accurate electromagnetic frequency control is required.
Our military sales are received through independent sales representatives who are paid a commission
Commercial INIVEN Sales and Products
INIVEN equipment is designed around four (4) core product groups:
(1) PTR and PDR Teleprotection Series (Protective Tone Relaying Communications Terminal), which includes the PTR-1000, PTR-1500 and PDR-2000.
(2) Audio Tone & Telemetry Equipment (Audio Tone Control, Telemetering and Data Transmission Systems), which includes Series 98, 68, 40 and GEN-1.
(3) Multiplex Supervisory Control System
(4) Communication Link Multihead Fiber Optic Couplers and Industrial Grade 1200 Baud Modems.
PTR TELEPROTECTION SERIES
This product is designed for use exclusively by electric power generators (electric utilities and co-generators) in order to protect their transmission and distribution lines. The PTR-1000, by monitoring the output signal
of the transmission equipment in less than one hundredth of a second protects the transmission and distribution lines.
The PTR-1000 are installed in pairs, one unit at each end of the line. Each unit is connected and in constant communication with the other, as they continuously monitor the line for faults. In the event of a fault occurring
(such as a downed line or a short circuit) at either end and when confirmed by the receiving PTR-1000 unit, the line is immediately isolated for shut down, averting costly damage and downtime.
The PTR-1000 system is composed of a transmitter, dual receivers, a logic card (brain center and controller of the system), relay module, line interface module and power supply module. The transmitters at each end are
independent and transmit (continuously) the status (information being monitored) at their end of the line.
The PTR-1500, is a quad system and performs as 2 duals or 4 singles with many unique features such as multiple line operation, event recording with date stamp with optional analog or digital transmission modes including
optic fiber interface.
The PDR 2000 is an 8 channel high speed communication system for use in electric power transmission protection schemes. Unique features include event recording, on-board and remote programming, and ID (unit to unit
identification on all communications), Packet Forwarding (ability to forward information such as trips and all events through indirect communication paths), password protection and multiple communication ports.
The PTR/PDR Teleprotection Series are designed for global use by electric utilities and any entity generating power for its own consumption with resale of surplus power to an electric utility, such as cities,
municipalities, cooperatives and large corporations that find it more economical to generate their own electricity.
The PTR/PDR market is:
New installations; i.e., new transmission lines, new distribution segments, for utilities and cogenerators.
Existing installations not properly protected, improving efficiency and reducing down time.
Existing installations for upgrading to PTR/PDR technology, again improving efficiency and down time.
Sales efforts for the PTR/PDR are presently being conducted by the Company's marketing executives, through independent manufacturers' representatives and through distributors. Sales are targeted primarily to the
largest
--8--
utilities and co-generators.
In the United States alone, there are over 500 large entities generating electricity. They are:
o Municipal Systems
o Cooperative Systems
o Federal, State and District Systems
o Audio Tone and Telemetry Equipment
For many years there has been a need for a modularly independent system that would permit a user, from a distance, to control functions such as opening a valve, starting a motor, shutting down a compressor, changing a
traffic signal, control landing lights at an airport, activate a hazard warning on a highway, and in return allow the user to receive information, such as the liquid level in a tank, the pressure in a pipe, the rate of flow out of a compressor, the
flow of traffic, the status of a traffic light, airport lights, or confirmation that a command was performed. Such information is transmitted and received and the control functions are performed from a distance utilizing telephone lines, microwave
link or direct wire.
These applications, by their nature, can be accomplished with slow speed signaling systems composed of a transmitter on one end and a receiver on the other to carry out the necessary instructions provided by the
transmitter. Each set (transmitter/receiver combination) is called a channel. Because of the slow speed, up to 30 channels could be made to transmit and receive signals, in either direction on a single telephone line, microwave link or direct-wired
line at the same time. This parallel transmission permits each transmitter/receiver pair to be independent of all the others.
This product segment includes the first generation equipment, known as GEN-1, followed by later generations which include technological improvements and programmable capabilities to include:
GEN-1 Series - First generation with electromagnetic modules and first generation programmable modules without electro-magnetic modules.
98 and 68 Series - The latest generation applies DSP and microprocessor technology with full programmability, in the field or at the factory.
40 Series - Designed to function with the 98 or 68 series; transmits and receives variable analog data.
GEN-1 AND GEN-1 PROGRAMMABLE SERIES
The diversity of applications for this equipment makes it available for a wide range of users who are not restricted to a single industry. Typical industrial uses include: the measurement of water and gas, waste water,
gasoline, oil, traffic, and electricity. Typical users include: utilities, co-generators, airports, navy yards, telephone companies, paper and pulp processors and wherever remote control and data acquisition is required.
Since our line has a distinct mechanical configuration, we designed our GEN-1 Programmable units and other improvements as replacements for existing units.
Our line of GEN-1 equipment is extensive and provides the user with the ability to perform multiple control functions, status monitoring as well as continuous variable data monitoring, such as a level in a tank or pressure
gauge.
