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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 10, 2000
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ASPEON, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 52-1945748
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
17891 CARTWRIGHT ROAD
IRVINE, CALIFORNIA 92614
(949) 440-8000
(Address, including zip code, and telephone number, including area code,
of Registrant's principal executive offices)
--------------------
RICHARD P. STACK
PRESIDENT AND CHIEF EXECUTIVE OFFICER
ASPEON, INC.
17891 CARTWRIGHT ROAD
IRVINE, CALIFORNIA 92614
(949) 440-8000
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
--------------------
COPIES TO:
BARBARA L. BORDEN
PATRICK R. O'NEIL
COOLEY GODWARD LLP
4365 EXECUTIVE DRIVE, SUITE 1100
SAN DIEGO, CA 92121
(858) 550-6000
--------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
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 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. / /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED BE REGISTERED PER SHARE (1) OFFERING PRICE (1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value 2,750,000 $17.00 $46,750,000 $12,342
===================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457(c) of the Securities Act of 1933. The
price per share and aggregate offering price are based upon the average of the
high and low sales price of Aspeon's common stock on April 4, 2000 as reported
on the Nasdaq National Market. It is not known how many shares will be purchased
under this registration statement or at what price such shares will be
purchased.
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THE REGISTRANT HEREBY AMENDS THIS 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 THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
SUBJECT TO COMPLETION, DATED APRIL 10, 2000
2,750,000 SHARES
ASPEON, INC.
COMMON STOCK
We are registering 2,750,000 shares of our common stock for resale by the
selling stockholder identified in this prospectus. We will not receive any of
the proceeds from the sale of shares by the selling stockholder. Our common
stock is listed on the Nasdaq National Market under the symbol "ASPE." The
closing sale price of our common stock, as reported on the Nasdaq National
Market on April 6, 2000, was $20.25 per share.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS," BEGINNING ON PAGE 3.
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 ________, 2000.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
THIS PROSPECTUS IS PART OF A LARGER REGISTRATION STATEMENT WE FILED
WITH THE SEC. YOU SHOULD RELY ON THE INFORMATION INCORPORATED BY REFERENCE OR
PROVIDED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE ELSE TO PROVIDE YOU
WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER OF THESE SECURITIES IN
ANY STATE WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD NOT ASSUME THAT THE
INFORMATION IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON
THE FRONT OF THE DOCUMENT.
WHERE YOU CAN GET MORE INFORMATION
We are a reporting company and file annual, quarterly and current
reports, proxy statements and other information with the SEC. You may read and
copy these reports, proxy statements and other information at the SEC's public
reference rooms in Washington, D.C., New York, NY and Chicago, IL. You can
request copies of these documents by writing to the SEC and paying a fee for the
copying cost. Please call the SEC at 1-800-SEC-0330 for more information about
the operation of the public reference rooms. Our SEC filings are also available
at the SEC's Web site at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" information that 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 we will make with
the SEC under Section 13 (a), 13(c), 14 or 15 (d) of the Securities Exchange Act
of 1934:
- Annual Report on Form 10-KSB for the year ended June 30, 1999;
- Quarterly Reports on Form 10-Q for the quarters ended September 30,
1999 and December 31, 1999;
- Current Report on Form 8-K filed with the Securities and Exchange
Commission on March 9, 2000;
- Proxy Statement for the 1999 Annual Meeting of Stockholders; and
- Registration statement on Form 8-A, as amended, which includes a
description of our common stock.
You may request a copy of these filings at no cost, by writing or telephoning us
at the following address or telephone number:
Aspeon, Inc.
17891 Cartwright Road
Irvine, CA 92614
Attn: Investor Relations
(949) 440-8000
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SUMMARY
ASPEON, INC.
We develop and sell open system point-of-sale (POS) touchscreen
computers and provide related systems integration services primarily to the food
service and retail industries. Customers that use POS systems incorporating our
products can gather data from the point of sale and use it at the in-store "back
office" and the enterprise's headquarters. Our products enable our customers to
process transactions to better manage inventory and costs, analyze sales data
and customize their products and services. We believe that our success is based
on the application of open system PC technology to POS systems which allows our
customers to choose the software application that best meets their needs. Our
network-ready computers have substantially all of the functionality of desktop
personal computers and can be integrated with hardware from other vendors. In
addition, our computers are competitively priced, durable and have a small
footprint.
We sell our POS systems integration services primarily to corporate
customers with multi-site operations. Our knowledge of advanced information
technologies, POS systems and numerous software applications enables us to help
our customers identify the optimal POS system for their particular business. Our
experience in the food service and retail industries enables us to effectively
manage the full deployment and ongoing support of these customers' POS
solutions. Because we offer both systems integration and hardware, we can
capture a greater percentage of the customer's total expenditures on POS
systems. We believe that the customer relationships we develop build recurring
help desk, maintenance and field service revenues and position us to recommend
changes and upgrades to systems.
In addition, we intend to develop and implement an application service
provider (ASP) offering whereby our customers will be able to access certain
business related applications we license from third parties, including our
applications related to the food service and retail industries, via the
internet. As a hardware provider, systems integrator and ASP, we believe we will
be able to deliver a comprehensive solution tailored to our customers' business
needs. We intend to offer our customers the option of purchasing or leasing our
solutions or components of our solutions, thereby providing them with more
flexibility, lower and more predictable operating costs for their information
technology needs and a total information technology solution.
We were formerly known as Javelin Systems, Inc. In September 1999,
we changed our name to Aspeon, Inc.
THE OFFERING
We recently completed a preferred stock financing from which we
received aggregate proceeds of $10 million. We are obligated to register the
common stock issuable upon conversion of this preferred stock so that it can be
resold in the public market. We are also registering the common stock issuable
upon exercise of warrants sold in connection with the sale of the preferred
stock and any common stock issued as a dividend on the preferred stock. We will
not receive any of the proceeds from the sale of common stock pursuant to this
prospectus.
The selling stockholder may sell its shares of common stock described
in this prospectus in public or private transactions, on or off the Nasdaq
National Market, at prevailing market prices, or at privately negotiated prices.
The selling stockholder may sell shares directly to purchasers or through
brokers or dealers. Brokers or dealers may receive compensation in the form of
discounts, concessions or commissions from the selling stockholder. More
information is provided in the section entitled "Plan of Distribution."
Our executive offices are located at 17891 Cartwright Road, Irvine,
California 92614, and our telephone number is (949) 440-8000.
All references to "Aspeon", "we" or "us" are to Aspeon, Inc. and not to
the selling stockholder.
