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Helios & Matheson Analytics Inc. – ‘424B1’ on 8/11/97

As of: Monday, 8/11/97 · Accession #: 950130-97-3528 · File #: 333-29233

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 8/11/97  Helios & Matheson Analytics Inc.  424B1                  1:223K                                   Donnelley R R & S… 02/FA

Prospectus — Rule 424(b)(1)
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 424B1       Prospectus                                            61    400K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (Word, et al.) Attraction and Retention of Project Managers and Technical Specialists Available Information Business Capitalization Certain Transactions Common Stock Company, The Competition Control by Principal Shareholder Description of Capital Stock Dilution Dividend Policy Employment Agreements Executive compensation Executive Officer Bonus Plan Experts Gross profit Human Resources Income (loss) from operations Index to Financial Statements Intellectual Property Rights Legal Matters Liquidity and Capital Resources Management Management of Growth Management's Discussion and Analysis of Financial Condition and Results of Operations Net income Notes to Financial Statements Offering, The Payments and Benefit to Existing Sole Shareholder Preferred Stock Principal and Selling Shareholder Prior S Corporation Status Pro forma net income per share Properties Prospectus Summary Report of Independent Auditors Risk Factors Robinson-Humphrey Company, Inc, The Selected Historical and Pro Forma Financial Data Shares Eligible For Future Sale Shmuel BenTov Stock Option Plan Tact TACT Recruiting The Company The Offering The Robinson-Humphrey Company, Inc Underwriting Use of Proceeds Variability of Quarterly Results of Operations
1	1st Page - Filing Submission
"	Tact
"	Common Stock
"	The Robinson-Humphrey Company, Inc
3	Prospectus Summary
"	The Company
5	The Offering
7	Risk Factors
"	Management of Growth
"	Attraction and Retention of Project Managers and Technical Specialists
8	Variability of Quarterly Results of Operations
9	Competition
"	Control by Principal Shareholder
"	Payments and Benefit to Existing Sole Shareholder
10	Intellectual Property Rights
11	Shares Eligible For Future Sale
13	Prior S Corporation Status
14	Use of Proceeds
15	Capitalization
"	Dividend Policy
16	Dilution
17	Selected Historical and Pro Forma Financial Data
18	Management's Discussion and Analysis of Financial Condition and Results of Operations
20	Gross profit
22	Income (loss) from operations
"	Net income
23	Liquidity and Capital Resources
25	Business
32	TACT Recruiting
34	Human Resources
"	Properties
35	Management
37	Executive compensation
"	Shmuel BenTov
"	Employment Agreements
38	Executive Officer Bonus Plan
"	Stock Option Plan
39	Certain Transactions
41	Principal and Selling Shareholder
42	Description of Capital Stock
"	Preferred Stock
45	Underwriting
46	Legal Matters
"	Experts
47	Available Information
48	Index to Financial Statements
49	Report of Independent Auditors
53	Notes to Financial Statements
58	Pro forma net income per share

424B1 1st Page of 61 TOC ↑Top Previous Next ↓Bottom Just 1st
FILED PURSUANT TO RULE NO. 424(b)(1)
REGISTRATION NO. 333-29233

1,800,000 SHARES

TACT
---------------------------
THE A CONSULTANT TEAM. INC.

COMMON STOCK
----------------

All of the 1,800,000 shares of Common Stock offered hereby are being sold by
The A Consulting Team, Inc. ("TACT" or the "Company").

Prior to this offering (the "Offering"), there has been no public market for
the Common Stock. See "Underwriting" for a discussion of the factors
considered in determining the initial public offering price of the Common
Stock. The Common Stock has been approved for listing on the Nasdaq National
Market under the symbol "TACX."

After completion of the Offering, Shmuel BenTov, the founder, Chairman of
the Board, Chief Executive Officer and President of the Company, will
beneficially own approximately 66.4% of the Company's outstanding shares of
Common Stock (62.3% if the Underwriters' over-allotment option is exercised in
full).

SEE "RISK FACTORS" BEGINNING ON PAGE 7 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED
HEREBY.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[Download Table]
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC DISCOUNTS(1) COMPANY(2)
-------------------------------------------------------------------------------

Per Share............................. $12.00 $0.84 $11.16
-------------------------------------------------------------------------------
Total(3).................................. $21,600,000 $1,512,000 $20,088,000
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

(1) See "Underwriting" for a description of the indemnification arrangements
with the Underwriters.
(2) Before deducting expenses payable by the Company estimated to be $500,000.
(3) The Company and its sole shareholder (the "Selling Shareholder") have each
granted the Underwriters a 30-day option to purchase up to 135,000
additional shares of Common Stock (for a total of 270,000 shares of Common
Stock) solely to cover over-allotments, if any. See "Underwriting." If
such option is exercised in full, the total Price to Public, Underwriting
Discounts, Proceeds to Company and Proceeds to the Selling Shareholder
will be $24,840,000, $1,738,800, $21,594,600 and $1,506,600, respectively.
The Company will not receive any of the proceeds from the sale of shares
by the Selling Shareholder. See "Underwriting."

----------------

The shares of Common Stock are offered severally by the Underwriters named
herein subject to prior sale when, as and if received and accepted by the
Underwriters, subject to their right to reject orders, in whole or in part,
and to certain other conditions. It is expected that delivery of the
certificates will be made against payment therefor at the office of The
Robinson-Humphrey Company, Inc., Atlanta, Georgia, on or about August 13,
1997.

THE ROBINSON-HUMPHREY COMPANY, INC. WHEAT FIRST BUTCHER SINGER

August 8, 1997

424B1 2nd Page of 61 TOC 1st Previous Next ↓Bottom Just 2nd
[Inside Front Cover of Preliminary Prospectus:]

THE A CONSULTING TEAM, INC.

TACT CONSULTING SERVICES

TACT Consulting has organized its extensive service offerings into Technical
Practices having specialized expertise in particular information technologies.
TACT Consulting continuously identifies and develops additional technical
expertise in emerging technologies in anticipation of the evolving IT needs of
its clients.

[Graphic depicting a three-dimensional cube. On the front face of the cube are
listed the Company's twelve Technical Practices. Four of the Technical Practices
are projected out into columns which list the IT professional services which the
Company provides for the respective Technical Practice. On the side of the cube
are listed the three broad services offered by the Company: Strategic IT
Consulting, IT Solutions and IT Professional Services.]

Client/Server

Infrastructure Design & Implementation

Application Development & Maintenance

Database Design, Implementation & Maintenance

Performance Monitoring/Tuning & Capacity Planning

System Implementations and Migration

Outsourcing

Project Management

Internet/Intranet

Infrastructure Design & Implementation

Website Design, Development & Maintenance

Web Application, Development & Maintenance

Performance Monitoring/Tuning & Capacity Planning

System Implementations & Migration

Outsourcing

Project Management

Legacy Systems

Application Development & Maintenance

Database Design, Implementation & Maintenance

Performance Monitoring/Tuning & Capacity Planning

Outsourcing of Database Administration Function

Conversions

Project Management

Windows NT

TCP/IP Architecture, Design & Implementation

Network Configuration & Administration

Performance Monitoring/Tuning & Capacity Planning

Enterprise-Wide Windows NT/95

Year 2000 & Conversions

Impact Analysis

Conversion Planning & Management

Pilot Study Identification

Code Remediation/ Conversion

Implementation

Rollout

CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING
PURCHASES OF THE COMMON STOCK TO STABILIZE ITS MARKET PRICE, PURCHASES OF THE
COMMON STOCK TO COVER SOME OR ALL OF A SHORT POSITION MAINTAINED BY THE
UNDERWRITERS IN THE COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."

424B1 3rd Page of 61 TOC 1st Previous Next ↓Bottom Just 3rd
PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information and consolidated financial statements, including the notes thereto,
appearing elsewhere in this Prospectus. Unless otherwise indicated or the
context otherwise requires: (i) the "Company" refers to The A Consulting Team,
Inc. ("TACT"), (ii) all information in this Prospectus has been adjusted to
reflect the distribution (the "Distribution") described under "Prior S
Corporation Status" and a 355,000-for-1 split of the shares of common stock,
$0.01 par value per share (the "Common Stock"), effected prior to the effective
date hereof in the form of a stock dividend, and (iii) all information in this
Prospectus assumes that the Underwriters' over-allotment option will not be
exercised.

THE COMPANY

The A Consulting Team, Inc. provides enterprise-wide information technology
("IT") consulting, software and training services and solutions primarily to
Fortune 1000 companies in a wide range of industries. The Company generally
serves as an outside resource to a client's internal IT staff, providing a
broad range of consulting services including strategic IT consulting, IT
solutions and IT professional services to improve the client's productivity,
competitive position and performance. Strategic IT consulting includes
technology infrastructure advisory services and systems architecture design. IT
solutions include planning, designing and implementing enterprise-wide
information systems, such as workgroup solutions (Microsoft Exchange and Lotus
Notes(R)); client/server; internet/intranet and EDI; database management
services; application design, development and implementation; networking;
imaging and workflow; and systems integration. IT professional services include
systems support, maintenance and contract programming. TACT's ability to
provide comprehensive services and solutions across diverse technology
platforms allows its clients to maintain and enhance their current systems
while embracing new technologies. Clients of the Company include Alamo Rent-A-
Car Inc., Allied Signal, Inc., BMW of North America, Inc., Chase Manhattan
Bank, ChaseMellon Shareholder Services, Citibank, N.A., Dreyfus Corporation,
First Chicago Trust Company, General Electric Company, Goldman Sachs & Co., The
Guardian Life Insurance Company of America, Humana Inc., International Business
Machines Corporation, Metropolitan Life Insurance Co., Merrill Lynch Pierce
Fenner & Smith Incorporated, National Broadcasting Co., Inc., New York Life
Insurance Company, Norfolk Southern Corporation, Pacific Telecom, Inc., Pfizer
Inc., Prudential Insurance Company, St. John's University and Summit Bancorp.
For the six months ended June 30, 1997, no client accounted for more than 10%
of revenues, except for one client which accounted for 26% of revenues. The
Company's customers are primarily located in the New York/New Jersey
metropolitan area.

The IT consulting industry has experienced accelerating growth in recent
years due to rapid technological advances which have strained businesses'
internal resources. These advances include more powerful and less expensive
computer technology and the transition from predominantly centralized mainframe
computer systems to open and distributed computing environments. Additionally,
information technology is becoming more critical to successful business
operations. IT services are no longer a peripheral component of most
organizations but instead are integral to many key business processes. At the
same time, managing information technology, especially distributed
architectures, has become more complex and expensive. Accordingly,
organizations are increasingly turning to external IT services organizations to
develop, support and enhance their internal IT systems. By outsourcing IT
services, companies are able to (i) focus on their core business, (ii) access
specialized technical skills, (iii) implement IT solutions more rapidly, (iv)
benefit from flexible staffing, providing a variable cost solution to a fixed
cost issue and (v) reduce the cost of recruiting, training, and adjusting the
number of employees as IT requirements change. Based on industry sources, IT
outsourcing in the United States is estimated to increase from approximately
$50 billion in 1995 to approximately $100 billion in 2000, representing a
compound annual growth rate of approximately 15%. The Company has achieved a
compound annual revenue growth rate of 47.6% for the three-year period ended
December 31, 1996.

424B1 4th Page of 61 TOC 1st Previous Next ↓Bottom Just 4th
By focusing on its technical expertise, high level of service and business-
oriented IT solutions, the Company has attempted to build a reputation as a
quality provider of IT services and solutions. In order to become a one stop
solution provider for its client's IT needs, the Company has developed an
extensive array of service offerings which are organized into specific
Technical Practices in particular information technologies. The Company's
current Technical Practices and other specialized areas of expertise include
Client/Server, Internet/Intranet, Legacy Systems, Networking and System
Management, Windows NT, Year 2000 and Conversions, Imaging and Workflow,
Quality Assurance and Testing, Messaging, Security, Data Warehousing and Lotus
Notes/Microsoft Exchange. The Company has organized its services into Technical
Practices in an effort to solve quickly and efficiently the diverse IT needs of
its clients. Further, the Company continuously identifies and develops
additional technical expertise in emerging technologies in anticipation of the
evolving IT needs of its clients. The Company also markets software add-on
tools that enhance Windows NT administration, database environments and
mainframe and non-mainframe connectivity. In addition, the Company offers a
wide selection of technical and end-user training courses in client/server,
internet/intranet, legacy, and networking technologies for both clients and
consultants. The Company has been successful in the past in generating
consulting business from existing software and training clients.

TACT markets and delivers its IT solutions through TACT Solution Teams
comprised of professionals who possess project management skills, technical
expertise and experience in a client's industry. These skills enable a Solution
Team to identify and address more effectively a particular client's technical
needs in relation to its business objectives. TACT's focus on providing highly
qualified IT professionals allows the Company to identify additional areas of
the client's business which could benefit from the Company's IT solutions,
thereby facilitating the cross- marketing of multiple Company services. A
Solution Team is typically deployed from one of the Company's two Solution
Branches in New York and New Jersey. Management's experience has been that the
local presence established by a Solution Branch improves the Company's ability
to attract local clients, as well as its ability to attract, develop, motivate
and retain locally-based IT professionals. The Company presently intends to
open a Solution Branch in Connecticut by the end of 1997 and additional
Solution Branches in select markets nationwide in the future. Management has
developed the TACT Solution Teams, as well as TACT's local Solution Branch
structure, in an effort to advance the Company's objective of establishing and
maintaining long-term relationships with its clients. Eleven of the Company's
top twenty clients measured by revenue for the six months ended June 30, 1997
had been clients for over three years.

The Company's objective is to become a leading provider of IT services to
Fortune 1000 companies and other organizations with diverse IT needs in select
markets nationwide. In order to achieve this objective, the Company intends to
pursue the following strategies: (i) cross-sell additional IT services to
existing clients, (ii) expand the client base, (iii) expand the range of
Technical Practices, (iv) open additional Solution Branches, (v) increase sales
and marketing of software products and training services and (vi) attract,
develop, motivate and retain quality IT professionals.

The address of TACT's principal executive office is 200 Park Avenue South,
New York, New York 10003. The telephone number of such office is (212) 979-
8228. The Company maintains a website at http://www.tact.com. Information
contained on the Company's website is not a part of this Prospectus and must
not be relied upon in evaluating the Company, its business or an investment in
the Common Stock offered hereby.

424B1 5th Page of 61 TOC 1st Previous Next ↓Bottom Just 5th
THE OFFERING

[Download Table]

Common Stock Offered by the Company..... 1,800,000 shares
Common Stock to be Outstanding after the
Offering............................... 5,350,000 shares (1)
Use of Proceeds by the Company.......... For payment of the Distribution;
repayment of certain indebtedness;
and working capital and general
corporate purposes, including the
opening of additional Solution
Branches, the expansion of Technical
Practices, the recruitment of
personnel and other services. See
"Use of Proceeds."
Proposed Nasdaq National Market Symbol.. TACX

--------
(1) Excludes 600,000 additional shares issuable pursuant to the Company's Stock
Option and Award Plan, of which 450,000 shares are subject to currently
outstanding options. See "Management--Stock Option Plan" and "Shares
Eligible For Future Sale."

424B1 6th Page of 61 TOC 1st Previous Next ↓Bottom Just 6th
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL INFORMATION (1)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

[Download Table]

SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, JUNE 30,
----------------------- --------------
1994 1995 1996 1996 1997
------ ------- ------- ------ -------
(UNAUDITED)

STATEMENT OF OPERATIONS DATA:
Consulting services...................... $9,463 $14,430 $18,981 $8,637 $15,378
Software licensing....................... 1,321 1,383 1,776 1,107 785
Training services........................ 98 210 238 149 110
------ ------- ------- ------ -------
Total revenues......................... 10,882 16,023 20,995 9,893 16,273
Cost of revenues......................... 8,016 11,041 14,521 6,806 11,217
------ ------- ------- ------ -------
Gross profit........................... 2,866 4,982 6,474 3,087 5,056
Executive compensation(2)................ 607 1,615 1,623 812 150
Income (loss) from operations............ (7) 92 102 317 1,678
Net income............................... 2 190 8 255 1,454
UNAUDITED PRO FORMA DATA(3):
Pro forma income from operations......... $ 1,325 $ 1,641
Pro forma net income..................... 692 852
Pro forma net income per share........... $ .19 $ .23
Weighted average shares outstanding...... 3,729 3,729

[Download Table]

AT JUNE 30, 1997
---------------------
PRO FORMA,
ACTUAL AS ADJUSTED(4)
------ --------------
(UNAUDITED)

BALANCE SHEET DATA:
Working capital........................................... $1,742 $19,318
Total assets.............................................. 7,236 22,075
Long-term debt............................................ 38 38
Shareholder's equity...................................... 2,265 19,795

--------
(1) See Note 1 of Notes to Financial Statements.
(2) Executive compensation represents compensation paid to Mr. BenTov during
the periods presented. Effective upon consummation of the Offering, Mr.
BenTov will enter into a two year employment agreement providing for an
annual salary of $250,000, providing that he will receive no cash bonus for
1997 and providing for an annual bonus not to exceed one percent of the
Company's total revenues for 1998 subject to approval by the non-employee
directors of the Company's Executive Compensation Committee and further
subject to the Company meeting certain financial performance criteria. Mr.
BenTov and the Company have agreed during the two year term of his
employment agreement not to (i) increase Mr. BenTov's compensation
(including salary and bonus) or (ii) otherwise amend the terms of Mr.
BenTov's employment agreement. See "Management--Employment Agreements" and
"--Executive Officer Bonus Plan."
(3) The pro forma statements of operations data are presented to reflect (i)
reduced executive compensation expense (excluding any bonus which is
contingent upon the Company meeting certain financial performance criteria)
effective upon consummation of the Offering relating to Mr. BenTov,
partially offset by increased salary expense related to the Company's
hiring of a Chief Financial Officer and (ii) provision for federal and
state income taxes as if the Company had been subject to federal and state
income taxation as a C Corporation during each of the periods presented. On
the closing date of the Offering, the Company will make the Distribution to
Mr. BenTov estimated to be approximately $2,000,000 as of June 30, 1997.
See "Prior S Corporation Status," "Management--Executive Officer Bonus
Plan" and Note 11 of Notes to Financial Statements.
(4) As adjusted to reflect (i) the sale of the 1,800,000 shares of Common Stock
offered hereby and the initial application of the estimated net proceeds
therefrom after deducting underwriting discounts and estimated offering
expenses payable by the Company, (ii) the recording of a deferred tax
liability of $58,000 resulting from the change from an S Corporation to a C
Corporation and (iii) the payment of the Distribution representing the
estimated earned and previously undistributed taxable S Corporation income
through the date prior to the Termination Date (as defined herein) that
will result in the reduction of shareholders' equity to $207,000 prior to
the Company's receipt of the net proceeds of the Offering. See "Prior S
Corporation Status" and Note 11 of Notes to Financial Statements.

424B1 7th Page of 61 TOC 1st Previous Next ↓Bottom Just 7th
RISK FACTORS

In addition to the other information contained in this Prospectus, the
following risk factors should be considered carefully in evaluating the
Company and its business before purchasing the securities offered hereby. This
Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain
factors, including those set forth in the following risk factors and elsewhere
in this Prospectus.

Management of Growth. The Company currently is experiencing rapid growth
that has strained, and could continue to strain, the Company's managerial and
other resources. The Company intends to actively pursue a strategy of
continued growth and will seek to expand the range of its services and
penetrate new geographic markets. More specifically, the Company intends to
open one additional Solution Branch in Connecticut by the end of 1997 and
additional Solution Branches in the future. The Company has very limited
experience in opening Solution Branches. To accomplish this branch expansion,
the Company will be required to make additional capital expenditures,
including leasing additional facilities. The availability of consultants as
employees or independent contractors will also become an important factor in
the Company's expansion plans. In addition, the Company will be required to
identify suitable new geographic markets with sufficient demand for the
Company's services; to hire and retain skilled management, marketing, customer
service and other personnel; and to successfully manage growth, including
monitoring operations, controlling costs and maintaining effective quality and
service controls. There can be no assurance that the Company will be able to
do so effectively or that allocation of capital or human resources will not
adversely impact the Company as a whole. If the Company's management is unable
to manage growth or new employees are unable to achieve anticipated
performance levels, the Company's business, results of operations and
financial condition could be materially and adversely affected. As part of its
growth strategy, the Company may consider acquisitions of complementary
businesses and, although the Company does not presently have any plans,
arrangements or agreements with respect to any potential acquisitions, there
can be no assurance that if the Company consummates an acquisition, it will be
able to successfully integrate any acquired businesses into the Company's
operations. There also can be no assurance that future acquisitions will not
have an adverse effect upon the Company's results of operations and earnings
per share, particularly in the fiscal quarters immediately following
consummation of such transactions while the operations of the acquired
business are being integrated into the Company's operations. See "Use of
Proceeds" and "Business."

Attraction and Retention of Project Managers and Technical Specialists. The
Company's business involves the delivery of professional services. Therefore,
its success will depend in large part upon its ability to attract and retain
highly skilled project managers and technical specialists. Qualified project
managers and technical specialists are in particularly great demand and are
likely to remain a limited resource for the foreseeable future. There can be
no assurance that the Company will be able to attract and retain sufficient
numbers of highly skilled project managers and technical specialists. The loss
of some or all of the Company's project managers and technical specialists
could have a material adverse impact on the Company, including its ability to
secure and complete engagements. No project managers or technical specialists
have entered into employment agreements with the Company for any specific
term. Although the Company utilizes the services of a significant number of
independent contractors to act as consultants, the Company believes it can
obtain the services of a sufficient number of independent contractors to
fulfill its needs as new projects commence. These independent contractors are
not employees of the Company, however, and there can be no assurance that the
services of these independent contractors will continue to be available to the
Company on terms acceptable to the Company. See "Business--TACT Recruiting"
and "--Human Resources" and "Management--Executive Compensation."

