Registration No. 333-18243
================================================================================
SECURITIES AND EXCHANGE COMMISSION
POST EFFECTIVE AMENDMENT NO. 2 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
- - --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
23-2257354
- - --------------------------------------------------------------------------------
(I.R.S. employer 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.
================================================================================
775555.6
<PAGE>
EXPLANATORY NOTE
This registration statement covers the offering by Questron and by certain
selling securityholders of certain securities of Questron. The primary
prospectus covers Questron's registration of: (1) up to 1,150,000 shares of
common stock issuable upon exercise of a like number of Series IV common stock
purchase warrants; (2) up to 1,500,000 shares of common stock issuable upon
exercise of a like number of Series IV common stock purchase warrants which were
sold by one of the selling securityholders to third parties; (3) up to 1,250,000
shares of common stock issuable upon exercise of a like number of Series IV
common stock purchase warrants held by certain selling securityholders; (4) up
to 143,750 shares of common stock issuable in connection with the exercise of a
certain underwriter's unit purchase option; (5) up to 100,000 Series IV common
stock purchase warrants issuable in connection with the exercise of a certain
underwriter's unit purchase option; and (6) up to 100,000 shares of common stock
issuable upon exercise of a like number of Series IV common stock purchase
warrants, which common stock purchase warrants are issuable in connection with
the exercise of certain underwriter's unit purchase option. All Series IV common
stock purchase warrants have an exercise price of $5.75, subject to certain
adjustments.
In addition, Questron is registering, on behalf of certain selling
securityholders, under an alternate prospectus (1) 1,250,000 Series IV common
stock purchase warrants held by such selling securityholders, (2) up to 143,750
shares of common stock issuable in connection with the exercise of a certain
underwriter's unit purchase option, (3) up to 100,000 Series IV common stock
purchase warrants issuable in connection with the exercise of a certain
underwriter's unit purchase option, and (4) up to 100,000 shares of common stock
issuable upon exercise of a like number of Series IV common stock purchase
warrants, which common stock purchase warrants are issuable in connection with
the exercise of a certain underwriter's unit purchase option. The primary
prospectus and the alternate prospectus are identical except for the following
pages and sections contained in the alternate prospectus:
o front and back cover pages
o Prospectus Summary-The Offering section
o Use of Proceeds section
o Plan of Distribution section
o Concurrent Sales section
In addition, a section entitled "Selling Securityholders" will be added to the
alternate prospectus. Any references contained in either the alternate
prospectus or the primary prospectus to the "Offering" shall mean Questron's
offering under the primary prospectus.
-ii-
775555.6
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities in any state where the offer or sale is not permitted.
Subject to Completion, dated _______, 1999
QUESTRON TECHNOLOGY, INC.
4,143,750 Shares of Common Stock
and
100,000 Series IV Common Stock Purchase Warrants
This Prospectus relates to the possible issuance by Questron from time to
time on a continuous basis of: (1) up to 1,150,000 shares of common stock
issuable upon exercise of a like number of Questron's Series IV common stock
purchase warrants; (2) up to 1,500,000 shares of common stock issuable upon
exercise of a like number of Series IV common stock purchase warrants which were
sold by one of the selling securityholders to third parties; (3) up to 1,250,000
shares of common stock issuable upon exercise of a like number of Series IV
common stock purchase warrants held by certain selling securityholders; (4) up
to 143,750 shares of common stock issuable in connection with the exercise of a
certain underwriter's unit purchase option; (5) up to 100,000 Series IV common
stock purchase warrants issuable in connection with the exercise of a certain
underwriter's unit purchase option; and (6) up to 100,000 shares of common stock
issuable upon exercise of a like number of Series IV common stock purchase
warrants which common stock purchase warrants are issuable in connection with
the exercise of a certain underwriter's unit purchase option. All Series IV
common stock purchase warrants have an exercise price of $5.75. On March 10,
1997, Questron 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 Questron, and one redeemable Series IV
common stock purchase warrant. See "Concurrent Sales." On July 2, 1998, such
shares of Series B convertible preferred stock were automatically converted into
1.4375 shares of common stock.
-----------------------------------------------------
Nasdaq SmallCap Market
Security Trading Symbol:
- - -------- ----------------------
Common Stock QUST
Series IV Common Stock Purchase Warrants QUSTW
-----------------------------------------------------
An investment in the securities offered hereby involves a high degree of
risk. You should consider investing in these securities only if you can afford a
complete loss. See "Risk Factors" beginning on page 7.
