As filed with the Securities and Exchange Commission on July 21, 1998
Registration No. 333-18243
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SECURITIES AND EXCHANGE COMMISSION
POST EFFECTIVE AMENDMENT NO. 1 ON FORM S-3 TO
FORM SB-2 ON FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
QUESTRON TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
Delaware 23-2257354
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6400 Congress Avenue, Suite 200A, Boca Raton, Florida 33487
(561) 241-5251
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
DOMINIC A. POLIMENI
Chairman, President and Chief Executive Officer
6400 Congress Avenue, Suite 200A, Boca Raton, Florida 33487
(561) 241-5251
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
LUKE P. IOVINE, III, ESQ.
Battle Fowler LLP
Park Avenue Tower
75 East 55th Street
New York, New York 10022
(212) 856-7000
Approximate date of commencement of proposed sale to the public: From
time to time after this post-effective amendment to the Registration Statement
becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered 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, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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(c) of the Securities Act of 1933, as
amended, 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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<PAGE>
EXPLANATORY NOTE
This registration statement covers the offering by Questron Technology,
Inc. (the "Company") and by certain selling securityholders (the "Selling
Securityholders") of certain securities of the Company. The primary prospectus
included herein (the "Primary Prospectus") covers the registration by the
Company of: (i) up to 1,150,000 shares of common stock (the "Common Stock"), par
value $.001 per share, of the Company (the "Company Shares"), issuable upon
exercise of a like number of Series IV Common Stock Purchase Warrants of the
Company (the "Series IV Warrants") at an exercise price of $5.75 per share,
subject to certain adjustments; (ii) up to 1,500,000 shares of Common Stock (the
"Third Party Shares") issuable upon exercise of a like number of Series IV
Warrants which were sold by one of the Selling Securityholders to third parties
(the "Third Party Warrants") at an exercise price of $5.75 per share, subject to
certain adjustments; and (iii) up to 1,250,000 shares of Common Stock (the
"Selling Securityholder Shares"), issuable upon exercise of a like number of
Series IV Common Stock Purchase Warrants held by the Selling Securityholders
(the "Selling Securityholder Warrants" and, together with the Series IV Warrants
and the Third Party Warrants, the "Warrants") at an exercise price of $5.75 per
share, subject to certain adjustments, are covered under the Primary Prospectus.
In addition, the Company is registering, on behalf of the Selling
Securityholders, under an alternate prospectus (the "Alternate Prospectus") the
Selling Securityholder Warrants. The Primary Prospectus and the Alternate
Prospectus will be identical, with the exception of the following alternate
pages for the Alternate Prospectus: the front and back cover pages, and the
sections entitled "Prospectus Summary--The Offering," "Plan of Distribution" and
"Concurrent Sales." In addition, the section entitled "Selling Securityholders"
will be added to the Alternate Prospectus. Furthermore, all references contained
in the Alternate Prospectus and the Primary Prospectus to the "Offering" shall
refer to the Company's offering under the Primary Prospectus.
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Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell, or the
solicitation of an offer to buy, nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion, dated July 21, 1998
QUESTRON TECHNOLOGY, INC.
3,900,000 Shares of Common Stock
This Prospectus relates to the possible issuance by Questron
Technology, Inc., a Delaware corporation ("Questron" or the "Company"), from
time to time on a continuous basis of: (i) up to 1,150,000 shares of common
stock (the "Common Stock"), par value $.001 per share, of the Company (the
"Company Shares") issuable upon exercise of a like number of Series IV Common
Stock Purchase Warrants of the Company (the "Series IV Warrants") at an exercise
price of $5.75 per share, subject to certain adjustments; (ii) up to 1,500,000
shares of Common Stock (the "Third Party Shares") issuable upon exercise of a
like number of Series IV Warrants which were sold by one of the Selling
Securityholders to third parties (the "Third Party Warrants") at an exercise
price of $5.75 per share, subject to certain adjustments; and (iii) up to
1,250,000 shares of Common Stock (the "Selling Securityholder Shares") issuable
upon exercise of a like number of Series IV Common Stock Purchase Warrants held
by the Selling Securityholders (the "Selling Securityholder Warrants" and,
together with the Series IV Warrants and the Third Party Warrants, the
"Warrants") at an exercise price of $5.75 per share, subject to certain
adjustments. On March 10, 1997, the Company completed an offering of 1,150,000
Units at a price of $6.00 per Unit which was covered by the registration
statement of which this Prospectus forms a part. Each Unit consisted of one
share of Series B Convertible Preferred Stock, par value $.01 per share, of the
Company (the "Series B Preferred Stock"), and one redeemable Series IV Warrant.
See "CONCURRENT SALES."
The Common Stock is included for quotation on The Nasdaq SmallCap
Market ("Nasdaq") under the symbol "QUST" and the Warrants are included for
quotation on Nasdaq under the symbol "QUSTW". Other than the exercise price of
$5.75 per share of Common Stock issued upon exercise of the Warrants, the
Company will not receive proceeds from the sale of the Warrants or underlying
shares of Common Stock. See "USE OF PROCEEDS" and "PLAN OF DISTRIBUTION."
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AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS," WHICH BEGINS ON PAGE 3, FOR
IMPORTANT INFORMATION WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND THE SECURITIES MAY NOT BE SOLD UNTIL THE
REGISTRATION STATEMENT BECOMES EFFECTIVE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
COMPANY MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND THE COMPANY IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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The date of this Prospectus is July , 1998.
<PAGE>
NOTE ON FORWARD LOOKING STATEMENTS
Certain information set forth or incorporated by reference herein
includes "forward looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995 and is subject to certain risks and
uncertainties including those identified herein under the caption "Risk Factors"
and those included under the same caption in the Company's reports filed
pursuant to the Securities Exchange Act of 1934, as amended ("Exchange Act").