Sales for this line are primarily for the replacement of existing installations and for expansion of these installations where it would not be economical to install the latest technology, which would not be mechanically
compatible.
Sales to this market are made in the same manner as the PTR/PDR market except that manufacturers' representatives
--9--
specialize in selling to this diverse market.
98, 68 and 40 Series represent our latest designs in the audio tone equipment utilizing the more advanced DSP technology, which provides high accuracy and long-term stability. These features have allowed us to greatly
improve the scope, density and number of functions that can be performed on a single phone line, microwave link or direct line.
Sales of these products are made by the same agents who sell our GEN-1 products, but are also directed to encompass more sophisticated users with larger amounts of data and control points. The mechanical configuration of
the 98 series is more compact, permitting more equipment in a given space, while performing many more functions when it is connected to the 40 Series. The 68 Series is the 98 Series repackaged mechanically specifically for customers with
older systems permitting them to upgrade their systems to DSP technology. The 40 Series, when connected to the 98 or 68 in the same chassis, permits the continuous monitoring of variable data.
Typical applications for these products include transmission of the variable data (such as volume, temperature, pressure and moisture) for water, gas, industrial gases, oil, gasoline, transportation equipment and telephone
exchanges, and for use at airports, tunnels and bridges and for security and electricity systems.
MULTIPLEX SUPERVISORY (IM) CONTROL SYSTEM
This product is a response to the cost and scarcity of dedicated phone lines (connections whereby the phone link is dedicated to one subscriber), and enables customers with high volumes of supervisory data (where many
functions are monitored from a single site) to transmit data on fewer phone lines (i.e., with more data per channel, up to a maximum of 30 channels per line).
Using the 98 DSP Series as its communications link, we designed the Multiplexer Supervisory Control System to handle 8 times the normal capacity per channel. The microprocessor-based system allows a single telephone line
to handle up to 900 data inputs. This product line because of its data density capability, may be utilized for a very broad range of applications. This product has only recently been introduced and our sales efforts for it are being conducted
through our existing independent manufacturers sales representatives.
FIBER OPTIC LINK AND DATA MODEM
The expansion of fiber lines by our customers and their need to switch equipment from phone lines to fiber prompted us to design and introduce a fiber-optic-coupler line to interface with the many different fiber heads. In
addition to complete data interface couplers we launched a series of 1200 Baud Modems (Industrial Grade) for operation under the same environmental specifications in line with our products.
OUR STRATEGY
Our strategy is to develop new commercial markets by continuing to develop new products and enhance existing products to improve both our market share and competitive position. Growth in commercial sales is expected to come
through internal growth of existing products, new product introductions and the expansion of regional markets to meet the growing needs of our customers for more sophisticated and comprehensive products and services.
MARKETING AND SALES
In general, our products are marketed through telemarketing and customer contacts by our President and through independent manufacturing sales representatives and distributors.
COMPETITION
The market for our products and staffing services is very competitive. There are several companies engaged in providing the services and in the manufacturing the products of the type produced by us, most of which are
substantially larger and have substantially greater name recognition or greater financial resources and personnel. The major competitive factors include availability of personnel, product quality, reliability, price, service and delivery.
--10--
Competition is expected to continue and intensify. The market is also characterized by rapid technological changes and advances. We would be adversely affected if our competitors introduced technology superior products or
offered these products and services at significantly lower prices than our products.
LARGEST CUSTOMERS
Our major customers during fiscal 2007 were Bonneville Power Authority and NSTAR. Sales to these customers totaled $229,512. None of these customers has or had any material relationship other than business with the
Company.
INVENTORY
RAW MATERIALS
We believe that we have adequate sources of raw materials available for use in our business. Our products are assembled from a variety of standard electronic components, such as integrated circuits, transformers,
transistors, passive components (i.e., resistors, capacitors and inductors), diodes and assorted hardware, such as, printed circuit boards, connectors and faceplates. We are not dependent upon any single supplier. We also purchase a number of other
electronic components and sub-assemblies from various suppliers.
In the past, we manufactured and held in our inventory finished products pursuant to the military specifications and based upon the military forecast for future quantities and delivery schedules. Widespread military
procurements were discontinued as a result of the end of the cold war and the downsizing of the military establishment. Consequently, management made a decision to write off a substantial amount of the military inventory in 2001 and 2002. As a
result, we no longer manufacture military products in advance. Rather, we only schedule production as purchase orders are received.
MANUFACTURING
The Company currently rents approximately 7,000 square feet of the facility located at 5 Columbia Road, for a combination of manufacturing and office space. The Company assembles, under normal workload conditions, the
product it sells; however, to accommodate the peak demands that occur from time to time, we can engage a number of subcontractors to assemble boards to our specifications. All assemblies, however, are inspected and fully tested by our quality,
engineering and testing departments. We maintain test equipment and every product is burned-in (i.e., each product is run at full power for 48 hours) and tested prior to shipment.
