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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE __, 1998
REGISTRATION NO. 333-51507
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE AMENDMENT NO.1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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NEXAR TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
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DELAWARE NO. 04-3268334
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
257 TURNPIKE ROAD
SOUTHBOROUGH, MASSACHUSETTS 01772
(508) 485-7900
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
ALBERT J. AGBAY
PRESIDENT AND CHIEF EXECUTIVE OFFICER
NEXAR TECHNOLOGIES, INC.
257 TURNPIKE ROAD
SOUTHBOROUGH, MASSACHUSETTS 01772
(508) 485-7900
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------------
COPY TO:
DAVID A. CIFRINO, P.C.
MCDERMOTT, WILL & EMERY
75 STATE STREET
BOSTON, MASSACHUSETTS 02109
(617) 345-5000
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Approximate date of commencement of proposed sale to the public:
From time to time after effective date of this
Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, check the following box.
[_]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of earlier
effective registration statement for the same offering. [_]
- ------------------
If this Form is a post-effective amendment filed pursuant to a 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. [_]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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PROSPECTUS
5,460,000 SHARES
NEXAR TECHNOLOGIES, INC.
COMMON STOCK
The Prospectus relates to the resale of up to 5,460,000 shares (the
"Shares") of Common Stock, $0.01 par value per share, of Nexar Technologies,
Inc. (the "Company" or "Nexar") by certain selling security holders of the
Company (the "Selling Shareholders"). 3,200,000 of the shares of Common Stock
covered by this Prospectus may be issued to certain of the Selling Shareholders
upon conversion of shares of the Series B Convertible Preferred Stock, $0.01 par
value per share ("Series B Preferred Stock"), of the Company which were issued
to the Selling Shareholders pursuant to the several Private Placement Purchase
Agreements between the Company and the Selling Shareholders, each dated as of
March 20, 1998 (collectively, the "Purchase Agreements"). 160,000 of the shares
of Common Stock covered by this Prospectus may be issued to Selling Shareholders
holding shares of Series B Preferred Stock in lieu of cash dividends payable
thereon. The remaining 2,100,000 shares of Common Stock covered by this
Prospectus may be issued to Selling Shareholders who received certain warrants
(the "Warrants") to acquire shares of Common Stock in connection with the
placement of the Series B Preferred Stock. See "The Purchase Agreements."
The shares covered by this Prospectus represent 200% of the number of
shares that may be issued as of the date of this Prospectus based upon a
conversion price of $2.00 per share in the case of shares issued upon conversion
of Series B Preferred Stock and a market value issue price of $2.00 per share in
the case of shares issued in lieu of cash dividends thereon. The actual number
of shares of Common Stock offered hereby is subject to adjustment and could be
materially less or more than the estimated amount indicated depending upon
factors which cannot be predicted by the Company at this time, including, among
others, market prices prevailing at the actual date of conversion. This
presentation is not intended to constitute a prediction as to the future market
price of the Common Stock or as to when Selling Shareholders will elect to
convert shares of the Series B Preferred Stock.
-------------------------
THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK. FOR A
DISCUSSION OF CERTAIN FACTORS WHICH SHOULD BE CONSIDERED IN CONNECTION WITH THE
PURCHASE OF THESE SECURITIES, SEE "RISK FACTORS" BEGINNING ON PAGE 5.
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The Selling Shareholders and their agents, donees, distributees, pledgees
and other successors in interest may offer and sell the Shares from time to time
in one or more transactions on The Nasdaq Stock Market, or otherwise, at market
prices then prevailing or in negotiated transactions. The Shares may also be
sold pursuant to option, hedging or other transactions with broker-dealers. The
Shares may also be offered in one or more underwritten offerings. The
underwriters in an underwritten offering, if any, and the terms and conditions
of any such offering will be described in a supplement to this Prospectus. See
"Selling Shareholders" and "Plan of Distribution." All of the Shares offered
hereunder are to be sold by the Selling Shareholders. The Company will not
receive any of the proceeds from the sale of the Shares by the Selling
Shareholders. See "Use of Proceeds". The Common Stock of the Company is traded
on the National Market of The Nasdaq Stock Market (the "Nasdaq National Market")
under the symbol "NEXR". On June __, 1998, the last reported sale price of
Common Stock on the Nasdaq National Market was $__ per share.
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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.
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THE DATE OF THIS PROSPECTUS IS JUNE__, 1998.
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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, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission
pursuant to the informational requirements of the Exchange Act may be inspected
and copied at the public reference facilities maintained by the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's regional
offices located at Seven World Trade Center, 13th Floor, New York, New York
10048, and at Northwestern Atrium Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such materials also 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 Common Stock of the Company is
traded on the Nasdaq National Market. Reports, proxy statements and other
information concerning the Company also may be inspected at the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006. Certain documents filed by the Company with the Commission
electronically may also be obtained at the Commission's site on the World Wide
Web at www.sec.gov.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Stock offered hereby. This Prospectus does not contain
all of the information set forth in the Registration Statement and the exhibits
and schedules filed therewith. For further information with respect to the
Company and the Common Stock offered hereby, reference is hereby made to such
Registration Statement and to the exhibits and schedules filed therewith.
Statements contained in this Prospectus regarding the contents of any agreement
or other document are not necessarily complete, and in each instance reference
is made to the copy of such agreement or document filed as an exhibit to the
Registration Statement, each such statement being qualified in all respects by
such reference. The Registration Statement, including the exhibits and
schedules thereto, may be inspected without charge at the principal office of
the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, and copies of
all or any part thereof may be obtained from such office upon payment of the
prescribed fees. The Registration Statement may also be obtained at the
Commission's site on the World Wide Web at www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
0-29194) are incorporated herein by reference: (1) the Company's Annual Report
on Form 10-K for the fiscal year ended December 31, 1997 filed on March 31,
1998; (2) the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1998 filed on May 14, 1998; (3) the Company's definitive Proxy
Statement for the Annual Meeting of Stockholders of the Company scheduled to be
held June 22, 1998 filed on April 30, 1998; and (4) the Company's Registration
Statement on Form 8-A registering the Company's Common Stock under Section 12(g)
of the Exchange Act filed on March 17, 1997.