When used in this registration statement on Form S-3 (the "Registration
Statement") and the documents incorporated herein by reference, the words
"believes," "anticipates," "expects," and similar expressions may identify in
certain circumstances forward looking statements. Such statements are subject to
a number of risks and uncertainties that could cause actual results to differ
materially from those projected, including the risks described in the "Risk
Factors" section. Investors are cautioned not to place undue reliance on these
statements, which are made as of the date hereof. The Company undertakes no
obligation to release any revisions to these forward looking statements to
reflect events or circumstances after the date hereof or to reflect
unanticipated events or developments.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act and in accordance therewith files periodic reports and other
information with the Securities and Exchange Commission (the "Commission"). As
permitted by the rules and regulations of the Commission, this Prospectus, which
constitutes part of the Registration Statement, does not contain all the
information set forth in the Registration Statement and the exhibits and
undertakings contained therein, to which reference is hereby made. Statements
made in this Prospectus or in any document incorporated or deemed to be
incorporated by reference herein as to the contents of any contract, agreement
or other document referred to are not necessarily complete and with respect to
each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is made to the exhibit for a more complete
description of the matter involved, and each such statement shall be deemed
qualified in its entirety by such reference. Any interested parties may inspect
the Registration Statement, the exhibits and schedules forming a part thereof
and the reports, proxy statements and other information filed by the Company at
the public reference facilities maintained by the Commission in Washington,
D.C., Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and may obtain
copies of all or any part of such documents from the Commission upon payment of
the fees prescribed by the Commission. Such documents also are available for
inspection and copying at prescribed rates at the regional offices of the
Commission located at 7 World Trade Center, Suite 1300, New York, New York
10048; the Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois
60661-2511; 1301 California Street, Suite 4800, Denver, Colorado 80202- 2648;
and 5670 Wilshire Boulevard, 11th Floor, Los Angeles, California 90036-3648.
Copies of such materials can also be obtained from the Public Reference Section
of the Commission, Washington, D.C. 20549 at prescribed rates. The Company's
Common Stock and Warrants are included for quotation on the National Association
of Securities Dealers, Inc. Automated Quotation System, SmallCap Market System,
and copies of the foregoing materials and other information concerning the
Company can be inspected at the offices of the National Association of
Securities Dealers, Inc. at 1735 K Street, N.W., Washington, D.C. 20006. In
addition, registration statements and other documents and reports that are filed
electronically through the Electronic Data Gathering, Analysis and Retrieval
System (including the Registration Statement) are publicly available through the
Commission's web site on the Internet at http://www.sec.gov.
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission pursuant to the Exchange Act (File No. 0-13324), are hereby
incorporated by reference into the Registration Statement:
(a) the Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1997;
(b) the Company's Quarterly Report on Form 10-QSB for the three months
ended March 31, 1998;
(c) the Company's Current Report on Form 8-K, filed on October 7, 1997,
related to the acquisition of California Fasteners, Inc.; and
(d) the Company's Current Report on Form 8-K/A, filed on December 5,
1997, relating to the acquisition of California Fasteners, Inc.
All documents filed by the Company pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offerings to which this Prospectus relates shall
be deemed to be incorporated by reference and a part of this Registration
Statement from the date of filing of such documents. Any statement contained in
a document incorporated or deemed to be incorporated by reference herein shall
be deemed to be modified or superseded for purposes of this Prospectus to the
extent that a statement contained herein, in any applicable Prospectus
Supplement or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus. The
Company hereby undertakes to provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus has been delivered, upon
written or oral request, a copy of any or all documents referred to above which
have been incorporated in this Prospectus by reference, other than exhibits to
such documents. Requests for such copies should be directed to Office of the
Secretary, Questron Technology, Inc., 6400 Congress Avenue, Suite 200A, Boca
Raton, Florida 33487 (telephone number: (561) 241-5251).
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more
detailed descriptions and the financial information and statements, and the
notes in such documents, included elsewhere and incorporated by reference in
this Prospectus. Unless the context otherwise requires, as used herein (i) the
terms "Company" or "Questron" include Questron Technology, Inc. and its direct
and indirect subsidiaries, including Questron Distribution Logistics, Inc.
("QDL"), and (ii) the term "QDL" includes Questron Distribution Logistics, Inc.
(formerly named Quest Electronic Hardware, Inc.) and its subsidiaries, (a)
California Fasteners, Inc. ("CalFast") and (b) Comp Ware, Inc., doing business
as Webb Distribution ("Webb").
The Company
Questron is a value-added distributor of fasteners (e.g., nuts, bolts
and screws) and other low cost, high volume related products (commonly referred
to as "C Items"), and a leading provider of customized inventory logistics
management ("ILM") solutions to original equipment manufacturers ("OEMs"). The
Company's ILM services are provided through QDL and include in-plant bin-stock
replenishment, kitting, technical support, quality assurance and other similar
programs and services in response to the growing trend of OEMs to outsource the
materials management functions associated with C Items. Inventory items
classified as C Items generally are relatively low in value compared with the
value of the end product being made by the OEM, are complex due to the
multiplicity and volume of parts, and are labor intensive in the preparation for
the production line. In providing ILM services, the Company serves as the supply
chain manager of C Items for most of its OEM customers, enabling such customers
to (i) eliminate process costs relating to the planning, purchasing and
expediting of such parts, (ii) reduce carrying costs, including labor, financing
and overhead charges, (iii) reduce parts shortages, which can lead to costly
production line stoppages, (iv) reduce product costs, (v) consolidate their
supplier base, and (vi) potentially consolidate the number of parts used.
Questron employs state-of-the-art technology in managing C Items from
procurement to direct deployment on the manufacturing floor, including a fully
integrated on-line real-time computer system that links all of the Company's
sales and distribution centers, offering electronic data interchange, bar
coding, consolidated billing options and "just in time" delivery programs.
Questron is also a master distributor of fasteners and a distributor of lithium
batteries, battery packs and assemblies.
The Company serves more than 4,000 customers, including computer and
computer networking, telecommunications, semiconductor fabrication equipment,
medical electronics, contract manufacturing, consumer products and industrial
equipment manufacturing companies. The Company supplies a wide range of products
which include fasteners, spacers and standoffs, plastic components, cable ties
and accessories, drawer slides, connectors, design/prototype components, lithium
batteries and customized battery packs and assemblies. Within the ILM market,
the Company concentrates on customers that produce high-end products with
significant product sophistication. The Company operates 11 facilities in seven
states and seeks to continue its expansion through both internal and external
growth.
Questron was incorporated in Delaware in 1983. The name was changed to
Questron Technology, Inc. in 1996 to better reflect its principal business of
supplying low-technology products to high-technology industries and other
industrial businesses. The Company, with its subsidiaries, currently has
approximately 130 employees. The Company's executive offices are located at 6400
Congress Avenue, Suite 200A, Boca Raton, Florida 33487 and its telephone number
is (561) 241-5251.
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<PAGE>
Pending Acquisitions
The Company has signed an agreement of sale to acquire Fas-Tronics,
Inc. ("Fas-Tronics"), a privately owned corporation which is a value-added
distributor of fasteners and other related C Items, primarily to manufacturers
in the commercial aerospace industry, located in the Dallas-Fort Worth area. The
purchase price is $9.5 million of which $7.0 million is payable in cash and $2.5
million is payable in Common Stock. In addition there is deferred purchase price
of up to $3.0 million payable in cash and Common Stock, subject to the
achievement of certain operating income levels for the year ended December 31,
1998.
