As Filed with the Securities and Exchange Commission on April 30, 1998
Registration No. 333-________
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 59-2327381
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1810 N.E. 144TH STREET
NORTH MIAMI, FLORIDA 33181
(305) 944-7710
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(Address, including zip code, and telephone
number, including area code, of
registrant's principal executive offices)
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SLAV STEIN,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
1810 N.E. 144TH STREET
NORTH MIAMI, FLORIDA 33181
(305) 944-7710
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(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies of all communications to:
Philip B. Schwartz, Esq.
Akerman, Senterfitt & Eidson, P.A.
One S.E. 3rd Avenue, 28th Floor
Miami, Florida 33131-1704
(305) 374-5600
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement.
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]
<PAGE>
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 PROPOSED
MAXIMUM MAXIMUM
TITLE OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SHARES TO BE BE PRICE PER OFFERING PRICE REGISTRATION
REGISTERED REGISTERED SHARE (1) (1) FEE
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<S> <C> <C> <C> <C>
Common Stock,
par value $.001 1,897,907 $3.78 $7,174,089 $2,174
per share shares
======================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c).
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, as amended, or until this Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
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PRELIMINARY PROSPECTUS, DATED APRIL 30, 1998
PROSPECTUS
1,897,907 SHARES
ADVANCED ELECTRONIC SUPPORT PRODUCTS, INC.
COMMON STOCK, PAR VALUE $.001 PER SHARE
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
This Prospectus relates to an aggregate of 1,897,907 shares (the "Shares")
of Common Stock, par value $.001 per share (the "Common Stock"), of Advanced
Electronic Support Products, Inc., a Florida corporation (the "Company"), being
sold by certain stockholders (the "Selling Stockholders") who have acquired such
shares prior to the Company's initial public offering or in acquisitions of
businesses by the Company not involving a public offering. The Shares are being
registered under the Securities Act of 1933, as amended (the "Securities Act"),
on behalf of the Selling Stockholders in order to permit public sale or other
distribution of the Shares. The Company is contractually obligated to register
the Shares on behalf of the Selling Stockholders.
The Shares may be sold or distributed from time to time by or for the
account of the Selling Stockholders or their pledgees through underwriters or
dealers, through brokers or other agents, or directly or indirectly to one or
more purchasers including pledgees, at market prices prevailing at the time of
sale or at prices otherwise negotiated. This Prospectus may also be used, with
the Company's prior written consent, by donees of the Selling Stockholders, or
other persons acquiring the Shares and who wish to offer and sell such Shares
under circumstances requiring or making desirable its use. The Company will
receive no portion of the proceeds from the sale of the Shares offered hereby
and will bear certain expenses incident to this registration. See "Selling
Stockholders" and "Plan of Distribution."
<PAGE>
The Common Stock of the Company is listed on the NASDAQ SmallCap Market
("NASDAQ") under the trading symbol "AESP". The last reported sales price of the
Common Stock of the Company on NASDAQ on April 20, 1998 was $3 15/16 per share.
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER
THE CAPTION "RISK FACTORS" BEGINNING ON PAGE 6 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is _______________________, 1998
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NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THE OFFER CONTAINED IN THIS PROSPECTUS, AND IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY OR THE SELLING STOCKHOLDERS. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE
THE DATE HEREOF. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SECURITIES OFFERED HEREBY BY ANYONE IN ANY
JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED OR IN WHICH
THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO OR TO
ANYONE TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION.
TABLE OF CONTENTS
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PAGE
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AVAILABLE INFORMATION........................................................4
THE COMPANY..................................................................5
RISK FACTORS.................................................................6
USE OF PROCEEDS.............................................................12
SELLING STOCKHOLDERS........................................................13
PLAN OF DISTRIBUTION........................................................14
DESCRIPTION OF CAPITAL STOCK................................................16
LEGAL MATTERS...............................................................18
EXPERTS.....................................................................18
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE...........................19
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Securities and Exchange
Commission (the "Commission"). These reports, proxy and information statements
and other information filed by the Company with the Commission pursuant to the
informational requirements of the Exchange Act may be inspected and copies at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the following Regional Offices of
the Commission: New York Regional Office, Seven World Trade Center, Room 1400,
New York, New York 10048; and Chicago Regional Office, Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60604. Copies of such material may
be obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also
maintains a site on the World Wide Web at http://www.sec.gov that contains
reports, proxy and other information regarding registrants that file
electronically with the Commission. The Common Stock is traded on the NASDAQ
Small-Cap Market. Information filed by the Company with NASDAQ may be inspected
at the offices of NASDAQ at 1735 K Street, NW, Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Shares offered hereby
(including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms part of the Registration Statement,
does not contain all of the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit to
the Registration Statement or otherwise filed with the Commission. Each such
statement is qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto can be inspected and copied at the public
reference facilities and regional offices of the Commission and at the offices
of NASDAQ referred to above.
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THE COMPANY
GENERAL
The Company designs, manufactures, markets and distributes computer
connectivity and networking products nationally and internationally. The Company
currently offers a broad range of products to its customers, including computer
cables, connectors, installation products, data sharing devices, and fiber optic
cables, as well as a complete selection of networking products, such as
networking interface cards, hubs, transceivers, and repeaters for different
networking topologies. The Company works with various manufacturers that
manufacture and assemble the Company's products using designs and manufacturing
specifications (including quality control) provided by the Company. For these
designs and manufacturing specifications, the Company uses its own designs as
well as standard industry designs. The Company's manufacturers are located
primarily in the Far East, allowing the Company to maintain competitive pricing
for its products due to comparatively lower labor-related costs of production in
the Far East. The Company also assembles a very small percentage of its products
at the Company's North Miami Beach headquarters and warehouse facility. The
Company offers its products to a broad range of customers, including original
equipment manufacturers ("OEM") and retail customers (such as computer
superstores and dealers, and mail order customers) in North America, Latin
America, Eastern and Western Europe, and Japan.
The Company's headquarters and its primary warehouse facility are located
at 1810 N.E. 144th Street, North Miami, Florida 33181. The Company's telephone
number is (305) 944-7710.
