<PAGE>
As filed with the Securities and Exchange Commission on September 15, 1999
Registration No. 333-_______
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________
REGISTRATION STATEMENT
ON
FORM S-3
Under
THE SECURITIES ACT OF 1933
__________
THE ASHTON TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-6650372
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
1900 Market Street, Suite 701
Philadelphia, Pennsylvania 19103
(215) 751-1900
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Fredric W. Rittereiser
Chairman and Chief Executive Officer
The Ashton Technology Group, Inc.
1900 Market Street, Suite 701
Philadelphia, Pennsylvania 19103
(215) 751-1900
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
__________
Copies to:
Justin P. Klein, Esq.
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street, 51st Floor
Philadelphia, PA 19103
(215) 665-8500
__________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
<PAGE>
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
Calculation of Registration Fee
<TABLE>
<CAPTION>
==============================================================================================================
Amount Proposed maximum Proposed maximum Amount of
Title of each class of to be offering price aggregate registration
securities to be registered registered (1)(3) per unit(2) offering price (1)(2) fee
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,031,551 $7.7815 $15,808,515.59 $4,394.77
- --------------------------------------------------------------------------------------------------------------
Total Registration Fee $4,394.77
==============================================================================================================
</TABLE>
(1) Pursuant to Rule 429 under the Securities Act of 1933, as amended, in
addition to the shares reflected in the above table, the prospectus
included as a part of this registration statement covers an aggregate of
6,535,144, of which 4,503,593 shares of the Registrant's common stock (the
"Previously Registered Shares") were registered under the Registrant's
registration statement on Form S-3 declared effective on August 13, 1998
(File No. 333-58041) (the "Previous Registration Statement"). The
Previously Registered Shares are not reflected in the above table and no
registration fee is being paid with respect thereto upon the filing of this
registration statement. A filing fee in the amount of $4,276.63 (of the
total filing fee of $14,646.63) was paid to the Securities and Exchange
Commission in respect of the 4,503,593 shares at the time of the filing of
the Previous Registration Statement, and is being carried forward to this
Registration Statement pursuant to Rule 429(b).
(2) Based on the average of the reported high and low sales prices of the
common stock as reported on The Nasdaq SmallCap Market of The Nasdaq Stock
Market, Inc. on September 10, 1999, estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(c).
(3) An aggregate of 6,535,144 shares of common stock is being offered by this
Registration Statement and the Previous Registration Statement consisting
of 5,935,144 shares issuable upon conversion of 20,000 shares of Series F
Preferred Stock, 400,000 shares issuable upon exercise of the Stock
Purchase Warrant, and 200,000 shares issuable upon exercise of the Series T
Warrants, all which are presently held by the Selling Stockholders. For
purposes of estimating the number of shares of common stock to be included
in this Registration Statement, the Company calculated 200% of the number
of shares of common stock issuable in connection with the conversion of the
Company's Series F Preferred Stock (based on a conversion price of $8.357,
which is 100% of the average of the five lowest closing bid prices of the
common stock reported on the Nasdaq SmallCap Market for the twenty-two (22)
trading days ended September 10, 1999), 200% of the number of shares of
common stock issuable upon the exercise of the Stock Purchase Warrant, and
100% of the number of shares of common stock issuable upon the exercise of
the Series T Warrants. In addition to the shares set forth in the table
and the Previously Registered Shares, the amount to be registered includes
an indeterminate number of shares issuable upon conversion of or in respect
of the Series F Convertible Preferred Stock, the Stock Purchase Warrant and
the Series T Warrants, as such number may be adjusted as a result of stock
splits, stock dividends and similar transactions in accordance with Rule
416.
The Registrant hereby amends the Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
================================================================================
<PAGE>
SUBJECT TO COMPLETION
DATED: SEPTEMBER 15, 1999
PROSPECTUS
6,535,144 SHARES
THE ASHTON TECHNOLOGY GROUP, INC.
COMMON STOCK, $.01 PAR VALUE
Our common stock and our publicly-traded warrants are listed on The Nasdaq
Small Cap Market under the trading symbols, "ASTN" and "ASTNW," respectively.
For a discussion of certain matters that you should consider in evaluating
an investment in these securities, see the "Risk Factors" beginning on page 5.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _________, 1999.
<PAGE>
PROSPECTUS SUMMARY
This Prospectus relates to the resale by RGC International Investors, LDC
("RGC International") of an indeterminate number of shares of our common stock,
par value $.01 per share, initially 5,935,144 shares, which is 200% of the
estimated number of shares that may be acquired by them upon conversion of
20,000 shares of Series F Convertible Preferred Stock which they acquired from
us. We will not receive any proceeds from the resale of our common stock by RGC
International.
This Prospectus also relates to the resale of an indeterminate number of
shares of our common stock, initially 400,000, which is 200% of the estimated
number of shares that may be acquired and resold by RGC International upon the
exercise of the Stock Purchase Warrant that RGC International acquired from us.
This Prospectus also relates to the resale of an aggregate of 200,000 shares
of our common stock, of which 100,000 shares each may be acquired and resold by
TK Holdings, Inc. and Mark Valentine, respectively (together, the "Canadian
Investors") upon the exercise of Series T Warrants that the Canadian Investors
acquired from us.
While we will receive proceeds from the exercise of the Stock Purchase Warrant
and Series T Warrants, we will not receive proceeds from the resale of our
common stock issued to RGC International and the Canadian Investors upon the
exercise of the Stock Purchase Warrant and the Series T Warrants, respectively.
Our common stock involves a high degree of risk. If you want to invest in our
common stock, you should read this prospectus carefully, especially the section
titled "Risk Factors" beginning on page 5.
COMPANY OVERVIEW
We are primarily engaged in the development and commercialization of online
transaction systems for participants in the U.S. and international financial
markets. We were founded in 1994 to take advantage of commercial opportunities
through the application of advanced telecommunication and computing technologies
to the area of electronic commerce. Currently, we are organized as a parent
company with four subsidiaries. The subsidiaries are:
1. Universal Trading Technologies Corporation
2. Gomez Advisors, Inc.
3. Electronic Market Center, Inc.
4. ATG(TM) International, Inc.
References herein to "us", "our", "we", the "Company" or "Ashton" include
Ashton and its subsidiaries, unless the context indicates otherwise. We
maintain our principal offices at 1900 Market Street, Suite 701, Philadelphia,
PA 19103. Our telephone number at that address is (215) 751-1900.