All documents filed by the Company with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date hereof and
prior to the termination of the offering of the Common Stock registered hereby
shall be deemed to be incorporated by reference into this Prospectus and to be a
part hereof from the date of filing of such documents. Any statements contained
in a document incorporated or deemed to be incorporated by reference herein
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shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus. The Company
will provide without charge to each person to whom this Prospectus is delivered,
upon a written request of such person, a copy of any or all of the foregoing
documents incorporated by reference into this Prospectus (other than exhibits to
such documents, unless such exhibits are specifically incorporated by reference
into such documents). Requests for such copies should be directed to the Chief
Financial Officer of the Company, 257 Turnpike Road, Southborough, Massachusetts
01772, Telephone: (508) 485-7900.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED IN
THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH OTHER INFORMATION AND
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT
RELATES. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL.
SPECIAL NOTE REGARDING FORWARD-LOOKING INFORMATION
Certain statements in this Prospectus and in the documents incorporated
herein constitute "forward-looking statements" within the meaning of Section 27A
of the Securities Act and Section 2B of the Exchange Act. For this purpose, any
statements contained herein or incorporated herein that are not statements of
historical fact may be deemed to be forward-looking statements. Without limiting
the foregoing, the words "believes," "plans," "expects" and similar expressions
are intended to identify forward-looking statements. There are a number of
important factors that could cause the results of the Company to differ
materially from those indicated by such forward-looking statements. These
factors include those set forth in "Risk Factors" herein.
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THE COMPANY
The Company is a new class of personal computer (PC) manufacturer which has
developed what it believes is the industry's first "future-ready" PC that is
readily upgradable using industry-standard components. Nexar PCs, which are
based on patented and patent-pending technologies, enable end-users to reduce
total cost of ownership (TCO), protect their technology investments and extend
the lifecycle of their PC. Unlike conventional PCs, NEXAR systems allow end-
users to easily upgrade or switch important components of the PC to accommodate
emerging and future technologies, resulting in a significant extension of the
computer's useful life. NEXAR sells a high-performance system which can be
shipped to resellers without the key system-defining components (microprocessor,
memory and hard drive), but which is otherwise fully configured. This ability:
. Enables the end-user, whether corporate or individual, to buy a system
configured exactly to that customer's technical and budgetary
requirements and, later, to easily upgrade the PC's key components
with industry-standard products.
. Enables the Company's resellers to offer Build-to-Order capability in
order to compete with direct marketers, such as Dell Computer and
Gateway 2000, because a NEXAR PC provides resellers with the ability
to promptly deliver a custom-configured, high-performance PC at a
competitive price.
The Company's objective is to become the industry leader in designing and
marketing PCs with technology which enables resellers and end-users, in an easy
and cost-effective manner, to upgrade and transition the central processing unit
(CPU) and the other key system-defining components in accordance with the known
and anticipated roadmaps of various makers of fundamental and leading edge PC
technology. NEXAR's current PCs feature the Company's patent-pending Cross-
Processor Architecture(TM) (NEXAR XPA(TM)) in which any one of several state-of-
the-art CPUs can be initially included or later installed, including Intel
Corporation's Pentium, Pentium Pro, Pentium II, dual Pentium II and compatible
CPUs. The Company also intends to develop the NEXAR XPA technology to
accommodate microprocessors based on other technologies. The NEXAR XPA allows
the CPU, random access memory (RAM), and cache memory to be replaced by end-
users without technical assistance. The Company's PCs also feature a removable
hard drive, permitting its replacement and the further advantages of increased
data portability and security, and the use of multiple operating systems in a
single PC. The Company does not market its products directly to end-users, but
instead distributes its products through a network of international, national
and regional distributors, value-added and other resellers, original equipment
manufacturers (OEMs), system integrators, computer superstores, direct response
resellers, and independent dealers.
The Company's principal executive offices are located at 257 Turnpike Road,
Southborough, Massachusetts 01772, and its telephone number is (508) 485-7900.
The Company's logo, Cross-Processor Architecture, NEXAR XPA and XPA are
trademarks of the Company and Nexar and Nexar Technologies are trade names of
the Company. This Prospectus and the documents incorporated by reference herein
also include trademarks and trade names of companies other than Nexar.
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RISK FACTORS
In addition to the other information contained in this Prospectus and in
the documents incorporated herein by reference (see "Incorporation of Certain
Documents by Reference" above), the following factors should be considered
carefully in evaluating an investment in the Common Stock.
LIMITED OPERATING HISTORY; HISTORY OF OPERATING LOSSES; ACCUMULATED DEFICIT
The Company was incorporated in March 1995 and commenced selling its PCs in
volume in April 1996. Accordingly, the Company has a limited operating history
upon which an evaluation of the Company and its prospects can be based. The
Company's prospects must be evaluated with regard to the risks encountered by a
company in an early stage of development, particularly in light of the
uncertainties relating to the intensely competitive market in which the Company
operates. As of March 31, 1998, the Company had an accumulated deficit of
$27,359,243. The Company's ability to generate significant revenue growth in the
future is subject to substantial uncertainty.
SIGNIFICANT CAPITAL REQUIREMENTS; UNCERTAINTY OF ADDITIONAL FUNDING
The Company's capital requirements in connection with its development and
marketing activities have been and will continue to be significant. The Company
believes that amounts available from cash generated from operations and the
recent sale of securities and future financing transactions which the Company is
currently seeking to consummate will be sufficient to meet the Company's cash
requirements through at least the next twelve months. The Company does need to
raise funds within the next few months in order to fund its operations, develop
new or enhanced products, and respond to competitive pressures. There can be no
assurance that such financing will be available. If adequate funds are not
available or are not available on acceptable terms, the Company may be unable to
continue operations, develop or enhance products or services, take advantage of
future opportunities, or respond to competitive pressures, which would have a
material adverse effect on the Company's business, financial condition and
operating results. Cash requirements for periods beyond the next twelve months
depend on the Company's profitability, its ability to manage working capital
requirements and its growth rate.