RECENT DEVELOPMENTS
Effective September 30, 1997, the Company acquired the assets of the
networking division of Focus Enhancements, Inc. ("Focus"). The networking
division of Focus sold networking products under the "Focus Networking"
tradename to retail customers, primarily in the United States, Asia and Europe.
In connection with this acquisition, the Company issued an aggregate 189,701
shares of its authorized but unissued Common Stock to Focus. The Company also
paid Focus an aggregate $159,371 to acquire Focus inventory of networking
products, subject to a warranty claims adjustment of $21,000.
On November 12, 1997, the Company acquired all of the outstanding shares of
Dataholding AS, a Norwegian limited company ("Dataholding"), from the
shareholders of Dataholding. Dataholding, based in Oslo, Norway, is a
distributor of connectivity and computer products primarily in Norway. In
connection with this acquisition, which was accounted for under the pooling of
interest business combination method of accounting, the Company issued 360,000
shares of its authorized but unissued Common Stock in exchange for all of the
issued and outstanding capital stock of Dataholding.
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RISK FACTORS
AN INVESTMENT IN THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVES A HIGH
DEGREE OF RISK. PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING
RISK FACTORS, AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS, IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY.
THIS PROSPECTUS CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS OR STATEMENTS
WHICH MAY BE DEEMED OR CONSTRUED TO BE FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF THE FEDERAL PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH
RESPECT TO THE FINANCIAL CONDITION, MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS, BUSINESS OF THE COMPANY, AND RISK
FACTORS. THE WORDS "ESTIMATE," "PROJECT," "INTEND," "EXPECT," AND SIMILAR
EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
FORWARD-LOOKING STATEMENTS INVOLVE AND ARE SUBJECT TO KNOWN AND UNKNOWN RISKS,
UNCERTAINTIES AND OTHER FACTORS WHICH COULD CAUSE THE COMPANY'S ACTUAL RESULTS,
PERFORMANCE (FINANCIAL OR OPERATING) OR ACHIEVEMENTS TO DIFFER FROM THE FUTURE
RESULTS, PERFORMANCE (FINANCIAL OR OPERATING), ACHIEVEMENTS EXPRESSED OR IMPLIED
BY SUCH FORWARD-LOOKING STATEMENT. INVESTORS ARE CAUTIONED NOT TO PLACE UNDUE
RELIANCE ON THESE FORWARD- LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE
HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO PUBLICLY RELEASE ANY REVISIONS
TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE
DATE HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.
RAPID TECHNOLOGICAL CHANGE. In general, the computer industry is
characterized by rapidly changing technology. The Company must continuously
update its existing products to keep them current with changing technology and
must develop new products to take advantage of new technologies that could
render existing products obsolete. These products must be compatible with the
computers and other products with which they are used. The Company's future
prospects are dependent in part on its ability to develop new products that
address new technologies and achieve market acceptance. There can be no
assurance that the Company will be successful in these efforts. If the Company
were unable, due to resource constraints or technological or other reasons, to
develop and introduce such products in a timely manner, this inability could
have a material adverse effect on the Company's results of operations. In
addition, due to the uncertainties associated with the evolving markets being
addressed by the Company, there can be no assurance that the Company will be
able to respond effectively to product demands, fluctuations, or to changing
technologies or customer requirements and specifications.
Although the computer connectivity and networking industry is not generally
affected as much by rapidly changing technology as the computer industry as a
whole, the Company is aware of and monitoring the development of universal
interfaces and any potential effect such developments would have on the Company.
In general, these interfaces would be used to facilitate the interaction between
many different types of computers and computer devices. Specifically, the
universal interfaces would allow many different devices (such as, monitors,
keyboards, modems and printers) and computer
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types which are currently connected by different connectors, to be connected
using one universal interface for each connection. It is possible that the
different connectors currently in use will be replaced by such universal
interfaces. Although the Company anticipates that the sales volume of these
universal interfaces should be at a similar level to the aggregate sales volume
for the connectors that they replace, it is possible that the profit margin
associated with the new universal interfaces may be lower than the Company's
current connectors. Although, in the short term, demand for these universal
interfaces may create a new product for the Company, the Company cannot
determine with any certainty how its other similar products will be affected or
what the long-term effect will be on the Company's sales and operating results.
No assurance can be given that the industry will agree on one or more of these
universal interfaces or that such interfaces will be accepted by the market.
COMPUTER INDUSTRY CYCLICALITY. The computer industry has been affected
historically by general economic downturns, which have had an adverse economic
effect upon manufacturers, distributors and retailers of computers and
computer-related products. General economic downturns have traditionally had
adverse effects upon the computer-related industry. There can be no assurance
that the Company will be able to predict or respond to such cycles.
DEPENDENCE ON THIRD PARTIES FOR MANUFACTURING AND ASSEMBLY; ABSENCE OF
SUPPLY AGREEMENTS. The Company is dependent on a number of manufacturers, both
domestic and foreign, for the manufacture and assembly of its products pursuant
to the Company's design specifications. Although the Company purchases its
retail products from several different manufacturers, the Company often relies
on an individual manufacturer to produce a particular line of OEM products.
Although the Company has several different product lines, and despite the
Company's efforts to minimize such reliance by having other manufacturers
available should the need arise, these manufacturers are currently not bound by
contract other than by individual purchase orders to supply the Company with
these products and the loss of one or more manufacturers of OEM products may
have a material adverse impact on the Company. While most of the retail products
sold by the Company are available from multiple sources, there can be no
assurance that the Company will be able to replace lost manufacturers of retail
products with others offering products of the same quality, with timely delivery
and/or similar terms. One manufacturer located in China (which manufacturer is
also not bound by a supply contract other than a purchase order), supplies
products which constitute approximately 10 percent of the Company's net sales.
No other manufacturer accounts for more than 10 percent of the Company's net
sales.