2
<PAGE>
Universal Trading Technologies Corporation
UTTC markets and operates electronic pricing and transactional systems for
securities trading markets. UTTC's target customers are exchanges, institutions,
money managers, broker-dealers and other members of the professional investment
community. We believe these professional investors would benefit from UTTC's
proprietary technologies and pricing mechanisms, which are expected to allow
them to trade efficiently and cost effectively in a password-protected encrypted
electronic trading environment. UTTC has developed the Volume Weighted Average
Price(TM) ("VWAP(TM)") Trading System ("VTS"), an electronic securities pricing
and transaction system for trading exchange-listed and Nasdaq Stock Market
securities.
In 1995, UTTC entered into an agreement with the Philadelphia Stock Exchange,
or the PHLX, to deploy VTS as a facility of the PHLX, for a term of five years
commencing from the date VTS becomes operational. Operation of the system was
contingent upon approval by the SEC of a rule proposal filed by the PHLX. On
March 24, 1999, the SEC approved this rule proposal. On August 27, 1999, the VTS
became operational on the PHLX.
At the request of regulatory bodies, we agreed to operate VTS through REB
Securities, Inc. as a facility of the PHLX. REB is a wholly owned broker-dealer
subsidiary of UTTC. REB was admitted to membership on the PHLX in April 1999
upon its acquisition of a seat on the PHLX.
NextExchange is a wholly owned subsidiary of UTTC that was created to
commercialize recent rules regarding non-mutualized, "for-profit" securities
exchanges. NextExchange intends to register with the SEC as a fully electronic
national securities exchange. NextExchange will be designed to trade equities,
options and other derivative securities. We are currently determining the
funding required to design, develop and begin operating NextExchange.
Croix Securities, Inc. is a wholly owned subsidiary of UTTC. We have applied
to the National Association of Securities Dealers ("NASD") to operate Croix as a
registered broker-dealer. We initially expect to operate Croix as an introducing
broker on behalf of institutions trading through VTS. Through Croix, we also
plan to develop research and analytical products for banks, broker-dealers,
insurance companies and other financial intermediaries.
Gomez Advisors, Inc.
We formed GA in May 1997 in conjunction with Julio Gomez, John Robb, and Dr.
Alexander Stein. GA helps customers and businesses transact business online. GA
delivers, via the Internet, interactive content and tools that provide decision
support for customers and businesses to engage more efficiently in e-commerce.
GA's consumer-focused products and services provide e-commerce consumers with
unique research and data services to assist them in all aspects of the e-
commerce purchasing decision through its web site at www.gomez.com. GA generates
advertising and sponsorship revenues, and transaction-based fees for leads
generated or transactions initiated through gomez.com. GA has built on its
consumer-based e-commerce expertise to offer e-commerce business services
through its Gomez Pro web site. GA generates subscription revenues from
businesses for gaining access to the Gomez Pro web site and it charges
additional fees to subscribe to its advanced data services and tools. GA also
generates listing fees and sponsorship revenues through its business-to-business
services.
3
<PAGE>
Prior to January 22, 1999, GA operated as our wholly owned subsidiary. Upon
GA's formation in May 1997, we paid $25,000 to GA as consideration for 1,000
shares of GA common stock and also agreed to provide advances to fund GA's
operations in the amount of $1,475,000.
On January 22, 1999, we had fully funded our commitment to GA, and we entered
into an exchange agreement with Julio Gomez, John Robb, Alexander Stein, and
certain members of our management. Additionally, on April 24, 1999, GA completed
a private placement of 1,100,000 shares of its Series B preferred stock for
$5,500,000. As a result of the exchange agreement and the private placement,
Julio Gomez, John Robb, and Alexander Stein now own 21.6% of GA's equity
securities while we and certain members of our management own an aggregate of
67.1% of GA's equity securities, assuming conversion of GA's preferred stock.
Electronic Market Center, Inc.
EMC is a wholly owned subsidiary that is expected to operate and market our
to-be-developed open finance system, the Electronic Market Center, or eMC. We
are designing eMC for interactive market access by member users and to provide a
global electronic distribution channel for all types of financial products and
services. While we have designed the specifications for the eMC, and have
developed a business plan for its operation, there can be no assurance that we
will be able to fully finance its development or to actually develop such a
finance system. See "Risk Factors."
ATG(TM) International, Inc.
ATG International is a wholly owned subsidiary that was created to market and
license our products and services abroad. The international markets represent
potentially significant growth for the application of our technology and skills.
In November 1997, we entered into a strategic initiative with Tianjin New Hong
Chen Technology & Trading Company to introduce Ashton's online trading
technology and systems to the financial markets in China. In June 1999, we
entered into a letter of intent to create a joint venture company with eTK, a
wholly owned subsidiary of Thomson Kernaghan & Co., Ltd., a Canadian investment
dealer, to market VTS in Canada. There can be no assurance that we will be able
to market and license our products and services abroad in accordance with either
of these arrangements or otherwise. See "Risk Factors".
------------------------------
Except for GA, all of the subsidiaries described above are in the development
stage and are subject to significant risks associated with development stage
businesses. Until August 27, 1999, when VTS became operational on the PHLX, all
of our revenues were generated by GA.
This summary is qualified in its entirety by the more detailed information
appearing in other places in this prospectus and in documents we incorporate by
reference into this prospectus. Unless we indicate otherwise, all information
with regard to our capital stock in this prospectus, including share and per
share information, assumes that our outstanding options and warrants have not
been exercised.
4
<PAGE>
RISK FACTORS
In addition to the other information contained or incorporated by reference in
this prospectus, you should consider carefully the following risk factors in
evaluating an investment in our securities. If any of the following risks
actually occur, our financial performance or business outlook could be adversely
affected, the trading price of our securities could decline, and you might lose
all or part of your investment.
Risks Related to Our Company
We have a limited operating history and a large accumulated deficit
We have never realized any operating profit and have generated a significant
accumulated deficit as a result of our reported losses. We were founded in 1994
as a development stage company with no operating history. Other than revenues
from a subsidiary which we sold in November 1997, our only source of meaningful
revenue has been GA, which was formed on May 22, 1997. Due to a financial
restructuring of GA in January 1999, and a private placement of GA's securities
in April 1999, our equity interest in GA has decreased from 100% to
approximately 50.4% assuming conversion of GA's preferred stock. Our revenue for
the fiscal year ended March 31, 1999 was $1.4 million.
We will need additional financing
In connection with the private placement of our Series F Preferred and Stock
Purchase Warrant completed in August 1999 with RGC International, we have
obtained proceeds of $20 million, which should provide sufficient working
capital for the next four fiscal quarters.
Our current plans for full-scale development of NextExchange and eMC will
require funding in excess of the $20 million obtained from the sale of the
Series F Preferred and the Stock Purchase Warrant. Such additional financing
may not be available on attractive terms or at all. Such financing may take the
form of redemption of our publicly traded warrants, spin-offs, joint ventures,
equity offerings or other collaborative relationships, which may require us to
share ownership and revenue. These financing strategies could impose operating
restrictions on us or be dilutive to holders of our common stock. This
projection is a forward-looking statement and our actual methods of financing
could differ materially from those anticipated.