RISKS ASSOCIATED WITH INTENSE COMPETITION
The desktop PC industry is intensely competitive and may become more so as
the result of, among other things, the introduction of new competitors
(including large multi-national, diversified companies) and possibly weakening
demand. The Company currently competes in the desktop PC market principally with
Acer America, Apple Computer, Compaq Computer, Dell Computer, Gateway 2000,
Hewlett-Packard, IBM and Packard Bell NEC. All of these companies have stronger
brand recognition, significantly greater financial, marketing, manufacturing,
technological and distribution resources, broader product lines and larger
installed customer bases than does the Company. Principal competitive factors
include product features, product performance, quality and reliability, the
ability to deliver product to customers in a timely fashion, customer service
and
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support, marketing and distribution capabilities and price. Also, in order to
compete successfully, the Company must attract and retain a sufficient number of
management, sales and technical personnel with high levels of relevant skills
and meaningful experience. Although the Company has assembled an experienced
senior management team, there can be no assurance that the Company will be able
to attract and retain sufficient numbers of additional personnel, as the need
for such individuals increases with the Company's anticipated growth, or
maintain or improve its current position with respect to any of these or other
competitive factors. This intense competition could result in loss of customers
or pricing pressures, which would negatively affect the Company's results of
operations.
The Company's ability to compete favorably is dependent, in significant
part, upon its ability to control costs, react timely and appropriately to
short- and long-term trends and competitively price its products while
preventing erosion of its margins, and there is no assurance that the Company
will be able to do so. Many of the Company's competitors can devote greater
managerial and financial resources than the Company can to develop, promote and
distribute products and provide related consulting and training services. Some
of the Company's competitors have established, or may establish, cooperative
arrangements or strategic alliances among themselves or with third parties, thus
enhancing their ability to compete with the Company. There can be no assurance
that the Company will be able to compete successfully against current or future
competitors or that the competitive pressures faced by the Company will not
materially and adversely affect its business, operating results and financial
condition.
DEPENDENCE ON SUBSTANTIAL CUSTOMER
In the fiscal year ended December 31, 1997, one customer of the Company,
Government Technology Services, Inc. (GTSI), a leading supplier of desktop
systems to United States government agencies, accounted for approximately 44% of
the Company's revenues. The Company expects that GTSI will continue to be an
important customer, but that sales to GTSI as a percentage of total revenues
will decline further as the Company further expands its distribution network and
increases its overall sales. The Company has entered into an agreement with GTSI
pursuant to which GTSI serves as the Company's exclusive federal reseller with
respect to Government Services Administration (GSA) scheduled purchases,
provided that GTSI purchases a specified minimum of the Company's products in
1998. GTSI is under no obligation, however, to purchase any products of the
Company. If GTSI makes fewer purchases in 1998 than the Company anticipates,
that would have a material adverse effect on the Company.
MANAGEMENT OF GROWTH
The anticipated growth in the size, geographic scope and complexity of the
Company's business and development of its customer base are expected to place a
significant strain on the Company's management, operations and capital needs.
The Company's continued growth, if any, will require it to attract, motivate and
retain additional highly skilled technical, managerial, consulting, sales and
marketing personnel both in the United States and abroad, and will also require
the Company to enhance its financial and managerial controls and reporting
systems. There is no assurance that the Company can manage its growth
effectively or that the Company will be able to attract and retain the necessary
personnel to meet its business challenges. If the Company is unable to manage
its growth effectively, the Company's business, financial condition and
operating results would be materially and adversely affected.
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DEPENDENCE ON NEW PRODUCTS; MARKET ACCEPTANCE
The Company's future success will be highly dependent upon its ability to
develop, produce and market products that incorporate new technology, are priced
competitively and achieve significant market acceptance. There can be no
assurance that the Company's products will be technically advanced or
commercially successful due to the rapid improvements in computer technology and
resulting product obsolescence. There is also no assurance that the Company will
be able to deliver commercial quantities of new products in a timely manner. The
success of new product introductions is dependent on a number of factors,
including market acceptance, the Company's ability to anticipate and manage
risks associated with product transitions, effective product marketing, proper
management of inventory levels in line with anticipated product demand and the
timely manufacturing of products in appropriate quantities to meet anticipated
demand. The Company currently has no other product lines, such as notebook
computers or other computer related products, planned. The failure of the
Company to develop, produce and market commercially viable products could result
in the Company's business, operating results and financial condition being
materially and adversely affected.
PRODUCT DEVELOPMENT RISKS
The Company's product development efforts will continue to require
substantial investments by the Company for third-party development, refinement
and testing, and there can be no assurance that the Company will have the
resources sufficient to make such investments. Participants in the PC industry
generally rely on the creation and implementation of technology standards to win
the broadest market acceptance for their products. The Company must successfully
monitor and participate in the development of standards while continuing to
differentiate its products in a manner valued by customers. Industry
participants generally accept, and may encourage, the use of their intellectual
property by third parties under license. Nonetheless, when intellectual property
owned by competitors or suppliers becomes accepted as an industry standard, the
Company must obtain a license, purchase components utilizing such technology
from the owners of such technology or their licensees, or otherwise acquire
rights to use such technology. The failure of the Company to license, purchase
or otherwise acquire rights to such technologies could result in the Company's
business, operating results and financial condition being materially and
adversely affected.
DEPENDENCE ON OUTSIDE PRODUCT ENGINEERING
The Company currently has only a limited product development staff. The
Company has engaged GDA Technologies, Inc. (GDA), a provider of computer
engineering services, to develop its new patent-pending NEXAR XPA technology and
to implement this technology on several motherboards for use in its XPA PCs.
Although the Company believes that it could find and engage equivalent
development and engineering services elsewhere within a reasonable period of
time, or hire sufficient capable engineers to perform such development work in-
house, the inability of GDA to adequately perform such services on a timely
basis could have a material adverse effect on the Company.
UNCERTAINTY REGARDING INTELLECTUAL PROPERTY RIGHTS
The Company's success is dependent in large part upon its intellectual
property rights. In September 1997, the United States Patent and Trademark
Office issued the Company a patent
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covering the essential technology which enables the easy installation, removal
and replacement of key components in the Company's original PCs, which was the
predecessor to its XPA architecture. The Company has filed an additional patent
application relating to the same technology covered by the patent which has
issued. The Company has also filed ten domestic and foreign patent
applications, the first in late 1996, covering its XPA technology. There can be
no assurance that any patents will be issued pursuant to the pending or future
patent applications of the Company. Even if issued, there can be no assurance
that the patent which has issued or any future patents would survive a legal
challenge to their validity or provide adequate protection. In addition, the
Company has not conducted any formal study of prior art and, therefore, has not
determined what effect any prior art may have on any such patents that may
issue. The Company also relies on copyrights, unpatented trade secrets and
trademarks to protect its proprietary technology. No assurance can be given
that the Company's competitors will not independently develop or otherwise
acquire substantially equivalent techniques or otherwise gain access to the
Company's proprietary technology or that the Company can ultimately protect its
rights to such proprietary technology. In addition, there can be no assurance
that the Company will be able to afford the expense of any litigation which may
be necessary to enforce its rights under any such patents that may issue. The
Company also relies on confidentiality agreements with its collaborators,
employees, advisors, vendors and consultants to protect its proprietary
technology. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or be independently
developed by competitors. Failure to obtain or maintain patent and trade secret
protection, for any reason, could have a material adverse effect on the
Company's business, financial condition and results of operations.