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.
The date of this Prospectus is ________ , 1999.
775555.6
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference rooms in Washington, D.C., New York, New York and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our Securities and Exchange
Commission filings are also available to the public from the Securities and
Exchange Commission's Website at "http://www.sec.gov."
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with them, which means that we can disclose
important information to you by referring you to those documents. The
information incorporated by reference is considered to be part of this
prospectus, and information that we file later with the Securities and Exchange
Commission will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the Securities and Exchange Commission under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended:
1. Our Annual Report on Form 10-KSB for the year ended December 31, 1997;
2. Our Quarterly Reports on Form 10-QSB for the fiscal quarters ended March
31, 1998, June 30, 1998 and September 30, 1998;
3. Our Current Reports on Form 8-K dated September 24, 1998 and filed on
October 8, 1998 relating to the acquisitions of Fas-Tronics, Inc. and Fortune
Industries, Inc., our senior secured credit facility and our change in
certifying accountants; and
4. The description of our Common Stock contained in our Registration Statement
on Form 8-A.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Questron Technology, Inc.
6400 Congress Avenue, Suite 200A
Boca Raton, Florida 33487
Telephone requests may be directed to (561)241-5251.
This Prospectus is part of a registration statement we filed with the
Securities and Exchange Commission. You should rely only on the information or
representations provided in this Prospectus. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this Prospectus is accurate as of any date other than
the date on the front of the document.
FORWARD-LOOKING INFORMATION
Certain information both included and incorporated by reference in this
Prospectus may contain forward-looking statements within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act, and as such may
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of our Company to be materially
775555.6
<PAGE>
different from future results, performance or achievements expressed or implied
by such forward-looking statements. Forward-looking statements, which are based
on certain assumptions and describe our future plans, strategies and
expectations are generally identifiable by use of the words "may," "will,"
"should," "expect," "anticipate," "estimate," "believe," "intend" or "project"
or the negative thereof or other variations thereon or comparable terminology.
Factors which could have a material adverse effect on the operations and future
prospects of our Company include, but are not limited to, changes in: economic
conditions generally and the fastener distribution market specifically,
dependence on major customers and key management, possible need for additional
financing, risks associated with acquisitions and rapid growth, dependence on
third-party suppliers and manufacturers, substantial competition, the adverse
effect on the market that the exercise of Series IV common stock purchase
warrants may have, lack of assurance of future profitability or payment of
dividends, year 2000 problems and product liability and claims exposure. These
risks and uncertainties should be considered in evaluating any forward-looking
statements contained or incorporated by reference herein.
775555.6
<PAGE>
PROSPECTUS SUMMARY
This summary highlights information contained elsewhere in this prospectus.
Because it is a summary, it does not contain all of the information that you
should consider before investing. You should read the entire prospectus
carefully, including the "Risk Factors" section and the financial statements and
the notes to the financial statements.
The Company
We are 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 solutions to original equipment manufacturers. Our inventory
logistics management services are provided through Questron Distribution
Logistics, Inc., our wholly-owned subsidiary, 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 original equipment
manufacturers 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 original
equipment manufacturer, are complex due to the multiplicity and volume of parts,
and are labor intensive in the preparation for the production line. In providing
inventory logistics management services, we serve as the supply chain manager of
C Items for most of our original equipment manufacturer customers, enabling
these customers to (1) eliminate process costs relating to the planning,
purchasing and expediting of such parts, (2) reduce carrying costs, including
labor, financing and overhead charges, (3) reduce parts shortages, which can
lead to costly production line stoppages, (4) reduce product costs, (5)
consolidate their supplier base, and (6) potentially consolidate the number of
parts used. We employ 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 our sales and
distribution centers, offering electronic data interchange, bar coding,
consolidated billing options and "just in time" delivery programs. We are also a
master distributor of fasteners and a distributor of lithium batteries, battery
packs and assemblies.
We serve more than 4,500 customers, including computer and computer
networking, telecommunications, semiconductor fabrication equipment, medical
electronics, contract manufacturing, consumer products and industrial equipment
manufacturing companies. We supply 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 inventory
logistics management market, we concentrate on customers that produce high-end
products with significant product sophistication. We operate 17 facilities in
seven states and seek to continue our expansion through both internal growth and
acquisitions.
We were incorporated in Delaware in 1983. We changed our name to Questron
Technology, Inc. in 1996 to better reflect our principal business of providing
inventory logistics management programs to original equipment manufacturers and
value-added distributions of fasteners and related products. Together with our
direct and indirect subsidiaries, we currently have approximately 230 employees.