Future conversion of our preferred stock may result in dilution.
We have two classes of preferred stock outstanding, Series B and Series F
Preferred Stock. The conversion of these classes of our preferred stock may
result in substantial dilution to the percentage ownership of current
stockholders. The conversion formula for the Series B Preferred Stock is fixed.
The conversion formula for the Series F Preferred is not fixed, and will
fluctuate with the market price of our common stock.
The shares of common stock underlying the Series B Preferred are not
registered and may be sold only if registered under the Securities Act or sold
in accordance with an exemption from registration, such as Rule 144. However,
holders of 67% of the Series B Preferred are entitled to demand registration of
the shares of
5
<PAGE>
common stock underlying their convertible preferred shares on one occasion after
February 18, 1998. To date, such holders have not demanded registration of the
common stock.
The Shares of common stock underlying the Series F Preferred, as well as the
shares of common stock underlying the Stock Purchase Warrant, are being
registered by means of this registration statement.
We do not expect to pay common stock dividends
We have not paid or declared any cash dividends upon our common stock since
our inception. We do not presently intend to pay cash dividends on our common
stock. Our Board of Directors has discretion to pay cash dividends on our
common stock and on our Series B Preferred Stock. While there are no
contractual limitations on our ability to pay cash dividends on our common
stock, based on our present financial status and contemplated future financial
requirements, we do not anticipate declaring any cash dividends on the common
stock. In determining whether to pay dividends, the Board of Directors
considers many factors, including our earnings, capital requirements and
financial condition. The effect of our election not to pay dividends will help
ensure that all of our resources will be reinvested in the Company. However,
you will not receive payment of any dividends in the foreseeable future and the
return on your investment may be lower than anticipated.
Risks Related to Our Management
We depend on key employees
Our future success depends upon the continued service of certain of our
executive officers and key technology personnel. If we lost the services of one
or more of our key employees it could have a material adverse effect on our
business. In particular, the services of Fredric W. Rittereiser, Fred
S.Weingard, Arthur J. Bacci, and William W. Uchimoto, would be difficult to
replace. Our subsidiary, GA, is dependent upon the services of Julio Gomez, Dr.
Alexander Stein and John Robb. We have entered into multi-year employment
agreements with Messrs. Weingard, Bacci, Gomez, Stein, Robb and certain other
officers. We have obtained "key-man" life insurance on each of these
individuals. We further believe our future success will depend upon our ability
to attract and retain additional highly skilled technical, managerial, sales and
marketing personnel. Competition for such personnel in the information
technology development industry is intense. If we are unable to attract and
retain such personnel, it could have a material adverse effect on our business,
operating results, and consolidated financial operations.
Our directors and officers may be able to exert control
Because our Certificate of Incorporation provides no cumulative voting rights,
our directors and officers, acting together, are in a position to exert
significant influence on the election of the members of the Board of Directors
of Ashton and each of its subsidiaries and on most corporate actions, as well as
any actions requiring the approval of stockholders, such as mergers and
acquisitions. Our directors and officers beneficially own approximately 3.5% of
the outstanding shares of our common stock. In addition, directors and officers
have been granted options to purchase our common stock, many of which vested on
July 15, 1999. Should all these options be exercised and converted into common
stock, the directors and officers would own 18.9% of the outstanding shares of
common stock.
6
<PAGE>
Risks Related to Our Products
Government regulation impacts many of our business strategies
UTTC, REB, Croix and NextExchange are subject to various regulations of the
SEC, certain states, the PHLX, and other self-regulatory organizations such as
the NASD, which are charged with protecting the interests of the investing
public and the integrity of the securities markets. The regulatory areas
governed by each of these regulatory bodies are subject to change and the timing
of any changes could impact our ability to launch new products.
Any failure to comply with the rules or regulations established by the SEC,
NASD, PHLX, self-regulatory entities or the states may also subject us to
suspension or penalties that could have a material adverse effect on our
business, operating results, and consolidated financial operations.
Our revenues will be subject to trading volume and could fluctuate
significantly
Our future revenues from UTTC will depend on the volume of securities traded
on our systems. Variations in transaction volume could result in significant
volatility in operating results. National and international economic and
political conditions and broad trends may affect securities trading volumes.
Acceptance of our products by financial market participants is necessary to
generate sufficient trading volumes. Any one or all of these factors could
result in lower share volumes offered through VTS and could adversely impact our
results of operations once VTS becomes fully operational.
We will be dependent on the continued growth of the market for VTS
The success of VTS is heavily dependent upon the acceptance of the product by
institutional investors. Failure to obtain such acceptance could result in
lower volumes and a lack of liquidity on VTS. Market and customer acceptance of
VTS will depend upon, among other things, VTS's operational performance. In
addition, VTS's institutional customers may discontinue use of VTS at any time.
While we continue to solicit customers to use VTS, there can be no assurance
that we will attract a sufficient number of customers to VTS.
We may be exposed to risks of software "bugs," errors and malfunctions
Complex software such as ours often contains undetected errors, defects or
imperfections (often referred to as "bugs"). Despite rigorous testing, the
software used in our products could still be subject to various risks associated
with systems errors, malfunctions and employee errors. These bugs could result
in service interruptions. In addition, because our products often work with
software developed by others, including customers, bugs in others' software
could damage the marketability and reputation of our products. Given the
competitive environment for electronic equity trading execution, investors could
elect to use our competitors' products on a temporary or permanent basis to
complete their trades. Prolonged service interruptions resulting from natural
disasters could also result in decreased trading volumes and the loss of
customers.
7
<PAGE>
We may be exposed to year 2000 risks
Computer systems and/or software products used by many companies may need to
be upgraded to comply with the problems associated with the year 2000. Many
currently installed computer systems and software products are designed to
accept only two digit entries in the date code field. Beginning in the year
2000, these code fields will need to accept four digit entries to distinguish
21st century dates.
We believe none of the applications we have developed or the critical internal
systems and equipment used by us present Y2K issues. However, our systems
interact electronically and operationally with software, hardware and equipment
outside of our control. We also depend on third parties for services such as
telecommunications. We are currently evaluating the public disclosures made by
our key vendors. However, we are not independently verifying the Y2K compliance
of these vendors. If a substantial number of our vendors are not Y2K compliant,
this could adversely affect our business and results of operations. Y2K
compliance issues could also cause a significant number of companies, including
our potential customers, to experience problems that impact us.