In addition, the Company has been advised by counsel for NEXOR Ltd.
("NEXOR"), an electronic messaging software company based in the United Kingdom,
that such company claims prior use of the name NEXOR and intends to oppose the
Company's registration of its NEXAR trademark, which is currently pending before
the United States Patent and Trademark Office. Such counsel has proposed an
agreement pursuant to which, among other things, the parties would each consent
to the other's use of their respective names so long as the respective parties
do not market classes of goods or services falling within the other party's
classes of goods or services. While the Company believes that it will be able to
resolve this potential dispute and continue to use the NEXAR trademark on its
current and anticipated products, there can be no assurance that an agreement
with NEXOR acceptable to the Company will be reached. The failure to reach a
satisfactory agreement could result in the inability of the Company to obtain
registration for the name NEXAR and/or litigation with NEXOR. An adverse
determination of any such litigation could result in the Company having to cease
use of the NEXAR trademark, which could have a material adverse effect on the
Company.
Also, NexTrend Technologies, Inc., a manufacturer of computer hardware has
filed a Notice of Opposition at the United States Patent and Trademark Office to
the Company's application to register the NEXAR mark for instructional manuals
in view of NexTrend's use of the NEXSTAR mark. NexTrend claims that the marks
are confusingly similar and that, as between the two parties it used its NEXSTAR
mark first. The Company has filed an answer to the Notice of Opposition denying
these allegations. Nonetheless, if NexTrend were to prevail in this matter and
then bring an action against NEXAR for trademark infringement an adverse
determination of such action could have a material adverse effect on NEXAR.
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POTENTIAL INFRINGEMENT OF PROPRIETARY TECHNOLOGY
Although the Company believes that its products do not infringe patents or
other proprietary rights of third parties, there can be no assurance that the
Company is aware of all patents or other proprietary rights that may be
infringed by the Company's products, that any infringement does not exist or
that infringement may not be alleged by third parties in the future. If
infringement is alleged, there can be no assurance that the necessary licenses
would be available on acceptable terms, if at all, or that the Company would
prevail in any related litigation. Patent litigation can be extremely protracted
and expensive even if the Company ultimately prevails, and involvement in such
litigation and related diversion of management attention and resources could
have a material adverse effect on the business, results of operations and
financial condition of the Company.
RISK OF TECHNOLOGICAL OBSOLESCENCE
There can be no assurance that products or technologies of the Company's
competitors will not render the Company's products or technologies
noncompetitive or obsolete. Although the Company's product lines have been
designed to forestall such obsolescence, there can be no assurance that the
Company's products will be competitive with products offered by other
manufacturers. In addition, delays in access to technology developed by
competitors and suppliers could slow the Company's design and manufacture of
components and subsystems that distinguish its products. If the Company is
unable for technological or other reasons to develop and introduce new or
enhanced products and services in a timely and effective manner, the Company's
business, operating results and financial condition would be materially and
adversely affected.
FORECASTING ISSUES
Because of the pace of technological advances in the computer industry, the
Company must introduce on a timely basis new products that offer customers
competitive technologies while managing the production and marketing cycles of
its existing products. Forecasting demand for newly-introduced products is
complicated by the availability of different product models, which may include
various types of built-in peripherals and software in certain markets. As a
result, while overall demand may be in line with the Company's projections and
manufacturing implementation, local market variations can lead to differences
between expected and actual demand and resulting delays in shipment, which can
affect the Company's financial results.
DEPENDENCE UPON THIRD PARTIES TO PERFORM SERVICE OBLIGATIONS
All of the Company's products are sold with a three year limited warranty
on hardware with one year on-site service. The Company currently lacks the
capability to provide technical support for its PCs in the field and it and
certain of its resellers have contracted with third party service providers,
including Wang, to perform the Company's warranty obligations with respect to
its products. These companies provide NEXAR's customers on-site hardware
support, including diagnostics and repair and also provides telephone support
for software products bundled with NEXAR's systems for a period of 90 days.
While the Company and its resellers selected these providers based on its belief
that these companies have the capability to perform these warranty obligations
on a timely and efficient basis, the failure of these providers to meet the
demands of the end-users of the Company's products could materially and
adversely affect the reputation of the Company and its products, which in turn
could result in lower sales and profits.
9
<PAGE>
DEPENDENCE ON MARKET SUCCESS OF THIRD PARTY CHANNEL DISTRIBUTION
The Company does not sell its products directly to end-users, but relies
instead on a variety of distribution channels, primarily distributors, value-
added and other resellers, original equipment manufacturers (OEMs), systems
integrators, direct response resellers, and independent dealers. The Company's
revenue is dependent, among other things, upon the ability of these distribution
channels to sell the Company's products to end-users. Factors affecting the
ability of these distribution channels to develop and sell their products
include competition, their ability to offer products that meet user requirements
at acceptable prices and overall economic conditions in both the United States
and foreign markets. The Company's business, results of operations and financial
condition would be materially and adversely affected if these distribution
channels are unsuccessful in selling the Company's products.