WARRANTY AND SERVICE
We provide a twelve-year warranty on our products, which covers parts and labor. The Company, at its option, repairs or replaces products that are found defective during the warranty period providing proper preventive
maintenance procedures have been followed by customers. Repairs that are necessitated by misuse of such products are not covered by our warranty.
In cases of defective products, the customer typically returns them to our facility in Somerville, New Jersey. Our service personnel then replace or repair the defective items and ship them back to the customer. Generally
all servicing is completed at our plant and customers are charged a fee for those service items that are not covered by the warranty. We do not offer our customers any formal written service contracts.
RESEARCH AND DEVELOPMENT
NEW PRODUCTS - CM-100 PLATFORM
In February 2007, we formally introduced the CM-100, which we believe is the first of its kind, direct substation hardened communication consolidator that fills the existing gap in substation communications. The hardwired
CM-100 will allow our existing products, including the PDR-100, to operate seamlessly over fiber optics together with existing substation equipment.
--11--
THIS OFFERING
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Shares of common stock outstanding prior to this offering
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2,787,469
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(1)
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Shares being offered by the selling stockholders
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800,000
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Shares of common stock to be outstanding after the offering
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2,787,469
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(1)
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Use of proceeds
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We will not receive any proceeds from
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the sale of the shares of common stock
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offered in this prospectus.
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Risk Factors
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The purchase of our common stock
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involves a high degree of risk. You
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should carefully review and consider
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"Risk Factors beginning on page __.
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NASDAQ Board Stock Exchange Symbol
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CNLGD(2)
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(1) As of July 2, 2008.
(2) Due to a four-for-one reverse stock split effected June 11, 2008, the Companys stock symbol changed
from CNLG to CNLGD. The Companys stock symbol will revert back to CNLG on July 10, 2008.
RISK FACTORS
An investment in our common stock involves a very significant risk. You should carefully consider the following risks and uncertainties in addition to other information in this prospectus in evaluating our company and its
business before purchasing shares of our company's common stock. Our business, operating results and financial condition could be seriously harmed due to any of the following risks. You could lose all or part of your investment due to any of these
risks.
Sales of a substantial number of shares of our common stock in the public market could cause a reduction in the market price of our common stock.
Any significant downward pressure on the price of our common stock as our shareholders sell shares of our common stock could encourage short sales. Any such short sales could place further downward pressure on the price of
our common stock.
We have a history of operating losses and thus we may not be profitable in the future.
Our continued existence is dependent upon us successfully expanding our business and attaining profitable operations. We have historically had net losses from operations and there can be no assurance that we will be
profitable in the future. If we are not profitable and cannot attain sufficient capital to fund our operations we may have to cease our operations.
We have many competitors and we may not be able to compete effectively against them.
The market for our manufactured products is very competitive. There are several companies that manufacture products similar to the products we sell. Most of these companies are substantially larger than us and have
substantially greater name recognition, financial resources and personnel than we do.
Our success depends on keeping up with technological changes.
The market for our manufactured products is characterized by rapid technological changes and advances. Our failure to continue to introduce new products in a timely or cost effective manner or our failure to continue to
improve our existing products in a timely or cost effective manner would materially adversely affect our operating results, and as a result, we may not be able to compete effectively against them.
We are dependent on a few large customers.
--12--
Our dependence on major customers including Bonneville Power Authority and NSTAR, which accounted for an aggregate $229,512 of our sales during the fiscal year ended July 31, 2007, subjects us to significant financial
risks in the operation of our business if a major customer were to terminate or materially reduce, for any reason, its business relationship with us.
We may not be able to attract the qualified personnel we need to succeed.
Because of the technical nature of our business, we are dependent upon our ability to attract and retain technologically qualified personnel. Competition for individuals with proven professional or technical skills is
intense, and the demand for these individuals is expected to remain very strong for the foreseeable future. Larger companies may be able to pay substantially higher salaries than we are able to pay. Therefore, we may not be successful, especially
during increased economic activity, in attracting qualified personnel.
Our minimal staff may have difficulty managing our operations.
We only employ about 15 people on a full time basis. Approximately 8 of our full time employees are involved in production. Our success is dependent upon the services of our current management, particularly Robert S. Benou,
our Chairman, Chief Executive Officer and Chief Financial Officer and Marc Benou our President, Chief Operating Officer and Secretary. Messrs. Robert Benou and Marc Benou are currently serving under employment contracts that renew on a year-to-year
basis unless terminated by either party thereto upon at least 90 days notice prior to the expiration of the then current term of such agreement. If the employment of Messrs. Robert Benou or Marc Benou terminates, or if either is unable to perform
his duties, we may be materially and adversely affected.
We are dependent on component manufacturers to provide us with the parts we need.
We are dependent on outside suppliers for all of the subcomponent parts and raw materials we need to assemble our products. A shortage, delay in delivery, or lack of availability of a part could lead to assembling delays,
which could reduce sales. We also purchase some custom parts, primarily printed circuit boards. The failure of a supplier of one of these customized components could cause a lengthy delay in production, resulting in a loss of revenues.