RISK FACTORS
AN INVESTMENT IN THE SHARES BEING OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK. IN DECIDING WHETHER TO PURCHASE SHARES OF OUR COMMON STOCK, YOU SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO OTHER INFORMATION
CONTAINED IN THIS PROSPECTUS, IN OUR MOST RECENT QUARTERLY REPORT ON FORM 10-Q,
IN OUR MOST RECENT
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ANNUAL REPORT ON FORM 10-KSB, AND IN ANY OTHER DOCUMENTS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS FROM OUR OTHER SEC FILINGS. THIS PROSPECTUS ALSO
CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. OUR
ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED HERE OR INCORPORATED
BY REFERENCE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO DIFFERENCES IN OUR
ACTUAL RESULTS INCLUDE THOSE DISCUSSED IN THIS SECTION, AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS AND IN OTHER DOCUMENTS INCORPORATED BY
REFERENCE INTO THIS PROSPECTUS.
RISKS RELATED TO OUR BUSINESS
OUR ASP OFFERING IS RELATIVELY NEW AND UNTESTED, AND WE WILL BE UNABLE TO GROW
OUR BUSINESS AS WE EXPECT IF OUR ASP OFFERING DOES NOT MEET WITH MARKET
ACCEPTANCE OR IF WE DO NOT EXECUTE OUR BUSINESS STRATEGY.
The market for ASP offerings has only recently begun to develop and we
have not previously generated revenue from our ASP offering. We cannot be
certain that the market for ASP offerings will develop. We intend to provide our
ASP offering through our Aspeon Solutions, Inc. subsidiary. Our ability to
increase ASP revenues will depend upon our ability to develop our ASP offering
and market acceptance of our ASP offering. The success of our ASP offering will
depend upon the execution of our business strategy which requires us to adopt a
sales, pricing, and support strategy and build our employee, information
technology and facility resources. If we fail to develop our ASP business in a
timely or cost effective manner or if our ASP offering does not meet with market
acceptance, we may incur substantial additional costs or delays in our ASP's
further development and launch or be prevented from capitalizing on the market
opportunity that we have identified. In addition, while we expect our existing
customer base to provide attractive opportunities for ASP sales, these customers
may be reluctant or unwilling to purchase our ASP offering.
IF OUR ASP PROCESSING SYSTEMS BECOME UNAVAILABLE FOR EXTENDED PERIODS OF TIME OR
ARE NOT ABLE TO ADEQUATELY SERVICE INCREASING TRAFFIC LEVELS, OUR REPUTATION AND
BUSINESS MAY SUFFER.
The success of our ASP offering depends in large part on the number of
customers who use our ASP offering to service their POS needs. Accordingly, our
system must be able to service increasing traffic while maintaining adequate
customer service. Any significant interruptions or delays in our system would
reduce the performance and the attractiveness of our ASP offering, which could
reduce customer satisfaction and harm our reputation and business. Substantial
increases in the volume of traffic or the number of transactions on our ASP
offering will require expansion of and upgrades to our technology
infrastructure. We cannot be sure that our systems will be able to accommodate
increased traffic in the future. Any failure of our system could result in fewer
transactions and, if sustained or repeated, could impair our reputation and the
attractiveness of our services or prevent us from providing our ASP offering
entirely.
WE EXPECT TO INCUR LOSSES WHILE WE ARE INVESTING IN THE FURTHER DEVELOPMENT AND
LAUNCH OF OUR ASP OFFERING, AND WE MAY NEVER RECOVER THE COSTS ASSOCIATED WITH
THOSE INVESTMENTS.
We intend to make significant investments in further developing and
launching our ASP offering by:
- constructing and staffing solution centers and centers where
we manage and monitor deployed customer solutions, or command
centers, in strategic geographic locations;
- entering into arrangements with third party suppliers of
elements of our ASP offering;
- developing shared process and software solutions and
industry-specific templates;
- expanding our system management resources; and
- expanding our sales and marketing activities.
Although we intend to increase our spending as described above, these efforts
may not result in increased revenues and the revenues from these efforts may not
be enough to compensate for their cost.
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WE CANNOT MAINTAIN OUR HISTORICAL RATE OF GROWTH.
We are currently experiencing rapid growth and expansion. This rapid
growth and expansion is primarily due to acquisitions and increased sales of
hardware, both domestically and internationally. We do not believe that our
domestic hardware sales will continue to grow at the rate at which they have
grown in the past. Further, we cannot guarantee you that we will be able to
increase our domestic service sales or our foreign hardware and service sales in
the future at or near the rates that we have in the past.
OUR BUSINESS WILL NOT OPERATE EFFICIENTLY AND OUR RESULTS OF OPERATIONS WILL BE
NEGATIVELY AFFECTED IF WE ARE UNABLE TO MANAGE OUR GROWTH EFFECTIVELY.
Because we are currently experiencing rapid growth and expansion, we
have also experienced, and will continue to experience, a strain on our
administrative, engineering and operating resources. Our growth has also
increased the demands on our information systems and controls. We anticipate
that continued growth will require us to recruit and hire a number of additional
management personnel, particularly in operational management. We cannot
guarantee that we will be successful at hiring or retaining these personnel or
that we will be able to successfully expand and improve our operational,
management and financial systems and controls.
In addition, we plan to increase our operating expenses to:
- Develop our ASP offering;
- Expand our product line;
- Increase our sales and marketing operations;
- Increase the volume of products manufactured;
- Develop new distribution channels;
- Broaden our customer support capabilities;
- Grow our international sales force; and
- Develop and fully integrate our international operations.
We anticipate that we will make significant investments in our
operations, particularly to support technological developments, our application
service provider business and sales activities which will cause our operating
expenses to continue to increase. We intend to make investments on an ongoing
basis, primarily from cash generated from our operations, and to the extent
necessary, funds available from our line of credit, as we develop and introduce
new products and services, our application service provider business, and expand
into new markets.
We cannot guarantee that we can successfully implement our expansion or
that the cost of our expansion will not exceed any revenues generated by it. In
addition, we may spend money on our expansion well before the expansion results
in greater sales or revenues. This may negatively impact our earnings in the
short term. Further, if the expansion does not result in increased revenues, our
financial performance may suffer and this could result in lower prices for our
common stock.
WE EXPECT OUR QUARTERLY RESULTS TO FLUCTUATE. IF WE FAIL TO MEET EARNINGS
ESTIMATES, OUR STOCK PRICE COULD DECLINE.
5
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Our operating results may fluctuate significantly in the future. Many
factors may cause these fluctuations, including:
- The size and timing of individual orders, particularly with
respect to our larger end users;
- General health of the food service industry, particularly the
quick service restaurant segment;
- Lengthy sales and implementation cycles;
- Competition and pricing in the POS systems industry;
- Our ability to expand our international and domestic sales;
- Changes in the mix of products and services sold;
- Employee hiring and retention, particularly with respect to
sales and consulting personnel;
- The mix of distribution channels through which our products
are sold; and
- The market acceptance of our ASP business.
