<PAGE>
FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION STATEMENT 333-18489
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
NEXAR TECHNOLOGIES, INC. (THE "COMPANY")
UNAUDITED FINANCIAL INFORMATION FOR THE THREE MONTHS AND NINE MONTHS ENDED
SEPTEMBER 30, 1997
The selected unaudited financial information of the Company presented below
is derived from (a) the unaudited financial information of the Company for the
three months and nine months ended September 30, 1996, and (b) the unaudited
financial information for the three months and nine months ended and as of
September 30, 1997 included herewith. The financial information set forth in
this Supplement should be read in conjunction with the audited consolidated
financial statements, related notes, other financial information and
Management's Discussion and Analysis of Financial Condition and Results of
Operations of the Company appearing in the Company's Prospectus dated April 15,
1997. In the opinion of management of the Company, the following financial
information has been prepared on the same basis as the audited consolidated
financial statements of the Company and contain all necessary adjustments
(consisting of normal recurring adjustments) to present fairly the financial
information for the periods presented. In view of the Company's recent growth
and other factors, the Company believes that interim period comparisons are not
necessarily meaningful and should not be relied upon as an indication of future
performance.
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
-------------------------------- -------------------------------
(In thousands, except share amounts)
CONSOLIDATED STATEMENTS OF OPERATIONS: Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996
--------------- --------------- --------------- --------------
<S> <C> <C> <C> <C>
Net revenues.............................................. $ 22,399 $11,341 $ 4,403 $9,190
Cost of revenues.......................................... 22,769 9,338 6,119 7,424
Gross profit............................................ (370) 2,003 (1,716) 1,766
Total operating expenses.................................. 9,966 4,984 3,802 1,732
Net income (loss)....................................... $(10,185) $(2,981) $(5,454) $ 34
Net loss per common and common
equivalent share outstanding(1)......................... $(1.24) $ (0.35) $( 0.65) $ 0.00
</TABLE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET DATA: Sept. 30, 1997
--------------
<S> <C>
Cash, cash equivalents and short term investments $ 2,727
Working capital.................... 12,438
Total assets....................... 24,062
Stockholders' equity............... 14,300
- -----------
</TABLE>
(1) Computed on the basis described in Note 5 of Notes to Condensed
Consolidated Unaudited Financial Statements of the Company included herewith.
NET REVENUES
Net revenues decreased 52% in the third quarter of 1997 to $4.4 million from
$9.2 million in the third quarter of 1996. For the nine months ended September
30, 1997, net revenues increased 98% to $22.4 million from $11.3 million in the
comparable period of 1996. The decrease in net revenues for the quarter was the
direct result of the Company's turnkey suppliers' inability to deliver its
proprietary motherboards on a timely basis. During August 1997, the Company
entered into agreements with two world class motherboard manufacturersto be the
primary suppliers of XPA motherboards. The increase in net revenues for the
first nine months of 1997 over the comparable period of 1996 was attributed to
increased units sold as a direct result of continued demand for the Company's
PCs.
Unit shipments in the nine month period ended September 30, 1997 increased
152% to approximately 28,000 from approximately 11,100 in the first nine months
of 1996. This growth is attributed to the acceptance of the Company's technology
and products by its growing customer base.
S-1
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
GROSS PROFIT (LOSS)
Gross profit (loss) in the three month and nine month period ended September
30, 1997 decreased 197% and 119% respectively over comparable periods of 1996.
As a percentage of revenues, gross profit (loss) for the third quarter and nine
months of 1997 decreased significantly over comparable periods of 1996. This was
primarily due to a short term interruption in supply of essential components
which resulted in lower than anticipated shipment levels and unabsorbed factory
overhead costs attributed to the lower revenues. The Company anticipates
improved product margins with resumed to full factory production and fulfillment
of the Company's backlog of orders for XPA product.
OPERATING EXPENSES
Research and development costs have increased in absolute dollars due to
increased staffing levels and accelerated product development costs of the
Company's XPA product. Research and development costs as a percentage of
revenues increased for both the third quarter of 1997 and the nine month period
ended September 30, 1997 as compared to the corresponding period(s) of 1996. The
increased percentage for the quarter was due primarily to lower revenues and
accelerated costs associated to its development efforts of the XPA product.