We have limited cash and may not be able to receive additional financing.
As of April 30, 2008, we had $2,109,455 in cash (including $1,821,052 in a certificate of deposit). We believe that this, together with anticipated cash flows from operations will be sufficient to satisfy our
working capital requirements for the foreseeable future. However, we may need to seek additional financing sooner than we anticipate as a result of factors including but not limited to the following:
o changes in operating plans
o lower than anticipated sales
o increased operating costs; and
o potential acquisitions
However, additional financing may not be available on commercially reasonable terms, if at all.
Our stock price may fluctuate, which may make it difficult to resell your shares at attractive prices.
The market price of our common stock may experience fluctuations. The market price of our common stock has been volatile, and may continue to be volatile. Factors that could cause volatility in our stock price
include:
o fluctuations in our quarterly operating results;
o stock market prices and volume fluctuations generally;
--13--
o economic conditions specific to any of the industries that we conduct business in;
o announcements by us or our competitors relating to new services or technologies, significant acquisitions, significant orders, strategic relationships, joint ventures or capital commitments; and
o applicable regulatory developments.
If we are delisted from the Nasdaq Capital Market, you may also find it more difficult to trade our common stock due to penny stock rules.
If we are unable to satisfy the requirements for continued quotation on Nasdaq, trading, if any, in our common stock would be conducted in the over-the-counter market in what is commonly referred to as the pink sheets or
on the OTC Bulletin Board. If our shares become subject to the regulations on penny stocks, the price and ability to sell our shares would be severely affected because the shares could only be sold in compliance with the penny stock
rules.
The issuance of shares upon conversion of our convertible securities and exercise of outstanding warrants may cause immediate and substantial dilution to our existing stockholders.
As of July 2, 2008, we had outstanding warrants to purchase 2,684,091 shares of our common stock, of which warrants to purchase 408,091 shares of our common stock have an exercise price of $25.16 per share, warrants to
purchase 1,695,000 shares of our common stock have an exercise price of $4.20 per share and warrants to purchase 581,000 shares of our common stock have an exercise price of $4.20 per share. As of July 2, 2008, we also had outstanding
convertible notes having an aggregate principal balance of $951,758 which are convertible into 793,132 shares of our common stock at a conversion price of $1.20 per share. Subject to the terms of the Convertible Notes we may also issue
shares of our common stock to pay interest due on the Convertible Notes. The issuance of shares of our common stock upon the exercise of warrants or upon conversion of the notes may result in substantial dilution to the interests of other
stockholders.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
We and our representatives may from time to time make written or oral statements that are forward-looking, including statements contained in this prospectus and other filings with the Securities and Exchange Commission,
reports to our stockholders and news releases. All statements that express expectations, estimates, forecasts or projections are forward-looking statements. In addition, other written or oral statements which constitute forward-looking statements
may be made by us or on our behalf. Words such as expects, anticipates, intends, plans, believes, seeks, estimates, projects, forecasts, may, should, variations of such words and similar expressions are intended to identify
forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is
expressed or forecasted in or suggested by such forward-looking statements. Among the important factors on which such statements are based are assumptions concerning our ability to obtain additional funding, our ability to compete against our
competitors, our ability to integrate our acquisitions and our ability to attract and retain key employees.
DETERMINATION OF OFFERING PRICE
The selling security holders may sell the common shares issued to them from time-to-time at prices and at terms then prevailing or at prices related to the then current market price, or in negotiated transactions.
--14--
USE OF PROCEEDS
We will not receive any proceeds from the sale of common shares by the Selling Stockholders pursuant to this prospectus. The Selling Stockholders will receive all proceeds from the sales of these common shares, and they
will pay any and all expenses incurred by them for brokerage, accounting or tax services (or any other expenses incurred by them in disposing of their common shares).
The shares of common stock offered hereby are being registered for the account of the Selling Stockholders named in this prospectus. As a result, all proceeds from the sales of the common stock will go to the Selling
Stockholders and we will not receive any proceeds from the resale of the common stock by the Selling Stockholders. We will incur all costs associated with this registration statement and prospectus, which are currently estimated to be approximately
$5,000.
SELLING STOCKHOLDERS
A total of 800,000 shares were issuable to officers, directors, employees and consultants of the Company pursuant to our 2008 Stock Incentive Plan. These 800,000 shares have been issued to the Selling Stockholders. The
following table sets forth, as of July 2, 2008, information regarding the beneficial ownership of our common stock by the Selling Stockholders. In the table below, the percentage ownership after the offering is based upon the assumed sale by the
Selling Stockholders of all shares they may offer for sale pursuant to this prospectus. Beneficial ownership is determined according to the rules of the Securities and Exchange Commission, and generally means that a person has beneficial ownership
of a security if he, she or it possesses sole or shared voting or investment power of that security. The percentages for each Selling Stockholder are calculated based on 2,787,469 shares issued and outstanding as of July 2, 2008, not including 9
shares held in treasury, plus any additional shares that the Selling Stockholder is deemed to beneficially own as set forth in the table. The shares offered by this prospectus shall be deemed to include shares offered by any pledgee, donee,
transferee or other successor in interest of any of the Selling Stockholders below, provided that this prospectus is amended or supplemented if required by applicable law. Except as noted, none of the Selling Stockholders have had any material
relationship with us or any of our predecessors or affiliates within the past three years.