We usually ship our products shortly after they are ordered and,
consequently, order backlog at the beginning of any quarter usually represents
only a small portion of that quarter's expected revenues. As a result, our
product revenues in any quarter are substantially dependent on orders booked and
shipped in that quarter, and this makes it difficult for us to predict revenues.
Our sales and implementation cycles vary substantially from customer to
customer. We have experienced, and expect to continue to experience, quarters or
periods where individual product or service orders are significantly larger than
our typical product or service orders. This will add to the unpredictability of
our revenues. Nevertheless, our expense levels are based in large part on
expectations of future revenues and are relatively fixed in the near term.
Because of this, our net income may be lower than expected if we experience an
unanticipated decline in revenue for a particular quarter. We also expect
expense levels to increase in the near term as we attempt to expand our
operations and develop our ASP offering. Moreover, the POS systems industry is
generally dependent on system roll-outs with fixed time horizons. Our operating
results, particularly with respect to our systems integration business, may vary
significantly if we fail to obtain major projects, if major projects are
cancelled or delayed or if we fail to replace projects that have been completed
or are nearing completion. In addition, we may also experience relatively weaker
demand for our products in August, particularly in international markets, and
December as a result of reduced sales activities during those months.
As a result of the above factors, revenues and earnings for any quarter
may vary significantly and we do not believe that period-to-period comparisons
of our financial performance are necessarily meaningful. You should not rely on
them as an indication of our future performance. Fluctuations in our operating
results may also result in volatility in the price of our common stock. It is
likely that in some future quarter our total revenues or operating results will
be below the expectations of public market analysts or investors. If that
happens, the price of our common stock may decline.
WE HAVE IN THE PAST AND MAY IN THE FUTURE MAKE ACQUISITIONS WHERE ADVISABLE,
WHICH WILL INVOLVE NUMEROUS RISKS. THERE IS NO ASSURANCE THAT WE WILL BE ABLE TO
ADDRESS THESE RISKS SUCCESSFULLY WITHOUT SUBSTANTIAL EXPENSE, DELAY OR OTHER
OPERATIONAL OR FINANCIAL PROBLEMS.
We have previously acquired a number of companies, including CCI Group,
Inc., POSNET Computers, Inc., Aspact IT Services Ltd., RGB/Trinet Limited, Jade
Communications Limited, Dynamic Technologies, Inc., SB Holdings, Inc.,
Restaurant Consulting Services, Inc. and Monument Software Corporation.
Acquisitions involve numerous risks. For example:
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- It is often difficult to assimilate the operations and
personnel of an acquired business into our own business;
- Management information and accounting systems of an acquired
business must be integrated into our current systems;
- Our management must devote its attention to assimilating the
acquired business which diverts their attention from our other
business concerns;
- We might enter markets in which we have limited prior
experience; and
- We might lose key employees of an acquired business.
In particular, the companies we acquired have self-contained management
information and accounting systems, and we have not yet created an information
management and accounting system that integrates them into our overall
enterprise. Further, the companies we acquired are POS systems integrators and
service providers and operate in a market where we had no direct prior
experience. We have devoted substantial time and resources to integrate these
recently acquired businesses, and we will be required to devote substantial time
and resources to integrate any other business we may acquire in the future.
We intend to continue to evaluate potential acquisitions of companies
which we believe will complement or enhance our existing business. If we acquire
other companies in the future, it may result in the issuance of equity
securities that could dilute your stock ownership. We may also incur additional
debt and amortize expenses related to goodwill and other tangible assets if we
acquire another company, and this could negatively impact our results of
operations. We currently do not have any arrangements or understandings to
acquire any company or business, and we cannot guarantee that we will be able to
identify or complete any acquisition in the future.
IF WE CANNOT MANAGE THE ADDITIONAL CHALLENGES PRESENTED BY OUR INTERNATIONAL
OPERATIONS, OUR REVENUES AND PROFITABILITY MAY SUFFER.
We derived approximately 35% of our total revenues from sales outside
North America, principally in Europe, in the year ended June 30, 1999. We
anticipate that the percentage of our revenues attributable to sales in
international markets will increase in the future. Part of our growth strategy
depends on increasing international sales. If we cannot increase our
international sales, we may not be able to achieve our business objectives. We
currently have sales or support staff located in Singapore, Australia and
England. We have already devoted significant resources to, and expect to
continue to devote resources to, our expansion into foreign countries,
particularly to expand our sales force. We also transferred a significant
portion of our manufacturing operations to a third-party manufacturer in
Singapore, which, along with our service-based subsidiaries in England will
strain our resources. To increase international sales in the future, we must
establish additional foreign operations, hire additional personnel and recruit
additional international resellers. There are many risks inherent in our
international business activities. For example:
- We are subject to many foreign regulatory requirements that
may change without notice;
- Our expenses related to sales and marketing and research and
development may increase;
- We are subject to various export restrictions, and export
licenses may not always be available;
- We are subject to foreign tariffs and other trade barriers;
- Some of the foreign countries that we deal with suffer from
political and economic instability;
- Some of the foreign currencies that we deal with fluctuate
significantly;
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- Asian markets have recently suffered considerable turmoil;
- It can be more difficult to staff and manage our foreign
operations; and
- We may have difficulty collecting accounts receivable.
Any of these factors could negatively affect our financial performance
and results of operations. In addition, some of our customer purchase agreements
are governed by foreign laws, which may differ significantly from U.S. laws.
Therefore, we may be limited in our ability to enforce our rights under such
agreements and to collect amounts owed to us should any foreign customer refuse
to pay us. We are also subject to the Foreign Corrupt Practices Act, the "FCPA,"
which may place us at a competitive disadvantage to foreign companies that are
not subject to the FCPA.
In addition, we cannot guarantee that we will be able to maintain or
increase international market demand for our products or services. Almost all of
our international sales are denominated in local currency. When accounts
receivable and accounts payable arising from international sales and services
are converted to U.S. dollars, the resulting gain or loss could contribute to
fluctuations in our operating results. We do not currently utilize foreign
currency hedging instruments, and we cannot assure you that fluctuations in
foreign currency rates will not impact our financial performance in the future.
OUR CUSTOMERS ARE CONCENTRATED, SO THE LOSS OF ONE OR MORE KEY CUSTOMERS COULD
SIGNIFICANTLY REDUCE OUR REVENUES AND PROFITS.
We have derived, and believe that we may continue to derive, a
significant portion of our revenues from a limited number of large customers.
For the fiscal year ended June 30, 1999, ScanSource, Inc. accounted for 11% of
our revenues. For the fiscal year ended June 30, 1998, AFC Enterprises, Inc.
accounted for 11% of our revenues. Our customers may buy less of our products or
services depending on their own technological developments and internal budget
cycles. A major customer in one year may not purchase any of our products or
services in another year, which may negatively affect our financial performance.
Further, as a result of our focus in specific markets, such as the quick service
restaurant market, we may be affected by economic and other conditions that
affect these markets.