We cannot assure you that we will not experience unanticipated negative
consequences, including material costs caused by undetected errors or defects in
the technology used in our internal systems. If it should come to our attention
that certain of our services or systems need modification, or certain of our
third-party hardware and software is not year 2000 compliant, then we will seek
modifications to our services, systems and hardware and software on a timely
basis. This year 2000 risk disclosure is a forward looking statement. There can
be no assurance that we will be able to modify our services, systems, hardware
and software on a timely basis, if at all.
We may be exposed to risks of intellectual property infringement
We regard our products and the research and development that went into
developing them as our property. Unauthorized third parties could copy or
reverse engineer certain portions of our products or obtain or use information
that we regard as proprietary. Nondisclosure and other contractual arrangements
used to protect our proprietary rights could be breached and we may not have
adequate remedies for any breach. We cannot be sure the actions we have
undertaken or are contemplating will be adequate to deter misappropriation of
proprietary information or enable us to detect unauthorized use of proprietary
information. If faced with these situations we may not be able to afford the
high cost required to enforce intellectual property rights or we may not have
adequate remedies for any breach.
In addition, our trade secrets could become known to or be independently
developed by our competitors. While our competitive position may be adversely
affected by the unauthorized use of our proprietary information, we believe the
ability to protect fully our intellectual property is less significant to our
success than other factors, such as the knowledge, ability and experience of our
employees and our ongoing product development and customer support activities.
We rely primarily on a combination of trademark and trade secret protection,
employee and third party confidentiality and non-disclosure agreements, license
agreements, and other intellectual property protection methods to protect these
property rights. However, we do not currently hold any material patents in nor
have we filed for copyright protection relating to current product lines. We
are currently considering whether to
8
<PAGE>
patent or copyright certain aspects of our product line, including the method
for pricing securities traded on the VWAP system.
Although we believe our services and products do not infringe on the
intellectual property rights of others, there can be no assurance that third
parties will not assert infringement claims against us in the future. Any such
assertions by third parties could result in costly litigation, in which we may
not prevail. Also, in such event, we may be unable to license any patents or
other intellectual property rights from third parties on commercially reasonable
terms, if at all. Litigation, regardless of its outcome, could also result in
substantial cost and diversion of our resources. Any infringement claims or
other litigation against us could materially impact our business, operating
results, and consolidated financial condition.
Risks Related to Our Industry
Our industry is highly competitive
With the SEC's approval of new regulations governing ATSs, there are now lower
barriers to entering the securities trading markets by alternative trading
systems. The regulatory and operating environment for these entities has been
undergoing significant changes. We could face increased competition should
traditional securities exchanges take steps to retain transaction volume or to
compete with VTS by establishing similar trading systems. We could also face
intense competition from other alternative trading systems that seek to take
advantage of the new SEC regulations.
Our products compete with other electronic trading systems, including Instinet
Corporation's Instinet system, Investment Technology Group Inc.'s POSIT system,
and OptiMark Technologies, Inc.'s OptiMark system. We also compete with other
companies that develop proprietary electronic trading systems. We believe that
the key competitive criteria include quality of trade execution, pricing, and
reliability of trade processing and settlement operations. Although we feel VTS
will offer improved trading performance, trading flexibility and commercial
benefits, there is no assurance that the VTS will be accepted by an extended
customer base. Nor can we be sure our products will be able to address
adequately the competitive criteria in a manner that results in a competitive
advantage. We also compete with various national, regional and foreign
securities exchanges for trade execution services.
GA competes in the market for e-commerce research products with Jupiter
Communications, Forrester Research, Inc., Media Metric, Inc., Gartner Group,
Inc., and Keynote Systems, Inc. and evaluation services and publications, such
as, Dow Jones, Barrons and Smart Money. Indirect competitors include the
------- -----------
internal planning and marketing staffs of GA's current and prospective clients
as well as other information providers, such as electronic and print publishing
companies, survey-based general market research firms and general business
consulting firms. GA also competes directly and indirectly for online
advertising and sponsorship revenues with established search engines, such as
Yahoo, Excite and Lycos, and other web sites, especially sites that provide e-
commerce information, such as bizrate, Comparate and gotonet.
There are relatively few barriers to entry into GA's market and new
competitors could seek to compete against GA in one or more market segments.
These competitors may have substantially longer operating histories, brand
recognition, larger customer and user bases and significantly greater financial,
technical and
9
<PAGE>
marketing resources than GA. There can be no assurance that GA will be able to
compete successfully against existing or new competitors.
Our automated trade execution and analytical services, including eMC will also
compete with services offered by leading brokerage firms and other information
service and transaction processing firms. Many of our competitors have
substantially greater financial, research, development and other resources than
we and many of their products have substantial operating histories. While we
believe our products, when operational, will offer certain competitive
advantages, our ability to maintain these advantages will require continued
investment in the development of additional marketing activities and customer
support services. We may be unable to marshal sufficient resources to continue
to make this investment while our competitors may continue to devote
significantly more resources to competing services.
Our markets will undergo rapid changes in technology
The technologies underlying our products and services are subject to rapid
evolution and change. Our future success depends upon our ability to respond
quickly and successfully to technological advances by developing and introducing
new and improved products and services. We may not be able to respond to such
advances. Competitors, including those with greater financial and other
resources, could also succeed in developing technologies, products, or services
that could be superior to ours.
The impact of extended trading hours
The national stock exchanges, including The Nasdaq Stock Market, are
considering whether to extend their trading hours for several hours beyond the
current close of the market at 4:00 p.m. Eastern Standard Time. No one can
predict what effect, if any, the extension of trading hours will have on
electronic trading systems designed to operate during the previous standard
trading day. We may have to redesign certain aspects of VTS to accommodate a
larger trading day and, if the cost to do so will be material, this may have a
material adverse impact on our financial operations and performance.
USE OF PROCEEDS
We will not receive any proceeds from the resale of the common stock by
RGC International or the Canadian Investors, and we are paying all expenses in
connection with this registration statement. We are registering these shares of
common stock to fulfill our contractual obligations to RGC International and the
Canadian Investors. Some of the shares of common stock are issuable in the
future upon the exercise of the outstanding Stock Purchase Warrant and the
Series T Warrants. We will receive proceeds from the exercise of the Stock
Purchase Warrant and the Series T Warrants, however, we will not receive any
proceeds from the resale of the common stock issuable upon the exercise of the
Stock Purchase Warrant or the Series T Warrants.
10
<PAGE>
SELLING STOCKHOLDERS
Based on information provided to us by RGC International and the Canadian
Investors, the table below sets forth information with respect to our common
stock beneficially owned by RGC International and the Canadian Investors as of
the date of this prospectus. As RGC International and the Canadian Investors
can offer all, some or none of their shares of our common stock, no definitive
estimate can be made as to the number of shares RGC International or the
Canadian Investors will hold after this offering. Therefore, we have prepared
the table below on the assumption that all shares offered under this prospectus
will be sold by RGC International and the Canadian Investors. To our knowledge,
each of RGC International and the Canadian Investors has sole voting and
investment power over the shares of our common stock listed in the table below
as being owned by each of them. In addition, to our knowledge, RGC
International and the Canadian Investors have not had a material relationship
with us during the last three years, other than as an owner of our common stock
or other securities.