Our executive offices are located at 6400 Congress Avenue, Suite 200A, Boca
Raton, Florida 33487 and our telephone number is (561) 241-5251.
-4-
775555.6
<PAGE>
Recent Developments
On September 24, 1998, we acquired Fas-Tronics, Inc., 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.
Fas-Tronics is located in the Dallas-Fort Worth area. We paid approximately $9.7
million to acquire Fas-Tronics, of which approximately $7.2 million was paid in
cash and approximately $2.5 million was paid in our common stock. Also, we will
pay Fas-Tronics up to an additional $3.25 million in cash and common stock if
they achieve certain operating income levels for the year ended December 31,
1998.
On September 24, 1998, we also acquired Fortune Industries, Inc., 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.
Fortune is located in the Dallas-Fort Worth area. We paid approximately $13.1
million to acquire Fortune, of which approximately $10 million was paid in cash
and approximately $3.1 million was paid in our common stock. Also, we will pay
Fortune up to an additional $2.0 million in cash and common stock if they
achieve certain operating income levels for the year ended December 31, 1998.
-5-
775555.6
<PAGE>
The Offering
Securities Offered..................... 4,143,750 shares of common stock and
100,000 Series IV common stock purchase
warrants
Use of Net Proceeds.................... If any of the Series IV common stock
purchase warrants are exercised for
shares of common stock, we anticipate
that the resulting proceeds will be
used for working capital purposes. See
"USE OF PROCEEDS."
Nasdaq Symbol--Common Stock ........... QUST
Nasdaq Symbol--Series IV Common Stock
Purchase Warrants................... QUSTW
-6-
775555.6
<PAGE>
RISK FACTORS
You should carefully consider the following risk factors and other
information in this Prospectus before deciding to invest in Questron's
securities.
Dependence Upon Major Customers
We have developed a customer base consisting of over 4,500 active
customers. Over 90% of our sales are recurring sales to existing customers. For
the year ended December 31, 1998, we had two customers that each accounted for
10% or more of our sales, but neither customer contributed more than 16%. These
sales arrangements are terminable upon short notice and neither of these
customers is obligated to continue to use our services, or acquire our products
at all or at existing prices. Our dependence on major customers subjects us to
significant financial risk in the operation of our business should a major
customer terminate its business relationship with us. Maintaining such customer
relationships and building new customer relationships is dependent, among other
things, upon our ability to maintain high quality standards and competitive
prices. There can be no assurance that we will be able to achieve such
objectives. The loss of a major customer could have a material adverse effect on
our financial condition, liquidity and results of operations.
Effects of Leverage
As of December 31, 1998, Questron would have had total indebtedness of
approximately $36 million. In addition, subject to restrictions in the senior
secured facility, Questron may incur up to $10 million of additional borrowings
under the senior secured facility. Questron's ability to pay principal and
interest on indebtedness under the senior secured facility and to satisfy its
other debt obligations will depend upon its future operating performance, which
performance will be affected by prevailing economic conditions and financial,
business and other factors, certain of which are beyond the control of Questron.
Possible Need for Additional Financing
We intend to fund our operations and other capital needs substantially from
operations and available borrowings under our existing senior secured credit
facility but there can be no assurance that such funds will be sufficient for
these purposes. In the event that we need additional financing to fund our
operations and capital needs or to finance future acquisitions, there can be no
assurance that such additional financing will be available, or that it will be
available on acceptable terms.
Dependence on Key Management
The success of Questron depends upon the efforts, abilities and expertise
of our executive officers and other senior managers, including Dominic A.
Polimeni, our Chairman, President and Chief Executive Officer, as well as the
presidents of our operating units. The loss of the services of such individuals
and/or other key individuals could have a material adverse effect on our
financial condition, liquidity and results of operations.