OUR FUTURE SUCCESS DEPENDS IN PART ON THE CONTINUED SERVICE OF OUR KEY
ENGINEERS, SALES, MARKETING AND EXECUTIVE PERSONNEL AND OUR ABILITY TO IDENTIFY,
HIRE AND RETAIN ADDITIONAL PERSONNEL.
Our success is dependent, in part, upon certain key executive officers
remaining employed with us, including Richard P. Stack, our President and Chief
Executive Officer, Robert D. Nichols, our Executive Vice President and President
of CCI Group, Inc. and Horace M. Hertz, our Chief Financial Officer. We also
believe that our future success depends to a significant degree upon the
continued contributions of our sales, marketing, research and development and
manufacturing personnel. We have entered into employment agreements with Messrs.
Stack, and Nichols and we carry key-man life insurance on Mr. Stack. We also
believe our future success will depend largely upon our ability to attract and
retain highly-skilled hardware engineers, managerial, and sales and marketing
personnel. We compete against numerous companies, including larger, more
established companies, for our personnel. We do not know if we will be
successful in attracting or retaining skilled personnel. Further, the loss of
certain key employees or our inability to attract and retain other qualified
employees could negatively affect our financial performance.
We intend to rely more heavily in the future on direct sales to end
users; however, we cannot guarantee you that we will be able to expand our
direct sales force or that the revenue generated by the expansion will exceed
the cost of expanding our sales force. In addition, we expect to experience a
significant time lag between the date sales personnel are hired and the date
sales personnel become fully productive. Competition for sales and support
personnel is intense, and we compete in a market for sales personnel against
numerous companies, including larger, more established companies with
significantly greater financial resources than we have.
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OUR GROWTH IS DEPENDENT ON DEVELOPING OUR DIRECT SALES AND MAINTAINING OUR
INDIRECT DISTRIBUTION CHANNELS.
We presently market our products primarily through resellers of our
products and direct sales to end-users. We intend to continue to utilize these
distribution channels in the future. Moreover, as part of our strategy to
increase international sales, we will need to more fully develop similar
distribution channels in international markets. We also anticipate that our
services business will increase in the future, resulting in a greater emphasis
on marketing and distributing directly to end users.
As we increasingly rely on direct sales to end users, we anticipate
competing to a certain extent with certain resellers of our products. This
competition may harm our relationship with some of our resellers and may cause
some of them to terminate their relationship with us. If we cannot expand our
distribution channels, develop our international distribution channels or manage
any potential channel conflicts, our growth may be adversely affected. If we are
unable to recruit, manage or retain important resellers, or if they cannot
penetrate their respective market segments, our financial performance could
suffer. We cannot guarantee you that we will be able to attract resellers that
will be able to market our products effectively and who will be qualified to
provide timely and cost-effective customer support and service. We also cannot
assure you that we will be able to manage conflicts among our resellers. In
addition, our agreements with resellers typically do not restrict them from
distributing competing products, and in most cases these agreements can be
terminated by either party without cause.
A DISRUPTION IN THE MANUFACTURING CAPABILITIES OF OUR THIRD-PARTY MANUFACTURERS
OR SUPPLIERS WOULD NEGATIVELY IMPACT OUR ABILITY TO MEET CUSTOMER DEMANDS.
Although we have the capacity to manufacture limited volumes of our
products, we currently rely on, and intend in the future to rely more heavily
on, third-party manufacturers to manufacture and assemble our products. In
particular, we are in the process of transferring a significant portion of
our manufacturing operations to a third-party manufacturer in Singapore. Any
termination of, or significant disruption in, our relationship with our
third-party manufacturers may prevent us from filling customer orders in a
timely manner since we generally do not maintain large inventories of our
products or components.
We have occasionally experienced, and may in the future experience,
delays in delivery of products and delivery of products of inferior quality from
some of our third-party manufacturers. Although alternate manufacturers are
available to produce our products, the number of manufacturers of some of our
products is limited, and qualifying a replacement manufacturer could take
several months. In addition, our use of third-party manufacturers reduces our
direct control over product quality, manufacturing timing, yields and costs.
Disruption of the manufacture of our products or a third-party manufacturers'
failure to remain competitive in functionality or price could delay or interrupt
our ability to manufacture or deliver our products to customers on a timely
basis. Moreover, although arrangements with our third-party manufacturers may
contain provisions for warranty obligations on the part of the third-party
manufacturers, we remain primarily responsible to our customers for warranty
obligations.
We also depend upon third-party suppliers to deliver components that
are free from defects, competitive in functionality and cost and in compliance
with our specifications and delivery schedules. We cannot be certain that the
components we need to build our products will be available in the future. For
example, we are aware of a decrease in the availability of liquid crystal
display panels that we use in some of our products. If a third-party supplier
fails to comply with any of our procurement needs, our ability to manufacture or
deliver our products to our customers on a timely basis could be delayed or
interrupted.
IF WE CANNOT EXPAND INTO CERTAIN MARKET SECTORS, WE WILL NOT BE ABLE TO GROW OUR
BUSINESS.
Although we have historically sold most of our products and services to
the food service industry, we are increasingly focusing on selling our products
and services to retailers and the industrial market. To date, we have only
recognized a limited amount of revenue in these markets. We cannot guarantee
that our products and services will gain acceptance in or meet these sectors'
expectations and needs.
9
<PAGE>
SINCE WE HAVE FEW PROPRIETARY RIGHTS, OUR COMPETITORS MAY DEVELOP PRODUCTS
SUBSTANTIALLY SIMILAR TO OUR PRODUCTS AND USE SIMILAR TECHNOLOGIES WHICH MAY
RESULT IN THE LOSS OF CUSTOMERS.
We hold no patents and believe that our competitive position is not
dependent upon patent protection. We believe that most of the technology used in
the design and manufacture of our products is generally known and available to
others. Consequently, others can develop, market and sell products substantially
equivalent to our products, or utilize technologies similar to those used by us.
We are aware of at least one competitor who has attempted to copy our products
in the past, and similar attempts may be made in the future.
OUR PRODUCTS AND OTHER PROPRIETARY RIGHTS MAY INFRINGE ON THE PROPRIETARY RIGHTS
OF THIRD PARTIES, WHICH MAY EXPOSE US TO LITIGATION.
Although we believe that our products do not infringe on any third
party's patents, we cannot be certain that we will not become involved in
litigation involving patents or proprietary rights. Patent and proprietary
rights litigation entails substantial legal and other costs, and we do not know
if we will have the necessary financial resources to defend or prosecute our
rights in connection with any litigation. Responding to, defending or bringing
claims related to our intellectual property rights may require our management to
redirect our human and monetary resources to address these claims.
WE MAY REQUIRE ADDITIONAL CAPITAL IN THE FUTURE.
