As filed with the Securities and Exchange Commission on April 13, 2000
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-1
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
----------------
GREENWICH TECHNOLOGY PARTNERS, INC.
(Exact name of registrant as specified in its charter)
----------------
Delaware 7371 13-3944171
(State or other (Primary standard industrial (I.R.S. employer
jurisdiction of classification code number) identification number)
incorporation or
organization)
123 Main Street
White Plains, NY, 10601
Telephone: (914) 289-8000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
Joseph P. Beninati
Chief Executive Officer
Greenwich Technology Partners, Inc.
123 Main Street
White Plains, NY 10601
(914) 289-8000
(Name, address, including zip code, and telephone number, including area code
of agent for service)
----------------
Copies to:
Kevin M. Barry, Esq. Stephen L. Burns, Esq.
Laurie A. Cerveny, Esq. Cravath, Swaine & Moore
Testa, Hurwitz & Thibeault, LLP Worldwide Plaza
125 High Street 825 Eighth Avenue
Boston, MA 02110 New York, NY 10019-7475
(617) 248-7000 (212) 474-1000
----------------
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, 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. [_]
If delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box. [_]
CALCULATION OF REGISTRATION FEE
- ---------------------------------------------------------------
- ---------------------------------------------------------------
Proposed Maximum
Title of Each Class of Aggregate Amount of
Securities to be Registered Offering Price(1) Registration Fee
- ---------------------------------------------------------------
Common stock, par value
$0.01 per share....... $55,000,000 $14,520
- ---------------------------------------------------------------
- ---------------------------------------------------------------
(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(o) under the Securities Act.
----------------
Registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the 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. We 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 it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED , 2000
Shares
[LOGO OF GREENWICH TECHNOLOGY PARTNERS]
Common Stock
--------
Prior to this offering, there has been no public market for our common stock.
The initial public offering price of the common stock is expected to be between
$ and $ per share. We have applied to list our common stock on The
Nasdaq Stock Market's National Market under the symbol "GTPI".
The underwriters have an option to purchase a maximum of additional shares
to cover over-allotments of shares.
Investing in the common stock involves risks. See "Risk Factors" on page 8.
Underwriting Proceeds to
Discounts Greenwich
Price to and Technology
Public Commissions Partners
------------ ------------ ------------
Per Share.................................. $ $ $
Total...................................... $ $ $
Delivery of the shares of common stock will be made on or about , 2000.
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.
Credit Suisse First Boston
First Union Securities, Inc.
Friedman Billings Ramsey
ING Barings
The date of this prospectus is , 2000.
[INSIDE FRONT COVER ARTWORK]
The color artwork will be a half circle of elipses containing
client logos around the words "The Greenwich Technology
Partners Solution."
------------
TABLE OF CONTENTS
Page
----
Prospectus Summary....................................................... 4
Risk Factors............................................................. 8
Note Regarding Forward-Looking Statements................................ 17
Use of Proceeds.......................................................... 18
Dividend Policy.......................................................... 18
Capitalization........................................................... 19
Dilution................................................................. 20
Selected Financial Data.................................................. 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 22
Business................................................................. 30
Management............................................................... 42
Page
----
Certain Relationships and Related Transactions........................... 52
Principal Stockholders................................................... 54
Description of Capital Stock............................................. 56
Shares Eligible for Future Sale.......................................... 60
Certain United States Federal Tax Considerations for Non-United States
Holders................................................................. 62
Underwriting............................................................. 66
Notice to Canadian Residents............................................. 69
Legal Matters............................................................ 70
Experts.................................................................. 70
Where You Can Find Additional Information................................ 70
Index to Financial Statements............................................ F-1
------------
You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
Dealer Prospectus Delivery Obligation
Until , 2000 (25 days after the commencement of this offering), all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealer's obligation to deliver a prospectus when acting
as an underwriter and with respect to unsold allotments or subscriptions.
3
PROSPECTUS SUMMARY
Because this is only a summary, it does not contain all of the information
that may be important to you. You should read the entire prospectus, including
"Risk Factors" and the financial statements and the notes to those financial
statements, before deciding to invest in our common stock. References in this
prospectus to "Greenwich Technology Partners," "GTP", "we," "our" and "us"
refer to Greenwich Technology Partners, Inc.
Greenwich Technology Partners, Inc.
We are a provider of a new category of network-focused professional services
called infrastructure architecture. Our highly trained consultants and
engineers provide sophisticated network services that enable our clients'
communications, Internet and e-business related strategies. As an independent
service provider, we offer our clients objective, vendor-neutral expertise and
assist them in implementing technology solutions that ensure secure, reliable
and scalable networks.
As infrastucture architects, we focus on six key areas of network
infrastructures: performance, security, internetworking, directory services,
network management and systems engineering. Our consultants and engineers
specialize in these practice areas to gain in-depth expertise with relevant
best practices, methodologies and technologies. We recruit experienced, highly
skilled consultants and engineers and expand their skills with focused training
in leading-edge technologies.
Using our proprietary consulting methodology, NetValue, our professionals
assess a client's needs, design a solution, then integrate and optimize the
enabling network infrastructure. We manage the entire delivery cycle and
provide quality assurance and post-project assessment. We believe that NetValue
enables our clients to make informed technology investments. We have also
created a number of productized services that have pre-defined delivery and
pricing structures and that are replicable across a variety of industries.
Our clients are Global 2000 enterprises such as Bear Stearns, Chase
Manhattan Bank, CK Witco, Morgan Stanley Dean Witter and Unilever,
telecommunications and Internet service providers such as UUNET, an MCI
Worldcom company, and select Internet companies such as Telemedia Accelerator.
Our service offerings are enhanced through technical alliances with network
equipment and software manufacturers, which help us maintain leadership in
network infrastructure technologies.
The tremendous recent growth of e-business has increased the importance,
complexity and size of networks. The implementation and maintenance of these
networks requires sophisticated technological skills and focused expertise,
which many businesses lack internally. We believe that a new category of
professional service firms, infrastructure architects, has emerged to provide
effective solutions to these complex network issues. According to estimates
from International Data Corporation, the worldwide market for network
consulting and integration services will grow from $15.5 billion in 1999 to
$32.8 billion in 2004.
4
Our goal is to become the recognized leader in providing infrastructure
architecture services to support e-business applications. To achieve this goal,
we have adopted the following strategies:
. Expand relationships with existing and new clients
. Attract and retain experienced professionals and expand recruiting
efforts
. Enhance our technological expertise
. Continue to strengthen our service offerings
. Bolster our brand as a leader in the development of infrastructure
architecture
. Continue to invest in internal systems
. Expand geographically
We commenced operations on May 1, 1997. On August 22, 1997, we changed our
name to Greenwich Technology Partners, Inc. As of March 31, 2000, we had 209
employees. Our principal executive offices are located at 123 Main Street,
White Plains, New York 10601. Our telephone number is (914) 289-8000. Our web
site address is www.greenwichtech.com. Information contained on our web site is
not a part of this prospectus.
Greenwich Technology Partners and GTP NetValue are trademarks of Greenwich
Technology Partners, Inc. Other trademarks and service marks appearing in this
prospectus are the property of their respective holders.
5
The Offering
Common stock offered by GTP.........
shares
Common stock to be outstanding
after the offering................. shares
Use of proceeds..................... For general corporate purposes, including
working capital, and potential strategic
alliances and acquisitions.
Proposed Nasdaq National Market
symbol............................. GTPI
----------------
The number of shares of common stock to be outstanding after the offering is
based on our shares outstanding as of , 2000 and excludes:
. 6,144,978 shares of common stock issuable upon the exercise of stock
options outstanding as of April 11, 2000 with a weighted average exercise
price of $0.49 per share that have been granted under our 1997 Stock
Plan;
. 1,048,010 shares of common stock reserved for issuance under our 1997
Stock Plan;
. 2,136,752 shares of common stock issuable upon the exercise of warrants
at an exercise price of $1.17 per share;
. 850,000 shares of common stock reserved for issuance under our 2000
Employee Stock Purchase Plan; and
. 6,000,000 shares of common stock issuable upon exercise of options to be
granted under our 2000 Stock Option and Incentive Plan.
----------------
Unless otherwise indicated, all information in this prospectus:
. reflects the conversion of all outstanding shares of preferred stock into
29,288,560 shares of our common stock immediately prior to completion of
this offering;
. assumes no exercise of the underwriters' over-allotment option; and
. assumes the filing of our amended and restated certificate of
incorporation and by-laws.
6
Summary Financial Data
(in thousands, except per share data)
The following tables summarize financial data and certain pro forma
financial data for our business during the years and as of the date indicated.
The summary financial data do not purport to be indicative of future operations
and should not be construed as representative of future operations. You should
read this information together with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and our audited financial
statements and accompanying notes included elsewhere in this prospectus.
Year ended
Inception December 31,
through -----------------
Dec. 31, 1997 1998 1999
------------- ------- --------
Statement of Operations Data:
Revenues...................................... $ 829 $ 6,028 $ 14,195
Gross profit.................................. 215 2,193 5,232
Operating loss................................ (616) (1,905) (6,657)
Net loss...................................... (616) (1,874) (6,350)
Basic and diluted net loss per share.......... $(3.51) $(11.92) $ (21.34)
Weighted average common shares used to compute
basic and diluted net loss per share......... 177 177 316
Pro forma basic and diluted net loss per share
(1).......................................... $(0.67) $ (0.16) $ (0.29)
Weighted average common shares used to compute
pro forma basic and diluted net loss per
share........................................ 917 11,974 21,601
- --------
(1) Pro forma basic and diluted net loss per share assumes the conversion of
all shares of preferred stock into common stock as of the original date of
preferred stock issuance.
December 31, 1999
-------------------------------------
Pro forma
as adjusted (3)
Actual Pro forma (2)
------- ------------- ---------------
Balance Sheet Data:
Cash and cash equivalents............... $17,568 $18,471
Working capital......................... 19,546 20,449
Total assets............................ 23,422 24,325
Total debt including borrowing under
installment loan and capitalized lease
agreement.............................. 44 44
Total shareholders' equity.............. $21,054 $21,957
- --------
(2) The pro forma data reflect the sale of 428,049 shares of series E preferred
stock at $2.11 per share on January 14, 2000.
(3) The pro forma as adjusted data give further effect to:
. the conversion of 29,288,560 shares of preferred stock into 29,288,560
shares of common stock immediately prior to completion of this offering;
and
. the sale of shares of common stock at an assumed initial public
offering price of $ per share, after deducting underwriting discounts
and commissions and estimated offering expenses payable by us.
7
RISK FACTORS
Any investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide to
buy our common stock. If any of the following events actually occurs, our
business and financial results may suffer. In this case, the market price of
our common stock could decline, and you could lose all or part of your
investment in our common stock.
Risks Related To Our Business
Our limited operating history makes evaluating our business prospects and
results of operations difficult
We commenced operations in May 1997 and therefore have only a limited
operating history for you to evaluate our business. Because of our limited
operating history, recent growth, recent acquisitions and the fact that many of
our competitors have longer operating histories than we do, we believe that the
prediction of our future success is difficult. You should evaluate our changes
of financial and operational success in light of the risks, uncertainties,
expenses, delays and difficulties associated with operating a new business,
many of which are beyond our control. You should not rely on our historical
results of operations as indications of future performance. The uncertainty of
our future performance and the uncertainties of our operating in a new and
expanding market increase the risk that the value of your investment will
decline.
We have a history of losses and expect to continue to incur losses for the
foreseeable future and may need additional financing
We have incurred substantial losses since we were founded, and we anticipate
we will continue to incur substantial losses for the foreseeable future. We
incurred net losses of $1.9 million and $6.4 million in 1998 and 1999,
respectively. If we do achieve profitability, we may not be able to sustain or
increase profitability on a quarterly or annual basis in the future. We expect
to continue to incur increasing sales and marketing, hiring and training,
infrastructure development and general and administrative expenses. As a
result, we will need to generate significant revenues to achieve profitability.
We cannot be certain whether or when we will achieve profitability because of
the significant risks and uncertainties that affect our business. If we fail to
generate sufficient cash from our operations to pay our expenses, our
management will need to identify other sources of funds. We may not be able to
borrow money or issue more shares of common stock to meet our cash needs on
terms favorable to us, or at all.
Competition in our industry for experienced personnel is intense and our
inability to attract, develop and retain qualified personnel could interrupt
our business and adversely affect our growth
Our business involves the delivery of professional services and is labor
intensive. Our success depends in large part on our ability to attract, develop
and retain highly skilled employees, particularly consultants and engineers and
other technical personnel, and we cannot assure you we will be able to do so.
We typically offer our employees options to purchase our common stock. A
decline in the price of our common stock could adversely affect our ability to
attract and retain employees. The loss of a significant number of our personnel
or the failure to attract new, highly
8
skilled employees could have a material adverse impact on us, including on our
ability to secure and complete engagements. Individuals with management
experience and consulting and technical skills are in short supply.
Accordingly, we may not be able to hire or retain the necessary number or mix
of personnel to implement our business strategy. Competition to hire from this
limited pool of qualified personnel is intense. In addition, we have
experienced, and may continue to experience, increasing compensation costs for
consultants and engineers. Our inability to recover increases in compensation
of consultants and engineers through higher billing rates, or to reduce other
expenses to offset such increases, could have an adverse effect on our
business.
The loss of executive management or other key personnel may harm our ability to
obtain and retain client engagements and to compete effectively
Our ability to continue to implement our business strategy and our future
success depends in large part on the continued services of a number of our key
personnel, including our founder, Chairman, Chief Executive Officer and
President, Joseph P. Beninati. The loss of the services of Mr. Beninati or any
of our other key personnel who have critical industry or client experience and
relationships could have a material adverse effect on our operating results. We
might not be able to prevent key personnel, who may leave our employ in the
future, from disclosing or using our technical knowledge, practices or
procedures. One or more of our key personnel might resign and join a competitor
or form a competing company. As a result, we might lose existing or potential
clients.
Because a large portion of our revenues to date has been generated from a small
number of clients, our revenues are difficult to predict and the loss of a
major client could significantly reduce our revenues
A small number of clients has accounted for a significant portion of our net
revenues to date, and we expect that this trend will continue for the
foreseeable future. In 1999, CK Witco and Bear Stearns accounted for 18% and
11% of our total revenues, respectively, and in 1998, Unilever and CK Witco
accounted for 39% and 14% of our total revenues, respectively. In 1999 and
1998, our five largest clients represented 51% and 68% of our total revenues,
respectively. Our dependence on a limited number of clients makes the
relationship between us and each client critically important to our business.
If one of our major clients discontinues or significantly reduces the use of
our services, we may not generate sufficient revenues to offset this loss of
revenues and our net income will decrease. In addition, the non-payment or late
payment of amounts due from a major client could adversely affect us.
Because we generally have short-term service contracts and clients can cancel
or modify these arrangements without penalty and with little or no notice, our
revenue stream is uncertain
Our services are often delivered pursuant to short-term arrangements and
most clients can reduce or cancel their contracts for our services without
penalty and with little or no notice. If a major client or a number of small
clients terminate our contracts or significantly reduce or modify their
business relationships with us, we may not be able to replace the shortfall in
revenues in a timely fashion due to our relatively long sales cycle or minimize
the underutilization of employees and the resulting adverse impact on our
operating results. Consequently, you should not predict or
9
anticipate our future revenues based upon the number of clients we have
currently or the number and size of our existing projects. Any errors in the
implementation of our services or failure to meet a client's expectations could
result in:
. our inability to receive payment from the client;
. requirements to provide additional services to a client at no charge;
. negative publicity about us and our services, which could adversely
affect our ability to attract or retain clients; and
. claims for substantial damages against us, regardless of our
responsibility for the failure, which may not be covered by our insurance
policies and which may not be limited by the contractual terms of our
engagement.
Our operating results may vary from quarter to quarter in future periods, and,
as a result, we may fail to meet the expectations of our investors and
analysts, which may cause our stock price to fluctuate or decline
We expect our quarterly revenues and operating results to be volatile and
difficult to predict. They are likely to vary significantly from quarter to
quarter. Factors that may cause our results to fluctuate include:
. the loss of key employees;
. an inability to hire and retain sufficient numbers of employees,
including consultants, engineers and account managers;
. reductions in our billing rates;
. unanticipated delays, deferrals or cancellations of major client
engagements;
. write-offs of billings or services performed at no charge as a result of
a failure to meet client expectations;
. claims by clients for the actions of our employees arising from damages
to clients' businesses or otherwise;
. the efficiency with which we utilize our billable professionals;
. the ability of our internal sales force to solicit engagements from new
and existing clients;
. the loss of billable workdays due to severe weather conditions, or other
factors;
. a decrease in the growth of the networking industry as a whole;
. seasonality;
. general economic conditions; and
. ongoing market acceptance of our services.
Any decline in revenues or earnings or a greater than expected loss for any
quarter could reduce the market price of our common stock, even if not
reflective of any long-term problems with our business.
10
We derive a portion of our professional services revenues from fixed-fee
projects, under which we assume greater financial risk if we fail to accurately
estimate the costs of the projects
We derive a portion of our professional services revenues from fixed-fee
projects. For the year ending December 31, 1999, fixed-fee projects accounted
for almost 19% of our professional services revenues. We assume greater
financial risks on a fixed-fee project than on a time-and-materials based
project. If we miscalculate the resources or time we need to complete these
fixed-fee projects, the costs of completing these projects may exceed the fee
we charge, which could result in a loss on the project. Further, the average
size of our contracts has increased in recent quarters, resulting in a
corresponding increase in our exposure to the financial risks of fixed-fee
projects.
We may have difficulty managing our expanding operations, which may harm our
business
A key part of our strategy is to grow our business. From March 1997 through
March 31, 2000 our staff increased from 2 to 209 employees. Our rapid growth
has placed a significant strain on our managerial, financial and operational
resources. To manage our growth, we must continue to improve our financial and
management controls, reporting systems and procedures, and to train and manage
our employees. If we are unable to manage growth effectively and new employees
are unable to achieve anticipated performance levels, it will affect our
revenues.
We compete in a new and highly competitive industry that has low barriers to
entry; if we cannot effectively compete our revenues will decline
The network technology consulting industry is comprised of many
participants, is highly competitive and is subject to rapid technological
change. Many of our competitors have greater name recognition, longer operating
histories, more relationships with large and established clients and greater
financial, technical and managerial resources than we do. Furthermore, we
expect that our competitors may in the future form alliances with technology
vendors, which may give them an advantage in managing networks that use that
vendor's equipment.
Most of our current clients and prospective clients have internal
information technology departments and could choose to satisfy their network
technology needs through these internal resources rather than by outsourcing
them to third-party service providers such as ourselves. The decision by
clients or prospective clients to rely on their own information technology
departments could harm our business. Moreover, as the domestic and global
markets for information technology services continue to grow, we expect to face
intense competition from new entrants into the network technology consulting
industry.
We believe that we compete with or in the future could compete with
organizations in the following categories:
. other infrastructure architects;
. information technology services firms;
. vendor affiliates;
. Internet professional services firms; and
. internal information technology departments.
11
There are relatively few barriers preventing competitors from entering the
network technology consulting industry. As a result, new market entrants pose a
threat to our business. We do not own any patented technology that precludes or
inhibits competitors from entering the network technology consulting industry.
Existing or future competitors may develop or offer services that are
comparable or superior to ours at a lower price, which could have a material
adverse effect on our business.
If we are unable to integrate our recent acquisitions of Aspire Technology
Group, Inc., NetGain LLC and Navigator Technologies, Inc. and other future
acquisitions, our business may be disrupted
We recently acquired Aspire Technology Group, Inc., a directory services
consulting company based in Virginia, NetGain LLC, a network performance
consulting company based in New York, and Navigator Technologies, Inc., a
company focused on converged voice and data solutions based in New Jersey. The
integration of these and any future acquisitions presents us with significant
financial, managerial and operational challenges. We may not be able to meet
these challenges effectively. To the extent our management is required to
devote significant time and attention to integrating the technology, operations
and personnel of acquired businesses, we may not be able to serve properly our
current clients or to attract new clients. Any difficulties in integrating
acquisitions could disrupt our ongoing business, distract our management and
employees, increase our expenses and otherwise adversely affect our business.
Commencing our international expansion efforts, which is a key part of our
growth strategy, may not be successful, and our business will be exposed to the
numerous risks associated with international operations
We expect to commence our international operations and international sales
and marketing efforts this year. We have had little experience in marketing,
selling and distributing our services internationally. We may not be able to
maintain and expand our international operations or successfully market our
services internationally. International operations are also subject to many
risks, including:
. the impact of recessions in economies outside the United States;
. unexpected changes in regulatory requirements;
. reduced protection for intellectual property rights in some countries;
. potentially adverse tax consequences, including restrictions on
repatriation of earnings;
. difficulties and costs of staffing and managing foreign operations, as a
result of, among other things, distance, language and cultural
differences;
. political and economic instability;
. the burdens of complying with a wide variety of foreign laws;
. fluctuations in currency exchange rates; and
. seasonal reductions in business activity, especially during the summer
months, in Europe and certain other parts of the world.
Failure to successfully expand into international markets may negatively
affect our business, as well as our ability to grow.
12
If we do not keep pace with technological changes, our services may become less
competitive and our business will suffer
Our market is characterized by rapidly changing technologies, frequent new
product and service offerings and evolving industry standards. As a result of
the complexities inherent in today's computing environments, we face
significant challenges in remaining abreast of such changes and new product
introductions. If we cannot keep pace with these changes, we will not be able
to meet our clients' increasingly sophisticated network technology consulting
needs, and our services will become less competitive.
Our future success will depend on our ability to:
. keep pace with continuing changes in industry standards, information
technology and client preferences;
. respond effectively to these changes; and
. develop new services or enhance our existing services.
We may be unable to develop and introduce new services or enhancements to
existing services in a timely manner or in response to changing market
conditions or client requirements.
If the use of large-scale, complex networks does not continue to grow, we may
not successfully increase or maintain our client base and revenues
To date, a majority of our revenues has been from network technology
consulting services related to large-scale, complex networks. As a result, our
future success is highly dependent on the continued growth and acceptance of
large-scale, complex networks and the continued trend among our clients to use
third-party service providers. If the growth of the use of these networks does
not continue or declines, our business and our revenues may decline.
Our business depends on continued growth in the use of the Internet
The growing demand for network technology consulting services has been
driven in part by the growth of the Internet. The Internet may not prove to be
a viable commercial marketplace because of:
. inadequate development of the infrastructure necessary to support the
Internet;
. lack of development of complementary products (such as higher-speed
modems and higher-speed communication lines);
. implementation of competing technology;
. delays in the development or adoption of new standards and protocols
required to handle increased levels of Internet activity; or
. government regulation.
Significant issues concerning the commercial use of Internet technologies
include security, reliability, cost, ease of use and quality of service. These
issues may inhibit the growth of Internet businesses that utilize large
networks.
13
Industry analysts and others have made many predictions concerning the
growth of the Internet as a business medium. You should not rely upon these
predictions. If the market for network infrastructure architects fails to
develop, or develops more slowly than expected, or if our services do not
achieve market acceptance, our business will not succeed and the value of your
investment in our common stock will decline.
Unauthorized use of our intellectual property by third parties may damage us
We regard our trade secrets and other intellectual property as critical to
our success. Unauthorized use of our intellectual property by third parties may
damage our brand and our reputation. We rely on trademark law and trade secret
protection and confidentiality and license and other agreements with our
employees, clients, partners and others to protect our intellectual property
rights. However, we do not have any patents or patent applications pending or
any registered copyrights, and existing trade secret and trademark laws afford
us only limited protection. Despite our precautions, it may be possible for
third parties to obtain and use our intellectual property without our
authorization. Furthermore, the validity, enforceability and scope of
protection of intellectual property in Internet-related industries is uncertain
and still evolving. The laws of some foreign countries are also uncertain or do
not protect intellectual property rights to the same extent as do the laws of
the United States.