Client Revenue and Geographic Concentrations. The Company derives a
significant portion of its revenues from a relatively limited number of
clients primarily located in the New York/New Jersey metropolitan area of the
United States. Revenues from the Company's ten most significant clients
accounted for approximately 60%, 60% and 69% of its revenues for the years
ended December 31, 1995 and 1996 and the six months ended

424B1 8th Page of 61 TOC 1st Previous Next ↓Bottom Just 8th
June 30, 1997, respectively. A significant client of the Company accounted for
4%, 8% and 26% of revenues for the years ended December 31, 1995 and 1996 and
the six months ended June 30, 1997, respectively. A second significant client
of the Company accounted for 14%, 12% and 8% of revenues for the years ended
December 31, 1995 and 1996 and the six months ended June 30, 1997,
respectively. A third significant client of the Company accounted for 5%, 8%
and 6% of revenues for the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997, respectively. In any given year, the Company's ten
most significant customers may vary based upon specific projects for those
clients during that year. There can be no assurance that TACT's significant
clients will continue to engage the Company for additional projects or do so
at the same revenue levels. Clients engage the Company on an assignment-by-
assignment basis, and a client can generally terminate an assignment at any
time without penalty. The loss of any significant customer could have a
material adverse effect on the Company's business, results of operations and
financial condition. The failure of the Company to develop relationships with
new customers could have a material adverse effect on the Company's business,
results of operations and financial condition. In addition, except for revenue
derived from software sales, substantially all of the Company's revenues for
the year ended December 31, 1996 and for the six months ended June 30, 1997,
respectively, were attributable to clients located in the New York/New Jersey
metropolitan area of the United States. Adverse economic conditions affecting
this region could have an adverse effect on the financial condition of the
Company's clients located there, which in turn could adversely impact the
Company's business and future growth. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Business--
Clients and Representative Solutions."

Project Risks. Many of the Company's engagements involve projects that are
critical to the operations of its clients' businesses and provide benefits
that may be difficult to quantify. The Company's failure or inability to meet
a client's expectations in the performance of its services could result in a
material adverse change to the client's operations and therefore could give
rise to claims against the Company or damage the Company's reputation,
adversely affecting its business, results of operations and financial
condition.

Rapid Technological Change; Dependence on New Solutions. The Company's
success will depend in part on its ability to develop IT solutions that keep
pace with continuing changes in IT, evolving industry standards, changing
client preferences and a continuing shift to outsourced solutions by clients.
There can be no assurance that the Company will be successful in adequately
addressing the outsourcing market or other IT developments on a timely basis
or that, if addressed, the Company will be successful in the marketplace.
There can also be no assurance that products or technologies developed by
others will not render the Company's services uncompetitive or obsolete. The
Company's failure to address these developments could have a material adverse
effect on the Company's business, results of operations and financial
condition. In addition, the market for the Company's software products is
characterized by rapid technological change, evolving industry standards in
computer hardware and software technology, changes in customer requirements
and frequent new product introductions and enhancements. If the Company is
unable to identify and introduce new third-party developed products in a
timely manner in response to changing market conditions or customer
requirements, the Company's business, results of operations and financial
condition could be adversely affected.

Variability of Quarterly Results of Operations. Variations in the Company's
revenues and results of operations occur from time to time as a result of a
number of factors, such as the timing of new Solution Branch openings,
Technical Practice expansion activities, the significance of client
engagements commenced and completed during a quarter, the number of business
days in a quarter, consultant hiring and utilization rates and the timing of
corporate expenditures. The timing of revenues is difficult to forecast
because the Company's sales cycle can be relatively long and may depend on
such factors as the size and scope of assignments and general economic
conditions. A variation in the number of client assignments or the timing of
the initiation or the completion of client assignments, particularly at or
near the end of any quarter, can cause significant variations in results of
operations from quarter to quarter and can result in losses to the Company. In
addition, the Company's engagements generally are terminable by the client at
any time without penalty. Although the number of consultants can be adjusted
to correspond to the number of active projects, the Company must maintain a
sufficient number of senior consultants to oversee existing client projects
and to assist with the Company's sales

424B1 9th Page of 61 TOC 1st Previous Next ↓Bottom Just 9th
force in securing new client assignments. An unexpected reduction in the
number of assignments could result in excess capacity of consultants and
increased selling, general and administrative expenses as a percentage of
revenues. The Company has also experienced, and may in the future experience,
significant fluctuations in the quarterly results of its software sales as a
result of the variable size and timing of individual license transactions,
competitive conditions in the industry, changes in customer budgets, and the
timing of the introduction of new products or product enhancements. In the
event that the Company's results of operations for any period are below the
expectation of market analysts and investors, the market price of the Common
Stock could be adversely affected. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations."

Ability to Maintain Margins. The Company derives revenues primarily from the
hourly billing of its consultants' services and, to a lesser extent, from
fixed-price projects. The Company's most significant cost is project personnel
cost, which consists of consultant salaries and benefits. Thus, the Company's
financial performance is primarily based upon billing margin (billable hourly
rate less the consultant's hourly cost) and personnel utilization rates
(number of days worked by a consultant during a two-week billing cycle divided
by the number of billing days in that cycle). To date, the Company has been
able to maintain its billing margins by offsetting increases in employee
salaries with increases in its hourly rates. There can be no assurance,
however, that the Company's revenues will continue to be billed primarily on a
time and materials basis or that the Company will be able to continue to pass
along increases in its cost of services to its clients. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

Competition. The market for IT services includes a large number of
competitors, is subject to rapid change and is highly competitive. Primary
competitors include participants from a variety of market segments, including
consulting divisions of the "Big Six" accounting firms, systems consulting and
implementation firms, application software firms and management consulting
firms. Many of these competitors have significantly greater financial,
technical and marketing resources and greater name recognition than the
Company. In addition, the Company competes with its clients' internal
resources, particularly when these resources represent a fixed cost to the
client. In the future, such competition may impose additional pricing
pressures on the Company. There can be no assurance that the Company will
compete successfully with its existing competitors or with any new
competitors. See "Business--Competition."

Reliance on Key Executives. The success of the Company is highly dependent
upon the efforts and abilities of its executive officers, particularly Shmuel
BenTov, the Company's founder, Chairman of the Board, Chief Executive Officer
and President. In addition, the Company is dependent upon the services of Mr.
Frank T. Thoelen, its Chief Financial Officer, who was hired as of June 1,
1997. Although Mr. BenTov and Mr. Thoelen have entered into employment
agreements containing noncompetition, nondisclosure and nonsolicitation
covenants, these contracts do not guarantee that these individuals will
continue their employment with the Company. The loss of the services of either
of these key executives for any reason could have a material adverse effect
upon the Company's business, results of operations and financial condition.
See "Management."

Control by Principal Shareholder. After the Offering, Mr. BenTov will
beneficially own approximately 66.4% of the outstanding Common Stock (62.3% if
the Underwriters' over-allotment option is exercised in full). Accordingly,
Mr. BenTov will be able to substantially control the election of the directors
of the Company and the outcome of all other matters submitted to a vote of the
shareholders. See "Principal and Selling Shareholder" and "Description of
Capital Stock."

Payments and Benefit to Existing Sole Shareholder. On the date of closing of
the Offering, the Company will make the Distribution to Mr. BenTov equal to
the Company's estimated earned and previously undistributed taxable S
Corporation income through the day preceding the Termination Date, which the
Company currently estimates will be approximately $2.0 million as of June 30,
1997. Purchasers of the Common Stock in the Offering will not receive any
portion of the Distribution. After the closing of the Offering, an appropriate
payment will be made to Mr. BenTov or the Company, as the case may be, in the
event that the actual amount of the previously undistributed taxable S
Corporation income through the day preceding the Termination Date is

424B1 10th Page of 61 TOC 1st Previous Next ↓Bottom Just 10th
different than the Distribution. Additionally, Mr. BenTov has personally
guaranteed the Company's line of credit with Citibank, N.A. To the extent that
this line of credit is repaid in full with the proceeds of the Offering, Mr.
BenTov will benefit from a corresponding decrease in his personal obligation
to secure repayment of such line of credit and will be released from his
guaranty. Neither Mr. BenTov nor any other person has any obligation to make
personal guarantees available to the Company in the future, and there can be
no assurance that the absence of personal guarantees will not adversely affect
the Company's ability to obtain future financing. See "Prior S Corporation
Status," "Capitalization" and "Use of Proceeds."

Change in Corporate Tax Status. Effective January 1, 1995, the Company
elected to be treated as an S Corporation for federal and state income tax
purposes. As a result, the Company currently pays no federal income tax, and
all of the earnings of the Company have been taxed for federal income tax
purposes directly to Mr. BenTov. The Company currently pays City of New York
income taxes in the same manner as a C Corporation and pays certain state
income taxes at rates that are lower than imposed on C Corporations. If the
Company's S Corporation status were to be terminated by reason of a failure to
satisfy the S Corporation requirements of the Internal Revenue Code of 1986,
as amended, the Company would be subject to income tax as a C Corporation. The
Company believes, however, that it has complied with all applicable S
Corporation requirements. The Company's S Corporation status will terminate
effective the day prior to the closing date of the Offering (the "Termination
Date"), and the Company will again become a C Corporation fully subject to
federal, state and local corporate income taxation. Prior to the Termination
Date, the Company and Mr. BenTov will enter into an agreement providing that,
among other things, the Company will be indemnified by Mr. BenTov with respect
to any federal, state or local corporate income taxes (plus interest and
penalties) as a result of the Company's failure to qualify as an S Corporation
with respect to tax returns in which the Company reported its income as an S
Corporation. Mr. BenTov's liability under the agreement will be limited to the
aggregate amount of all distributions received by Mr. BenTov from the Company
during such S Corporation reporting period, net of taxes paid or payable by
Mr. BenTov with respect to such distributions. The agreement will further
provide that the Company will indemnify Mr. BenTov on an after-tax basis with
respect to any federal, state or local income taxes (plus interest and
penalties) paid or required to be paid by Mr. BenTov, and Mr. BenTov will pay
to the Company any refunds of federal, state or local income taxes (including
interest received thereon) received by (or credited to) Mr. BenTov, as a
result of a subsequent adjustment in income of the Company with respect to any
tax return in which the Company reported its income as an S Corporation. The
agreement will also provide that Mr. BenTov shall have the option to control
the filing of the current year's tax returns and control or participate in
audits and certain other matters for any period in which the Company reported
its income as an S Corporation. See "Certain Transactions."

Intellectual Property Rights. The Company's business includes the
development of custom software applications in connection with specific client
engagements. Ownership of such software is generally assigned to the client.
The Company relies upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect its
proprietary rights and the proprietary rights of third parties from whom the
Company licenses intellectual property. The Company enters into
confidentiality agreements with its employees and limits distribution of
proprietary information. There can be no assurance that the steps taken by the
Company in this regard will be adequate to deter misappropriation of
proprietary information or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its intellectual
property rights. The Company is subject to the risk of litigation alleging
infringement of third-party intellectual property rights. Any such claims
could require the Company to spend significant sums in litigation, pay
damages, develop non-infringing intellectual property or acquire licenses to
the intellectual property which is the subject of the asserted infringement.
In addition, the Company is aware of other users of the term "TACT" and
combinations including "A Consulting," which users may be able to restrict the
Company's ability to establish or protect its right to use these terms. The
Company has in the past been contacted by other users of the term "TACT"
alleging rights to the term. The Company's inability or failure to establish
rights to these terms may have a material adverse effect on the Company's
business, results of operations and financial condition. See "Business--
Intellectual Property Rights."

424B1 11th Page of 61 TOC 1st Previous Next ↓Bottom Just 11th
No Prior Public Market; Determination of Offering Price; Possible Volatility
of Stock Price. Prior to the Offering, there has been no public market for the
Common Stock. Consequently, the initial public offering price per share of the
Common Stock has been determined by negotiations among management of the
Company and the representatives of the Underwriters (the "Representatives")
and may bear no relationship to the price of the Company's securities after
the Offering. See "Underwriting" for factors considered in determining the
initial public offering price per share. The Common Stock has been approved
for quotation on the Nasdaq National Market System; however, there can be no
assurance that an active trading market will develop and be sustained
subsequent to the Offering or that the market price of the Common Stock will
not decline below the initial public offering price. The Common Stock may be
subject to wide fluctuations in price in response to variations in quarterly
results of operations and other factors, including acquisitions, technological
innovations and general economic or market conditions. In addition, stock
markets have experienced extreme price and volume trading volatility in recent
years. This volatility has had a substantial effect on the market price of
many technology companies and has often been unrelated to the operating
performance of those companies. This volatility may adversely affect the
market price of the Common Stock. See "Underwriting."

Shares Eligible for Future Sale. Upon completion of the Offering, the
Company will have a total of 5,350,000 shares of Common Stock outstanding
(5,485,000 shares if the Underwriters' over-allotment option is exercised in
full). Of these shares, the 1,800,000 shares offered hereby (2,070,000 shares
if the Underwriters' over-allotment option is exercised in full) will be
freely tradeable without restriction or registration under the Securities Act
by persons other than "affiliates" of the Company, as defined under the
Securities Act of 1933, as amended (the "Securities Act"). Mr. BenTov, who
holds the remaining 3,550,000 shares (3,415,000 shares if the Underwriters'
over-allotment option is exercised in full), will be eligible to sell such
shares pursuant to Rule 144 ("Rule 144") under the Securities Act beginning 90
days after the date of this Prospectus, subject to a lockup agreement and
subject to the manner of sale, volume, notice and information restrictions of
Rule 144. As of the date of this Prospectus, options to purchase a total of
450,000 shares of Common Stock pursuant to the Company's Stock Option and
Award Plan are outstanding, none of which options are exercisable for a period
of one year from the date hereof. An additional 150,000 shares of Common Stock
are available for future option grants under the Stock Option and Award Plan.
The Company's existing sole shareholder, executive officers and directors have
agreed not to sell, offer to sell, contract to sell, solicit an offer to buy,
grant any option for the purchase or sale of, assign, pledge, distribute or
otherwise transfer, dispose of or encumber (or make any announcement with
respect to any of the foregoing), directly or indirectly, any shares of Common
Stock, or any options, rights, warrants or other securities convertible into
or exercisable or exchangeable for Common Stock or evidencing any right to
purchase or subscribe for shares of Common Stock, whether or not beneficially
owned by such director or executive officer, except as contemplated in the
Offering, for a period of 180 days from the date of this Prospectus without
the prior written consent of The Robinson-Humphrey Company, Inc., on behalf of
the Underwriters. Sales of a substantial amount of such shares in the public
market, or the availability of such shares for future sale, could adversely
affect the market price of the shares of Common Stock and the Company's
ability to raise additional capital at a price favorable to the Company. See
"Management--Stock Option Plan," "Principal and Selling Shareholder," "Shares
Eligible for Future Sale," "Underwriting" and Note 10 of Notes to Financial
Statements.

Immediate and Substantial Dilution. The initial public offering price per
share of Common Stock is substantially higher than the net tangible book value
per share of the Common Stock. Purchasers of shares of Common Stock in the
Offering will experience immediate and substantial dilution of $8.30 (69.2%)
in the pro forma net tangible book value per share of Common Stock. To the
extent outstanding options to purchase the Company's Common Stock are
exercised, there will be further dilution. See "Dilution."

Broad Discretion of Management and the Board of Directors in Use of
Proceeds. Although the Company intends to apply the net proceeds of the
Offering in the manner described under "Use of Proceeds," the Company's
management and the Board of Directors have broad discretion within such
proposed uses as to the precise allocation of the net proceeds, the timing of
expenditures and all other aspects of the use thereof. The

424B1 12th Page of 61 TOC 1st Previous Next ↓Bottom Just 12th
Company reserves the right to reallocate the net proceeds of the Offering
among the various categories set forth under "Use of Proceeds" as it, in its
sole discretion, deems necessary or advisable based upon prevailing business
conditions and circumstances. There can be no assurance that management will
use such net proceeds in a manner that enhances shareholder value. See "Use of
Proceeds."

Certain Anti-Takeover Provisions. The Company's Certificate of Incorporation
and the New York Business Corporation Law (the "NYBCL") contain provisions
that may have the effect of delaying, deferring or preventing a non-negotiated
merger or other business combination involving the Company. Section 912 of the
NYBCL prohibits a domestic corporation from engaging in a business combination
with an interested shareholder (defined as the beneficial owner of 20% or more
of the stock of the corporation) for a period of five years from the time the
shareholder acquired the stock unless certain conditions are met. These
provisions are intended to encourage any person interested in acquiring the
Company to negotiate with and obtain the approval of its Board of Directors in
connection with the transaction. Moreover, pursuant to the Company's
Certificate of Incorporation, the Board of Directors of the Company is
empowered to issue up to 2,000,000 shares of preferred stock and to determine
the price, rights, preferences and privileges of such shares, without any
further shareholder action. The existence of this "blank-check" preferred
stock could render more difficult or discourage an attempt to obtain control
of the Company by means of a tender offer, merger, proxy contest or otherwise.
These and certain other provisions of the Company's Certification of
Incorporation may discourage or make more difficult a future acquisition of
the Company not approved by the Board of Directors in which shareholders might
receive an attractive value for their shares or that a substantial number or
even a majority of the Company's shareholders might believe to be in their
best interest. As a result, shareholders who desire to participate in such a
transaction may not have the opportunity to do so. Such provisions could also
discourage bids for the shares of Common Stock at a premium, as well as create
a depressive effect on the market price of the shares of Common Stock. See
"Management--Directors and Executive Officers" and "Description of Capital
Stock--Preferred Stock."

Absence of Dividends. Except for the Distribution, the Company does not
anticipate paying any cash dividends in the foreseeable future and intends to
retain earnings, if any, to develop, operate and expand its business. See
"Prior S Corporation Status" and "Dividend Policy."

424B1 13th Page of 61 TOC 1st Previous Next ↓Bottom Just 13th
THE COMPANY

The Company was incorporated under the laws of the State of New York on
February 16, 1983 under the name of Software Ben-Tov, Inc. and changed its
name to The A Consulting Team, Inc. on April 26, 1983. The mailing address of
its principal executive office is 200 Park Avenue South, New York, New York
10003. The telephone number of such office is (212) 979-8228. The Company
maintains a website at http://www.tact.com. Information contained on the
Company's website is not a part of this Prospectus and must not be relied upon
in evaluating the Company, its business or an investment in the Common Stock
offered hereby.

PRIOR S CORPORATION STATUS

Effective January 1, 1995, the Company elected to be treated as an S
Corporation for federal and state income tax purposes. As a result, the
Company currently pays no federal income tax, and all of the earnings of the
Company have been taxed for federal income tax purposes directly to Mr.
BenTov. The Company currently pays City of New York income taxes in the same
manner as a C Corporation and pays certain state income taxes at rates that
are lower than imposed on C Corporations. If the Company's S Corporation
status were to be terminated by reason of a failure to satisfy the S
Corporation requirements of the Internal Revenue Code of 1986, as amended, the
Company would be subject to income tax as a C Corporation. The Company
believes, however, that it has complied with all applicable S Corporation
requirements. The Company's S Corporation status will terminate effective the
Termination Date, and the Company will again become a C Corporation fully
subject to federal, state and local corporate income taxation.

On the date of closing of the Offering, the Company will make the
Distribution to Mr. BenTov equal to the Company's estimated earned and
previously undistributed taxable S Corporation income through the day
preceding the Termination Date, which the Company currently estimates will be
approximately $2.0 million as of June 30, 1997. Purchasers of the Common Stock
in the Offering will not receive any portion of the Distribution. After the
closing of the Offering, an appropriate payment will be made to Mr. BenTov or
the Company, as the case may be, in the event that the actual amount of the
previously undistributed taxable S Corporation income through the day
preceding the Termination Date is different than the Distribution. See "Use of
Proceeds," "Capitalization" and Notes 5 and 12 of Notes to Financial
Statements.

Prior to the Termination Date, the Company and Mr. BenTov will enter into
the S Corporation Termination, Tax Allocation and Indemnification Agreement
(the "Termination Agreement") providing that, among other things, the Company
will be indemnified by Mr. BenTov with respect to any federal, state or local
corporate income taxes (plus interest and penalties) as a result of the
Company's failure to qualify as an S Corporation with respect to tax returns
in which the Company reported its income as an S Corporation. Mr. BenTov's
liability under the Termination Agreement will be limited to the aggregate
amount of all distributions received by Mr. BenTov from the Company during
such S Corporation reporting period, net of taxes paid or payable by Mr.
BenTov with respect to such distributions. The Termination Agreement will
further provide that the Company will indemnify Mr. BenTov on an after-tax
basis with respect to any federal, state or local income taxes (plus interest
and penalties) paid or required to be paid by Mr. BenTov, and Mr. BenTov will
pay to the Company any refunds of federal, state or local income taxes
(including interest received thereon) received by (or credited to) Mr. BenTov,
as a result of a subsequent adjustment in income of the Company with respect
to any tax return in which the Company reported its income as an S
Corporation. The Termination Agreement will also provide that Mr. BenTov shall
have the option to control the filing of the current year's tax returns and
control or participate in audits and certain other matters for any period in
which the Company reported its income as an S Corporation. See "Certain
Transactions."

424B1 14th Page of 61 TOC 1st Previous Next ↓Bottom Just 14th
USE OF PROCEEDS

The net proceeds to the Company from the sale of the shares of Common Stock
offered hereby are estimated to be $19,588,000 ($21,095,000 if the over-
allotment option is exercised in full) after deducting underwriting discounts
and estimated offering expenses payable by the Company.

The Company presently intends to use the net proceeds as follows:

[Download Table]

APPROXIMATE APPROXIMATE
DOLLAR AMOUNT PERCENTAGE
------------- -----------

To pay the Distribution(1)..................... $ 2,000,000 10%
To repay certain indebtedness and accrued in-
terest........................................ 2,800,000 14
For working capital and general corporate pur-
poses......................................... 14,788,000 76
----------- ---
$19,588,000 100%
=========== ===

--------
(1) See "Prior S Corporation Status."

At June 30, 1997, the Company owed $2,665,000 in principal amount under the
Company's line of credit with Citibank, N.A. The line of credit provides for
borrowings of up to $3.1 million and bears interest at a variable rate based
on prime plus 1% (9.5% at June 30, 1997). The indebtedness under the line of
credit was incurred by the Company for working capital and other corporate
purposes, including payment of a loan from the Company's sole shareholder (the
"Shareholder Loan"), which had been accruing interest at a variable rate based
on prime (8.5% at June 13, 1997, the date of repayment). The Company's bank
line of credit is secured by substantially all of the Company's assets. Mr.
BenTov has guaranteed the Company's outstanding indebtedness under the line of
credit, and it is anticipated that he will be relieved of his guarantees as a
result of the Company's repayment of borrowings under this line. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Certain Transactions."

The balance of the net proceeds of the Offering (including any proceeds
received by the Company from the exercise of the Underwriters' over-allotment
option) will be used for working capital and general corporate purposes,
including opening additional Solution Branches and expanding the Company's
Technical Practices and sales and marketing staff. The Company presently plans
to open a Solution Branch in Connecticut by the end of 1997 and plans to open
additional Solution Branches in the future. In addition, the Company plans to
use a portion of the net proceeds to expand the scope of its Technical
Practices to address new technologies and vendor software solutions, such as
SAP and PeopleSoft. The Company also plans to hire additional technical, sales
and recruiting personnel to expand its client base. Finally, the Company plans
to expand its in-house selling and marketing capabilities in order to market
additional packaged software products to its growing client base.