<TABLE>
<CAPTION>
Beneficial Ownership Number of shares Beneficial Ownership
of Common Stock to be sold of Common Stock
Prior to the Offering under this Prospectus After the Offering
--------------------- --------------------- ------------------
Number Number Percent
Name of Shares of Shares of Class
- ---- --------- --------- --------
<S> <C> <C> <C> <C>
RGC International 6,335,144 6,335,144 0 0
Investors
TK Holdings, Inc. 100,000 100,000 0 0
Mark Valentine 100,000 100,000 0 0
</TABLE>
RGC International
The number of shares set forth in the table for RGC International is an
aggregate total of 6,335,144. The aggregate total consists of an estimated
5,935,144 shares, which is 200% of the number of shares of common stock issuable
upon conversion of 20,000 shares of Series F Preferred Stock (based on a
conversion price of $8.357 which is 100% of the average of the five lowest
closing bid prices of the common stock reported on the Nasdaq SmallCap market
for the twenty-two (22) trading days ended September 10, 1999) and 400,000
shares, which is 200% of the number of shares of common stock issuable upon
exercise of the Stock Purchase Warrant (which grants RGC International the right
to purchase initially 200,000 shares of common stock at an exercise price of
$12.2579 per share). The conversion price of the Series F Preferred Stock will
fluctuate with the market price of the common stock, and the exercise price of
the Stock Purchase Warrant will vary in accordance with the anti-dilution
provisions of the Stock Purchase Warrant. The Series F Preferred and the Stock
Purchase Warrant contain provisions which limit the number of shares of common
stock into which the Series F Preferred is convertible and the Stock Purchase
Warrant is exercisable. Under these provisions, the number of shares of common
stock into which the Series F Preferred is
11
<PAGE>
converted and the Stock Purchase Warrant is exercised on any given date
(together with any additional shares of common stock held by RGC International)
will not result in beneficial ownership by RGC International of more than 4.9%
of our then outstanding common stock as determined in accordance with Section
13(d) of the Exchange Act. Accordingly, the number of shares of common stock set
forth in the table for RGC International exceeds the number of shares of common
stock that RGC International could own beneficially at any given time through
their ownership of the Series F Preferred Stock and the Stock Purchase Warrant.
In that regard, the beneficial ownership of the common stock by RGC
International set forth in the table is not determined in accordance with Rule
13(d)-3 under the Exchange Act.
The Canadian Investors
On June 4, 1999, our subsidiary UTTC completed a private placement to the
Canadian Investors of its Series TK Convertible Preferred Stock for gross
proceeds in the amount of $2,000,000. In connection with that private placement,
we offered the Canadian Investors our Series T Warrants that are subject to this
prospectus and Series K Warrants, both of which are exercisable into shares of
our common stock. The Series K Warrants may be issued to the Canadian Investors
upon the achievement by the joint venture of certain milestones in the future.
The investors in the private placement were TK Holdings, Inc., an affiliate of
Thomson Kernaghan & Co., Ltd., a Canadian investment dealer, and Mark Valentine,
a private Canadian investor.
The primary purpose of the UTTC private placement is to fund a joint
venture, ATG-Canada. The goal of this Canada-based subsidiary of our company is
to co-develop, co-market and introduce alternative trading systems for seamless
use by U.S. and Canadian institutions as well as other financial intermediaries
as broker-dealers and banks.
The Series T Warrants shall vest in quarterly installments of 25,000 shares
beginning on June 4, 2000 and thereafter on the last business day of each
complete calendar quarter. Upon the written demand of the Company, any remaining
portion of the Series T Warrants shall vest immediately and be exercised on the
first business day following the twentieth consecutive business day on which the
closing stock price of our common stock on the Nasdaq SmallCap Market or other
market on which our common stock is listed for trading, exceeds $15.00 per
share. In the event the Company is sold, or merged in a transaction involving
cash, the Canadian Investors shall have thirty days in which to exercise the
Series T Warrants. In the event the Company effects a sale or merger for
consideration other than cash, the Canadian Investors shall have the right to
exercise the Series T Warrants for common stock. The Series T Warrants shall
terminate on or before June 4, 2002.
PLAN OF DISTRIBUTION FOR RGC INTERNATIONAL
This Prospectus relates to the resale by RGC International of an
indeterminate number of shares of our common stock, par value $.01 per share,
initially 6,335,144 shares, which is 200% of the estimated number of shares that
may be acquired by them upon conversion of shares of Series F Convertible
Preferred Stock and exercise of the Stock Purchase Warrant which they acquired
from us. The registration of the shares of common stock does not necessarily
mean that any of the shares will be offered or sold by RGC International under
this prospectus.
12
<PAGE>
RGC International and its pledgees, donees, transferees or other successors
in interest may offer its shares at various times in one or more of the
following transactions:
. a block trade on the Nasdaq SmallCap Market or other market on which
the common stock may be trading in which the broker-dealer so engaged
will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
. purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus;
. ordinary brokerage transactions and transactions in which the broker
solicits a purchaser;
. privately negotiated face-to-face transactions between RGC
International and purchasers without a broker-dealer;
. through the writing of options or short sales; and
. any combination of the above.
The sale price to the public may be the market price prevailing at the time
of sale, a price relating to such prevailing market price, a negotiated price or
such other prices as RGC International determines from time to time.
RGC International may also sell the shares directly to market makers acting
as principals or broker-dealers acting as agents for themselves or their
customers. Brokers acting as agents for RGC International will receive usual
and customary commissions for brokerage transactions, and market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that RGC International will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price. There
can be no assurance that all or any of the shares offered hereby will be issued
to or sold by RGC International. RGC International and any brokers, dealers or
agents effecting the sale of any of the shares may be deemed to be
"underwriters" under the Securities Act.
In addition, any securities covered by this prospectus may also be sold
under Rule 144 rather than pursuant to this prospectus. RGC International has
the sole discretion not to accept any offer to purchase shares or make any sale
of shares if it concludes the purchase price is inadequate.
RGC International, alternatively, may sell the shares offered under this
prospectus through an underwriter. RGC International has not entered into any
agreement with a prospective underwriter, however, RGC International may enter
into this type of agreement. If RGC International does enter into this type of
agreement, we will supplement or revise this prospectus.