We may have to defend intellectual property infringement claims, which could be
expensive and, if we are not successful, could disrupt our business
We cannot be certain that our services or materials provided to us by our
clients for use in finished products do not or will not infringe valid patents,
copyrights, trademarks or other intellectual property rights held by third
parties. As a result, we may be subject to legal proceedings and claims from
time to time relating to the intellectual property of others in the ordinary
course of our business. We may incur substantial expenses in defending against
these third-party infringement claims, regardless of their merit. Successful
infringement claims against us may result in substantial monetary liability or
may materially disrupt the conduct of our business.
Because our services are often critical to our clients' operations, we may be
subject to significant claims if our services do not meet our clients'
expectations
Many of our projects are critical to the operations of our clients'
businesses. If we cannot complete these projects to our clients' expectations,
we could materially harm our clients' operations. Any failure to meet our
clients' expectations could damage our reputation, subject us to increased risk
of litigation or result in our having to provide additional services to a
client at no charge, which could adversely affect our ability to attract new
business from that client or others. If we fail to perform adequately on a
project, a client could sue us for damages. Although we carry general liability
insurance, our insurance may not cover all potential claims to which we are
exposed or may not be adequate to indemnify us for all liability that may be
imposed.
Our business may suffer if we have disputes with clients over our right to
reuse intellectual property developed during client engagements
Part of our business involves the development of software applications for
discrete client engagements. Ownership of client-specific software is generally
held by the client, although we
14
typically retain the right to reuse some of the processes and other
intellectual property developed in connection with a client engagement. Issues
relating to the right to use intellectual property can be complicated.
Accordingly, disputes may arise that could adversely affect our ability to
reuse applications, processes and other intellectual property that result from
particular client engagements. Such disputes could damage our relationships
with our clients and our business reputation, divert our management's attention
and have an adverse effect on our ability to grow our business.
Risks Related to this Offering
The net proceeds of this offering may be allocated in ways with which you and
other stockholders may not agree, and they may not be allocated effectively
Our management has significant flexibility in applying the proceeds we
receive in this offering. Because the proceeds are not required to be allocated
to any specific investment or transaction, you cannot determine at this time
the value or propriety of our management's application of the proceeds on our
behalf and you and other stockholders may not agree with our management's
decisions. In addition, our management may not allocate or invest these
proceeds effectively.
The market price of our common stock may be less than the initial public
offering price, or may be volatile, and you may not be able to resell your
shares at or above the initial public offering price
Prior to this offering there was no public market for our common stock. The
initial public offering price for our common stock will be determined through
negotiations between the underwriters and us. This initial public offering
price may vary from the market price of our common stock after the offering. If
you purchase shares of common stock, you may not be able to resell those shares
at or above the initial public offering price.
We are controlled by a small group of our existing stockholders, whose
interests may differ from other stockholders
As of April 11, 2000, our directors, executive officers and affiliates
beneficially owned approximately 85.3% of the outstanding shares of our common
stock, and after the offering will beneficially own approximately % of the
outstanding shares of common stock. As a result, if these persons act together,
they will have the ability to exercise substantial control over our affairs and
corporate actions requiring stockholder approval, including the election of
directors, a sale of substantially all of our assets, a merger with another
entity or an amendment to our certificate of incorporation. The ownership
position of these stockholders could delay, deter or prevent a change in
control and could adversely affect the price that investors might be willing to
pay in the future for shares of our common stock. In addition, the interests of
these stockholders may differ from the interests of our other stockholders.
Shares eligible for public sale after this offering could adversely affect our
stock price
The market price of our common stock could decline as a result of sales by
our existing stockholders of shares of common stock in the market after this
offering, or the perception that these sales could occur. In addition, we have
a significant number of shares that are subject to outstanding
15
options and warrants. The exercise of these options or warrants and the
subsequent sale of the underlying common stock also could cause a decline in
our stock price. These sales also might make it difficult for us to sell equity
securities in the future at a time and at a price that we deem appropriate.
Investors in this offering will suffer immediate and substantial dilution
The initial public offering price per share will significantly exceed the
pro forma net tangible book value per share of $0.75 as of December 31, 1999.
Accordingly, investors purchasing shares in this offering will suffer immediate
and substantial dilution of their investment. In addition, we had 6,144,978
shares subject to options outstanding as of April 11, 2000 at a weighted
average exercise price of $0.49 per share and outstanding warrants to purchase
2,136,752 shares of common stock issuable at an exercise price of $1.17 per
share. The exercise of these options and warrants will result in further
dilution of the value of the shares purchased in this offering.
Anti-takeover provisions of Delaware's General Corporation Law and our
certificate of incorporation could delay or deter a change in control
Provisions of our certificate of incorporation and by-laws, as well as
various provisions of the Delaware General Corporation Law, may make it more
difficult to effect a change in control of us. The existence of these
provisions may adversely affect the price of our common stock, discourage third
parties from making a bid for us or reduce any premiums paid to our
stockholders for their common stock. For example, our certificate of
incorporation authorizes our board of directors to issue up to 20,000,000
shares of "blank check" preferred stock and to attach special rights and
preferences to this preferred stock. The issuance of this preferred stock may
make it more difficult for a third party to acquire control of us. Our
certificate of incorporation provides for the division of our board of
directors into three classes as nearly equal in size as possible with staggered
three-year terms. This classification of the board of directors could have the
effect of making it more difficult for a third party to acquire us, or of
discouraging a third party from acquiring control of us. A special meeting of
stockholders only may be called by a majority of the board of directors or by
our president, chief executive officer or chairman. In addition, a stockholder
proposal for an annual meeting must be received within a specified period of
time to be placed on the agenda. Because stockholders do not have the ability
to require the calling of a special meeting of stockholders and are subject to
timing requirements in submitting stockholder proposals for consideration at an
annual meeting, any third-party takeover not supported by the board of
directors would be subject to significant delays and difficulties.
16
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements that involve risks and
uncertainties. These forward-looking statements, which are usually accompanied
by words such as "may," "might," "will," "should," "could," "intends,"
"estimates," "predicts," "potential," "continue," "believes," "anticipates,"
"plans," "expects" and similar expressions, relate to, without limitation,
statements about our market opportunities, our strategy, our competition, our
projected expense levels and the adequacy of our available cash resources. This
prospectus also contains forward-looking statements attributed to third parties
relating to their estimates regarding our industry and the growth of business-
to-business e-commerce activities. You should not place undue reliance on these
forward-looking statements which apply only as of the date of this prospectus.
Our actual results could differ materially from those expressed or implied by
these forward-looking statements as a result of various factors, including the
risks described above and elsewhere in this prospectus. Except as may be
required by federal securities laws, we undertake no obligation to update
publicly any forward-looking statements for any reason, even if new information
becomes available or other events occur in the future.
17
USE OF PROCEEDS
We estimate that we will receive net proceeds from the sale of the shares of
common stock in this offering of $ million, assuming an initial public
offering price of $ per share and after deducting estimated underwriting
discounts and commissions and estimated offering expenses. If the underwriters
exercise their over-allotment option in full, we estimate that our net proceeds
will be $ million.
The primary purposes of this offering are to obtain additional equity
capital, create a public market for our common stock, and facilitate future
access to public markets. As of the date of this prospectus, we have not made
any specific expenditure plans with respect to the proceeds of this offering.
Accordingly, our management will have significant flexibility in applying the
net proceeds of this offering. We expect to use the net proceeds of this
offering for general corporate purposes, including working capital. A portion
of the net proceeds also may be used for the acquisition of complementary
businesses or technologies. Currently, we have no specific understandings,
commitments or agreements and are not currently engaged in any active
negotiations with respect to any such acquisitions.
Pending such uses, we intend to invest the net proceeds of this offering in
short-term, interest-bearing, investment-grade securities.
DIVIDEND POLICY
We have not declared or paid any cash dividends on our capital stock since
our inception. We intend to retain future earnings, if any, to finance the
operation and expansion of our business and do not anticipate paying any cash
dividends in the foreseeable future. Consequently, stockholders will need to
sell shares of common stock to realize a return on their investment, if any.
18
CAPITALIZATION
(in thousands)
The following table sets forth our capitalization as of December 31, 1999:
. on an actual basis;
. on a pro forma basis after giving effect to the sale of 428,049 shares of
series E preferred stock at $2.11 per share on January 14, 2000 and the
receipt of the net proceeds therefrom; and
. on a pro forma as adjusted basis to further reflect (1) the conversion of
all outstanding shares of preferred stock into common stock immediately
prior to completion of this offering and (2) the sale of shares of common
stock at an assumed initial public offering price of $ per share,
after deducting underwriting discounts and commissions and estimated
offering expenses payable by us.
You should read this information together with our audited financial
statements and accompanying notes appearing elsewhere in this prospectus.
December 31, 1999
-------------------------------
Pro forma
Actual Pro forma as adjusted
------- --------- ------------
Cash and cash equivalents...................... $17,568 $18,471 $
======= ======= =====
Total debt including borrowing under
installment loan and capitalized lease
agreement..................................... 44 44 44
Shareholders' equity:
Convertible series A through E preferred
stock, $.01 par value, 35,175,218 authorized,
28,860,511 issued and outstanding, actual;
35,175,218 authorized, 29,288,560 issued and
outstanding, pro forma; and no shares
authorized issued and outstanding, pro forma
as adjusted.................................. 289 293
Preferred stock, $.01 par value, no shares
issued and outstanding, actual; no shares
issued and outstanding, pro forma; 20,000,000
authorized, no shares issued and outstanding,
pro forma as adjusted........................
Common stock, $.01 par value, 54,824,782
shares authorized, 1,019,849 issued, actual;
54,824,782 authorized, 1,019,849 issued, pro
forma; 300,000,000 authorized, issued,
pro forma as adjusted........................ 10 10
Additional paid-in capital..................... 29,648 30,547
Accumulated deficit............................ (8,840) (8,840)
Treasury stock................................. (53) (53)
------- ------- -----
Total shareholders' equity.................... 21,054 21,957
Total capitalization......................... $21,098 $22,001 $
======= ======= =====
The number of shares of common stock to be outstanding after this offering
is based on the number of shares outstanding as of December 31, 1999 and
excludes:
. 6,144,978 shares subject to options outstanding as of April 11, 2000 at a
weighted average exercise price of $0.49 per share;
. 7,048,010 additional shares reserved for issuance under our stock option
plans;
. 850,000 additional shares available for issuance under our employee stock
purchase plan; and
. the exercise of 2,136,752 warrants to purchase shares of our common
stock.
19
DILUTION
Our pro forma net tangible book value as of December 31, 1999 was
approximately $22 million, or approximately $0.75 per share of common stock.
Pro forma net tangible book value per share is determined by dividing the
amount of our total tangible assets less total liabilities by the number of
shares of common stock outstanding after giving effect to the sale of 428,049
shares of series E preferred stock at $2.11 per share on January 14, 2000, and
the conversion of each share of preferred stock into one share of common stock
immediately prior to completion of this offering. Dilution in pro forma net
tangible book value per share represents the difference between the amount per
share paid by purchasers of shares of common stock in this offering and the net
tangible book value per share of common stock immediately after the completion
of this offering.
After giving further effect to our sale of shares offered hereby at an
assumed initial public offering price of $ per share and after deducting
estimated underwriting discounts and estimated offering expenses payable by us,
and the application of the estimated net proceeds from the offering, our pro
forma net tangible book value as of December 31, 1999 would have been $ , or
$ per share. This represents an immediate increase in pro forma net tangible
book value of $ per share to existing stockholders and an immediate dilution
in net tangible book value of $ per share to new investors. The following
table illustrates this per share dilution:
Assumed initial public offering price per share..................... $
Pro forma net tangible book value per share as of December 31,
1999............................................................. $0.75
Increase per share attributable to new investors..................
-----
Pro forma net tangible book value per share after this offering.....
---
Dilution in pro forma net tangible book value per share to new
investors.......................................................... $
===
The following table summarizes, on a pro forma basis after giving effect to
the sale of 428,049 shares of series E preferred stock at $2.11 per share on
January 14, 2000 and the conversion of each outstanding shares of preferred
stock into common stock immediately prior to this offering, the total number of
shares of common stock purchased from us, the total consideration paid to us
and the average price per share paid to us by existing stockholders and by new
investors before deducting the estimated underwriting discounts and commissions
and estimated offering expenses payable by us:
Shares Purchased Total Consideration
------------------ ------------------- Average Price
Number Percent Amount Percent Per Share
---------- ------- ----------- ------- -------------
Existing stockholders...... 30,308,409 % $32,513,461 % $1.07
New investors..............
---------- ----- ----------- -----
Total.................... 100.0% $ 100.0%
========== ===== =========== =====
The foregoing tables and calculations assume no exercise of any stock
options or warrants outstanding as of December 31, 1999. As of April 11, 2000,
there were options outstanding to purchase a total of 6,144,978 shares of
common stock with a weighted average exercise price of $0.49 per share and
2,136,752 shares of common stock issuable upon the exercise of warrants at an
exercise price of $1.17 per share. To the extent the outstanding warrants and
options are exercised there will be further dilution to new investors.
20
SELECTED FINANCIAL DATA
(in thousands, except per share amounts)
The selected statement of operations data for the period from March 14, 1997
(inception) through December 31, 1997 and for the years ended December 31, 1998
and 1999, and the selected balance sheet data as of December 31, 1998 and 1999
have been derived from our audited financial statements included in this
prospectus. Balance sheet data as of December 31, 1997 have been derived from
our audited financial statements not included in this prospectus. You should
read these selected financial data in conjunction with "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and our audited
financial statements and the accompanying notes included elsewhere in this
prospectus.
Fiscal year
ended
Inception December 31,
through ----------------
Dec. 31, 1997 1998 1999
------------- ------- -------
Statement of Operations Data:
Revenues:
Professional services....................... $ 472 $ 4,252 $12,539
Provisioning................................ 357 1,776 1,656
------ ------- -------
Total revenues............................ 829 6,028 14,195
------ ------- -------
Cost of revenues:
Professional services....................... 306 2,473 7,704
Provisioning................................ 308 1,362 1,259
------ ------- -------
Total cost of revenues.................... 614 3,835 8,963
------ ------- -------
Gross profit:
Professional services....................... 166 1,779 4,835
Provisioning................................ 49 414 397
------ ------- -------
Total gross profit........................ 215 2,193 5,232
Expenses:
Sales and marketing expenses................ 174 1,762 5,734
General and administrative expenses......... 447 2,139 5,408
Depreciation and amortization expense....... 210 197 747
Operating loss................................ (616) (1,905) (6,657)
Other income, net............................. -- 31 307
------ ------- -------
Net loss...................................... $ (616) $(1,874) $(6,350)
====== ======= =======
Basic and diluted net loss per share.......... $(3.51) $(11.92) $(21.34)
====== ======= =======
Weighted average common shares used to compute
basic and diluted net loss per share......... 177 177 316
====== ======= =======
December 31,
------------------------------
1997 1998 1999
------------- ------- -------
Balance Sheet Data:
Cash and cash equivalents..................... $ 700 $ 695 $17,568
Working capital............................... 635 1,296 19,546
Total assets.................................. 1,077 3,284 23,422
Total debt including borrowing under
installment loan and capitalized lease
agreement.................................... 25 55 44
Total shareholders' equity.................... $ 818 $ 2,090 $21,054
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with
"Selected Financial Data" and our financial statements and the accompanying
notes included elsewhere in this prospectus. This discussion contains forward-
looking statements that involve risks and uncertainties. Our actual results
could differ materially from those anticipated in the forward-looking
statements as a result of certain factors including the risks discussed in
"Risk Factors" and elsewhere in this prospectus.
Overview
GTP is a provider of a new category of network-focused professional services
called infrastructure architecture. As infrastructure architects, we focus on
the design, implementation, security, performance and management of network
infrastructures that have become the foundation of the emerging e-business
economy. Our clients are Global 2000 enterprises such as Bear Stearns, Chase
Manhattan Bank, CK Witco, Morgan Stanley Dean Witter and Unilever,
telecommunications and Internet service providers such as UUNET, an MCI
Worldcom company, and select Internet companies such as Telemedia Accelerator.
We derive a majority of our revenues from professional services. We provide
professional services on both a time-and-materials and fixed-fee basis. Upon a
client's specific request, we also sell hardware and software, which we refer
to as provisioning revenues. During the year ended December 31, 1999, less than
12% of our total revenues were provisioning revenues. We expect provisioning
revenues to decline as a percentage of total revenues.
Revenue is only recognized when a contract arrangement exists, services have
been rendered, the fees are fixed or determinable and collectibility is
reasonably assured. Provisioning revenues are recognized when equipment is
delivered to a client. Revenues are recognized for time-and-materials contracts
as services are provided. Revenues from fixed-fee contracts are recognized as
services are provided upon the achievement of specified milestones. Revenue is
recognized on partially completed milestones in proportion to the costs
incurred for that milestone and only to the extent that an irrevocable right to
the revenue exists. Costs incurred under time-and-materials and fixed-fee
contracts are recognized as incurred which generally is in the same period that
revenue is recorded. Reimbursable expenses are not reported in revenues. For
the year ended December 31, 1999, we derived approximately 81% of our
professional services revenues from time-and-materials engagements. We believe
that fixed-fee revenues will increase in the future as a percentage of total
revenues as we increase sales of our productized services.
Revenues from several large clients historically have constituted a
significant portion of our total revenues in a particular quarter or year. In
1999, CK Witco and Bear Stearns accounted for 18% and 11% of our total
revenues, respectively, and in 1998, Unilever and CK Witco accounted for 39%
and 14% of our total revenues, respectively. In 1999 and 1998, our five largest
clients represented 51% and 68% of our total revenues, respectively. We expect
a relatively high level of client concentration to continue, although not
necessarily involving the same clients from period to period.
22
Costs of professional services consist of compensation and benefits for our
consultants and engineers and project-related costs that are not billable to
our clients. We expect that salaries for our billable professionals will
increase over time due to the intense competition in our industry for qualified
individuals. Costs of provisioning consist of the cost of hardware and software
sold and related shipping costs.
Our gross profit is driven in large part by the overall utilization of
professionals in billable engagements and by the average bill rates we charge
our clients, both of which may vary from period to period.
Sales and marketing expenses consist primarily of compensation and benefit
costs for our sales and marketing personnel, travel expenses for our sales
personnel and certain advertising and promotional expenses. We believe that
continued expenditures for sales and marketing personnel and programs are
required to remain competitive and to promote awareness of our brand and
services. We therefore expect that these expenses will continue to increase for
the foreseeable future. However, we expect these expenses to decline as a
percentage of total revenues as we continue to grow our business.
General and administrative expenses consist primarily of compensation and
benefit costs and related expenses for general corporate functions, including
managerial, financial, personnel, facilities and other administrative expenses.
These expenses also include legal, accounting and other professional fees and
expenses. We expect our general and administrative expenses will increase for
the foreseeable future as we continue to hire personnel and incur expenses to
build our administrative infrastructure to support the growth of our business
and our operations. However, we expect these expenses to decline as a
percentage of total revenues as we continue to grow our business.
We intend to expand our presence in our current markets and to enter new
domestic and international markets. We currently have branches serving
Baltimore, Boston, Chicago, Hartford, New York City, Northern New Jersey and
Washington, D.C. During 2000, we plan to open branches serving Atlanta, Dallas,
Denver and San Francisco as well as two European branches. Since many of our
clients are large, geographically diverse businesses, we will continue to
review opportunities to enter new markets in response to our clients' needs.
Our number of billable employees increased from 55 at December 31, 1998 to
91 at December 31, 1999. Our total number of employees increased from 101 at
December 31, 1998 to 161 at December 31, 1999. We will continue to actively
recruit billable professionals and the staff required to support their
activities and we expect our total number of employees to increase
significantly in 2000.
23
Results of Operations
The following table presents for the periods indicated, our selected
statements of operations data in dollars and as a percentage of our revenues.
Inception Year ended Inception Year ended
through December 31, through December 31,
December 31, ---------------- December 31, -----------------
1997 1998 1999 1997 1998 1999
------------ ------- ------- ------------ ------ ------
(in thousands)
Revenues:
Professional
services............. $ 472 $ 4,252 $12,539 57 % 71 % 88 %
Provisioning.......... 357 1,776 1,656 43 29 12
----- ------- ------- --- ------ ------
Total revenues...... 829 6,028 14,195 100 100 100
----- ------- -------
Cost of revenues:
Professional
services............. 306 2,473 7,704 65(1) 58(1) 61(1)
Provisioning.......... 308 1,362 1,259 86(2) 77(2) 76(2)
----- ------- -------
Total cost of
revenues........... 614 3,835 8,963 74 64 63
----- ------- -------
Gross profit:
Professional
services............. 166 1,779 4,835 35(1) 42(1) 39(1)
Provisioning.......... 49 414 397 14(2) 23(2) 24(2)
----- ------- -------
Total gross profit.. 215 2,193 5,232 26 36 37
Expenses:
Sales and marketing
expenses............. 174 1,762 5,734 21 29 40
General and
administrative
expenses............. 447 2,139 5,408 54 35 38
Depreciation and
amortization
expense.............. 210 197 747 25 3 5
Other income, net....... -- 31 307 -- 1 2
----- ------- ------- --- ------ ------
Net loss................ $(616) $(1,874) $(6,350) (74)% (30)% (44)%
===== ======= ======= === ====== ======
- --------
(1) Percentage of professional services revenues
(2) Percentage of provisioning revenues
Years Ended December 31, 1998 and 1999
Revenues
Total revenues increased $8.2 million, or 135%, to $14.2 million in 1999
from $6.0 million in 1998. Revenues from professional services increased $8.3
million, or 195%, to $12.5 million in 1999 from $4.3 million in 1998. The
increase in professional services revenues was the result of an increase in the
number of active clients, which led to an increase in both the number of
professional services projects and the number of billable professionals engaged
in those projects.
The increase in total revenues in 1999 was offset in part by a $120,000
decrease in provisioning revenues as compared to the prior period. Provisioning
revenues decreased 7% to $1.7 million in 1999 from $1.8 million in 1998. This
decrease was the result of our decision to provide hardware and software resale
services only upon a client's specific request and in connection with a
professional services project.
Cost of Revenues
Cost of revenues for professional services increased 211% to $7.7 million in
1999 from $2.5 million in 1998. As a percentage of professional services
revenues, cost of professional services
24
increased to 61% in 1999 from 58% in 1998. The increase in cost of revenues for
professional services was primarily due to the hiring of additional consultants
and engineers and their corresponding compensation and benefits. We strive to
hire in advance of new projects to ensure that we have the resources required
to respond quickly to our clients' needs.
Cost of provisioning revenues decreased 8% to $1.3 million in 1999 from $1.4
million in 1998. This decrease in cost of provisioning revenues was primarily
due to the corresponding reduction in provisioning sales. As a percentage of
provisioning revenues, cost of provisioning decreased to 76% in 1999 from 77%
in 1998.
Sales and Marketing Expenses
Sales and marketing expenses increased 225% to $5.7 million in 1999 from
$1.8 million in 1998. This increase was primarily attributable to a $2.0
million increase in compensation and benefits for additional staff and a $1.0
million increase in sales commissions earned as a result of increased revenues.
As a percentage of revenues, sales and marketing expenses increased to 40% in
1999 from 29% in 1998.
General and Administrative Expenses
General and administrative expenses increased 153% to $5.4 million in 1999
from $2.1 million in 1998. General and administrative expenses increased
primarily as a result of increases in our personnel, facilities and recruiting
costs to support the growth of our business. As a percentage of revenues,
general and administrative expenses increased to 38% in 1999 from 35% in 1998.
Depreciation and Amortization Expense
Depreciation and amortization expense consist of depreciation of property
and equipment and amortization of goodwill. Depreciation and amortization
expense increased 280% to $747,000 in 1999 from $197,000 in 1998. This increase
was primarily attributable to the depreciation associated with property and
equipment purchases in 1999 that were necessary to support our growth.
Additionally, in conjunction with upgrading our computer systems, we recorded a
charge of $207,000 in 1999 to reduce the carrying amount of certain computer
software assets that are to be disposed of to zero.
Other Income, Net
Net interest income increased 891% to $307,000 in 1999 from $31,000 in 1998.
This increase was primarily attributable to interest earned on the investment
of proceeds received from the issuance of series D preferred stock and series E
preferred stock sold during 1999.