The Company believes opportunities may exist to expand its current business
through acquisitions of local or regional competitors and may utilize a
portion of the proceeds for such purpose. In addition, the Company may
consider acquisitions of complementary businesses. The Company is not
currently a party to any agreements, arrangements or understandings with
respect to any acquisitions, and there can be no assurance that any of the
Company's expansion plans will be realized or, if realized, will prove
profitable for the Company. See "Risk Factors--Management of Growth."

The foregoing represents the Company's best estimate of its use of the net
proceeds based upon its current plans, certain assumptions regarding industry
and general economic conditions, and the Company's future revenues and
expenditures. If any of these factors change, the Company may find it
necessary or advisable to reallocate some of the proceeds within the above-
described categories or to use portions thereof for other purposes or may be
required to seek additional financing. Pending application thereof, the net
proceeds will be invested in short-term, investment-grade, interest bearing
securities. The Company will not receive any proceeds from the sale of shares
by the Selling Shareholder pursuant to any exercise of the Underwriters' over-
allotment option. See "Capitalization" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations--Liquidity and
Capital Resources."

424B1 15th Page of 61 TOC 1st Previous Next ↓Bottom Just 15th
CAPITALIZATION

The following table sets forth the unaudited capitalization of the Company
at June 30, 1997 (i) on an actual basis and (ii) on a pro forma, as adjusted
basis, to reflect (x) the sale of the Common Stock offered hereby and the
initial application of the estimated net proceeds therefrom, after deducting
underwriting discounts and estimated offering expenses payable by the Company,
including payment of the Distribution representing the Company's estimated
earned and previously undistributed S Corporation income and the repayment of
debt described under "Use of Proceeds" and (y) the recording of deferred tax
liability in the amount of $58,000 resulting from the change from an S
Corporation to a C Corporation. See "Prior S Corporation Status" and "Use of
Proceeds." The information set forth below should be read in conjunction with
the Financial Statements and Notes thereto included elsewhere in this
Prospectus.

[Download Table]

JUNE 30, 1997
------------------
PRO FORMA,
ACTUAL AS ADJUSTED
------ -----------
(IN THOUSANDS)

Short-term debt (including current portion of long-term
debt).................................................. $2,860 $ 195
====== =======
Long-term debt.......................................... $ 38 $ 38
Shareholders' equity(1):
Preferred stock--$0.01 par value; 2,000,000 shares
authorized; no shares issued......................... -- --
Common stock--$0.01 par value; 10,000,000 shares
authorized; 3,550,000 shares issued and outstanding;
5,350,000 shares issued and outstanding, pro forma,
as adjusted.......................................... -- 53
Additional paid-in capital............................ -- 19,570
Retained earnings..................................... 2,265 172
------ -------
Total shareholders' equity.......................... 2,265 19,795
------ -------
Total capitalization.............................. $2,303 $19,833
====== =======

--------
(1) Excludes 600,000 additional shares issuable pursuant to the Stock Option
and Award Plan, of which 450,000 shares are subject to currently
outstanding options. See "Management--Stock Option Plan" and "Shares
Eligible for Future Sale."

DIVIDEND POLICY

Except for the Distribution to its existing shareholder, the Company
presently intends to employ all available funds for the expansion of its
business and, therefore, does not anticipate declaring or paying cash
dividends on the Common Stock in the foreseeable future. The payment of cash
dividends, if any, in the future will depend upon the Company's earnings,
financial condition, capital requirements, cash flow, long range plans and
such other factors as the Board of Directors of the Company may deem relevant.

424B1 16th Page of 61 TOC 1st Previous Next ↓Bottom Just 16th
DILUTION

The unaudited pro forma net tangible book value of the Company's Common
Stock as of June 30, 1997, after giving effect to the Distribution and the
deferred tax liability in the amount of $58,000 resulting from the change from
an S Corporation to a C Corporation, was $162,000, or approximately $.05 per
share. "Net tangible book value per share" represents the total amount of
tangible assets less total liabilities divided by the number of shares of
Common Stock issued and outstanding. After giving effect to the sale of the
1,800,000 shares of Common Stock offered hereby and after deducting
underwriting discounts and estimated offering expenses payable by the Company,
the pro forma net tangible book value of the Company at June 30, 1997 would
have been $19,795,000, or approximately $3.70 per share. This represents an
immediate increase in net tangible book value of $3.65 per share to the
Company's sole existing shareholder and an immediate dilution in net tangible
book value of $8.30 per share to new investors. The following table
illustrates this dilution to new investors on a per share basis:

[Download Table]

Initial public offering price................................... $12.00
Pro forma net tangible book value per share prior to the Of-
fering....................................................... $ .05
Increase per share attributable to the Offering............... 3.65
-----
Pro forma net tangible book value after the Offering............ 3.70
------
Dilution to new investors(1).................................... $ 8.30
======

--------
(1) Dilution is determined by subtracting adjusted net tangible book value per
share after completion of the Offering from the public offering price paid
by a new shareholder for a share of Common Stock in the Offering. Assuming
the exercise in full of the Underwriters' over-allotment option, the pro
forma net tangible book value of the Company at June 30, 1997 would have
been approximately $3.88 per share, representing an immediate increase in
net tangible book value of $3.83 per share to the Company's sole existing
shareholder and an immediate dilution in net tangible book value of $8.12
per share to new investors.

The following table summarizes the number of shares of Common Stock
purchased from the Company, the total consideration paid and the average price
per share paid by the Company's existing sole shareholder and new investors in
the Offering. The calculation below is based on the initial public offering
price of $12.00 per share (before deducting underwriting discounts and other
estimated expenses of the Offering payable by the Company).

[Download Table]

SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- ---------------------- PRICE PER
NUMBER PERCENTAGE AMOUNT PERCENTAGE SHARE
--------- ---------- ----------- ---------- ---------

Existing sharehold-
er(1)(2)................ 3,550,000 66.4% $ 100 0.0% $ --
New investors(2)......... 1,800,000 33.6 21,600,000 100.0 12.00
--------- ----- ----------- -----
Total.................. 5,350,000 100.0% $21,600,100 100.0%
========= ===== =========== =====

--------
(1) Excludes shares of Common Stock issuable upon exercise of outstanding
options. See "Management."
(2) Assuming the Underwriters' over-allotment option is exercised in full, the
number of shares held by new investors will be increased by 270,000 shares
to 2,070,000, or 37.7%, of the total shares of Common Stock outstanding
after the Offering, and the number of shares held by the Company's sole
existing shareholder will be reduced by 135,000 shares to 3,415,000, or
62.3%, of the total shares of Common Stock outstanding after the Offering.

424B1 17th Page of 61 TOC 1st Previous Next ↓Bottom Just 17th
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following statement of operations data of the Company for the years
ended December 31, 1994, 1995 and 1996 and the balance sheet data as of
December 31, 1995 and 1996 have been derived from the financial statements of
the Company, which have been audited by Ernst & Young LLP, independent
auditors, as indicated in their report included elsewhere herein. The selected
financial data for the six months ended June 30, 1996 and 1997, respectively,
and the balance sheet data as of December 31, 1994 and June 30, 1997,
respectively, are unaudited. In the opinion of the Company, such unaudited
data include all adjustments (consisting of only normal recurring adjustments)
necessary for a fair presentation of the information set forth therein.
Results of operations for interim periods are not necessarily indicative of
results to be expected for the full year. Selected financial data should be
read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the financial statements and the
related notes included elsewhere in this Prospectus.

[Download Table]

YEAR ENDED SIX MONTHS ENDED
DECEMBER 31, JUNE 30,
------------------------- -----------------
1994 1995 1996 1996 1997
------- ------- ------- -------- --------
(UNAUDITED)
(IN THOUSANDS, EXPECT PER SHARE DATA)

STATEMENT OF OPERATIONS DATA:
Consulting services.............. $ 9,463 $14,430 $18,981 $ 8,637 $ 15,378
Software licensing............... 1,321 1,383 1,776 1,107 785
Training services................ 98 210 238 149 110
------- ------- ------- ------- --------
Total revenues.................. 10,882 16,023 20,995 9,893 16,273
Cost of revenues................. 8,016 11,041 14,521 6,806 11,217
------- ------- ------- ------- --------
Gross profit.................... 2,866 4,982 6,474 3,087 5,056
Operating expenses:
Selling, general and administra-
tive expenses
(excluding executive compensa-
tion).......................... 2,001 3,090 4,700 1,924 3,241
Executive compensation(1)....... 607 1,615 1,623 812 150
Research and development........ 300 185 -- -- --
Equity in net (income) loss from
joint venture(2)............... (35) -- 49 34 (13)
------- ------- ------- ------- --------
Income (loss) from operations.... (7) 92 102 317 1,678
Interest income.................. 3 3 2 2 --
Interest expense................. -- (14) (67) (39) (108)
------- ------- ------- ------- --------
Income (loss) before income tax-
es.............................. (4) 81 37 280 1,570
Provision (credit) for income
taxes........................... (6) (109) 29 25 116
------- ------- ------- ------- --------
Net income....................... $ 2 $ 190 $ 8 $ 255 $ 1,454
======= ======= ======= ======= ========
UNAUDITED PRO FORMA DATA(3):
Historical income (loss) from op-
erations........................ $ 102 $ 1,678
Pro forma adjustment for execu-
tive compensation............... 1,223 (37)
------- --------
Pro forma income from operations. 1,325 1,641
Interest (expense) income........ (65) (108)
------- --------
Pro forma income before income
taxes........................... 1,260 1,533
Pro forma provision for income
taxes........................... 568 681
------- --------
Pro forma net income............. $ 692 $ 852
======= ========
Pro forma net income per share... $ .19 $ .23
======= ========
Weighted average number of common
shares outstanding.............. 3,729 3,729
[Download Table]

AT DECEMBER 31,
----------------------- AT JUNE 30,
1994 1995 1996 1997
----------- ----- ----- -----------
(UNAUDITED) (UNAUDITED)
(IN THOUSANDS)

BALANCE SHEET DATA:
Working capital............................. $ 421 $ 579 $ 428 $1,742
Total assets................................ 1,663 3,196 5,100 7,236
Long-term debt.............................. -- -- 44 38
Total shareholder's equity.................. 613 803 811 2,265

-------
(1) Executive compensation represents compensation paid to Mr. BenTov during
the periods presented. Effective upon consummation of the Offering, Mr.
BenTov will enter into a two year employment agreement providing for an
annual base salary of $250,000, providing that he will receive no cash
bonus for 1997 and providing for an annual bonus not to exceed one percent
of the Company's total revenues for 1998 subject to approval by the non-
employee directors of the Executive Compensation Committee and further
subject to the Company meeting certain financial performance criteria. Mr.
BenTov and the Company have agreed during the two year term of Mr.
BenTov's employment agreement not to (i) increase Mr. BenTov's
compensation (including base salary and bonus) or (ii) otherwise amend the
terms of Mr. BenTov's employment agreement. See "Management--Employment
Agreements" and "--Executive Officer Bonus Plan."
(2) See Note 7 of Notes to Financial Statements and "Certain Transactions."
(3) The pro forma statements of operations data are presented to reflect (i)
reduced executive compensation expense (excluding any bonus which is
contingent upon the Company meeting certain financial performance
criteria) effective upon consummation of the Offering relating to Mr.
BenTov, partially offset by increased salary expense related to the
Company's hiring of a Chief Financial Officer and (ii) provision for
federal and state income taxes as if the Company had been subject to
federal and state income taxation as a C Corporation during each of the
periods presented. On the closing date of the Offering, the Company will
make the Distribution to Mr. BenTov estimated to be approximately
$2,000,000 as of June 30, 1997. See "Prior S Corporation Status,"
"Management--Executive Officer Bonus Plan" and Note 11 of Notes to
Financial Statements.

424B1 18th Page of 61 TOC 1st Previous Next ↓Bottom Just 18th
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's historical financial
condition and results of operations should be read in conjunction with the
historical Financial Statements and Notes thereto and the other financial
information appearing elsewhere in this Prospectus. In addition to historical
information, this Management's Discussion and Analysis of Financial Condition
and Results of Operations and other parts of this Prospectus contain forward-
looking information that involves risks and uncertainties. The Company's
actual results could differ materially from those anticipated by such forward-
looking information due to competitive factors, risks associated with the
Company's expansion plans and other factors discussed under "Risk Factors" and
elsewhere in this Prospectus. All amounts and percentages are approximations.

OVERVIEW

Founded in 1983, TACT provides enterprise-wide IT consulting, software and
training services and solutions primarily to Fortune 1000 companies in a wide
range of industries. For each of the years ended December 31, 1995 and 1996
and the six months ended June 30, 1997, the Company generated over 90% of its
revenues from IT consulting services. Moreover, in each of these periods over
95% of the Company's consulting services revenues were generated from the
hourly billing of its consultants' services to its clients under time and
materials engagements, with the remainder generated under fixed-price
engagements.

The Company establishes standard billing guidelines for consulting services
based on the type of service offered. Actual billing rates are established on
a project by project basis and may vary from the standard guidelines. During
the years ended December 31, 1994, 1995 and 1996 and the six months ended June
30, 1997, the Company's average revenues per assignment hour have steadily
increased. The Company typically bills its time and materials clients on a
semi-monthly basis and makes arrangements on fixed-price engagements on a case
by case basis. The Company recognizes consulting services revenues generated
under time and materials engagements as those services are provided, whereas
consulting services revenues generated under fixed-price engagements are
recognized according to the percentage of completion method.

The Company's most significant operating cost is personnel cost, which is
contained in cost of revenues. As a result, the Company's financial
performance is primarily based upon billing margin (billable hourly rate less
the consultant's hourly cost) and consultant utilization rates (number of days
worked by a consultant during a two-week billing cycle divided by the number
of billing days in that cycle). During the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1997, the Company has been able to
increase its billing margins by increasing its hourly billing rates and
through higher margin service offerings in new technologies such as
client/server and internet/intranet. These increases, however, were partially
offset by increases in consultants' and employees' salaries and wages. Because
most of the Company's engagements are on a time and materials basis, the
Company generally has been able to pass on to its clients most increases in
cost of services. Accordingly, such increases have historically not had a
significant impact on the Company's financial results. Further, most of the
Company's engagements allow for periodic price adjustments to address, among
other things, increases in consultant costs. TACT also actively manages its
personnel utilization rates by constantly monitoring project requirements and
timetables. As projects are completed, consultants are redeployed either to
new projects at the current client site or to new projects at another client
site, or are encouraged to participate in TACT's training programs in order to
expand their technical skill sets.

The Company also generates revenues by selling software licenses and
providing training services. Historically, the Company has achieved attractive
gross margins on its software licensing. In addition to initial software
license fees, the Company derives revenues from the annual renewal of software
licenses. Revenues from the sale of software licenses are recognized upon
delivery of the software to a customer, and training service revenues are
recognized as the services are provided.

The Company's revenue growth over the past three years has been driven by
three primary factors: increasing the number of technical consultants,
managing the business to attain higher average billing rates through the
delivery of higher value-added services to the Company's clients and carefully
managing consultant utilization rates. Additionally, the Company has expanded
its Technical Practices into areas such as Windows

424B1 19th Page of 61 TOC 1st Previous Next ↓Bottom Just 19th
NT and Internet/Intranet which has enabled it to cross-sell higher margin
services. The Company also has been successful in expanding existing client
relationships as well as establishing new client relationships. Such
relationships are established and maintained through local Solution Branches.
The Company currently plans to open one additional Solution Branch in
Connecticut by the end of 1997. Thereafter, the Company presently plans to
open additional Solution Branches in other select major U.S. markets. Based
upon its limited experience with opening Solution Branches, the Company cannot
predict when new Solution Branches will contribute to the Company's net
income. Until such time, the Company will have incurred the costs associated
with opening each new Solution Branch, including the costs of salaries,
occupancy and office equipment.

Because the Company has been an S Corporation since January 1, 1995, the
Company historically has not paid federal income taxes at the corporate level.
See "Prior S Corporation Status." Instead, the net income of the Company, for
federal and certain state income tax purposes, was reported by and taxed
directly at such time to Mr. BenTov, the Company's sole shareholder, rather
than to the Company. In addition, effective upon consummation of the Offering,
Mr. BenTov has entered into an employment agreement with the Company pursuant
to which he will be entitled to receive a base salary of $250,000 per annum
and an annual bonus for 1998 not to exceed one percent of the Company's total
revenues for 1998, subject to approval by the non-employee directors of the
Company's Executive Compensation Committee and further subject to the Company
meeting certain financial performance criteria. The Company also recently
entered into an employment agreement with Mr. Thoelen, its Chief Financial
Officer, pursuant to which he will receive $150,000 per annum in base salary.
See "Management--Employment Agreements" and "--Executive Officer Bonus Plan."
Mr. BenTov will not receive a cash bonus for 1997. Accordingly, the Company
has calculated certain pro forma items to reflect (i) reduced executive
compensation expense (not including any bonus), effective upon consummation of
the Offering, relating to Mr. BenTov that is partially offset by increased
salary expense related to the Company's hiring of Mr. Thoelen and (ii)
provision for federal and state income taxes as if the Company had been
subject to federal and state income taxation as a C Corporation during each of
the periods presented. The Company's status as an S Corporation will be
terminated prior to consummation of the Offering. See Note 11 of Notes to
Financial Statements.

RESULTS OF OPERATIONS

The following tables set forth for the periods indicated the percentages of
total revenues represented by each line item presented, together with the
percentage increase (or decrease) in each line item between comparative
periods:

[Download Table]

PERCENTAGE OF TOTAL REVENUES
-------------------------------
PERCENTAGE
YEAR ENDED DECEMBER 31, INCREASE (DECREASE)
------------------------------- -------------------
1994 1995 1996 1994/1995 1995/1996
--------- --------- --------- --------- ---------

Consulting services....... 87.0% 90.1% 90.4% 52.5% 31.5%
Software licensing........ 12.1 8.6 8.5 4.6 28.5
Training services......... 0.9 1.3 1.1 113.4 13.4
--------- --------- ---------
Total revenues.......... 100.0 100.0 100.0 47.2 31.0
Cost of revenues.......... 73.7 68.9 69.2 37.7 31.5
--------- --------- ---------
Gross profit............ 26.3 31.1 30.8 73.8 29.9
Selling, general and
administrative expenses
(excluding executive
compensation)............ 18.4 19.3 22.4 54.4 52.1
Executive compensation.... 5.6 10.1 7.7 165.9 0.5
Income (loss) from opera-
tions.................... (0.1) 0.6 0.5 NM 10.5
Net income................ * 1.2 * NM (95.8)
Pro forma income from op-
erations................. 6.3
Pro forma net income...... 3.3

--------
* Represents less than 0.1%.
NM--not meaningful.

424B1 20th Page of 61 TOC 1st Previous Next ↓Bottom Just 20th
[Download Table]

PERCENTAGE OF
TOTAL REVENUES
----------------
SIX MONTHS PERCENTAGE
ENDED INCREASE
JUNE 30, (DECREASE)
---------------- ----------
1996 1997 1996/1997
------- ------- ----------

Consulting services............................... 87.3% 94.5% 78.1%
Software licensing................................ 11.2 4.8 (29.1)
Training services................................. 1.5 0.7 (26.2)
------- -------
Total revenues.................................. 100.0 100.0 64.5
Cost of revenues.................................. 68.8 68.9 64.8
------- -------
Gross profit.................................... 31.2 31.1 63.8
Selling, general and administrative expenses
(excluding executive compensation)............... 19.4 19.9 68.5
Executive compensation............................ 8.2 0.9 (81.5)
Income from operations............................ 3.2 10.3 429.8
Net income........................................ 2.6 8.9 470.1
Pro forma income from operations.................. 10.1
Pro forma net income.............................. 5.2

COMPARISON OF SIX MONTHS ENDED JUNE 30, 1996 TO SIX MONTHS ENDED JUNE 30, 1997

Revenues. Revenues of the Company increased by $6,380,000, or 64.5%, from
$9,893,000 for the six months ended June 30, 1996 to $16,273,000 for the six
months ended June 30, 1997. Revenues from consulting services increased by
$6,741,000, or 78.1%, from $8,637,000 for the six months ended June 30, 1996
to $15,378,000 for the comparable period in 1997. As a percentage of total
revenues, consulting services revenues increased, representing 87.3% of
revenues for the six months ended June 30, 1996 compared to 94.5% for the
comparable period in 1997. This increase in revenues from consulting services
was primarily the result of an increase in the number of consultants and, to a
lesser extent, higher hourly billing rates and a higher consultant utilization
rate. The number of consultants engaged by the Company increased 38% from June
30, 1996 to June 30, 1997. In particular, the Company obtained significant
full life cycle projects involving networking and system management, Windows
NT rollout, client/server development, quality assurance and testing, and
internet/intranet from existing clients which resulted in higher billings.

Software licensing revenues decreased by $323,000, or 29.1%, from $1,107,000
for the six months ended June 30, 1996 to $785,000 for the comparable period
in 1997 as a result of licensing of new software products introduced in early
1996. As a percentage of revenues, software licensing revenue decreased from
11.2% for the six months ended June 30, 1996 to 4.8% for the comparable period
in 1997.

Training services revenues decreased by $39,000, or 26.2%, from $149,000 for
the six months ended June 30, 1996 to $110,000 for the comparable period in
1997. This decrease resulted from the use of the Company's training personnel
for in-house training in Windows NT administration and internet/intranet
technologies during the six months ended June 30, 1997.

Gross Profit. As a result of the above factors, gross profit increased by
$1,970,000, or 63.8%, from $3,087,000 for the six months ended June 30, 1996
to $5,056,000 for the comparable period in 1997. As a percentage of total
revenues, gross profit remained constant at approximately 31% during both of
the six month periods.

424B1 21st Page of 61 TOC 1st Previous Next ↓Bottom Just 21st
selling, general and administrative expenses in the six months ended June 30,
1997 were primarily a result of the addition of several Technical Practice
Managers in the third quarter of 1996. As a percentage of total revenues,
selling, general and administrative expenses increased slightly, representing
19.4% of revenues for the six months ended June 30, 1996 compared to 19.9% for
the comparable period in 1997. Executive compensation representing
compensation to the Company's principal shareholder totalled $812,000 for the
six months ended June 30, 1996 and $150,000 for the comparable period in 1997.
The decrease results from the Company allocating the $1,623,000 in salary and
bonus paid to its sole shareholder in 1996 ratably over the six months ended
June 30, 1996 and allocating his compensation for the comparable period in
1997 based on an aggregate annual compensation of $250,000, which is the
amount set forth in his two-year employment agreement with the Company which
becomes effective upon the consummation of the Offering.