FOREIGN SUPPLIERS AND MANUFACTURERS. Most of the components utilized by the
Company in the manufacture and assembly of its products are obtained from
foreign countries and a majority of the Company's products are manufactured or
assembled in foreign countries, such as South Korea, China and Taiwan as well as
the United Kingdom and other European countries. The risks of doing business
with companies in these areas include potential adverse changes in the
diplomatic relations of foreign countries with the United States, changes in the
relative purchasing power of the United States dollar, hostility from local
populations, changes in exchange controls and the instability of foreign
governments, increases in tariffs or duties, changes in China's or other
countries' most favored nation trading status, changes in trade treaties,
strikes in air or sea transportation, and
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possible future United States legislation with respect to import quotas on
products from foreign countries and anti-dumping legislation, any of which could
result in delays in manufacturing, assembly and shipment and the inability of
the Company to obtain supplies and finished products. Alternative sources of
supply, manufacture or assembly may be more expensive. Although the Company has
not encountered significant difficulties in its transactions with foreign
suppliers and manufacturers in the past, there can be no assurance that the
Company will not encounter such difficulties in the future.
FLUCTUATION IN EXCHANGE RATES. The majority of the Company's suppliers of
components, manufacturers, and assemblers are foreign, and although all price
quotations and payments with those entities are made in U.S. dollars,
fluctuations in exchange rates could alter the price charged by these foreign
suppliers, manufacturers and assemblers, and depending on the level of such
exchange rate fluctuations, such price fluctuations could adversely affect the
Company's performance. Although the majority of the Company's sales are made to
customers in the United States and although all price quotations and payments
from customers are made in U.S. dollars, the same risks of adverse exchange rate
fluctuations which are present with suppliers, manufacturers and assemblers (as
set forth above) are also present in transactions with customers. The Company
does not have a formal exchange risk management program nor does the Company
engage in hedging activities with respect to exchange rate fluctuations because
all price quotations and payments are made in U.S. dollars, which the Company
believes helps reduce but does not eliminate the risk attendant to fluctuations
in exchange rates.
DEPENDENCE ON THIRD PARTIES FOR DISTRIBUTION. Substantially all of the
Company's revenues are derived from the sale of its products through third
parties. Domestically, the Company's products are sold to end users primarily
through OEM customers, wholesale distributors, value added resellers ("VARs"),
mail order companies, computer superstores and dealers. Internationally, the
Company's products are sold through wholesale distributors and mail order
companies, dealers, VARs, as well as OEM customers. Accordingly, the Company is
dependent on the continued viability and financial stability of its resellers.
The Company's resellers often offer products of several different companies,
including, in many cases, products that are competitive with the Company's
products. There can be no assurance that the Company's resellers will continue
to purchase its products or provide them with adequate levels of support. The
loss of, or a significant reduction in sales volume to, a significant number of
the Company's resellers could have a material adverse effect on its results of
operations.
DEPENDENCE ON SIGNIFICANT CUSTOMERS. The Company's largest customer
accounted for 15.1% of the Company's net sales for 1997. No other customer of
the Company accounted for more than 10 percent of the Company's net sales for
1997. The Company's top 10 customers accounted for approximately 40% of the
Company's net sales for 1997. The loss of one or more significant customers
could have a material adverse effect on the Company's business and results of
operations.
SIGNIFICANT INVENTORY; RISK OF PRODUCT RETURNS. Although the Company
monitors its inventory on a regular basis, the Company needs to maintain a
significant inventory in order to ensure prompt response to orders and to avoid
backlogs. The Company may need to hold such inventory during periods of low
sales activity. The capital necessary to hold such inventory restricts the funds
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available for other corporate purposes. The Company does not provide allowances
for anticipated product returns. Although the Company endeavors to reduce
product returns through its quality control program, and although historically
product returns have been relatively insubstantial, there can be no assurance
that product returns will not increase in the future.
FLUCTUATIONS IN OPERATING RESULTS. The Company's quarterly and annual
operating results are impacted by many factors, including the timing of orders
and the availability of inventory to meet customer requirements. A large portion
of the Company's operating expenses are relatively fixed. Since the Company
typically does not obtain long-term purchase orders or commitments from its
customers, it must anticipate the future volume of orders based upon the
historic purchasing patterns of its customers and upon its discussions with its
customers as to their future requirements. Cancellations, reductions or delays
in orders by a large customer or a group of customers could have a material
adverse impact on the Company's business, financial condition and results of
operations.
COMPETITION. The Company competes with many companies that manufacture,
distribute and sell computer connectivity products. While these companies are
largely fragmented, throughout different sectors of the computer connectivity
industry, several of these companies have greater assets and possess greater
financial and personnel resources than those of the Company. Some of these
competitors also carry product lines which the Company does not carry and
provide services which the Company does not provide. There can be no assurance
that competitive pressure from these companies will not materially adversely
affect the Company's business and financial condition. In the event that more
competitors begin to carry products which the Company carries and price
competition with respect to the Company's products significantly increases,
competitive pressures could cause the Company to reduce the prices of its
products, which would result in reduced profit margins. Prolonged price
competition would have a material adverse effect on the Company's operating
results and financial condition. A variety of other potential actions by the
Company's competitors, including increased promotion and accelerated
introduction of new or enhanced products, could have a material adverse effect
on the Company's results of operations. There can be no assurance that the
Company will be able to compete successfully in the future.
GROWTH STRATEGY AND RISKS RELATING TO FUTURE ACQUISITIONS. The Company's
ability to grow by acquisition is dependent upon, and may be limited by, the
availability of suitable acquisition candidates and capital, and by restrictions
contained in the Company's credit agreements, which restrictions include
maintaining certain minimum ratios of assets versus liabilities and not
permitting any indebtedness, guarantees or liens which would materially affect
the Company's ability to repay its loan to the bank. In addition, acquisitions
involve risks that could adversely affect the Company's operating results,
including the assimilation of the operations and personnel of acquired
companies, the possible amortization of acquired intangible assets and the
potential loss of key employees of acquired companies. Although the Company
completed two acquisitions during 1997, there can be no assurance that the
Company will be successful in consummating a future acquisitions on terms
acceptable to the Company. Other than as required by the Company's Articles of
Incorporation, ByLaws, and applicable law, shareholders of the Company generally
will not be entitled to vote upon such acquisitions.