We have expended, and will continue to expend, substantial funds on
expansion of our sales and marketing efforts, expansion of our services
business, potential acquisitions and product development. We expect that our
current sources of financing available to us, will be sufficient to fund our
operations for the next eighteen months. After that, we may require additional
funds to finance our operations. We do not know at this time when we may need
additional funds, and we cannot be certain that if we do need additional funds
in the future that we will be able to obtain them on terms satisfactory to us,
if at all. If we do raise additional funds through the issuance of equity or
convertible debt securities, your stock ownership will be diluted. Further,
these new securities may have rights, preferences or privileges senior to yours.
Additionally, any debt financing that may be available to us may include
restrictive covenants. If we are unable to raise additional funds when
necessary, we may have to reduce planned capital expenditures, scale back our
manufacturing, sales or other operations or enter into financing arrangements on
terms which we would not otherwise accept.
IF OUR PRODUCTS ARE NOT COMPATIBLE WITH THIRD-PARTY SOFTWARE, OUR SALES COULD
SUFFER.
Although we produce PC-based open system hardware for the food service
and retail industries, we do not develop software. Consequently, we are
dependent upon third party software providers to develop the POS application
software that operates on our hardware platform. As in other sectors of the
computer industry, hardware sales can often be driven by advances in software
technology. Accordingly, if software providers do not, or are unable to,
continue to provide state-of-the-art POS application software that runs on our
hardware, our financial performance may suffer.
We cannot guarantee that all available software will be compatible with
our hardware. In the past, certain software installed in our products did not
function properly and software fixes were required. Further, we cannot assure
you that we will have the technical personnel necessary to evaluate and fix any
software compatibility problems that may exist in the future. If we do not have
technical personnel available to address and fix similar software compatibility
problems, our sales could decline.
OUR PRIMARY COMPUTER AND TELECOMMUNICATIONS SYSTEMS ARE IN A LIMITED NUMBER OF
GEOGRAPHIC LOCATIONS, WHICH MAKES THEM MORE VULNERABLE TO DAMAGE OR
INTERRUPTION. THIS DAMAGE OR INTERRUPTION COULD HARM OUR BUSINESS.
Though we do have back-up systems, substantially all of our primary
computer and telecommunications systems are located in two geographic areas.
These systems are vulnerable to damage or interruption from:
10
<PAGE>
- fire
- earthquake
- water damage
- sabotage
- flood
- power loss
- technical or telecommunications failure
- break-ins
While we have business interruption insurance, this coverage may not
adequately compensate us for our lost business and will not compensate us for
any liability we incur due to our inability to provide services to our
customers. Although we have implemented network security measures, our systems,
like all systems, are vulnerable to computer viruses, physical or electronic
break-ins and similar disruptions. These disruptions could lead to
interruptions, delays, loss of data or the inability to service our customers,
including our ASP customers. Any of these occurrences impair our ability to
serve our customers and would harm our business.
RISKS RELATED TO OUR INDUSTRY
THE MARKETS IN WHICH WE COMPETE ARE HIGHLY COMPETITIVE AND SUBJECT TO RAPID
TECHNOLOGICAL CHANGE AND PRICE EROSION.
The market for our products and services is highly competitive. It is
also subject to rapid change and sensitive to new product introductions or
enhancements and marketing efforts by industry participants. We expect to
continue to experience significant and increasing levels of competition in the
future. The principal elements of competition related to our products include:
- Price;
- Product features and performance;
- Compatibility with open systems;
- Quality and reliability;
- Brand awareness;
- Level of customer service; and
- Quality of display.
The POS systems integration industry is also highly competitive and
undergoing continual change. The principal elements of competition related to
our systems integration services include:
- Reputation;
- Scope of services provided;
- Availability of resources; and
- Price.
In many of our markets, traditional computer hardware manufacturing,
communications and consulting companies provide the most significant
competition. We must also compete with smaller service providers that have been
able to develop strong local or regional customer bases. Most of our competitors
and potential competitors are
11
<PAGE>
more established, benefit from greater name recognition and have significantly
greater resources than we do. We also believe the use of open systems
architecture in our targeted industries is an important competitive element.
Several of our competitors currently offer open systems, and we believe that the
number of competitors offering open systems solutions will grow over the next
several years.
In order to effectively compete, we need to continue to grow our
business and generate greater revenue so that we have the resources to timely
develop new products and services in response to evolving technology and
customer demands and to sell products and services through a broad distribution
channel. We cannot assure you that we will be able to grow sufficiently to
compete effectively in this marketplace.
Our competitors include a substantial number of large well-established
companies including International Business Machines (IBM), MICROS Systems, Inc.,
Par Technology Corporation, Radiant Systems, Inc., NCR Corp., Panasonic
Communications and Systems Co., Fujitsu, Ltd. and ICL Retail Systems. These
companies all offer open systems architecture products and related services. We
cannot assure you that we will be able to compete effectively with these
competitors or that our existing competitors, or new competitors, will not
develop competitive products and services at lower prices than we offer.
Moreover, we have little or no proprietary barriers to entry that could
keep our competitors from developing products or services and technology similar
to ours or from selling competing products or services in our markets. We could
be forced to reduce prices and suffer reduced margins and market share due to
increased competition from manufacturers or distributors of products similar to,
or competitive with, our products, or from service providers that provide
services similar to our services. Competition could also render our technology
obsolete.
Increased competition from manufacturers or distributors of products
similar to or competitive with our products, or from service providers that
provide services similar to our services, could result in price reductions,
reduced margins and a loss of market share or could render our products
obsolete.
WE ARE SUBJECT TO RISKS RELATED TO PRODUCT DEFECTS.
Computer products and systems often contain undetected errors. Despite
product testing prior to sale, our products have in the past contained errors
that were discovered after they were sold. Errors or performance problems may
also be discovered in the future. If a customer detects a defect after shipment
in the future, it could result in loss of sales, delays in or elimination of
market acceptance, damage to our brand or to our reputation, or product returns
and warranty costs. This is particularly true in the quick service restaurant
market which does not tolerate product defects that cause a restaurant's POS
systems and cash registers to be inoperable. In addition, third-party products,
upon which our products are dependent, may contain defects which could reduce or
undermine entirely the performance of our products.
In addition, although our sales agreements with our customers typically
contain provisions designed to limit our exposure to potential product liability
claims, we do not know if these limitations of liability are enforceable or
would otherwise protect us from liability for damages to a customer resulting
from a defect in one of our products. Although we maintain product liability
insurance covering certain damages arising from implementation and use of our
products, we do not know if this insurance would cover any claims brought
against us. Any product liability or other claims brought against us, if
successful and of sufficient magnitude, could negatively impact our financial
performance.
OUR MARKETS ARE SUBJECT TO RAPID TECHNOLOGICAL CHANGE, SO OUR SUCCESS DEPENDS
HEAVILY ON OUR ABILITY TO DEVELOP AND INTRODUCE NEW PRODUCTS.