The information in this table is based upon information provided by each respective Selling Stockholder.
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Name
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Shares Beneficially Owned
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Number Of
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Shares Beneficially Owned Upon
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Prior to this Offering
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Shares Being
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Completion of the Offering (1)
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Offered
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Number
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Percent
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Number
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Percent
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Robert Benou (2)
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316,751
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11.36
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%
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237,500
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79,251
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2.84
%
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Marc Benou (3)
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318,700
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11.43
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%
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237,000
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81,700
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2.93%
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David Peison (4)
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45,834
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1.64
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%
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35,000
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10,834
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*
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Louis Massad (5)
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43,750
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1.56
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%
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35,000
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8,750
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*
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Edward J. Rielly(6)
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35,000
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1.26
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%
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35,000
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0
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*
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Tom Fogg (7)
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29,250
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1.05
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%
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25,000
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4,250
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*
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Thomas DiVito(8)
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30,000
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1.08
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%
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30,000
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0
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*
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Albert Lenhardt(9)
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30,000
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1.08
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%
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30,000
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0
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*
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Frank Bruekl (10)
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30,000
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1.08
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%
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30,000
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0
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*
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Theodora DePrisco (11)
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20,000
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*
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20,000
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0
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*
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Andrew Herrick (12)
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15,000
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*
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15,000
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0
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*
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--15--
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Martha Nunez (13)
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15,000
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*
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15,000
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0
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*
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Marina Krigeris (14)
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5,000
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*
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5,000
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0
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*
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Vincent Locollo (15)
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5,000
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*
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5,000
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0
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*
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Andrzej
Zielinski (16)
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5,000
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*
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10,000
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0
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*
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Alexander Kaminsky (17)
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5,000
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*
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5,000
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|
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0
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|
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*
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John Engelhardt (18)
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5,000
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|
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*
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5,000
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0
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*
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Malcolm Swanson (19)
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10,500
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*
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10,500
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0
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*
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David Roth (20)
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15,000
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*
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15,000
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0
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*
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TOTAL
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800,000
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|
|
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* Less than one percent.
(1) Assumes that all shares offered are sold.
(2) Robert Benou has been chief executive officer and chairman of Conolog since May 2001. Robert Benou also serves as Conologs chief financial officer.
(3) Marc Benou has been president and chief operating officer of Conolog since May 2001. Marc Benou also serves as a director of Conolog and as Conologs secretary.
(4) David Peison has been a director of Conolog since October 2004.
(5) Louis Massad has been a director of Conolog since April 1995.
(6) Edward J. Rielly has been a director of Conolog since January 1998.
(7) Tom Fogg has been Conologs vice president, engineering, since 1986.
(8) Thomas DiVito has been an employee
of Conolog since January 2005.
(9) Albert Lenhardt has been an
employee of Conolog since 1988.
(10) Frank Bruekl has been an employee of Conolog since 1984.
(11) Theodore DePrisco has been
an employee of Conolog since 2004.
(12) Andrew Herrick has been an
employee of Conolog since January 2007.
(13) Martha Nunez has been an employee
of Conolog since 1992.
(14) Marina Krigeris has been an employee of Conolog since 1990.
--16--
(15) Vincent Locollo has been an employee of Conolog since 2002.
(16) Adrzej Zielinski has been an employee of Conolog since 2004.
(17) Alexander Kaminsky has been an employee of Conolog since May 2006.
(18) John Engelhardt has been an employee of Conolog since 1996.
(19) Malcolm Swanson has provided sales and marketing consulting services to Conolog since 2003.
(20) David Roth has provided business consulting services to Conolog since 2004.
--17--
PLAN OF DISTRIBUTION
Timing of Sales
Under our 2008 Stock Incentive Plan, we were authorized to issue up to 800,000 shares of our common stock. These 800,000 shares have been issued to the Selling Stockholders.
The Selling Stockholders may offer and sell the shares covered by this prospectus at various times. The Selling Stockholders will act independently of our company in making decisions with respect to the timing, manner and
size of each sale.
No Known Agreements to Resell the Shares
To our knowledge, no Selling Stockholder has any agreement or understanding, directly or indirectly, with any person to resell the common shares covered by this prospectus.
Offering Price
The sales price offered by the Selling Stockholders to the public may be:
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1.
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the market price prevailing at the time of sale;
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2.
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a price related to such prevailing market price; or
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3.
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such other price as the Selling Stockholders determine
from time to time.
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Manner Of Sale
The common shares may be sold by means of one or more of the following methods:
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1.
