaim beneficial ownership of the
shares held by Duncan Capital LLC.
(10) Gamma Capital Advisors, Ltd. is the general partner to Gamma Opportunity
Capital Partners, LP, with the power to vote and dispose of the shares
offered by Gamma
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Opportunity Capital Partners, LP. As such, Gamma Capital Advisors, Ltd.
may be deemed to be the beneficial owner of the shares offered.
Christopher Rossman and Jonathan P. Knight, PhD. are the directors of
Gamma Capital Advisors, Ltd., each possessing the power to act on its
behalf. Gamma Capital Advisors, Ltd. and Messrs Rossman and Knight each
disclaim beneficial ownership of the shares held by Gamma Opportunity
Capital Partners, LP.
(11) The person having sole voting and dispositive power over the shares owned
by H.T. Ardinger & Sons, Inc. is H.T. Ardinger. Mr. Ardinger disclaims
beneficial ownership of the shares held by H. T. Ardinger and Sons, Inc.
The number of shares stated for H.T. Ardinger & Sons, Inc., beneficial
ownership includes 1,355,308 shares which may be acquired upon the
exercise of warrants, 15,750 shares which may be acquired upon conversion
of Series A Preferred Stock shares. Does not include 1,140,310 shares held
by the Ardinger Family Trust, over which shares Mr. Ardinger has sole
voting and dispositive power but not beneficial ownership.
(12) Major Capital Management, LLC is the general partner to Neptune Partners,
L.P., with the power to vote and dispose of the shares offered by Neptune
Partners, L.P. As such, Major Capital Management, LLC may be deemed to be
the beneficial owner of the shares offered. Steven Major is the managing
members of Major Capital Management, LLC, each possessing the power to act
on its behalf. Major Capital Management, LLC and Mr. Major disclaim
beneficial ownership of the shares held Neptune Partners, L.P.
(13) Dan Purjes is also a beneficial owner of Duncan Capital LLC.
(14) RHP Master Fund, Ltd. is a party to an investment management agreement
with Rock Hill Investment Management, L.P., a limited partnership of which
the general partner is RHP General Partner, LLC. Pursuant to such
agreement, Rock Hill Investment Management directs the voting and
disposition of shares owned by RHP Master Fund, Ltd. Wayne Bloch, Gary
Kaminsky and Peter Lockhart own all of the interests in RHP General
Partner, LLC. The aforementioned entities and individuals disclaim
beneficial ownership of the shares held by RHP Master Fund, Ltd.
(15) Stonestreet Corporation is the general partner of Stonestreet LP. Michael
Finkelstein and Elizabeth Leonard are the stockholders in Stonestreet
Corporation and have sole voting and dispositive power over the shares
offered by Stonestreet LP. Mr. Finkelstein and Ms. Leonard disclaim
beneficial ownership of shares held by Stonestreet LP.
(16) The persons having sole voting and dispositive power over the shares
offered by WEC Partners, LLC are Ethan Benovitz, Daniel Saks, and Jaime
Hartman. Messrs. Benovitz, Saks, and Hartman disclaim beneficial ownership
of the shares held by WEC Partners, LLC.
(17) The persons having sole voting and dispositive power over the shares
offered by Whalehaven Fund Limited are Michael Finkelstein and Eric
Weisblum. Messrs. Finkelstein and Weisblum disclaim beneficial ownership
of the shares held by Whalehaven Fund Limited.
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The shares beneficially owned by the selling stockholders as a group
include shares of common stock issuable by us upon the exercise of warrants held
by the selling stockholders, all of which are offered pursuant to this
prospectus.
We believe that voting and investment power with respect to shares shown
as beneficially owned by selling stockholders that are entities resides with the
individuals identified in the preceding table. There can be no assurance that
any of the shares offered hereby will be sold.
PLAN OF DISTRIBUTION
General
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock offered through this prospectus on any stock exchange, market or
trading facility on which the shares are traded or in private transactions.
These sales may be at fixed or negotiated prices. The selling stockholders may
use any one or more of the following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker/dealer solicits purchasers;
o block trades in which the broker/dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker/dealer as principal and resale by the
broker/dealer for its account;
o an exchange distribution in accordance with the Rules of the
applicable exchange;
o privately negotiated transactions;
o settlement of short sales;
o broker/dealers may agree with the selling stockholders to sell
a specified number of such shares at a stipulated price per
share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Exchange Act of 1933, as amended (the Act), if available, rather than
under this prospectus.