The Company has also signed an agreement of sale to acquire Fortune
Industries, Inc. ("Fortune"), a privately owned corporation which is a
value-added distributor of fasteners and other related C Items with a primary
focus on aerospace defense contractors, located in the Dallas-Fort Worth area.
The purchase price is $12.5 million of which $9.3 million is payable in cash and
$3.2 million is payable in Common Stock. In addition there is deferred purchase
price of up to $2.0 million payable in cash and Common Stock, subject to the
achievement of certain operating income levels for the year ended December 31,
1998.
These pending acquisitions are subject to completion of customary
closing conditions (including the satisfactory completion by the Company of its
due diligence investigation and financing) and, as a result, no assurance can be
given that these, or any other acquisitions will be completed.
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<PAGE>
The Offering
<TABLE>
<CAPTION>
<S> <C>
Securities Offered........................................ 3,900,000 shares of Common Stock
Use of Net Proceeds....................................... To the extent that any of the Warrants are
exercised for shares of Common Stock, the
Company anticipates that the proceeds
therefrom will be used for working capital
purposes. See "USE OF PROCEEDS."
Nasdaq Symbol--Common Stock .............................. QUST
Nasdaq Symbol--Warrants................................... QUSTW
</TABLE>
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<PAGE>
RISK FACTORS
Investment in the securities offered hereby involves a substantial
degree of risk. Prospective investors should carefully consider, in addition to
matters set forth elsewhere in this Prospectus, the following factors relating
to the business of the Company and this Offering. Prospective investors should
carefully review all risk factors. Such information is presented as of the date
hereof and is subject to change, completion or amendment without notice.
Dependence Upon Major Customers
The Company has developed a customer base consisting of over 4,000
active customers. Over 95% of the Company's sales are recurring sales to
existing customers. For the year ended December 31, 1997, the Company had two
customers each of which accounted for 10% or more of its sales, with no one
customer contributing more than 16%. These sales arrangements are terminable
upon short notice and none of these customers is obligated to continue to use
the services, or acquire the products, of the Company at all or at existing
prices. The dependence on major customers subjects the Company to significant
financial risk in the operation of its business should a major customer
terminate, for any reason, its business relationship with the Company. The
Company maintaining such customer relationships and building new customer
relationships is dependent, among other things, upon the Company's ability to
maintain high quality standards and competitive prices, and there can be no
assurance that the Company will be able to achieve such objectives. The loss of
a major customer could have a material adverse effect on the Company's financial
condition, liquidity and results of operations.
Possible Need for Additional Financing
The Company intends to fund its operations and other capital needs
substantially from operations and available borrowings under the Company's
credit agreement with a bank; however there can be no assurance that such funds
will be sufficient for these purposes. In the event that the Company needs
additional financing to fund its operations and capital needs or to finance
future acquisitions, there can be no assurance that such financing will be
available, or that it will be available on acceptable terms resulting in the
risk that such financing will have a material adverse effect on the Company's
financial condition, liquidity and results of operations.
Dependence on Key Management
The success of the Company depends upon the efforts, abilities and
expertise of its executive officers and other senior managers, including Dominic
A. Polimeni, its Chairman, President and Chief Executive Officer, as well as the
presidents of the Company's operating units. The loss of the services of such
individuals and/or other key individuals could have a material adverse effect on
the Company's financial condition, liquidity and results of operations.
Requirements of Current Prospectus and State Blue Sky Registration in Connection
with the Exercise of the Warrants which May Not Be Exercisable and May Therefore
Be Valueless
The Company will be able to issue the shares of its Common Stock upon
the exercise of the Warrants only if (i) there is a current prospectus relating
to the securities offered hereby under an effective
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<PAGE>
registration statement filed with the Commission and (ii) such Common Stock is,
to the extent required, then qualified for sale or exempt therefrom under
applicable state securities laws of the jurisdictions in which the various
holders of Warrants reside. There can be no assurance, however, that the Company
will be successful in maintaining a current registration statement. In addition,
the Company intends to qualify the sale of the Warrants in a limited number of
states, although certain exemptions under certain state securities ("Blue Sky")
law may permit the Warrants to be transferred to purchasers in states other than
those in which the Warrants were initially qualified. The Company will be
prevented, however, from issuing Common Stock upon exercise of the Warrants in
those states where exemptions are unavailable and the Company has failed to
qualify the Common Stock issuable upon exercise of the Warrants. The Company may
decide not to seek, or may not be able to obtain qualification of the issuance
of such Common Stock in all of the states in which the ultimate purchasers of
the Warrants reside. In such a case, the Warrants of those purchasers will
expire and have no value if such warrants cannot be exercised or sold.
Accordingly, the market for the Warrants may be limited because of the Company's
obligation to fulfill both of the foregoing requirements.
Risks Associated with Acquisitions
Prior to March 1997, the Company derived its revenues primarily
through its wholly-owned subsidiary, Quest Electronic Hardware, Inc. (now known
as Questron Distribution Logistics, Inc.). Subsequent to March 1997, the Company
has acquired Compware, Inc., doing business as Webb Distribution, California
Fasteners, Inc., Integrated Material Systems, Inc. and Power Components, Inc.
The Company has integrated such acquisitions, which account for approximately
65% of the Company's revenues for the quarter ended March 31, 1998. Such
businesses may have characteristics or deficiencies unknown to the Company
affecting their value or potential. In addition, the integration of these
companies could divert management's attention from the daily operation of the
Company, require additional management, operational and financial resources, and
place significant demands on the Company's management and infrastructure. No
assurance can be given that the Company will be able to succeed with such
integration or effectively manage newly acquired businesses or that such
businesses will perform as expected. In addition, there can be no assurance that
the acquired companies will not have additional liabilities or contingencies
that were unanticipated by the Company at the time of the acquisitions. A
primary element of the Company's growth strategy is to continue to pursue
strategic acquisitions that expand and complement the Company's business. The
Company regularly reviews various strategic acquisition opportunities and
periodically engages in discussions regarding such possible acquisitions. There
can be no assurance that the Company will be able to identify additional
acquisition candidates on terms acceptable to the Company or in a timely manner,
enter into acceptable agreements or close any such transactions. There can also
be no assurance that the Company will be able to continue to execute its
acquisition strategy, and any failure to do so could have a materially adverse
effect on the Company's ability to sustain growth.
Risks Associated with Rapid Growth
The Company has experienced rapid growth since 1995 which has placed
significant demands on its administrative, operational and financial resources.
