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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Act of 1934
Date of Report: March 31, 1999
THE ASHTON TECHNOLOGY GROUP, INC.
(Exact name of registrant as specified in its charter)
1-11747
(Commission file number)
Delaware 22-6650372
(State or other (I.R.S. Employer
jurisdiction of incorporation) Identification No.)
1900 Market Street, Suite 701, Philadelphia, PA 19103
(Address of principal executive offices with zip code)
(215) 751-1900
(Registrant's telephone number, including area code)
Not applicable
(Former name or former address, if changed since last report)
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ITEM 5. OTHER ITEMS.
(A) On May 29, 1998, David N. Rosensaft ("Rosensaft") served the The Ashton
Technology Group, Inc. ("ATG/TM/" or the "Registrant") with a complaint in the
U.S. District Court for the Southern District of New York, entitled "David
Rosensaft vs. ATG/TM/ and Universal Trading Technologies Corporation
("UTTC/TM/")" No. 98 Civ 3681, alleging claims against ATG/TM/ and its
subsidiary, UTTC/TM/, for breach of fiduciary duty to Rosensaft as a minority
shareholder of UTTC/TM/, for invalid amendments to the certificates of
incorporation of UTTC/TM/ and ATG/TM/ and invalid issuance of UTTC/TM/ common
stock to ATG/TM/ and improper issuance of additional shares of UTTC/TM/ common
stock to ATG/TM/.
More specifically, Rosensaft alleged that in 1995 the Registrant breached
its March 7, 1995 agreement with Rosensaft by issuing only 2 million shares of
UTTC/TM/ common stock to him in violation of a provision of that agreement that
allegedly entitled him to receive 2.45 million shares of UTTC/TM/ common stock.
In addition, Rosensaft alleged that, in causing UTTC/TM/ to issue approximately
19 million shares of UTTC/TM/ common stock to ATG/TM/ in September 1997
allegedly without adequate consideration, the Registrant improperly diluted
Rosensaft's share of UTTC/TM/ common stock ownership from 6.7% to 1.38% in
violation of Delaware corporate law and in breach of Rosensaft's March 7, 1995
agreement with the Registrant.
The relief sought by Rosensaft was: (i) 450,000 shares of UTTC/TM/ common
stock or damages to be determined at trial, but not less than $2 million; (ii)
an order revoking or canceling the issuance of additional shares of UTTC/TM/
common stock in excess of the 10 million shares authorized by UTTC/TM/'s
original Certificate of Incorporation; and (iii) an order revoking or canceling
the issuance of approximately 19 million additional shares of UTTC/TM/ common
stock to the Registrant; and (iv) and damages to be determined at trial.
On March 22, 1999, the Registrant, UTTC/TM/ and Rosensaft entered into a
settlement agreement whereby the Registrant and UTTC/TM/ agreed to, among other
considerations, issue 416,667 additional shares of UTTC/TM/ common stock to
Rosensaft and to reimburse Rosensaft $47,500 for legal expenses. The parties
also executed comprehensive mutual releases as between each other. While the
Registrant and UTTC/TM/ believe Rosensaft's claims are without merit and that
the Registrant and UTTC/TM/ would have prevailed at trial, the Board of
Directors of ATG/TM/ and UTTC/TM/ believe the cost of litigation would have
significantly exceeded the costs associated with the settlement. Therefore, the
Board of Directors of ATG/TM/ and UTTC/TM/ agreed to the settlement to avoid
significant additional legal costs and the management distraction associated
with such litigation.
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(B) On March 24, 1999, ATG/TM/ announced that the Securities and Exchange
Commission (the "Commission") approved a rule proposed by the Philadelphia Stock
Exchange, Inc. (the "PHLX") that allows the PHLX to operate the volume weighted
average price (VWAP/R/) trading system (VTS/TM/). Further details regarding this
announcement are contained in the Registrant's press release dated March 24,
1999 attached as an exhibit hereto and incorporated by reference herein.
(C) On March 25, 1999, the Board of Directors of ATG/TM/ and the Board of
Directors UTTC/TM/ approved a restructuring of the management of ATG/TM/ and
UTTC/TM/. Fredric W. Rittereiser will serve as Chairman and Chief Executive
Officer of both ATG/TM/ and UTTC/TM/. Fred S. Weingard, ATG/TM/'s Executive Vice
President and Chief Technology Officer, was appointed Chief Operating Officer
and President of UTTC/TM/. William W. Uchimoto, ATG/TM/'s Executive Vice
President and General Counsel, and Arthur J. Bacci, ATG/TM/'s Senior Vice
President and Chief Financial Officer were appointed to the Board of Directors
of UTTC/TM/.
In addition, Mr. Uchimoto, was named Chief Executive Officer and President
of NextExchange, Inc. ("NextExchange"). Mr. Bacci will assume the additional
responsibilities of Chief Operating Officer and President of ATG/TM/.
NextExchange was formed on February 5, 1999 as a wholly owned subsidiary of
UTTC/TM/. NextExchange plans to avail itself of the opportunities made available
as a result of the Commission's recently articulated support for non-mutualized,
"for profit" exchanges.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: March 31, 1999 /s/ Arthur J. Bacci
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Arthur J. Bacci
Chief Operating Officer, President and
Chief Financial Officer
INDEX TO EXHIBITS
99 Press Release dated March 24, 1999
EXHIBIT NUMBER - DESCRIPTION
99 Press Release dated March 24, 1999
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EXHIBIT 99
Ashton Technology Group, Inc. Announces
SEC Approval of VTS/TM/
PHILADELPHIA, PA - March 24, 1999 - The Ashton Technology Group, Inc. (ATG/TM/)
(ASTN - NASDAQ Small Cap Market) announced today that the Securities and
Exchange Commission (SEC) has granted approval to the Philadelphia Stock
Exchange, Inc. to operate the volume weighted average price (VWAP/R/) trading
system (VTS/TM/).
The VTS/TM/ was designed and developed by the Universal Trading Technologies
Corporation (UTTC/TM/), a subsidiary of ATG/TM/. The VTS/TM/ is a fully
automated electronic trading system featuring a unique order matching algorithm
for execution and a self-regulatory organization (SRO)-surveilled standard for
calculating the VWAP/R/. The System will initially be introduced as a
pre-opening session for listed securities where investors can execute trades at
VWAP/R/. Pre-opening matches are ascribed the daily VWAP/R/ price determined
from all trades occurring during the same day as reported to the Consolidated
Tape.
Fredric W. Rittereiser, ATG/TM/'s President and CEO stated, "VTS/TM/ will be
available directly to institutions, broker-dealers, and the public through
financial intermediaries. Our System provides absolute anonymity and no market
impact for its users through encryption and the absence of human intervention in
the operation of VTS/TM/. We plan to introduce a series of product variations
and enhancements based on VWAP/R/ as well as other innovative trading products."
ATG/TM/ is an Internet technology company that is designing products and
services for use by the financial services industry. ATG/TM/ is developing a
family of on-line transaction systems using advanced telecommunication
technologies, computing technologies, together with data and information
security technologies designed to facilitate transactions among participants in
the financial markets. ATG/TM/'s proprietary transaction systems will be made
available to end users through both proprietary communications networks and the
Internet. VWAP/R/ is a registered mark of UTTC/TM/.
CONTACT: Christine A. Geisser, Director of Corporate Relations of the Ashton
Technology Group, Inc., 1900 Market Street, Suite 701, Philadelphia, PA 19103.
Telephone: 215-751-1900, Telefax: 215-636-3560. Website:
www.ashtontechgroup.com.
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