Broker/dealers engaged by the selling stockholders may arrange for other
brokers/dealers to participate in sales. Broker/dealers may receive commissions
from the selling stockholders (or, if any broker/dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to
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be negotiated. The selling stockholders do not expect these commissions to
exceed what is customary in the types of transactions involved.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
The selling stockholders and any broker/dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Act in connection with such sales. In such event, any commissions
received by such broker/dealers or agents and any profit on the resale of the
shares purchased by them may be deemed to be underwriting commissions under the
Act. The selling stockholders have informed us that they does not have any
agreement or understanding, directly or indirectly, with any person to
distribute the common stock.
We are required to pay all fees and expenses incident to the registration
of the shares. We have agreed to indemnify the selling stockholders against
certain losses, claims, damages and liabilities, including liabilities under the
Act.
The anti-manipulation rules of Regulation M under the Securities Exchange
Act of 1934, as amended, may apply to sales of our common stock and activities
of the selling stockholders.
Registration Obligations
Under the securities purchase agreement and registration rights agreement,
as well as investment banking advisory agreement with Rockwood, we have agreed
to register the shares for resale by the selling stockholders under the Act and
to maintain the effectiveness of that registration until the earliest date on
which:
o all the shares acquired by selling stockholder under the
securities purchase agreement have been disposed of pursuant
to the registration statement;
o all shares acquired by selling stockholders under the
securities purchase agreement that are then held by selling
stockholders may be sold under the provisions of Rule 144
without limitation as to volume, whether pursuant to Rule
144(k) or otherwise; or
o we have determined that all shares acquired by selling
stockholders under the securities purchase agreement that are
then held by selling stockholders may be sold without
restriction under the Securities Act and we have removed any
stop transfer instructions relating to such shares.
We will pay the costs of registering the shares as contemplated by the
subscription agreement, including the expenses of preparing this prospectus and
the related registration
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statement of which it is a part. We estimate that our costs associated with such
registration will be approximately $80,000.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby will be
passed upon for us by Nixon Peabody LLP, New York, New York.
EXPERTS
Our financial statements as of and for the years ended June 30, 2003 and
2004, incorporated into this prospectus by reference to our 2003 and 2004 Annual
Reports on Form 10-K, respectively, have been so incorporated in reliance on the
report of Marcum & Kliegman, LLP, an independent registered public accounting
firm, given upon the authority of such firm as experts in accounting and
auditing. Our financial statements as of and for the year ended June 30, 2002,
incorporated into this prospectus by reference to our 2002 Annual Report on Form
10-K have been so incorporated in reliance on the report of Grassi & Co., P.C.,
an independent registered public accounting firm, given upon the authority of
such firm as experts in accounting and auditing.
DOCUMENTS INCORPORATED BY REFERENCE
We are incorporating by reference in this prospectus the following
documents that have been filed by us with the Securities and Exchange
Commission:
1. Annual Report on Form 10-K for the year ended June 30, 2004
(SEC File No. 001-11568).
2. Amendment No. 1 to Annual Report on Form 10-K for the year
ended June 30, 2004 (SEC File No. 001-11568).
Subsequent Filings
We are also incorporating by reference additional documents that may be
filed by us with the Securities and Exchange Commission under Section 13(a),
13(c), 14, or 15(d) of the Securities Exchange Act of 1934 after the date of
this prospectus and prior to the termination of this offering. These include
periodic reports, such as annual reports on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and proxy statements, except for information
furnished under Item 9 and Item 12 of the Form 8-K, which is not deemed filed
and not incorporated by reference herein. Information that we file with the
Securities and Exchange Commission will automatically update and may replace
information in this prospectus and information previously filed with the
Securities and Exchange Commission.
This prospectus incorporates by reference documents that are not presented
or delivered to you with it. You may obtain any of these incorporated documents
from us without charge, excluding any exhibits to these documents unless the
exhibit is specifically incorporated by reference in such document, by
requesting them from us in writing or by telephone at the following address:
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DynTek, Inc.
18881 Von Karman Avenue, Suite 250
Irvine, California 92612
Attention: President
(949) 955-0078
Documents may also be available on our website at www.dyntek.com.