The Company intends to seek to continue such growth, which could place
additional demands on its resources. Future internal growth will depend on a
number of factors, including the effective and timely initiation and development
of customer relationships, the Company's ability to maintain the quality of
services it provides to its customers and the recruitment,
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<PAGE>
motivation and retention of qualified personnel. Sustaining growth will also
require the implementation of enhancements to its operational and financial
systems and will require additional management, operational and financial
resources. There can be no assurance that the Company will be able to manage its
expanding operations effectively or that it will be able to maintain or
accelerate its growth, and any failure to do so could have a materially adverse
effect on the Company's business, results of operations and financial condition.
Dependence on Third-Party Suppliers and Manufacturers
The Company purchases substantially all of its products, principally
fasteners and other related C Items, from third-party suppliers and
manufacturers. Management believes that there are numerous available sources of
supply for required products. However, while the Company currently maintains
alternative sources for products, the Company's businesses are subject to the
risk of price fluctuations, different product performance and quality, and
periodic delays in the delivery of certain specialty fasteners and other
products. Failure by certain suppliers to continue to supply the Company with
products on commercially reasonable terms, or at all, may have a material
adverse effect on the Company's operations and financial condition.
Substantial Competition
The market for the Company's products is highly competitive, and the
Company encounters substantial competition from domestic distributors. Certain
of the Company's competitors are large companies that have greater financial
resources and technical expertise than the Company and may offer lower prices on
competing products. In addition, such competitors may have substantially greater
managerial capabilities than the Company and, consequently, the Company may be
at a substantial competitive disadvantage in the conduct of its business.
Furthermore, the potential growth of the market in which the Company competes
may attract new entrants as they perceive opportunities. There can be no
assurance that the Company will be able to compete successfully with its
existing competitors or with new competitors. Failure to compete successfully
could have a material adverse effect on the Company's financial condition,
liquidity and results of operations.
Exercise of Warrants May Have Dilutive Effect on Market
The Warrants will provide, during their term, an opportunity for the
holder to exercise the Warrants and profit from a rise in the market price of
the Common Stock, of which there is no assurance, with resulting dilution in the
ownership interest in the Company held by the then present stockholders. Holders
of the Warrants most likely would exercise the Warrants and purchase the
underlying Common Stock at a time when the Company may be able to obtain capital
on terms more favorable than those provided by such Warrants, in which event the
terms on which the Company may be able to obtain additional capital would be
affected adversely.
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<PAGE>
Release of Lock-Up May Adversely Affect the Market
The Registration Statement of which this Prospectus is a part also
covers the offering of 1,250,000 Series IV Warrants, which are being offered by
the Selling Securityholders. The securities held by the Selling Securityholders
may be sold commencing 18 months from March 4, 1997 (the date of the
Company's final prospectus to which this post-effective amendment relates)
subject to earlier release at the sole discretion of the Underwriter. In other
offerings where the underwriter for such offering (the "Underwriter") has acted
as the managing underwriter, it has released similar restrictions applicable to
selling securityholders prior to the expiration of the lock-up period.
Certificates evidencing these securities will bear a legend reflecting such
restrictions. The resale of the securities held by the Selling Securityholders
is subject to prospectus delivery and other requirements of the Securities Act
of 1933, as amended (the "Securities Act"). Sales of such securities or the
potential of such sales at any time may have an adverse effect on the market
prices of the securities offered hereby.
No Assurance of Future Profitability or Payment of Dividends
No assurance can be given that the future operations of the Company or
its subsidiaries will be profitable. Should the operations of the Company or its
subsidiaries remain profitable, it is likely that the Company or its
subsidiaries would retain much or all of the earnings in order to finance future
growth and expansion. Therefore, the Company does not presently intend to pay
dividends on its Common Stock.
Risks Associated with Year 2000
The Company has addressed the impact of the year 2000 on its
information systems in order to ensure that its network, computer systems and
software will manage and manipulate data involving the transition of dates from
1999 to 2000 without functional or data abnormality and without inaccurate
results related to such data. The Company does not expect year 2000 compliance
costs to have a material adverse impact on the Company's business or results of
operations. No assurance can be given, however, that unanticipated or
undiscovered year 2000 compliance problems will not have a material adverse
effect on the Company's business or results of operations. In addition, if the
Company's clients or significant suppliers and contractors do not successfully
achieve year 2000 compliance, the Company's business and results of operations
could be adversely affected, resulting from, among other things, the Company's
inability to properly exchange and/or receive data.
Product Liability; Claims Exposure
The Company maintains product liability insurance to protect it from
such liabilities; however, no assurance can be given that claims will not arise
in the future or that such insurance coverage will be adequate. Additionally,
there can be no assurance that insurance coverage can be maintained in the
future at an acceptable cost. Any such liability not covered by insurance, or
for which third party indemnification is not available, could have a material
adverse effect on the Company's results of operation and financial condition.
-10-
<PAGE>
USE OF PROCEEDS
To the extent any of the Warrants are exercised for shares of Common
Stock, the Company anticipates that the proceeds therefrom will be used for
working capital purposes. If all of the Warrants were exercised, the Company
would receive $22,425,000 in proceeds from the sale of the Warrants.
-11-
<PAGE>
PLAN OF DISTRIBUTION
In the event that the Company receives proceeds from the exercise of
the Warrants, such funds will be used for general working capital purposes.
There can be no assurance that any of the Warrants will be exercised.
-12-
<PAGE>
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 20,000,000
shares of Common Stock and 10,000,000 shares of preferred stock, of which (i)
10,000 shares have been designated as Series A Cumulative Convertible Preferred
Stock (the "Series A Cumulative Preferred Stock"), (ii) 900,000 shares have been
designated as Series A Preferred Stock (the "Series A Preferred Stock"), and
(iii) 1,250,000 shares have been designated as Series B Preferred Stock. There
are (i) 3,799,301 shares of Common Stock issued and outstanding, (ii) no shares
of Series A Cumulative Preferred Stock outstanding, (iii) no shares of Series A
Preferred Stock outstanding, (iv) 1,150,000 shares of Series B Preferred Stock
issued and outstanding and (v) 3,900,000 Warrants issued and outstanding.
Common Stock
The shares of Common Stock currently outstanding are validly issued,
fully paid and non-assessable. Each holder of Common Stock is entitled to one
vote for each share owned of record on all matters voted upon by the
stockholders, and a majority vote is required for action to be taken by the
stockholders, except that a plurality vote is required for the election of
directors. In the event of a liquidation, dissolution or winding-up of the
Company, the holders of Common Stock are entitled to share equally and ratably
in the assets of the Company, if any, remaining after the payment of all debts
and liabilities of the Company and the liquidation preference of any outstanding
preferred stock. The holders of the Common Stock have no preemptive rights or
cumulative voting rights and there are no redemption, sinking fund or conversion
provisions applicable to the Common Stock.