Income Taxes
We did not incur any current U.S. Federal or State income tax provision for
any period presented because we have experienced operating losses since
inception. Utilization of our net operating loss carryforwards, which begin to
expire in 2002, may be subject to limitations under Section 382 of the Internal
Revenue Code of 1986. Due to the uncertainty regarding our ability to utilize
this deferred asset, we have recorded a valuation allowance to offset this
asset.
25
Inception (March 14, 1997) through December 31, 1997 and Year Ended December
31, 1998
Revenues
Total revenues increased $5.2 million, or 627%, to $6.0 million in 1998 from
$829,000 in the period from inception through December 31, 1997. Revenues from
professional services increased $3.8 million, or 801%, to $4.3 million in 1998
from $472,000 in the period from inception through December 31, 1997. The
increase was primarily the result of an increase in the number of professional
services projects combined with an increase in the size of these projects.
Provisioning revenues increased $1.4 million, or 397%, to $1.8 million in
1998 from $357,000 in the period from inception through December 31, 1997. This
increase was primarily attributable to an increase in both the number of
clients to whom we provided hardware and software resale services and the
number of projects with related hardware and software requirements. As a
percentage of revenues, provisioning revenues accounted for 29% of our revenues
in 1998 and 43% of our revenues for the period from inception through December
31, 1997. This decrease was the result of our decision to provide hardware and
software resale services only upon a client's specific request and in
connection with a professional services project.
Cost of Revenues
Cost of revenues for professional services increased 709% to $2.5 million in
1998 from $306,000 in the period from inception through December 31, 1997. The
increase in cost of revenues for professional services was primarily
attributable to the hiring of consultants and engineers and their corresponding
compensation and benefits. As a percentage of professional services revenues,
these costs decreased to 58% in 1998 from 65% for the period from inception
through December 31, 1997.
The cost of provisioning revenues increased 342% to $1.4 million in 1998
from $308,000 in the period from inception through December 31, 1997. The
increase in provisioning costs was a result of increases in product sales. As a
percentage of provisioning revenues, these costs decreased to 77% in 1998 from
86% from inception through December 31, 1997.
Sales and Marketing Expenses
Sales and marketing expenses increased 909% to $1.8 million in 1998 from
$174,000 in the period from inception through December 31, 1997. The increase
was primarily attributable to a $1.2 million increase in compensation and
benefits for additional sales personnel and an increase of approximately
$330,000 in sales commissions earned as a result of increased revenues. As a
percentage of revenues, sales and marketing expenses increased to 29% in 1998
from 21% in the period from inception through December 31, 1997.
General and Administrative Expenses
General and administrative expenses increased 379% to $2.1 million in 1998
from $447,000 in the period from inception through December 31, 1997. General
and administrative expenses increased as a result of increases in personnel,
facilities and recruiting expenses. As a percentage of revenues, general and
administrative expenses decreased to 35% in 1998 from 54% in the period from
inception through December 31, 1997.
26
Depreciation and Amortization Expense
Depreciation and amortization expense decreased 7% to $197,000 in 1998 from
$210,000 in the period from inception through December 31, 1997. Depreciation
and amortization decreased primarily as a result of a $101,000 decrease in the
amortization of goodwill. This decrease in goodwill was primarily attributable
to the value of a customer list acquired and substantially amortized in 1997.
This decrease was partially offset by the depreciation associated with
purchases of capital equipment in 1998 necessary to support our growth.
Other Income, Net
Net interest income increased to $31,000 in 1998. There was no net interest
income from inception to December 31, 1997. This increase was primarily
attributable to interest earned on the investment of proceeds received from the
issuance of series C preferred stock sold during 1998.
Quarterly Results of Operations
The following table presents our unaudited quarterly data for the periods
indicated. We derived these data from our unaudited consolidated interim
financial statements, and, in our opinion, these data include all necessary
adjustments, which consist only of normal recurring adjustments necessary to
present fairly the financial results for the periods presented. Our quarterly
operating results have varied significantly in the past and will continue to
vary in the future due to a number of factors including, but not limited to,
the number, size and scope of engagements, unanticipated delays, deferrals or
cancellation of significant engagements, unanticipated changes in the scope of
major engagements, utilization rates, realized hourly billing rates and general
economic conditions. Accordingly, our results for any given quarter or series
of quarters are not necessarily indicative of our results that may be expected
for any future period. However, our quarterly operating results may represent
trends that aid in understanding our business.
Quarter Ended
-------------------------------------
Mar. 31, June 30, Sept. 30, Dec. 31,
1999 1999 1999 1999
-------- -------- --------- --------
(in thousands)
Statement of Operations:
Revenues:
Professional services................... $2,490 $ 2,893 $ 3,596 $ 3,560
Provisioning............................ 458 573 415 210
------ ------- ------- -------
Total revenues........................ 2,948 3,466 4,011 3,770
------ ------- ------- -------
Cost of revenues:
Professional services................... 1,448 1,823 2,157 2,276
Provisioning............................ 360 441 310 148
------ ------- ------- -------
Total cost of revenues................ 1,808 2,264 2,467 2,424
------ ------- ------- -------
Gross profit:
Professional services................... 1,042 1,070 1,439 1,284
Provisioning............................ 98 132 105 62
------ ------- ------- -------
Total gross profit.................... 1,140 1,202 1,544 1,346
Expenses:
Sales and marketing expenses............ 1,152 1,288 1,460 1,834
General and administrative expenses..... 901 923 1,633 1,951
Depreciation and amortization expense... 77 118 146 406
Other income, net......................... 13 50 63 181
------ ------- ------- -------
Net loss.................................. $ (977) $(1,077) $(1,632) $(2,664)
====== ======= ======= =======
27
We experienced continued growth in total revenue in each quarter during
1999, with the exception of the fourth quarter. Professional services revenues
followed this trend with a slight decrease in the fourth quarter. This decrease
was primarily the result of a delay in the start of new projects as clients
approached the year 2000 with caution. In conjunction with this expected delay,
we implemented a new, scalable branch business model, which also affected the
utilization rate of our billable professionals for the quarter. Provisioning
revenues declined to $210,000 by the fourth quarter. This decrease was the
result of our decision to provide hardware and software resale services only
upon a client's specific request and in connection with a professional services
project. Gross profit increased in all quarters with the exception of the
fourth quarter. The lower utilization of billable professionals in that period
and our continued hiring of billable professionals in advance of new projects
decreased our gross profit. Both sales and marketing and general and
administrative expenses increased in each quarter during 1999 as we continued
to add personnel, systems and infrastructure to support the growth of our
business and operations.
Liquidity and Capital Resources
Since inception in 1997, we have financed our operations through the
issuance of preferred stock, raising a total of $29.5 million through December
31, 1999, net of issuance costs. As of December 31, 1999, we had approximately
$17.6 million in cash and cash equivalents. Subsequent to December 31, 1999, we
sold 428,049 shares of preferred stock raising an additional $903,000 in net
proceeds.
Net cash used in operating activities was $7.0 million in 1999, $2.4 million
in 1998 and $374,000 for the period from inception through December 31, 1997.
Net cash used in operating activities resulted primarily from net losses for
the periods and increases in accounts receivable, and was partially offset by
increases in accounts payable and accrued expenses.
Net cash used in investing activities was $1.5 million in 1999, $817,000 in
1998, and $59,000 in 1997, primarily due to the purchase of property and
equipment.
Net cash provided by financing activities was $25.3 million in 1999. In
1999, we raised net proceeds of $25.3 million from the sale of 5.2 million
shares and 9.8 million shares of series D preferred stock and series E
preferred stock, respectively. Cash provided by financing activities was $3.2
million in 1998. In 1998, we raised net proceeds of $3.1 million from the sale
of 4.2 million shares of series C preferred stock. Net cash provided by
financing activities was $1.1 million in 1997. In 1997, we raised net proceeds
of $1.1 million from the issuance of 4.1 million shares and 5.7 million shares
of series A preferred stock and series B preferred stock, respectively. At the
completion of this offering, each preferred share will convert into one common
share.
We anticipate spending between $5.0 million and $8.0 million in capital
expenditures during 2000 as a result of expenditures to be incurred in
connection with enhancing our networking lab, moving to our new corporate
headquarters, opening new branch offices and upgrading our computer systems.
At our current rate of expenditure, we believe that our current cash and
cash equivalents will be sufficient to fund our working capital and capital
expenditure requirements for at least the next 12
28
months. We believe our current cash and cash equivalents, combined with the
proceeds of this offering, will allow us to grow our business substantially. To
the extent we require additional funds to support our operations or the
expansion of our business, we may need to sell additional equity, issue debt or
convertible securities or obtain credit facilities through financial
institutions. If additional funds are raised through the issuance of debt
securities, these securities could have rights, preferences and privileges
senior to holders of common stock. The terms of any debt securities could
impose restrictions on our operations. If additional funds are raised through
the issuance of additional equity or convertible securities, our stockholders
could suffer dilution. We cannot assure you that additional funding, if
required, will be available to us in amounts or on terms acceptable to us. If
sufficient funds are not available or are not available on acceptable terms,
our ability to fund our expansion, take advantage of acquisition opportunities,
develop or enhance our services or products, or otherwise respond to
competitive pressures would be significantly limited. Those limitations would
materially and adversely affect our business, results of operations and
financial condition.
Recently Issued Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 133, Accounting for
Derivatives and Hedging Activities. This Statement establishes accounting and
reporting standards for derivatives instruments, including certain derivative
instruments embedded in other contracts, and hedging contracts. This Statement
is effective for all fiscal years beginning after June 15, 2000. We do not
expect adoption of this Standard to have a material effect on our results of
operations, financial position or cash flows.
Quantitative and Qualitative Disclosure About Market Risk
We have no derivative financial instruments in our cash and cash equivalents
and investments. We invest our cash and cash equivalents in short term,
investment-grade securities. We anticipate investing the net proceeds from this
offering in similar investment-grade securities pending their use as described
in this prospectus. Our transactions are conducted and all our accounts are
denominated in United States dollars. As a result, we are not exposed to
foreign currency risk. Further, we do not have any current borrowings that
require us to repay a variable interest rate and are therefore not currently
exposed to market risk from changes in interest rates.
29
BUSINESS
Overview
GTP is a provider of a new category of network-focused professional services
called infrastructure architecture. As infrastructure architects, we focus on
the design, implementation, security, performance and management of network
infrastructures that have become the foundation of the emerging e-business
economy. Our clients are Global 2000 enterprises such as Bear Stearns, Chase
Manhattan Bank, CK Witco, Morgan Stanley Dean Witter and Unilever,
telecommunications and Internet service providers such as UUNET, an MCI
Worldcom company, and select Internet companies such as Telemedia Accelerator.
GTP commenced operations on May 1, 1997 and at March 31, 2000 employed 209
people, 118 of whom were billable professionals. Our headquarters are in White
Plains, New York. In addition to our branches in markets serving Boston,
Hartford, New York City and Northern New Jersey, we recently opened branches
serving Baltimore, Chicago and Washington, D.C. During 2000, we plan to open
branches serving markets in Atlanta, Dallas, Denver and San Francisco as well
as two European branches. In 1999, we generated revenues of $14.2 million.
Industry Background
The tremendous recent growth of e-business has increased the importance,
complexity and size of network infrastructures. The implementation and
maintenance of these networks requires sophisticated technological skills and
focused expertise, which many businesses lack internally. E-business involves
exchanging information electronically with outside organizations for the
purposes of conducting business. Examples of e-business activities include:
. business-to-business systems such as electronic supply chains;
. customer management solutions such as customer relationship management
applications and web-enabled call centers; and
. external applications that link with outside business partners, suppliers
and customers.
Global 2000 enterprises, telecommunications and Internet service providers
and Internet companies are all actively engaged in implementing these e-
business initiatives. Forrester Research, an independent research firm,
projects that business-to-business e-commerce activities in the United States
will grow from $406 billion in 2000 to $2.7 trillion in 2004, a compound annual
growth rate of 61%.
A robust, reliable and secure network infrastructure is critical to ensure
the availability, performance and scalability of e-business applications. Many
organizations now view networks as strategic assets rather than as cost centers
and have determined that having the right networking technologies, architecting
the most effective solutions and efficiently managing those solutions has
become critical to their operations. As e-business activities become central to
companies' operations, the consequences of network disruptions become more
severe. Therefore, companies are investing additional resources to improve
network infrastructures. In addition, many companies are increasingly focusing
on their core competencies and outsourcing functions considered to be outside
of their main business, such as network operations.
We believe that a new category of professional services firms is emerging to
provide effective solutions to complex network issues. These infrastructure
architects provide network services focused
30
on infrastructure design, implementation, management and security. According to
estimates from International Data Corporation, the worldwide market for network
consulting and integration services will grow from $15.5 billion in 1999 to
$32.8 billion in 2004. We believe that infrastructure architects fill the gap
between management consulting firms, which provide e-business strategy but do
not address network infrastructures, and staff augmentation firms, which do not
provide project-based e-business solutions.
We believe that there are a limited number of professional services
companies that focus on infrastructure architecture. Large information
technology services companies such as CSC and EDS provide a broad range of
services, including technology investment strategic guidance, enterprise
business solution development, e-commerce applications and supply-chain
management. Other service providers, such as Hewlett-Packard, IBM and
Lucent/INS, are affiliated with a particular technology or product. Management
consulting firms such as Bain, Boston Consulting Group and McKinsey provide e-
business strategy services, but typically do not provide engineering expertise
to implement the required network infrastructures. Finally, Internet
professional services groups such as Proxicom, Razorfish, Scient and Viant
provide technology strategy consulting, operational process applications and
systems and application development, but typically do not focus on developing
underlying network infrastructures. We believe that a significant opportunity
exists for a service provider that delivers complex network infrastructure
architecture solutions.
The Greenwich Technology Partners Solution
We provide high quality infrastructure architecture solutions to meet our
clients' complex e-business needs. The key distinguishing elements of our
solution include:
Focus on Infrastructure Architecture. As infrastructure architects, we focus
on the design, implementation, security, performance and management of our
clients' network infrastructures. We believe that our focus on infrastructure
architecture enables us to provide better solutions to our clients.
Additionally, our focus enables us to forge a unique brand identity that
enhances our ability to establish new client relationships and attract talented
professionals.
Technology Expertise. Our expertise in complex network technology is the
cornerstone of our service offerings. This expertise enables us to deliver
sophisticated network design, integration and management services. Our
commitment to maintaining technology expertise is reflected in our investment
in attracting and retaining experienced, highly skilled professionals. We have
assembled a team of seasoned professionals that possesses in-depth knowledge in
a wide variety of advanced networking technologies, extensive field experience
and the leading industry certifications and credentials. On average, our
billable professionals have more than nine years of relevant technology
experience. We enhance the abilities of our professionals by providing them
with ongoing training and with the opportunity to work with the latest
developments in network technology. Through technical alliances with developers
of network equipment and software, we have preferred access to training,
equipment and information on advances in our alliance partners' respective
technologies.
Integrated Service Offering. We have organized our professionals into six
practice areas: performance, security, internetworking, directory services,
network management and systems engineering. Given the complex nature of our
clients' networking infrastructures, we often provide
31
customized solutions that draw upon a number of our practice areas. Our
organizational framework is designed to balance in-depth expertise in a given
practice area with the ability to provide an integrated solution. We offer our
clients multi-disciplinary teams of consultants and engineers to address the
most complex and sophisticated networking requirements in an integrated and
cost-effective fashion.
Objective Approach. As an independent consulting firm, we provide our
clients with objective, vendor-neutral recommendations. We are committed to
delivering optimal technology solutions within the context of our clients'
strategic business objectives, technology requirements and existing network
infrastructures. In order to ensure our continued ability to deliver leading
technologies to our clients, we continually evaluate new technologies and
enhance our service offerings in response to new market developments.
Proprietary NetValue Methodology. Our NetValue methodology structures our
client engagements and service delivery process. NetValue leverages the
collective experience of our consultants and engineers, and distills their
knowledge into best practices that ensure consistent, predictable, high-quality
results. We believe that optimization of network infrastructures is an ongoing
process that continues throughout the life cycle of network technologies. As
shown in the figure below, we initiate each engagement by assessing a client's
needs and reviewing its existing operating environment. We then translate the
client's business objectives into technology strategies, and plan and design
the enabling network infrastructures. We work with our clients to integrate our
recommended design improvements with their existing infrastructures and to
optimize the performance of their networks. We manage the entire delivery cycle
and provide quality assurance and post-project assessment.
[GRAPHIC]
The graphic shows four circles labeled "Assess", "Design", "Integrate" and
"Optimize", with arrows connecting the circles into a large circle around the
word "NetValue".
32
Strategy
Our goal is to become the recognized leader in providing infrastructure
architecture services to support e-business applications. To achieve this goal,
we have adopted the following strategies:
Expand Client Relationships. We intend to increase the strength of our
relationships with existing clients and to develop long-term relationships with
new clients. In addition to securing additional projects with existing clients,
we are focused on establishing new relationships with other Global 2000
enterprises, telecommunications and Internet service providers and select
Internet companies. Our goal is to become integral to the development and
ongoing implementation of our clients' network infrastructures to enable their
e-business objectives.
Attract and Retain Experienced Professionals and Expand Recruiting
Efforts. We focus on attracting and retaining experienced and talented network
technology professionals. We regularly provide our professionals the
opportunity to work on challenging and high-profile projects that involve
complex issues and leading-edge technologies. We offer our consultants and
engineers various opportunities to further develop their expertise, including
training in our lab with new technologies. We also offer competitive
compensation packages that include equity participation for all employees. As
of March 31, 2000, our recruiting team consisted of 14 full-time employees. We
will continue to expand our recruiting efforts.
Enhance our Technological Expertise. We will continue to enhance our
technological expertise to serve our clients better, and we are committed to
training and educating our professionals in leading-edge technologies. We have
developed a state-of-the-art lab in which we maintain current networking
technologies for our professionals to use for training and certification
purposes. We also have developed technical alliances with developers of network
equipment and software through which our professionals can become certified
experts in industry designations. In addition, we are investing resources in
our knowledge management systems to leverage the collective experience of our
professionals by promoting knowledge capture and transfer.
Continue to Strengthen our Service Offerings. We will continue to expand our
portfolio of service offerings in response to technological developments. For
example, we recently enhanced our service offerings to include our directory
services and voice data integration capabilities. We continue to develop new
productized service offerings, which are pre-defined, fixed-fee engagements. In
addition, we have recently hired an experienced Chief Technology Officer to
enhance our efforts in analyzing the evolving technologies and issues relating
to e-business infrastructures. We believe that our investment in expanding our
practice areas improves our ability to help our clients optimize the
performance and utility of their networks.
Bolster our Brand. We intend to raise GTP's profile and recognition as a
leader in the development of infrastructure architecture. Our professionals
speak regularly at industry conferences, host seminars and publish articles in
leading trade and business publications. We have established a public relations
program consisting of media relations and targeted communications. In addition,
we have established co-marketing campaigns with several of our technical
alliance partners. Finally, we promote our NetValue methodology as a standard,
replicable approach to achieve our clients' objectives.
33
Continue to Invest in Internal Systems. We are committed to building a
sustainable infrastructure to ensure that our ability to deliver consistent,
quality services to our clients will not be compromised as we grow. We will
continue to invest substantial resources in developing our back office support
functions, including our human resources, recruiting and administrative
staffs. We continue to invest in technology systems, applications and network
infrastructures to support our professionals.
Expand Geographically. We intend to expand our presence in our current
markets and to enter new domestic and international markets. Our decentralized
branch model, under which a particular sales and technical management team has
responsibility for the operations and profitability of each branch,
facilitates this expansion. In addition to our branches in markets serving
Boston, Hartford, New York City and Northern New Jersey, we recently opened
branches serving Baltimore, Chicago and Washington, D.C. During 2000, we plan
to open branches serving markets in Atlanta, Dallas, Denver and San Francisco
as well as two European branches. Since many of our clients are large,
geographically diverse businesses, we will continue to review opportunities to
enter new markets in response to our clients' needs.
Our Consulting and Engineering Services
Our consulting and engineering services are organized into six practice
areas: performance, security, internetworking, directory services, network
management and systems engineering. Given the complex nature of our clients'
network infrastructures, we often provide customized solutions that draw upon
a number of our practice areas. We provide objective, vendor-neutral expertise
that ensures our clients the secure, reliable, scalable and manageable network
infrastructures necessary to enable their e-business objectives.
Performance
Our performance practice area focuses on maintaining optimal performance
through the measurement, collection and analysis of network and server data.
We use sophisticated, proprietary tools and techniques to gather, organize and
warehouse this data, which subsequently may be used for a number of related
performance analysis applications, including capacity planning and network
simulation modeling.
Our network performance consultants and engineers maintain expertise in the
following areas:
. network baselining--establishes the operational performance parameters of
the current network infrastructure to use as a benchmark to evaluate the
impact of changes to the network, particularly those involving additional
investment
. capacity planning--analyzes a client's network resources to identify
bandwidth constraints to avoid performance degradation, particularly
prior to the deployment of new applications
. network simulation--creates a virtual model of a defined network
environment to test new configurations and applications prior to
deployment on the network
. performance troubleshooting--diagnoses the root cause of an application's
suboptimal performance by analyzing and isolating faults within the
network
34
Security
Our security practice focuses on protecting the confidentiality, integrity
and availability of our clients' networks and their component systems. By
translating the abstract objective of "security" into understandable terms such
as risks, costs and benefits, we enable our clients to make clear and informed
decisions regarding the protection of their networks.
Our security practice addresses challenges in the following areas:
. authorization and authentication--provides systems and devices that
support authentication and authorization of users and applications,
including secure web servers, authentication servers and public key
infrastructures, or PKIs. PKIs enable users to manage and administer the
cryptographic keys and identification certificates used to identify
users, applications and network devices
. policies, standards and guidelines--defines the levels of risk to our
clients' networks and promulgates rules and standards for the security
techniques and programs to be deployed
. security management and operations--provides for the continuous
monitoring of security controls deployed on all internal systems using
such technologies as intrusion detection and perimeter monitoring systems
. network security infrastructure--enables access control, encryption and
management, including firewalls and virtual private networks, or VPNs,
which enable users to communicate securely across a public network such
as the Internet
Internetworking
Our internetworking practice area focuses on the design and implementation
of network-enabled solutions that support our clients' geographically
distributed computing environments. Our consultants and engineers use hardware
and software to interconnect multiple, physically distributed networks into
large, uniform data communications systems. Our professionals use their
specialized technical skills and relevant industry experience to address the
challenges associated with building, integrating and operating heterogeneous
infrastructures.
Our internetworking practice area addresses challenges in the following
areas:
. packet-based routing and switching--configures network hardware devices
and their operating system software to transfer data traffic in various
formats
. network infrastructures architecture--assesses, designs and implements
network-enabled distributed computing environments and communications
systems
. remote access--provides secure, high-performance remote access and VPN
solutions for our clients and their geographically distributed employees,
supply-chain and other business associates
. voice, video and data integration--supports the convergence of all
traffic to a digital format providing for transport over enterprise-based
intranets and the public Internet
35
Directory Services
Our directory services practice area focuses on enabling our clients to more
effectively control and manage information regarding their networked users and
resources. Directories are databases that store information about network
applications, users and devices. Directories are critical in enhancing access
to network resources, ensuring security and managing infrastructure, all of
which lower costs and increase reliability and functionality. Our directory
services practice area enables our clients to design, implement and manage
their directories. We believe that an effective directory design is essential
for the complex e-business applications that our clients are planning and
implementing.
Our directory services practice area specializes in the following:
. naming and addressing schema--creates a detailed definition of network
elements, users and resources and key attributes
. application integration--integrates critical applications such as
messaging, groupware and web services into the selected directory
. network impact assessment--ensures current and planned local and wide-
area networks and network operating systems will optimally support the
new directory design
. policy and procedure definition--develops the structural, behavioral and
functional relationships between applications and network devices, and
defines rights and privileges of individual users
. security integration--integrates security functionality, such as
identification certificates, simplified sign-on procedures and VPNs
Network Management
Our network management practice encompasses the operation, monitoring,
maintenance and measurement of large-scale, highly complex networks. We design,
implement and customize network management systems that provide network traffic
control, data collection, analysis and reporting services. These systems
translate network data into useable information that enables our clients to
manage their networks proactively. We institute operational processes that
allow our clients to identify, isolate, resolve and prevent network failures.