Information contained on our website is not a prospectus and does not constitute
a part of this prospectus.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We currently file quarterly and annual reports with the SEC on Forms 8-K,
10-Q and 10-K. We have filed with the SEC, under the Securities Act of 1933, a
registration statement on Form S-3 with respect to the shares being offered in
this offering. This prospectus does not contain all of the information set forth
in the registration statement, certain items of which are omitted in accordance
with the rules and regulations of the SEC. The omitted information may be
inspected and copied at the Public Reference Room maintained by the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. You can obtain
information about the operation of the Public Reference Room by calling the SEC
at 1-800-SEC-0330. The SEC also maintains an Internet site that contains
reports, proxy and information statements, and other information regarding
issuers that file electronically with the SEC at http://www.sec.gov. Copies of
such materials can be obtained from the public reference section of the SEC at
prescribed rates. Statements contained in this prospectus as to the contents of
any contract or other document filed as an exhibit to the registration statement
are not necessarily complete and in each instance reference is made to the copy
of the document filed as an exhibit to the registration statement, each
statement made in this prospectus relating to such documents being qualified in
all respect by such reference.
For further information with respect to DynTek and the securities being
offered hereby, reference is hereby made to the registration statement,
including the exhibits thereto and the financial statements, notes, and
schedules filed as a part thereof.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
All amounts, except the SEC registration fee, are estimates. None of the
expenses will be paid by the selling stockholders.
SEC Registration Fee ....................................... $ 931.00
Nasdaq SmallCap Market Listing Fee ......................... 0.00
Printing Costs ............................................. 15,000.00
Legal Fees and Expenses .................................... 50,000.00
Accounting Fees and Expenses ............................... 7,500.00
Blue Sky Fees and Expenses ................................. 5,000.00
Transfer Agent and Registrar Fees .......................... 0.00
Miscellaneous .............................................. 1,569.00
Total ...................................................... $ 80,000.00
Item 15. Indemnification of Directors and Officers
Section 145 of the Delaware General Corporation Law authorizes a court to
award or a corporation's board of directors to grant indemnification to
directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act of 1933,
as amended (the Securities Act).
Our Certificate of Incorporation and By-Laws provide for indemnification
of our directors, officers, employees and other agents to the extent and under
the circumstances permitted by the Delaware General Corporation Law. Our By-Laws
require us to, among other things, indemnify them against certain liabilities
that may arise by reason of their status or service as directors or officers to
the fullest extent not prohibited by law. We have purchased an insurance policy
that insures both DynTek and its officers and directors against exposure and
liability normally insured against under such policies.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions, we have been advised that, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits
See Exhibit Index immediately following the Signatures.
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(b) Financial Statement Schedules
None.
Item 17. Undertakings
The undersigned registrant hereby undertakes that:
(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 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) of this Item 17 do not
apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable,
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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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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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 registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Irvine, State of California, on the 22nd day of
October, 2004.
DynTek, Inc.
By: /s/ Steven J. Ross
-----------------------------------------------
Steven J. Ross
President, Chief Executive Officer and Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
/s/ Steven J. Ross Director, President, Chief October 22, 2004
- ------------------------- Executive Officer, and Chairman
Steven J. Ross (Principal Executive Officer)
/s/ Robert I. Webber Chief Financial Officer October 22, 2004
- ------------------------- (Principal Financial and
Robert I. Webber Accounting Officer)
* Director October 22, 2004
- -------------------------
Brian D. Bookmeier
* Director October 22, 2004
- -------------------------
Michael W. Grieves
* Director October 22, 2004
- -------------------------
Marshall Toplasky
/s/ Stephen J. Ross*
--------------------------------------
Stephen J. Ross, By Power of Attorney
granted in original filing of this
Registration Statement, Registration
No. 33-112555, that was filed with
the Securities and Exchange Commission
on February 6, 2004.
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EXHIBIT INDEX
Exhibit
Number Description of Exhibit
2.1 Agreement and Plan of Merger, dated as of December 27, 2001, among
DynCorp Management Resources, Inc., Newport Acquisition Corp.,
DynCorp and DynTek, Inc. (19)
2.2 Stock Option Agreement, dated as of April 25, 2001, between DynTek,
Inc. and DynCorp. (3)
2.3 First Amendment to Agreement and Plan of Reorganization, dated as of
July 9, 2001, among DynCorp Management Resources, Inc., Newport
Acquisition Corp., DynCorp and DynTek, Inc. (3)
2.4 Fourth Amendment to Agreement and Plan of Reorganization, dated as
of December 27, 2001, DynCorp Management Resources, Inc., Newport
Acquisition Corp., DynCorp and DynTek, Inc. (19)
3(i) Amended and Restated Charter of DynTek, Inc. (1)(2)(19)(26)
3(ii) Amended and Restated By-Laws of DynTek, Inc. (19)
4.1 Specimen Common Stock Certificate of DynTek, Inc. (4)
4.2 Specimen of Series A Convertible Preferred Stock Certificate of
DynTek, Inc. (2)
4.3 Specimen of Redeemable Common Stock Purchase Warrant. (6)
4.4 Form of Warrant Agent Agreement between the Company and American
Stock Transfer and Trust Company. (5)
4.5 Amended Warrant Agreement, dated November 30, 1999, between the
Company and American Stock Transfer and Trust Company. (1)
4.6 Second Amended Warrant Agreement, dated as of November 30, 2000,
between DynTek, Inc. and American Stock Transfer & Trust Company.