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CREDIT FACILITY RESTRICTIONS; FUTURE AVAILABILITY. The Company has a
$4,500,000 credit facility with a financial institution. The agreement governing
the line of credit contains covenants that impose limitations on the Company,
and requires the Company to be in compliance with certain financial ratios. If
the Company fails to make required payments, or if the Company fails to comply
with the various covenants contained in its agreement, the lender may be able to
accelerate the maturity of such indebtedness. As of December 31, 1997, the
Company was in compliance with the required financial ratios and the Company
believes that it is presently in compliance with all other covenants under this
agreement. The receivables, inventory and all other assets of the Company are
pledged to the lender to secure its revolving line of credit. The Company
intends to renew the revolving line of credit agreement which expires on July
31, 1998, although no assurance can be given that such renewal can be obtained,
or if obtained, that such renewal can be obtained upon terms favorable to the
Company. To the extent that there is an increase in interest rates, or present
borrowing arrangements are no longer available, the Company's future growth
could be adversely impacted.
RELIANCE ON EXECUTIVE OFFICERS AND KEY EMPLOYEES. The continued success of
the Company is dependent to a significant degree upon the services of Slav Stein
(President and Chief Executive Officer) and Roman Briskin (Executive Vice
President) and upon the Company's ability to attract and retain qualified
personnel experienced in the various phases of the Company's business. The
ability of the Company to operate successfully could be jeopardized if one or
more of its executive officers were unavailable and capable successors were not
found. The employment agreements between the Company and Messrs. Stein and
Briskin, respectively, are individually terminable by each executive officer
upon a change in control of the Company.
CONTROL BY PRINCIPAL SHAREHOLDERS. As of the date of this Prospectus,
Messrs. Stein and Briskin, who are the Company's principal shareholders, own
collectively, of record and beneficially, 35.6% of the outstanding Common Stock
(excluding shares issuable to them upon the conversion of certain convertible
subordinated promissory notes and the exercise of stock options). While each of
these stockholders is an independent party, if Messrs. Stein and Briskin were to
act together as a group, they would effectively have the ability to control the
election of all of the members of the Company's Board of Directors and,
therefore, to control the business, policies and affairs of the Company.
SHARES ELIGIBLE FOR FUTURE SALE. The 812,500 shares of Common Stock held
collectively by Messrs. Stein and Briskin (assuming no conversion into shares of
Common Stock of certain convertible subordinated promissory notes and no
exercise of options held by the principal shareholders), as well as the shares
issued by the Company to Focus and to the shareholders of Dataholding in
connection with the Company's recent acquisitions, are "restricted securities,"
as defined in Rule 144 under the Securities Act, and in the future may be sold
in compliance with Rule 144. Although their shares are being registered in the
Registration Statement, the principal shareholders have entered into written
agreements not to sell, transfer, encumber, assign or otherwise dispose of any
of their Common Stock for 24 months from February 13, 1997 without the prior
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written consent of the underwriters of the Company's initial public offering.
The shares of Common Stock issued to Focus and to the shareholders of
Dataholding are also being registered in the Registration Statement. Sales of
significant numbers of shares of restricted Common Stock in the public market
may have a depressive effect on the market price of the Common Stock.
NO DIVIDENDS. The Company does not intend to declare or pay cash dividends
in the foreseeable future. Earnings, if any, are expected to be retained to
finance the development and expansion of the Company's business.
PUBLIC MARKET; POTENTIAL VOLATILITY OF STOCK PRICE. There can be no
assurance that an active trading market for the Common Stock will continue to be
sustained. The market price of the Common Stock could be subject to significant
fluctuations in response to the Company's operating results and other factors.
In addition, the stock market generally, and technology-related securities in
particular, may experience extreme price and volume fluctuations that may be
unrelated or disproportionate to the operating performance of companies. Such
fluctuations, and general economic and market conditions, may adversely affect
the market price of the Common Stock.
ANTI-TAKEOVER PROVISIONS. The Company's Articles of Incorporation and
Bylaws contain provisions that may have the effect of discouraging certain
transactions involving an actual or threatened change of control of the Company.
In addition, the Board of Directors of the Company has the authority to issue up
to 1,000,000 shares of preferred stock in one or more series and to fix the
preferences, rights and limitations of any such series without stockholder
approval. In addition, Messrs. Stein and Briskin have provisions in their
employment agreements with the Company requiring the Company to pay each
$750,000 in the event of a change in control of the Company. Furthermore, such
payments which exceed a certain level of compensation may not be deductible by
the Company for federal corporate income tax purposes. The ability to issue
preferred stock and the change in control payments could have the effect of
discouraging unsolicited acquisition proposals or making it more difficult for a
third party to gain control of the Company, or otherwise could adversely affect
the market price of the Common Stock.
11
<PAGE>
USE OF PROCEEDS
This Prospectus relates to the Shares being offered and sold for the
account of the Selling Stockholders. This Prospectus also may be used, with the
Company's prior written consent, by donees of the Selling Stockholders, or by
other persons acquiring Shares and who wish to offer and sell such Shares under
circumstances requiring or making desirable its use. The Company will not
receive any proceeds from the sale of the Shares, but will pay expenses related
to the registration of the Shares. See "Plan of Distribution."
12
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth the name of each Selling Stockholder, the
aggregate number of shares of Common Stock beneficially owned by each of the
Selling Stockholders on the date hereof, the aggregate number of shares of
Common Stock that each Selling Stockholder may offer and sell pursuant to this
Prospectus, and the aggregate number and percentage of shares of Common Stock
that will be beneficially owned by each Selling Stockholder after completion of
this offering (the "Offering"). However, because the Selling Stockholders may
offer all or a portion of the Shares at any time and from time to time after the
date hereof, the exact number of Shares that each Selling Stockholder may retain
upon completion of the Offering cannot be determined at this time.
To the knowledge of the Company, none of the Selling Stockholders has had
within the past three years any material relationship with the Company except as
set forth in the footnotes to the following table.