RELIANCE ON SUPPLIERS; RISK OF DELAY
The Company's manufacturing process requires a high volume of quality
components that are procured from third party suppliers. Reliance on suppliers,
as well as industry supply conditions generally, involves several risks,
including the possibility of defective parts, a shortage of components,
increases in component costs and reduced control over delivery schedules, any or
all of which could adversely affect the Company's financial results. As part of
the manufacturing process, the Company uses industry standard components for its
products. Most of these components are generally available from multiple
sources; however, the Company relies on two outside contractors to manufacture
motherboards used in its PCs. In addition, the Company relies on a single
supplier to produce its customized chassis and has several other single supplier
relationships for less critical components, and the lack of availability of
timely and reliable supply of components from these sources could adversely
affect the Company's business. Also, the Company ultimately is reliant on major
suppliers of key components, such as CPUs and chipsets sold by Intel, which are
included in the Company's products, either at the request of a customer prior to
shipment or by the Company's resellers. Occasionally, such components are
subject to allocations and the Company has at times experienced difficulty in
obtaining sufficient quantities of such products. In some cases, alternative
sources of supply are not readily available for some of the Company's single-
sourced components. In other cases, the Company may establish a working
relationship with a single source, even when multiple suppliers are available,
if the Company believes it is advantageous to do so due to performance, quality,
support, delivery, capacity or price considerations. Where alternative sources
are available, qualification of the alternative suppliers and establishment of
reliable supplies could result in delays, which could adversely affect the
Company's manufacturing processes and results of operations.
The Company occasionally experiences delays in receiving certain
components, which can cause delays in the shipment of some products to
customers. There can be no assurance that the Company will be able to continue
to obtain additional supplies of reliable components in a timely or cost-
effective manner.
RISKS ASSOCIATED WITH INVENTORY LEVELS
Although the design of the NEXAR PC provides the Company with the ability
to operate with reduced inventories of components and finished goods, shifts in
technology and market demand may nevertheless result in excess inventory,
declining inventory values or even obsolescence. Maintaining
10
<PAGE>
a low inventory level is dependent upon the Company's ability to achieve
targeted revenue and product mix. There can be no assurance that the Company
will be able to maintain optimal inventory levels in future periods.
DEPENDENCE ON KEY PERSONNEL
The Company's future success depends to a significant extent on certain key
personnel, including its Chairman and Chief Executive Officer, Albert J. Agbay,
and its other executive officers and certain technical, managerial, consulting,
sales and marketing personnel. The loss of the services of any of these
individuals or group of individuals could have a material adverse effect on the
Company's business, operating results and financial condition.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS
The Company's quarterly revenues, expenses and operating results are likely
to vary considerably in the future. Such fluctuations can be traced to many
factors, including the timing and terms of large transactions, delays in
customer acceptance, delays in receiving components, the length of sales cycles,
changes in the level of operating expenses, demand for the Company's products
and services, the introduction of new products and product enhancements by the
Company and its competitors, changes in customer budgets, competitive conditions
in the industry and general economic conditions. For example, during the third
quarter of 1997, the Company did not have in inventory and was unable to obtain
on a timely basis sufficient quantities of key components to meet outstanding
purchase orders, which caused the financial results for such period to be
adversely affected. The Company budgets its product development and other
expenses anticipating future revenues. If revenues fall below expectations, the
Company's business, operating results and financial condition are likely to be
materially and adversely affected because a proportionately smaller amount of
the Company's expenses vary with its revenues. As a result, the Company believes
that period-to-period comparisons of its operating results are not necessarily
meaningful and should not be relied upon to predict future performance. Due to
the foregoing factors, it is likely that, in some future quarters, the Company's
operating results will fall below the market's or investors' expectations, and,
in such event, the price of the Common Stock would likely be materially and
adversely affected.
RISKS ASSOCIATED WITH INTERNATIONAL EXPANSION
The Company plans to expand its business into international markets.
To date, the Company has minimal experience in marketing and distributing its
products internationally and plans to establish alliances with sales
representative organizations and resellers with particular experience in
international markets. Accordingly, the Company's success in international
markets will be substantially dependent upon the skill and expertise of such
international participants in marketing the Company's products. There can be no
assurance that the Company will be able to successfully market, sell and deliver
its products in these markets. In addition, there are certain risks inherent in
doing business in international markets, such as unexpected changes in
regulatory requirements, export restrictions, tariffs and other trade barriers,
difficulties in staffing and managing foreign operations, political instability
and fluctuations in currency exchange rates and potentially adverse tax
consequences, which could adversely impact the success of the Company's
international operations. There can be no assurance that one or more of such
factors will not have a material adverse effect on the Company's future
international operations and, consequently, on the Company's business, financial
condition or operating results.
11
<PAGE>
RECENT DEVELOPMENTS
During 1997 many computer manufacturers, including industry leader Compaq
Computer, began offering PCs to home customers for less than $1,000. This has
led to growth in the home PC market, but also increased pressure on price
margins in the corporate, government and educational PC markets in which the
Company primarily competes. Industry forecasters are predicting that prices for
a wide range of PC hardware products will fall significantly during 1998 and
profit margins for makers of corporate PC systems will generally decline.
Although the Company believes that its relationships with its customers are good
and that its focus on increasing sales through private brand OEM agreements and
other strategic distribution agreements is a sound strategy for growth, there
can be no assurance that the recent trends in the industry identified above will
not have a material adverse effect on the Company and preclude it from achieving
profitability in the foreseeable future. Due to these factors, management of
the Company has determined that it is in the best interests of the Company and
its stockholders to explore the possibility of entering into strategic alliances
with larger industry participants. In March 1998, the Company engaged Southport
Partners, L.P., an investment banking firm based in Southport, Connecticut, to
provide advisory services to the Company concerning a possible joint venture, a
sale of the Company, licensing and other potential transactions. The Company is
not currently engaged in any negotiations with respect to any such potential
transaction nor has any determination been made by the Company whether to enter
into any such transaction.
Due to the factors described in the preceding paragraph, the shortfall in
the Company's revenues in the first quarter of 1998, and the uncertainty of
obtaining additional financing as needed, the Company is currently developing
plans to restructure its operations. Such a restructuring could involve, among
other things, cost reductions, outside contract manufacturing, joint ventures or
a combination of these and other initiatives. The Company has not as of the
date of this report made any final determination as to the details of any such
plan.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders.