Our network management practice addresses challenges in the following areas:
. instrumentation and monitoring--designs and implements solutions to
collect, store and analyze network traffic data
. configuration management--provides the processes needed to store, update,
distribute and document network device configurations
. fault management--detects, diagnoses and corrects network performance
degradation and failure resulting from hardware or software issues
. change management--plans, tracks and documents changes to the network
infrastructures and associated management systems
. accounting management--measures network traffic, data collection and
storage, and analyzes bandwidth utilization which enables the client to
allocate costs based on usage
36
Systems Engineering
Our systems engineering practice area provides comprehensive design and
integration services for our clients' distributed computing environments. Our
systems engineering professionals also develop and implement voice-enhanced
messaging applications to provide integrated voice and data solutions. The
focus of this practice area is on the processing and storage hardware and
operating system software that enable services such as e-business applications.
Our systems engineering practice addresses the following areas:
. systems infrastructure engineering--translates system availability and
scalability requirements into hardware and software specifications and
integrates web and application server systems into new or existing
computing environments
. systems administration--institutionalizes formal operating policies and
procedures and focuses on technical issues such as addressing and domain
management
. data management--addresses data availability and integrity issues,
including storage area networks and disaster prevention and recovery
programs
. data processing architecture--focuses on operating platforms, application
hosting, load balancing and server clusters
. messaging--develops and implements unified messaging systems that enhance
e-mail and messaging infrastructure with voice and fax capabilities
Productized Services
We have formulated standardized service offerings to address commonly
recurring network infrastructure needs. These productized services are
distinguished by pre-defined delivery and pricing structures and are replicable
across a wide variety of industries. Our productized services offer our sales
force an opportunity to market an easily understood, fixed-fee project to
potential clients. Furthermore, our productized services can be priced based on
the value offered to the client, rather than on the cost of providing the
service.
Our productized services currently consist of:
Internetwork Assessment
This productized solution involves an evaluation of the client's existing
network topology, including: WAN and LAN environments, naming, addressing,
routing, switching, performance, capacity, connectivity, redundancy and
management considerations. The report we generate from our assessment enables
the client to understand the performance and reliability of its network,
provides specific recommendations for improvements to the network and analyzes
the benefits that can be achieved through the recommended improvements.
Security Assessment
This assessment analyzes the security controls on our clients' Internet-
visible networks, including network devices, firewalls, applications and
servers, and documents vulnerabilities to
37
external Internet-based assaults and intrusions. In addition, our report
explains how these vulnerabilities expose the client to service interruptions
and financial risks. We provide a prioritized set of recommendations for
reducing or eliminating identified vulnerabilities.
Virtual CIO
Through our virtual CIO service offering, one or more of our most senior
professionals provides high-level, strategic advice to help a client utilize
network-based technologies to leverage its existing competencies and business
model. After thoroughly analyzing the client's operating processes and legacy
technology assets, the virtual CIO uses our proprietary NetValue methodology to
develop solutions to meet the client's e-business objectives. The virtual CIO
then manages the implementation of these recommendations, often employing GTP
expertise and resources.
Usage-Based Cost Recovery
This service utilizes sophisticated hardware and software to generate
individual user bills that accurately reflect the utilization of network
resources. Our report details how, when, where and by whom network resources
are consumed. We collaborate with our clients to create an internal billing
policy for the allocation of costs associated with providing network bandwidth
and services consistent with the client's business objectives, ultimately
producing usage-based bills for each user on the network.
Thin-Client Enterprise Solution
Ensuring that application software is correctly configured, inventoried,
licensed, secured and managed has become a logistical challenge that consumes
an increasing amount of our clients' IT resources. In addition, many
client/server-based applications have not been optimized for utilization across
distributed networks. Our thin-client enterprise solution redesigns our
clients' systems architecture to provide centralized application services and
management. This centralization reduces administrative costs and challenges,
and improves application performance on LANs, WANs and remote access networks.
Voice-Enhanced Messaging
With this offering, GTP integrates voice and fax message-handling
capabilities into a client's e-mail platform. Once implemented, users can log
into an e-mail system and receive e-mail, voice mail and faxes through a
graphical user interface. Similarly, users can log into voice mail and get
access to e-mail and faxes through a telephone.
Windows 2000 Readiness Assessment
Microsoft's new Windows 2000 is a complex and feature-rich product,
including areas of high-availability, remote access, security, networking,
directory and administration services. However, many of our client's
environments are not currently configured to allow a seamless migration to
Windows 2000. In order to manage this migration risk, our consultants and
engineers evaluate all critical functional areas in our clients' environments.
The resulting report both details the client's readiness to migrate and
provides guidance on the use of new Windows 2000 features to achieve
operational objectives.
38
Technical Alliances
Our service offerings are enhanced through technical alliances with or
certifications by network equipment and software manufacturers. These technical
alliances and certifications help us maintain technical leadership in network
infrastructures. We define technical alliances as mutually beneficial
relationships between ourselves and other organizations that include mutual
investments of resources such as time, people and money. Significant benefits
we derive from our technical alliances include enhanced expertise with popular
products, certification in a valuable technical area, an increased ability to
deploy end-to-end solutions, greater name recognition in the marketplace and
enhanced lead and revenue generation.
We undertake a comprehensive review of potential technical alliance partners
before entering into a technical alliance. We target partners that have
leading-edge technology, are aligned with GTP core competencies, have products
that require substantial professional services and can provide us access to new
client engagements.
Clients
We provide our services to a variety of clients across a variety of
industries. During the first quarter of 2000, we had active engagements with 76
clients. In 1999, CK Witco and Bear Stearns accounted for 18% and 11% of our
total revenues, respectively, and in 1998, Unilever and CK Witco accounted for
39% and 14% of our total revenues, respectively. In 1999 and 1998, our five
largest clients represented 51% and 68% of our total revenues, respectively.
Our clients include:
AIG E-commerce Solutions Phillips Group
Bear Stearns ESPN Sony Corporation
Boston Consulting Fleet Financial Starwood
Group GTECH Corporation St. John's University
Bristol Myers Squibb Guardian Life Insurance Telemedia Accelerator
Chase Manhattan Bank LivePerson Time Warner
CIT Group Maimonides Medical Unilever
Citizens Bank MCI Worldcom University of
Citizens Utilities Morgan Stanley Dean Witter Connecticut Health
CK Witco Corporation NASDAQ Stock Market Systems
Credit Suisse First Outpost.com UUNET
Boston Wellington Management
Dayton Hudson
Dow Jones
Representative Client Case Study
A Large Financial Services Company
Challenge: A large financial services company was alerted to possible
discrepancies between its security policies and current best practices, which
could have resulted in unauthorized access to the client's network.
Solution: A team of GTP security experts utilized our packaged security
assessment to analyze the client's security posture. We assessed the client's
policies and guidelines for its network infrastructure and compared them to the
actual network configurations. We analyzed internal and external detection
systems, and evaluated escalation and contingency planning procedures. As a
result
39
of this analysis, our security team compiled a report detailing our findings,
identifying methods to improve the client's procedural, operational,
organizational, physical and technical plan. Additionally, this report
identified and prioritized recommended remediation procedures.
Result: We provided a full risk assessment and quantified the potential
impact on the client's business. Following this analysis, GTP implemented the
recommended policy changes and reconfigured the client's network to improve its
security.
Sales and Marketing
We have a sales and marketing team of 21 full-time professionals focused on
pursuing Global 2000 enterprises, telecommunications and Internet service
providers and Internet companies. We are continuing to expand our staff as we
open new locations and intensify our efforts toward particular industries. To
support our direct sales force, we have invested in, and will continue to
invest in, a wide range of training, sales lead generation, sales tracking and
contact management tools. Additionally, we support our direct sales efforts
with telemarketing campaigns to identify new business opportunities in new
markets. We complement our direct sales efforts with indirect sales leads
generated by our technical alliance affiliates, our clients and our advisory
board.
Our marketing efforts include ongoing public relations initiatives focused
on industry and general business publications. In addition, we have conducted
focused network technology seminars for industry constituents and we
participate in a wide range of technology events. Furthermore, we intend to
improve recognition of GTP as a leading provider of infrastructure architecture
through targeted marketing efforts.
Competition
The technology consulting industry is comprised of many participants, is
highly competitive and is subject to rapid technological change. Many of our
competitors or potential competitors have greater name recognition, longer
operating histories, more relationships with large and established clients and
greater financial, technical and managerial resources. Furthermore, we expect
that our competitors may in the future form alliances with other technology
vendors, which may give them an advantage in managing networks that use that
vendor's equipment.
We believe that our most direct competitors are other infrastructure
architects, such as Predictive Systems. Other competitors include large
information technology services firms and affiliates of product or technology
firms. Potential competitors include Internet professional services firms if
they decide to extend their capabilities in this area. In addition, most of our
current clients and prospective clients have internal information technology
departments and, if they are able to attract and retain qualified personnel,
could choose to satisfy their network management needs through internal
resources rather than by outsourcing them to third-party service providers such
as ourselves. The decision by clients or prospective clients to rely on their
own information technology departments could have a material adverse effect on
our business, results of operations and financial condition. Moreover, as the
domestic and global markets for infrastructure architecture services to
continue to grow, we expect to face competition from new entrants.
40
We believe that the principal competitive factors in the infrastructure
architecture market are the quality and breadth of services offered, the
ability to attract and retain qualified personnel, a focus on providing
infrastructure architecture, price and reliability of services provided and the
strength of client relationships. We believe we compete favorably with respect
to all of these factors.
Proprietary Rights
We regard our trade secrets and other intellectual property as critical to
our success. Unauthorized use of our intellectual property by third parties may
damage our brand and our reputation. We rely on trademark law and trade secret
protection and confidentiality and/or license and other agreements with our
employees, clients, partners and others to protect our intellectual property
rights. However, we do not have any patents or patent applications pending or
any registered copyrights, and existing trade secret and trademark laws afford
us only limited protection. Despite our precautions, it may be possible for
third parties to obtain and use our intellectual property without our
authorization. Furthermore, the validity, enforceability and scope of
protection of intellectual property in Internet-related industries is uncertain
and still evolving. The laws of some foreign countries are also uncertain or do
not protect intellectual property rights to the same extent as do the laws of
the United States.
Employees
At March 31, 2000, we had a total of 209 employees of whom 118 were billable
professionals. None of our employees is represented by a labor union. We have
not experienced any work stoppages, and we consider relations with our
employees to be satisfactory. Competition for qualified personnel in our
industry is intense. We believe that we will need to continue to attract, hire
and retain qualified personnel to be successful in the future.
Locations
We currently lease approximately 29,400 square feet of space at our
headquarters in White Plains, New York. We also lease office space in Andover,
MA; Chantilly, VA; Chicago, IL; Columbia, MD; East Berlin, CT; New York City;
and Parsippany, NJ.
We believe that our existing facilities are adequate for our current needs
and that additional space will be available as needed.
Legal Proceedings
We are not presently a party to any material legal proceedings.
41
MANAGEMENT
The following table contains information with respect to the directors and
executive officers of Greenwich Technology Partners and their ages and
positions as of April 11, 2000.
Name Age Position
- ---- --- --------
Joseph P. Beninati............. 36 Chief Executive Officer, President and Chairman of
the Board
Dennis M. Goett................ 51 Senior Vice President, Chief Financial Officer,
Treasurer and Director
Richard Haverly................ 51 Senior Vice President Operations
Johna Till Johnson............. 35 Senior Vice President and Chief Technology Officer
John Stopper................... 46 Senior Vice President Sales and Marketing
Ronald V. Davis(2)............. 53 Director
Edmund A. Hajim(1)............. 63 Director
Jonathan R. Lynch(1)(2)........ 32 Director
William Jefferson Marshall(2).. 43 Director
David H.W. Turner(1)........... 41 Director
- --------
(1) Member of the audit committee.
(2) Member of the compensation committee.
Joseph P. Beninati founded Greenwich Technology Partners in May 1997 and has
served as Chief Executive Officer, President and Chairman of the Board since
that time. From 1992 through 1995, Mr. Beninati was at Telos Corporation, a
large technical services government contractor, where he served initially as
Chief Financial Officer from February 1992 through December 1993 and as
Chairman of the Board from January 1994 to January 1995. In February 1995, Mr.
Beninati co-founded Antares Investment Partners. Mr. Beninati has a B.A. from
Middlebury College.
Dennis M. Goett has been Senior Vice President, Chief Financial Officer,
Treasurer and director of GTP since December 1998. From February 1996 until
February 1998, Mr. Goett served as Chief Financial Officer of Claremont
Technology Group, an information technology services firm. Since February 1998,
Mr. Goett has been the sole shareholder and President of CrossRoads Strategy
Group, Inc., a private consulting services firm. In 1989, Mr. Goett founded
Gabriel Partners, a financial and management consulting company, and served as
its President until January 1996. Mr. Goett has a B.A. from Fordham University.
Richard Haverly joined GTP in January 2000 as Senior Vice President
Operations. Before joining GTP, Mr. Haverly was a Partner at Andersen
Consulting from September 1980 until November 1999. Mr. Haverly joined Andersen
Consulting in 1970 and, in addition to his duties as a Partner, served as a
Quality Assurance Partner for various engagements starting in 1991. Mr. Haverly
has a B.S. from Rensselaer Polytechnic Institute.
Johna Till Johnson has served as Senior Vice President and Chief Technology
Officer since April 2000. From September 1996 through March 2000, Ms. Johnson
served as Vice President and Director of the Global Networking Strategy Service
of META Group, Inc., a technology advisory firm. From 1990 until September
1996, Ms. Johnson served in various capacities at Data Communications Magazine,
most recently as Senior Technology Editor, where she oversaw the lab testing
program. Ms. Johnson has a B.S. in electrical engineering and computer science
from The John Hopkins University and performed graduate work at the University
of Rochester.
42
John Stopper joined GTP in August 1999 and has served as Senior Vice
President Sales and Marketing since that time. Prior to joining GTP, Mr.
Stopper served from September 1997 until June 1999 as a vice president and
member of the worldwide management board of James Martin & Company, an IT
consulting firm. Prior to that time, Mr. Stopper founded the eastern division
of Paranet, a network consulting firm, where he served as Division Manager from
June 1995 until September 1997. Mr. Stopper has a B.A. from Wheeling Jesuit
University and has performed graduate work at the University of Bridgeport.
Ronald V. Davis has served as a director since December 1997. Mr. Davis has
served as the Chairman of Davis Capital, L.L.C., an investment firm, since
January 1994. Mr. Davis served as a President of Reid Plastics from December
1998 until July 1999, and has served as Chairman of the Executive Committee of
Consolidated Container Corporation since July 1999. Previously, Mr. Davis
founded the Perrier Group of America and served as its Chief Executive Officer
from October 1979 until January 1994. Mr. Davis is a member of the board of
directors of Celestial Seasonings and Consolidated Container Company. Mr. Davis
has a B.A. from California State University, Fullerton and an M.B.A. from the
University of Southern California.
Edmund A. Hajim has served as a director since October 1998. He has served
as Co-Chairman and Chief Executive Officer of ING Furman Selz Asset Management,
a division of ING Group, since July 1998. In addition, Mr. Hajim was Co-
Chairman of ING Barings, Americas Region, from December 1997 until February
1999. From October 1983 until December 1997, he served as Chairman and Chief
Executive Officer of Furman Selz LLC. Mr. Hajim is also a director of Tosco
Corporation and NFO Worldwide, Inc. Mr. Hajim has a B.S. from the University of
Rochester and an M.B.A. with distinction from the Harvard Business School.
Jonathan R. Lynch has served as a director since September 1999. He has
served as a Principal at Chase Capital Partners, a private equity fund, since
January 1997 and oversees the Information Technology Services Practice. Prior
to becoming a Principal, Mr. Lynch was an associate at Chase from August 1993
until January 1997. He has a B.S. from Georgetown University and an M.B.A. from
the Harvard Business School.
William Jefferson Marshall has served as a director since February 1999. He
has served as a Partner of VantagePoint Venture Partners, a venture capital
firm, since January 1998 and as a Senior Advisor to VantagePoint from January
1996 until December 1997. Prior to that time, he served as Senior Managing
Director, Chief Technology Officer and head of the Communications Technologies
Group at Bear Stearns from 1985 until 1996. Mr. Marshall has a B.S. from New
York University and completed the Harvard Management Program.
David H.W. Turner has served as a director since March 2000. He has served
as the Executive Vice President of Reuters America Holdings, Inc. since January
1995 and as the Chief Financial Officer of Reuterspace since January 2000. From
January 1999 until December 1999, Mr. Turner served as the Commercial Director
for Reuters Information. Mr. Turner also served as the Chief Financial Officer
for Reuters America from January 1996 to January 1999. Mr. Turner has a B.Sc.
with Honors, from Saint Andrews University in Scotland.
43
Composition of the Board
Prior to the closing of this offering, we intend to file a revised
certificate of incorporation pursuant to which our board of directors will be
divided into three classes, each of whose members will serve for a staggered
three-year term. Upon the expiration of the term of a class of directors,
directors for that class will be elected for three-year terms at the annual
meeting of stockholders in the year in which their term expires. Our board of
directors has resolved that William Jefferson Marshall and Ronald V. Davis will
be Class I Directors whose terms expire at the 2001 annual meeting of
stockholders, Dennis M. Goett and Edmund A. Hajim will be Class II Directors
whose terms expire at the 2002 annual meeting of stockholders and Joseph P.
Beninati, David H.W. Turner and Jonathan R. Lynch will be Class III Directors
whose terms expire at the 2003 annual meeting of stockholders.
Board Committees
The Audit Committee of the board of directors will review, act on and report
to the board of directors with respect to various auditing and accounting
matters, including the recommendation of our auditors, the scope of the annual
audits, fees to be paid to the auditors, the performance of our independent
auditors and our accounting practices. Messrs. Turner, Hajim and Lynch are
members of the Audit Committee.
The board of directors has a Compensation Committee consisting of Messrs.
Marshall, Lynch and Davis. The Compensation Committee was created in August
1999. The Compensation Committee will recommend, review and oversee the
salaries, benefits and stock option plans for our employees, consultants,
directors and other individuals whom we compensate. The Compensation Committee
will also administer our compensation plans.
Compensation Committee Interlocks and Insider Participation
No member of the Compensation Committee serves as a member of the board of
directors or compensation committee of any entity that has one or more
executive officers serving as a member of Greenwich Technology Partners' board
of directors or Compensation Committee.
Director Compensation
Directors who are also employees of GTP receive no additional compensation
for their services as directors. Directors who are not employees of GTP will
not receive a fee for attendance at meetings of the board of directors or
committees of the board of directors, but they will be reimbursed for travel
expenses and other out-of-pocket costs incurred in connection with their
attendance at meetings. Pursuant to our 2000 Stock Option and Incentive Plan,
non-employee directors will be granted an option to purchase 25,000 shares of
common stock upon initial election to the board of directors, and an option to
purchase 10,000 shares of common stock upon each subsequent re-election to the
board of directors. The options will vest quarterly over two years.
44
Advisory Board
GTP has also created an informal advisory board. The advisory board's
purposes include assisting GTP with business development and providing counsel
and advice on technology and other business matters to GTP senior management.
The board of directors appoints new members to the advisory board and grants
the new members options to purchase shares of common stock. Existing advisory
board members have each been granted an option to purchase 10,000 shares of
common stock at an exercise price of $0.60 per share. The option grants vest
based on the individual member's attendance at advisory board meetings. The
current members of the advisory board are:
. James P. Cabrera, Managing Partner, Antares Investment Partners
. Kevin McGilloway, CIO and Managing Director, Lehman Brothers
. Graham Albutt, President of Reuters Trading Systems, Reuters America
Holdings Inc.
. Robert Garbarino, Senior Managing Director, Bear Stearns
. Stephen B. Siegel, Chairman and CEO, Insignia/ESG, Inc.
. Clint Heiden, President, Onlineofficesupplies.com
. Pablo Tapia, President and Founder, Apogee Networks, Inc.
. Jeffrey G. Dishner, Managing Director, Starwood Capital Group, LLC
. Anthony M. Carvette, President, StructureTone Inc.
. Joseph A. Cabrera, Executive Managing Director, Insignia/ESG, Inc.
. Greg Berger, President and CEO, Colin Services Systems, Inc.
. Terry Williams, President, T. Williams Consulting, Inc.
Employment Agreements and Severance Arrangements
On December 9, 1997, GTP entered into an employment agreement with Joseph P.
Beninati, GTP's Chief Executive Officer, President and Chairman. The initial
term of the agreement extends until December 31, 2002. The agreement will renew
automatically every year thereafter, unless GTP or Mr. Beninati gives notice of
termination ninety days prior to the end of the initial term or ninety days
prior to the end of any other successive yearly term. In addition, this
employment agreement will terminate automatically if GTP sells substantially
all of its assets, consolidates or merges with another company, dissolves or
liquidates, or upon the public offering of common stock at a price of at least
$5.00 per share and gross proceeds to GTP of at least $10.0 million. The
agreement provides for the payment of salary and of bonuses as GTP may
determine from time to time. The agreement contains a covenant by Mr. Beninati
not to compete with GTP during his employment with us or for three years after
his employment with us ends. GTP may increase Mr. Beninati's annual salary. At
February 1, 2000, Mr. Beninati's annual salary was $270,000. The employment
agreement provides for other benefits to Mr. Beninati including the payment of
finance payments for an automobile Mr. Beninati uses. The employment agreement
does not contain severance provisions.
45
On December 1, 1998, GTP and Dennis M. Goett, GTP's Senior Vice President,
Chief Financial Officer and Treasurer entered into an employment letter
providing for the terms of Mr. Goett's employment with GTP at a salary of
$100,000 for the first year and $200,000 for the second year. Thereafter, Mr.
Goett's salary will be increased by a percentage equal to the consumer price
index for the New York metropolitan area. At February 1, 1999, Mr. Goett's
annual salary was $200,000. Mr. Goett's employment letter also provides for
reimbursement for car expenses and participation in a bonus plan. Mr. Goett's
employment letter also provides that he will be entitled to receive three
months of salary and benefits if his employment with GTP is terminated without
cause. In connection with his employment, Mr. Goett was issued options to
purchase 500,000 shares of common stock on December 1, 1998 that will vest over
a period ending on December 1, 2001. The corresponding stock option agreement
provides that any unvested options will vest in full upon the acquisition or
initial public offering of GTP or in the event GTP terminates Mr. Goett without
cause. In addition, any unvested shares vest in full upon the termination,
resignation or any other event resulting in Mr. Beninati no longer holding the
full-time position of Chief Executive Officer of GTP. Mr. Goett's employment
letter also states that GTP will issue immediately exercisable options to
purchase up to 33,333 shares of common stock on each of the first three
anniversaries of his employment. Mr. Goett has received additional stock option
awards since December 1, 1998. The employment letter also contains a covenant
by Mr. Goett not to compete with GTP during his employment and for a period of
one year after his employment with GTP ends.
On October 1, 1999, GTP and John Stopper, GTP's Senior Vice President Sales
and Marketing, entered into an employment letter providing for the terms of Mr.
Stopper's employment with GTP at an initial salary of $150,000. At February 1,
2000, Mr. Stopper's annual salary was $150,000. Mr. Stopper's employment letter
also provides for participation in a bonus plan. In connection with his
employment, Mr. Stopper was granted options to purchase 168,600 shares of
common stock. In addition, in 2000 Mr. Stopper also received 112,400 options to
purchase shares of common stock. If, following a change of control of GTP, Mr.
Stopper is terminated without cause within twelve months of starting his
employment with GTP, options to purchase 70,250 shares of common stock will
automatically vest and, in any event, at least 25% of the options granted to
Mr. Stopper will vest. If, following a change in control, Mr. Stopper is
terminated without cause within six months of starting his employment, he will
be entitled to six months' severance pay; if he has been with GTP between six
and twelve months, he will be entitled to nine months' severance pay; and, if
he has been with GTP over twelve months, he will be entitled to twelve months'
severance pay. The employment letter also contains a covenant by Mr. Stopper
not to compete with GTP during his employment and for a period of one year
after his employment with GTP ends.