Actual and Pro Forma Income From Operations. Due to the foregoing reasons,
actual operating income increased by $1,362,000 from $317,000 for the six
months ended June 30, 1996 to $1,678,000 for the comparable period in 1997.
Pro forma income from operations was $1,641,000 for the six months ended June
30, 1997.

Actual and Pro Forma Net Income. Actual net income increased by $1,199,000
from $255,000 for the six months ended June 30, 1996 to $1,455,000 for the
comparable period in 1997. Pro forma net income was $852,000 for the six
months ended June 30, 1997.

COMPARISON OF YEAR ENDED DECEMBER 31, 1995 TO YEAR ENDED DECEMBER 31, 1996

Revenues. Revenues of the Company increased by $4,972,000, or 31.0%, from
$16,023,000 for the year ended December 31, 1995 ("1995") to $20,995,000 for
the year ended December 31, 1996 ("1996"). Revenues from consulting services
increased by $4,551,000, or 31.5%, from $14,430,000 in 1995 to $18,981,000 in
1996. As a percentage of total revenues, consulting services revenues remained
relatively constant at approximately 90%. The increase in 1996 revenues from
consulting services was primarily the result of an increased number of
consultants and, to a lesser extent, higher hourly billing rates. The number
of consultants engaged by the Company increased 34% from December 31, 1995 to
December 31, 1996. The Company obtained several large projects from its
existing client base and new clients related to higher valued-added services
such as internet/intranet, client/server and networking and system management
services.

Software licensing revenues increased by $393,000, or 28.5%, from $1,383,000
in 1995 to $1,776,000 in 1996. This increase primarily resulted from increased
sales and marketing efforts by additional sales staff and the marketing of new
software products.

Training services revenues increased by $28,000, or 13.4%, from $210,000 in
1995 to $238,000 in 1996. This increase primarily resulted from a significant
training engagement obtained by the Company in early 1996.

Gross Profit. The resulting gross profit increased by $1,492,000, or 29.9%,
from $4,982,000 in 1995 to $6,474,000 in 1996. As a percentage of total
revenues, gross profit decreased slightly from 31.1% of total revenues in 1995
to 30.8% of total revenues in 1996, primarily as a result of increased cost of
revenues in 1996 related to software licensing and, to a lesser extent,
training services.

Selling, General and Administrative Expenses and Executive
Compensation. Selling, general and administrative expenses (excluding
executive compensation) increased by $1,610,000, or 52.1% from $3,090,000 in
1995 to $4,700,000 in 1996. As a percentage of total revenues, selling,
general and administrative expenses increased, representing 19.3% of total
1995 revenues as compared to 22.4% of total 1996 revenues. During 1996, the
Company implemented an expansion strategy to develop additional Technical
Practices. As a result, the Company incurred additional salary expense in 1996
because of the hiring of a number of additional Technical Practice Managers,
additional sales representatives and recruiters as well as other technical
support personnel. Executive compensation totalled $1,615,000 in 1995 compared
to $1,623,000 in 1996.

424B1 22nd Page of 61 TOC 1st Previous Next ↓Bottom Just 22nd
Actual and Pro Forma Income From Operations. Actual operating income
increased by $10,000 from $92,000 in 1995 to $102,000 in 1996. Pro forma
income from operations was $1,325,000 in 1996.

Actual and Pro Forma Net Income. Actual net income decreased by $182,000, or
95.8%, from $190,000 in 1995 to $8,000 in 1996. Pro forma net income was
$692,000 in 1996.

COMPARISON OF YEAR ENDED DECEMBER 31, 1994 TO YEAR ENDED DECEMBER 31, 1995

Revenues. Revenues of the Company increased by $5,141,000, or 47.2%, from
$10,882,000 for the year ended December 31, 1994 ("1994") to $16,023,000 for
1995. Revenues from consulting services increased by $4,968,000, or 52.5%,
from $9,463,000 in 1994 to $14,430,000 in 1995 as the Company continued to
expand its Technical Practices, increased its number of client relationships
and hired additional technical consultants. The number of consultants engaged
by the Company increased 26% from December 31, 1994 to December 31, 1995.
Increased revenues in 1995 were the result of, among others, the addition of a
systems integration project for an existing client, a client/server project
for a new client and the expansion of value-added services to its existing
clients. As a percentage of total revenues, consulting services revenue
increased from 87.0% of total 1994 revenues to 90.1% of total 1995 revenues.

Software licensing revenues increased by $61,000, or 4.6%, from $1,321,000
in 1994 to $1,383,000 in 1995. Software licensing revenue growth in 1995 was
negatively impacted by the fact that the Company's customers were
transitioning to new releases of computer software, which in turn delayed the
licensing of the Company's add-on software products.

Training services revenues increased by $112,000, or 113.4%, from $98,000 in
1994 to $210,000 in 1995. This increase primarily resulted from a greater
focus by the Company on increasing training services revenue and, to that end,
the addition of an experienced manager for the Company's training division.

Gross Profit. As a result of the above factors, gross profit increased by
$2,116,000, or 73.8%, from $2,866,000 in 1994 to $4,982,000 in 1995. As a
percentage of total revenues, gross profit increased from 26.3% of total
revenues in 1994 to 31.1% of total revenues in 1995 primarily as a result of
the Company providing higher value-added services during 1995.

Selling, General and Administrative Expenses and Executive
Compensation. Selling, general and administrative expenses (excluding
executive compensation) increased by $1,089,000, or 54.4%, from $2,001,000 in
1994 to $3,090,000 in 1995. Selling, general and administrative expenses also
increased as a percentage of total revenues from 18.4% of 1994 revenues to
19.3% of 1995 revenues due to higher office occupancy costs in 1995. Executive
compensation totalled $607,000 in 1994 compared to $1,615,000 in 1995.

Income (Loss) From Operations. Operating income increased by $99,000 from a
loss of $7,000 in 1994 to an income of $92,000 in 1995.

Net Income. Net income increased by $188,000 from $2,000 in 1994 to $190,000
in 1995.

UNAUDITED SELECTED QUARTERLY RESULTS OF OPERATIONS

The following tables set forth certain unaudited quarterly operating
information for each of the ten quarters ending with the quarter ended June
30, 1997, both in dollars and as a percentage of total revenues. This data has
been prepared on the same basis as the audited financial statements contained
elsewhere in this Prospectus and management believes that it includes all
adjustments, consisting only of normal recurring adjustments, necessary for
the fair presentation of the information for the periods presented when read
in conjunction with the Company's Financial Statements and related Notes
thereto. Results for any previous fiscal quarter are not necessarily
indicative of results for the full year or for any future quarter. The
Company's quarterly operating

424B1 23rd Page of 61 TOC 1st Previous Next ↓Bottom Just 23rd
results have varied significantly in the past and may vary significantly in
the future. See "Risk Factors--Variability of Quarterly Results of
Operations."

[Enlarge/Download Table]

QUARTER ENDED
----------------------------------------------------------------------------------------
1995 1996 1997
---------------------------------- ---------------------------------- ----------------
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30
------- ------- -------- ------- ------- ------- -------- ------- ------- -------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Consulting services..... $3,359 $3,480 $3,719 $3,872 $4,028 $4,609 $4,925 $5,419 $7,058 $8,320
Software licensing...... 377 224 274 508 238 869 279 390 298 487
Training services....... 52 53 63 42 95 54 58 31 71 39
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total revenues......... 3,788 3,757 4,056 4,422 4,361 5,532 5,262 5,840 7,427 8,846
Cost of revenues........ 2,435 2,669 2,887 3,050 3,059 3,747 3,591 4,124 5,106 6,111
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Gross profit........... 1,353 1,088 1,169 1,372 1,302 1,785 1,671 1,716 2,321 2,735
Selling, general and
administrative
(excluding executive
compensation).......... 651 757 799 883 779 1,145 1,331 1,445 1,513 1,728
Executive compensation.. 404 404 404 403 406 406 406 405 87 63
Income (loss) from oper-
ations................. 301 (92) (157) 40 89 228 (74) (141) 734 944
Net income (loss)....... 407 (90) (156) 29 59 196 (91) (156) 635 819
Pro forma income from
operations............. 395 534 232 164 722 919
Pro forma net income.... 206 287 119 80 373 479
Pro forma net income per
share.................. $ .06 $ .08 $ .03 $ .02 $ .10 $ .13
[Enlarge/Download Table]

Consulting services..... 88.7% 92.6% 91.7% 87.6% 92.4% 83.3% 93.6% 92.8% 95.0% 94.1%
Software licensing...... 9.9 6.0 6.8 11.5 5.4 15.7 5.3 6.7 4.0 5.5
Training services....... 1.4 1.4 1.5 0.9 2.2 1.0 1.1 0.5 1.0 0.4
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Total revenues......... 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0
Cost of revenues........ 64.3 71.0 71.2 69.0 70.2 67.7 68.2 70.6 68.7 69.1
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
Gross profit........... 35.7 29.0 28.8 31.0 29.8 32.3 31.8 29.4 31.3 30.9
Selling, general and
administrative
(excluding executive
compensation).......... 17.2 20.1 19.7 20.0 17.9 20.7 25.3 24.7 20.4 19.5
Executive compensation.. 10.7 10.7 10.0 9.1 9.3 7.3 7.7 6.9 1.2 0.7
Income (loss) from oper-
ations................. 8.0 (2.4) (3.9) 0.9 2.0 4.1 (1.4) (2.4) 9.9 10.7
Net income (loss)....... 10.8 (2.4) (3.9) 0.7 1.3 3.6 (1.7) (2.7) 8.6 9.3
Pro forma income from
operations............. 9.1 9.6 4.4 2.8 9.7 10.4
Pro forma net income.... 4.7 5.2 2.3 1.4 5.0 5.4

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary cash requirements to date have been satisfied through
periodic use of its line of credit and from borrowings from its principal
shareholder. In April 1996, the Company increased its line of credit with
Citibank, N.A. from $200,000 to $350,000 and in December 1996 the line of
credit was increased to $1,700,000. In February 1997, the Company further
increased its line of credit to $2,100,000. In addition, in March 1997, the
Company borrowed an additional $150,000 from Citibank, N.A., which was
subsequently repaid by the Company in April 1997. In June 1997, the Company
further increased its line of credit by $1,000,000 to $3,100,000 for the
purpose of paying the outstanding balance of $980,000 under the Shareholder
Loan. The Company had $135,000, $1,450,000 and $2,665,000 in outstanding
borrowings from Citibank, N.A. as of December 31, 1995, December 31, 1996 and
June 30, 1997, respectively. The line of credit is guaranteed by the Company's
shareholder. The line of credit bears interest at a variable rate based on
prime plus 1% (9.25% at December 31, 1996 and 9.5% at June 30, 1997). See
"Risk Factors--Payments and Benefit to Existing Sole Shareholder" and "Use of
Proceeds."

The Company had $1,111,000, $1,045,000 and $0 outstanding under the
Shareholder Loan as of December 31, 1995, December 31, 1996 and June 30, 1997,
respectively. The Shareholder Loan bore interest at a variable rate based on
prime (8.5% on June 13, 1997, the date of repayment). At December 31, 1996,
$500,000 of such Shareholder Loan was subordinated to the Company's line of
credit. See "Use of Proceeds" and "Risk Factors--Payments and Benefit to
Existing Sole Shareholder."

424B1 24th Page of 61 TOC 1st Previous Next ↓Bottom Just 24th
The Company's cash balances were $420,000 at December 31, 1995, $347,000 at
December 31, 1996 and $8,000 at June 30, 1997. Net cash used in operating
activities was $841,000 for the year ended December 31, 1995, $1,030,000 for
the year ended December 31, 1996 and $506,000 for the six months ended June
30, 1997, primarily due to increases in accounts receivable during the
respective periods and executive compensation payments. Net cash used in
investing activities was $98,000 for the year ended December 31, 1995,
$349,000 for the year ended December 31, 1996 and $135,000 for the six months
ended June 30, 1997. Net cash provided by financing activities was $1,246,000
for the year ended December 31, 1995, $1,306,000 for the year ended December
31, 1996 and $301,000 for the six months ended June 30, 1997.

The Company's accounts receivable at December 31, 1996 and June 30, 1997
were $4,164,000 and $6,528,000, representing 65 and 67 days of sales
outstanding ("DSO"), respectively. The Company does not anticipate any
difficulty in collecting amounts due, since this increase in DSO primarily
resulted from increased business with a client that has been granted longer
payment terms. Such account is not delinquent and represented approximately
19% and 31% of accounts receivable at December 31, 1996 and June 30, 1997,
respectively.

On April 11, 1994, the Company entered into a joint venture with Kalanit
Center for Marketing Software & Hardware Ltd. ("Kalanit"), an Israeli software
distribution company. At such time, Mr. BenTov owned less than 5% of Kalanit's
outstanding ordinary shares. The Company and Kalanit each owned a 50% interest
in a joint venture organized as Vianet, Inc. ("Vianet"). Vianet was
established to recruit international consultants and develop software. The
Company incurred research and development expenses of $185,000 for 1995
consisting of amounts paid to Vianet for software development which were
included in Vianet's revenues in 1995. In addition, the Company paid Vianet
$140,000, $37,000 and $0 for recruiting services for the years ended December
31, 1995 and 1996 and for the six months ended June 30, 1997, respectively.
The Company accounted for its investment in Vianet under the equity method of
accounting. The Company's investment in Vianet did not have a material impact
on the Company's results of operations. On March 31, 1997, the Company sold
its 50% interest in Vianet for a negligible amount to Kalanit at which time
Mr. BenTov owned approximately 6.8% of the outstanding ordinary shares of
Kalanit. In January 1997, Mr. BenTov subscribed for an additional 12.5% of the
outstanding ordinary shares of Kalanit, which shares have not yet been issued.
For the years ended December 31, 1994, 1995 and 1996 and the six months ended
June 30, 1997, Mr. BenTov acted as President of Vianet and received $150,000,
$150,000, $0 and $0, respectively, in compensation from Vianet. During 1994,
1995 and 1996, Mr. BenTov's sister, Victoria BenTov, was employed by Vianet as
a consultant and received a salary of $31,000, $60,000 and $65,000,
respectively. As of April 1, 1997, Ms. BenTov's employment with Vianet was
terminated, and she was hired by the Company as a consultant at a base salary
of $60,000. See Note 7 of Notes to Financial Statements and "Certain
Transactions."

The Company presently anticipates utilizing a portion of the net proceeds of
the Offering to repay approximately $2,665,000 in principal amount and accrued
interest estimated to be outstanding on the closing date of the Offering under
its revolving line of credit with Citibank, N.A., which bears interest at a
variable rate based on prime plus 1% (9.5% at June 30, 1997). The indebtedness
under the line of credit was incurred by the Company for working capital and
other corporate purposes, including payment of the Shareholder Loan. The line
of credit is secured by substantially all of the Company's assets. Mr. BenTov
has guaranteed the Company's outstanding indebtedness under the line of
credit, and it is anticipated that he will be relieved of his guarantees as a
result of the Company's repayment of all outstanding borrowings under this
line of credit. See "Use of Proceeds" and "Prior S Corporation Status."

In management's opinion, cash flows from operations and borrowing capacity
combined with proceeds from the Offering anticipated to be available to the
Company following the Offering will provide adequate flexibility for financing
the Company's expansion plans.

NEW ACCOUNTING PRONOUNCEMENT

In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, "Earnings per Share" ("SFAS 128"), which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary (basic) earnings
per share, the dilutive effect of stock options will be excluded. The impact
of the adoption of SFAS 128 on the calculation of earnings per share for
periods prior to June 30, 1997 is not expected to be material.

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BUSINESS

GENERAL

The A Consulting Team, Inc. provides enterprise-wide information technology
("IT") consulting, software and training services and solutions primarily to
Fortune 1000 companies in a wide range of industries. The Company generally
serves as an outside resource to a client's internal IT staff, providing a
broad range of consulting services including strategic IT consulting, IT
solutions and IT professional services to improve the client's productivity,
competitive position and performance. Strategic IT consulting includes
technology infrastructure advisory services and systems architecture design.
IT solutions include planning, designing and implementing enterprise-wide
information systems, such as workgroup solutions (Microsoft Exchange and Lotus
Notes); client/server; internet/intranet and EDI; database management
services; application design, development and implementation; networking;
imaging and workflow; and systems integration. IT professional services
include systems support, maintenance and contract programming. TACT's ability
to provide comprehensive services and solutions across diverse technology
platforms allows its clients to maintain and enhance their current systems
while embracing new technologies. Clients of the Company include Alamo Rent-A-
Car Inc., Allied Signal, Inc., BMW of North America, Inc., Chase Manhattan
Bank, ChaseMellon Shareholder Services, Citibank, N.A., Dreyfus Corporation,
First Chicago Trust Company, General Electric Company, Goldman Sachs & Co.,
The Guardian Life Insurance Company of America, Humana Inc., International
Business Machines Corporation, Metropolitan Life Insurance Co., Merrill Lynch
Pierce Fenner & Smith Incorporated, National Broadcasting Co., Inc., New York
Life Insurance Company, Norfolk Southern Corporation, Pacific Telecom, Inc.,
Pfizer Inc., Prudential Insurance Company, St. John's University and Summit
Bancorp. For the six months ended June 30, 1997, no client accounted for more
than 10% of revenues, except for one client which accounted for 26% of
revenues. The Company's customers are primarily located in the New York/New
Jersey metropolitan area.

INDUSTRY BACKGROUND

The IT industry has experienced accelerating growth in recent years due to
rapid technological advances. These advances include more powerful and less
expensive computer technology and the transition from predominantly
centralized mainframe computer systems to open and distributed computing
environments. Additionally, information technology is becoming more critical
to successful business operations. IT services are no longer a peripheral
component of most organizations but instead are integral to many key business
processes. At the same time, managing information technology, especially
distributed architectures, has become more complex and expensive. Accordingly,
organizations are increasingly turning to external IT services organizations
to develop, support and enhance their internal IT systems. By outsourcing IT
services, companies are able to (i) focus on their core business, (ii) access
specialized technical skills, (iii) implement IT solutions more rapidly, (iv)
benefit from flexible staffing, providing a variable cost solution to a fixed
cost issue, and (v) reduce the cost of recruiting, training, and adjusting the
number of employees as IT requirements change. Based on industry sources, IT
outsourcing in the United States is estimated to increase from approximately
$50 billion in 1995 to approximately $100 billion in 2000, representing a
compound annual growth rate of approximately 15%. The Company has achieved a
compound annual revenue growth rate of 47.6% for the three year period ended
December 31, 1996.

The Company operates in a highly fragmented segment of the IT services
industry. In addition to the consulting divisions of the "Big Six" accounting
firms, the Company's competitors include a large number of small and medium-
sized consulting firms as well as divisions of national and regional
consulting firms. The Company believes that the industry is experiencing a
trend toward consolidation and that there may be opportunities to expand
TACT's current business through acquisitions of small local or regional
competitors.

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GROWTH STRATEGY

The Company's objective is to be a leading provider of IT services and
solutions for Fortune 1000 companies and other organizations with diverse IT
needs in select markets nationwide. In order to achieve this objective, the
Company intends to pursue the following strategies:

Cross-Sell Additional IT Services To Existing Clients. TACT intends to
leverage its existing client base by offering its current clients
additional IT consulting, software and training services. The Company's
access to and relationship with existing clients provide the Company with
significant opportunities to market additional services and solutions to
these clients in current and new geographic markets. For example, the
Company has been successful in generating incremental consulting business
from existing software and training clients. The Company also believes its
ability to address the broad spectrum of its clients' IT needs provides the
opportunity to become a preferred provider of IT solutions.

Expand Client Base. The Company seeks to develop additional client
relationships in new and existing Solution Branches through targeted
marketing initiatives, participation in local and national trade shows,
user group meetings and conventions, referrals from existing clients and
direct mail. With a portion of the proceeds of the Offering, the Company
intends to hire additional sales personnel in order to achieve greater
market penetration.

Expand the Range of Technical Practices. The Company is committed to
continuously expanding its Technical Practice expertise and plans to add
additional Technical Practices, such as SAP and PeopleSoft, in the near
future. The Company has historically invested significant human and capital
resources in identifying, evaluating and recommending leading edge
technologies to be added to the Company's Technical Practices when such
technologies are commercially viable and can help address business needs.
The Company believes the expansion of its service offerings will allow the
Company to continue to address its clients' needs throughout the lifecycle
of their IT systems, thereby providing the opportunity to become a
preferred provider of IT solutions for its client base.

Open Additional Solution Branches. The Company intends to increase its
client base by opening additional Solution Branches in select major markets
throughout the country. It has been management's experience that its local
Solution Branch structure has contributed to the Company's ability to
provide efficient and effective solutions to its clients by reducing
consultant travel expenses and enhancing the Company's ability to attract
skilled, locally-based consultants. Furthermore, TACT believes that local
Solution Branches establish greater name recognition for the Company and
increase referrals for its services within the potential client base in
that market. As a result, the Company believes that it possesses a
competitive advantage when competing with firms that do not maintain a
local presence. The Company anticipates opening a Solution Branch in
Connecticut by the end of 1997 and presently plans to open additional
Solution Branches in select major markets nationwide in the future. The
Company plans to leverage its current client base by targeting markets
where its existing consulting, software and training clients have
operations.

Increase Sales and Marketing of Software Products and Training
Services. The Company intends to continue to add to its software product
offerings by identifying and marketing innovative third-party developed
software products, particularly in the area of Windows NT add-on products.
TACT also intends to increase its marketing efforts of its software
products through trade shows, direct mail, telemarketing, telesales, client
presentations and referrals. The Company also plans to expand its training
services in order to generate additional revenue as well as to attract,
develop, motivate and retain its IT professionals. The Company plans to
continue to generate incremental consulting business from existing software
and training clients.

Attract, Develop, Motivate and Retain Quality IT Professionals. The
Company's past and future success is dependent upon TACT's ability to
attract, develop, motivate and retain highly qualified personnel. As a
result, the Company offers attractive compensation and benefit packages and
free training opportunities to attract, develop, motivate and retain highly
qualified IT professionals. In addition, the Company devotes

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significant resources to recruiting by maintaining recruiting personnel at
corporate headquarters as well as at the Company's local Solution Branches.
In addition to providing consultants with challenging project opportunities
and significant client responsibility, development of TACT employees is
enhanced by in-house consultant training and mentoring programs.

TACT OPERATIONS

The Company provides enterprise-wide IT consulting, software and training
services and solutions to Fortune 1000 companies and other organizations in a
wide range of industries. The Company's services offered through TACT
Consulting include strategic IT consulting, IT solutions and IT professional
services designed to improve the client's productivity, competitive position
and performance. TACT Software markets software add-on tools to enhance
database environments, mainframe and non-mainframe connectivity and Windows NT
administration. TACT Training offers a wide selection of technical and end-
user training courses in client/server, internet/intranet, legacy and
networking technologies for both clients and consultants.