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a block trade in which the broker-dealer so engaged
will attempt to sell the common shares as agent, but may position and resell
a portion of the block as principal to facilitate the transaction;
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2.
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purchases by a broker-dealer as principal and resale
by that broker-dealer for its account pursuant to this prospectus;
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3.
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ordinary brokerage transactions in which the broker
solicitx purchasers;
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4.
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through options, swaps or derivatives;
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5.
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in transactions to cover short sales;
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6.
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privately negotiated transactions; or
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7.
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in a combination of any of the above methods.
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The Selling Stockholders may sell their common shares directly to purchasers or may use brokers, dealers, underwriters or agents to sell their common shares. Brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers may receive commissions, discounts or concessions from the Selling Stockholders, or, if any such broker-dealer acts as agent for the purchaser of common shares, from the
purchaser in amounts to be negotiated immediately prior to the sale. The compensation received by brokers or dealers may, but is not expected to, exceed that which is customary for the types of transactions involved.
Broker-dealers may agree with a Selling Stockholder to sell a specified number of common shares at a stipulated price per common share, and, to the extent the broker-dealer is unable to do so acting as agent for a Selling
Stockholder, to purchase as principal any unsold common shares at the price required to fulfill the broker-dealer commitment to the Selling Stockholder.
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Broker-dealers who acquire common shares as principal may thereafter resell the common shares from time to time in transactions, which may involve block transactions and sales to and through other broker-dealers, including
transactions of the nature described above, in the over-the-counter market or otherwise at prices and on terms then prevailing at the time of sale, at prices then related to the then-current market price or in negotiated transactions. In connection
with resales of the common shares, broker-dealers may pay to or receive from the purchasers of shares commissions as described above.
If our Selling Stockholders enter into arrangements with brokers or dealers, as described above, we are obligated to file a post-effective amendment to this registration statement disclosing such arrangements, including the
names of any broker-dealers acting as underwriters.
The Selling Stockholders and any broker-dealers or agents that participate with the Selling Stockholders in the sale of the common shares may be deemed to be underwriters within the meaning of the Securities Act. In that
event, any commissions received by broker-dealers or agents and any profit on the resale of the common shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.
Sales Pursuant to Rule 144
Any common shares covered by this prospectus which qualify for sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather than pursuant to this prospectus.
Regulation M
The Selling Stockholders must comply with the requirements of the Securities Act and the Exchange Act in the offer and sale of the common stock. In particular we will advise the Selling Stockholders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of common shares in the market and to the activities of the Selling Stockholders and their affiliates. Regulation M under the Exchange Act prohibits, with certain
exceptions, participants in a distribution from bidding for, or purchasing for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution.
Accordingly, during such times as a Selling Stockholder may be deemed to be engaged in a distribution of the common stock, and therefore be considered to be an underwriter, the Selling Stockholder must comply with
applicable law and, among other things:
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1.
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may not engage in any stabilization activities in connection
with our common stock;
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2.
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may not cover short sales by purchasing shares while
the distribution is taking place; and
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3.
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may not bid for or purchase any of our securities or attempt to
induce any person to purchase any of our securities other than as
permitted under the Exchange Act.
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In addition, we will make copies of this prospectus available to the Selling Stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.
State Securities Laws
Under the securities laws of some states, the common shares may be sold in such states only through registered or licensed brokers or dealers. In addition, in some states the common shares may not be sold unless the shares
have been registered or qualified for sale in the state or an exemption from registration or qualification is available and is complied with.
Expenses of Registration
We are bearing all costs relating to the registration of the common stock. These expenses are estimated to be $5,000, including, but not limited to, legal, accounting, printing and mailing fees. The Selling
Stockholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the common stock.
--19--
LEGAL MATTERS
The validity of the common stock has been passed upon by Sichenzia Ross Friedman Ference LLP, New York, New York.
EXPERTS
The financial statements incorporated by reference in the prospectus have been audited by Bagell, Josephs, Levine & Company, LLC, an independent registered public accounting firm, to the extent and for the periods set
forth in their report included in our 10-KSB for the year ended July 31, 2007 and are incorporated in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in
connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its parents
or subsidiaries.
INFORMATION INCORPORATED BY REFERENCE
The Securities and Exchange Commission allows us to incorporate by reference certain of our publicly-filed documents into this prospectus, which means that such information is considered part of this prospectus. Information
that we file with the SEC subsequent to the date of this prospectus will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under all documents
subsequently filed by us pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 until the Selling Stockholders have sold all of the shares offered hereby or such shares have been deregistered.
The following documents filed with the SEC are incorporated herein by reference:
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Reference is made to Registrant's current report on Form 8-K filed with the SEC on July 7, 2008, which is hereby
incorporated by reference.
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Reference is made to Registrant's current report on Form 8-K filed with the SEC on June 19, 2008, which is hereby
incorporated by reference.
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Reference is made to the Registrant's quarterly report on Form 10-QSB for the period ending April 30, 2008, as filed
with the SEC on June 16, 2008.