The POS computer industry is characterized by evolving technology and
industry standards. We must cost effectively develop and introduce new products
that keep pace with technological developments to compete. If we do not gain
market acceptance for our existing or new products or if we fail to introduce
progressive new products in a timely or cost-effective manner, our financial
performance will be negatively affected. We cannot guarantee you that our new
products, even if successfully developed, will ever achieve market acceptance.
Moreover, if our competitors
12
<PAGE>
introduce new technology or new industry standards emerge, our existing products
could be rendered obsolete and unmarketable.
Moreover, if we are going to develop and manufacture new competitive
products and enhance our existing products, we must continue to make significant
investments in engineering and product development. The success of product
enhancements and new products depends on a variety of factors, including product
selection and specification, timely and efficient completion of product design,
cost-effective implementation of the manufacturing and assembly processes and
effective sales and marketing efforts. We cannot guarantee you that we will be
able to successfully manage all of the diverse aspects of successful product
development.
RISKS RELATED TO THIS OFFERING
OUR STOCK PRICE HAS BEEN HIGHLY VOLATILE.
The market price of our common stock has been, and is likely to
continue to be, volatile. When we or our competitors announce new customer
orders or services, change pricing policies, experience quarterly fluctuations
in operating results, announce strategic relationships or acquisitions, change
earnings estimates, experience government regulatory actions or suffer from
generally adverse economic conditions, our stock price is often affected.
Recently, companies similar to ours have experienced extreme price fluctuations,
often for reasons unrelated to their performance.
WE MAY ISSUE PREFERRED STOCK IN THE FUTURE. DELAWARE LAW AND SOME PROVISIONS OF
OUR CHARTER MAY AFFECT THE PRICE OF YOUR STOCK.
We are authorized to issue up to 1,000,000 shares of preferred stock.
We may issue the preferred stock in one or more series. Our Board of Directors
may determine the terms of the preferred stock without further action by our
stockholders. These terms may include voting rights, preferences as to dividends
and liquidation, conversion and redemption rights, and sinking fund provisions.
Although we have no present plans to issue shares of preferred stock, if we do
issue preferred stock, it could affect your rights or even reduce the value of
your common stock. In particular, specific rights granted to future holders of
preferred stock could be used to restrict our ability to merge with or sell our
assets to a third party. Further, special meetings of our stockholders may be
called only by the Chairman of the Board of Directors, the Chief Executive
Officer of the Company, by the Board of Directors pursuant to a resolution
adopted by a majority of the total number of authorized directors or by the
holders of 10% of the outstanding voting stock of the Company. Our corporate
charter documents also provide for staggered terms for the members of the Board
of Directors. These and other provisions of our charter documents, as well as
certain provisions of Delaware law, could delay or make more difficult certain
types of transactions involving a change in control of the Company or our
management. As a result, the price of our common stock may be adversely
affected.
13
<PAGE>
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares of common
stock offered by the selling stockholder.
FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act and Section 21E of the Exchange Act. Any statements about
our expectations, beliefs, plans, objectives, assumptions or future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
such as "anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "we believe," "we intend" and similar words or
phrases. Accordingly, these statements involve estimates, assumptions and
uncertainties which could cause actual results to differ materially from those
expressed in them. Any forward-looking statements are qualified in their
entirety by reference to the factors discussed in this prospectus or
incorporated by reference.
Because the factors discussed in this prospectus or incorporated by
reference could cause actual results or outcomes to differ materially from those
expressed in any forward-looking statements made by us or on behalf of the
company, you should not place undue reliance on any such forward-looking
statements. Further, any forward-looking statement speaks only as of the date on
which it is made, and we undertake no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for us to
predict which will arise. In addition, we cannot assess the impact of each
factor on our business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
14
<PAGE>
SELLING STOCKHOLDER
The following table sets forth the name and address of the selling
stockholder, the number of shares of common stock beneficially owned by the
selling stockholder as of March 31, 2000 and the number of shares of common
stock being offered by it pursuant to this prospectus. This information is based
upon information provided by the selling stockholder. Because the selling
stockholder may offer all, some or none of its shares of common stock, no
definitive estimate can be provided as to the number of shares or percentage of
outstanding common stock that will be held by the selling stockholder after such
offering. The term "selling stockholder" includes the stockholder listed below
and its transferees, pledgees, donees or other successors.
- To our knowledge, the entity named in the table below has sole
voting and investment power with respect to all shares of the
common stock shown as beneficially owned by it.
- Percentage ownership is based on 9,293,874 shares of common
stock outstanding as of March 31, 2000.
- The number of shares being offered reflects the maximum number
of shares of common stock issuable upon conversion of shares
of our Series A Convertible Exchangeable Preferred Stock
beneficially owned by the selling stockholder. The number of
shares of common stock that are issuable upon conversion of
our Series A Convertible Exchangeable Preferred Stock at
any given time is subject to certain restrictions as set
forth in the Certificate of Designations related to our
Series A Convertible Exchangeable Preferred Stock. The
number of shares being offered also includes shares of common
stock issuable as dividends payable on the shares of Series A
Convertible Exchangeable Preferred Stock, assuming such
dividends are paid in stock in lieu of cash. It also includes
shares of common stock issuable upon exercise of a warrant to
purchase 583,334 shares of common stock held by the selling
stockholder.
If the selling stockholder elects to take such dividends in cash, the
number of shares of common stock issuable upon conversion of the Series A
Convertible Exchangeable Preferred Stock would be approximately 6% less than the
number indicated in the table below.
This information is based upon information provided by the selling stockholder,
schedules 13G and other public documents filed with the SEC, and assumes the
sale of all of the shares being offered by the selling stockholder.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY OWNED SHARES BENEFICIALLY OWNED
PRIOR TO OFFERING NUMBER OF AFTER OFFERING
------------------------- SHARES BEING -------------------------
SELLING STOCKHOLDER NUMBER PERCENT REGISTERED NUMBER PERCENT
- ------------------------------------ ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Marshall Capital Management, Inc... 463,764 4.99% 2,750,000 -- --
c/o Credit Suisse First Boston
11 Madison Avenue, 7th Floor
New York, New York 10010
</TABLE>
- -------------------------
15
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock may be sold from time to time by the selling
stockholder in one or more transactions at fixed prices, at market prices at the
time of sale, at varying prices determined at the time of sale or at negotiated
prices. The selling stockholder may offer its shares of common stock in one or
more of the following transactions:
- on any national securities exchange or quotation service at
which the common stock may be listed or quoted at the time of
sale, including the Nasdaq National Market;
- in the over-the-counter market;
- in private transactions;
- through options; and
- by pledge to secure debts and other obligations, or a
combination of any of the above transactions.