TACT Consulting. Founded in 1983, TACT Consulting provides enterprise-wide
IT consulting services across diverse technology platforms for Fortune 1000
companies and other organizations. Strategic IT consulting includes technology
infrastructure advisory services and systems architecture design. IT solutions
include planning, designing and implementing enterprise-wide information
systems, such as workgroup solutions (Microsoft Exchange and Lotus Notes);
internet/intranet and EDI; client/server; database management services;
application design, development and implementation; networking; imaging and
workflow; and systems integration. Revenues from consulting services were
$14,430,000 (90.1% of total revenues), $18,981,000 (90.4% of total revenues)
and $15,378,000 (94.5% of total revenues) for the years ended December 31,
1995 and 1996 and the six months ended June 30, 1997, respectively.

By focusing on its technical expertise, high level of service and business-
oriented IT solutions, the Company has attempted to build a reputation as a
quality provider of IT consulting services. The Company continuously
identifies and develops additional technical expertise in emerging
technologies in anticipation of the evolving IT needs of its clients. In order
to become a one stop solution provider for its client's IT needs, the Company
has organized its extensive service offerings into specific Technical
Practices having specialized expertise in particular information technologies.
The Company's current Technical Practices and other specialized areas of
expertise include Internet/Intranet, Client/Server, Legacy Systems, Networking
and System Management, Windows NT, Year 2000 and Conversions, Imaging and
Workflow, Quality Assurance and Testing, Messaging, Security, Data Warehousing
and Lotus Notes/Microsoft Exchange.

Each Technical Practice is managed by an expert in a particular IT field.
Technical Practice Managers architect and develop solutions for the Company's
clients as well as interact closely with one another to devise a total
solution that spans multiple technologies and platforms for a client.
Additionally, the Technical Practice Managers continually perform quality
assurance reviews to ensure that the proposed solution addresses both the
technical and business needs of the client. The Company has organized its
services into Technical Practices in an effort to enable TACT to deliver IT
services quickly and efficiently to solve the diverse IT needs of its clients.

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The following table provides a list of TACT's consulting services and related
skills associated with the Company's current Technical Practices and other
specialized areas of expertise:

[Download Table]

SERVICES PROCESSES SKILLS/TOOLS
----------------------------------------------------------------------------------

Client/Server . Infrastructure Design and . PowerBuilder, Visual
Implementation Basic, Visual C+ +
. Application Development and . SYBASE, Oracle, MS
Maintenance SQLServer, ACCESS
. Database Design, Implementation and . Object Oriented
Maintenance Methodologies
. Performance Monitoring/Tuning and
Capacity Planning
. System Implementations and
Migrations
. Outsourcing
. Project Management
----------------------------------------------------------------------------------
Internet/Intranet . Infrastructure Design and . Java, VB Script, CGI,
Implementation HTML, Microsoft
. Website Design, Development and . Active Server Pages,
Maintenance ActiveX Controls
. Web Application, Development and . Microsoft Internet
Maintenance Information Server,
Netscape
. Database Design, Implementation and Enterprise, Microsoft
Maintenance Internet Explorer,
Netscape
. Performance Monitoring/Tuning and Navigator
Capacity Planning
. System Implementation and
Migrations
. Outsourcing
. Project Management
----------------------------------------------------------------------------------
Legacy Systems . Application Development and . COBOL, CICS,
Maintenance ADS/Online, Assembler
. Database Design, Implementation and . DB2, IDMS, VSAM
Maintenance
. Performance Monitoring/Tuning and . Performance Monitoring
Capacity Planning Tools
. Outsourcing of Database
Administration Function
. Conversions
. Project Management
----------------------------------------------------------------------------------
Networking and . LAN/WAN Architecture Design and . Window NT Server,
Netware, UNIX, MVS
System Implementation . Window NT
Workstation/95/3.11,
Management . System Planning, Implementation and Xterminal, NetPC
Management . Microsoft BackOffice
(SMS, SNA Server,
. Network Integration, Monitoring, IIS, Exchange Servers),
Management and Administration CA Unicenter,
Intel LanDesk, Netview,
OpenView, PVCS
. Remote Access and Monitoring . TCP/IP, SNA, IPX, DNS,
Frame Relay,
. Change and Problem Management Remote Access, WINS,
Winframe
. Performance Monitoring/Tuning and . Cisco, 3Com, Bay
Capacity Planning Networks Routers
. Software Distribution
----------------------------------------------------------------------------------
Windows NT . TCP/IP Architecture, Design and . Windows NT Server and
Implementation Workstation
. Domain Planning and Implementation . Microsoft SMS
. Network Configuration and . Microsoft SNA Server
Administration
. Performance Monitoring/Tuning and
Capacity Planning
. Enterprise-Wide Windows NT/95
Rollout
----------------------------------------------------------------------------------
Year 2000 & . Impact Analysis . Microfocus Revolve,
Compuware tools,
Conversions . Conversion Planning and Management CA Discovery 2000, EZ-
Test2000,
. Pilot Study Identification Platinum tools,
Hourglass
. Code Remediation/Conversion
. Implementation
. Roll-Out

--------------------------------------------------------------------------------

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[Download Table]

SERVICES PROCESSES SKILLS/TOOLS
----------------------------------------------------------------------------------

Imaging & . Architecture Design and . Filenet, Liberty, Key
Workflow Implementation File
. Application Development and . Microsoft Exchange,
Maintenance Novell GroupWise
. Business Process Re-engineering
. Performance Monitoring/Tuning and
Capacity Planning
. Outsourcing
. Project Management
. Document Management
. Automated Work Procedures/Workflow
. COLD, COOL
----------------------------------------------------------------------------------
Q/A and Testing . Usability Analysis (Flow, Screen . SQA TeamTest,
Design) Microsoft Visual Test,
. Design Walkthrough Mercury Test
. Test Planning, Tracking and Review . Object based modeling
tools
. Unit, System, Integration, . ISO 900x
Performance, Regression and User
Acceptance Testing
----------------------------------------------------------------------------------
Messaging . Infrastructure Design and . IBM MQSeries,
Implementation Microsoft Message Q
. Distributed Processing and Multi- Server, Microsoft
Tier Transaction Server
. Application Development . CORBA, DCOM, DCE
Architecture
. Application Development and . Internet Inter-ORB
Maintenance Protocol (IIOP),
Orbix,
. Software Installation, Configuring Tuxedo, Encino
and Customization
. Performance Monitoring/Tuning and
Capacity Planning
. Project Management
----------------------------------------------------------------------------------
Security . Security Architecture Design and . TCP/IP, PGP, Kerberos,
Implementation Encryption Key
. Fire Walls, Router Based Security, Algorithms, TACACS+
Proxy Servers
. Authentication and Monitoring . HP Prasaedium, Cisco
Secure, ACF2, RACF,
. Internet/Electronic Commerce Top Secret, Secured
Security Sockets
. Windows, Netware, UNIX, Mainframe, Layer, PGP, Checkpoint,
LAN, Raptor, Alta
Database Security Vista, Axcent Systems,
Platinum, LDAP,
. Single Sign On Solutions OSI Security
Implementations and
Smartcard
. Public Key, Private Key and Vendor Solutions
Encryption
. Virus Protectlon . Bay Networks, Cisco
and 3Com Router
Security Packet
Filtering
. Virus Protection
Software
----------------------------------------------------------------------------------
Data Warehousing . Data Mining . Info Pump, DataHub,
Cognos Impromptu,
. Source Systems Analysis and DynaCube
Migration
. Data Conversion and Cleanup . Arbor Essbase, Oracle,
Redbrick
. Infrastructure Design and
Implementation
. Database Design, Implementation and
Maintenance
. Performance Monitoring/Tuning and
Capacity Planning
----------------------------------------------------------------------------------
Lotus Notes/ . Infrastructure, Design, . Lotus Notes, Microsoft
Implementation and Exchange, Domino
Microsoft Administration Notes and HTTP Server,
Exchange CC-Mail
. Application Development and and Notes Mail,
Maintenance Internet/Intranet Mail
. Performance Monitoring/Tuning and Systems and Gateways,
Capacity Planning NNTP News Servers
. Enabling Internet Access
. Project Management

TACT markets and delivers its IT solutions through TACT Solution Teams
comprised of Project Managers, Technical Practice Managers and Technical
Specialists. These professionals possess the project management skills,
technical expertise and industry experience to identify and effectively
address a particular client's technical needs in relation to its business
objectives. TACT's focus on providing highly qualified IT professionals allows
the Company to identify additional areas of the client's business which could
benefit from the Company's IT solutions, thereby facilitating the cross-
marketing of multiple Company services. The Company keeps its

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Solution Teams at the forefront of emerging technologies through close
interaction with TACT research personnel who identify innovative IT tools and
technologies with significant applications for Fortune 1000 companies and
other organizations. As a result, management believes that TACT Solution Teams
are better prepared to anticipate client needs, develop appropriate strategies
and deliver comprehensive IT services, thereby allowing the Company to deliver
the highest quality IT services in a timely fashion.

A Solution Team is typically deployed from one of the Company's local
Solution Branches in order to provide solutions to its clients by utilizing
local resources. Currently, the Company maintains two Solution Branches in New
York and New Jersey. Management's experience has been that the local presence
established by a Solution Branch improves the Company's ability to attract
local clients, as well as its ability to attract, develop, motivate and retain
locally-based IT professionals. The Company's corporate headquarters supports
each Solution Branch and performs many functions which allow the Solution
Branches to focus on recruiting, sales and marketing. Management has developed
the TACT Solution Teams, as well as TACT's local Solution Branch structure, in
an effort to advance the Company's objective of establishing and maintaining
long-term relationships with its clients. Eleven of the Company's top twenty
clients measured by revenue for the six months ended June 30, 1997 had been
clients for over three years.

Solution Branch Managers are responsible for recruiting consultants,
assigning consultants to fulfill client requirements, implementing sales and
marketing programs, and managing client and employee relations. In employing
new Solution Branch Managers, the Company seeks candidates who have
demonstrated IT industry and local client knowledge, managerial and
organizational skills, initiative and strong interpersonal skills. In
addition, a significant portion of the Solution Branch Managers' compensation
results from an incentive bonus package based upon revenue and profit
generated by the Solution Branch, fostering an entrepreneurial culture
throughout the Company.

TACT has established professional affiliations that enable the Company to
share technical and industry knowledge and pursue marketing opportunities.
TACT is currently an IBM BESTeam Member, Microsoft Solution Provider and
Computer Associates Consulting Partner. These relationships typically allow
the Company to receive information, products and product support and
participate in training programs which may enable the Company's employees to
become certified in a given technology.

TACT Software. TACT markets and distributes over 20 software products
developed by independent software developers. The Company believes its
relationships with over 150 software clients throughout the country provide
opportunities for the delivery of additional TACT consulting services. The
software products offered by TACT Software are developed in England and
Finland and marketed primarily through trade shows, direct mail,
telemarketing, client presentations and referrals. TACT Software personnel
currently includes sales and marketing personnel as well as 24-hour technical
support. Revenues from the sale of software products were 8.6%, 8.5% and 4.8%
of total revenues for the years ended December 31, 1995 and 1996 and the six
months ended June 30, 1997, respectively.

TACT's software product offerings include add-on tools that enhance
functionality, performance and productivity of IDMS database environments,
IDMS and DB2 connectivity, and mainframe and non-mainframe connectivity. For
example, the Company's VEGA-90's software allows coexistence of mainframe and
non-mainframe clients in a client/server environment as well as connectivity
between IDMS and DB2 database systems.

The Company intends to continue to focus on adding to its software product
offerings by identifying and marketing innovative third-party developed
software products and become a leading provider of Windows NT add-on products.
TACT intends to increase its marketing efforts of new and existing software
products through telemarketing, telesales, direct mail, client presentations,
trade shows and referrals. The Company intends to leverage existing software
client relationships by targeting new Solution Branches in or near markets
where software clients are located to cross-sell consulting services.

TACT Training. TACT offers an extensive selection of technical training
courses to Fortune 1000 companies and other organizations at either TACT's
Training Center or at a client's site. These courses include classes in
client/server and legacy technologies as well as in recent technologies, such
as JAVA, ActiveX, Active Server Pages and HTML. In addition, the Company
conducts presentations on specific topics, such as co-

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existence of legacy and client/server systems, use of legacy mainframe
databases as servers, conversion/migration of legacy systems to new
architectures and performance monitoring/tuning. TACT offers end-user training
for both off-the-shelf software, such as Microsoft Office and Lotus Notes, and
customer specific applications. Revenues from training services represented
approximately 1% of total revenues for the years ended December 31, 1995 and
1996 and less than 1% for the six months ended June 30, 1997, respectively.

The Company's training services are often included in total project
solutions for businesses, in retraining MIS personnel in new technologies and
in software vendor product training. These courses may be customized to
address a client's specific needs and are taught at the client's site or at
the TACT Training Center. TACT utilizes computer labs to enable participants
to gain practical experience in the materials presented. TACT's training
curriculum is developed in-house by technicians with a working experience in
the technologies being taught. In addition, TACT provides a "Fast Track"
program and a series of "For Consultants Only" classes on evenings and
weekends to train/re-train the consultant community in new technologies. All
classes are free of charge for TACT employees. Consultants who are non-TACT
employees pay a nominal fee which is refunded if the consultant joins TACT
within three months after completing the training.

Management believes that TACT's training services are an important and
differentiating factor in attracting and retaining IT professionals. TACT
training courses introduce prospective consultants to the Company and provide
for technical advancement for the Company's existing consultants. TACT
training clients also represent an opportunity for the Company to market
additional services such as consulting services. The Company has been
successful in generating consulting business from its training clients and
plans to continue to identify situations where its knowledge of a training
client's needs can lead to other IT business.

CLIENTS

The Company's clients consist primarily of Fortune 1000 companies. Because
of the diverse range of industries in which the Company's clients operate, the
Company believes that it is not dependent upon any single industry or market.
The Company establishes and maintains long-term relationships with its
clients. Eleven of the Company's top twenty clients measured by revenue for
the six months ended June 30, 1997 had been clients for over three years.

The Company believes the ability to provide qualified personnel in a timely
manner, to understand specific technical requirements and to ensure client
satisfaction are the primary factors in attracting and retaining clients.
Although the Company believes it offers its services at competitive prices, it
is typically not the lowest priced provider and, instead, competes on the
basis of technical expertise and quality of service.

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The following is a partial list of the Company's clients:

MANUFACTURING
BANKING/FINANCE Allied Signal, Inc.
BMW of North America, Inc.
Bank of Boston, N.A. General Electric Company
Chase Manhattan Bank Matsushita Electric Corp. of
ChaseMellon Shareholder Services America
Citibank, N.A. Mercedes-Benz of North America,
Donaldson, Lufkin & Jenrette, Inc.
Inc.

Dreyfus Corporation MEDIA
First Chicago Trust Company Capital Cities/ABC, Inc.
Goldman Sachs & Co. Dow Jones, Inc.
MasterCard International, Inc. National Broadcasting Co., Inc.
Merrill Lynch Pierce Fenner & Smith Time Warner Inc.
Incorporated Viacom Inc.
Salomon Brothers Inc.

Scudder, Stevens & Clark, Inc. TELECOMMUNICATIONS/TECHNOLOGY
Spear Leeds & Kellogg
Sumitomo Bank, Limited AT&T Corporation

International Business Machines
GOVERNMENT/EDUCATION Corporation
NCR Corporation
Clemson University Pacific Telecom, Inc.
Comptroller of the Currency

Department of Agriculture OTHER
Department of Health and Human Alamo Rent-A-Car Inc.
Services Consolidated Edison Company of New
St. John's University York, Inc.
U.S. Air Force Florida Power Corporation
Veterans Affairs Holland America Line Westours

Joseph E. Seagram & Sons, Inc.
HEALTHCARE/INSURANCE/PHARMACEUTICALS Norfolk Southern Corporation

Aetna Life and Casualty
American International Group
Bergen Brunswig Corporation
The Guardian Life Insurance Company
of America
Humana Inc.
Merck & Co., Inc.
Metropolitan Life Insurance Co.
Montefiore Medical Center
New York Life Insurance Company
Pfizer Inc.
Prudential Insurance Company

TACT RECRUITING

The Company's success depends in large part upon its ability to attract,
develop, motivate and retain highly skilled technical consultants. Because
qualified technical consultants are in great demand and are likely to remain a
limited resource for the foreseeable future, the Company dedicates significant
human and capital resources to recruit consultants with both IT consulting and
industry experience. The Company's corporate headquarters has overall
responsibility for national, international and internet recruiting and for
providing corporate-wide recruiting guidelines and procedures. In addition,
each Solution Branch works with corporate headquarters to recruit locally-
based consultants. TACT conducts ongoing candidate searches and maintains an
extensive central repository of data for candidates and client requirements.

The Company hires consultants through various recruiting efforts and by
referral from the technical and administrative personnel of the Company. Each
candidate is screened through detailed interviews by the Company's recruiting,
technical and management personnel. In addition, the Company's training
programs provide a pool of experienced candidates from which the Company has
recruited and hired qualified consultants. Consultants include management
consultants, project managers, team leaders, system architects, business
analysts, system analysts, database administrators, programmer analysts,
programmers, data warehousing specialists, systems administrators, LAN
administrators and messaging specialists. The Company seeks to offer

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its consultants competitive pay, attractive assignment opportunities and state
of the art training and retraining courses and may, in the future, consider
offering stock options as part of an overall compensation program to attract
and retain certain technical specialists. See "Risk Factors--Attraction and
Retention of Project Managers and Technical Specialists."

TACT RESEARCH

TACT continuously researches new technologies developed by third parties to
determine their viability and potential acceptance in the Fortune 1000
marketplace. TACT research personnel work closely with Technical Practice
Managers to predict future tools and technologies to be used by corporate
America so that TACT consultants can be trained in those emerging
technologies. TACT research personnel also prepare technology demonstrations
and pilot projects used in the Company's marketing and sales efforts and
identify, evaluate and recommend software products, including those to be
marketed by TACT's Software division. In addition, TACT research personnel
participate in short-term special projects requiring particular expertise for
certain of the Company's clients.

MARKETING ACTIVITIES

TACT markets its services to its clients directly through its marketing and
relationship management personnel at its corporate headquarters. The Company's
relationship managers focus their marketing efforts at the level of chief
information officers and senior executives who determine corporate level IT
needs and requirements. The Company's customer relationship managers interact
closely with the Company's sales, recruiting and Technical Practice personnel.
Sales representatives at the Solution Branch level initiate contacts at lower
levels within an organization, targeting actual users up to the decision
makers.

The Company also markets itself through various targeted marketing
initiatives. One such initiative is The Tactician magazine, which is regularly
published in-house and distributed by TACT. The Tactician presents articles on
a variety of topics including current TACT projects, TACT's accomplishments,
industry viewpoints and technology trends, technology "bugs" or "fixes,"
product reviews and business-related news and developments. The magazine
circulates both to existing and potential clients as well as existing
consultants and candidates. Another marketing resource, which has also served
the Company in its recruiting efforts, is the Company's web site at
http://www.tact.com. The web site provides information about TACT consulting
and training services and software products to the IT community.

The Company's participation in local and national user groups, trade shows,
conventions and expositions enhances the Company's visibility, name
recognition and contacts. TACT Consulting, for example, exhibited a
demonstration of its web-enabled database transaction capabilities by creating
personalized web pages for visitors at the DB-Expo and Internet World shows in
New York City in 1996. TACT Software exhibited its products at COMDEX Chicago
and Las Vegas, the Windows NT/Internet Solutions show in San Francisco,
Computer Associates World '96 in New Orleans and IDUG '97 in Chicago. In
addition, TACT's recruiting personnel regularly participate in IT industry
career fairs.

COMPETITION

The market for IT services is intensely competitive, is affected by rapid
technological advances and includes a large number of competitors. Primary
competitors include the consulting divisions of "Big Six" accounting firms,
systems consulting and implementation firms, application software firms and
management consulting firms. Many of these competitors have significantly
greater financial, technical and marketing resources and greater name
recognition than the Company. In addition, the Company competes with its
clients' internal resources, particularly when these resources represent an
existing cost to the client. Such competition may impose additional pricing
pressures on the Company. See "Risk Factors--Competition."

The Company believes that the principal competitive factors in the IT
services market include breadth of services offered, technical expertise,
knowledge and experience in the industry, quality of service and
responsiveness to client needs. The Company believes it competes primarily on
the basis of its in-depth technical expertise, timely delivery and quality of
service.

A critical component of the Company's ability to compete in the marketplace
is its ability to attract, develop, motivate and retain skilled professionals.
Although highly skilled technical employees, particularly project

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managers and technical specialists, are in great demand, the Company believes
it can compete favorably in hiring such personnel by offering competitive
compensation packages and attractive assignment opportunities.

HUMAN RESOURCES

At June 30, 1997, the Company had 276 employees and independent contractors,
of whom 216 were consultants, 8 were recruiting personnel, 13 were sales and
marketing personnel, 7 were technical and customer service personnel, and 32
were executive and administrative personnel. The Company utilizes the services
of a significant number of independent contractors to act as consultants.
These independent contractors are not employees of the Company, and there can
be no assurance that the services of these independent contractors will
continue to be available to the Company on terms acceptable to the Company.

Except for two of the Company's executive officers who have employment
agreements with the Company, the Company does not have any collective
bargaining, employment, pension, incentive compensation arrangements or non-
solicitation agreements with any of its employees or independent contractors.
The Company considers its relations with its employees and independent
contractors to be good. See "Management."

INTELLECTUAL PROPERTY RIGHTS

The Company relies upon a combination of nondisclosure and other contractual
arrangements and trade secret, copyright and trademark laws to protect its
proprietary rights and the proprietary rights of third parties from whom the
Company licenses intellectual property. The Company has entered into
confidentiality agreements with its employees and limits distribution of
proprietary information. There can be no assurance, however, that the steps
taken by the Company in this regard will be adequate to deter misappropriation
of proprietary information or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its intellectual
property rights. In addition, the Company is aware of other users of the term
"TACT" and combinations including "A Consulting," which users may be able to
restrict the Company's ability to establish or protect its right to use these
terms. The Company has in the past been contacted by other users of the term
"TACT" alleging rights to the term. The Company's inability or failure to
establish or protect rights to these terms may have a material adverse effect
on the Company's business, results of operations and financial condition. See
"Risk Factors--Intellectual Property Rights."

Software developed by the Company in connection with a client engagement is
typically assigned to the client. In limited situations, the Company may
retain ownership or obtain a license from its client, which permits the
Company or a third party to market the software for the joint benefit of the
client and the Company or for the sole benefit of the Company.