<TABLE>
<CAPTION>
NUMBER OF NUMBER OF
SHARES SHARES BEING
BENEFICIALLY OFFERED FOR SHARES PERCENTAGE OF
OWNED PRIOR SELLING BENEFICIALLY SHARES OWNED
TO THE STOCKHOLDER'S OWNED AFTER AFTER THE
SELLING STOCKHOLDERS OFFERING ACCOUNT THE OFFERING(1) OFFERING (1)
- --------------------- ------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Slav Stein (2)(3) 686,140 (3) 586,140 100,000 4.38%
Roman Briskin (2)(3) 686,140 (3) 586,140 100,000 4.38%
Knut Johansson (4)(5) 130,008 130,008 -- --
Petter Gi0rtz (4)(5) 92,273 92,273 -- --
Vera Nygard (4)(5) 8,076 8,076 -- --
AS Industribygningen (4) 100,207 100,207 -- --
Eivind Urbye (4) 29,436 29,436 -- --
Focus Enhancements, Inc.(6) 189,701 189,701 -- --
Timothy E. Mahoney (5)(7) 63,000 63,000 -- --
Malcolm McGuire (5)(8) 124,500 120,000 4,500 *
-------
1,897,907
<FN>
- ------------------------
* Less than one percent.
(1) Assumes that all of the Shares will be sold, that no additional shares will
be acquired and that no shares other than those offered will be sold.
(2) Director and Executive Officers of the Company.
(3) Shares being registeredhereby include (i) 406,250 shares of Common Stock
owned of record by each of Messrs. Stein and Briskin, (ii) 100,000 shares of
Common Stock issuable to each of Messrs. Stein and Briskin upon the exercise
of certain stock options granted to such principal shareholders exercisable
at $6.00 per share, and (iii) 179,890 shares of Common Stock issuable to
each of Messrs. Stein and Briskin upon the conversion of certain convertible
subordinated promissory notes, which notes are convertible at $4.00 per
share.. Shares beneficially owned after the Offering consists of shares
underlying presently exercisable stock options, and excludes 180,250 shares
issuable to each of Messrs. Stein and Briskin upon the exercise of certain
contingent stock options, which options are not presently vested.
(4) Seller of an interest in Dataholding AS, a company acquired by the Company.
(5) Employee or consultant of the Company.
(6) Includes 18,970 shares of Common Stock held in escrow pursuant to that
certain Asset Purchase Agreement between the Company and Focus Enhancements,
Inc., dated as of September 30, 1997, which escrow term expired on March 30,
1998.
(7) Shares being registered hereby represent 40,000 shares of Common Stock
issuable upon the exercise of stock options which are exercisable at $6.00
per share and 23,000 shares of Common Stock issuable upon the exercise of
stock options which are exercisable at $4.00 per share.
(8) Shares being registered hereby represent 120,000 shares of Common Stock
issuable upon the exercise of stock options which are exercisable at $3.69
per share.
</FN>
</TABLE>
13
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders or pledgees may sell or distribute some or all of
the Shares from time to time through underwriters or dealers or brokers or other
agents or directly to one or more purchasers, including pledgees, in
transactions (which may involve crosses and block transactions) on NASDAQ,
privately negotiated transactions (including sales pursuant to pledges), in the
over-the-counter market, or in transactions in which Shares may be delivered in
connection with the issuance of securities by issuers other than the Company
that are exchangeable for (whether optional or mandatory), or payable in such
Shares (whether such securities are listed on a national securities exchanges or
otherwise) or pursuant to which such Shares may be distributed (which securities
issued by others will, to the extent required by applicable law, be registered
under the Securities Act), or in a combination of such transactions. Such
transactions may be effected by the Selling Stockholders at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, at negotiated prices or at fixed prices, which may be changed. Brokers,
dealers, agents or underwriters participating in such transactions as agent may
receive compensation in the form of discounts, concessions or commissions from
the Selling Stockholder (and if they act as agent for the purchaser of such
shares, from such purchaser). Such discounts, concessions or commissions as to a
particular broker, dealer, agent or underwriter might be in excess of those
customary in the type of transaction involved. This Prospectus may be used, with
the Company's prior written consent, by donees of the Selling Stockholders, or
by other persons acquiring Shares and who wish to offer and sell such Shares
under circumstances requiring or making desirable its use.
The Selling Stockholders and any such underwriters, brokers, dealers or
agents or underwriters that participate with the Selling Stockholders in the
distribution of the Shares may be deemed to be "underwriters" within the meaning
of the Securities Act, and any discounts, commissions or concessions received by
any such underwriters, brokers, dealers or agents might be deemed to be
underwriting commissions or discounts under the Securities Act. Neither the
Company nor the Selling Stockholders can presently estimate the amount of such
compensation. The Company knows of no existing arrangements between any Selling
Stockholder and any other Selling Stockholder, underwriter, broker, dealer or
other agent relating to the sale or distribution of the Shares.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares may not simultaneously engage in
market-making activities with respect to the Common Stock for a period of nine
business days prior to the commencement of such distribution. In addition and
without limiting the foregoing, the Selling Stockholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including without limitation, Regulation M, which provisions may
limit the timing of the purchases and sales of Shares by the Selling
Stockholders.
The Company has agreed to pay all fees and expenses incident to the
registration of the Shares, except commissions and discounts of underwriters,
brokers, dealers or agents and fees and expenses of counsel or any other
professionals or other advisors, if any, to the Selling Stockholders. Each
Selling Stockholder may indemnify any broker, dealer, agent or underwriter that
participates
14
<PAGE>
in transactions involving sales of the Shares against certain liabilities,
including liabilities arising under the Securities Act.
If Shares are sold in an underwritten offering, the Shares may be acquired
by the underwriters for their own account and may be further resold from time to
time in one or more transactions, including negotiated transactions, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at negotiated prices, or at fixed prices. The names of the
underwriters with respect to any such offering and the terms of the
transactions, including any underwriting discounts, concessions or commissions
and other items constituting compensation of the underwriters and
broker-dealers, if any, will be set forth in a supplement to this Prospectus
relating to such offering. Any public offering price and any discounts,
concessions or commissions allowed or reallowed or paid to broker-dealers may be
changed from time to time. Unless otherwise set forth in a supplement to this
Prospectus, the obligations of the underwriters to purchase the Shares will be
subject to certain conditions precedent and the underwriters will be obligated
to purchase all of the Shares specified in such supplement if any such Shares
are purchased.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states, the
Shares may not be sold unless they have been registered or qualified for sale in
the applicable state or an exemption from the registration or qualification
requirement is available and is complied with by the Company and the Selling
Stockholders.