Similarly, the increased percentage for the comparable nine months period was
attributed to the company's accelerated efforts.
Selling, general and administrative expenses increased in absolute dollars
109% and 88% for the third quarter and nine months of 1997, respectively as
compared to the same periods of the prior year. As a percentage of net revenues,
selling, general and administrative expenses increased both in the third quarter
and nine months ended September 30, 1997 comparatively over the same period for
1996. These increases are attributed to increased sales staffing, aggressive
advertising campaigns, trade show expenses and related infrastructure needs to
meet the demands of the Company's growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operating activities and capital expenditure
requirements since the date of its initial public offering from the net proceeds
received from the initial public offering. The Company's working capital has
increased to $12.5 million at September 30, 1997, as compared to $10.4 million
at December 31, 1996.
The Company's cash, cash equivalents and short term investments was $2.7
million at September 30, 1997. At September 30, 1997, accounts receivable and
inventories were $11.4 million and $6.7 million, respectively, as compared to
$7.7 million and $6.1 million, respectively, at September 30, 1996. The increase
in accounts receivable is primarily due to longer than anticipated collection
cycles from customers. Inventory increased primarily due to receipt of those
essential components at the end of the quarter which were delayed during the
third quarter of 1997.
The Company expects to fund capital expenditures requirements , as well as,
working capital needs with a combination of its cash and cash equivalent funds
provided by operations and possible future financing arrangements, as the need
arises.
S-2
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
Nexar Technologies, Inc. and Subsidiary
Condensed Consolidated Unaudited Financial Statements
for the Three Months and Nine Months Ended September 30, 1997
<TABLE>
<CAPTION>
Index Page
- ----- ----
<S> <C>
Condensed Consolidated Balance Sheets as of
December 31, 1996 and September 30, 1997 (Unaudited) S-4
Condensed Consolidated Statements of Operations for
the three months and nine months ended
September 30, 1997 (Unaudited) S-5
Condensed Consolidated Statements of Cash Flows for
the three months and nine months ended
September 30, 1997 (Unaudited) S-6
Notes to Condensed Consolidated Financial Statements S-7
</TABLE>
S-3
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
Nexar Technologies, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
(In Thousands, Except Share Amounts)
<TABLE>
<CAPTION>
December 31, Sept. 30, 1997
1996 (Unaudited)
------------- --------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents............................................ $ 2,739 $ 1,730
Short term investments............................................... -- 997
Accounts receivable, net............................................. 7,747 11,439
Inventories.......................................................... 6,113 6,698
Prepaid expenses and other
current assets..................................................... 368 1,336
------- --------
Total current assets.............................................. 16,967 22,200
Property and equipment, net.......................................... 255 555
Purchased technology, net............................................ 1,375 1,031
Other assets......................................................... 992 276
------- --------
$19,589 $ 24,062
======= ========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Accounts payable..................................................... $ 4,537 $ 5,966
Accrued expenses..................................................... 2,005 1,888
Deferred Revenue........................................................ -- 1,908
------- --------
Total current liabilities......................................... 6,542 9,762
Due to related parties.................................................. 22,818 --
------- --------
COMMITMENTS AND CONTINGENCIES
Stockholders' Equity (Deficit):
Preferred stock, $.01 par value,
10,000,000 shares authorized;
no shares issued and outstanding
at December 31, 1996; 45,684
shares issued and outstanding
at September 30, 1997.............................................. -- 1
Common stock, $.01 par value,
30,000,000 shares authorized; 4,800,000
shares issued and outstanding at December 31,
1996; 9,340,780 shares issued and
outstanding at September 30, 1997.................................. 48 93
Additional paid-in capital........................................... (48) 34,162
Accumulated deficit............................................... (9,771) (19,956)
------- --------
Total Stockholders' Equity (Deficit)........................... (9,771) 14,300
------- --------
$19,589 $ 24,062
======= ========
See accompanying notes to condensed consolidated financial statements.