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Reference is made to the Schedule 14-A filed by the Registrant with the SEC on April 21, 2008, which is hereby
incorporated by reference.
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Reference is made to Registrant's Current Report on Form 8-K filed with the SEC on March 26, 2008, which is hereby
incorporated by reference.
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Reference is made to the Registrant's quarterly report on Form 10-QSB for the period ending January 31, 2008, as filed
with the SEC on March 14, 2008.
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Reference is made to the Schedule 14-A filed by the Registrant with the SEC on February 15, 2008, which is hereby
incorporated by reference.
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Reference is made to the Registrant's quarterly report on Form 10-QSB for the period ending October 31, 2007, as
filed with the SEC on December 17, 2007, which is hereby
incorporated by reference.
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Reference is made to Registrant's current report on Form 8-K filed with the SEC on November 6, 2007, which is
hereby incorporated by reference.
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Reference is made to the Registrant's annual report on Form 10-KSB for the period ending July 31, 2007, as filed with
the SEC on October 29, 2007, which is hereby
incorporated by reference.
--20--
We will provide without charge to each person to whom a copy of this prospectus has been delivered, on written or oral request a copy of any or all of the documents incorporated by reference in this prospectus, other than
exhibits to such documents. Written or oral requests for such copies should be directed to Robert Benou.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
The Company's Certificate of Incorporation limits the liability of Directors to the maximum extent permitted by Section 102(b)(7) of the Delaware General Corporation Law. Delaware law provides that the directors of a
corporation will not be personally liable to such corporation or its stockholders for monetary damages for breach of their fiduciary duties as directors, except for liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law; or (iv) for any transaction from which the director derives an improper personal benefit. The Company's By-Laws provide that the Company shall indemnify its directors and officers under certain circumstances,
including those circumstances in which indemnification would otherwise be discretionary.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act") may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company 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 us of expenses incurred or paid by our directors, officers or controlling persons in the successful defense of any action, suit or proceedings, is asserted by such director,
officer, or controlling person in connection with any securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.
ADDITIONAL INFORMATION AVAILABLE TO YOU
This prospectus is part of a Registration Statement on Form S-8 that we filed with the SEC. Certain information in the Registration Statement has been omitted from this prospectus in accordance with the rules of the SEC. We
file annual, quarterly and special reports, proxy statements and other information with the SEC. You can inspect and copy the Registration Statement as well as reports, proxy statements and other information we have filed with the SEC at the public
reference room maintained by the SEC at 100 F Street N.E. Washington, D.C. 20549, You can obtain copies from the public reference room of the SEC at 100 F Street N.E. Washington, D.C. 20549, upon payment of certain fees. You can call the SEC at
1-800-732-0330 for further information about the public reference room. We are also required to file electronic versions of these documents with the SEC, which may be accessed through the SEC's World Wide Web site at http://www.sec.gov. No dealer,
salesperson or other person is authorized to give any information or to make any representations other than those contained in this prospectus, and, if given or made, such information or representations must not be relied upon as having been
authorized by us. This prospectus does not constitute an offer to buy any security other than the securities offered by this prospectus, or an offer to sell or a solicitation of an offer to buy any securities by any person in any jurisdiction where
such offer or solicitation is not authorized or is unlawful. Neither delivery of this prospectus nor any sale hereunder shall, under any circumstances, create any implication that there has been no change in the affairs of our company since the date
hereof.
--21--
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 3. Incorporation of Documents By Reference.
The Registrant hereby incorporates by reference into this Registration Statement the documents listed below. In addition, all documents subsequently filed pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 (the Exchange Act"), prior to the filing of a post-effective amendment which indicates that all securities offered have been sold or which deregisters all securities then remaining unsold, shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date of filing of such documents:
The following documents filed with the SEC are incorporated herein by reference:
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Reference is made to Registrant's current report on Form 8-K filed with the SEC on June 19, 2008, which is hereby
incorporated by reference.
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Reference is made to the Registrant's quarterly report on Form 10-QSB for the period ending April 30, 2008, as filed
with the SEC on June 16, 2008.
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Reference is made to the Schedule 14-A filed by the Registrant with the SEC on April 21, 2008, which is hereby
incorporated by reference.
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Reference is made to Registrant's Current Report on Form 8-K filed with the SEC on March 26, 2008, which is hereby
incorporated by reference.
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Reference is made to the Registrant's quarterly report on Form 10-QSB for the period ending January 31, 2008, as filed
with the SEC on March 14, 2008.
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Reference is made to the Schedule 14-A filed by the Registrant with the SEC on February 15, 2008, which is hereby
incorporated by reference.
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Reference is made to the Registrant's quarterly report on Form 10-QSB for the period ending October 31, 2007, as
filed with the SEC on December 17, 2007, which is hereby
incorporated by reference.
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Reference is made to Registrant's current report on Form 8-K filed with the SEC on November 6, 2007, which is
hereby incorporated by reference.