(8)
4.7 Third Amended Warrant Agreement, dated as of April 10, 2001, between
DynTek, Inc. and American Stock Transfer & Trust Company. (9) 4.8
Form of Underwriter's Warrant Agreement. (7)
4.9 1992 Employee Incentive Stock Option Plan, including form of
Incentive Stock Option Agreement. (5)
4.10 Form of Amendment to 1992 Employee Incentive Stock Option Plan. (10)
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4.11 1998 Non-Employee Director Stock Option Plan. (11)
4.12 2001 Employee Incentive Stock Option Plan. (12)
5 Opinion of Nixon Peabody LLP (27)
10.1 Form of 20% Investor Warrant. (21)
10.2 Form of 30% Investor Warrant. (21)
10.3 Form of Placement Agent Warrant Agreement between DynTek, Inc. and
Rockwood Inc. (21)
10.4 Form of Series A Warrant (25)
10.5 Form of Series B Warrant (25)
10.6 Form of Placement Agent Warrant issued to Duncan Capital LLC (25)
10.7 Employment Agreement, dated as of August 14, 2000, between DynTek,
Inc. and James Linesch. (13)
10.8 Letter, dated August 15, 2001, from DynTek, Inc. to James Linesch
amending the Employment Agreement, dated as of August 14, 2000,
between DynTek, Inc. and James Linesch. (14)
10.9 Letter Agreement, dated November 3, 2000, between DynTek, Inc. and
LaborSoft Corporation. (15)
10.10 Employment Agreement, dated as of December 10, 2001, between DynTek,
Inc. and Steven J. Ross. (19)
10.11 Registration Rights Agreement, dated as of December 27, 2001,
between DynTek, Inc. and DynCorp (19)
10.12 Stock Purchase and Settlement Agreement, dated August 20, 2002,
between DynCorp and DynTek, Inc. (20)
10.13 General Release, dated August 20, 2002, of DynTek, Inc. by DynCorp.
(20)
10.14 Form of Settlement Agreement between the Commonwealth of Virginia
Department of Medical Assistance and DynTek Services, Inc. (22)
10.15 Asset Purchase Agreement, effective March 1, 2003, among DynTek
Services, Inc. and First Transit, Inc. (16)
10.16 Factoring Agreement, dated as of July 1, 2003, between Systran
Financial Services Corporation, DynTek, Inc. and DynTek Services,
Inc. (17)
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10.17 Limited Release and Agreement to Indemnify, dated as of July 3,
2003, executed by DynCorp in favor of DynTek, Inc. (14)
10.18 Amendment to Employment Agreement, dated October 8, 2003, between
James Linesch and DynTek, Inc. (18)
10.19 Form of Securities Purchase Agreement between DynTek, Inc. and the
purchasers listed therein. (21)
10.20 Form of Registration Rights Agreement between DynTek, Inc. and the
purchasers listed therein. (21)
10.21 Securities Purchase Agreement, dated January 30, 2004, by and
between DynTek, Inc. and an institutional investor with respect to
the purchase of DynTek's $3,500,000 Secured Convertible Term Note of
even date. (23)
10.22 $3,500,000 Secured Convertible Term Note, dated January 30, 2004,
made by DynTek, Inc. in favor of an institutional investor. (23)
10.23 Form of Common Stock Purchase Warrant, dated January 30, 2004, made
by DynTek, Inc. in favor of an institutional investor for 425,000
shares of common stock. (23)
10.24 Registration Rights Agreement, dated January 30, 2004, by and
between DynTek, Inc. and an institutional investor. (23)
10.25 Security Agreement, dated January 30, 2004, by and between DynTek,
Inc. and an institutional investor. (23)
10.26 Security Agreement, dated January 30, 2004, by and between DynTek
Services, Inc. and an institutional investor. (23)
10.27 Guaranty, dated January 30, 2004, made by DynTek Services, Inc. in
favor of an institutional investor. (23)
10.28 Placement Agent's Agreement, dated as of February 27, 2004, by and
between DynTek, Inc. and Network 1 Financial Securities, Inc. with
respect to the offering of up to 150 Units of securities consisting
of shares of common stock and warrants (the "Network 1 Offering").