</TABLE>
S-4
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
Nexar Technologies, Inc. and Subsidiary
Condensed Consolidated Statements of Operations
(In Thousands, Except Share And Per Share Data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
----------------------- ------------------------
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
1996 1997 1996 1997
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net revenues....................... $ 9,190 $ 4,403 $ 11,341 $ 22,399
Cost of revenues................... 7,424 6,119 9,338 22,769
---------- ---------- ---------- ----------
Gross profit (loss)............ 1,766 (1,716) 2,003 (370)
Operating expenses:
Research and development....... 131 464 301 1,184
Selling and marketing.......... 981 1,692 2,987 5,612
General and administrative..... 620 1,646 1,696 3,170
---------- ---------- ---------- ----------
Total operating expenses....... 1,732 3,802 4,984 9,966
---------- ---------- ---------- ----------
Interest income.................... -- 64 -- 151
---------- ---------- ---------- ----------
Net income (loss).................. $ 34 ($5,454) $ (2,981) $ (10,185)
========== ========== ========== ==========
Net loss per common and common
equivalent share............... $0.00 $(0.65) $(0.35) $(1.24)
========== ========== ========== ==========
Weighted average number of common
and common equivalent
shares outstanding............. 8,421,838 8,437,029 8,421,838 8,211,313
========== ========== ========== ==========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
S-5
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
Nexar Technologies, Inc. and Subsidiary
Condensed Consolidated Statements of Cash Flows
(In Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------
Sept. 30, Sept. 30,
1996 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss............................................ $(2,981) $(10,185)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization.................. 18 444
Changes in current assets and liabilities:
Accounts receivable......................... (7,822) (3,692)
Inventories................................. (2,984) (585)
Prepaid expenses and other current assets... (132) (968)
Accounts payable............................ 4,626 1,429
Accrued expenses............................ 210 (117)
Due to related parties...................... -- (545)
Deferred revenue............................ -- 1,908
------- --------
Net cash used in operating activities....... (9,065) (12,311)
Cash flows from investing activities:
Increase in short term investments.................. -- (997)
Purchases of property and equipment................. (134) (370)
Decrease in other assets............................ (91) 686
------- --------
Net cash (used in) provided by investing
activities.................................... (225) (681)
Cash flows from financing activities:
Borrowing (payments) of amounts to
related parties.............................. 16,457 (7,704)
Net proceeds from issuance of common stock..... -- 19,687
------- --------
Net cash provided by financing activities...... 16,457 11,983
Net increase (decrease) in cash and
cash equivalents...................................... 7,167 (1,009)
Cash and cash equivalents, beginning of period......... 981 2,739
------- --------
Cash and cash equivalents, end of period............... $ 8,148 $ 1,730
======= ========
Supplemental disclosure of non cash investing
and financing activities:
Conversion of amounts due to related parties to
preferred stock................................ -- 4,568
======= ========
Conversion of amounts due to related parties
to common stock................................ -- 10,000
======= ========
</TABLE>
S-6
<PAGE>
Nexar Technologies, Inc. and Subsidiary
Notes to Condensed Consolidated Financial Statements
1.) Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared by Nexar Technologies, Inc. (the "Company") pursuant to the rules and
regulations of the Securities and Exchange Commission regarding interim
financial reporting. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements and should be read in conjunction with the financial
statements and notes thereto for the year ended December 31, 1996 included in
the Company's Registration Statement on Form S-1 (File No. 333-18489), as
amended (the "Registration Statement"). The accompanying condensed consolidated
financial statements reflect all adjustments (consisting of normal, recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods presented. The results of
operations for the nine month period ended September 30, 1997 may not be
indicative of the results to be expected for the full year.
2.) Principles of Consolidation
The accompanying condensed consolidated financial statements include the
accounts of the Company and its wholly owned subsidiary. All significant
intercompany balances and transactions have been eliminated in consolidation.
3.) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or market and
consist of the following (in thousands):
<TABLE>
<CAPTION>
December 31, 1996 September 30, 1997
----------------- ------------------
Unaudited
<S> <C> <C>
Raw Materials.... $4,214 $3,656
Work-in-process.. 769 581
Finished Goods... 1,130 2,461
------ ------
$6,113 $6,698
====== ======
</TABLE>
Work-in-process and finished goods inventories consist of material, labor and
manufacturing overhead.