13
<PAGE>
Upon being notified by RGC International that any material arrangement has
been entered into with a broker or dealer for the sale of shares through a block
trade, special offering, exchange distribution or secondary distribution or a
purchase by a broker or dealer, we will file a supplemented prospectus, if
required, pursuant to Rule 424(c) under the Securities Act, disclosing:
. the name of each broker or dealer;
. the number of shares involved;
. the price at which the shares were or will be sold;
. the commissions paid or to be paid, or discounts or concessions
allowed or to be allowed to the broker(s) or dealer(s), where
applicable;
. that the broker(s) or dealer(s) did not conduct any investigation to
verify the information set out or incorporated by reference in this
prospectus, as supplemented; and
. other facts material to the transaction.
RGC International and any other persons participating in the sale or
distribution of the shares of common stock will be subject to the relevant
provisions of the Exchange Act, including, without limitation, Regulation M.
These provisions may limit the timing of purchases and sales of any of the
shares by RGC International or any other person. Furthermore, under Regulation
M, persons engaged in a distribution of securities are prohibited from
simultaneously engaging in market making and certain other activities with
respect to such securities for a specified period of time prior to the
commencement of such distribution, subject to specified exceptions and
exemptions.
We will indemnify RGC International, or its transferees or assignees,
against certain liabilities, including liabilities under the Securities Act, or
we will contribute to payments RGC International or its respective pledgees,
donees, transferees or other successors in interest, may be required to make in
respect thereof.
We are bearing all costs relating to the registration of the shares, other
than fees and expenses, if any, of counsel or other advisers to RGC
International. RGC International will pay any commissions, discounts or other
fees payable to broker-dealers in connection with any sale of the shares
utilizing the services of a broker-dealer.
PLAN OF DISTRIBUTION FOR CANADIAN INVESTORS
The 200,000 shares of common stock being offered by the Canadian Investors
or their respective pledgees, donees, transferees or other successors in
interest, may be sold in one or more transactions on the Nasdaq SmallCap Market
or any other market on which our common stock may trade. These may involve
block transactions. The shares of common stock may also be sold in privately-
negotiated transactions, through the writing of options on the shares, through
short sales or
14
<PAGE>
any combination of these methods. The sale price to the public may be the market
price prevailing at the time of sale, a price relating to the prevailing market
price, or such other price as the Canadian Investors may determine from time to
time. The shares may also be sold in transactions exempt from registration with
the Securities and Exchange Commission pursuant to Section 4(1) of the
Securities Act and Rule 144 thereunder.
The Canadian Investors or their respective pledgees, donees, transferees or
other successors in interest may also sell the shares of common stock directly
to market makers acting as principals and/or broker/dealers acting as agents for
themselves or their customers. Broker/dealers acting as agents for the Canadian
Investors will receive customary commissions for brokerage transactions, and
market makers and block purchasers purchasing the shares will do so for their
own account and at their own risk. One or both of the Canadian Investors may
attempt to sell shares of common stock in block transactions at a price per
share which may be below the market price at that time. There can be no
assurance that all or any of the shares offered by this prospectus will be
issued to, or sold by, the Canadian Investors. The Canadian Investors and any
brokers, dealers, or agents, when selling any of the shares offered by this
prospectus, may be deemed "underwriters" as that term is defined under the
Securities Act or the Exchange Act, or the rules and regulations under those
statutes.
The Canadian Investors and any other persons participating in the sale or
distribution of the shares of common stock will be subject to applicable
provisions of the Exchange Act and the rules and regulations under that statute,
which may limit the timing of purchases and sales of any such person. This may
affect the marketability of the shares of common stock. We have agreed to
indemnify the Canadian Investors against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments the Canadian
Investors or their respective pledgees, donees, transferees, or other successors
in interest, may be required to make in respect of certain liabilities under the
Securities Act. We are bearing all costs relating to the registration of the
Canadian Investors' shares, other than fees and expenses, if any, of counsel or
other advisors to the Canadian Investors. The Canadian Investors will pay any
commissions, discounts or other fees payable to broker-dealers in connection
with any sale of their shares.
DESCRIPTION OF CAPITAL STOCK
As of September 10, 1999, the authorized capital stock of the Company
consisted of 60,000,000 shares of common stock, par value $.01 per share, of
which 24,836,233 were issued and outstanding, and 3,000,000 shares of Preferred
Stock, of which 165,200 were issued and outstanding.
Common Stock
Holders of common stock are entitled to one vote per share on all matters
to be voted upon by the stockholders. Holders of common stock are entitled to
receive such dividends, if any, that are declared by the Board of Directors.
The common stock has no other rights attached to it and there are no preemptive
or sinking fund provisions applicable to the common stock. All of the shares of
common stock offered by the Company by this prospectus will, when issued, be
fully paid and non-assessable. If we issue any additional shares of common
stock, your rights as holders of common
15
<PAGE>
stock could be affected, your proportionate ownership interest in the Company
could be diluted and the value of your common stock could be reduced.
Preferred Stock
We are authorized to issue up to 3,000,000 shares of Preferred Stock. We
have already issued the following six series:
. 251,844 shares of Series A Convertible PIK Preferred Stock;
. 592,500 shares of Series B Convertible Preferred Stock;
. 105,000 shares of Series C Convertible Preferred Stock;
. 3.15 shares of Series D Convertible Preferred Stock;
. 2.1 shares of Series E Convertible Preferred Stock; and
. 20,000 shares of Series F Convertible Preferred Stock.
All of the Series A, C, D and E Convertible Preferred Stock have already
been converted and retired by us. We may issue further series of Preferred
Stock. Our Board of Directors will determine the terms of any future series
without input from our stockholders. The terms of any issuance of Preferred
Stock may include voting rights (including the right to vote as a series on
particular matters) which could be superior to those of the shares of common
stock, may have preferences over the shares of common stock as to dividends and
distributions in liquidation, conversion and redemption rights (including the
right to convert into shares of common stock) and sinking fund provisions. If
we issue additional Preferred Stock, your rights as holders of common stock
could be affected, your proportionate ownership interest in the Company could be
diluted and the value of your common stock could be reduced.
Public Warrants
We have registered an aggregate of 3,232,500 publicly tradable warrants.
The holders of each of these warrants is entitled, upon payment of the exercise
price of $5.85, to purchase one share of common stock. Unless previously
redeemed, the warrants are exercisable at any time during the five-year period
ending May 2, 2002, provided that a current prospectus relating to the
underlying common stock is in effect and the shares are qualified for sale or
exempt from qualification under applicable securities laws.