15
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's authorized capital consists of 20,000,000 shares of common
stock, par value $.001 per share, and 1,000,000 shares of preferred stock, par
value $.001 per share (the "Preferred Stock"). None of the Preferred Stock is
outstanding.
COMMON STOCK
Each outstanding share of Common Stock is entitled to one vote, either in
person or by proxy, on all matters that may be voted upon by the owners thereof
at meetings of the shareholders. The holders of Common Stock (i) have equal
ratable rights to dividends from funds legally available therefor, when, as and
if declared by the Board of Directors of the Company, (ii) are entitled to share
ratably in all of the assets of the Company available for distribution to
holders of Common Stock upon liquidation, dissolution or winding up of the
affairs of the Company, (iii) do not have preemptive, subscription or conversion
rights, or redemption or sinking fund provisions applicable thereto, and (iv)
are entitled to one non-cumulative vote per share on all matters on which
shareholders may vote at all meetings of shareholders. The rights of the holders
of Common Stock will be subject to, and may be adversely affected by, the rights
of the holders of any series of preferred stock that may be issued in the
future, including voting, dividend, and liquidation rights.
The holders of shares of Common Stock of the Company do not have cumulative
voting rights, which means that the holders of more than 50% of such outstanding
shares, voting for the election of directors, can elect all of the directors of
the Company if they so choose and, in such event, the holders of the remaining
shares will not be able to elect any of the Company's directors.
PREFERRED STOCK
The Company's Board of Directors has the authority to issue 1,000,000
shares of Preferred Stock, $.001 par value, none of which is issued and
outstanding, in one or more series and to fix, by resolution, conditional, full,
limited or no voting powers, and such designations, preferences and relative,
participating, optional or other special rights, if any, and the qualifications,
limitations or restrictions thereof, if any, including the number of shares in
such series (which the Board may increase or decrease as permitted by Florida
law), liquidation preferences, dividend rates, conversion or exchange rights,
redemption provisions of the shares constituting any series, and such other
special rights and protective provisions with respect to any class or series as
the Board may deem advisable without any further vote or action by the
shareholders. Any shares of Preferred Stock so issued would have priority over
the Common Stock with respect to dividend or liquidation rights or both and
could have voting and other rights of shareholders. The issuance of Preferred
Stock with voting or conversion rights may adversely affect the voting rights of
the holders of Common Stock. The Company has no present plans to issue shares of
Preferred Stock.
CERTAIN PROVISIONS OF THE ARTICLES AND BYLAWS
GENERAL. A number of provisions of the Articles of Incorporation ("Articles")
and Bylaws ("Bylaws") of the Company concern matters of corporate governance and
the rights of shareholders. Certain of
16
<PAGE>
these provisions, as well as the ability of the Board of Directors to issue
shares of Preferred Stock and to set the voting rights, preferences and other
terms thereof, may be deemed to have an anti-takeover effect and may discourage
takeover attempts not first approved by the Board of Directors (including
takeovers which certain shareholders may deem to be in their best interests). To
the extent takeover attempts are discouraged, temporary fluctuations in the
market price of the Common Stock, which may result from actual or rumored
takeover attempts, may be inhibited. These provisions, together with the ability
of the Board to issue Preferred Stock without further shareholder action, also
could delay or frustrate the removal of incumbent Directors or the assumption of
control by shareholders, even if such removal or assumption would be beneficial
to shareholders of the Company. These provisions also could discourage or make
more difficult a merger, tender offer or proxy contest, even if they could be
favorable to the interests of shareholders, and could potentially depress the
market price of the Common Stock. The Board of Directors believes that these
provisions are appropriate to protect the interests of the Company and all of
its shareholders.
MEETINGS OF SHAREHOLDERS. The Bylaws provide that a special meeting of
shareholders may be called by the Board of Directors unless otherwise required
by law. The Company's Bylaws provide that only those matters set forth in the
notice of the special meeting may be considered or acted upon at that special
meeting, unless otherwise provided by law. In addition, the Bylaws set forth
certain advance notice and informational requirements and time limitations on
any director nomination or any new business which a shareholder wishes to
propose for consideration at an annual meeting of shareholders.
NO SHAREHOLDER ACTION BY WRITTEN CONSENT. The Articles provide that any action
required or permitted to be taken by the shareholders of the Company at an
annual or special meeting of shareholders must be effected at a duly called
meeting and may not be taken or effected by a written consent of shareholders in
lieu thereof.
INDEMNIFICATION AND LIMITATION OF LIABILITY. The Bylaws provide that directors
and officers of the Company shall be, and in the discretion of the Board of
Directors non-officer employees may be, indemnified by the Company to the
fullest extent authorized by Florida law, as it now exists or may in the future
be amended, against all expenses and liabilities reasonably incurred in
connection with service for or on behalf of the Company. The Bylaws also provide
that the right of directors and officers to indemnification shall be a contract
right and shall not be exclusive of any other right possessed or hereafter
acquired under any bylaw, agreement, vote of shareholders or otherwise. The
Articles contain a provision permitted by Florida law that generally eliminates
the personal liability of directors for monetary damages unless the director has
breached his or her fiduciary duty and such breach constitutes or includes
certain violations of criminal law, a transaction from which the director
derived an improper personal benefit, certain unlawful distributions or certain
other reckless, wanton or willful acts or misconduct. This provision does not
alter a director's liability under the federal securities laws. In addition,
this provision does not affect the availability of equitable remedies, such as
an injunction or rescission, for breach of fiduciary duty.
AMENDMENT OF THE ARTICLES. The Articles provide that an amendment thereof must
first be approved by a majority of the Board of Directors and (with certain
exceptions) thereafter approved by the holders of a majority of the total votes
eligible to be cast by holders of voting stock with respect to
17
<PAGE>
such amendment or repeal; provided however, that the affirmative vote of 80% of
the total votes eligible to be cast by holders of voting stock, voting together
as a single class, is required to amend provisions relating to the establishment
of the Board of Directors and amendments to the Articles.