Holders of Common Stock are entitled to receive dividends if, as and
when, declared by the Board of Directors, out of funds legally available for
such purpose, subject to the dividend and liquidation rights of any preferred
stock that may be issued.
As of July 2, 1998, 3,799,301 shares of Common Stock were issued and
outstanding.
Preferred Stock
The Company's Certificate of Incorporation provides that the Company
may, by vote of the Board of Directors of the Company, issue preferred stock in
one or more series having the rights, preferences, privileges and restrictions
thereon, including dividend rights, dividend rates, conversion rights, voting
rights, terms of redemption, redemption prices, liquidation preferences and the
number of shares constituting any series or designation of such series, without
further vote or action by the stockholders. The issuance of preferred stock may
have the effect of delaying, deferring or preventing a change in control of the
Company without further action by the stockholders and may adversely affect the
voting and other rights of the holders of Common Stock. The issuance of
preferred stock with voting and conversion rights may adversely affect the
voting power of the holders of Common Stock, including the loss of voting
control to others. Upon conversion of all of the 1,150,000 shares of Series B
Preferred Stock on or after the Conversion Date (as defined below), up to
10,000,000 shares of Preferred Stock may be issued from time to time in one or
more series.
Based on the Company's amended certificate of designation, dated June
30, 1998 and approval of the Company's shareholders, each share of Series B
Preferred Stock was automatically converted without
-13-
<PAGE>
any action on the part of the Company or the holder thereof into 1.4375 shares
of Common Stock on July 2, 1998 (the "Conversion Date"). As of the close of
business on July 2, 1998, there were no shares of Series B Preferred Stock
issued and outstanding.
Warrants
The Company currently has 3,900,000 Warrants issued and outstanding.
Each Warrant entitles the holder to purchase one share of Common Stock at an
exercise price of $5.75 per share, subject to certain adjustments.
Warrants only can be exercised when there is a current effective
registration statement covering the shares of Common Stock underlying the
Warrants. If the Company does not or is unable to maintain a current effective
registration statement, the Warrant holders will be unable to exercise the
Warrants and the Warrants may become valueless. Moreover, if the shares of
Common Stock underlying the Warrants are not registered or qualified for sale in
the state in which a Warrant holder resides, such holder might not be permitted
to exercise the Warrants.
Holders of the Warrants are protected against dilution of the equity
interest represented by the underlying shares of Common Stock upon the
occurrence of certain events, including, but not limited to, the issuance of
stock dividends other than dividends paid in respect of the Series B Preferred
Stock. If the Company merges, reorganizes or is acquired in such a way as to
terminate the Warrants, the Warrants may be exercised immediately prior to such
action. In the event of liquidation, dissolution, or winding up of the Company,
holders of the Warrants are not entitled to participate in the Company's assets.
Transfer Agent and Registrar
The transfer agent and registrar for the Common Stock and Series IV
Warrants is American Stock Transfer & Trust Company, 40 Wall Street, New York,
New York 10005, telephone number (212) 936-5100.
-14-
<PAGE>
CONCURRENT SALES
The Registration Statement, of which this Prospectus forms a part,
also relates to the offering and sale from time to time by certain selling
securityholders of the Company (the "Selling Securityholders") of up to
1,250,000 Selling Securityholder Warrants. The Selling Securityholder Warrants
will be registered under the Securities Act and are expected to become eligible
for trading on or about the date of this Prospectus. Sales of the Selling
Securityholder Warrants, or even the potential of such sales, will likely have
an adverse effect on the market price of the Common Stock. Other than the
exercise price of $5.75 per share of Common Stock, subject to certain
adjustments, issuable upon exercise of the Selling Securityholder Warrants which
is payable upon exercise of the Selling Securityholder Warrants ($7,187,500 if
all Selling Securityholder Warrants are exercised) the Company will not receive
any proceeds from the sale of the Selling Securityholder Warrants.
-15-
<PAGE>
LEGAL MATTERS
The legality of the Securities has been passed upon for the Company by
Gould & Wilkie, One Chase Manhattan Plaza, 58th Floor, New York, New York 10005.
EXPERTS
The Company's Consolidated Financial Statements as of December 31,
1997, and for each of the two years in the period, then ended, incorporated by
reference in this Registration Statement have, been incorporated herein in
reliance on the report of Moore Stephens, P.C., independent certified public
accountants.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Certificate of Incorporation limits the liability of its
directors. As permitted by the Delaware General Corporation Law ("DGCL"),
directors will not be liable to the Company for monetary damages arising from a
breach of their fiduciary duty as directors in certain circumstances. Such
limitation does not affect liability (i) for any breach of the director's duty
of loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) pursuant to Section 174 of the DGCL (relating to unlawful payment of
dividends or unlawful stock purchase or redemption); or (iv) for any transaction
from which such director derived an improper personal benefit. Such limitation
of liability also does not affect the availability of equitable remedies such as
injunctive relief or rescission.
Section 145 ("Section 145") of the Delaware General Corporation Law
(the "DGCL") permits indemnification of directors, officers, agents and
controlling persons of a corporation under certain conditions and subject to
certain limitations. Article VIII of the Company's Certificate of Incorporation
and Article VII of the Company's Bylaws provide for the indemnification of
directors, officers and other authorized representatives of the Company to the
maximum extent permitted by the DGCL. Section 145 empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was a director, officer or agent of the corporation or another
enterprise if serving at the request of the corporation. Depending on the
character of the proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding if the person indemnified acted in good faith and in a manner such
person 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 such person's conduct was unlawful. In the case of
an action by or in the right of the corporation, no indemnification may be made
with respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such person is fairly
and reasonably entitled to indemnity for such expenses that the court shall deem
proper. Section 145 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
-16-
<PAGE>
proceeding referred to above or in the defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection therewith.
The Company's Certificate of Incorporation and Bylaws provide that the
Company shall indemnify its directors and officers to the full extent permitted
by Delaware law. However, insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is therefore unenforceable.
-17-
<PAGE>
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations other than those contained in
this Prospectus in connection with the offering covered by this Prospectus. If
given or made, such information or representations must not be relied upon as
having been authorized by the Company or any of the Underwriters. This
Prospectus does not constitute an offer to sell, or a solicitation of an offer
to buy any of the securities offered hereby in any jurisdiction where, or to any
person to whom, it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has not been any change in the
facts set forth in this Prospectus or in the affairs of the Company since the
date hereof.