If required, we will distribute a supplement to this prospectus to
describe material changes in the terms of the offering.
The shares of common stock described in this prospectus may be sold
from time to time directly by the selling stockholder. Alternatively, the
selling stockholder may from time to time offer shares of common stock to or
through underwriters, broker/dealers or agents. The selling stockholder and any
underwriters, broker/dealers or agents that participate in the distribution of
the shares of common stock may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933. Any profits on the resale of shares of common
stock and any compensation received by any underwriter, broker/dealer or agent
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
Any shares covered by this prospectus which qualify for sale pursuant
to Rule 144 under the Securities Act of 1933 may be sold under rule 144 rather
than under the terms of this prospectus. The selling stockholder may not sell
all of its shares. The selling stockholder may transfer, will or gift its shares
by other means not described in this prospectus.
To comply with the securities laws of certain jurisdictions, the common
stock must be offered or sold only through registered or licensed brokers or
dealers. In addition, in certain jurisdictions, the common stock may not be
offered or sold unless they have been registered or qualified for sale or an
exemption is available and complied with.
Under the Securities Exchange Act of 1934, any person engaged in a
distribution of the common stock may not simultaneously engage in market-making
activities with respect to the common stock for nine business days prior to the
start of the distribution. In addition, the selling stockholder and any other
person participating in a distribution will be subject to the Securities
Exchange Act of 1934 which may limit the timing of purchases and sales of common
stock by the selling stockholder or any such other person. These factors may
affect the marketability of the common stock and the ability of brokers or
dealers to engage in market-making activities.
All expenses of this registration will be paid by Aspeon. These expenses
include the SEC's filing fees and fees under state securities or "blue sky"
laws. We estimate that our expenses in connection with this offering will be
approximately $55,000. We will also pay all expenses for the issuance of a
supplement to this prospectus, when requested by selling stockholder, will be
paid by.
LEGAL MATTERS
Cooley Godward LLP will give its opinion that the shares offered in
this prospectus have been validly issued and are fully paid and non-assessable,
and that the shares which will be issued upon the exercise of certain warrants
will be validly issued, fully paid and nonassessable.
16
<PAGE>
EXPERTS
The financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-KSB/A for the year ended June 30,
1999 have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority
of said firm as experts in auditing and accounting.
17
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION DIFFERENT FROM THAT
CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT. THIS PROSPECTUS IS
NOT AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE AN OFFER AND SALE IS
NOT PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS
OF THE DATE OF THIS COMMON STOCK PROSPECTUS, REGARDLESS OF THE TIME OF DELIVERY
OF THIS PROSPECTUS OR ANY SALE OF OUR COMMON STOCK.
TABLE OF CONTENTS
PAGE
----
WHERE YOU CAN GET MORE INFORMATION............... 2
ASPEON, INC...................................... 3
RISK FACTORS .................................... 3
USE OF PROCEEDS.................................. 4
FORWARD-LOOKING STATEMENTS....................... 14
SELLING STOCKHOLDER.............................. 15
PLAN OF DISTRIBUTION............................. 16
LEGAL MATTERS.................................... 16
EXPERTS ......................................... 17
----------------------------
2,750,000 SHARES
ASPEON, INC.
----------------------------
PROSPECTUS
----------------------------
_________________, 2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The expenses in connection with the issuance and distribution of the
securities being registered are set forth in the following table (all amounts
except the registration fee and the listing fee are estimated):
<TABLE>
<S> <C>
SEC Registration Fee ........................... $12,342
Nasdaq National Market Listing Fee............... $17,500
Legal fees and expenses ........................ $20,000
Accounting fees and expenses ................... $3,000
Printing and Engraving ......................... $500
Miscellaneous .................................. $1,658
Total ................................. $55,000
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS.
The Registrant's Bylaws require that directors and officers be indemnified to
the maximum extent permitted by Delaware law.
The Delaware General Corporation Law (the "DGCL") provides that a director or
officer of a corporation (i) shall be indemnified by the corporation for all
expenses of litigation or other legal proceedings when he is successful on the
merits, (ii) may be indemnified by the corporation for the expenses, judgments,
fines and amounts paid in settlement of such litigation (other than a derivative
suit) even if he is not successful on the merits if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the corporation (and, in the case of a criminal proceeding, had no reason to
believe his conduct was unlawful), and (iii) may be indemnified by the
corporation for expenses of a derivative suit (a suit by a stockholder alleging
a breach by a director or officer of a duty owed to the corporation), even if he
is not successful on the merits, if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation, provided that no such indemnification may be made in accordance
with this clause (iii) if the director or officer is adjudged liable to the
corporation, unless a court determines that, despite such adjudication but in
view of all of the circumstances, he is entitled to indemnification of such
expenses. The indemnification described in clauses (ii) and (iii) above shall be
made upon order by a court or a determination by (i) a majority of disinterested
directors, (ii) if there are no such directors or if such directors so direct,
by independent legal counsel in a written opinion or (iii) the stockholders that
indemnification is proper because the applicable standard of conduct is met.
Expenses incurred by a director or officer in defending an action may be
advanced by the corporation prior to the final disposition of such action upon
receipt of an undertaking by such director or officer to repay such expenses if
it is ultimately determined that he is not entitled to be indemnified in
connection with the proceeding to which the expenses relate. The Registrant's
Certificate of Incorporation includes a provision eliminating, to the fullest
extent permitted by Delaware law, director liability for monetary damages for
breaches of fiduciary duty.
The Registrant has entered into indemnity agreements (the "Indemnity
Agreements") with each director or officer designated by the Board of Directors.
The Indemnity Agreements require that the Registrant indemnify directors and
officers who are parties thereto in all cases to the fullest extent permitted by
Delaware law. Under the DGCL, except in the case of litigation in which a
director or officer is successful on the merits, indemnification of a director
or officer is discretionary rather than mandatory. Consistent with the
Registrant's Bylaw provision on the subject, the Indemnity Agreements require
the Registrant to make prompt payment of litigation expenses at the request of
the director or officer in advance of indemnification provided that he
undertakes to repay the amounts if it is ultimately determined that he is not
entitled to indemnification for such expenses. The advance of litigation
expenses is mandatory; under the DGCL such advance would be discretionary. Under
the Indemnity Agreements, the director or officer is permitted to bring suit to
seek recovery of amounts due under the Indemnity Agreements and is entitled to
recover the expenses of seeking such recovery unless a court determines that the
action was not made in good faith or was frivolous. Without the Indemnity
Agreements, the Registrant would not be required to pay the director or
II-1
<PAGE>
officer for his expenses in seeking indemnification recovery against the
Registrant. Under the Indemnity Agreements, directors and officers are not
entitled to indemnity or advancing of expenses (i) if such director or officer
has recovered payment under an insurance policy for the subject claim, or has
otherwise been indemnified against the subject claim, (ii) for actions initiated
or brought by the director or officer and not by way of defense (except for
actions seeking indemnity or expenses from the Registrant), (iii) if the
director or officer violated section 16(b) of the Exchange Act or similar
provisions of law or (iv) if a court of competent jurisdiction determines that
the director or officer failed to act in good faith and in a manner reasonably
believed to be in or not opposed to the best interests of the Registrant or,
with respect to any proceeding which is of a criminal nature, had reasonable
cause to believe his conduct was unlawful. Absent the Indemnity Agreements,
indemnification that might be made available to directors and officers could be
changed by amendments to the Registrant's Certificate of Incorporation or
Bylaws.