12
<PAGE>
THE PURCHASE AGREEMENTS
GENERAL
On March 20, 1998, pursuant to the Purchase Agreements, the Company
consummated a private placement financing transaction (the "Private Placement")
resulting in gross proceeds to the Company of $3,200,000. The Company issued an
aggregate of 32,000 shares of the Company's Series B Preferred Stock in the
Private Placement. As compensation for services rendered in connection with the
Private Placement, the Company also issued to Adar Equities, LLC and Mueller &
Company, Inc. cash compensation of $80,000 each and warrants (the Warrants")
exercisable prior to March 20, 2002 for up to an aggregate of 2,100,000 shares
of Common Stock, subject to the Share Issuance Limit, at the following exercise
prices: 1,000,000 shares are exercisable at $4.00 per share; 550,000 shares are
exercisable at $4.25 per share and 550,000 shares are exercisable at $4.75 per
share. Each of the Warrants provide that they are not exercisable to the extent
that following any such exercise, the holder thereof would then be the
"beneficial owner" (as defined in Section 13(d) of the Exchange Act) of 10% or
more of the Company's then outstanding Common Stock. All of the securities sold
in the Private Placement were sold solely to accredited investors under the
Securities Act.
SUMMARY OF TRANSACTION TERMS
Set forth below is a summary of the material terms of the Private
Placement, which summary is qualified by reference to the full text of the
underlying documents which have been filed as exhibits to the Registration
Statement of which this Prospectus is a part.
Each share of Series B Preferred Stock is convertible into the number of
shares of Common Stock (subject to the Share Issuance Limit described in the
following paragraph) determined by dividing $100 by the lesser of (a) $3.25 and
(b) 75% of the average of the closing bid price of a share of the Common Stock
during the five trading days prior to such conversion. Until converted, each
share of Series B Preferred Stock is entitled to receive quarterly dividends at
the rate of $5.00 per share per annum, payable in cash or shares of Common Stock
having a market value equal to the dividend payable. The Company agreed to
register the shares of Common Stock issuable upon conversion of the Series B
Preferred Stock, shares of Common Stock issued in lieu of cash dividends thereon
at the option of the Company and shares of Common Stock issued upon exercise of
the Warrants for resale under the Securities Act no later than May 1, 1998. The
dividend increases to $18.00 per share per annum if resales of the Issuances are
not subject to an effective registration statement under the Securities Act by
June 30, 1998 and to $24.00 a share per annum if resales of shares issued in the
Issuances are not subject to such a registration statement by August 31, 1998.
Each share of Series B Preferred Stock is also entitled to a liquidation
preference of $100 per share, plus any accrued but unpaid dividends in
preference to any other class or series of capital stock of the Company. Except
as provided by applicable law, holders of shares of Series B Preferred Stock
have no voting rights. Shares of Series B Preferred Stock are convertible at any
time prior to March 1, 2000, on which date all outstanding shares of the Series
B Preferred Stock will automatically convert into shares of Common Stock at the
then applicable conversion rate.
The exact number of shares of Common Stock issuable upon conversion of the
Series B Preferred Stock and exercise of the Warrants (collectively, the
"Issuances") cannot currently be determined because the number of shares
issuable upon conversion of the Series B Preferred Stock
13
<PAGE>
is dependent on future events, principally consisting of the future trading
prices of the Common Stock and the conversion decisions of holders of shares of
the Series B Preferred Stock. The number of shares of Common Stock issuable as
a result of the conversion of the Series B Preferred Stock generally will vary
inversely with the market price of the Common Stock. Rules of the National
Association of Securities Dealers applicable to the Company require that the
Company obtain approval of its stockholders before the issuance at a price per
share below the greater of market or book value of the Common Stock of
securities (or securities convertible thereinto) having voting power equal to or
greater than 20% or more of the outstanding Common Stock of the Company.
Accordingly, the Warrants and the Certificate of Designation (the "Certificate")
for the Series B Preferred Stock each provide that no more than 2,001,810 shares
(the "Share Issuance Limit") of Common Stock (equal to approximately 19.99
percent of the Common Stock based on the 10,009,055 shares of Common Stock
outstanding as of March 20, 1998) are issuable upon the total aggregate of
conversions of the Series B Preferred Stock and the Warrants (on a first
converted/first exercised basis) until stockholder approval of the Issuances are
obtained. The Certificate and the Warrants require that the Company seek to
obtain stockholder approval of the Issuances at a meeting of stockholders on or
prior to June 30, 1998. It is presently expected that this approval will be
sought at a annual meeting of stockholders to be held on June 22, 1998. Under
the terms of Certificate and the Warrants, holders of shares of Common Stock
issued upon conversion of the Series B Preferred Stock or exercise of the
Warrants are not entitled to vote such shares at the annual meeting or any other
meeting at which such approval is sought. The Certificate also provides that
shares of the Series B Preferred Stock shall not be convertible at any time to
the extent that the holder of shares thereof would after such conversions be the
beneficial holder of more than 9.99% of the outstanding shares of Common Stock.
If stockholder approval of the Issuances is not approved by the
stockholders of the Company at a meeting held prior to June 30, 1998, the
holders of the Series B Preferred Stock shall have the right at any time to
require the Company to redeem any portion or all of any outstanding shares of
the Series B Preferred Stock at a price equal to $125 per share which sum would
accrue interest at the rate of 11% per annum until paid. If all 32,000 shares of
Series B Preferred Stock were so redeemed, the Company would be required to pay
the holders thereof a total of $4 million. In addition, during the absence of
such stockholder approval the holders of the Warrants shall have the right to
require the Company to redeem any portion of the Warrants designated by such
holders for redemption at a redemption price per share equal to the pre-tax
profit such holders would have earned had such holders, at the close of business
on the date of its demand for redemption, exercised the redeemed portion and
simultaneously sold the shares received on such exercise at the closing sales
price of the Common Stock on such date, such redemption price accruing interest
at 11% per annum until paid. There can be no assurance that the Company will
have available cash resources to redeem the Series B Preferred Stock or Warrants
if required to do so. In the event stockholder approval of the Issuances is not
obtained, redemption of a substantial number of shares of Series B Preferred
Stock or warrants could have a material adverse effect on the Company's
financial condition and its ability to implement its business strategy. Further,
if any such redemption causes the Company to fail to meet the listing
requirements of the Nasdaq National Market, including the requirement that the
Company have tangible net assets in excess of $4 million, the Company would be
subject to delisting. If delisted from the Nasdaq National Market, the Company
would attempt to become listed on another stock exchange where it is able to
meet the listing requirements or to arrange for the Common Stock to be traded on
the Nasdaq electronic bulletin board.
14
<PAGE>
SELLING SHAREHOLDERS
Set forth below is the number of shares of Common Stock beneficially owned
by the Selling Shareholders as of April 15, 1998, the number of Shares offered
pursuant to this Prospectus and the number of shares to be owned after
completion of the offering (assuming the sale of all the Shares offered
hereunder).