Various trademarks, service marks and trade names to which reference is made
in this Prospectus are the property of owners other than the Company. Such
owners have all applicable rights with respect to their respective trademarks,
service marks and trade names.

PROPERTIES

The Company does not own any real property. The Company's principal
executive offices are leased and are located at 200 Park Avenue South, New
York, New York and consist of approximately 5,900 square feet of space. The
Company is presently negotiating to acquire approximately 5,800 square feet of
additional office space at its present location. The Company also leases a
facility at 67 Walnut Avenue, Clark, New Jersey, consisting of approximately
2,591 square feet of space. See "Certain Transactions."

LEGAL PROCEEDINGS

The Company is not involved in any material legal proceedings.

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MANAGEMENT

DIRECTORS, DIRECTOR NOMINEES, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth the directors, director nominees, executive
officers and key employees of TACT, their ages and the positions held by them
with TACT.

Directors, Director Nominees and Executive Officers:

[Enlarge/Download Table]

NAME AGE POSITION
---- --- --------

Chairman of the Board, Chief Executive Officer and
Shmuel BenTov............... 42 President
Frank T. Thoelen(1)......... 48 Chief Financial Officer, Director Nominee
Joseph E. Imholz(1)......... 65 Director Nominee
Steven S. Mukamal(1)........ 57 Director Nominee

Key Employees:

NAME AGE POSITION
---- --- --------

Martin Korsin............... 39 Director of Marketing
Allison H. Mandel........... 38 Director of Corporate Recruiting
Shai Talmi.................. 34 Director of Research
Meira Steinbock............. 56 Director of Finance and Administration

--------
(1) Messrs. Imholz and Mukamal have each agreed to serve as a director and to
serve on certain committees of the Board of Directors described below
effective upon completion of the Offering. Following the Offering, the
Company plans to elect one additional independent Board member and to
elect contemporaneously Mr. Frank T. Thoelen as a member of the Board.

SHMUEL BENTOV is the founder, Chairman of the Board, Chief Executive Officer
and President of TACT. Mr. BenTov received a B.Sc. in Economics and Computer
Science in 1979 from the Bar-Ilan University in Israel and founded TACT in
1983. From 1979 to 1983, Mr. BenTov was a consultant Database Administrator
and then an Account Manager with Spiridellis & Associates. From 1972 to 1979,
Mr. BenTov served with the Israeli Defense Forces as a Programmer, Analyst,
Project Manager, Database Administrator and Chief Programmer.

FRANK T. THOELEN is the Chief Financial Officer of TACT. Mr. Thoelen is a
C.P.A. and received a B.S. in Public Accounting in 1971 from the University at
Albany, New York. Prior to joining TACT in June 1997, Mr. Thoelen was
President of FTT Consulting Inc., his own consulting firm. From 1971 to 1996,
Mr. Thoelen was with Arthur Andersen, an international consulting and business
advisory firm. From 1989 to 1996, he was the Division Head for the Business
Systems Consulting and Computer Risk Management Business Unit. Prior to that,
he was an Audit and Business Advisory Partner, serving a variety of global
companies.

JOSEPH E. IMHOLZ has been nominated to serve as a director of TACT following
the completion of the Offering. Mr. Imholz received a B.S. in Management in
1957 from Hofstra University. Prior to his retirement in 1995, Mr. Imholz was
Vice President and Chief Information Officer of the Property and Casualty
Division of Metropolitan Life Insurance Co. ("MetLife") since 1987. From 1985
to 1987, Mr. Imholz was Executive Director and Chief Information Officer of
Albany Life Insurance, a subsidiary of MetLife. From 1981 to 1985, Mr. Imholz
was Vice President of Corporate Information Systems of MetLife, and from 1974
to 1981 he was the officer in charge of the MetLife Computer Center in
Greenville, South Carolina. From 1957 to 1974, Mr. Imholz served in various
capacities with MetLife, including Analyst, Programmer and Manager of
Information Systems.

STEVEN S. MUKAMAL has been nominated to serve as a director of TACT
following the completion of the Offering. Mr. Mukamal received a B.A. in 1962
from Michigan State University and a J.D./L.L.B. in 1965 from Brooklyn Law
School. Since 1965, he has been a member and senior partner of the law firm
Barst & Mukamal. Mr. Mukamal specializes in the areas of immigration and
nationality law, consular law and real estate and debt restructuring.

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MARTIN KORSIN is the Director of Marketing for TACT. His primary
responsibilities include sales and marketing of TACT IT solutions to chief
information officers and senior executives. Mr. Korsin received a B.A. in
Philosophy in 1979 from the University of Sussex in England and has been with
TACT since May 1995. From August 1992 to May 1995, Mr. Korsin was Vice
President, Client/Server with RCG. From February 1989 to August 1992, Mr.
Korsin was a Corporate Vice President of New York Life. From October 1988 to
February 1989, Mr. Korsin was a Director of End User Computers at Integrated
Resources, and from July 1982 to September 1987 he was Manager of Development
and Customer Service at Warner Computer.

ALLISON H. MANDEL is TACT's Director of Corporate Recruiting. Her
responsibilities include overseeing national, international and internet
recruiting; providing priority recruiting support to all Solution Branch
locations; overseeing the central candidate, client/manager and requirement
listing databases; and establishing and implementing standard recruiting
guidelines and procedures. Ms. Mandel received an M.S. degree in Special
Education in 1981 and a B.S. degree in Psychology and Elementary Education in
1980 from SUNY--Geneseo and has been with TACT since August 1993. From July
1990 to August 1993, Ms. Mandel was a Senior Recruiter at Comtex Systems,
Inc., a division of Norrell. From January 1990 until June 1990, Ms. Mandel was
a Senior Recruiter at TelTech, Inc. From January 1987 to December 1989, Ms.
Mandel was a Manager of the Full Time Division at TSR Consulting Services,
Inc., and from January 1986 to January 1987 she was a Recruiter at Protocol
Career Concepts Inc.

SHAI TALMI is TACT's Director of Research. He is responsible for evaluating
new technology to determine its viability and acceptance in the Fortune 1000
marketplace. Mr. Talmi has been with TACT since 1990. From 1988 to 1990, Mr.
Talmi was a Software Developer and Product Manager with Outlook Systems. From
1987 to 1988, Mr. Talmi was a Technical Account Manager at Contahal, and from
1981 to 1987 he was a Programmer, Database Administrator and Team Leader with
the Israeli Defense Forces.

MEIRA STEINBOCK is the Director of Finance and Administration for TACT. She
is responsible for finance, accounting, personnel, legal and office
administration. Ms. Steinbock received an Associate degree in Business
Administration in 1982 from the Israel Institute of Productivity and has been
with TACT since 1989. From 1983 to 1989, Ms. Steinbock was a Finance
Consultant and Controller for various businesses. From 1972 to 1983, Ms.
Steinbock was Executive Vice President of ATIDIM, and from 1959 to 1965 she
was a Sergeant-Major with the Israeli Defense Forces.

The term of office of each director ends when his or her successor has been
elected at the annual meeting of shareholders and qualified or upon his or her
removal or resignation. The term in office of each executive officer ends when
his or her successor has been elected by the Board at any time in its
discretion and qualified or upon his or her removal or resignation.

DIRECTOR COMPENSATION

TACT has adopted a policy of paying an annual fee of $4,000 to each non-
employee director for serving on the Board of Directors. All directors will
also be reimbursed for all reasonable expenses incurred in connection with
traveling to and from meetings. In addition, the Company plans to issue
options to each of the Company's non-employee Directors to purchase 1,000
shares of Common Stock at the initial public offering price hereof. The
options will vest one-year after the date of grant. Each subsequently elected
non-employee Director (including each non-employee director who is re-elected
to the Board of Directors) will receive an option to purchase an additional
1,000 shares of Common Stock at the fair market value of the Common Stock on
the date of grant. Directors who are officers of TACT are not entitled to any
additional compensation as such.

COMMITTEES OF THE BOARD

In connection with the Offering, the Board of Directors will establish an
Executive Committee. The Executive Committee will have the authority to
exercise all of the powers of the Board between meetings of the Board. The
members of the Executive Committee will include Mr. BenTov and two additional
directors to be nominated effective upon consummation of the Offering.

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In addition, the Board will establish an Audit Committee to consist of three
directors, two of whom will not be officers or employees of the Company. The
Audit Committee will be responsible for the engagement of the Company's
independent auditors and will review with them the scope and timing of their
audit services and any other services they are asked to perform, their report
on the Company's financial statements following completion of their audit and
the Company's policies and procedures with respect to internal accounting and
financial controls. It is presently anticipated that Mr. BenTov and two
additional independent directors will serve on the Audit Committee.

The Board will establish an Executive Compensation Committee to consist of
three directors, two of whom will not be officers or employees of the Company.
The Executive Compensation Committee will be responsible for approving
appointments and promotions and fixing salaries of executives of the Company
between meetings of the full Board and for administering the Stock Option and
Award Plan. Mr. BenTov and two additional independent directors will serve on
the Executive Compensation Committee. All actions of the Executive
Compensation Committee must be ratified by the Board within six months in
order to remain effective.

EXECUTIVE COMPENSATION

The following table sets forth information concerning the annual and long-
term compensation earned for the year ended December 31, 1996 for services to
the Company in all capacities by the Chief Executive Officer of the Company
and his spouse, Ronit BenTov. No other executive officers of the Company
earned salary and bonus in excess of $100,000 for the year ended December 31,
1996.

SUMMARY COMPENSATION TABLE

[Download Table]

ANNUAL COMPENSATION
-------------------
NAME AND PRINCIPAL POSITION SALARY BONUS(1)
--------------------------- -------- ----------

Shmuel BenTov
Chairman of the Board, Chief Executive Officer and
President.............................................. $350,000 $1,272,886
Ronit BenTov(2)
Corporate Secretary.................................... $121,529 --

--------
(1) Includes $12,886 in payment of health and insurance benefits and a car
allowance.
(2)Mrs. BenTov's employment was terminated as of December 31, 1996.

EMPLOYMENT AGREEMENTS

Effective upon consummation of the Offering, the Company and Mr. BenTov will
enter into a two year employment agreement providing for his employment as the
Company's Chairman of the Board, Chief Executive Officer and President at an
initial base salary of $250,000. Mr. BenTov and the Company have agreed during
the two year term of his employment agreement not to (i) increase Mr. BenTov's
compensation (including base salary and bonus) or (ii) otherwise amend the
terms of Mr. BenTov's employment agreement. The employment agreement provides
that in the event of termination: (i) without cause, Mr. BenTov will receive a
lump sum severance allowance in an amount equal to 2.00 times his then annual
base salary; (ii) as a result of the disability or incapacity of Mr. BenTov,
Mr. BenTov will be entitled to receive his then annual base salary during the
two years following the termination notice; and (iii) as a result of the death
of Mr. BenTov, Mr. BenTov's estate will be entitled to receive a lump sum
payment equal to his then annual base salary. The agreement includes a two-
year non-compete covenant commencing on the termination of employment.

Effective June 1997, the Company and Mr. Thoelen entered into a three year
employment agreement providing for his employment as the Company's Chief
Financial Officer at an initial base salary of $150,000. The employment
agreement provides that in the event of termination due to a change of control
or without cause, Mr. Thoelen will receive a lump sum severance allowance in
an amount equal to his then annual base salary. The agreement includes a one-
year non-compete covenant commencing on the termination of employment.
Pursuant to the employment agreement, Mr. Thoelen received a one-time signing
bonus of $25,000 and five-year options to purchase an aggregate 50,000 shares
of Common Stock at the initial public offering price of the Offering, 20,000
of which options vest after one year and 30,000 of which vest ratably over the
next three years.

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EXECUTIVE OFFICER BONUS PLAN

Upon consummation of the Offering, the Company's bonus program for executive
officers will be administrated by the non-employee directors of the Company's
Executive Compensation Committee. In determining the bonus compensation
payable to the Company's executive officers, the committee will seek to create
a direct link between the bonus payable to each executive officer and the
financial performance of the Company as a whole. Factors which may be
considered in determining the amount of individual bonus awards will include
earnings per share targets and individual performance compared to pre-
established strategic, financial and operational objectives. For the year
ending December 31, 1997, Mr. BenTov will not receive a cash bonus award for
his services as Chief Executive Officer and President of the Company and, for
the year ending December 31, 1998, may be entitled to receive an annual cash
bonus not to exceed one percent of the Company's total revenues for that year
subject to approval by the non-employee directors of the Executive
Compensation Committee and further subject to the Company meeting certain
financial performance criteria.

STOCK OPTION PLAN

Prior to the effective date hereof, the Company will adopt the Stock Option
and Award Plan (the "Plan"). The purpose of the Plan is to enable the Company
to provide additional incentives to the Company's officers, directors and
employees to advance the interests of the Company by giving them an
opportunity to participate in an increase in the market value of the Common
Stock. The Plan provides for the grant of stock options, stock appreciation
rights, restricted stock awards, performance units and performance shares
(collectively, "Awards") to eligible participants. "Incentive" stock options
must satisfy the requirements of Section 422 of the Internal Revenue Code of
1986, as amended, and, accordingly, no "incentive" stock options may be
granted to directors of the Company who are not also employees of the Company.

The Plan, which provides for the issuance of up to a maximum of 600,000
shares of Common Stock (subject to adjustment pursuant to customary anti-
dilution provisions), will be administered by the Executive Compensation
Committee of the Board (the "Committee"). The Committee will have sole
discretion (subject to the terms of the Plan) to determine the officers,
directors and employees to whom Awards will be granted and the terms and
conditions of such Awards. The number of shares of Common Stock as to which
Awards will be granted to any officer, director or employee will be determined
by the Committee based upon such factors as it may deem to be relevant, such
as previous and anticipated contributions to, and duration of employment with,
the Company.

The exercise price per share of a stock option will be established by the
Committee in its discretion, but may not be less than the fair market value
(or not less than 110% of such value if the individual to whom an "incentive"
stock option is granted owns, as of the date of grant, shares of the Company's
capital stock possessing 10% or more of the total voting power of all
outstanding shares of the Company's capital stock) of a share of Common Stock
as of the date of grant. The aggregate fair market value (determined as of the
date of grant) of shares of Common Stock with respect to which "incentive"
stock options are exercisable for the first time by an individual to whom an
"incentive" stock option is granted during any calendar year (under
"incentive" stock option plans of the Company) may not exceed $100,000.
Payment for shares of Common Stock purchased upon the exercise of stock
options may be made only in cash or by check.

Stock appreciation rights ("SARs") entitle the participant to receive, upon
exercise of the SAR, an amount determined by multiplying: (1) the difference
between (a) the fair market value of a share of Common Stock on the date of
exercise and (b) the exercise price, times (2) the number of shares with
respect to which the SAR is exercised. The exercise price of each SAR will
equal at least 100% of the fair market value of the shares covered by the
Award on the date of grant. Thus, SARs, like options, will have value only if
the Common Stock appreciates in value after the date of grant. Proceeds from
SAR exercises may be paid in cash or shares of Common Stock, as determined in
the discretion of the Committee.

Awards of restricted stock are shares of Common Stock which vest in
accordance with terms established in the discretion of the Committee. For
example, the Committee may determine that the shares will vest only upon the
satisfaction of a continuous employment requirement and/or the achievement of
performance goals specified by the Committee.

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Performance units and performance shares are amounts credited to a
bookkeeping account established for the participant. Whether a performance
unit or share actually will result in a payment to a participant will depend
upon the extent to which performance goals established by the Committee are
satisfied. Payment will be in cash or shares of Common Stock, as determined in
the discretion of the Committee.

No stock options or other equity-linked derivative securities have been
granted or awarded by the Company outside of the Plan.

401(K) PLAN

The Company sponsors a defined contribution plan under Section 401(k) of the
Internal Revenue Code for eligible employees of the Company. Participants may
contribute up to 15% of their annual salaries to the 401(k) Plan not to exceed
certain limitations. All contributions made by an employee are fully vested
and are not subject to forfeiture. The Company may make discretionary matching
contributions to the 401(k) Plan on behalf of all eligible employees. No such
contributions were made by the Company in 1994, 1995, 1996 and the six months
ended June 30, 1997.

CERTAIN TRANSACTIONS

The Company leased an apartment, located at 7 East 14th Street, Suite 20F,
New York, New York, from Mr. BenTov, the Company's sole shareholder and
Chairman of the Board, Chief Executive Officer and President, on a month-to-
month basis with annual payments of $12,000 in 1996 and $30,000 in 1995. The
Company terminated this rental effective December 31, 1996. The Company
believes the terms of the rental agreement were no less favorable to the
Company than could have been obtained from an unaffiliated third party. See
"Business--Properties."

In April 1996, the Company increased its line of credit with Citibank, N.A.
from $200,000 to $350,000, and in December 1996 this line of credit was again
increased to $1,700,000. In February 1997, the Company increased this line of
credit from $1,700,000 to $2,100,000 and, in June 1997, to $3,100,000 to repay
$980,000 outstanding under the Shareholder Loan. The Company had $135,000,
$1,450,000 and $2,665,000 outstanding under this line of credit as of December
31, 1995 and 1996 and June 30, 1997, respectively. In March 1997, the Company
borrowed an additional $150,000 from Citibank, N.A., which subsequently was
repaid by the Company in April 1997. The line of credit is guaranteed by Mr.
BenTov and bears interest at a variable rate based on prime plus 1% (9.5% at
June 30, 1997). It is anticipated that Mr. BenTov will be relieved of his
guarantees as a result of the Company's repayment of borrowings under this
line. See "Risk Factors--Payments and Benefit to Existing Sole Shareholder,"
"Prior S Corporation Status" and "Use of Proceeds."

The Company had outstanding $1,111,000, $1,045,000 and $0 under the
Shareholder Loan from Mr. BenTov as of December 31, 1995 and 1996 and June 30,
1997, respectively. The loan bore interest at a variable rate based on prime
(8.5% on June 13, 1997, the date of repayment). At December 31, 1996, $500,000
of the Shareholder Loan was subordinated to the Company's line of credit. The
Company will use a portion of the proceeds to repay amounts outstanding under
the line of credit. See "Use of Proceeds."

Effective January 1995, the Company became an S Corporation for federal and
certain state income tax purposes. As such, the Company's income was allocated
and taxable to the Company's individual shareholder, Mr. BenTov, rather than
to the Company. Between January 1, 1995 and June 30, 1997, the Company paid
Mr. BenTov compensation aggregating $3,388,000. The Company intends to use a
portion of the proceeds to pay the Distribution. See "Prior S Corporation
Status."

Prior to the Termination Date, the Company and Mr. BenTov will enter into
the Termination Agreement providing, among other things, that the Company will
be indemnified by Mr. BenTov with respect to any federal, state or local
corporate income taxes (plus interest and penalties) as a result of the
Company's failure to qualify as an S Corporation with respect to tax returns
in which the Company reported its income as an S Corporation.

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Mr. BenTov's liability under the Termination Agreement will be limited to the
aggregate amount of all distributions received by Mr. BenTov from the Company
during such S Corporation reporting period, net of taxes paid or payable by
Mr. BenTov with respect to such distributions. The Termination Agreement will
further provide that the Company will indemnify Mr. BenTov on an after-tax
basis with respect to any federal, state or local income taxes (plus interest
and penalties) paid or required to be paid by Mr. BenTov, and Mr. BenTov will
pay to the Company any refunds of federal, state or local income taxes
(including interest received thereon) received by (or credited to) Mr. BenTov,
as a result of a subsequent adjustment in income of the Company with respect
to any tax return in which the Company reported its income as an S
Corporation. The Termination Agreement will also provide that Mr. BenTov shall
have the option to control the filing of the current year's tax returns and
control or participate in audits and certain other matters for any period in
which the Company reported its income as an S Corporation. See "Prior S
Corporation Status."

During 1994, 1995 and 1996, Mr. BenTov's spouse, Ronit BenTov, was employed
by the Company as Corporate Secretary and received a salary of $126,529,
$121,529 and $121,529, respectively. Mrs. BenTov's employment was terminated
as of December 31, 1996. During 1994, 1995 and 1996, Mr. BenTov's sister,
Victoria BenTov, was employed by Vianet as a consultant and received a salary
of $31,000, $60,000 and $65,000, respectively. As of April 1, 1997, Ms.
BenTov's employment with Vianet was terminated, and she was hired by the
Company as a consultant at a base salary of $60,000.

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PRINCIPAL AND SELLING SHAREHOLDER

The following table sets forth information with respect to beneficial
ownership of the Common Stock, as of June 30, 1997 and as adjusted to reflect
the sale of Common Stock offered hereby by (i) each person who beneficially
owns, to the knowledge of the Company, 5% or more of the Common Stock, (ii)
each director and director nominee of the Company, (iii) each executive
officer named in the Summary Compensation Table, and (iv) all directors,
director nominees and executive officers of the Company as a group.

[Download Table]

BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
PRIOR TO OFFERING(2) AFTER OFFERING(2)
---------------------- ----------------------
NUMBER NUMBER OF
NAME(1) OF SHARES PERCENT SHARES PERCENT
------- ------------ --------- ------------ ---------

Shmuel BenTov(3)................ 3,550,000 100.0% 3,550,000 66.4%
Frank T. Thoelen................ -- -- -- --
Joseph E. Imholz................ -- -- -- --
Steven S. Mukamal............... -- -- -- --
All directors, director nominees
and executive officers as a
group (four persons)(4)........ 3,550,000 100.0% 3,550,000 66.4%

--------
(1) The address of each person listed, unless otherwise indicated, is 200 Park
Avenue South, New York, New York 10003.
(2) As used in this table "beneficial ownership" means the sole or shared
power to vote or direct the voting or to dispose or direct the disposition
of any security. A person is deemed as of any date to have "beneficial
ownership" of any security that such person has a right to acquire within
60 days after such date. Any security that any person named above has the
right to acquire within 60 days is deemed to be outstanding for purposes
of calculating the ownership percentage of such person but is not deemed
to be outstanding for purposes of calculating the ownership percentage of
any other person. Unless otherwise noted, each person listed has the sole
power to vote, or direct the voting of, and power to dispose, or direct
the disposition of, all of such shares.
(3) Assumes no exercise of the Underwriters' over-allotment option. In the
event such option is exercised in full, each of the Company and Mr. BenTov
will sell 135,000 shares of Common Stock (for a total of 270,000 shares of
Common Stock) and Mr. BenTov will beneficially own 3,415,000 shares, or
62.3%, of the outstanding Common Stock after the Offering.

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DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company consists of 10,000,000 shares of
Common Stock, par value $0.01 per share, and 2,000,000 shares of Preferred
Stock, par value $0.01 per share. As of the date of this Prospectus, 3,550,000
shares of Common Stock are outstanding and no shares of Preferred Stock are
outstanding. After giving effect to the sale of the shares of Common Stock
offered hereby, there will be 5,350,000 shares of Common Stock outstanding
(5,485,000 shares if the Underwriters' over-allotment option is exercised in
full).