TABLE OF CONTENTS
Page
Prospectus Summary....................................................... 4
Risk Factors............................................................. 7
Use of Proceeds.......................................................... 11
Plan of Distribution..................................................... 12
Description of Securities................................................ 13
Concurrent Sales......................................................... 15
Legal Matters............................................................ 16
Experts.................................................................. 16
Limitation of Liability and
Indemnification Matters................................................ 16
3,900,000 Shares
QUESTRON
TECHNOLOGY
INC.
Common Stock
------------------------------
PROSPECTUS
------------------------------
July , 1998
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell, or the
solicitation of an offer to buy, nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
Subject to Completion, dated July __, 1998
QUESTRON TECHNOLOGY, INC.
1,250,000 Series IV Common Stock Purchase Warrants
This Prospectus relates to the possible resale from time to time on a
continuous basis of up to 1,250,000 Series IV Common Stock Purchase Warrants
("Selling Securityholder Warrants") of Questron Technology, Inc., a Delaware
corporation (the "Company"). The Selling Securityholder Warrants are being
offered by the securityholders identified in this Prospectus (the "Selling
Securityholders"). The Selling Securityholder Warrants were issued to the
Selling Securityholders pursuant to an exchange agreement upon cancellation of
rights under prior agreements. The distribution of the Selling Securityholder
Warrants offered hereby by the Selling Securityholders may be effected in one or
more transactions on the Nasdaq SmallCap Market, in privately negotiated
transactions or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Selling
Securityholder Warrants to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Securityholders or the purchasers of the Selling Securityholder
Warrants for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commission). See "PLAN OF DISTRIBUTION." The Selling
Securityholders and intermediaries through whom such securities may be sold may
be deemed "underwriters" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act") with respect to the securities offered, and any
profits realized or commissions received may be deemed underwriting
compensation.
As of the date of this Prospectus, there is a registration statement,
which had previously been filed under the Securities Act and subsequently
declared effective by the Securities and Exchange Commission covering the
offering (the "Concurrent Offering") by the Company of (i) up to 1,150,000
shares of common stock (the "Common Stock"), par value $.001 per share, of the
Company (the "Company Shares"), issuable upon exercise of a like number of
Series IV Common Stock Purchase Warrants of the Company (the "Series IV
Warrants") at an exercise price of $5.75 per share, subject to certain
adjustments; (ii) up to 1,500,000 shares of Common Stock (the "Third Party
Shares"), issuable upon exercise of a like number of Series IV Common Stock
Warrants which were sold by one of the Selling Securityholders to third parties
(the "Third Party Warrants") at an exercise price of $5.75 per share, subject to
certain adjustments; and (iii) up to 1,250,000 shares of Common Stock (the
"Selling Securityholder Shares"), issuable upon exercise of a like number of
Series IV Common Stock Purchase Warrants described in this Prospectus (the
"Selling Securityholder Warrants" and, together with the Series IV Warrants and
Third Party Warrants, the "Warrants") at an exercise price of $5.75 per share,
subject to certain adjustments. The Company will not receive any proceeds from
the sale of the Company Shares, the Third Party Shares or the Selling
Securityholder Shares other than the exercise price of $5.75 per share, subject
to certain adjustments, of Common Stock issued, which exercise price the Company
will receive upon the exercise, if any, by warrantholders of the Warrants. Sales
of Selling Securityholder Warrants by the Selling Securityholders or even the
potential of such sales, would likely have an adverse effect on the market price
of the Common Stock.
The Company will not receive any of the proceeds from the sale of the
Selling Securityholder Warrants by the Selling Securityholders. All costs
incurred in the registration of the Selling Securityholder Warrants are being
borne by the Company. See "SELLING SECURITYHOLDERS." The Selling Securityholder
Warrants will be offered for sale from time to time on terms to be determined at
the time of sale by the Selling Securityholders. The Selling Securityholder
Warrants are included for quotation on The Nasdaq SmallCap Market ("Nasdaq")
under the symbol QUSTW. See "USE OF PROCEEDS" and "PLAN OF DISTRIBUTION."
<PAGE>
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF
THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS," WHICH BEGINS ON PAGE 3 FOR
IMPORTANT INFORMATION WHICH SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION AND THE SECURITIES MAY NOT BE SOLD UNTIL THE
REGISTRATION STATEMENT BECOMES EFFECTIVE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
COMPANY MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND THE COMPANY IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The Selling Securityholders, directly or through agents designated
from time to time, or through dealers or underwriters also to be designated, may
sell the Selling Securityholder Warrants from time to time on terms to be
determined at the time of sale. To the extent required, the specific Selling
Securityholder Warrants to be sold, the purchase price, the public offering
price, the name of any such agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offer will be set forth in a
Prospectus Supplement. The aggregate proceeds to the Selling Securityholders
from the Selling Securityholder Warrants will be the purchase price of such
Selling Securityholder Securities sold less the aggregate agents' commissions
and underwriters' discounts, if any, and other expenses of issuance and
distribution not borne by the Company. Any such Prospectus Supplement will also
set forth any additional information regarding indemnification by the Company of
the Selling Securityholders or any underwriter, dealer or agent against certain
liabilities, including liabilities under the Securities Act. The Selling
Securityholders and any broker-dealers, agents or underwriters that participate
with the Selling Securityholders in the distribution of any of the Selling
Securityholder Warrants may be deemed to be "underwriters" within the meaning of
the Securities Act, and any commission received by them and any profit on the
resale of the Selling Securityholder Securities purchased by them may be deemed
to be underwriting commissions or discounts under the Securities Act. See "PLAN
OF DISTRIBUTION".
The date of this Prospectus is July , 1998.
<PAGE>
<TABLE>
<CAPTION>
The Offering
<S> <C>
Securities Offered........................................ 1,250,000 Selling Securityholder Warrants
exercisable at an exercise price of $5.75 per share
of the Company's Common Stock, subject to
certain adjustments.
Use of Net Proceeds....................................... The Company will not receive any of the proceeds
from the sale of the Selling Securityholder
Warrants by the Selling Securityholders. Any
proceeds received by the Company from the
exercise of the Selling Securityholder Warrants
will be used for working capital purposes. See
"USE OF PROCEEDS."