ITEM 16. EXHIBITS.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Certificate of Designation, Preferences, and Rights of Series A Convertible Exchangeable Preferred
Stock of Aspeon, Inc. (1)
4.1 Securities Purchase Agreement between the Registrant and Marshall Capital Management, Inc. dated
March 7, 2000. (1)
4.2 Registration Rights Agreement, dated as of March 7, 2000, by and among the Company, Aspeon
Solutions, Inc. and Marshall Capital Management, Inc. (1)
5.1 Opinion of Cooley Godward LLP.
10.1 Warrant Agreement between Aspeon, Inc. and Marshall Capital Management, Inc. (1)
10.2 Warrant Agreement between Aspeon Solutions, Inc. and Marshall Capital Management, Inc. (1)
10.3 Reference is made to Exhibit 4.2 above.
10.4 Reference is made to Exhibit 4.1 above.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24 Power of Attorney. Reference is made to page II-4.
</TABLE>
- --------------------
(1) Filed as an exhibit to the Registrant's Current Report on Form 8-K dated
March 9, 2000 and incorporated by reference herein.
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
(1) To file, during any period during which offers or sales are being
made, a post-effective amendment to this registration statement;
(I) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(II) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or any 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 end or high end
of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20% change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-2
<PAGE>
(III) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in the registration
statement.
(2) That, for purposes of determining liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities to be offered therein, and the
offering of such securities at that time shall be deemed to be an initial BONA
FIDE offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which shall remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial BONA FIDE offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to provisions described in Item 15, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-3
<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 to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of San Diego, State of California, on April 7, 2000.
ASPEON, INC.
By /s/ RICHARD P. STACK
-----------------------------------
Richard P. Stack
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Richard P. Stack and Horace Hertz, and
each of them, his or her true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he or she might or could do in person,
hereby ratifying and confirming all that said attorney-in-fact and agent, or any
of them, or his or her substitutes or substitute, may lawfully do or cause to be
done by virtue hereof.
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>
<S> <C> <C>
/s/ RICHARD P. STACK President, Chief Executive Officer April 7, 2000
- -------------------------------- and Director
Richard P. Stack (PRINCIPAL EXECUTIVE OFFICER)
/s/ HORACE HERTZ Chief Financial Officer April 7, 2000
- -------------------------------- (PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
Horace Hertz
Director April , 2000
- --------------------------------
Jay L. Kear
/s/ ANDREW F. PUZDER Director April 7, 2000
- --------------------------------
Andrew F. Puzder
/s/ Robert Nichols Director April 7, 2000
- --------------------------------
Robert Nichols
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Certificate of Designation, Preferences, and Rights of Series A Convertible Exchangeable Preferred
Stock of Aspeon, Inc. (1)
4.1 Securities Purchase Agreement between the Registrant and Marshall Capital Management, Inc. dated
March 7, 2000. (1)
4.2 Registration Rights Agreement, dated as of March 7, 2000, by and among the Company, Aspeon
Solutions, Inc. and Marshall Capital Management, Inc. (1)
5.1 Opinion of Cooley Godward LLP.
10.1 Warrant Agreement between Aspeon, Inc. and Marshall Capital Management, Inc. (1)
10.2 Warrant Agreement between Aspeon Solutions, Inc. and Marshall Capital Management, Inc. (1)
10.3 Reference is made to Exhibit 4.2 above.
10.4 Reference is made to Exhibit 4.1 above.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Cooley Godward LLP. Reference is made to Exhibit 5.1.
24 Power of Attorney. Reference is made to page II-4.
</TABLE>
- --------------------
(1) Filed as an exhibit to the Registrant's Current Report on Form 8-K dated
March 9, 2000 and incorporated by reference herein.
<PAGE>
EXHIBIT 5.1
[Letterhead of Cooley Godward LLP]
April 6, 2000
Aspeon, Inc.
17891 Cartwright Road
Irvine, CA 92614
Ladies and Gentlemen:
You have requested our opinion with respect to certain matters in
connection with the filing by Aspeon, Inc., a Delaware corporation (the
"Company"), of a Registration Statement on Form S-3 (the "Registration
Statement") including a related prospectus filed with the Registration
Statement (the "Prospectus"), covering the registration of up to 2,750,000
shares of the Common Stock, $.01 par value, of the Company including 583,334
shares (the "Warrant Shares") issuable upon the exercise of a certain warrant
to purchase common stock (the "Warrant") and up to 2,166,666 shares (the
"Conversion Shares") issuable upon conversion of the outstanding shares of
the Company's Series A Convertible Exchangeable Preferred Stock, including
stock dividends thereon, on behalf of a certain selling stockholder, as
described in the Registration Statement.
In connection with this opinion, we have examined and relied upon
the Registration Statement and related Prospectus, the Company's Amended and
Restated Certificate of Incorporation, the Certificate of Designations,
Preferences and Rights of the Series A Convertible Exchangeable Preferred
Stock, the Bylaws, as amended, the Warrant and such other records,
documents, certificates, memoranda and other instruments as we deem necessary
as a basis for this opinion. We have assumed the genuineness and authenticity
of all documents submitted to us as originals, the conformity to originals of
all documents submitted to us as copies thereof and the due execution and
delivery of all documents where due execution and delivery are a prerequisite
to the effectiveness thereof.
On the basis of the foregoing, and in reliance thereon, we are of
the opinion that (i) the Conversion Shares, when issued upon conversion of
the Series A Convertible Preferred Stock, and (ii) the Warrant Shares, when
issued and sold in accordance with the terms of the Warrant, will be validly
issued, fully paid and nonassessable.
We consent to the reference to our firm under the caption "Legal
Matters" in the Prospectus included in the Registration Statement and to the
filing of this opinion as an exhibit to the Registration Statement.
Very truly yours,
Cooley Godward LLP
/s/ Thomas A. Coll
Thomas A. Coll
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated August 31, 1999 relating to the
financial statements, which appears in Aspeon, Inc.'s (formerly Javelin
Systems, Inc.) Annual Report on Form 10-KSB/A for the year ended June 30,
1999. We also consent to the reference to us under the heading "Experts" in
such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Costa Mesa, California
April 5, 2000