Commencing May 2, 1997, the warrants may be redeemed by the Company at a
price of $.25 per warrant, if the trading price for the common stock on The
Nasdaq SmallCap Market is equal to or exceeds $6.75 per share for twenty (20)
consecutive trading days. We must give each warrant holder thirty (30) days
notice if we intend to redeem any or all of the warrants. If we give notice of
our intention to redeem any of the warrants, the warrant holders' right to
exercise their warrants will be
16
<PAGE>
forfeited unless they exercise their warrants prior to the date on the notice of
redemption. The decision to redeem the warrants is at the discretion of the
Board of Directors.
Anti-Takeover Provisions
We are subject to Section 203 of the Delaware General Corporation Law. In
general, the statute prohibits a publicly-held Delaware corporation from
engaging in a "business combination" with an "interested stockholder" for a
period of three years after the date that the person became an interested
stockholder unless (with certain exceptions) the Company approves the business
combination in a prescribed manner. Generally, a "business combination"
includes a merger, asset or stock sale, or other transaction resulting in a
financial benefit to the stockholder. Generally, an "interested stockholder" is
a person who, together with affiliates and associates, owns (or within three
years prior, did own) 15% or more of the corporation's voting stock.
Our Bylaws provide that (i) the authorized number of directors may be
changed only by resolution of the Board of Directors, and (ii) directors can
only be removed with or without cause by a majority vote of the stockholders.
Our Bylaws also provide that the Board of Directors be notified not less than 60
and not more than 90 days prior to any stockholders' meeting or any stockholder
proposals or nominations of directors by the stockholders. These provisions
could delay, deter, or prevent a change in control of the Company or depress the
market price of common stock or discourage hostile bids in which stockholders of
the Company could receive a premium for their shares of common stock.
INDEMNIFICATION
The Delaware General Corporation Law allows us to indemnify our directors
and officers in terms sufficiently broad to indemnify such persons for
liabilities arising under the Securities Act. We have a directors and officers
liability insurance policy that, under certain circumstances, could serve to
indemnify our directors and officers against liabilities under the Securities
Act.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant to
the foregoing provisions, or otherwise, we have been advised that in the opinion
of the Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is, therefore,
unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission" or
"SEC"). Our SEC filings are available to the public over the Internet at the
SEC's website at http://www.sec.gov. You may also read and copy any document we
file at the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms.
17
<PAGE>
Our common stock and public warrants are listed on The Nasdaq SmallCap Market,
a subsidiary of the National Association of Securities Dealers, Inc., or NASD.
Our filings may be inspected and copied at the NASD's offices at 1735 K Street,
N.W., Washington, DC 20006-1500.
We have filed a Registration Statement on Form S-3 with the SEC under the
Securities Act. The Registration Statement, together with all amendments and
exhibits, updates the information contained in the prospectus used in our IPO.
This prospectus does not contain all the information set forth in the
Registration Statement. The Registration Statement omits certain information in
accordance with the rules and regulations of the Commission. Statements made in
this prospectus as to the contents of any agreement or other document referred
to herein are not necessarily complete. We refer you to the Registration
Statement and to the exhibits and amendments filed with it for further
information. Copies of these documents may be obtained from the Commission upon
payment of the prescribed fee.
TRANSFER AGENT AND REGISTRAR
StockTrans, Inc., Ardmore, Pennsylvania, is the transfer agent and registrar
for the Company's common stock and public warrants.
LEGAL MATTERS
Ballard Spahr Andrews & Ingersoll, LLP has passed upon certain legal matters
with respect to the validity of the shares of common stock offered by this
prospectus.
EXPERTS
Goldstein Golub Kessler LLP, or GGK, New York, New York, has audited the
consolidated financial statements of the Company and subsidiaries for the two
fiscal years ended March 31, 1998 and March 31, 1999 incorporated by reference
in this prospectus and Registration Statement. The Company has relied on GGK's
report in incorporating these financial statements given GGK's expertise in
accounting and auditing.
IMPORTANT INFORMATION INCORPORATED INTO THIS PROSPECTUS
The SEC allows us to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
SEC will automatically update and supersede this information.
We incorporate by reference the documents listed below and any future filings
made with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
until we sell all of the securities covered by this prospectus:
. our Quarterly Reports on Form 10-Q for the fiscal quarter ended June
30, 1999 and on Form 10-QSB for the fiscal quarters ended December 31,
1998, September 30,
18
<PAGE>
1998, as amended, June 30, 1998, December 31, 1997, as amended, and
September 30, 1997;
. our Current Reports on Form 8-K dated August 24, 1999, March 31, 1999,
December 10, 1998, September 1, 1998, April 9, 1998, January 27, 1998,
November 12, 1997, and November 6, 1997;
. our Proxy Statements dated July 19, 1999, July 27, 1998 and May 8,
1998;
. our Annual Reports on Form 10-KSB for the fiscal years ended March 31,
1999, March 31, 1998 and March 31, 1997;
. our prospectuses dated June 4, 1999 and August 11, 1998.
You may request a copy of these filings at no cost, by writing or telephoning
us at the following address:
The Ashton Technology Group, Inc.
1900 Market Street, Suite 701
Philadelphia, PA 19103
Attn: Chief Financial Officer
(215) 751-1900.
FORWARD-LOOKING STATEMENTS
Certain statements in this prospectus may be "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. A
forward-looking statement involves known and unknown risks, uncertainties and
other important factors that could cause our actual financial performance or
achievements to differ materially from our future financial performance or
achievements expressed or implied by such forward-looking statements.
The risks, uncertainties, and other important factors that could affect us
include, among others:
. our dependence on our arrangements with the Philadelphia Stock
Exchange;
. our dependence on proprietary technology;
. the risks of technological change and the increased cost of
technology;
. trends in the electronic commerce industry and the Internet;
. our ability to develop markets;
19
<PAGE>
. changes in our business strategy or development plans;
. the acceptance of our products;
. the availability, terms and deployment of capital;
. the availability of qualified personnel;
. changes in government regulation;
. general economic and business conditions;
. and other factors discussed in this prospectus.
Such forward-looking statements speak only as of the date of this prospectus.
For discussion of the factors that might cause our performance to differ from
actual results, see the discussion of "Risk Factors" beginning on page 5. We
are not obligated to update or revise any forward-looking statement contained in
this prospectus to reflect any change in our expectations with regard to such
statement or any change in events, conditions, or circumstances on which any
forward-looking statement is based.
20
<PAGE>
We have not authorized any dealer, salesman or other person to give any
information or to make any representation other than those contained in this
prospectus. If any person makes a representation or gives any information other
than those contained in this prospectus, you should not rely on it as having
been authorized by the Company. This prospectus does not constitute an offer to
sell or solicitation of an offer to buy any securities other than the shares
offered by this prospectus. This prospectus does not constitute an offer or
solicitation to any person in any state where such an offer or solicitation
would be unlawful. If you receive this prospectus or purchase any of the common
stock offered by this prospectus, you should not assume that the information
contained in this prospectus is correct as of any date after the date written on
this prospectus.