On January 26, 2000, GTP and Richard Haverly, GTP's Senior Vice President
Operations, entered into an employment letter providing for the terms of Mr.
Haverly's employment with GTP at an initial base salary of $150,000. Mr.
Haverly's employment letter provides for a car allowance and participation in a
bonus plan. Mr. Haverly also was granted options to purchase up to 300,000
shares of common stock. Pursuant to Mr. Haverly's employment letter, if his
employment with GTP is terminated without cause or if Mr. Haverly cannot
continue his employment due to his death or permanent disability prior to his
first anniversary of employment with GTP, 25% of his options automatically will
vest. The employment letter contains a covenant by Mr. Haverly not to compete
with GTP during his employment and for a period of one year after his
employment with GTP ends.
46
Prior to, but in anticipation of, Mr. Haverly's employment with GTP, GTP
allowed Mr. Haverly to purchase 100,000 shares of its series E preferred stock
at $2.11 per share.
On March 13, 2000, GTP and Johna Till Johnson, GTP's Senior Vice President
and Chief Technology Officer, entered into an employment letter providing for
the terms of Ms. Johnson's employment with GTP at an initial base salary of
$150,000. Ms. Johnson will receive a yearly bonus of $12,500 with an additional
bonus of up to $50,000 based on merit. Ms. Johnson's employment letter also
provides for a computer allowance of $2,000 per year. Ms. Johnson was granted
an option to purchase 125,000 shares of common stock. If Ms. Johnson's
employment with GTP is terminated without cause or if Ms. Johnson resigns her
position with GTP for cause prior to her first anniversary with GTP, then 25%
of the options granted to her will automatically vest. The employment letter
also contains a covenant by Ms. Johnson not to compete with GTP during her
employment and for a period of ninety days after her employment with GTP ends.
Executive Compensation
The following table contains information concerning all compensation paid by
GTP during 1999 to our CEO and our two other most highly compensated executive
officers.
Annual Compensation
--------------------
Name and All Other
Principal Position Salary Bonus Securities Underlying Options Compensation(1)
------------------ ---------- --------- ----------------------------- ---------------
Joseph P. Beninati...... $ 250,375 -- 25,000 $8,748
Chief Executive Officer
Dennis M. Goett(2)...... 108,333 -- 108,333 3,356
Chief Financial Officer
John Stopper(3)......... 61,875 $ 62,500 168,600 --
Senior Vice President
Sales and Marketing
- --------
(1) These amounts consist of car allowances and 401(k) plan contributions.
(2) Mr. Goett joined GTP on December 1, 1998. Mr. Goett was paid his salary and
car allowance for December 1998 in February 1999.
(3) Mr. Stopper joined GTP in August of 1999 and did not receive salary prior
to that date.
47
Option Grants in 1999
The following table sets forth information regarding grants of stock options
for the year ended December 31, 1999 to our Chief Executive Officer and to each
executive officer named in the Summary Compensation Table. All options were
granted pursuant to our 1997 Stock Plan. We have never granted stock
appreciation rights. The percentage of total options granted to employees in
the last fiscal year is based on options to purchase an aggregate of 2,659,375
shares of common stock granted under our option plans.
Individual Grants(1)
------------------------------------------
Potential Realizable
% of Total Value At Assumed
Number of Options Annual Rates of Stock
Securities Granted to Price Appreciation
Underlying Employees Exercise For Option Term(2)
Options in Fiscal Price Per Expiration ----------------------
Name Granted Year Share Date 5% 10%
- ---- ---------- ---------- --------- ---------- ---------- -----------
Joseph P. Beninati(3)... 25,000 * $0.30 8/24/09 $ 4,750 $ 12,000
Dennis M. Goett(4)...... 50,000 1.9% 0.30 2/1/09 9,500 24,000
Dennis M. Goett(3)...... 25,000 * 0.30 8/24/09 4,750 12,000
Dennis M. Goett(4)...... 33,333 1.3 0.60 12/2/09 12,667 32,000
John Stopper(5)......... 145,000 5.5 0.30 8/24/09 27,550 69,600
John Stopper(5)......... 23,600 * 0.60 12/2/09 8,968 22,656
- --------
* Less than 1%.
(1) Each option represents the right to purchase one share of common stock.
This table does not reflect GTP's grant of an option to purchase common
stock on February 15, 2000 to Dennis Goett for 66,667 shares. 33,333 of
these options vest on December 1, 2000 and 33,334 vest on December 1, 2001.
(2) Amounts represent hypothetical gains that could be achieved for the
respective options if exercised at the end of the option term. The 5% and
10% assumed annual rates of compounded stock price appreciation are
mandated by rules of the Securities and Exchange Commission and do not
represent our estimate or projection of our future common stock prices.
These amounts represent certain assumed rates of appreciation in the value
of our common stock from the fair market value on the date of grant. Actual
gains, if any, on stock option exercises depend on the future performance
of the common stock. The amounts reflected in the table may not necessarily
be achieved.
(3) These options vest according to the following schedule: 12.5% of the
options vest at the end of each calendar quarter over a two-year period
beginning with the quarter ending on September 30, 1999.
(4) These options were immediately exercisable upon grant.
(5) These options vest according to the following schedule: 25% on the options
vest August 3, 2000, with an additional 2.08% of the option grant vesting
each month after that for 36 consecutive months.
48
Aggregated Option Exercises in Fiscal 1999 and Fiscal Year-End Option Values
The following table provides certain summary information concerning stock
options held as of December 31, 1999 by each of the named executive officers.
The value of unexercised in-the-money options at December 31, 1999, is based on
$ per share, the assumed fair market value of the common stock at December
31, 1999, less the exercise price of the share.
Number of Securities
Underlying Options Value of Unexercised
Unexercised In-the-Money Options
Shares at December 31, 1999 at December 31, 1999(1)
Acquired on Value ------------------------- -------------------------
Name Exercise Realized ($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------ ----------- ------------- ----------- -------------
Joseph P. Beninati...... -- 6,250 18,750 $ $
Dennis M. Goett......... 256,250 -- 352,083
John Stopper............ -- -- 168,600
- --------
(1) There was no public trading market for the common stock as of December 31,
1999. Accordingly, these values have been calculated on the basis of the
initial public offering price $ per share, less the applicable exercise
price per share, multiplied by the number of shares underlying such
options.
Stock Option Plans
2000 Stock Option and Incentive Plan
GTP's 2000 Stock Option and Incentive Plan was adopted by the board of
directors in April 2000 and approved by GTP's stockholders in , 2000, to be
effective upon the closing of this offering. The 2000 Stock Option and
Incentive Plan provides for the grant of stock-based awards to employees,
officers and directors of, and consultants or advisors to, GTP. Under the 2000
Stock Option and Incentive Plan, GTP may grant options that are intended to
qualify as incentive stock options within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended, options not intended to qualify as
incentive stock options, restricted stock and other stock-based awards.
Incentive stock options may be granted only to employees of GTP. A total of
6,000,000 shares of common stock may be issued upon the exercise of options or
other awards granted under the 2000 Stock Option and Incentive Plan after the
completion of this offering. The maximum number of shares with respect to which
awards may be granted to any employee under the 2000 Stock Option and Incentive
Plan may not exceed 1,000,000 shares of common stock during any calendar year.
The 2000 Stock Option and Incentive Plan is administered by the board of
directors and the compensation committee. Subject to the provisions of the 2000
Stock Option and Incentive Plan, each of the board of directors and the
compensation committee has the authority to select the persons to whom awards
are granted and to determine the terms of each award, including the number of
shares of common stock subject to the award. Payment of the exercise price of
an award may be made in cash, shares of common stock, a combination of cash and
stock, a promissory note, or by any other method approved by the board or
compensation committee, consistent with Section 422 of the Internal Revenue
Code and Rule 16b-3 under the Securities Exchange Act of 1934. Unless otherwise
permitted by the board of directors, awards are not assignable or transferable
except by will or the laws of descent and distribution, and, during the
participant's lifetime, may be exercised only by the participant.
49
The board of directors or compensation committee may, in its sole
discretion, amend, modify or terminate any award granted or made under the 2000
Stock Option and Incentive Plan, so long as the amendment, modification or
termination would not materially and adversely affect the participant. The
board of directors or compensation committee may also, in its sole discretion,
accelerate or extend the date on which any options granted under the 2000 Stock
Option and Incentive Plan may be exercised.
1997 Stock Plan
Our 1997 Stock Plan was adopted by the board of directors and approved by
our stockholders on May 1, 1997. We have authorized 9,150,000 shares of common
stock for issuance under this plan. We are authorized to grant to our employees
options to purchase common stock intended to qualify as incentive stock options
under Section 422 of the Internal Revenue Code. In addition, we are authorized
to grant non-qualified stock option to purchase shares of common stock to
employees, consultants and directors. In general, options granted pursuant to
the 1997 Stock Plan are exercisable within ten years of the original grant
date. The board of directors has the discretion to make each option immediately
exercisable or exercisable in installments. Options are not assignable or
transferable except by will or the laws of descent or distribution. As of April
11, 2000, an aggregate of 6,144,978 shares of common stock at a weighted
average price of $0.49 per share were outstanding under the 1997 Stock Plan. No
additional option grants will be made under the 1997 Stock Plan following this
offering.
2000 Employee Stock Purchase Plan
The 2000 Employee Stock Purchase Plan was adopted by the board of directors
in April 2000 and approved by GTP's stockholders in , 2000, to be effective
upon the closing of this offering. The 2000 Employee Stock Purchase Plan
provides for the issuance of a maximum of 850,000 shares of common stock.
The 2000 Employee Stock Purchase Plan is administered by the Compensation
Committee of the board of directors. All employees of GTP whose customary
employment is for more than 32 hours per week and for more than six months in
any calendar year and who have completed more than three months of employment
with GTP on or before the first day of any six-month payment period are
eligible to participate in the 2000 Employee Stock Purchase Plan. Employees who
would own 5% or more of the total combined voting power or value of GTP's stock
immediately after the grant may not participate in the 2000 Employee Stock
Purchase Plan. To participate in the 2000 Employee Stock Purchase Plan, an
employee must authorize GTP to deduct an amount (not less than 1% nor more than
10% of a participant's total cash compensation) from his or her pay during six-
month pay periods. The first payment period will commence following this
offering or a date determined by the board of directors and will end on March
31, 2001. Thereafter, the payment periods will commence on the six-month
periods commencing on July 1 and January 1, respectively, and ending on the
following December 31 and June 30, respectively, of each year, but in no case
will an employee be entitled to purchase more than 1,000 shares in any one
payment period. The exercise price for the option granted in each payment
period is 85% of the lesser of the average market price of the common stock on
the first or last business day of the payment period, in either event rounded
up to the nearest cent to avoid fractions of a dollar other than 1/4, 1/2 and
3/4. If an employee is not a
50
participant on the last day of the payment period, the employee is not entitled
to exercise his or her option and the amount of his or her accumulated payroll
deductions will be refunded. Options granted under the 2000 Employee Stock
Purchase Plan may not be transferred or assigned. An employee's rights under
the 2000 Employee Stock Purchase Plan terminate upon his or her voluntary
withdrawal from the plan at any time or upon termination of employment. No
options have been granted to date under the 2000 Employee Stock Purchase Plan.
401(k) Plan
GTP has established a tax-qualified employee savings and retirement plan.
Employees must complete two months of service at GTP before they are eligible
to participate on the first day of the month following completion. Employees
may contribute a percentage of their pre-tax compensation and GTP may, in its
discretion from year-to-year, make matching contributions to employees. Amounts
matched by GTP vest over four years.
Limitation of Liability and Indemnification Matters
GTP's amended and restated certificate of incorporation and by-laws provide
that the directors and officers of GTP shall be indemnified by GTP to the
fullest extent permitted by Delaware law, as it now exists or may in the future
be amended, against all expenses and liabilities reasonably incurred in
connection with their service for or on behalf of GTP. In addition, the amended
and restated certificate of incorporation provides that the directors of GTP
will not be personally liable for monetary damages to GTP for breaches of their
fiduciary duty as directors, unless they violated their duty of loyalty to GTP
or its stockholders, acted in bad faith, knowingly or intentionally violated
the law, authorized illegal dividends or redemptions or derived an improper
personal benefit from their action as directors. GTP intends to obtain
insurance which insures the directors and officers of GTP against certain
losses and which insures GTP against certain of its obligations to indemnify
its directors and officers.
51
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We believe that all of the transactions set forth below were made on terms
no less favorable to us than could have been obtained from unaffiliated third
parties. We intend that all future transactions, including loans between us and
our officers, directors, principal stockholders and their affiliates will be
approved by a majority of the board of directors, including a majority of the
independent and disinterested members of the board of directors, and will be on
terms no less favorable to us than those that could be obtained from
unaffiliated third parties.
Sales of Stock and Warrants
Series D Preferred Stock and Warrant financing. On February 1, 1999, we sold
an aggregate of 5,128,205 shares of series D preferred stock for $1.17 per
share for an aggregate purchase price of $6.0 million to seven accredited
investors, and we issued two warrants, which are subject to vesting, to
purchase up to an aggregate of 4,273,504 shares of series D preferred stock at
an exercise price of $1.17 per share to two of those investors. Investors
owning five percent or more of our outstanding capital stock who invested over
$60,000 are as follows:
Series D
Series D Preferred Stock
Investor Preferred Stock Warrant
- -------- --------------- ---------------
VantagePoint Communications Partners, LP....... 2,849,002 2,849,002
VantagePoint Venture Partners 1996, LP......... 1,424,502 1,424,502
William Jefferson Marshall, one of our directors, is a partner of
VantagePoint Partners, an affiliate of the above-referenced VantagePoint
entities.
In addition, Dennis Goett, one of our directors and our Senior Vice
President, Chief Financial Officer and Treasurer was issued 85,470 shares of
series D preferred stock and was paid $200,000 for consulting services provided
by CrossRoads Strategy Group, Inc. to GTP in connection with GTP's series D
preferred stock financing.
Series E Preferred Stock financing. GTP issued an aggregate of 10,235,188
shares of its series E preferred stock for $2.11 per share for an aggregate
purchase price of $21.6 million, between September 10, 1999 and January 14,
2000. Dennis Goett invested over $60,000 in this financing as follows:
Series E
Investor Date of Purchase Preferred Stock
- -------- ---------------- ---------------
Dennis Goett................................. 10/28/99 18,957
1/14/00 14,218
Dennis Goett (through IRA FBO Dennis M.
Goett)...................................... 10/28/99 28,435
52
Investors owning five percent or more of our outstanding capital stock who
invested over $60,000 in this financing are as follows:
Series E
Investor Date of Purchase Preferred Stock
- -------- ---------------- ---------------
Chase Venture Capital Associates, L.P......... 9/10/99 4,739,337
10/28/99 473,933
VantagePoint Communications Partners, L.P. ... 9/10/99 947,867
10/28/99 316,114
VantagePoint Venture Partners 1996, L.P....... 9/10/99 473,934
10/28/99 157,820
FG-GTPF....................................... 9/10/99 236,967
FG-GTPF and four of its affiliates collectively own more than 25% of our
outstanding capital stock and are collectively referred to in this prospectus
as the FG II Entities.
Registration Rights. In connection with the issuance of series D preferred
stock and series E preferred stock, we granted registration rights to the
holders of such stock. See "Description of Capital Stock--Registration Rights."
Agreements with stockholders or their affiliates.
GTP has entered into a Master Services Agreement with Chase Capital
Partners, an affiliate of Chase Venture Capital Associates, L.P., dated
September 28 1999, requiring GTP to provide information technology services to
Chase.
GTP has also provided information technology consulting services to FG II,
an affiliate of the FG II Entities.
In addition, GTP has also entered into a Master Services Agreement with
VantagePoint Venture Partners, an affiliate of the VantagePoint Entities, dated
June 8, 1999, requiring GTP to provide information technology consulting
services to VantagePoint Venture Partners.
53
PRINCIPAL STOCKHOLDERS
The following table sets forth information with respect to the beneficial
ownership of our common stock as of April 11, 2000, and as adjusted to reflect
the sale of the shares of common stock offered by us in this offering for:
. each person known by us to beneficially own more than 5% of our common
stock;
. each executive officer named in the Summary Compensation Table;
. each of our directors; and
. all of our executive officers and directors as a group.
Unless otherwise indicated, the address of each beneficial owner listed
below is c/o Greenwich Technology Partners, Inc., 123 Main Street, White
Plains, New York 10601.
The following table gives effect to the shares of common stock issuable
within 60 days of April 11, 2000 upon the exercise of all options and other
rights beneficially owned by the indicated stockholders on that date.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and includes voting and investment power
with respect to the shares. Unless otherwise indicated, the persons named in
the table have sole voting and sole investment control with respect to all
shares beneficially owned.
Percentage of Shares
Beneficially Owned(1)
Number of Shares ------------------------------
Beneficial Owner Beneficially Owned Before Offering After Offering
- ---------------- ------------------ --------------- --------------
Named Executive Officers and
Directors:
Joseph P. Beninati(2)....... 4,695,400 14.6% %
Ronald V. Davis(3).......... 9,962,930 31.0
Dennis M. Goett(4).......... 746,038 2.3
Edmund A. Hajim(5).......... 9,629,930 30.0
Jonathan R. Lynch(6)........ 5,222,645 16.3
William Jefferson
Marshall(7)................ 8,742,716 25.5
John Stopper................ 23,696 *
David H.W. Turner(8)........ 21,223 *
Other 5% Stockholders:
Chase Venture Capital
Associates, L.P.(6)........ 5,222,645 16.3
FG II Entities(9)........... 9,620,555 29.9
Persistence Partners,
L.P.(2).................... 4,486,025 14.0
VantagePoint Entities(10)... 8,733,341 25.5
All directors and executive
officers as a group:
(10 persons)(11)........... 29,524,023 85.3
- --------
* Less than 1%.
(1) Percentage of beneficial ownership is based on 32,123,072 shares of common
stock outstanding as of April 11, 2000 and shares of common stock
outstanding after this offering.
54
(2) Includes 200,000 shares of common stock gifted to various family trusts
and 4,486,025 shares of common stock owned by Persistence Partners, L.P.
Mr. Beninati is the Chief Executive Officer and majority shareholder of
JoBen Equities, LTD., the general partner of Persistence Partners L.P. and
may be deemed to be a beneficial owner of all the shares held by
Persistence. Also includes 9,375 shares of common stock issuable upon the
exercise of options that are currently exercisable or that are exercisable
within 60 days.
(3) Includes 9,620,555 shares of common stock owned by the FG II Entities, as
described in note 9 below, 333,000 shares of common stock owned by Mr.
Davis and 9,375 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days. Mr. Davis' address is c/o of Davis Capital, L.L.C., 332 Forest
Avenue, Suite 22, Laguna Beach, California 92651.
(4) Includes 64,000 shares of common stock issued to the Dennis M. Goett
Children's Irrevocable Trust as to which Mr. Goett disclaims beneficial
ownership, and 28,435 shares issued to an individual retirement account
for the benefit of Mr. Goett. Also includes 301,041 shares of common stock
issuable upon the exercise of options that are currently exercisable or
that are exercisable within 60 days.
(5) Includes 9,620,555 shares of common stock owned by the FG II Entities, as
described in note 9 below, and 9,375 shares of common stock issuable upon
the exercise of options that are currently exercisable or that are
exercisable within 60 days. Mr. Hajim's address is c/o ING Furman Selz
Asset Management, 230 Park Avenue, 13th Floor, New York, New York 10169.
(6) Includes 9,375 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days. Mr. Lynch is a Principal of and may be deemed to beneficially own
all of the shares held by Chase Venture Capital Associates, L.P. Mr.
Lynch's address is c/o Chase Capital Partners, 380 Madison Avenue, 12th
Floor, New York, New York 10017.
(7) Includes 8,733,341 shares of common stock owned by the VantagePoint
Entities, as described in note 10 below, and 9,375 shares of common stock
issuable upon the exercise of options that are currently exercisable or
become exercisable within 60 days. Mr. Marshall's address is c/o
VantagePoint Venture Partners, One Stamford Landing, Suite 201, Stamford,
Connecticut 06902.
(8) Includes 9,375 shares of common stock issuable upon the exercise of
options that are currently exercisable or that are exercisable within 60
days. Mr. Turner's address is c/o Reuters American Holding Incorporated,
263 Tresser Boulevard, Stamford, Connecticut 06901.
(9) Includes 9,620,555 shares of common stock held by the various FG II
Entities. These entities are all affiliated with FG II. Messrs. Davis and
Hajim are both members of FG II. As a result, Messrs. Davis and Hajim may
be deemed to be beneficial owners of all of the shares held by the FG II
Entities. The address for the FG II Entities is c/o FG II, 20 Dayton
Avenue, Greenwich, Connecticut 06830.
(10) Includes 2,136,752 shares of common stock issuable upon the conversion of
warrants which are currently exercisable or will be exercisable within 60
days. The VantagePoint Entities are controlled by VantagePoint Venture
Partners. Mr. Marshall is a Managing Partner of VantagePoint Venture
Partners and may be deemed to beneficially own all of the shares held by
the VantagePoint Entities. Mr. Marshall has disclaimed beneficial
ownership as to all of the shares owned by the VantagePoint Entities. The
VantagePoint entities address is c/o VantagePoint Venture Partners, One
Stamford Landing, Suite 201, Stamford, Connecticut 06902.
(11) Includes 347,916 shares of common stock issuable upon the exercise of
options which are currently exercisable or which are exercisable within 60
days and 2,136,752 shares of common stock issuable upon the exercise, and
subsequent conversion, of warrants to purchase 2,136,752 shares of common
stock which will become exercisable immediately prior to the offering.
55
DESCRIPTION OF CAPITAL STOCK
General
The following description of our common stock and preferred stock and the
relevant provisions of our amended and restated certificate of incorporation
and by-laws to be effective upon the closing of this offering are summaries and
are qualified by reference to our amended and restated certificate of
incorporation and by-laws, copies of which have been filed with the Securities
and Exchange Commission as exhibits to our registration statement, of which
this prospectus forms a part.
Upon the closing of our offering, our authorized capital stock will consist
of 300,000,000 shares of common stock, par value $0.01 per share, and
20,000,000 shares of preferred stock, par value $0.01 per share.
Common Stock
As of April 11, 2000, there were 32,123,072 shares of our common stock
outstanding on an as- converted basis held of record by 143 stockholders.
Holders of shares of common stock are entitled to one vote for each share held
on all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Accordingly, holders of a majority of the shares of common stock
entitled to vote in any election of directors may elect all of the directors
standing for election. Holders of common stock are entitled to receive ratably
those dividends, if any, as may be declared by our board of directors out of
funds legally available, subject to any preferential dividend rights of any
outstanding preferred stock. Upon the liquidation, dissolution or winding up of
GTP, the holders of our common stock are entitled to receive ratably our net
assets available, if any, after the payment of all debts and other liabilities
and subject to the prior rights of any outstanding preferred stock. Holders of
our common stock have no preemptive, subscription, redemption or conversion
rights. The outstanding shares of our common stock are, and the shares offered
in this offering will be, when issued in consideration for payment, fully paid
and nonassessable. The rights, preferences and privileges of holders of common
stock are subject to, and may be adversely affected by, the rights of the
holders of shares of any series of preferred stock which GTP may designate and
issue in the future.
Preferred Stock
Upon the closing of this offering, there will be no shares of preferred
stock outstanding. Our board of directors will be authorized, without further
stockholder approval, to issue from time to time up to an aggregate of
20,000,000 shares of preferred stock in one or more series and to fix or alter
the designations, preferences, rights and any qualifications, limitations or
restrictions of the shares of each series of preferred stock, including the
dividend rights, dividend rates, conversion rights, voting rights, terms of
redemption, including sinking fund provisions, redemption price or prices,
liquidation preferences and the number of shares constituting any series or
designation of series. For more information, see "--Anti-Takeover Effects of
Provisions of Delaware Law and Our Certificate of Incorporation and By-laws."