AMENDMENT OF BYLAWS. The Articles provide that the Bylaws may be amended or
repealed by the Board of Directors or by the shareholders. Such action by the
Board of Directors requires the affirmative vote of a majority of the directors
then in office. Such action by the shareholders requires the affirmative vote of
the holders of at least two-thirds of the total votes eligible to be cast by
holders of voting stock with respect to such amendment or repeal at an annual
meeting of shareholders or a special meeting called for such purposes, unless
the Board of Directors recommends that the shareholders approve such amendment
or repeal at such meeting, in which case such amendment or repeal shall only
require the affirmative vote of a majority of the total votes eligible to be
cast by holders of voting stock with respect to such amendment or repeal.
NASDAQ SMALLCAP MARKET
The Company's Common Stock is traded on the NASDAQ SmallCap Market under
the symbol "AESP."
TRANSFER AGENT
The transfer agent for the Shares of Common Stock is Continental Stock
Transfer & Trust Company, 2 Broadway, New York, New York 10004.
LEGAL MATTERS
Certain legal matters in connection with the Shares being offered hereby
will be passed upon for the Company by Akerman, Senterfitt & Eidson, P.A.,
Miami, Florida.
EXPERTS
The consolidated financial statements for the Company as of December 31,
1996 and 1997, incorporated by reference in this Registration Statement, have
been audited by BDO Seidman, LLP, independent certified public accountants, to
the extent and for the periods indicated in their reports with respect thereto.
The financial statements referred to above have been incorporated by reference
herein in reliance upon authority of said firm as experts in accounting and
auditing in giving said report.
The consolidated financial statements for Dataholding as of December 31,
1996, incorporated by reference in this Registration Statement, have been
audited by Deloitte & Touche LLP, independent certified public accountants, to
the extent and for the periods indicated in their report with respect thereto.
The financial statements referred to above have been incorporated by reference
18
<PAGE>
herein in reliance upon authority of said firm as experts in accounting and
auditing in giving said report.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission are incorporated herein
by reference:
(a) Annual Report of the Company on Form 10-KSB for the fiscal year ended
December 31, 1997.
(b) Current Reports of the Company on Form 8-K filed on October 15, 1997.
(c) Current Report of the Company on Form 8-K filed on January 26, 1998.
(d) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on December 18, 1996, together
with any amendment or report filed with the Commission for the purpose
of updating such description.
(e) All reports and documents filed by the Company pursuant to Section 13,
14 or 15(d) of the Exchange Act, prior to the filing of a
post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference
herein and to be a part hereof from the respective date of filing of
such documents. Any statement incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein or in any other
subsequently filed document, which also is or is deemed to be
incorporated by reference herein, modifies or supersedes such
statement. Any statement modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person,
including any beneficial owner, to whom a copy of the Prospectus has been
delivered, on the written or oral request of any such person, a copy of any or
all of the documents referred to above which have been or may be incorporated by
reference in this Prospectus, other than exhibits to such documents. Written
requests for such copies should be directed to Corporate Secretary, Advanced
Electronic Support Products, Inc. at the Company's principal executive office,
1810 N.E. 144th Street, North Miami, Florida 33181, Telephone (305) 944-7710.
19
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION (1)
The following is a list of estimated expenses to be incurred by the Company
in connection with the registration of the shares of Common Stock registered
hereunder:
Securities and Exchange Commission registration fee........... $ 2,174
Printing expenses............................................. 1,000
Legal fees and expenses....................................... 25,000
Accountants' fees and expenses................................ 10,000
Miscellaneous................................................. 3,000
-------
Total $41,174
=======
- -------------------
(1) Estimated except for SEC registration fee.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the provisions of Section 607.0850(1) of the Florida Business
Corporation Act, the Company has the power to indemnify any person who is or was
a party to any proceeding (other than an action by, or in the right of, the
Company), because such person is or was a director, officer, employee, or agent
of the Company (or is or was serving at the request of the Company under
specified capacities) against liability incurred in connection with such
proceeding provided such person acted in good faith and in a manner such person
reasonably believed to be in, or not opposed to, the best interest of the
Company (and with respect to any criminal action or proceeding, such person had
no reasonable cause to believe such person's conduct was unlawful).
With respect to a proceeding by or in the right of the Company to procure a
judgment in its favor, Section 607.0850(2) of the Florida Business Corporation
Act provides that the Company shall have the power to indemnify any person who
is or was a director, officer, employee, or agent of the Company (or is or was
serving at the request of the Company under specified capacities) against
expenses and amounts paid in settlement not exceeding, in the judgment of the
Board of Directors, the estimated expense of litigating the proceeding to
conclusion, actually and reasonably incurred in connection with the defense or
settlement of such proceeding provided such person acted in good faith and in a
manner such person reasonably believed to be in, or not opposed to, the best
interest of the Company, except that no indemnification shall be made in a case
in which such person shall have been adjudged to be liable to the Company unless
and only to the extent that the court in which the proceeding was brought, shall
determine upon application that, despite the adjudication of liability but in
view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses.
II-1
<PAGE>
Indemnification as described above shall only be granted in a specific case
upon a determination that indemnification is proper under the circumstances
using the applicable standard of conduct which is made by (a) a majority of a
quorum of directors who were not parties to such proceeding, (b) if such a
quorum is not attainable or by majority vote of a committee designated by the
Board of Directors consisting of two or more directors not parties to the
proceeding, (c) by independent legal counsel selected by the Board of Directors
described in the foregoing parts (a) and (b), or if a quorum cannot be obtained,
then selected by a majority vote of the full Board of Directors, or (d) by the
shareholders by a majority vote of a quorum consisting of shareholders who are
not parties to such proceeding.
Section 607.0850(12) of the Florida Business Corporation Act permits the
Company to purchase and maintain insurance on behalf of any director, officer,
employee or agent of the Company (or is or was serving at the request of the
Company in specified capacities) against any liability asserted against such
person or incurred by such person in any such capacity whether or not the
Company has the power to indemnify such person against such liability.
The Articles of Incorporation of the Company (the "Articles") provide for
the indemnification of directors and officers of the Company to the fullest
extent permitted by Section 607.0850 of the Florida Business Corporation Act.
The Articles further provide that the indemnification provided for therein shall
not be exclusive of any rights to which those indemnified may be entitled under
any bylaw, agreement, vote of shareholders or disinterested directors, or
otherwise.