COMMON STOCK

The holders of shares of Common Stock are entitled to one vote per share on
all matters submitted to a vote at a meeting of shareholders. Each shareholder
may exercise such vote either in person or by proxy. Shareholders are not
entitled to cumulate their votes for the election of directors, which means
that the holders of more than 50% of the Common Stock voting for the election
of directors can elect all of the directors to be elected by holders of Common
Stock, in which event the holders of the remaining shares of Common Stock will
not be able to elect any director. Subject to preferences to which holders of
Preferred Stock issued after the sale of the Common Stock offered hereby may
be entitled, the holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board out of
funds legally available therefor. In the event of a liquidation, dissolution
or winding up of the Company, the holders of Common Stock are entitled to
share ratably in all assets of the Company which are legally available for
distribution to shareholders, subject to the prior rights on liquidation of
creditors and to preferences to which holders of Preferred Stock issued after
the sale of the Common Stock offered hereby may be entitled. The holders of
Common Stock have no preemptive, subscription, redemption or sinking fund
rights. The Common Stock currently outstanding, and the Common Stock offered
hereby, is and will be validly issued, fully paid and nonassessable. The
Company does not presently anticipate paying cash dividends in the foreseeable
future. See "Dividend Policy."

Subsequent to the completion of the Offering, Mr. BenTov will own
approximately 66.4% of the then-outstanding shares of Common Stock (62.3% if
the Underwriter's over-allotment option is exercised in full) and will be able
to elect all of the members of the Board of Directors and exercise substantial
influence over the outcome of any issues which may be subject to a vote of the
Company's shareholders. See "Risk Factors--Control by Principal Shareholder."

PREFERRED STOCK

The Board has the authority to issue the Preferred Stock in one or more
series and to fix the rights, preferences, privileges and restrictions
thereof, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption (including sinking fund provisions), redemption
prices and liquidation preferences, and the number of shares constituting and
the designation of any such series, without further vote or action by the
shareholders. At present, the Company has no plans to issue any of the
Preferred Stock and is not aware of any pending or proposed transaction that
would be affected by such an issuance.

NEW YORK ANTI-TAKEOVER LAW

The Company, as a New York corporation, is subject to the provisions of
Section 912 of the New York Business Corporation Law and will continue to be
so subject if and for so long as it has a class of securities registered under
Section 12 of the Exchange Act and continues to be organized under the laws of
the State of New York. Section 912 provides, with certain exceptions, that a
New York corporation may not engage in a "business combination" (e.g., merger,
consolidation, recapitalization or disposition of stock or assets) with any
"interested shareholder" for a period of five years from the date that such
person first became an interested shareholder unless: (a) the transaction
resulting in a person becoming an interested shareholder, or the business
combination, was approved by the Board of Directors of such corporation prior
to that person becoming an interested shareholder; (b) the business
combination is approved by the holders of a majority of the outstanding

424B1 43rd Page of 61 TOC 1st Previous Next ↓Bottom Just 43rd
voting stock not beneficially owned by such interested shareholder; or (c) the
business combination meets certain valuation and consideration requirements
for the stock of such corporation. An "interested shareholder" is defined as
any person that is the beneficial owner of 20% or more of the then-outstanding
voting stock. These provisions are likely to impose greater restrictions on an
unaffiliated shareholder than on the existing shareholder who will continue to
own a majority of the Company's outstanding Common Stock after the Offering.

CERTAIN EFFECTS OF AUTHORIZED AND UNISSUED STOCK

There will be, at the time of the sale of the Common Stock offered hereby,
4,100,000 unissued and unreserved shares of Common Stock (3,965,000 shares if
the Underwriters' over-allotment option is exercised in full) and 2,000,000
unissued and unreserved shares of Preferred Stock. These additional shares may
be issued for a variety of proper corporate purposes, including future public
or private offerings to raise additional capital or facilitate acquisitions.
The Company does not presently intend to issue additional shares of Common
Stock or Preferred Stock (other than in connection with the Plan).

One of the effects of the existence of unissued and unreserved shares of
Common Stock and Preferred Stock may be to enable the Board to discourage an
attempt to change control of the Company (by means of a tender offer, proxy
contest or otherwise) and thereby to protect the continuity of the Company's
management. If, in the due exercise of its fiduciary duties, the Board
determined that an attempt to change control of the Company was not in the
Company's best interest, the Board could authorize, without having to obtain
approval of the shareholders, the issuance of such shares in one or more
transactions that might prevent or render more difficult the completion of
such attempt. In this regard, the Board has the authority to establish the
rights and preferences of the authorized and unissued shares of Preferred
Stock, one or more series of which could be issued entitling the holders
thereof to vote separately as a class or to cast a proportionately larger vote
than the holders of shares of Common Stock on any proposed action, to elect
directors having terms of office or voting rights greater than the terms of
office or voting rights of other directors, to convert shares of Preferred
Stock into a proportionately larger number of shares of Common Stock or other
securities of the Company, to demand redemption at a specified price under
prescribed circumstances related to such a change or to exercise other rights
designed to impede such a change. The issuance of shares of Preferred Stock,
whether or not related to any attempt to effect such a change, may adversely
affect the rights of the holders of shares of Common Stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services.

424B1 44th Page of 61 TOC 1st Previous Next ↓Bottom Just 44th
SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, the Company will have a total of 5,350,000
shares of Common Stock outstanding (5,485,000 if the Underwriters' over-
allotment option is exercised in full). Of these shares, the 1,800,000 shares
offered hereby (2,070,000 shares if the Underwriters' over-allotment option is
exercised in full) will be freely tradeable without restriction or
registration under the Securities Act by persons other than "affiliates" of
the Company, as defined by Rule 144 promulgated under the Securities Act. The
remaining 3,550,000 shares of Common Stock outstanding upon completion of the
Offering (3,415,000 shares of Common Stock outstanding if the Underwriters'
over-allotment option is exercised in full) will be "restricted shares" as
that term is defined by Rule 144.

In general, under Rule 144 as currently in effect, a person (or persons
whose shares are aggregated) who has beneficially owned restricted securities
for at least one year, including persons who may be deemed "affiliates" of the
Company, would be entitled to sell within any three-month period a number of
shares that does not exceed the greater of one percent of the number of shares
of Common Stock then outstanding or the average weekly trading volume of the
Common Stock during the four calendar weeks preceding the filing of a Form 144
with respect to such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions and notice requirements and to the availability of
current public information about the Company. In addition, a person who is not
deemed to have been an affiliate of the Company 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 would be entitled to sell such shares under Rule 144(k)
without regard to the requirements described above.

Under Rule 144 (and subject to the conditions thereof), all of the
restricted shares will be eligible for sale upon completion of the Offering.
However, the Company's existing sole shareholder and its executive officers
and directors, who in the aggregate will beneficially own 66.4% shares of
Common Stock upon completion of the Offering (62.3% if the Underwriters' over-
allotment option is exercised in full), have agreed not to sell, offer to
sell, contract to sell, solicit an offer to buy, grant any option for the
purchase or sale of, assign, pledge, distribute or otherwise transfer, dispose
of or encumber (or make any announcement with respect to any of the
foregoing), directly or indirectly, any shares of Common Stock, or any
options, rights, warrants or other securities convertible into or exercisable
or exchangeable for Common Stock or evidencing any right to purchase or
subscribe for shares of Common Stock, whether or not beneficially owned by
such shareholder, director or executive officer, except as contemplated in the
Offering, for a period of 180 days from the date of this Prospectus without
the prior written consent of The Robinson-Humphrey Company, Inc., on behalf of
the Underwriters.

The Company may file a registration statement on Form S-8 under the
Securities Act registering the 600,000 shares of Common Stock reserved for
issuance under its Stock Option and Award Plan. As a result, shares issued
upon exercise of stock options granted under the Plan will be available,
subject to special rules for affiliates, for resale in the public market after
the effective date of such registration statement. Options to purchase 450,000
shares of Common Stock commence vesting one year from the date hereof. See
"Management--Stock Option Plan."

No prediction can be made as to the effect, if any, that the sales of the
Common Stock or the availability of such shares for sale in the public market
will have on the market price for the Common Stock prevailing from time to
time. Nevertheless, sales of substantial amounts of Common Stock in the public
market after the restrictions described above lapse could adversely affect
prevailing market prices for the Common Stock and impair the ability of the
Company to raise capital through an offering of its equity securities in the
future.

424B1 45th Page of 61 TOC 1st Previous Next ↓Bottom Just 45th
UNDERWRITING

Subject to the terms and conditions set forth in the Underwriting Agreement,
the Underwriters named below, for whom The Robinson-Humphrey Company, Inc. and
Wheat, First Securities, Inc. are acting as representatives (the
"Representatives"), have severally agreed to purchase from the Company, and
the Company has agreed to sell to the Underwriters, the respective number of
shares of Common Stock set forth opposite their respective names below at the
initial public offering price less the underwriting discounts set forth on the
cover page of this Prospectus:

[Download Table]

NUMBER OF
UNDERWRITER SHARES
----------- ---------

The Robinson-Humphrey Company, Inc. ............................... 640,000
Wheat, First Securities, Inc. ..................................... 640,000
Alex. Brown & Sons Incorporated.................................... 45,000
Dillon, Read & Co. Inc. ........................................... 45,000
Donaldson, Lufkin & Jenrette Securities Corporation................ 45,000
J.P. Morgan Securities Inc. ....................................... 45,000
Robertson, Stephens & Company LLC.................................. 45,000
Smith Barney Inc. ................................................. 45,000
Robert W. Baird & Co. Incorporated................................. 25,000
George K. Baum & Company........................................... 25,000
Brean Murray & Co., Inc. .......................................... 25,000
Cowen & Company.................................................... 25,000
Furman Selz LLC.................................................... 25,000
Gerard Klauer Mattison & Co., LLC.................................. 25,000
Hanifen, Imhoff Inc. .............................................. 25,000
The Seidler Companies Incorporated................................. 25,000
Stephens Inc. ..................................................... 25,000
Unterberg Harris................................................... 25,000
---------
Total............................................................ 1,800,000
=========

The Underwriting Agreement provides that the obligations of the several
Underwriters thereunder are subject to approval of certain legal matters by
counsel and to various other conditions. The nature of the Underwriters'
obligations is such that they are committed to purchase all shares of the
Common Stock offered hereby if any such shares are purchased.

The Company has been advised by the Underwriters that they propose to offer
the shares of Common Stock directly to the public at the initial public
offering price per share set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession not in excess of $0.48 per
share. The Underwriters may allow, and such dealers may reallow, a concession
not in excess of $0.10 per share in sales to certain other dealers. After the
Offering, the public offering price and other selling terms may be changed by
the Underwriters.

The Company and the Selling Shareholder have each granted the Underwriters
an option, exercisable not later than 30 days after the date of this
Prospectus, to purchase up to an additional 135,000 shares of Common Stock (a
total of 270,000 shares of Common Stock) at the initial public offering price,
less the underwriting discounts, set forth on the cover page of the Prospectus
to cover over-allotments, if any. If the Underwriters exercise their over-
allotment option, the Underwriters have severally agreed, subject to certain
conditions, to purchase from the Company and the Selling Shareholder
approximately the same percentage thereof that the number of shares of Common
Stock to be purchased by each of them as shown in the table above bears to the
1,800,000 shares of Common Stock offered hereby. The Underwriters may exercise
such option only to cover over-allotments made in connection with the sale of
the 1,800,000 shares of Common Stock offered hereby. If purchased, the
Underwriters will offer such additional shares on the same terms as those on
which the 1,800,000 shares are being offered.

424B1 46th Page of 61 TOC 1st Previous Next ↓Bottom Just 46th
The Company, the existing sole shareholder and each of the Company's
directors and executive officers have agreed that they will not sell, offer to
sell, contract to sell, solicit an offer to buy, grant any option for the
purchase or sale of, assign, pledge, distribute or otherwise transfer, dispose
of or encumber (or make any announcement with respect to any of the
foregoing), directly or indirectly, any shares of Common Stock, or any
options, rights, warrants or other securities convertible into or exercisable
or exchangeable for Common Stock or evidencing any right to purchase or
subscribe for shares of Common Stock, whether or not beneficially owned by
such shareholder, director or executive officer, except as contemplated in the
Offering, for a period of 180 days from the date of this Prospectus without
the prior written consent of The Robinson-Humphrey Company, Inc. on behalf of
the Underwriters. See "Shares Eligible for Future Sale."

The Company and the Selling Shareholder have agreed to indemnify the
Underwriters against, or to contribute to losses arising out of, certain
liabilities, including liabilities under the Securities Act.

In connection with the Offering, certain Underwriters and selling group
members (if any) and their respective affiliates who are qualified registered
market makers on the Nasdaq National Market may engage in transactions that
stabilize, maintain or otherwise affect the market price of the Common Stock.
Such transactions may include stabilization transactions effected in
accordance with Rule 104 of Regulation M promulgated under the Securities
Exchange Act of 1934, as amended, pursuant to which such persons may bid for
or purchase the Common Stock for the purpose of stabilizing their respective
market prices. The Underwriters also may create a short position for the
account of the Underwriters by selling more Common Stock in connection with
the Offering than they are committed to purchase from the Company, and in such
case may purchase Common Stock in the open market following completion of the
Offering to cover all or a portion of such short position. The Underwriters
may also cover all or a portion of such short position, up to 270,000 shares
of Common Stock, by exercising the over-allotment option referred to above. In
addition, the Underwriters may impose "penalty bids" under contractual
arrangements with dealers whereby they may reclaim from a dealer participating
in the Offering for the account of the Underwriters the selling concession
with respect to the Common Stock that is distributed in the Offering but
subsequently purchased for the account of the Underwriters in the open market.
Any of the transactions described in this paragraph may result in the
maintenance of the prices of the Common Stock at a level above that which
might otherwise prevail in the open market. None of the transactions described
in this paragraph is required, and, if they are undertaken, they may be
discontinued at any time.

Prior to the Offering, there has been no public market for the Common Stock.
Consequently, the initial public offering price for the Common Stock was
determined by negotiations between the Company and the Representatives and was
not based upon any independent appraisal or valuation of the Company. Among
the factors considered in determining the initial public offering price were
the economic outlook for the industry in which the Company operates, the
Company's position in the industry, the Company's earnings prospects, the
Company's financial position, the ability and experience of the Company's
management, the prevailing conditions of the securities market at the time of
the Offering and the stock prices of publicly traded companies which the
Company and the Representatives believe to be comparable to the Company.

LEGAL MATTERS

Certain legal matters with respect to the validity of the shares of Common
Stock offered hereby will be passed upon for the Company by Orrick, Herrington
& Sutcliffe LLP, New York, New York. Certain legal matters will be passed upon
for the Underwriters by Alston & Bird LLP, Atlanta, Georgia.

EXPERTS

The financial statements of the Company at December 31, 1995 and 1996, and
for each of the three years in the period ended December 31, 1996, appearing
in this Prospectus and Registration Statement have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon
appearing elsewhere herein, and are included in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.

424B1 47th Page of 61 TOC 1st Previous Next ↓Bottom Just 47th
AVAILABLE INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. 20549, a Registration Statement (which term
shall include all amendments, exhibits and schedules thereto) on Form SB-2
under the Securities Act with respect to the shares of Common Stock offered
hereby. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission, to which Registration Statement
reference is hereby made. Statements made in this Prospectus as to the
contents of any contract, agreement or other documents filed as an exhibit to
the Registration Statement, are not necessarily complete and reference is made
to the exhibit for a more complete description of the matter involved, and
each such statement shall be deemed qualified in its entirety by such
reference. The Registration Statement and the exhibits thereto may be
inspected and copied at prescribed rates at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.C., Washington, D.C. 20549 and at the regional offices of the Commission
located at Seven World Trade Center, 13th Floor, New York, New York 10048 and
500 West Madison Street, Suite 1400, Chicago, Illinois 60661. In addition, the
Company is required to file electronic versions of these documents with the
Commission through the Commission's Electronic Data Gathering, Analysis and
Retrieval (EDGAR) system. The Commission maintains a World Wide Web site at
http://www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants that file electronically with the
Commission.

As a result of the Offering, the Company will become subject to the
information and reporting requirements of the Securities Exchange Act of 1934,
as amended, and in accordance therewith will file periodic reports, proxy
statements and other information with the Securities and Exchange Commission.
The Company intends to furnish to its shareholders annual reports containing
audited financial information for each fiscal year of the Company and
unaudited quarterly reports for the first three quarters of each fiscal year
of the Company.

424B1 48th Page of 61 TOC 1st Previous Next ↓Bottom Just 48th
THE A CONSULTING TEAM, INC.

INDEX TO FINANCIAL STATEMENTS

[Download Table]

Report of Independent Auditors............................................ F-2
Balance Sheets as of December 31, 1995 and 1996 and June 30, 1997
(unaudited).............................................................. F-3
Statements of Operations and Retained Earnings for the years ended
December 31, 1994, 1995 and 1996 and the six months ended
June 30, 1996 and 1997 (unaudited)....................................... F-4
Statements of Cash Flows for the years ended December 31, 1994, 1995
and 1996 and the six months ended June 30, 1996 and 1997 (unaudited)..... F-5
Notes to Financial Statements............................................. F-6

F-1

424B1 49th Page of 61 TOC 1st Previous Next ↓Bottom Just 49th
REPORT OF INDEPENDENT AUDITORS

The Board of Directors
The A Consulting Team, Inc.

We have audited the accompanying balance sheets of The A Consulting Team,
Inc. (the "Company") as of December 31, 1995 and 1996, and the related
statements of operations and retained earnings, and cash flows for each of the
three years in the period ended December 31, 1996. 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 generally accepted auditing
standards. 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 the Company at December
31, 1995 and 1996, and the results of its operations and its cash flows for
each of the three years in the period ended December 31, 1996 in conformity
with generally accepted accounting principles.

ERNST & YOUNG LLP

New York, New York
January 31, 1997, except for
Note 1, as to which the date
is August 4, 1997

F-2

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THE A CONSULTING TEAM, INC.

BALANCE SHEETS

[Download Table]

DECEMBER 31, PRO FORMA
--------------------- JUNE 30, JUNE 30,
1995 1996 1997 1997
---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
(NOTE 11)

ASSETS
Current assets:
Cash............................ $ 420,157 $ 347,285 $ 7,578 $ 7,578
Accounts receivable............. 2,496,360 4,163,869 6,528,427 6,528,427
Prepaid expenses and other...... 56,241 162,550 138,703 138,703
---------- ---------- ---------- ----------
Total current assets.......... 2,972,758 4,673,704 6,674,708 6,674,708
Investment in and advances to
joint venture (Note 7).......... 36,322 16,452 -- --
Property and equipment, at cost,
less accumulated depreciation
(Note 2)........................ 170,531 375,323 481,053 481,053
Deposits......................... 16,696 34,614 34,614 34,614
Deferred offering costs.......... -- -- 45,511 45,511
---------- ---------- ---------- ----------
Total assets.................. $3,196,307 $5,100,093 $7,235,886 $7,235,886
========== ========== ========== ==========
LIABILITIES AND SHAREHOLDER'S EQ-
UITY
Current liabilities:
Loan payable--bank (Note 3)..... $ 135,000 $1,450,000 $2,665,000 $2,665,000
Loan payable to shareholder
(Note 3)....................... 1,111,000 1,045,000 -- --
Current portion of long-term
debt (Note 3).................. -- 12,896 13,332 13,332
Due to joint venture (Note 7)... 43,480 -- -- --
Distribution payable to share-
holder......................... -- -- -- 2,000,000
Accounts payable and accrued ex-
penses (Note 4)................ 998,591 1,713,347 2,156,449 2,156,449
Income taxes payable............ 58,515 8,107 91,441 91,441
Deferred income taxes (Note 5).. 47,000 16,000 6,000 64,000
---------- ---------- ---------- ----------
Total current liabilities..... 2,393,586 4,245,350 4,932,222 6,990,222
Long-term debt (Note 3).......... -- 44,059 38,367 38,367
Commitments (Note 9).............
Shareholder's equity:
Preferred stock, (pro forma:
$.01 par value; 2,000,000
shares authorized; no shares
issued or outstanding)......... -- -- -- --
Common stock, no par value;
3,550,000 shares authorized,
issued and outstanding (pro
forma: $.01 par value;
10,000,000 authorized)......... 100 100 100 35,500
Retained earnings............... 802,621 810,584 2,265,197 171,797
---------- ---------- ---------- ----------
Total shareholder's equity.... 802,721 810,684 2,265,297 207,297
---------- ---------- ---------- ----------
Total liabilities and share-
holder's equity.............. $3,196,307 $5,100,093 $7,235,886 $7,235,886
========== ========== ========== ==========

See accompanying notes.

F-3

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THE A CONSULTING TEAM, INC.

STATEMENTS OF OPERATIONS AND RETAINED EARNINGS

[Enlarge/Download Table]

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
------------------------------------- ------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)

HISTORICAL:
Revenues:
Consulting services.... $ 9,462,400 $14,430,355 $18,980,857 $8,636,946 $15,378,395
Software licensing..... 1,321,228 1,382,642 1,776,222 1,107,307 784,781
Training services...... 98,363 209,888 237,975 149,425 110,222
----------- ----------- ----------- ---------- -----------
Total revenues....... 10,881,991 16,022,885 20,995,054 9,893,678 16,273,398
Cost of revenues........ 8,015,818 11,040,609 14,521,124 6,806,991 11,216,866
----------- ----------- ----------- ---------- -----------
Gross profit............ 2,866,173 4,982,276 6,473,930 3,086,687 5,056,532
Operating expenses:
Selling, general and
administrative
(excluding executive
compensation)......... 2,001,280 3,089,911 4,699,756 1,923,999 3,241,165
Executive compensation. 607,465 1,615,162 1,622,886 811,462 150,000
Research and
development (Note 7).. 300,000 185,000 -- -- --
Equity in net (income)
loss from joint
venture, including
loss on disposal of
$1,584 for June 30,
1997 (Note 7)......... (35,475) 153 49,575 34,395 (13,253)
----------- ----------- ----------- ---------- -----------
Total operating ex-
penses.............. 2,873,270 4,890,226 6,372,217 2,769,856 3,377,912
----------- ----------- ----------- ---------- -----------
Income (loss) from oper-
ations................. (7,097) 92,050 101,713 316,831 1,678,620
Interest income......... 2,840 3,321 2,446 2,331 171
Interest expense........ -- (13,996) (67,496) (39,725) (108,178)
----------- ----------- ----------- ---------- -----------
Income (loss) before in-
come taxes............. (4,257) 81,375 36,663 279,437 1,570,613
Provision (credit) for
income taxes (Note 5).. (6,700) (108,800) 28,700 24,300 116,000
----------- ----------- ----------- ---------- -----------
Net income.............. 2,443 190,175 7,963 255,137 1,454,613
Retained earnings at
beginning of period.... 610,003 612,446 802,621 802,621 810,584
----------- ----------- ----------- ---------- -----------
Retained earnings at end
of period.............. $ 612,446 $ 802,621 $ 810,584 $1,057,758 $ 2,265,197
=========== =========== =========== ========== ===========
UNAUDITED PRO FORMA
INFORMATION
(NOTE 11):
Historical income (loss)
from operations........ $ 101,713 $ 1,678,620
Pro forma adjustment for
executive compensation. 1,222,886 (37,500)
----------- -----------
Pro forma income from
operations............. 1,324,599 1,641,120
Interest (expense) in-
come, net.............. (65,050) (108,007)
----------- -----------
Pro forma income before
income taxes........... 1,259,549 1,533,113
Pro forma provision for
income taxes........... 568,000 681,000
----------- -----------
Pro forma net income.... $ 691,549 $ 852,113
=========== ===========
Pro forma net income per
share.................. $ .19 $ .23
=========== ===========
Weighted average number
of common shares out-
standing............... 3,729,211 3,729,211
=========== ===========

See accompanying notes.