-7-
775555.6
<PAGE>
Requirements of Current Prospectus and State Blue Sky Registration in Connection
with the Exercise of the Series IV Common Stock Purchase Warrants Which May Not
Be Exercisable and May Therefore Be Valueless
We will only be able to issue common stock upon the exercise of the Series
IV common stock purchase warrants if (1) there is a current prospectus relating
to the securities offered hereby under an effective registration statement filed
with the Securities and Exchange Commission and (2) such common stock is, to the
extent required, then qualified for sale or exempt from registration under
applicable state securities laws of the jurisdictions in which the various
holders of these warrants reside. There can be no assurance that we will be
successful in maintaining a current registration statement. In addition, we
intend to qualify the sale of these warrants in a limited number of states,
although certain exemptions under certain state securities ("Blue Sky") law may
permit these warrants to be transferred to purchasers in states other than those
in which these warrants were initially qualified. We will be prevented from
issuing common stock upon exercise of these warrants in states where exemptions
are unavailable and we have failed to qualify the common stock issuable upon
exercise of these warrants. We 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 these warrants reside. In such a case, these
warrants of those purchasers will expire and have no value if such warrants
cannot be exercised or sold. Accordingly, the market for these warrants may be
limited because of our obligation to fulfill both of these requirements.
Risks Associated with Acquisitions
Prior to March 1997, we derived our revenues primarily through our
wholly-owned subsidiary, Quest Electronic Hardware, Inc. (now named as Questron
Distribution Logistics, Inc.). Subsequent to March 1997, we acquired Comp Ware,
Inc., doing business as Webb Distribution, California Fasteners, Inc.,
Integrated Material Systems, Inc., Power Components, Inc., Fas-Tronics, Inc. and
Fortune Industries, Inc. We have integrated such acquisitions, which account for
approximately 20% of our revenues for the year ended December 31, 1998. The
acquired businesses may have characteristics or deficiencies unknown to us which
could affect their value or potential. In addition, the integration of these
companies could divert our management's attention from the daily operation of
Questron, require additional management, operational and financial resources,
and place significant demands on our management and infrastructure. We cannot
assure you that we will be able to succeed with the integration or effective
management of these newly acquired businesses or that such businesses will
perform as expected. In addition, we cannot assure you that the acquired
companies will not have additional liabilities or contingencies that we did not
anticipate at the time of the acquisitions. A primary element of our growth
strategy is to continue to pursue strategic acquisitions that expand and
complement our business. We regularly review various strategic acquisition
opportunities and periodically engage in discussions regarding possible
acquisitions. We cannot assure you that we will be able to identify additional
acquisition candidates on terms acceptable to us or in a timely manner, enter
into acceptable agreements or close any such transactions. Also, we cannot
assure you that we will be able to continue to execute our acquisition strategy,
and any failure to do so could have a materially adverse effect on our ability
to sustain growth.
-8-
775555.6
<PAGE>
Risks Associated with Rapid Growth
We have experienced rapid growth since 1995 which has placed significant
demands on our administrative, operational and financial resources. We intend to
seek to continue such growth, which could place additional demands on our
resources. Future internal growth will depend on a number of factors, including
the effective and timely initiation and development of customer relationships,
our ability to maintain the quality of services we provide to our customers and
the recruitment, motivation and retention of qualified personnel. Sustaining
growth will also require the implementation of enhancements to our operational
and financial systems and will require additional management, operational and
financial resources. There can be no assurance that we will be able to manage
our expanding operations effectively or that we will be able to maintain or
accelerate our growth, and any failure to do so could have a materially adverse
effect on our business, results of operations and financial condition.
Dependence on Third-Party Suppliers and Manufacturers
We purchase substantially all of our products, principally fasteners and
other related C Items, from third-party suppliers and manufacturers. Our
management believes that there are numerous available sources of supply for
required products. However, while we currently maintain alternative sources for
products, our 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 us with products on commercially reasonable terms, or at
all, may have a material adverse effect on our operations and financial
condition.
Substantial Competition
The market for our products is highly competitive, and we encounter
substantial competition from domestic distributors. Certain of our competitors
are large companies that have greater financial resources and technical
expertise than we and may offer lower prices on competing products. In addition,
such competitors may have substantially greater managerial capabilities than we
have and, consequently, we may be at a substantial competitive disadvantage in
the conduct of our business. Furthermore, the potential growth of the market in
which we compete may attract new entrants as they perceive opportunities. There
can be no assurance that we will be able to compete successfully with the
market's existing competitors or with new competitors. Failure to compete
successfully could have a material adverse effect on our financial condition,
liquidity and results of operations.
Exercise of Series IV Common Stock Purchase Warrants May Have Dilutive Effect on
Market
A holder of Series IV common stock purchase warrants will have the
opportunity to exercise their warrants and may potentially profit from their
exercise if there is a rise in the market price of the common stock. As a
result, there may be a dilutive effect to the other stockholders' interest in
Questron. Holders of the Series IV common stock purchase warrants would most
likely exercise their warrants and purchase the underlying shares of common
stock at a time when we may be able to obtain capital on terms more favorable
than those provided by the exercise of their warrants.