<TABLE>
<CAPTION>
Number of Number of Shares
Total Number of Shares to be to be Owned After
Name Shares Owned Offered or Sold the Offering (1)
- ---- ------------ --------------- ------------------
<S> <C> <C> <C>
Adar Equities, LLC 1,050,000(2) 1,050,000 0
Beauchamp Finance 315,000(3)(4) 315,000 0
Dora Fried 262,500(3)(5) 262,500 0
Ellanby Ltd. 262,500(3)(5) 262,500 0
Euro Factors Intl. Inc. 656,250(3)(6) 656,250 0
Mueller & Company, Inc. 1,050,000(2) 1,050,000 0
Olam Investments Ltd. 183,750(3)(7) 183,750 0
</TABLE>
_________________________
(1) Assumes that the Selling Shareholders will each sell all of the Shares
registered hereunder. The Selling Shareholders may sell all or any part of
its Shares pursuant to this Prospectus.
(2) Such Shares may be acquired upon exercise of Warrants acquired in the
Private Placement. See "The Purchase Agreements" above.
(3) Such beneficial ownership represents an estimate of the number of shares of
Common Stock issuable upon the conversion of shares of the Series B
Preferred Stock and shares issued in lieu of cash dividends payable thereon
beneficially owned by such person, assuming a price of $2.00 per share of
Common Stock was used to determine the number of shares of Common Stock
issuable upon conversion. The actual number of shares of Common Stock
offered hereby is subject to adjustment and could by materially less or
more than the estimated amount indicated depending upon factors which
cannot be predicted by the Company at this time, including, among others,
application of the conversion provisions based on market prices prevailing
at the actual date of conversion. This presentation is not intended to
constitute a prediction as to the future market price of the Common Stock
or as to when Selling Stockholders will elect to convert shares of
Convertible Preferred Stock issued in the Private Placement.
(4) Includes up to 15,000 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
(5) Includes up to 12,500 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
(6) Includes up to 31,250 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
(7) Includes up to 8,750 shares of Common Stock which may be issued to such
person in lieu of cash dividends, assuming a fair market value basis of the
number of shares issuable of $2.00 per share.
15
<PAGE>
PLAN OF DISTRIBUTION
The Selling Shareholders and their agents, donees, distributees, pledgees
and other successors in interest may, from time to time, offer for sale and sell
or distribute the Shares to be offered by them hereby (a) in transactions
executed on the Nasdaq National Market, or any securities exchange on which the
shares may be traded, through registered broker-dealers (who may act as
principals, pledgees or agents) pursuant to unsolicited orders or offers to buy,
(b) in negotiated transactions, or (c) through other means. The Shares may be
sold from time to time in one or more transactions at market prices prevailing
at the time of sale or a fixed offering price, which may be changed, or at
varying prices determined at the time of sale or at negotiated prices. Such
prices will be determined by the Selling Shareholders or by agreement between
the Selling Shareholders and their underwriters, dealers, brokers or agents.
The Shares may also be offered in one or more underwritten offerings. The
underwriters in an underwritten offering, if any, and the terms and conditions
of any such offering will be described in a supplement to this Prospectus.
In connection with distribution of the Shares, the Selling Shareholders may
enter into hedging or other option transactions with broker-dealers in
connection with which, among other things, such broker-dealers may engage in
short sales of the Shares pursuant to this Prospectus in the course of hedging
the positions they may assume with one or more of the Selling Shareholders. The
Selling Shareholders may also sell Shares short pursuant to this Prospectus and
deliver the Shares to close out such short positions. The Selling Shareholders
may also enter into option or other transactions with broker-dealers which may
result in the delivery of Shares to such broker-dealers who may sell such Shares
pursuant to this Prospectus. The Selling Shareholders may also pledge the
Shares to a broker-dealer and upon default the broker-dealer may effect the
sales of the pledged Shares pursuant to this Prospectus.
The distribution of the Shares by the Selling Shareholders is not subject
to any underwriting agreement. Any underwriters, dealers, brokers or agents
participating in the distribution of the Shares may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the
Selling Shareholders and/or purchasers of Shares, for whom they may act. Such
discounts, concessions, commissions or fees will not exceed those customary for
the type of transactions involved. In addition, the Selling Shareholders and
any such underwriters, dealers, brokers or agents that participate in the
distribution of Shares may be deemed to be underwriters under the Securities
Act, and any profits on the sale of Shares by them and any discounts,
commissions or concessions received by any of such persons may be deemed to be
underwriting discounts and commissions under the Securities Act. Those who act
as underwriter, broker, dealer or agent in connection with the sale of the
Shares will be selected by the Selling Shareholders and may have other business
relationships with the Company and its subsidiaries or affiliates in the
ordinary course of business.
The aggregate proceeds to the Selling Shareholders from the sale of the
Shares offered by the Selling Shareholders hereby will be the purchase price of
such Shares less any broker's commissions.
In order to comply with the securities laws of certain states, if
applicable, the Shares will be sold in such jurisdiction 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
16
<PAGE>
applicable state or an exemption from the registration of qualification
requirement is available and is complied with.
The Selling Shareholders and any broker-dealer, agent or underwriter that
participates with the Selling Shareholders in the distribution of the Shares may
be deemed to be "underwriters" within the meaning of the Securities Act, in
which event any commissions received by such broker-dealers, agents or
underwriters and any profit on the resale of the Shares purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the Shares offered hereby may not simultaneously
engage in market making activities with respect to the Shares for a period of
two business days prior to the commencement of such distribution. In addition,
and without limiting the foregoing, the Selling Shareholders will be subject to
applicable provisions of the Exchange Act and the rules and regulations
thereunder, including, without limitation, Rules 10b-2, 10b-5, 10b-6 and 10b-7,
which provisions may limit the timing of sales of the Shares by the Selling
Shareholder.
There is no assurance that the Selling Shareholders will sell any or all of
the Shares described herein and may transfer, devise or gift such securities by
other means not described herein. The Company is permitted to suspend the use
of this Prospectus in connection with sales of the Shares by holders during
certain periods of time under certain circumstances relating to pending
corporate developments and public filings with the Commission and similar
events. Expenses of preparing and filing the registration statement all post-
effective amendments will be borne by the Company.