Options
We have 9,150,000 shares of our common stock reserved for issuance, upon
exercise of stock options, under our 1997 Stock Plan, 6,000,000 shares of
common stock reserved for issuance, upon
56
exercise of stock options under our 2000 Stock Option and Incentive Plan and
850,000 shares of common stock reserved for issuance under our 2000 Employee
Stock Purchase Plan. As of April 11, 2000, there were outstanding options to
purchase a total of 6,144,978 shares of common stock, of which options to
purchase approximately 2,377,575 will be exercisable upon the closing of this
offering. Since GTP intends to file a registration statement on Form S-8 as
soon as practicable following the closing of this offering, any shares issued
upon exercise of these options will be immediately available for sale in the
public market, subject to the terms of lock-up agreements entered into with the
underwriters. For more information, see "Management--Stock Option Plans" and
"Shares Eligible for Future Sale."
Warrants
We have two outstanding warrants. The warrants entitle the respective
holders the right to purchase up to 2,849,002 and 1,424,502 shares of Series D
preferred stock, convertible into shares of common stock, at an exercise price
of $1.17 per share. Both warrants expire on February 1, 2004. The warrants
become exercisable upon the earliest to occur of (i) the completion of an
initial public offering of GTP's common stock; (ii) the merger or acquisition
of the company where fifty percent of the outstanding capital stock of GTP or
fifty percent of the voting power in GTP is transferred; (iii) a sale or other
disposition of all or substantially all of GTP's assets; and (iv) January 1,
2001. Notwithstanding the above, fifty percent of the warrants vests if a
liquidity event with a value of greater than $4.68 occurs prior to June 30,
2000 and sixty percent of the warrants vests if the event occurs prior to
December 31, 2000, with the remaining rights pursuant to the warrants
terminating.
Registration Rights
Pursuant to the terms of a registration rights agreement, beginning six
months after the closing of this offering, the holders of 17,585,615 shares of
common stock and shares of common stock issuable upon the exercise of warrants
to purchase common stock will be entitled to demand registration rights with
respect to the registration of their shares under the Securities Act of 1933.
GTP is not required to effect more than one registration pursuant to these
demand registration rights. In addition, these holders will be entitled to
piggyback registration rights with respect to the registration of their shares
under the Securities Act of 1933, subject to various limitations. Further, at
any time after GTP becomes eligible to file a registration statement on Form S-
3, these holders may require us to file one or more registration statements
under the Securities Act of 1933 on Form S-3 with respect to their shares of
common stock. These registration rights are subject to conditions and
limitations, among them the right of the underwriters of an offering to limit
the number of shares of common stock held by security holders with registration
rights to be included in a registration. Generally, we are required to bear all
of the expenses of all of these registrations, except underwriting discounts
and selling commissions. Registration of any shares of common stock held by
security holders with registration rights would result in shares becoming
freely tradeable without restriction under the Securities Act of 1933
immediately upon effectiveness of the registration.
Anti-Takeover Effects of Provisions of Delaware Law and Our Certificate of
Incorporation and By-laws
Upon completion of this offering, GTP will be subject to the provisions of
Section 203 of the General Corporation Law of Delaware. Section 203 prohibits a
publicly held Delaware corporation
57
from engaging in a "business combination" with an "interested stockholder" for
a period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved
in a prescribed manner. A "business combination" includes mergers, asset sales
and other transactions resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within the last
three years did own, 15% or more of the corporation's voting stock.
GTP's amended and restated certificate of incorporation provides for the
division of the board of directors into three classes as nearly equal in size
as possible with staggered three-year terms. See "Management--Composition of
the Board." In addition, GTP's amended and restated certificate of
incorporation provides that directors may be removed only for cause by the
affirmative vote of the holders of 75% of the shares of capital stock of GTP
entitled to vote. Under the amended and restated certificate of incorporation,
any vacancy on the board of directors, including a vacancy resulting from an
enlargement of the board, may only be filled by vote of a majority of the
directors then in office. The likely effect of the classification of the board
of directors and the limitations on the removal of directors and filling of
vacancies is an increase in the time required for the stockholders to change
the composition of the board of directors. For example, in general, at least
two annual meetings of the stockholders will be necessary for stockholders to
effect a change in a majority of the members of the board of directors.
The amended and restated certificate of incorporation also provides that,
after the closing of this offering, any action required or permitted to be
taken by the stockholders of GTP at an annual meeting or special meeting of
stockholders may only be taken if it is properly brought before the meeting and
may not be taken by written action in lieu of a meeting. The amended and
restated certificate of incorporation further provides that special meetings of
stockholders may only be called by the board of directors, the Chairman of the
board of directors or the President of GTP. Under the restated by-laws, in
order for any matter to be considered "properly brought" before a meeting, a
stockholder must comply with certain requirements regarding advance notice to
GTP. These provisions could have the effect of delaying until the next
stockholders' meeting stockholder actions which are favored by the holders of a
majority of GTP's outstanding voting securities. These provisions may also
discourage another person or entity from making a tender offer for GTP's common
stock, because such person or entity, even if it acquired a majority of the
outstanding voting securities of GTP, would be able to take action as a
stockholder (such as electing new directors or approving a merger) only at a
duly called stockholders meeting, and not by written consent.
The Delaware General Corporation Law provides generally that the affirmative
vote of a majority of the shares entitled to vote on any matter is required to
amend a corporation's certificate of incorporation or by-laws, unless a
corporation's certificate of incorporation or by-laws, as the case may be,
require a greater percentage. The amended and restated certificate of
incorporation requires the affirmative vote of the holders of at least 75% of
the shares of capital stock of GTP issued and outstanding and entitled to vote
to amend or repeal any of the foregoing provisions of the amended and restated
certificate of incorporation, and to reduce the number of authorized shares of
common stock and preferred stock. The restated by-laws also may be amended or
repealed by a majority vote of the board of directors subject to any
limitations set forth in the restated by-laws, and amendment
58
by stockholders of provisions described above requires the affirmative vote of
the holders of at least 75% of the shares of capital stock of GTP issued and
outstanding and entitled to vote. The 75% stockholder vote would be in addition
to any separate class vote that might in the future be required pursuant to the
terms of any series preferred stock that might be outstanding at the time any
such amendments are submitted to stockholders.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock will be ChaseMellon
Shareholder Services, L.L.C.
59
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of our common stock in the public market could
adversely affect prevailing market prices of our common stock. Furthermore,
since only 100,000 shares will be available for sale shortly after this
offering because of certain contractual and legal restrictions on resale
described below, sales of substantial amounts of common stock in the public
market after these restrictions lapse could adversely affect the prevailing
market price and our ability to raise equity capital in the future.
Upon the closing of this offering, we will have outstanding an aggregate of
shares of our common stock, assuming no exercise of outstanding options and
warrants. Of these shares, all shares sold in this offering will be freely
tradeable without restriction or further registration under the Securities Act
unless such shares are purchased by "affiliates" as that term is defined in
Rule 144 under the Securities Act. The following table illustrates the shares
eligible for sale in the public market:
Number of Shares Date
---------------- ----
100,000 After the date of this prospectus, freely tradeable shares
sold in this offering and shares saleable under Rule 144(k)
that are not subject to the 180-day lock-up
2,544,934 After 90 days from the date of this prospectus, shares
saleable under Rule 144 or Rule 701 that are not subject to
the 180-day lock-up
28,693,324 After 180 days from the date of this prospectus, the 180-
day lock-up is released and these shares are saleable under
Rule 144 (subject, in some cases, to volume limitations),
Rule 144(k) or Rule 701
3,429,748 After 180 days from the date of this prospectus, restricted
securities that are held for less than one year are not yet
saleable under Rule 144
Lock-up Agreements
Holders of approximately 90% of our outstanding shares have signed lock-up
agreements under which they agreed not to transfer or dispose of, directly or
indirectly, any shares of our common stock or any securities convertible into
or exercisable or exchangeable for shares of our common stock for 180 days
after the date of this prospectus.
Rule 144
In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any three-
month period a number of shares that does not exceed the greater of:
. 1% of the number of shares of common stock then outstanding, which will
equal approximately shares immediately after the offering; or
. the average weekly trading volume of the common stock on the Nasdaq
National Market during the four calendar weeks preceding the filing of a
notice on Form 144 with respect to the sale.
60
Sales under Rule 144 are also subject to certain manner-of-sale provisions,
notice requirements and the availability of current public information about
us.
Rule 144(k)
Under Rule 144(k), a person who is not one of our affiliates at any time
during the 90 days preceding a sale and who has beneficially owned the shares
proposed to be sold for at least two years, including the holding period of any
prior owner other than an affiliate, is entitled to sell the shares without
complying with the manner of sale, public information, volume limitation or
notice provisions of Rule 144. Therefore, unless otherwise contractually
restricted, "144(k)" shares may be sold immediately upon completion of this
offering.
Rule 701
In general, under Rule 701 of the Securities Act as currently in effect,
each of our employees, consultants or advisors who purchased shares from us in
connection with a compensatory stock plan or other written agreement is
eligible to resell the shares 90 days after the effective date of this offering
in reliance on Rule 144, but without compliance with certain restrictions,
including the holding period, contained in Rule 144.
Registration Rights
After this offering, the holders 17,585,615 shares of common stock and
shares of common stock issuable upon the exercise of warrants to purchase
common stock will be entitled to certain rights with respect to the
registration of those shares under the Securities Act. For more information,
see "Description of Capital Stock--Registration Rights." Once registered, these
shares of our common stock become freely tradeable without restriction under
the Securities Act. These sales could have a material adverse effect on the
trading price of our common stock.
Stock Plans
We intend to file a registration statement under the Securities Act covering
16,000,000 shares of common stock reserved for issuance under our 1997 Stock
Plan, 2000 Stock Option and Incentive Plan and 2000 Employee Stock Purchase
Plan and the shares reserved for issuance upon exercise of outstanding non-plan
options. We expect this registration statement to be filed and to become
effective as soon as practicable after the effective date of this offering.
As of April 11, 2000, options to purchase 6,144,978 shares of common stock
were outstanding. All of these shares will be eligible for sale in the public
market from time to time, subject to vesting provisions, Rule 144 volume
limitations applicable to our affiliates and, in the case of some options, the
expiration of lock-up agreements.
61
CERTAIN UNITED STATES FEDERAL TAX
CONSIDERATIONS FOR NON-UNITED STATES HOLDERS
General
This section summarizes some of the material U.S. Federal tax consequences
to holders of common stock that are "non-U.S. holders." In general, you are a
non-U.S. holder if you are:
. an individual that is a nonresident alien of the U.S.;
. a corporation organized or created under non-U.S. law;
. an estate that is not taxable in the U.S. on its worldwide income; or
. a trust that is either not subject to primary supervision over its
administration by a U.S. Court or not subject to the control of a U.S.
person with respect to substantial trust decisions.
If a partnership holds common stock, the tax treatment of a partner will
generally depend upon the status of the partner and upon the activities of the
partnership. If you are a partner of a partnership holding common stock, we
suggest that you consult your tax advisor.
This discussion does not address all aspects of U.S. Federal taxation, and
in particular is limited in the following ways:
. The discussion only covers you if you hold your common stock as a capital
asset (that is, for investment purposes), and if you do not have a
special tax status, such as your status as an insurance company, tax-
exempt organization, financial institution, broker-dealer, U.S.
expatriate, or holder of our securities as part of a "straddle," "hedge"
or "conversion transaction."
. The discussion does not cover tax consequences that depend upon your
particular tax situation in addition to your ownership of the common
stock.
. The discussion is based on provisions of the United States Internal
Revenue Code of 1986, as amended (the "Code"), existing and proposed
Treasury regulations thereunder and administrative and judicial
interpretations thereof, all as of the date hereof. Changes in the law
may change the tax treatment of holding the common stock.
. The discussion does not cover state, local or foreign law.
. We have not requested a ruling from the IRS on the tax consequences of
owning the common stock. As a result, the IRS could disagree with
portions of this discussion.
If you are considering buying common stock, we suggest that you consult your
tax advisors about the United States Federal, state, local and non-U.S. income
and other tax consequences of holding the common stock in your particular
situation.
Distributions
Distributions paid on the shares of common stock generally will constitute
dividends for U.S. Federal income tax purposes to the extent paid from our
current or accumulated earnings and profits, as determined under U.S. Federal
income tax principles. Dividends paid to you generally will be subject to
United States withholding tax at a 30% rate or, if a tax treaty applies, a
lower rate specified by the treaty, unless you receive the dividends in
connection with a trade or business you
62
conduct in the United States. To receive a reduced treaty rate, you must
furnish to us or our paying agent a duly completed Form 1001 or Form W-8BEN (or
substitute form) certifying to your qualification for the reduced rate.
Currently, withholding generally is imposed on the gross amount of a
distribution, regardless of whether we have sufficient earnings and profits to
cause the distribution to be a dividend for U.S. Federal income tax purposes.
However, withholding on distributions made after December 31, 2000, may be on
less than the gross amount of the distribution if the distribution exceeds a
reasonable estimate of our accumulated and current earnings and profits.
In order to claim an exemption from withholding on the ground that the
dividends are effectively connected with a U.S. trade or business that you
conduct in the United States, you must provide to us or our paying agent a duly
completed Form 4224 or Form W-8ECI (or substitute form) certifying your
exemption and complying with other applicable certification and disclosure
requirements. However, dividends exempt from U.S. withholding because they are
effectively connected generally are subject to U.S. Federal income tax on a net
income basis at the regular graduated United States Federal income tax rates.
These rules might be altered by an applicable tax treaty. You should consult
your tax advisors about your entitlement, if any, to benefits under an
applicable tax treaty. If you are a corporation, any effectively connected
dividends received by you may also, under certain circumstances, be subject to
an additional "branch profits tax" at a 30% rate or a lower rate specified by
an applicable income tax treaty.
Under current U.S. Treasury regulations, dividends paid before January 1,
2001, to an address outside the United States are presumed to be paid to a
resident of the country of address, unless the payor has knowledge to the
contrary, for purposes of the withholding discussed above and for purposes of
determining the applicability of a tax treaty rate. However, U.S. Treasury
regulations applicable to dividends paid after December 31, 2000 eliminate this
presumption, subject to certain transition rules.
For dividends paid after December 31, 2000, you generally will be subject to
U.S. backup withholding tax at a 31% rate under the backup withholding rules
described below, rather than at the 30% or reduced tax treaty rate, as
described above, unless you comply with certain Internal Revenue Service
("IRS") certification or documentary evidence procedures. Certain changes to
these rules apply to dividend payments made after December 31, 2000 to certain
non-U.S. holders or foreign intermediaries. You should consult your own tax
advisor concerning the effect, if any, of the rules affecting post-December 31,
2000 dividends on your possible investment in common stock.
You may obtain a refund of any excess amounts withheld by filing an
appropriate claim for refund along with the required information with the IRS.
Gain on Disposition of Common Stock
You generally will not be subject to U.S. Federal income tax with respect to
gain recognized on a sale or other disposition of the common stock unless one
of the following applies:
. If the gain is effectively connected with a trade or business you conduct
in the United States (and, if a tax treaty applies, is attributable to a
permanent establishment you maintain in the United States) you will,
unless an applicable treaty provides otherwise, be taxed on your net
63
gain on the sale under regular graduated U.S. Federal income tax rates. If
you are a foreign corporation, you may also, under certain circumstances,
be subject to an additional branch profits tax at a 30% rate, unless an
applicable income tax treaty provides for a lower rate and you demonstrate
your qualification for such rate.
. If you are an individual and are present in the United States for 183 or
more days in the taxable year of the sale or other disposition and
certain other conditions are met, you will be subject to a flat 30% tax
on your gain from the sale, which may be offset by certain U.S. capital
losses.
. If we are or have been a "U.S. real property holding corporation" for
U.S. Federal income tax purposes at any time during the shorter of the
five-year period ending on the date of the disposition or the period
during which you held the common stock, and certain other conditions
apply, you may be taxable in the U.S. on your gain from a sale of the
common stock pursuant to the effectively connected rules described above.
We believe that we never have been, are not currently and are not likely
in the future to become a U.S. real property holding corporation for U.S.
Federal income tax purposes.
Federal Estate Tax
If you are an individual non-U.S. holder who is not a citizen or resident,
as defined for U.S. Federal estate tax purposes, common stock held by you at
the time of your death will be included in your gross estate for U.S. Federal
estate tax purposes, and may be subject to U.S. Federal estate tax, unless an
applicable estate tax treaty provides otherwise.
Information Reporting and Backup Withholding Tax
We must report annually to the IRS the amount of dividends paid to you and
the tax withheld with respect to the dividends. These requirements apply even
if withholding was not required on payments to you. Pursuant to an applicable
tax treaty, that information may also be made available to the tax authorities
in your country of residence.
Backup withholding tax generally may be imposed at the rate of 31% on
certain payments to holders that are not "exempt recipients", and that fail to
furnish certain required information. Backup withholding generally will not
apply to dividends paid before January 1, 2001 to a non-U.S. holders at an
address outside the United States (unless the payor has actual knowledge that
the payee is a U.S. holder) or to dividends paid to non-U.S. holders that are
subject to the 30% withholding discussed above, or that are not so subject
because a tax treaty reduces or eliminates such withholding. See the discussion
under "Distributions" above for rules regarding reporting requirements to avoid
backup withholding on dividends paid after December 31, 2000.
As a general matter, information reporting and backup withholding will not
apply to a payment to you by or through a foreign office of a foreign broker of
the proceeds of a sale of common stock effected outside the U.S. However,
information reporting requirements, but not backup withholding, will apply to a
payment by as through a foreign office of a broker of such proceeds if the
broker:
. is a U.S. person for U.S. Federal income tax purposes;
. is a foreign person that derives 50% or more of its gross income for
certain periods from the conduct of a trade or business in the U.S.;
64
. is a "controlled foreign corporation" as defined in the Code; or
. is a foreign partnership with certain U.S. connections (for payments made
after December 31, 2000).
Information reporting requirements will not apply in the above cases if the
broker has documentary evidence in its records that you are a non-U.S. holder
and certain conditions are met or you otherwise establish an exemption.
Payment of the proceeds of a sale of common stock by or through a U.S.
office of a broker is subject to both backup withholding and information
reporting unless you certify to the payor in the manner required as to your
non-U.S. status under penalties of perjury or otherwise establish an exemption.
Amounts withheld under the backup withholding rules do not constitute a
separate U.S. Federal income tax. Rather, any amounts withheld under the backup
withholding rules will be refunded or allowed as a credit against your U.S.
Federal income tax liability, if any, provided the required information or
appropriate claim for refund is filed with the IRS.
The foregoing discussion is only a summary of certain U.S. Federal income
and estate tax consequences of the ownership, sale or other disposition of
common stock by non-U.S. holders. You are urged to consult your own tax advisor
with respect to the particular tax consequences to you of ownership and
disposition of common stock, including the effect of any state, local, foreign
or other tax laws and any applicable income or estate tax treaties.
65
UNDERWRITING
Under the terms and subject to the conditions contained in an underwriting
agreement dated , 2000, we have agreed to sell to the underwriters named
below, for whom Credit Suisse First Boston Corporation, First Union Securities,
Inc., Friedman, Billings, Ramsey & Co., Inc. and ING Barings LLC are acting as
representatives, the following respective numbers of shares of common stock:
Number
Underwriter of Shares
----------- ---------
Credit Suisse First Boston Corporation............................
First Union Securities, Inc.......................................
Friedman, Billings, Ramsey & Co., Inc.............................
ING Barings LLC...................................................
---
Total...........................................................
===
The underwriting agreement provides that the underwriters are obligated to
purchase all the shares of common stock in the offering if any are purchased,
other than those shares covered by the over-allotment option described below.
The underwriting agreement also provides that if an underwriter defaults, the
purchase commitments of non-defaulting underwriters may be increased or the
offering of common stock may be terminated.
We have granted to the underwriters a 30-day option to purchase on a pro
rata basis up to additional shares at the initial public offering price
less the underwriting discounts and commissions. The option may be exercised
only to cover any over-allotments of common stock.
The underwriters propose to offer the shares of common stock initially at
the public offering price on the cover page of this prospectus and to selling
group members at that price less a concession of $ per share. The
underwriters and selling group members may allow a discount of $ per share
on sales to other broker/dealers. After the initial public offering, the public
offering price and concession and discount to dealers may be changed by the
representatives.
The following table summarizes the compensation and estimated expenses we
will pay.
Per Share Total
----------------------------- -----------------------------
Without With Without With
Over-allotment Over-allotment Over-allotment Over-allotment
-------------- -------------- -------------- --------------
Underwriting Discounts
and Commissions paid by
us..................... $ $ $ $
Expenses payable by us.. $ $ $ $
The underwriters have informed us that they do not expect discretionary
sales to exceed 5% of the shares of common stock being offered.
66
We have agreed that we will not offer, sell, contract to sell, pledge or
otherwise dispose of, directly or indirectly, or file with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933
relating to, any shares of our common stock or securities convertible into or
exchangeable or exercisable for any of our common stock, or publicly disclose
the intention to make any such offer, sale, pledge, disposition or filing,
without the prior written consent of Credit Suisse First Boston Corporation for
a period of 180 days after the date of this prospectus except issuances
pursuant to the exercise of employee stock options outstanding on the date
hereof.
Our officers and directors and holders of approximately 85% of our
outstanding stock have agreed that they will not offer, sell, contract to sell,
pledge or otherwise dispose of, directly or indirectly, any shares of our
common stock or securities convertible into or exchangeable or exercisable for
any shares of our common stock, enter into a transaction that would have the
same effect, or enter into any swap, hedge or other arrangement that transfers,
in whole or in part, any of the economic consequences of ownership of our
common stock, whether any such aforementioned transaction is to be settled by
delivery of our common stock or other such securities, in cash or otherwise, or
publicly disclose the intention to make any such offer, sale, pledge or
disposition, or enter into any such transaction, swap, hedge or other
arrangement, without, in each case, the prior written consent of Credit Suisse
First Boston Corporation for a period of 180 days after the date of this
prospectus.
The underwriters have reserved for sale at the initial public offering price
up to shares of the common stock for employees, directors and certain other
persons associated with us who have expressed an interest in purchasing common
stock in the offering. The number of shares available for sale to the general
public in the offering will be reduced to the extent these persons purchase
such reserved shares. Any reserved shares not so purchased will be offered by
the underwriters to the general public on the same terms as the other shares.
We have agreed to indemnify the underwriters against liabilities under the
Securities Act, or contribute to payments which the underwriters may be
required to make in that respect.
We have applied to list the shares of common stock on The Nasdaq Stock
Market's National Market under the symbol "GTPI".
Prior to this offering, there has been no public market for the common
stock. The initial public offering price will be determined by negotiation
between us and the underwriters. The principal factors to be considered in
determining the public offering price include the following:
. the information included in this prospectus and otherwise available to
the representatives;
. market conditions for initial public offerings;
. the history and the prospects for the industry in which we will compete;
. the ability of our management;
. the prospects for our future earnings;
. the present stage of our development and our current financial condition;
. the general condition of the securities markets at the time of this
offering; and
. the recent market prices of, and the demand for, publicly traded common
stock of generally comparable companies.
67
The representatives may engage in over-allotment, stabilizing transactions,
syndicate covering transactions and penalty bids in accordance with Regulation
M under the Securities Exchange Act of 1934.
. Over-allotment involves syndicate sales in excess of the offering size,
which creates a syndicate short position.
. Stabilizing transactions permit bids to purchase the underlying security
so long as the stabilizing bids do not exceed a specified maximum.
. Syndicate covering transactions involve purchases of the common stock in
the open market after the distribution has been completed in order to
cover syndicate short positions.
. Penalty bids permit the representatives to reclaim a selling concession
from a syndicate member when the common stock originally sold by the
syndicate member is purchased in a stabilizing or syndicate covering
transaction to cover syndicate short positions.
These stabilizing transactions, syndicate covering transactions and penalty
bids may cause the price of the common stock to be higher than it would
otherwise be in the absence of these transactions. These transactions may be
effected on The Nasdaq National Market or otherwise and, if commenced, may be
discontinued at any time.