(24)
10.29 Form of Subscription Agreement with investors in the Network 1
Offering. (24)
10.30 Form of Registration Rights Agreement with investors in the Network
1 Offering. (24)
10.31 Form of Warrant issuable to investors in the Network 1 Offering.
(24)
10.32 Form of Placement Warrant issuable to Network 1 Financial
Securities, Inc. in connection with the Network 1 Offering. (24)
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10.33 Securities Purchase Agreement, dated April 27, 2004, between DynTek,
Inc. and purchasers listed therein. (25)
10.34 Registration Rights Agreement, dated April 27, 2004, between DynTek,
Inc. and the purchasers listed herein. (25)
10.35 Amended and Restated Convertible Term Note, dated May 3, 2004, made
by DynTek, Inc. in favor of Laurus Master Funds, Ltd. ("Laurus
Funds") (25)
10.36 Form of Common Stock Purchase Warrant, dated May 3, 2004, made by
DynTek, Inc, in favor of Laurus Funds for 625,000 shares of common
stock. (25)
10.37 Amended Registration Rights Agreement, dated May 3, 2004, by and
between DynTek, Inc. and Laurus Funds. (25)
10.38 Amended Loan Agreement with Systran (28)
21 Subsidiaries of DynTek, Inc. (8)
23.1 Consent of Marcum & Kliegman LLP
23.2 Consent of Grassi & Co., P.C.
23.3 Consent of Nixon Peabody LLP (contained in the opinion filed as
Exhibit 5) (27)
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1. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed on December 6, 1999.
2. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Amendment No. 1 to Registration Statement on Form S-4, filed on July
13, 2000 (File No. 333-36044).
3. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed May 2, 2001.
4. Incorporated by reference, filed as an exhibit to Amendment No. 2 to
DynTek, Inc.'s Registration Statement on Form S-1 filed on November
10, 1992 (File No. 333-50426).
5. Incorporated by reference, filed as an exhibit to Amendment No. 1 to
DynTek, Inc.'s Registration Statement on Form S-1 filed on October
13, 1992 (File No. 333-50426).
6. Incorporated by reference, filed as an exhibit to Amendment No. 4 to
DynTek, Inc.'s Registration Statement on Form S-1 filed on December
4, 1992 (File No. 333-50426).
7. Incorporated by reference, filed as an exhibit to Amendment No. 5 to
DynTek, Inc.'s Registration Statement on Form S-1 filed on December
8, 1992 (File No. 333-50426).
8. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed on January 11, 2001.
9. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed on April 17, 2001.
10. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Registration Statement on Form S-4, filed on May 1, 2000 (File No.
333-36044).
11. Incorporated by reference, filed as an exhibit to DynTek, Inc.'s
Quarterly Report on Form 10-Q, filed on December 24, 1998.
12. Incorporated by reference, filed as Annex D to DynTek, Inc.'s
definitive Proxy Statement for Special Meeting of Stockholders,
filed November 6, 2001.
13. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Annual Report on Form 10-K/A, filed on October 27, 2000.
14. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Annual Report on Form 10-K, filed October 7, 2003.
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15. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Quarterly Report of Form 10-Q, filed on December 31, 2000.
16. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed March 25, 2003.
17. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed July 9, 2003.
18. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Quarterly Report on Form 10-Q, filed November 14, 2003.
19. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed January 7, 2002.
20. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed August 23, 2002.
21. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed December 10, 2003.
22. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Quarterly Report on Form 10-Q, filed February 20, 2003.
23. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed February 3, 2004.
24. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed April 1, 2004.
25. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Current Report on Form 8-K, filed May 3, 2004.
26. Incorporated by reference, filed as Annex A to DynTek, Inc.'s
definitive proxy statement for Special Meeting of Stockholders,
filed June 17, 2004
27. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Registration Statement on Form S-1/A (File No. 333-112555),
filed April 2, 2004.
28. Incorporated by reference, filed as an Exhibit to DynTek, Inc.'s
Annual Report on Form 10-K, filed September 28, 2004.
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