Nasdaq Symbol--Common Stock............................... QUST
Nasdaq Symbol--Warrants................................... QUSTW
</TABLE>
ALT-6
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Securityholders or
pledgees, donees, transferees of or other successors in interest to the Selling
Securityholder Warrants may sell the Selling Securityholder Warrants from time
to time in transactions on the Nasdaq SmallCap Market, in privately negotiated
transactions or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. The Selling
Securityholders may effect such transactions by selling the Selling
Securityholder Warrants to or through broker-dealers, and such broker-dealers
may receive compensation in the form of discounts, concessions or commissions
from the Selling Securityholders or the purchasers of the Selling Securityholder
Warrants for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation to a particular broker-dealer might be in
excess of customary commission).
The Company has advised the Selling Securityholders that the
anti-manipulative rules under Regulation M under the Securities Exchange Act of
1934, as amended (the "Exchange Act") may apply to their sales in the market and
has informed them of the need for delivery of copies of this Prospectus. The
Company is not aware as of the date of this Prospectus of any agreements between
any of the Selling Securityholders and any broker-dealers with respect to the
sale of the Selling Securityholder Warrants offered by this Prospectus. The
Selling Securityholders and any broker-dealer or other agent executing sell
orders on behalf of the Selling Securityholders may be deemed to be
"underwriters" within the meaning of the Securities Act, in which case the
commissions received by any such broker-dealer or agent and profit on any resale
of the Selling Securityholder Warrants may be deemed to be underwriting
commissions under the Securities Act. The commissions received by a
broker-dealer or agent may be in excess of customary compensation. Upon the
Company being notified by the Selling Securityholders that any material
arrangement has been entered into with a broker-dealer, agent or underwriter for
the sale of Selling Securityholder Warrants through a block trade, special
offering, exchange distribution or secondary distribution or purchases by a
broker or a dealer, a supplemental prospectus will be filed, if required,
disclosing the terms of the offering of the Selling Securityholder Warrants,
including the name of names of any underwriters, dealers or agents, the public
offering price, any underwriting discounts and other items constituting
underwriters compensation, any discounts or concessions allowed or reallowed or
paid to dealers, and any securities exchanges on the securities may be listed.
The Company will receive no part of the proceeds from the sale of any Selling
Securityholder Warrants offered hereunder.
Any or all of the sales or other transactions involving the Selling
Securityholder Warrants described above, whether effected by the Selling
Securityholders, any broker-dealer or others, may be made pursuant to this
Prospectus. In addition, any Selling Securityholder Warrants that qualify for
sale pursuant to Rule 144 under the Securities Act may be sold under Rule 144
rather than pursuant to this Prospectus.
In order to comply with the securities laws of certain states, if
applicable, the Selling Securityholder Warrants may be sold in such
jurisdictions only through registered or licensed brokers or dealers. In
addition, in certain states the Selling Securityholder Warrants may not be sold
unless they have been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied with.
ALT 12
<PAGE>
All costs and expenses associated with registering the Selling
Securityholder Warrants being offered hereunder with the Securities and Exchange
Commission will be paid by the Company. Such costs and expenses are estimated to
be approximately $37,000.
The Selling Securityholders have agreed that the Selling
Securityholder Warrants held by the Selling Securityholders and offered
hereunder may be sold commencing 18 months from March 4, 1997 (the date of the
Company's final prospectus to which this post-effective amendment relates)
subject to earlier release at the sole discretion of the Underwriter.
The Company and the Selling Securityholders may agree to indemnify
certain persons including broker-dealers or others, against certain liabilities
in connection with any offering of the Selling Securityholder Warrants,
including liabilities under the Securities Act.
The Selling Securityholders may elect to sell all, a portion or none
of the Selling Securityholder Warrants offered by them hereunder.
ALT 12.1
<PAGE>
SELLING SECURITY HOLDERS
This Prospectus relates to the sale of an aggregate of 1,250,000
Selling Securityholder Warrants.
The following table sets forth certain information with respect to the
Selling Securityholders. The Selling Securityholder Warrants to which this
Prospectus relates may be sold from time to time in whole or in part by the
Selling Securityholders as described herein.
<TABLE>
<CAPTION>
Selling
Security-
Percentage Selling holder Selling
Shares of Shares of of Total Security- Warrants Security-
Common Common Common holder that may be holder
Stock Stock Stock Warrants offered Warrants
owned owned after Outstanding owned prior pursuant to owned after
prior to the after the to the this the
Selling Securityholders Offering(1) Offering Offering Offering Prospectus Offering
- ----------------------- ----------- -------- -------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Gulfstream Financial Group, 274,958 274,958 7.24% 1,000,000 1,000,000 1,000,000
Inc.(2)
6400 Congress Avenue
Suite 200A
Boca Raton, FL 33487
Phillip D. Schwiebert (3) 113,339 113,339 2.98% 250,000 250,000 250,000
c/o Questron Distribution
Logistics, Inc.
1180 Murphy Avenue
San Jose, CA 95131
</TABLE>
- ---------------
(1) For the purpose of this calculation, the number of shares of Common
Stock outstanding includes shares of Common Stock issued on the
Conversion Date upon conversion of the Series B Preferred Stock
previously held by each Selling Securityholder. Assumes no exercise of
the Selling Securityholder Warrants offered under this Prospectus.
(2) Dominic A. Polimeni, the Chairman, Chief Executive Officer and
President of the Company, is an officer, director and 50% stockholder
of Gulfstream Financial Group, Inc. ("Gulfstream"). In addition, Robert
V. Gubitosi, a director of the Company since 1996, is a Managing
Director of Gulfstream and Joan Gubitosi, Mr. Gubitosi's wife, is a 50%
stockholder of Gulfstream. All costs incurred by the Company in
connection with the registration of the Selling Securityholder Warrants
are being borne by the Company.
(3) Phillip Schwiebert is an employee and officer of the Company.
CONCURRENT SALES
As of the date of this Prospectus, there is a registration statement,
which had previously been filed under the Securities Act and subsequently
declared effective by the Commission, covering the Concurrent Offering of (i) up
to 1,150,000 Company Shares; (ii) up to 1,250,000 Selling Securityholder Shares;
and (iii) up to 1,500,000 Third Party Shares.
Sales by the Company of the Company Shares, the Selling Securityholder
Shares and the Third Party Shares and sales by the Selling Securityholders of
the Selling Securityholder Warrants, or even the potential, in each case, of
such sales, would likely have an adverse effect on the market price of the
Common Stock. As a result of the Concurrent Offering, the freely tradeable
Common Stock will be increased by up to 3,900,000 shares of Common Stock upon
exercise of the Company Warrants and the Selling Securityholder Warrants, if
any.