A prospectus in electronic format may be made available on the web sites
maintained by one or more of the underwriters participating in this offering.
The representatives may agree to allocate a number of shares to underwriters
for sale to their online brokerage account holders. Internet distributions will
be allocated by the underwriters that will make Internet distributions on the
same basis as other allocations.
68
NOTICE TO CANADIAN RESIDENTS
Resale Restrictions
The distribution of the common stock in Canada is being made only on a
private placement basis exempt from the requirement that we prepare and file a
prospectus with the securities regulatory authorities in each province where
trades of common stock are effected. Accordingly, any resale of the common
stock in Canada must be made in accordance with applicable securities laws
which will vary depending on the relevant jurisdiction, and which may require
resales to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable Canadian
securities regulatory authority. Purchasers are advised to seek legal advice
prior to any resale of the common stock.
Representations of Purchasers
Each purchaser of common stock in Canada who receives a purchase
confirmation will be deemed to represent to us and the dealer from whom such
purchase confirmation is received that (i) such purchaser is entitled under
applicable provincial securities laws to purchase such common stock without the
benefit of a prospectus qualified under such securities laws, (ii) where
required by law, that such purchaser is purchasing as principal and not as
agent, and (iii) such purchaser has reviewed the text above under "Resale
Restrictions".
Rights of Action (Ontario Purchasers)
The securities being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
Ontario securities law. As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights of action for
damages or rescission or rights of action under the civil liability provisions
of the U.S. federal securities laws.
Enforcement of Legal Rights
All of the issuer's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be
possible for Canadian purchasers to effect service of process within Canada
upon the issuer or such persons. All or a substantial portion of the assets of
the issuer and such persons may be located outside of Canada and, as a result,
it may not be possible to satisfy a judgment against the issuer or such persons
in Canada or to enforce a judgment obtained in Canadian courts against such
issuer or persons outside of Canada.
Notice to British Columbia Residents
A purchaser of common stock to whom the Securities Act (British Columbia)
applies is advised that such purchaser is required to file with the British
Columbia Securities Commission a report within ten days of the sale of any
common stock acquired by such purchaser pursuant to this offering. Such report
must be in the form attached to British Columbia Securities Commission Blanket
Order BOR #95/17, a copy of which may be obtained from us. Only one such report
must be filed in respect of common stock acquired on the same date and under
the same prospectus exemption.
69
Taxation and Eligibility for Investment
Canadian purchasers of common stock should consult their own legal and tax
advisors with respect to the tax consequences of an investment in the common
stock in their particular circumstances and with respect to the eligibility of
the common stock for investment by the purchaser under relevant Canadian
legislation.
LEGAL MATTERS
The validity of the common stock will be passed upon for us by Testa,
Hurwitz & Thibeault, LLP, Boston, Massachusetts. Testa, Hurwitz & Thibeault,
LLP, using the name High Street Investors 2000, and attorneys at the firm hold
in the aggregate 70,631 shares common stock. Cravath, Swaine & Moore, New York,
New York, has represented the underwriters in this offering.
EXPERTS
The financial statements and schedule included in this prospectus and
elsewhere in the registration statement have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their reports with respect
thereto, and are included herein in reliance upon the authority of said firm as
experts in giving said reports.
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 (including exhibits and schedules), under the Securities
Act with respect to the common stock to be sold in this offering. This
prospectus does not contain all of the information set forth in that
registration statement. For further information about Greenwich Technology
Partners and the shares of common stock to be sold in the offering, please
refer to this registration statement. For additional information, please refer
to the exhibits that have been filed with our registration statement on Form S-
1.
You may read and copy all or any portion of the registration statement or
any other information Greenwich Technology Partners files at the Securities and
Exchange Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C., 20549. You can request copies of these documents upon payment
of a duplicating fee, by writing to the Securities and Exchange Commission.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
further information about the public reference rooms. Greenwich Technology
Partners' Securities and Exchange Commission filings, including the
registration statement, will also be available to you on the Securities and
Exchange Commission's web site (http://www.sec.gov). As a result of this
offering, we will become subject to the information and reporting requirements
of the Securities Exchange Act of 1934, and will file periodic reports, proxy
statements and other information with the Securities and Exchange Commission.
We intend to furnish our stockholders annual reports containing audited
financial statements and to make available to our stockholders quarterly
reports for the first three quarters of each year containing unaudited
financial information.
70
GREENWICH TECHNOLOGY PARTNERS, INC.
INDEX TO FINANCIAL STATEMENTS
Page
----
Report of Independent Public Accountants................................. F-2
Balance Sheets as of December 31, 1998 and 1999.......................... F-3
Statements of Operations for the period from inception (March 14, 1997)
through December 31, 1997 and for the years ended December 31, 1998 and
December 31, 1999....................................................... F-4
Statements of Shareholders' Equity for the period from inception (March
14, 1997) through December 31, 1997 and for the years ended December 31,
1998 and December 31, 1999.............................................. F-5
Statements of Cash Flows for the period from inception (March 14, 1997)
through December 31, 1997 and for the years ended December 31, 1998 and
December 31, 1999....................................................... F-6
Notes to Financial Statements............................................ F-7
F-1
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Greenwich Technology Partners, Inc.:
We have audited the accompanying balance sheets of Greenwich Technology
Partners, Inc. (a Delaware corporation) as of December 31, 1998 and 1999 and
the related statements of operations, shareholders' equity and cash flows for
the period from inception (March 14, 1997) through December 31, 1997 and for
the years ended December 31, 1998 and 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Greenwich Technology
Partners, Inc. as of December 31, 1998 and 1999, and the results of its
operations and its cash flows for the period from inception through December
31, 1997 and for the years ended December 31, 1998 and 1999 in conformity with
accounting principles generally accepted in the United States.
Arthur Andersen LLP
Stamford, Connecticut
February 2, 2000
F-2
GREENWICH TECHNOLOGY PARTNERS, INC.
BALANCE SHEETS
As of December 31, 1998 and 1999
1998 1999
----------- ------------
ASSETS
Current assets:
Cash and cash equivalents
(Note 2)................. $ 695,182 $ 17,568,371
Accounts receivable (net
of allowance for doubtful
accounts of $97,038 in
1998 and $216,615 in 1999).. 1,644,636 4,244,590
Inventory................. 27,280 2,118
Advances and other current
assets................... 79,416 66,718
----------- ------------
Total current assets.... 2,446,514 21,881,797
Property, plant and equip-
ment, at cost.............. 921,474 1,927,275
Less:
Accumulated depreciation
and amortization......... (103,910) (496,519)
----------- ------------
Property, plant and equip-
ment, net (Note 4)......... 817,564 1,430,756
Other long-term assets...... 19,796 109,394
----------- ------------
Total assets............ $ 3,283,874 $ 23,421,947
=========== ============
LIABILITIES AND SHAREHOLD-
ERS' EQUITY
Current liabilities:
Current maturities of in-
stallment loan and capi-
talized lease obliga-
tion..................... $ 10,536 $ 11,569
Accounts payable.......... 573,480 610,359
Accrued expenses.......... 501,463 1,606,371
Other current liabili-
ties..................... 64,706 107,125
----------- ------------
Total current liabili-
ties................... 1,150,185 2,335,424
Installment loan and capi-
talized lease obligation... 43,994 32,426
Shareholders' equity:
Preferred Stock--Series A,
par value $.01,
Authorized and
outstanding shares
4,100,000, at par........ 41,000 41,000
Preferred Stock--Series B,
par value $.01,
Authorized and
outstanding shares
5,723,000 in 1998 and
5,533,031 in 1999, at
par...................... 57,230 55,330
Preferred Stock--Series C,
par value $.01,
Authorized and
outstanding shares
4,216,697 in 1998 and
4,206,666 in 1999, at
par...................... 42,167 42,067
Preferred Stock--Series D,
par value $.01,
Authorized shares
9,487,179, outstanding
5,213,675, at par........ -- 52,137
Preferred Stock--Series E,
par value $.01,
Authorized shares
11,848,342, outstanding
9,807,139, at par........ -- 98,072
Common stock--Par value
$.01, Authorized shares
54,824,782, issued
177,000 in 1998 and
1,019,849 in 1999, at
par...................... 1,770 10,198
Additional paid-in capi-
tal...................... 4,437,225 29,648,470
Accumulated deficit....... (2,489,697) (8,840,077)
Less--177,000 shares of
common stock held in
treasury in 1999, at
cost..................... -- (53,100)
----------- ------------
Total shareholders' eq-
uity................... 2,089,695 21,054,097
----------- ------------
Total liabilities and
shareholders' equity... $ 3,283,874 $ 23,421,947
=========== ============
The accompanying notes to the financial statements are an integral part of
these statements.
F-3
GREENWICH TECHNOLOGY PARTNERS, INC.
STATEMENTS OF OPERATIONS
For the period from inception (March 14, 1997) through December 31, 1997 and
for the
years ended December 31, 1998 and December 31, 1999
1997 1998 1999
--------- ----------- -----------
Revenues:
Professional services................... $ 471,844 $ 4,251,734 $12,539,406
Provisioning............................ 357,180 1,775,943 1,655,522
--------- ----------- -----------
Total revenues........................ 829,024 6,027,677 14,194,928
Cost of revenues:
Professional services................... 305,707 2,473,266 7,703,602
Provisioning............................ 307,983 1,361,295 1,259,149
--------- ----------- -----------
Total cost of revenues................ 613,690 3,834,561 8,962,751
--------- ----------- -----------
Gross profit.............................. 215,334 2,193,116 5,232,177
Sales and marketing expenses.............. 174,651 1,762,397 5,734,535
General and administrative expenses....... 446,684 2,138,862 5,407,923
Depreciation and amortization expense..... 210,297 196,603 747,146
--------- ----------- -----------
Operating loss............................ (616,298) (1,904,746) (6,657,427)
Other income, net......................... 377 30,970 307,047
--------- ----------- -----------
Loss before income taxes.................. (615,921) (1,873,776) (6,350,380)
Provision for income taxes................ -- -- --
Net loss.................................. $(615,921) $(1,873,776) $(6,350,380)
========= =========== ===========
Net loss per share
Basic................................... $ (3.51) $ (11.92) $ (21.34)
========= =========== ===========
Diluted................................. $ (3.51) $ (11.92) $ (21.34)
========= =========== ===========
Weighted average shares outstanding
Basic................................... 177,000 177,000 315,643
========= =========== ===========
Diluted................................. 177,000 177,000 315,643
========= =========== ===========
The accompanying notes to the financial statements are an integral part of
these statements.
F-4
GREENWICH TECHNOLOGY PARTNERS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended
December 31, 1998 and December 31, 1999
Common
Stock Held in Additional Total
Preferred Preferred Preferred Preferred Preferred Common Treasury, at Paid-In Accumulated Shareholders'
Stock (A) Stock (B) Stock (C) Stock (D) Stock (E) Stock Cost Capital Deficit Equity
--------- --------- --------- --------- --------- ------- ------------- ----------- ----------- -------------
Issuance of
177,000 shares
of common
stock........... $ -- $ -- $ -- $ -- $ -- $ 1,770 $ -- $ 298,230 $ -- $ 300,000
Issuance of
4,100,000 shares
of preferred
stock (A)....... 41,000 -- -- -- -- -- -- 967,916 -- 1,008,916
Issuance of
5,723,000 shares
of preferred
stock (B)....... -- 57,230 -- -- -- -- -- 67,770 -- 125,000
Net loss........ -- -- -- -- -- -- -- -- (615,921) (615,921)
------- ------- ------- ------- ------- ------- -------- ----------- ----------- -----------
Balance December
31, 1997......... 41,000 57,230 -- -- -- 1,770 -- 1,333,916 (615,921) 817,995
Issuance of
4,216,697 shares
of preferred
stock (C)....... -- -- 42,167 -- -- -- -- 3,103,309 -- 3,145,476
Net loss........ -- -- -- -- -- -- -- -- (1,873,776) (1,873,776)
------- ------- ------- ------- ------- ------- -------- ----------- ----------- -----------
Balance December
31, 1998......... 41,000 57,230 42,167 -- -- 1,770 -- 4,437,225 (2,489,697) 2,089,695
Conversion of
189,969 shares
to common
stock........... -- (1,900) -- -- -- 1,900 -- -- -- --
Conversion of
10,031 shares to
common stock.... -- -- (100) -- -- 100 -- -- -- --
Issuance of
5,213,675 shares
of preferred
stock (D)....... -- -- -- 52,137 -- -- -- 5,644,926 -- 5,697,063
Issuance of
9,807,139 shares
of preferred
stock (E)....... -- -- -- -- 98,072 -- -- 19,468,044 -- 19,566,116
Options
Exercised....... -- -- -- -- -- 6,428 -- 198,264 -- 204,692
Purchase of
Treasury
shares.......... -- -- -- -- -- -- (53,100) -- -- (53,100)
Employee loans.. -- -- -- -- -- -- -- (99,989) -- (99,989)
Net loss........ -- -- -- -- -- -- -- -- (6,350,380) (6,350,380)
------- ------- ------- ------- ------- ------- -------- ----------- ----------- -----------
Balance December
31, 1999......... $41,000 $55,330 $42,067 $52,137 $98,072 $10,198 $(53,100) $29,648,470 $(8,840,077) $21,054,097
======= ======= ======= ======= ======= ======= ======== =========== =========== ===========
The accompanying notes to the financial statements are an integral part of
these statements.
F-5
GREENWICH TECHNOLOGY PARTNERS, INC.
STATEMENTS OF CASH FLOWS
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
1997 1998 1999
---------- ----------- -----------
Cash flows for operating activities
Net loss................................ $ (615,921) $(1,873,776) $(6,350,380)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization......... 210,297 196,603 747,146
Loss on asset sales................... -- -- 87,024
(Increase) in accounts receivable..... (109,483) (1,493,036) (2,599,954)
(Increase) /Decrease in advances...... (2,240) (77,176) 12,698
(Increase) /Decrease in inventory..... (16,789) (7,658) 25,162
(Increase) in other long term assets.. (2,079) (13,271) (89,598)
Increase in accounts payable.......... 44,365 492,706 36,878
Increase in other current liabili-
ties................................. 21,764 8,282 45,065
Increase in accrued expenses.......... 95,656 405,807 1,104,908
---------- ----------- -----------
Net cash used in operating activities... (374,430) (2,361,519) (6,981,051)
Cash flows from investing activities
Purchase of property, plant and
equipment.............................. (58,696) (817,203) (1,710,565)
Sale of assets.......................... -- -- 260,552
---------- ----------- -----------
Net cash used in investing activities... (58,696) (817,203) (1,450,013)
Cash flows from financing activities
Proceeds from installment loan.......... -- 33,989 --
Net proceeds from issuance of preferred
stock (A).............................. 1,008,916 -- --
Net proceeds from issuance of preferred
stock (B).............................. 125,000 -- --
Net proceeds from issuance of preferred
stock (C).............................. -- 3,145,476 --
Net proceeds from issuance of preferred
stock (D).............................. -- -- 5,697,063
Net proceeds from issuance of preferred
stock (E).............................. -- -- 19,566,116
Issuance of common stock................ -- -- 104,709
Purchase of treasury stock.............. -- -- (53,100)
Payments on capitalized lease obligation
and installment loan................... (682) (5,669) (10,535)
---------- ----------- -----------
Net cash provided by financing
activities............................. 1,133,234 3,173,796 25,304,253
---------- ----------- -----------
Net increase (decrease) in cash......... 700,108 (4,926) 16,873,189
Cash, beginning of period............... -- 700,108 695,182
---------- ----------- -----------
Cash, end of period..................... $ 700,108 $ 695,182 $17,568,371
========== =========== ===========
Supplemental cash flow information
Cash paid for interest.................. $ 1,486 $ 1,317 $ 6,230
Cash paid for income taxes.............. $ 1,200 $ 2,893 $ 10,747
The accompanying notes to the financial statements are an integral part of
these statements.
F-6
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
1. THE COMPANY
Antares Networks, Inc. ("Antares"), a Delaware corporation, was incorporated
on March 14, 1997. During 1997, Antares acquired all of the assets and
liabilities of Datamax Inc. The acquisition was accounted for as a purchase
whereby all assets and liabilities were recorded at their fair values at the
date of purchase. Goodwill of approximately $300,000 from this purchase was
amortized over 12 months. On August 22, 1997, the name was changed to Greenwich
Technology Partners, Inc. ("GTP").
GTP is a provider of a new category of network-focused professional services
called infrastructure architecture. GTP is comprised of one business segment.
As infrastructure architects, GTP focuses on the design, implementation,
security, performance and management of network infrastructures that have
become the foundation of the emerging e-business economy.
GTP's headquarters is in Stamford, Connecticut, with offices serving markets
in Baltimore, Boston, Chicago, Hartford, New York City, Northern New Jersey and
Washington, D.C.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make various estimates
and assumptions. Actual results could differ from those estimates.
Revenue Recognition
We derive revenue from professional services and provisioning. Professional
services revenue is only recognized when a contract arrangement exists,
services have been rendered, the fees are fixed or determinable and
collectibility is reasonably assured. Revenues are recognized for time-and-
materials contracts as services are provided. Revenues from fixed-fee contracts
are recognized as services are provided upon the achievement of specified
milestones. Revenue is recognized on partially completed milestones in
proportion to the costs incurred for that milestone and only to the extent that
an irrevocable right to the revenue exists. Costs incurred under time-and-
materials and fixed-fee contracts are recognized as incurred which generally is
in the same period that revenue is recorded. Provisioning refers to the sale of
hardware and software. Revenue from provisioning is recognized when equipment
is delivered to customers. For the year ended December 31, 1998, 39% of the
total revenue was derived from one customer and for the year ended December 31,
1999, 18% of the total revenue was derived from a different customer. In 1998
and 1999, GTP's five largest clients represented 68% and 51% of total revenues,
respectively.
F-7
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
Cash and Cash Equivalents
Cash and cash equivalents represents highly liquid investments with original
maturities of three months or less.
On July 30, 1999, GTP entered into a revolving $2.5 million credit facility
with First Union National Bank. This facility is available to finance working
capital requirements. The financing is collateralized by a pledge of $1.0
million held in a depository account with First Union. This amount represents
restricted cash. There were no amounts outstanding under this facility at
December 31, 1999. When borrowings are outstanding under the revolving credit
facility, interest rates are based upon the London Interbank Offered Rate plus
a premium ranging from 1.75% to 3.75%.
Inventories
Inventory represents non-client specific parts and hardware utilized in
installation and service. Inventories are valued at the lower of cost or
market, determined on the first in, first out (FIFO) basis.
Property, Plant and Equipment
Property, plant and equipment are carried at cost and depreciated and
amortized over their estimated useful lives using the straight-line method.
Leasehold improvements are depreciated over the term of the lease or the life
of the asset, as appropriate, using the straight-line method. GTP reviews the
carrying value of long lived assets for impairment when events indicate that
the carrying value may not be recoverable. GTP evaluates property, plant and
equipment for impairment by comparing the carrying value to undiscounted future
net pre-tax cash flows. If impairment is identified, the asset-carrying amount
is adjusted to fair value. Expenditures for maintenance and repairs are charged
to operations as incurred.
Deferred Income Taxes
Deferred income taxes are determined utilizing a liability approach. The
statement of operations effect is derived from changes in deferred income taxes
on the balance sheet. This approach gives consideration to future tax
consequences associated with differences between financial accounting and tax
bases of assets and liabilities. We reduce deferred income tax assets by a
valuation allowance when it is more likely than not that they will not be
realized.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts and other
receivables, and accounts payable approximate fair value due to the short-term
maturity of these instruments.
F-8
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
Concentration of Credit Risk
Trade accounts receivable potentially subject the Company to a
concentration of credit risk. GTP performs an ongoing credit evaluation of
customers and generally does not require collateral on accounts receivable.
GTP maintains allowances for potential credit losses and such losses have been
assessed within management's expectations.
Reclassification
Certain prior year amounts have been reclassified to conform to the current
year presentation.
3. NET LOSS PER SHARE
Net loss per share is calculated in accordance with SFAS No. 128, "Earnings
per Share". Basic net loss per common share is computed based upon the average
number of common shares outstanding. Diluted net loss per common share
includes dilutive stock options, warrants and convertible securities. Dilutive
net loss per common share is equivalent to basic loss per share as stock
options, warrants and convertible preferred stock are antidilutive. The
following table summarizes the calculation of earnings per share:
Inception to
December 31, Year Ended December 31,
------------ --------------------------
1997 1998 1999
------------ ------------ ------------
Net loss........................... $ (615,921) $ (1,873,776) $ (6,350,380)
Preferred stock dividend require-
ments............................. (6,193) (236,131) (386,307)
---------- ------------ ------------
Net loss applicable to common
stockholders for basic and
diluted loss per share.......... (622,114) (2,109,907) (6,736,687)
Weighted average shares for basic
and diluted loss per share...... 177,000 177,000 315,643
Basic loss per share from net
loss.............................. (3.51) (11.92) (21.34)
Diluted loss per share from net
loss.............................. $ (3.51) $ (11.92) $ (21.34)
In addition, the potential dilutive effect of 594,000, 2,002,025 and
3,744,626 employee stock options outstanding at December 31, 1997, 1998 and
1999 were not included in the calculation of loss per share as the effects
were antidilutive. The potential dilutive effect of preferred stock
convertible into common stock of 9,823,000, 14,039,700 and 28,860,511
outstanding at December 31, 1997, 1998 and 1999 were not included in the
calculation of loss per share as the effects were antidilutive.
F-9
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
4. PROPERTY, PLANT AND EQUIPMENT
December 31,
Estimated -------------------
Life (years) 1998 1999
------------ -------- ----------
Furniture and fixtures...................... 10 $ 86,773 $ 155,219
Computers and software...................... 3 691,138 1,536,402
Office equipment............................ 5 39,252 66,017
Leasehold improvements...................... (lease term) 69,410 134,736
Autos....................................... 3 34,901 34,901
-------- ----------
921,474 1,927,275
Less: Accumulated depreciation and amortiza-
tion....................................... 103,910 496,519
-------- ----------
$817,564 $1,430,756
======== ==========
Capitalized lease amounts included in
above...................................... $ 19,864 $ 14,682
In 1999, GTP recorded a charge of $207,000 to reduce the carrying amount of
certain computer software assets to be disposed of to zero. This charge was
recorded as depreciation expense in the Statement of Operations.
5. COMMITMENTS, INSTALLMENT LOANS AND CONTINGENCIES
Greenwich Technology Partners is obligated under various operating leases
and subleases for its corporate offices, operations facilities and various
equipment used in the business. The facilities leases and subleases are for
various terms and provide for escalations and landlord cost reimbursements
consistent with applicable market conditions. Capitalized lease commitments
relate to GTP's telephone system. The following is a schedule of the future
minimum lease payments under all operating leases and capitalized lease
commitments:
Operating Capitalized
Fiscal Year Leases Leases
----------- --------- -----------
2000.................................................. $585,366 $ 6,406
2001.................................................. 297,762 6,406
2002.................................................. 48,550 5,106
2003.................................................. 8,261 --
-------- --------
$939,939 17,918
========
Less: interest factor................................. (2,127)
--------
Present value of total capitalized lease obligation... 15,791
Less: Current Portion................................. (5,195)
--------
Long term portion of capitalized lease obligation..... $ 10,596
========
Payments associated with GTP's capitalized lease obligation for the years
ending December 31, 1998 and 1999 were $4,687 and $4,750, respectively. In
addition, payments associated with operating lease obligations for the year
ending December 1998 and 1999 totaled $179,877 and $698,515, respectively.
F-10
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
At December 31, 1998 and 1999, GTP had an outstanding installment loan of
$33,987 and $28,204 relating to the purchase of automobiles. This installment
loan has an interest rate of 9.7%. The loan is payable monthly through 2002.
In the ordinary course of business, GTP is involved in various claims and
lawsuits. Ultimate liability with respect to such contingencies is not
presently determinable, but in the opinion of management it will not have a
material adverse effect on the results of operations or financial position of
GTP.