F-4

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THE A CONSULTING TEAM, INC.

STATEMENTS OF CASH FLOWS

[Enlarge/Download Table]

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------- ------------------------
1994 1995 1996 1996 1997
--------- ----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)

CASH FLOWS FROM OPERAT-
ING ACTIVITIES
Net income.............. $ 2,443 $ 190,175 $ 7,963 $ 255,137 $ 1,454,613
Adjustments to reconcile
net income to net cash
provided by (used in)
operating activities:
Depreciation.......... 56,782 66,588 96,261 23,984 59,143
Deferred income taxes. (22,000) (168,000) (31,000) (15,500) (10,000)
Equity in net (income)
loss from joint
venture, including
loss on disposal of
$1,584 for June 30,
1997................. (35,475) 153 49,575 34,395 (13,253)
Changes in operating
assets and
liabilities:
Accounts receivable.. (108,773) (1,181,348) (1,667,509) (1,650,424) (2,364,558)
Prepaid expenses and
other............... (17,533) (14,206) (106,309) 59,360 23,847
Accounts payable and
accrued expenses.... 281,320 213,311 714,756 1,315,544 261,171
Due to joint venture. 50,000 (6,520) (43,480) (43,480) --
Income taxes payable. -- 58,515 (50,408) (27,090) 83,334
--------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) operating
activities............. 206,764 (841,332) (1,030,151) (48,074) (505,703)
CASH FLOWS FROM
INVESTING ACTIVITIES
Purchase of property and
equipment.............. (130,589) (95,598) (301,053) (72,169) (164,873)
Repayment from (invest-
ment and advances in)
joint venture.......... (1,000) -- (29,705) -- 29,705
Deposits................ (2,447) (2,701) (17,918) (4,080) --
--------- ----------- ----------- ----------- -----------
Net cash used in invest-
ing activities......... (134,036) (98,299) (348,676) (76,249) (135,168)
CASH FLOWS FROM
FINANCING ACTIVITIES
Bank overdraft.......... -- -- -- 194,926 181,931
Proceeds from loan pay-
able--bank............. -- 135,000 1,315,000 65,000 1,215,000
Proceeds from loan to
shareholder............ -- 1,111,000 691,000 -- --
Repayment of loan to
shareholder............ -- -- (757,000) (550,000) (1,045,000)
Proceeds from long-term
debt................... -- -- 57,984 -- --
Repayment of long-term
debt................... -- -- (1,029) -- (5,256)
Deferred offering costs. -- -- -- -- (45,511)
--------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities............. -- 1,246,000 1,305,955 (290,074) 301,164
--------- ----------- ----------- ----------- -----------
Net increase (decrease)
in cash................ 72,728 306,369 (72,872) (414,397) (339,707)
Cash at beginning of pe-
riod................... 41,060 113,788 420,157 420,157 347,285
--------- ----------- ----------- ----------- -----------
Cash at end of period... $ 113,788 $ 420,157 $ 347,285 $ 5,760 $ 7,578
========= =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW
INFORMATION
Cash paid during the pe-
riod for:
Interest.............. $ 902 $ 3,214 $ 13,921 $ 13,170 $ 88,819
========= =========== =========== =========== ===========
Income taxes.......... $ 13,263 $ 685 $ 110,108 $ 66,890 $ 42,666
========= =========== =========== =========== ===========

See accompanying notes.

F-5

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

1. SIGNIFICANT ACCOUNTING POLICIES

Organization and Description of Business

The A Consulting Team, Inc. (the "Company") was incorporated on February 16,
1983, in the State of New York, for the purpose of providing various computer
consulting and training services and marketing software products. The
Company's customers are primarily located in the New York/New Jersey
metropolitan area.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

Share Information

All outstanding share amounts included in the accompanying financial
statements have been adjusted to reflect a 355,000-for-1 stock split on August
4, 1997.

Interim Financial Statements

The unaudited interim information as of June 30, 1997 and for the six months
ended June 30, 1996 and 1997 has been prepared on the same basis as the annual
financial statements and, in the opinion of the Company's management, reflects
normal recurring adjustments necessary for a fair presentation of the
information for the periods presented. Interim results are not necessarily
indicative of results for a full year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.

Cash Equivalents

The Company considers all highly liquid financial instruments with a
maturity of three months or less when purchased to be cash equivalents. The
Company had no cash equivalents as of the dates presented.

Property and Equipment

Property and equipment acquired after December 31, 1994 are depreciated
using the straight-line method over the estimated useful lives of the assets,
which range from five to ten years. Property and equipment acquired prior to
January 1, 1995 are depreciated using an accelerated method over the estimated
useful lives of the assets, which range from five to seven years.

Revenue and Accounts Receivable

Consulting and training revenue are recognized as services are provided.
Revenue from sales of software licenses is recognized upon delivery of the
software to a customer because future obligations associated with such revenue
are insignificant.

The Company performs periodic credit evaluations of its customers' financial
condition and generally does not require collateral. Provisions for doubtful
accounts, which have not been material for any of the periods presented, are
recorded when such losses are determined. Credit losses historically have been
consistent with management's expectations.

Research and Development Expenses

Research and development costs are charged to expense as incurred.

F-6

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

2. PROPERTY AND EQUIPMENT

Property and equipment, at cost, consists of the following:

[Download Table]

DECEMBER 31,
-----------------
JUNE 30,
1995 1996 1997
-------- -------- --------

Equipment........................................ $251,121 $450,056 $599,897
Software......................................... 5,911 8,518 8,518
Furniture and fixtures........................... 83,189 124,715 136,491
Automobiles...................................... 72,346 102,355 96,824
-------- -------- --------
412,567 685,644 841,730
Less accumulated depreciation.................... 242,036 310,321 360,677
-------- -------- --------
$170,531 $375,323 $481,053
======== ======== ========

3. LOANS PAYABLE AND CREDIT ARRANGEMENT

In February 1997, the Company increased its line of credit with a bank from
$1,700,000 to $2,100,000 and, in June 1997, the Company further increased its
line of credit to $3,100,000 to repay the then outstanding balance of the
shareholder's loan. As of December 31, 1995 and 1996, and June 30, 1997,
$135,000, $1,450,000 and $2,665,000 was outstanding under the line of credit,
respectively. The line of credit is guaranteed by the shareholder. The loan
bears interest at a variable rate based on prime plus 1% (9.25% at December
31, 1996 and 9.5% at June 30, 1997).

The Company had outstanding borrowings of $1,111,000, $1,045,000 and $0 from
the shareholder as of December 31, 1995 and 1996, and June 30, 1997,
respectively. The loan bore interest at a variable rate based on prime (8.25%
at December 31, 1996 and 8.5% at June 13, 1997, the date of repayment) and was
due on demand. At December 31, 1996, $500,000 of the shareholder loan was
subordinated to the above mentioned bank loan.

Long-term debt is comprised of an automobile loan and is payable in monthly
installments of $1,415 including interest at 8%. As of December 31, 1996, the
loan matures as follows: 1997--$12,896, 1998--$13,967, 1999--$15,126 and
2000--$14,966.

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consists of the following:

[Download Table]

DECEMBER 31,
-------------------
JUNE 30,
1995 1996 1997
-------- ---------- ----------

Accounts payable.............................. $357,878 $ 680,805 $ 479,764
Bank overdraft................................ -- -- 181,931
Commissions................................... 46,295 74,227 7,825
Payroll....................................... 407,284 716,280 1,167,983
Interest...................................... 10,782 64,357 83,716
Other accrued expenses........................ 176,352 177,678 235,230
-------- ---------- ----------
$998,591 $1,713,347 $2,156,449
======== ========== ==========

F-7

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

5. INCOME TAXES

The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."

Effective January 1, 1993, the Company elected to change its tax accounting
method from cash to accrual basis. The cumulative tax effect of this change as
of January 1, 1993 is being recognized over four years on the Company's tax
returns. The federal income tax provision consists of the tax effect of this
change.

Effective January 1, 1995, the Company elected to be treated as an S
Corporation under Subchapter S of the Internal Revenue Code for federal income
tax purposes. In addition, the Company elected to be treated for New Jersey
and New York State income tax purposes as an S Corporation. Consequently, the
Company is not subject to federal income taxes because the shareholder
includes the Company's income in his own personal income tax return. For New
York and New Jersey State purposes, S Corporations are subject to a minimum
income tax. The Company is liable for New York City income taxes because New
York City does not allow S Corporation status.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities are as follows:

[Download Table]

DECEMBER 31,
---------------
JUNE 30,
1995 1996 1997
------- ------- --------

Licensing revenue.................................. $15,000 $16,000 $6,000
Amortization of cumulative effect of change in tax
accounting basis.................................. 32,000 -- --
------- ------- ------
Total deferred tax liabilities................... $47,000 $16,000 $6,000
======= ======= ======

Significant components of the provision (credit) for income taxes are as
follows:

[Download Table]

SIX MONTHS ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------- -----------------
1994 1995 1996 1996 1997
-------- --------- -------- ------- --------

Current:
Federal..................... $ 2,000 $ 28,300 $ 28,300 $14,200 $ --
State and local............. 13,300 30,900 31,400 25,600 126,000
-------- --------- -------- ------- --------
Total current............. 15,300 59,200 59,700 39,800 126,000
-------- --------- -------- ------- --------
Deferred:
Federal..................... (8,800) (117,400) (28,500) (14,200) --
State and local............. (13,200) (50,600) (2,500) (1,300) (10,000)
-------- --------- -------- ------- --------
Total deferred............ (22,000) (168,000) (31,000) (15,500) (10,000)
-------- --------- -------- ------- --------
$ (6,700) $(108,800) $ 28,700 $24,300 $116,000
======== ========= ======== ======= ========

As a result of the change in tax status effective January 1, 1995,
approximately $110,000 of the December 31, 1994 deferred tax liability was
reversed and reflected as a 1995 deferred tax benefit.

F-8

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

5. INCOME TAXES--(CONTINUED)

A reconciliation between the federal statutory rate and the effective
unaudited pro forma income tax rate for the year ended December 31, 1996 and
the six months ended June 30, 1997 is as follows:

[Download Table]

SIX MONTHS
YEAR ENDED ENDED
DECEMBER 31, 1996 JUNE 30, 1997
----------------- -------------

Federal statutory rate......................... 34.0% 34.0%
State and local taxes net of federal tax bene-
fit........................................... 10.0 9.9
Non deductible expenses........................ 1.1 0.5
---- ----
45.1% 44.4%
==== ====

The Company presently plans to effect an initial public offering ("IPO").
Effective upon consummation of the IPO, the Company will no longer be an S
Corporation. Upon the change in status of the Company, under SFAS 109, there
will be an additional income tax liability due to federal and state income
taxes being payable on the temporary differences. The additional income tax
expense that would have to be recognized had the change occurred on December
31, 1996 and June 30, 1997 would be approximately $165,000 and $58,000,
respectively.

6. RETIREMENT PLAN

The Company sponsors a defined contribution plan under Section 401(k) of the
Internal Revenue Code for its employees. Participants can make elective
contributions subject to certain limitations. The Company can make matching
contributions on behalf of all participants. No such contributions were made
by the Company in 1994, 1995, 1996 or the six months ended June 30, 1997.

7. JOINT VENTURE

The Company owned a 50% interest in Vianet, Inc. ("Vianet"), which is
located in New York and is engaged in the recruiting of international
consultants and software development for resale. The Company's research and
development expenses of $300,000 and $185,000 for the years ended December 31,
1994 and 1995, respectively, consisted of amounts paid to Vianet for software
development. These amounts were included in Vianet's revenues in 1994 and
1995. In addition, the Company paid Vianet $139,565 and $36,595 for recruiting
services in 1995 and 1996, respectively. The Company accounts for this
investment under the equity method of accounting.

The following is summarized financial information of Vianet:

[Download Table]

DECEMBER 31,
----------------
1995 1996
------- --------

Cash..................................................... $24,757 $ 4,036
Due from related party................................... 43,480 --
Other assets............................................. 4,406 3,140
------- --------
Total assets........................................... $72,643 $ 7,176
======= ========
Due to related party..................................... $ -- $ 29,705
Other liabilities........................................ -- 3,978
Shareholders' equity (deficit)........................... 72,643 (26,507)
------- --------
$72,643 $ 7,176
======= ========

F-9

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

7. JOINT VENTURE--(CONTINUED)

[Download Table]

YEAR ENDED DECEMBER 31,
-------------------------------
1994 1995 1996
--------- --------- ---------

Revenues.................................. $ 300,000 $ 324,565 $ 36,595
Costs and expenses........................ (229,051) (324,871) (135,745)
--------- --------- ---------
Net income (loss)......................... $ 70,949 $ (306) $ (99,150)
========= ========= =========

Vianet had limited activity during the six months ended June 30, 1996 and
the three months ended March 31, 1997. On March 31, 1997, the Company sold its
50% interest in Vianet to its joint venture partner for a nominal amount.
Vianet repaid the $29,705 advance to the Company during March 1997.

8. CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to
concentrations of credit risk consist primarily of cash and accounts
receivable. The Company maintains its cash balances on deposit with a limited
number of financial institutions.

Sales to two customers represent approximately 12% and 11%, 11% and 14%, 12%
and 8%, 14% and 8% and 26% and 8% of revenues for the years ended December 31,
1994, 1995 and 1996, and for the six months ended June 30, 1996 and 1997,
respectively. Receivables from two customers with the largest balances
represent approximately 18%, 28% and 37% of accounts receivable as of December
31, 1995 and 1996, and June 30, 1997, respectively.

9. LEASES

The Company leases office space under noncancellable operating leases.
Future base rental payments are as follows:

[Download Table]

YEARS ENDING DECEMBER 31:
-------------------------

1997........................................ $120,000
1998........................................ 110,000
1999........................................ 77,000
--------
$307,000
========

Rent expense for the years ended December 31, 1994, 1995 and 1996 and for
the six months ended June 30, 1996 and 1997 was approximately $72,000,
$101,000 $119,000, $52,000 and $68,000, respectively.

In addition, the Company has leased on a month-to-month basis, other space
from the shareholder. Rent paid to the shareholder was $30,000 in 1994 and
1995, $12,000 in 1996 and $6,000 for the six months ended June 30, 1996.

10. STOCK OPTION PLAN

The Company intends to adopt a Stock Option Plan which provides for the
grant of stock options that are either "incentive" or "non-qualified" for
federal income tax purposes. The Plan will provide for the issuance of up to a
maximum of 600,000 shares of common stock (subject to adjustment pursuant to
customary anti-dilution provisions).

The exercise price per share of a stock option is to be established by the
Executive Compensation Committee of the Board of Directors in its discretion,
but may not be less than the fair market value of a share of common stock as
of the date of grant. The aggregate fair market value of the shares of common
stock with respect to which "incentive" stock options are exercisable for the
first time by an individual to whom an "incentive" stock option is granted
during any calendar year may not exceed $100,000.

F-10

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

10. STOCK OPTION PLAN--(CONTINUED)

Stock options, subject to certain restrictions, may be exercisable any time
after full vesting for a period not to exceed five years from the date of
grant and terminate upon the date of termination of employment. Such period is
to be established by the Company in its discretion on the date of grant.

In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123"). SFAS 123 requires compensation expense to be
recorded (i) using the new fair value method or (ii) using existing accounting
rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees" ("APB 25") and related interpretations with pro
forma disclosure of what net income and earnings per share would have been had
the Company adopted the new fair value method. The Company intends to account
for its stock-based compensation plans in accordance with the provisions of
APB 25.

11. PRO FORMA ADJUSTMENTS (UNAUDITED)

Pro Forma Balance Sheet

Effective upon consummation of the IPO, the Company intends to declare an S
Corporation distribution to its existing shareholder representing all previous
earned and undistributed S Corporation taxable earnings. Through June 30,
1997, such amount is estimated to be approximately $2,000,000. A portion of
the net proceeds from the IPO will be used to pay such distribution. The pro
forma balance sheet at June 30, 1997 gives effect to this item.

The pro forma balance sheet at June 30, 1997 also gives effect to an
additional deferred tax liability of $58,000 (see Note 5) and the change in
common stock from no par value to $.01 par value.

Pro Forma Statements of Operations

Effective upon consummation of the IPO, the Company will no longer be
treated as an S Corporation, and accordingly will be subject to federal and
New York and New Jersey state income taxes. In addition, effective upon
consummation of the IPO, the Company will enter into a two-year employment
contract with its Chief Executive Officer ("CEO") which provides for an annual
base salary of $250,000, and a three-year employment contract with its Chief
Financial Officer ("CFO") which provides for an annual base salary of
$150,000. The CEO's employment contract also will provide that he will receive
no cash bonus for 1997 and will provide for an annual bonus not to exceed one
percent of the Company's total revenues for 1998 subject to approval by the
non-employee directors of the Company's Executive Compensation Committee and
further subject to the Company meeting certain financial performance criteria.
The CEO and the Company have agreed during the two year term of his employment
agreement not to (i) increase his compensation (including base salary and
bonus) or (ii) otherwise amend the terms of his employment agreement. The
unaudited pro forma adjustments on the statements of operations reflect (i) a
provision for income taxes based upon pro forma income as if the Company had
not been an S Corporation, and (ii) an adjustment to reflect the terms of the
new contracts with the CEO and CFO (excluding any bonus to the CEO which is
contingent upon the Company meeting certain financial performance criteria).

Pro Forma Net Income Per Share

Pro forma net income per share for the year ended December 31, 1996 and the
six months ended June 30, 1997 has been computed by dividing pro forma net
income by the weighted average number of common shares outstanding plus the
estimated number of shares assumed to be sold by the Company to pay the S
Corporation distribution to the shareholder (estimated to be $2,000,000 at
June 30, 1997). There were no common stock equivalents outstanding during any
period presented.

The estimated number of shares assumed to be sold by the Company to repay
the loans payable to the bank and shareholder (net of the cash balance at
December 31, 1996 and June 30, 1997) had no material effect on pro forma net
income per share for the year ended December 31, 1996 and for the six months
ended June 30, 1997.

F-11

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THE A CONSULTING TEAM, INC.

NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
(INFORMATION AS OF JUNE 30, 1997 AND FOR THE
SIX MONTHS ENDED JUNE 30, 1996 AND 1997 IS UNAUDITED)

11. PRO FORMA ADJUSTMENTS (UNAUDITED)--(CONTINUED)

F-12

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-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PRO-
SPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER,
ANY OF THE UNDERWRITERS OR ANY OTHER PERSON. NEITHER THE DELIVERY OF THIS PRO-
SPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
DATE SUBSEQUENT TO THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OF-
FER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OTHER THAN
THE SHARES OF COMMON STOCK OFFERED HEREBY, NOR DOES IT CONSTITUTE AN OFFER TO
SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE SHARES OF COMMON STOCK
OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITA-
TION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITA-
TION IS NOT QUALIFIED TO DO SO OR TO ANYONE TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION.

----------------

TABLE OF CONTENTS

[Download Table]

PAGE
----

Prospectus Summary........................................................ 3
Risk Factors.............................................................. 7
The Company............................................................... 13
Prior S Corporation Status................................................ 13
Use of Proceeds........................................................... 14
Capitalization............................................................ 15
Dividend Policy........................................................... 15
Dilution.................................................................. 16
Selected Historical and Pro Forma Financial Data.......................... 17
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 18
Business.................................................................. 25
Management................................................................ 35
Certain Transactions...................................................... 39
Principal and Selling Shareholder......................................... 41
Description of Capital Stock.............................................. 42
Shares Eligible for Future Sale........................................... 44
Underwriting.............................................................. 45
Legal Matters............................................................. 46
Experts................................................................... 46
Available Information..................................................... 47
Index to Financial Statements............................................. F-1

UNTIL SEPTEMBER 2, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPAT-
ING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIV-
ERY REQUIREMENT IS IN ADDITION TO THE OBLIGATIONS OF DEALERS TO DELIVER A PRO-
SPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOT-
MENTS OR SUBSCRIPTIONS.
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------

1,800,000 SHARES

TACT
---------------------------
THE A CONSULTING TEAM, INC.

COMMON STOCK

----------------
PROSPECTUS
----------------

THE ROBINSON-HUMPHREY COMPANY, INC.

WHEAT FIRST BUTCHER SINGER

August 8, 1997

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Dates Referenced Herein and Documents Incorporated by Reference

		Referenced-On Page
This ‘424B1’ Filing	Date	First	Last	Other Filings

	12/31/98	38		10-K405, 4
	12/31/97	24	59	10KSB, 4
	9/2/97	61
	8/13/97	1		3
Filed on:	8/11/97
	8/8/97	1	61
	8/4/97	49	53
	6/30/97	3	59
	6/13/97	14	54	SB-2
	6/1/97	9
	4/1/97	24	40
	3/31/97	24	57
	1/31/97	49
	12/31/96	3	58
	6/30/96	17	59
	12/31/95	7	57
	1/1/95	10	55
	12/31/94	17	57
	4/11/94	24	40
	1/1/93	55
				List all Filings

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Filing Submission 0000950130-97-003528 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Helios & Matheson Analytics Inc. – ‘424B1’ on 8/11/97

As of: Monday, 8/11/97 · Accession #: 950130-97-3528 · File #: 333-29233

Prospectus — Rule 424(b)(1)Filing Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated by Reference

Prospectus — Rule 424(b)(1)
Filing Table of Contents