ALT-15
<PAGE>
No dealer, salesperson or other individual has been authorized to give
any information or to make any representations other than those contained in
this Prospectus in connection with the offering covered by this Prospectus. If
given or made, such information or representations must be relied upon as having
been authorized by the Company or any of the Underwriters. This Prospectus does
not constitute an offer to sell, or a solicitation of an offer to buy, any of
the securities offered hereby in any jurisdiction where, or to any person to
whom, it is unlawful to make such offer or solicitation. Neither the delivery of
this Prospectus nor any sale made hereunder shall, under any circumstances,
create an implication that there has not been any change in the facts set forth
in this Prospectus or in the affairs of the Company since the date hereof.
------------------------------------
TABLE OF CONTENTS
Page
Prospectus Summary............................................ 4
Risk Factors.................................................. 7
Use of Proceeds............................................... 11
Plan of Distribution.......................................... 12
Description of Securities..................................... 13
Selling Securityholders....................................... 15
Concurrent Sales.............................................. 15
Legal Matters................................................. 16
Experts....................................................... 16
Limitation of Liability and
Indemnification Matters..................................... 16
------------------------------------
1,250,000 Series IV
Common Stock
Purchase Warrants
QUESTRON
TECHNOLOGY,
INC.
-------------------------------
PROSPECTUS
-------------------------------
July , 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The estimated expenses of the registration of the securities concerned
herein which are payable by the Company are as follows:
Printing expenses................................. $ 5,000
Legal fees and expenses........................... 25,000
Accounting fees and expenses...................... 2,000
Miscellaneous expenses............................ 5,000
------
Total............................... $37,000
=======
All expenses (other than commissions and any transfer taxes on the
securities being offered) will be paid by the Company.
Item 15. Indemnification of Directors and Officers
Section 145 ("Section 145") of the Delaware General Corporation Law
(the "DGCL") permits indemnification of directors, officers, agents and
controlling persons of a corporation under certain conditions and subject to
certain limitations. Article VIII of the Company's Certificate of Incorporation
and Article VII of the Company's Bylaws provide for the indemnification of
directors, officers and other authorized representatives of the Company to the
maximum extent permitted by the DGCL. Section 145 empowers a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that
such person is or was a director, officer or agent of the corporation or another
enterprise if serving at the request of the corporation. Depending on the
character of the proceeding, a corporation may indemnify against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with such action, suit or
proceeding if the person indemnified acted in good faith and in a manner such
person 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 such person's conduct was unlawful. In the case of
an action by or in the right of the corporation, no indemnification may be made
with respect to any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine that despite the adjudication of liability such person is fairly
and reasonably entitled to indemnity for such expenses that the court shall deem
proper. Section 145 further provides that to the extent a director or officer of
a corporation has been successful in the defense of any action, suit or
proceeding referred to above or in the defense of any claim, issue or matter
therein, such person shall be indemnified against expenses (including attorneys'
fees) actually and reasonably incurred by such person in connection therewith.
<PAGE>
Section 102(b)(7) of the DGCL provides as follows:
"(b) In addition to the matters required to be set forth in the
certificate of incorporation by subsection (a) of this section, the certificate
of incorporation may also contain any or all of the following matters:
(7) A provision eliminating or limiting the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (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 this Title, or (iv) for any
transaction from which the director derived an improper personal benefit. No
such provision shall eliminate or limit the liability of a director for any act
or omission occurring prior to the date when such provision becomes effective.
All references in this paragraph to a director shall also be deemed to refer (x)
to a member of the governing body or a corporation that is not authorized to
issue capital stock, and (y) to such other person or persons, if any, who,
pursuant to a provision of the certificate of incorporation in accordance with
Section 141(a) of this title, exercise or perform any of the powers or duties
otherwise conferred or imposed upon the board of directors by this title."
The Company also maintains directors and officers liability
insurance for the benefit of its officers and directors.
<PAGE>
Item 16. Exhibits
Exhibit No. Description
4.1* Specimen Common Stock Certificate
4.2* Form of Series IV Common Stock Purchase Warrant Agreement
4.3* Stock Purchase Warrant Certificate for Purchase of Common Stock of
Questron Technology, Inc.
5.1* Opinion of Gould & Wilkie
23.1 Consent of Moore Stephens, P.C.
23.2 Consent of Gould & Wilkie (see Exhibit 5.1).
- -------------------
*Previously filed.
Item 17. Undertakings
(a) 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 prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective
amendment thereof) which, individually or together,
represent a fundamental change in the information set
forth in this Registration Statement;
provided, however, that the undertakings set forth in paragraphs
(a)(1)(i) and (a)(1)(ii) above do not apply if the information
required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the
Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement;
(iii) To include any material with respect to the plan of
distribution not previously disclosed in this
Registration Statement or any material change to such
information in this 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;
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
(b) The undersigned hereby undertakes that, for purposes 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.
(c)Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
<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
Post-Effective Amendment No. 1 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in Boca Raton, Florida
on July 21, 1998.
QUESTRON TECHNOLOGY, INC.
By: /s/ Dominic A. Polimeni
-----------------------
Dominic A. Polimeni
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to this Registration Statement has been signed by
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
/s/ Dominic A. Polimeni Chairman, President, July 21, 1998
- -------------------------
Dominic A. Polimeni Chief Executive Officer and
Director (Principal Executive
Officer)
/s/ Milton M. Adler Treasurer, Secretary, July 21, 1998
- -------------------------
Milton M. Adler Controller and Director
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Robert V. Gubitosi Director July 21, 1998
- -------------------------
Robert V. Gubitosi
/s/ Frederick W. London Director July 21, 1998
- -------------------------
Frederick W. London
/s/ William J. McSherry, Jr. Director July 21, 1998
- -------------------------
William J. McSherry, Jr.
</TABLE>
716355.5
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
4.1* Specimen Common Stock Certificate
4.2* Form of Series IV Common Stock Purchase Warrant Agreement
4.3* Stock Purchase Warrant Certificate for Purchase of Common Stock of
Questron Technology, Inc.
5.1* Opinion of Gould & Wilkie
23.1 Consent of Moore Stephens, P.C.
23.2 Consent of Gould & Wilkie (see Exhibit 5.1)
- -------------------
*Previously filed.
<PAGE>
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this
Registration Statement (No. 333-18243) on Form S-3 of our report dated February
24, 1998, on our audit of the consolidated financial statements of Questron
Technology, Inc. (the "Company") and its subsidiaries, as of December 31, 1997,
and for each of the two years in the period then ended, included in the
Company's Annual Report on Form 10-KSB. We also consent to the reference to our
firm under the caption "Experts."
MOORE STEPHENS, P.C.
Certified Public Accountants
New York, New York
July 21, 1998
<PAGE>