S-7
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
4.) Concentration of Credit Risk
Statement of Financial Accounting Standards (SFAS) No. 105, Disclosure of
Information About Financial Instruments with Off-Balance-Sheet Risk and
Financial Instruments with Concentrations of Credit Risk, requires disclosures
of any significant off-balance-sheet and credit risk concentrations. The Company
has no significant off-balance-sheet concentrations of credit risk such as
foreign currency exchange contracts, options contracts or other foreign hedging
arrangements. Financial instruments that subject the Company to credit risk
consist primarily of cash and cash equivalents and trade accounts receivable.
The Company places its cash and cash equivalents in highly rated financial
institutions. The Company's accounts receivable credit risk is limited to one
customer who represented approximately $2,968,000 of accounts receivable at
September 30, 1997. To reduce risk, the Company routinely assesses the financial
strength of its customers and, as a result, believes that its accounts
receivable credit risk exposure is limited. The Company maintains an allowance
for potential credit losses. The Company has not experienced any significant
losses related to individual customers or groups of customers in any particular
industry or geographic area.
5.) Net Loss per Common and Common Equivalent Share
Net loss per common and common equivalent share is computed by dividing the net
loss by the weighted average number of common and common equivalent shares
outstanding. Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin No. 83, and the Accounting Principles Board (APB) Opinion No. 15, the
weighted average number of common and common equivalent shares outstanding
assumes the conversion of $10,000,000 due to related parties into 700,000 shares
of the Company's common stock (excluding 1,200,000 shares of common stock
subject to a contingent repurchase right of the Company, at a nominal price per
share, and will only be released upon the attainment of certain revenue, net
income and stock price milestones, as defined in an agreement between the
Company's majority stockholder and the Company), and assumes that all common
stock and common stock equivalents issued within twelve months prior to the
initial filing of the Company's initial public offering (See Note 7) have been
included in the calculation, using the treasury stock method, as if they were
outstanding for all periods immediately preceding the initial public offering.
Options issued more than twelve months prior to the initial filing of the
Company's initial public offering have not been included as their effect would
be anti-dilutive.
6.) New Accounting Standard
On March 31, 1997, the Financial Accounting Standards Board issued SFAS No. 128,
Earnings Per Share. SFAS No. 128 establishes standards for computing and
presenting earnings per share and applies to entities with publicly held common
stock or potential common stock. SFAS No. 128 is effective for fiscal years
ending after December 15, 1997 and early adoption is not permitted. When adopted
by the Company, SFAS No. 128 will require restatement of prior years' earnings
per share. The Company will adopt SFAS No. 128 for its fiscal year ended
December 31, 1997. The Company believes that the adoption of SFAS No. 128 will
not have a material effect on its financial statements.
7.) Initial Public Offering
The Company completed its initial public offering of 2,500,000 shares at $9.00
per share on April 14, 1997. Net proceeds to the Company amounted to $19.7
million.
S-8
<PAGE>
SUPPLEMENT DATED NOVEMBER 20, 1997 TO PROSPECTUS DATED APRIL 15, 1997
SUBSEQUENT EVENT
On November 13, 1997, Arthur Andersen LLP ("Arthur Andersen") informed the
Company that
it was resigning as the Company's independent accountants. None of the reports
of Arthur Andersen on the Company's financial statements since the Company's
inception in March 1995 contained an adverse opinion or a disclaimer of opinion
or was qualified or modified as to uncertainty, audit scope or accounting
principles.
In connection with its audits for the fiscal year ended December 31, 1996
and for the period from inception (March 7, 1995) to December 31, 1995, and
through November 13, 1997, there were no disagreements concerning any matter of
accounting principals or practices, financial statement disclosure, or auditor
scope or procedure between the Company and Arthur Andersen which require
disclosure under the rules of the Securities and Exchange Commission, other than
a single difference of opinion between the Company and Arthur Andersen, which
was resolved to Arthur Andersen's satisfaction, regarding the accounting of
certain sales of products to a new foreign distributor during the quarter ended
June 30, 1997. Arthur Andersen took the position that the appropriate
accounting was to defer the recognition of revenue on these transactions until
payment was received. After full discussion of the matter between Arthur
Andersen and the Audit Committee of the Company's Board of Directors, the
Company accepted Arthur Andersen's recommended accounting treatment prior to
releasing its earnings and filing its Form 10-Q for such quarter. The Company
has authorized Arthur Andersen to respond fully to any inquiries by the
Company's new certifying accountants concerning such resolved matter.
S-9