TABLE OF CONTENTS
PAGE
----
Prospectus Summary........................... 2
Company Overview............................. 2
Risk Factors................................. 5
Use of Proceeds.............................. 10
Selling Stockholders......................... 11
Plan of Distribution for RGC International... 12
Plan of Distribution for Canadian Investors.. 14
Description of Capital Stock................. 15
Indemnification.............................. 17
Where You Can Find More Information.......... 17
Transfer Agent and Registrar................. 18
Legal Matters................................ 18
Experts...................................... 18
Important Information Incorporated
Into this Prospectus........................ 18
Forward-Looking Statements................... 19
6,535,144
Shares
Common Stock
THE ASHTON TECHNOLOGY
GROUP, INC.
_____________
PROSPECTUS
_____________
_______, 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 15. Indemnification of Directors and Officers
The Delaware General Corporation Law authorizes the Company to grant
indemnity to directors and officers in terms sufficiently broad to permit
indemnification of such persons under certain circumstances for liabilities
(including reimbursement for expenses incurred) arising under the Securities
Act. In addition, the Company has obtained Directors' and Officers' Liability
Insurance, which insures its officers and directors against certain liabilities
such persons may incur in their capacities as officers or directors of the
Company. The Company pays annual premiums of approximately $200,000 on this
policy.
Article 7 of the Company's Amended Certificate of Incorporation
provides as follows:
SEVENTH: Directors of the Corporation shall not be liable to either
the corporation or its stockholders for monetary damages for a breach
of fiduciary duties unless the breach involves: (1) a duty of loyalty
to the corporation or its stockholders, (2) acts or omissions not in
good faith or which involve intentional misconduct or a knowing
violation of law, (3) liability for unlawful payments of dividends or
unlawful stock purchase or redemption by the corporation, or (4) a
transaction from which the director derived an improper personal
benefit.
Item 16. Exhibits
The following is a list of exhibits filed as part of this Registration
Statement, as amended.
Exhibit
Number Description
- ------ -----------
5.1 Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 Consent of Goldstein Golub Kessler LLP
22
<PAGE>
Item 17. Undertakings
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events arising after the effective
date of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate represent a fundamental change
in the information in the registration statement. Notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range may
be reflected in the form of prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and
(iii) Include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material change to
such information in the registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) of this section
do not apply if the Registration Statement is on Form S-3 or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement of the securities offered therein, and the offering
of such securities at that time shall be deemed to be the initial bona fide
offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered, which remain unsold at the
termination of the offering.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement on Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Philadelphia, Commonwealth of Pennsylvania, on
September 15, 1999.
THE ASHTON TECHNOLOGY GROUP, INC.
By: /s/ Arthur J. Bacci
--------------------
Arthur J. Bacci
President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Signature Title Date
--------- ----- ----
- ------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Fredric W. Rittereiser Chairman of the Board and September 15, 1999
- --------------------------
Fredric W. Rittereiser Chief Executive Officer
(Principal Executive Officer)
- ------------------------------------------------------------------------------------------
/s/ Arthur J. Bacci Director, President, and September 15, 1999
- -------------------
Arthur J. Bacci and Chief Financial Officer
(Principal Financial Officer)
- ------------------------------------------------------------------------------------------
/s/ William W. Uchimoto Director and General Counsel September 15, 1999
- -----------------------
William W. Uchimoto
- ------------------------------------------------------------------------------------------
/s/ Fred S. Weingard Director September 15, 1999
- --------------------
Fred S. Weingard
- ------------------------------------------------------------------------------------------
/s/ K. Ivan F. Gothner Director September 15, 1999
- ----------------------
K. Ivan F. Gothner
- ------------------------------------------------------------------------------------------
/s/ Richard E. Butler Director September 15, 1999
- ---------------------
Richard E. Butler
- ------------------------------------------------------------------------------------------
/s/ Thomas G. Brown Director September 15, 1999
- -------------------
Thomas G. Brown
- ------------------------------------------------------------------------------------------
/s/ Jennifer L. Andrews Controller (Principal September 15, 1999
- -----------------------
Jennifer L. Andrews Accounting Officer)
- ------------------------------------------------------------------------------------------
</TABLE>
24
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Number
- --------------
5.1 Form of Opinion of Ballard Spahr Andrews & Ingersoll, LLP
23.1 Consent of Goldstein Golub Kessler LLP
25
<PAGE>
Exhibit 5.1
(Letterhead of Ballard Spahr Andrews & Ingersoll, LLP)
September __, 1999
VIA EDGAR
U.S. Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: The Ashton Technology Group, Inc.
Registration Statement on Form S-3
----------------------------------
Ladies and Gentlemen:
You have requested our opinion regarding the validity of the issuance
of shares of The Ashton Technology Group, Inc. (the "Company") Common Stock
covered by the above-referenced Registration Statement on Form S-3 (the
"Registration Statement"). These shares include: (i) 5,935,144 shares issuable
upon the conversion of outstanding Series F Convertible Preferred Stock; (ii)
400,000 shares issuable upon the exercise of an outstanding Stock Purchase
Warrant; and (iii) 200,000 shares issuable upon the exercise of outstanding
Series T Warrants.
In our opinion, the 5,935,144 shares of Common Stock issuable upon the
conversion of the Series F Preferred Stock and the 600,000 shares of Common
Stock issuable upon exercise of the Stock Purchase Warrant and Series T
Warrants, when issued in accordance with the terms of the Convertible Preferred
Stock and Warrants, as the case may be, will be duly and validly issued by the
Company, fully paid and non-assessable.
We hereby consent to the inclusion of this opinion in the Registration
Statement, including any amendments thereto and to the reference to this firm in
the Registration Statement under the section entitled "Legal Matters."
Very truly yours,
26
<PAGE>
Exhibit 23.1
(Letterhead of Goldstein Golub Kessler LLP)
INDEPENDENT AUDITOR'S CONSENT
To the Board of Directors and Stockholders
of The Ashton Technology Group, Inc.
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 of our report dated
May 7, 1999, except for paragraph two of Note 14, as to which the date is
June 4, 1999, on the consolidated balance sheet of The Ashton Technology Group,
Inc. and Subsidiaries as of March 31, 1998 and 1999, and the related
consolidated statements of operations, stockholders' equity, and cash flows for
the years then ended, which report appears in the March 31, 1999 annual report
on Form 10-KSB of The Ashton Technology Group, Inc. and Subsidiaries. We also
consent to the reference to our firm under the caption "experts" in such
Prospectus.
/s/ Goldstein Golub Kessler LLP
GOLDSTEIN GOLUB KESSLER LLP
New York, New York
September 14, 1999