INTERESTS OF NAMED EXPERTS AND COUNSEL
The legality of the Common Stock offered hereby is being passed upon for
the Company by McDermott, Will & Emery (a partnership including professional
corporations), Boston, Massachusetts. David A. Cifrino, the Secretary of the
Company, is the President of David A. Cifrino, P.C., a Massachusetts
professional corporation which is a partner of McDermott, Will & Emery.
17
<PAGE>
================================================================================
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT 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. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN
OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY
JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Available Information............................ 2
Incorporation of Certain Documents by
Reference...................................... 2
The Company...................................... 4
Risk Factors..................................... 5
Recent Developments.............................. 12
Use of Proceeds.................................. 12
The Purchase Agreements.......................... 13
Selling Shareholders............................. 15
Plan of Distribution............................. 16
Interests of Named Experts
and Counsel..................................... 17
</TABLE>
- --------------------------------------------------------------------------------
5,460,000 SHARES
NEXAR TECHNOLOGIES, INC.
COMMON STOCK
-------------------------
PROSPECTUS
JUNE__, 1998
-------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the
registrant in connection with the distribution of the securities being
registered hereunder. All of the amounts shown are estimates, except the
Securities and Exchange Commission registration fee.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission Registration Fee $ 4,128
Legal Fees and Expenses.............................. 10,000
Accountants' Fees and Expenses....................... 2,500
------
TOTAL........................................... $ 16,628
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the General Corporation Law of the State of Delaware
provides that a corporation may indemnify a director, officer, employee or agent
against expenses (including attorneys' fees), judgments, fines and for amounts
paid in settlement in respect of or in successful defense of any action, suit or
proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the corporation, and, with respect
to any criminal action or proceeding, had no reasonable cause to believe his
conduct was unlawful.
Article Twelfth of the Company's Restated Certificate of Incorporation
provides that no director of the Company shall be personally liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability (i) for any breach of the director's duty of
loyalty, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law or (iv) for any transaction from which the
director derived an improper personal benefit. Article Twelfth further provides
that a director's personal liability shall be eliminated or limited in the
future to the fullest extent permitted from time to time by the Delaware General
Corporation Law.
Article Thirteenth of the Company's Restated Certificate of Incorporation
provides that the Company shall, to the fullest extent permitted from time to
time under the Delaware General Corporation Law, indemnify each of its directors
and officers against all expenses (including attorneys' fees and expenses),
judgments, fines and amounts paid in settlement in respect to any action, suit
or proceeding in which such director or officer may be involved or with which he
may be threatened, while in office or thereafter, by reason of his or her
actions or omissions in connection with services to the company, such
indemnification to include prompt payment of expenses in advance of the final
disposition of any such action, suit or proceeding.
The Company maintains a directors and officers liability insurance policy
for the benefit of its directors and officers.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit Number
- -------------
<S> <C>
*4.1 Form of Private Placement Purchase Agreements between the Company and
the Selling Shareholders.
*5.1 Opinion of McDermott, Will & Emery as to validity of shares being
registered and Consent.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of McDermott, Will & Emery (included in Exhibit 5.1).
*25.1 Power of Attorney (part of Signature Page).
</TABLE>
- ------------
* Previously filed
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration Statement
or any material change to such information in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4), or 497(h)
under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-2
<PAGE>
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification of liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described under Item 15 above, 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 registrant of expenses incurred or paid by a director, officer or
controlling person of the registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with any of 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-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Pre-Effective
Amendment No.1 to Registration on Form S-3 Statement to be signed on its behalf
by the undersigned, thereunto duly authorized, in the Town of Southborough, The
Commonwealth of Massachusetts, on the 1st day of June, 1998.
NEXAR TECHNOLOGIES, INC.
By: /s/ Albert J. Agbay
--------------------------------------------
Albert J. Agbay
President and Chief Executive Officer
II-4
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Pre-
Effective Amendment No.1 to Registration Statement on Form S-3 has been signed
below on June 1, 1998 by the following persons in the capacities indicated.
Signature Capacity
--------- --------
/s/ Albert J. Agbay
________________________________ President, Chief Executive Officer and
Albert J. Agbay Chairman of the Board of Directors
(Principal Executive Officer)
/s/ Gerald Y. Hattori
________________________________ Chief Financial Officer, Vice President of
Gerald Y. Hattori Finance and Treasurer (Principal
Financial Officer and Principal Accounting
Officer)
*
________________________________ Director
Steven Georgiev
*
________________________________ Director
Joseph E. Levangie
*By: /s/ Albert J. Agbay
____________________________
Attorney-in-Fact
II-5
<PAGE>
INDEX TO EXHIBITS
*4.1 Form of Private Placement Purchase Agreements between the Company and
the Selling Shareholders.
*5.1 Opinion of McDermott, Will & Emery as to validity of shares being
registered and Consent.
23.1 Consent of BDO Seidman, LLP.
23.2 Consent of Arthur Andersen LLP.
*23.3 Consent of McDermott, Will & Emery (included in Exhibit 5.1).
*25.1 Power of Attorney (part of Signature Page).
--------
* Previously Filed
II-6
<PAGE>
Exhibit 23.1
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Pre-Effective
Amendment No. 1 to Form S-3, Registration Statement of our report dated February
13, 1998 (except for Note 10 which is as of March 20, 1998) included in Nexar
Technologies, Inc.'s Annual Report on Form 10-K for the year ended December 31,
1997 and all references to our firm included in this Registration Statement.
BDO Seidman, LLP
Boston, Massachusetts
June 3, 1998
<PAGE>
Exhibit 23.2
------------
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in the Registration Statement on Form S-3 of Nexar Technologies,
Inc. of our report dated January 24, 1997 (except with respect to the matter
discussed in Note 10 as to which the date is February 28, 1997) on the financial
statements of Nexar Technologies, Inc. as of December 31, 1995 and 1996, and for
the period from inception (March 7, 1995) to December 31, 1995 and for the year
ended December 31, 1996 included in Nexar Technologies, Inc. Form 10-K for the
year ended December 31, 1997 and to all references to our firm included in the
Registration Statement. It should be noted that we have not audited any
financial statements of Nexar Technologies, Inc. subsequent to December 31,
1996.
Arthur Andersen LLP
Boston, Massachusetts
June 2, 1998