6. INCOME TAXES
The provision for income taxes represents only certain state and local
minimum amounts due to GTP's net operating loss. Deferred income taxes are
determined based on the temporary differences between the financial reporting
and tax bases of assets and liabilities. The current federal and state tax
rates in effect during the year are used to calculate the temporary
differences. At December 31, 1998 and 1999, temporary differences exist for the
allowance for doubtful accounts and depreciation expense. The net operating
loss ("NOL") carryforward is valued as a deferred tax asset. A valuation
allowance has been established to offset the net deferred tax asset, as the
realizability of the asset is uncertain. These carryforwards begin to expire in
2012 and 2002, for federal and state purposes, respectively. Future utilization
of the NOL may be subject to certain limitations imposed by the Internal
Revenue Code.
At December 31, 1998 and 1999, the federal and state NOL carryforwards are
as follows:
1998 1999
----------- -----------
Federal.............................................. $ 2,031,647 $ 8,122,130
State................................................ 2,064,564 8,122,130
7. CAPITAL STOCK
Greenwich Technology Partners has issued five classes of preferred stock
which include series A preferred stock, series B preferred stock, series C
preferred stock, series D preferred stock and series E preferred stock. The
preferred stockholders may, at the option of the holder, convert their
preferred shares into fully paid shares of GTP's common stock. All shares of
preferred stock automatically convert into shares of common stock immediately
upon the closing of a public offering of GTP pursuant to an effective
registration statement under the Securities Act of 1933 with a per share price
of at least $5.50 and at least $30.0 million in net proceeds to GTP. The number
of shares of common stock to which a holder of preferred stock shall be
entitled upon conversion is determined using the applicable "Conversion Rate"
for that series of preferred stock. As of December 31, 1999, each share of
preferred stock is convertible into one share of common stock. During 1999,
189,969 shares of series B preferred stock and 10,031 shares of series C
preferred stock were converted into 200,000 shares of GTP's common stock.
F-11
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
In connection with the issuance of series D preferred stock, warrants for
the purchase of 4,273,504 additional shares of series D preferred stock at
$1.17 per share were issued. The fair value of these warrants was de minimus at
the date of issuance. These warrants vest at the earliest of the following: (i)
January 1, 2001 or (ii) the effective date on which GTP elects an initial
public offering or (iii) on the effective day of any consolidation or merger of
GTP with any other corporation, subject to certain provisions or (iv) the sale
of substantially all of GTP's assets. In the event GTP completes a public
offering of its shares before December 31, 2000, the number of shares the
warrant entitles the holder to purchase reduces by 40%. In the event offering
is completed on or before June 30, 2000, the reduction of shares is 50%.
Holders of series A, series B and series C preferred stock are entitled to
cumulative cash dividends at a rate of 9% of the original issue price. GTP has
not declared cumulative dividends on common stock and preferred stock from
inception through December 31, 1999. The amount of dividends undeclared on the
series A preferred stock, series B preferred stock and series C preferred stock
at December 31, 1999 were $190,060, $21,639 and $416,932, respectively. Upon
conversion of preferred stock into common stock, preferred stockholders are no
longer entitled to any of these undeclared dividends.
Greenwich Technology Partners has a share repurchase agreement with certain
of its stockholders by which GTP shall have an irrevocable option to purchase
the shares from certain terminated employee stockholders or the estate of
deceased stockholders. A stockholder voluntarily separated from GTP during 1998
and in accordance with the above agreement, during 1999 GTP purchased 177,000
shares from the individual for $53,100.
8. STOCK INCENTIVE PLAN
Greenwich Technology Partners' board of directors has authorized the
issuance of up to 7.0 million shares at December 31, 1999 that may be awarded
as stock options under GTP's 1997 Stock Plan (the "Plan") to employees,
directors and consultants of GTP. Stock options, granted at fair market value,
under the Plan extend for 10 years from the date of grant and generally vest
ratably over a two to four year period. The estimated fair market value of a
common share is determined by GTP as of the quarter-end immediately preceding
the date an employee elects to exercise the option.
F-12
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
GTP accounts for stock options by applying the guidelines of the Accounting
Principles Board "Accounting for Stock Issued to Employees" (APB 25). No
compensation cost has been recognized for its employee stock option grants as
the options have been granted at fair market value as determined by GTP's board
of directors. Had stock options been accounted for based on the fair value
method of Statement of Financial Accounting Standards "Accounting for Stock-
Based Compensation" (SFAS 123), the impact on the net loss would have been as
follows:
Year Ended December 31,
------------------------
Inception to
date 1997 1998 1999
------------ ----------- -----------
Net loss:
As reported........................... $(615,921) $(1,873,776) $(6,350,380)
Pro forma............................. (633,088) (1,960,178) (6,439,766)
Basic and Diluted net loss per share
As reported........................... $ (3.51) $ (11.92) $ (21.34)
Pro forma............................. $ (3.61) $ (12.41) $ (21.63)
The fair market value of options is estimated on the date of grant using the
Black-Scholes option pricing model with the following weighted average
assumptions used for grants during the years ended December 31, 1997, 1998 and
1999, respectively, dividend yield of 0% for all periods; expected volatility
of 0% for all periods; risk-free interest rates ranging from 5.96% to 6.69% in
1997 and 4.17% to 5.73% in 1998 and 4.70% to 6.44% in 1999; and an expected
option life of four years for all periods.
Option award activity from the period of inception through December 31, 1997
and during 1998 and 1999 are summarized as follows:
Weighted
Average
Shares Exercise Price
--------- --------------
Inception, March 14, 1997
Granted.......................................... 594,000 0.50
--------- ----
Outstanding at December 31, 1997................... 594,000 0.50
Granted.......................................... 1,413,525 0.30
Forfeited........................................ (5,500) 0.30
--------- ----
Outstanding at December 31, 1998................... 2,002,025 0.30
Granted.......................................... 2,659,375 0.35
Exercised........................................ (642,849) 0.32
Forfeited........................................ (273,925) 0.30
--------- ----
Outstanding at December 31, 1999................... 3,744,626 0.33
========= ====
Exercisable at December 31,1999.................... 1,471,410 0.31
========= ====
F-13
GREENWICH TECHNOLOGY PARTNERS, INC.
NOTES TO FINANCIAL STATEMENTS--(Continued)
For the period from inception (March 14, 1997) through December 31, 1997 and
for the years ended December 31, 1998 and December 31, 1999
On December 3, 1998, GTP's Board of Director's elected to re-price the
exercise price of all 1997 option grants from $0.50 to $0.30. The purpose of
the re-pricing was to price options at the fair market value of the common
stock on the date of grant.
The following table summarizes information on stock options outstanding at
December 31, 1999:
Weighted Average
Exercise Price Options Remaining Life of Options
(per share) Outstanding Options Outstanding Exercisable
-------------- ----------- ------------------- -----------
$0.30 3,659,374 8.9 yrs 1,446,410
$0.60 85,252 9.9 yrs 25,000
--------- ---------
3,744,626 1,471,410
9. EMPLOYEE BENEFIT PLAN
Greenwich Technology Partners established a salary deferral plan (the
"Plan") pursuant to Section 401(k) of the Internal Revenue Code, as amended.
Effective January 1, 1998, all employees that are at least age 21 are eligible
to join the Plan. After January 1, 1998, employees are eligible to join the
Plan if they are at least age 21 and have completed two months of service with
GTP. GTP will match 25% of the first 6% of pay the employee contributes to the
Plan through salary deferral. These matching contributions vest ratably over
four years. GTP's contributions to the Plan during 1998 and 1999 were $16,492
and $81,511, respectively.
10. RELATED PARTIES
During 1999, GTP paid fees of $200,000 and 85,470 shares of series D
preferred stock to a senior officer of GTP for his services rendered prior to
becoming an officer of GTP. The payments were made in connection with services
rendered as a consultant in the offering of the series D preferred stock.
In December 1999, GTP loaned certain employees $99,989 in connection with
the exercise of stock options. The employees have signed demand notes payable
to GTP in exchange for the loans, which bear a 5.5% rate of interest. The note
receivable is reported as a reduction of additional paid in capital.
11. SUBSEQUENT EVENT
On January 14, 2000, GTP completed the sale in a third closing of additional
shares of series E preferred stock with proceeds totaling $903,183. The
financing resulted in the issuance of 428,049 shares of series E preferred
stock at $2.11 per share.
F-14
[INSIDE BACK COVER ARTWORK]
The color artwork will be a half circle of elipse:
containing technical alliance partner logos around the
words "The Greenwich Technology Partners Solution."
[LOGO OF GREENWICH TECHNOLOGY PARTNERS]
Schedule II--Valuation and Qualifying Accounts
Allowance for Doubtful Accounts
Greenwich Technology Partners, Inc.
Inception
(March 14,
1997) Years ended
through December 31,
December 31, ----------------
1997 1998 1999
------------ ------- --------
(in thousands)
Balance at beginning of period................... $ 0 $20,000 $ 97,038
Additions charged to Statement of Operations..... 25,204 95,433 166,194
Deductions....................................... 5,204 18,395 46,617
------- ------- --------
Balance at end of period......................... $20,000 $97,038 $216,615
======= ======= ========
S-1
PART II
Information Not Required in Prospectus
Item 13. Other Expenses of Issuance and Distribution
The following table sets forth the estimated costs and expenses, other than
the underwriting discounts and commissions, payable by the registrant in
connection with the sale of the common stock being registered.
Amount
to be
Paid
-------
SEC registration fee................................................ $14,520
NASD filing fee..................................................... 6,000
Nasdaq National Market listing fee.................................. *
Legal fees and expenses............................................. *
Accounting fees and expenses........................................ *
Printing and engraving expenses..................................... *
Transfer agent and Registrar fees and expenses...................... *
Miscellaneous....................................................... *
-------
Total............................................................. $ *
=======
--------
* To be provided by amendment
Item 14. Indemnification of Directors and Officers
The Delaware General Corporation Law and GTP's charter and by-laws provide
for indemnification of GTP's directors and officers for liabilities and
expenses that they may incur in such capacities. In general, directors and
officers are indemnified with respect to actions taken in good faith in a
manner reasonably believed to be in, or not opposed to, the best interests of
GTP, and with respect to any criminal action or proceeding, actions that the
indemnitee had no reasonable cause to believe were unlawful. Reference is made
to GTP's amended and restated charter and by-laws filed as Exhibits 3.3 and
3.5, respectively.
The Underwriting Agreement provides that the underwriters are obligated,
under certain circumstances, to indemnify directors, officers and controlling
persons of GTP against certain liabilities, including liabilities under the
Securities Act. Reference is made to the form of Underwriting Agreement filed
as Exhibit 1.1 hereto.
GTP intends to apply for a directors' and officers' insurance policy.
Item 15. Recent Sales of Unregistered Securities
Common Stock
GTP initially issued 3,000 shares of its common stock to Antares Networks,
Inc. for an aggregate consideration of $2,000 on April 30, 1997.
II-1
On December 9, 1997, GTP issued 177,000 shares of its common stock to
Vincent Yenko, as described more fully below.
On February 1, 1999, Persistence Partners, L.P. converted 189,696 of its
Series B preferred stock and 10,031 shares of its Series C preferred stock into
common stock on a one-to-one basis for a total of 200,000 shares of common
stock.
On March 1, 2000, GTP issued 98,250 and 79,250 shares of its common stock to
John Rothenberger and G. Richard Rothenberger, respectively, in connection with
the acquisition of Aspire Technology Group, Inc. The fair market value of the
common stock at that time was $.60 per share.
On April 13, 2000, GTP issued 500,000 shares of its common stock to Michael
Waresk in connection with the merger of Navigator Technologies, Inc. into GTP.
Preferred Stock and Warrants.
On December 9, 1997, GTP issued 5,723,000 shares of its series B preferred
stock and 177,000 shares of its common stock to Persistence Partners, L.P. and
Vincent Yenko, respectively, in consideration of these two parties' ownership,
equal to all of the outstanding interests, in Antares Networks, Inc.
Also on December 9, 1997, GTP issued 4,100,000 shares of its series A
preferred stock to two investors for an aggregate purchase price of $1,025,000.
On June 25, 1998, GTP issued an aggregate of 3,060,000 shares of its series
C preferred stock to two investors for an aggregate purchase price of
$2,295,000. On August 7, 1998, GTP issued an aggregate of 823,364 shares of its
series C preferred stock to two investors for an aggregate purchase price of
$617,523. On October 26, 1998, GTP issued 333,333 shares of its series C
preferred stock to one investor for an aggregate purchase price of $249,999.75.
On February 1, 1999, GTP issued 5,213,675 shares of its series D preferred
stock to eight investors for an aggregate purchase price of $6,099,999.75.
Included in these figures is a grant of 85,470 shares of series D preferred
stock that GTP issued to Dennis M. Goett as partial payment for services
rendered by Mr. Goett's company, CrossRoads Strategy Group, Inc. to GTP in
connection with the financing. GTP also issued two warrants to purchase up to
an aggregate of 4,273,504 shares of series D preferred stock at $1.17 per
share. The warrants become exercisable upon the earliest to occur of (i) the
initial public offering of GTP's common stock below; (ii) the merger or
acquisition of the company where fifty percent of the outstanding capital stock
of GTP or fifty percent of the voting power in GTP is transferred; (iii) a sale
or other disposition of all or substantially all of GTP's assets; and (iv)
January 1, 2001. Notwithstanding the above, fifty percent of the warrants will
vest if a liquidity event with a value of greater than $4.68 occurs prior to
June 30, 2000 and sixty percent of the warrants will vest prior to December 21,
2000, with the remaining rights pursuant to the warrants terminating.
On September 10, 1999, GTP issued 7,582,940 shares of its series E preferred
stock to six investors for an aggregate purchase price of $16,000,003.40. On
October 28, 1999, GTP sold an additional 2,224,199 shares of its series E
preferred stock for an aggregate purchase price of $4,693,059.89. On January
14, 2000, GTP sold 428,049 shares of its series E preferred stock for an
aggregate purchase price of $903,183.39.
II-2
No underwriters were used in the foregoing transactions. All sales of
securities described above were made in reliance upon the exemption from
registration provided by Section 3(a)(9) and Section 4(2) of the Securities Act
of 1933 (and/or Regulation D promulgated thereunder) for transactions by an
issuer not involving a public offering.
Grants and Exercises of Stock Options
Since April 21, 1997 through April 11, 2000, GTP has granted stock options
to purchase 8,499,891 shares of common stock with exercise prices ranging from
$.30 to $2.00 per share, to employees, directors, and consultants pursuant to
our 1997 Stock Plan. Of these options, 1,957,012 have been exercised for an
aggregate consideration of $767,254.60 as of April 11, 2000. The issuance of
these options and the common stock issuable upon the exercise of the options
was exempt either pursuant to Rule 701, as a transaction pursuant to a
compensatory benefit plan, or pursuant to Section 4(2), as a transaction by an
issuer not involving a public offering.
II-3
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits.
Number Description
------ -----------
1.1* Form of Underwriting Agreement
2.1 Stock Purchase Agreement by and among the Registrant and Aspire
Technology Group, Inc. dated as of March 1, 2000
2.2 Asset Purchase Agreement by and among the Registrant and NetGain, LLC
dated as of March 31, 2000
2.3* Agreement and Plan of Merger and Reorganization by and between the
Registrant, Navigator Technologies, Inc. and Michael Waresk dated as of
April 13, 2000.
3.1 Amended and Restated Certificate of Incorporation
3.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation
3.3* Form of Amended and Restated Certificate of Incorporation to be in
effect upon the closing of this offering
3.4 By-laws
3.5* Certificate of Merger of Navigator and the Registrant dated as of April
13, 2000.
3.6* Form of Amended and Restated By-laws to be in effect upon the closing
of this offering
4.1* Specimen Common Stock certificate
4.2* See Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions defining the
rights of holders of common stock of the registrant
4.3* Form of Series D Preferred Stock Purchase Warrant
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
10.1 Loan Agreement with First Union National Bank dated July 30, 1999
10.2 Security Agreement with First Union National Bank dated July 30, 1999
10.3 Promissory Note to First Union National Bank dated July 30, 1999
10.4 1997 Stock Option Plan as amended
10.5* 2000 Stock Incentive Plan
10.6* 2000 Employee Stock Purchase Plan
10.7 Investment Agreement, dated December 9, 1997
10.8 Investment Agreement (Series C Preferred Stock), dated June 25, 1998
10.9 Investment Agreement (Series C Preferred Stock), dated August 7, 1998
10.10 Investment Agreement (Series D Preferred Stock), dated February 1, 1999
10.11 Series E Preferred Stock Investment Agreement, dated September 10, 1999
10.12 Amendment No. 1 to the Series E Preferred Stock Investment Agreement
dated January 14, 2000
10.13 Amended and Restated Shareholders' Agreement, dated September 10, 1999
10.14 Amended and Restated Registration Rights Agreement, dated September 10,
1999
10.15* Sublease Agreement for the Registrant dated March 22, 2000.
10.16 Employment Agreement dated December 9, 1997 with Joseph P. Beninati
10.17 Employment Letter dated December 1, 1998 with Dennis M. Goett
10.18 Amendment to Employment Letter with Dennis M. Goett
10.19 Employment Letter dated October 1, 1999 with John Stopper
10.20 Employment Letter dated January 26, 2000 with Richard Haverly
10.21 Employment Letter dated March 13, 2000 with Johna Till Johnson
10.22 Letter Agreement dated July 27, 1999 with Credit Suisse First Boston
Corporation
10.23 Letter Agreement regarding Indemnification dated July 27, 1999 with
Credit Suisse First Boston Corporation
10.24 Shareholders' Agreement between John Rothenberger and G. Richard
Rothenberger and the Registrant, dated March 1, 2000
10.25* Shareholders' Agreement between Michael Waresk and the Registrant dated
April 13, 2000.
10.26* Escrow Agreement between Michael Waresk, Navigator Technologies, Inc.
and the Registrant.
11.1* Statement re: Computation of Basic and Diluted Net Loss Per Share
21.1 Subsidiaries
23.1 Consent of Arthur Andersen, LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (See Signature Page)
27.1 Financial Data Schedule
- --------
* To be supplied by amendment.
+ Confidential treatment requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.
II-4
(b) Financial Statement Schedules.
Schedule II--Valuation and Qualifying Accounts
Item 17. Undertakings
The undersigned registrant hereby undertakes to provide to the underwriter
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.
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 counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424 (b)(1) or (4), or
497(h) under the Securities Act of 1933, shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act of
1933, each post-effective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in White Plains, New York,
on this 13th day of April, 2000.
Greenwich Technology Partners, Inc.
/s/ Joseph P. Beninati
By: _________________________________
Joseph P. Beninati
Chief Executive Officer and
President
POWER OF ATTORNEY
We, the undersigned directors and/or officers of Greenwich Technology
Partners, Inc. (the "Company"), hereby severally constitute and appoint Joseph
P. Beninati and Dennis M. Goett and each of them individually, with full powers
of substitution and resubstitution, our true and lawful attorneys, with full
powers to them and each of them to sign for us, in our names and in the
capacities indicated below, the Registration Statement on Form S-1 filed with
the Securities and Exchange Commission, and any and all amendments to said
Registration Statement (including post-effective amendments), and any
registration statement filed pursuant to Rule 462(b) under the Securities Act
of 1933, as amended, in connection with the registration under the Securities
Act of 1933, as amended, of equity securities of the Company, and to file or
cause to be filed the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys, 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
connection therewith, as fully to all intents and purposes as each of them
might or could do in person, and hereby ratifying and confirming all that said
attorneys, and each of them, or their substitute or substitutes, shall do or
cause to be done by virtue of this Power of Attorney.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated:
Signature Title(s) Date
--------- -------- ----
/s/ Joseph P. Beninati Chief Executive Officer, April 13, 2000
______________________________________ President and Chairman of
Joseph P. Beninati the Board of Directors
(Principal Executive
Officer)
/s/ Dennis M. Goett Senior Vice President, April 13, 2000
______________________________________ Chief Financial Officer,
Dennis M. Goett Treasurer and Director
(Principal Financial and
Accounting Officer)
/s/ Ronald V. Davis Director April 13, 2000
______________________________________
Ronald V. Davis
II-6
Signature Title(s) Date
--------- -------- ----
/s/ Edmund A. Hajim Director April 13, 2000
______________________________________
Edmund A. Hajim
/s/ Jonathan R. Lynch Director April 13, 2000
______________________________________
Jonathan R. Lynch
/s/ William Jefferson Marshall Director April 13, 2000
______________________________________
William Jefferson Marshall
/s/ David H.W. Turner Director April 13, 2000
______________________________________
David H.W. Turner
II-7
INDEX TO EXHIBITS
Number Description
------ -----------
1.1* Form of Underwriting Agreement
2.1 Stock Purchase Agreement by and among the Registrant and Aspire
Technology Group, Inc. dated as of March 1, 2000
2.2 Asset Purchase Agreement by and among the Registrant and NetGain, LLC
dated as of March 31, 2000
2.3* Agreement and Plan of Merger and Reorganization by and between the
Registrant, Navigator Technologies, Inc. and Michael Waresk dated as of
April 13, 2000.
3.1 Amended and Restated Certificate of Incorporation
3.2 Certificate of Amendment to Amended and Restated Certificate of
Incorporation
3.3* Form of Amended and Restated Certificate of Incorporation to be in
effect upon the closing of this offering
3.4 By-laws
3.5* Certificate of Merger of Navigator and the Registrant dated as of April
13, 2000.
3.5* Form of Amended and Restated By-laws to be in effect upon the closing
of this offering
4.1* Specimen Common Stock certificate
4.2* See Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions defining the
rights of holders of common stock of the registrant
4.3* Form of Series D Preferred Stock Purchase Warrant
5.1* Opinion of Testa, Hurwitz & Thibeault, LLP
10.1 Loan Agreement with First Union National Bank dated July 30, 1999
10.2 Security Agreement with First Union National Bank dated July 30, 1999
10.3 Promissory Note to First Union National Bank dated July 30, 1999
10.4 1997 Stock Option Plan as amended
10.5* 2000 Stock Incentive Plan
10.6* 2000 Employee Stock Purchase Plan
10.7 Investment Agreement, dated December 9, 1997
10.8 Investment Agreement (Series C Preferred Stock), dated June 25, 1998
10.9 Investment Agreement (Series C Preferred Stock), dated August 7, 1998
10.10 Investment Agreement (Series D Preferred Stock), dated February 1, 1999
10.11 Series E Preferred Stock Investment Agreement, dated September 10, 1999
10.12 Amendment No. 1 to the Series E Preferred Stock Investment Agreement
dated January 14, 2000
10.13 Amended and Restated Shareholders' Agreement, dated September 10, 1999
10.14 Amended and Restated Registration Rights Agreement, dated September 10,
1999
10.15* Sublease agreement for the Registrant dated March 22, 2000.
10.16 Employment Agreement dated December 9, 1997 with Joseph P. Beninati
10.17 Employment Letter dated December 1, 1998 with Dennis M. Goett
10.18 Amendment to Employment Letter with Dennis M. Goett
10.19 Employment Letter dated October 1, 1999 with John Stopper
10.20 Employment Letter dated January 26, 2000 with Richard Haverly
10.21 Employment Letter dated March 13, 2000 with Johna Till Johnson
10.22 Letter Agreement dated July 27, 1999 with Credit Suisse First Boston
Corporation
10.23 Letter Agreement regarding Indemnification dated July 27, 1999 with
Credit Suisse First Boston Corporation
10.24 Shareholders' Agreement between John Rothenberger and G. Richard
Rothenberger and the Registrant, dated March 1, 2000
10.25* Shareholders' Agreement between Michael Waresk and the Registrant dated
April 13, 2000.
10.26* Escrow Agreement between Michael Waresk, Navigator Technologies, Inc.
and the Registrant.
11.1* Statement re: Computation of Basic and Diluted Net Loss Per Share
21.1 Subsidiaries
23.1 Consent of Arthur Andersen, LLP
23.2* Consent of Testa, Hurwitz & Thibeault, LLP (included in Exhibit 5.1)
24.1 Power of Attorney (See Signature Page)
27.1 Financial Data Schedule
- --------
* To be supplied by amendment.
+ Confidential treatment requested for certain portions of this Exhibit
pursuant to Rule 406 promulgated under the Securities Act.