The Articles also contain a provision that eliminates the personal
liability of the Company's directors to the Company for monetary damages unless
the director has breached his or her fiduciary duty and such breach constitutes
or includes certain violations of criminal law, a transaction from which the
director derived an improper personal benefit, certain unlawful distributions or
certain other reckless, wanton or wilful acts or misconduct. This provision does
not alter a director's liability under the federal securities laws. In addition,
this provision does not affect the availability of equitable remedies, such as
an injunction or rescission, for breach of fiduciary duty.
II-2
<PAGE>
ITEM 16. EXHIBITS
5.1 Opinion of Akerman, Senterfitt & Eidson, P.A. as to the validity of
the Shares
23.1 Consent of Akerman, Senterfitt & Eidson, P.A. (included in Exhibit
5.1)
23.2 Consent of BDO Seidman, LLP
23.3 Consent of Deloitte & Touche
24.1 Powers of Attorney - included as part of the signature page hereto
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which it offers or sells
securities, 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 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 high or low 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 this
Registration Statement;
(iii) To include any additional or changed material information on the
plan of distribution.
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) above do not
apply if the information required to be included in a post-effective amendment
by these paragraphs is contained in periodic reports filed with or furnished by
the Registrant pursuant to the Exchange Act that are incorporated by reference
in this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, treat each such post-effective amendment as a new
Registration Statement of the securities offered, and the offering of the
securities at that time to be the initial bona fide offering.
II-3
<PAGE>
(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the issuer of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-4
<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 Miami, State of Florida, on the 30th day of April,
1998.
ADVANCED ELECTRONIC SUPPORT
PRODUCTS, INC.
By: /S/ SLAV STEIN
---------------------
Slav Stein, President
Each person whose signature appears below appoints Slav Stein and Roman
Briskin, and each of them, as his true and lawful attorney-in-fact and agent,
with full power of substitution and resubstitution, for him and in his stead, in
any 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 all other document in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been duly signed by the following persons in the
capacities and on the dates indicated below:
SIGNATURES TITLES DATE
---------- ------ ----
/S/ SLAV STEIN President and Chief April 30, 1998
- ---------------------- Executive Officer and
Slav Stein Director
/S/ RANDALL N. PAULFUS Chief Financial Officer April 30, 1998
- -----------------------
Randall N. Paulfus
/S/ ROMAN BRISKIN Executive Vice President and April 30, 1998
- ---------------------- Director
Roman Briskin
II-5
<PAGE>
SIGNATURES TITLES DATE
---------- ------ ----
/S/ TERRENCE R. DAIDONE Director April 30, 1998
- ---------------------------
Terrence R. Daidone
Director April ___, 1998
- ---------------------------
L. Phillips Reames
/S/ WILLIAM B. COLDRICK Director April 30, 1998
- ---------------------------
William B. Coldrick
II-6
<PAGE>
EXHIBIT INDEX
5.1 Opinion of Akerman, Senterfitt & Eidson, P.A. as to the validity of
the Shares
23.1 Consent of Akerman, Senterfitt & Eidson, P.A. (included in Exhibit
5.1)
23.2 Consent of BDO Seidman, LLP
23.3 Consent of Deloitte & Touche
24.1 Powers of Attorney - included as part of the signature page hereto
EXHIBIT 5.1
AKERMAN, SENTERFITT & EIDSON, P.A.
ATTORNEYS AT LAW
One S.E. Third Avenue
28th Floor
Miami, Florida 33131-2948
Telephone: (305) 374-5600
Telecopy: (305) 374-5095
April 30, 1998
Advanced Electronic Support Products, Inc.
1810 N.E. 144th Street
North Miami, FL 33181
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as counsel to Advanced Electronic Support Products, Inc., a
Florida corporation (the "Company"), in connection with the preparation and
filing by the Company with the Securities and Exchange Commission of a
Registration Statement on Form S-3 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"). The Registration
Statement relates to an aggregate of 1,897,907 shares of the Company's common
stock, par value $.001 per share, all of which are issued and outstanding (the
"Shares").
We have examined such corporate records, documents, instruments and
certificates of the Company and have received such representations from the
officers and directors of the Company and have reviewed such questions of law as
we have deemed necessary, relevant or appropriate to enable us to render the
opinion expressed herein. In such examination, we have assumed the genuineness
of all signatures and authenticity of all documents, instruments, records and
certificates submitted to us as originals.
Based upon such examination and review and upon the representations made to
us by the officers and directors of the Company, we are of the opinion that the
Shares have been duly and validly authorized and are validly issued, fully paid
and nonassessable.
The opinions expressed herein are limited to the corporate laws of the
State of Florida and we express no opinion as to the effect on the matters
covered by the laws of any other jurisdiction. Our opinion as to the matters
expressed herein is as of the date above and we disclaim any obligation to
update our opinion.
<PAGE>
Advanced Electronic Support Products, Inc.
April 30, 1998
Page 2
This firm consents to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to the firm under the caption "Legal
Matters" in the prospectus which is part of the Registration Statement. In
giving such consent, we do not thereby admit that we are included within the
category of persons whose consent is required under Section 7 of the Securities
Act to the rules and regulations promulgated thereunder.
Very truly yours,
/S/ AKERMAN, SENTERFITT & EIDSON, P.A.
--------------------------------------------
AKERMAN, SENTERFITT & EIDSON, P.A.
CONSENT OF INDEPENDENT
CERTIFIFED PUBLIC ACCOUNTANTS
Advanced Electronic Support Products, Inc.
North Miami, Florida
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated March 20,
1998, relating to the consolidated financial statements of Advanced Electronic
Support Products, Inc. appearing in the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
/S/ BDO SEIDMAN, LLP
---------------------
BDO SEIDMAN, LLP
Miami, Florida
April 28, 1998
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Dataholding AS
Oslo, Norway
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement of our report dated April 10,
1997, relating to the financial statements of Dataholding AS appearing in the
Advanced Electronic Support Product, Inc.'s Annual Report on Form 10-KSB for the
year ended December 31, 1997.
We also consent to the reference to us under the caption "Experts" in the
Prospectus.
DELOITTE & TOUCHE
/S/ JACOB BERGER
----------------------------
Jacob Berger
State Authorized Public Accountant
Oslo, Norway
April 28, 1998