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Reference is made to the Registrant's annual report on Form 10-KSB for the period ending July 31, 2007, as filed with
the SEC on October 29, 2007, which is hereby
incorporated by reference.
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The description of the Company's Common Stock contained in its Registration Statement on Form SB-2/A filed on
December 19, 2007 including all amendments or reports filed for
the purpose of updating such description.
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Item 4.
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Description of Securities.
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Not applicable.
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Item 5.
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Interests of Named Experts and Counsel.
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No expert or counsel named in this prospectus as having prepared or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in
connection with the registration or offering of the common stock was employed on a contingency basis or had, or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in the registrant or any of its parents
or subsidiaries.
--22--
Item 6. Indemnification of Directors and Officers.
The Company's Certificate of Incorporation limits the liability of Directors to the maximum extent permitted by Section 102(b)(7) of the Delaware General Corporation Law. Delaware law provides that the directors of a
corporation will not be personally liable to such corporation or its stockholders for monetary damages for breach of their fiduciary duties as directors, except for liability (i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the
Delaware General Corporation Law; or (iv) for any transaction from which the director derives an improper personal benefit. The Company's By-Laws provide that the Company shall indemnify its directors and officers under certain circumstances,
including those circumstances in which indemnification would otherwise be discretionary.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the Act") may be permitted to directors, officers and controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company 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 us of expenses incurred or paid by our directors, officers or controlling persons in the successful defense of any action, suit or proceedings, is asserted by such director,
officer, or controlling person in connection with any securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the Act and will be governed by the final adjudication of such issues.
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Item 7.
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Exemption from Registration Claimed
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Not applicable.
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Item 8.
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Exhibits.
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EXHIBIT
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NUMBER
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EXHIBIT
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4.1
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2008 Stock Incentive Plan
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5.1
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Opinion of Sichenzia Ross Friedman Ference LLP
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23.1
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Consent of Sichenzia Ross Friedman Ference LLP (included
in Exhibit 5.1)
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23.2
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Consent of Bagell, Josephs, Levine & Company, LLC.
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(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
--23--
(ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in the maximum aggregate offering price set forth in the Calculation of Registration Fee table in the effective registration statement;
(iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the
registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i), and (1)(ii) do not apply if the Registration Statement is on Form S-8 and if the information required to be included in a post-effective amendment by
those paragraphs is contained in reports filed with or furnished to the Commission by the Registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) That, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial BONA FIDE offering thereof.
(5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser:
(A) Each prospectus filed by a Registrant pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration
statement; and
(B) Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5) or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii) or (x) for
the purpose of providing the information required by Section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after
effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which the prospectus relates, and the offering of such securities at that time shall be deemed to be the initial
bona fide
offering thereof.
provided, however
, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time
of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such
effective date.
(6) That, for the purpose of determining liability of a Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, each undersigned Registrant
undertakes that in a primary offering of securities of an undersigned Registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to
such purchaser by means of any of the following communications, the
--24--
undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
(i) Any preliminary prospectus or prospectus of an undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii) Any free writing prospectus relating to the offering prepared by or on behalf of an undersigned Registrant or used or referred to by an undersigned Registrant;
(iii) The portion of any other free writing prospectus relating to the offering containing material information about an undersigned Registrant or its securities provided by or on behalf of an
undersigned Registrant; and
(iv) Any other communication that is an offer in the offering made by an undersigned Registrant to the 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 Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such
issue.
--25--
SIGNATURES
In accordance with the requirements of the Securities
Act of 1933, as amended, the registrant certifies that it has reasonable grounds
to believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Form S-8 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Somerville, State of New Jersey, on July 8, 2008.
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Conolog Corporation
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By:
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/s/ Robert S. Benou
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Robert S. Benou
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Chief Executive Officer and Chief Financial Officer
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(Principal Executive Officer, Principal Financial Officer, and
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Principal Accounting Officer)
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POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints Robert S. Benou and Marc R. Benou and each of them, his or her true and lawful attorneys-in-fact and agents with full
power of substitution and resubstitution, for him and in his name, place, and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) and additions to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and hereby grants to such attorneys-in-fact and agents full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents or his substitute or substitutes may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration Statement has been signed below by the following persons in the capacities and on the dates
indicated.
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Date: July 8, 2008
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/s/
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Robert S. Benou
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Robert S. Benou
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Chairman, Chief Executive Officer, Chief Financial Officer
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and Director (Principal Executive Officer, Principal Financial
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Officer and Principal Accounting Officer)
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Date: July 8, 2008
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/s/
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Marc R. Benou
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Marc R. Benou
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President, Chief Operating Officer,
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Secretary and Director
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Date: July 8, 2008
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/s/
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Louis S. Massad
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Louis S. Massad
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Director
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Date: July 8, 2008
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Edward J. Rielly
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Director
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Date: July 8, 2008
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David M. Peison
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Director
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--26--
Grafico Azioni Conolog (MM) (NASDAQ:CNLGD)
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