-9-
775555.6
<PAGE>
No Assurance of Future Profitability or Payment of Dividends
No assurance can be given that the future operations of Questron or its
subsidiaries will be profitable. Should the operations of Questron or its
subsidiaries remain profitable, it is likely that Questron or its subsidiaries
would retain much or all of the earnings in order to finance future growth and
expansion. Therefore, we do not presently intend to pay dividends on the common
stock.
Risks Associated with Year 2000
We have addressed the impact of the year 2000 on our information systems in
order to ensure that our 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. We do not expect year 2000 compliance costs to have a material adverse
impact on our 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 our business or results of operations. In
addition, if our clients or significant suppliers and contractors do not
successfully achieve year 2000 compliance, our business and results of
operations could be adversely affected, resulting from, among other things, our
inability to properly exchange and/or receive data. We are currently formulating
a survey and plan for working with key third-parties to understand their ability
to continue providing services and products through the change to 2000 and will
work with them, if necessary, to avoid any business interruptions in 2000.
Product Liability; Claims Exposure
We maintain product liability insurance to protect us 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 our financial condition and results of operations.
USE OF PROCEEDS
To the extent that (1) the lead underwriter of Questron's March 1997 public
offering determine to exercise its option to acquire (A) up to 143,750 shares of
common stock, and (B) up to 100,000 Series IV common stock purchase warrants or
(2) any of the Series IV common stock purchase warrants registered hereby and by
the alternate prospectus are exercised for shares of common stock, we anticipate
that the proceeds from any of those transactions will be used for working
capital purposes. If all of the Series IV common stock purchase warrants
registered hereby and by the alternate prospectus are exercised, we will receive
$23 million in proceeds and if such underwriter exercises its unit purchase
option, we will also receive $990,000 in proceeds from the issuance to the
underwriter of 143,750 shares of Questron's common stock and 100,000 Series IV
common stock purchase warrants.
PLAN OF DISTRIBUTION
Questron will issue the shares of Common Stock to warrant holders upon its
receipt of the underlying warrant certificate, together with the exercise price
for the warrants. There can be no assurance that any of the Series IV common
stock purchase warrants will be exercised or that the
-10-
775555.6
<PAGE>
underwriter will exercise its unit purchase option to acquire shares of
Questron's common stock and Series IV common stock purchase warrants.
-11-
775555.6
<PAGE>
DESCRIPTION OF SECURITIES
General
The authorized capital stock of Questron consists of 20,000,000 shares of
common stock and 10,010,000 shares of preferred stock, of which (i) 10,000
shares have been designated as Series A cumulative convertible preferred stock,
(ii) 900,000 shares have been designated as Series A preferred stock and (iii)
10,000 shares have been designated as Series A Junior Participating Preferred
Stock. There are (i) 4,736,935 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) no shares of Series A
Junior Participating Preferred Stock outstanding, (v) no shares of Series B
preferred stock issued and outstanding and (v) 3,900,000 warrants to purchase
shares of common stock 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 Questron, the holders of common
stock are entitled to share equally and ratably in the assets of Questron, if
any, remaining after the payment of all debts and liabilities of Questron 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 November 6, 1998, 4,736,935 shares of common stock were issued and
outstanding.
Preferred Stock
Questron's Certificate of Incorporation provides that Questron may, by vote
of its Board of Directors, 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 Questron 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. On July 2, 1998, all of
the 1,150,000 shares of Series B preferred stock were automatically converted
into 1.4375 shares of common stock and there are presently up to 10,000 shares
of preferred stock that may be issued from time to time, all of which shares may
be issued in connection with the shareholder rights plan described below.
Pursuant to Questron's certificate of designation governing the Series B
preferred stock, upon automatic conversion of the 1,150,000 shares of Series B
preferred stock on July 2, 1998, such
-12-
775555.6
<PAGE>
shares were automatically canceled, retired and eliminated from the shares which
Questron is authorized to issue.
Based on Questron's amended certificate of designation, dated June 30, 1998
and approval of Questron's shareholders, each share of Series B preferred stock
was automatically converted without any action on the part of Questron or the
holder thereof into 1.4375 shares of common stock on July 2, 1998. As of the
close of business on December 31, 1998, there were no shares of Series B
preferred stock issued and outstanding. In addition, in connection with the
board of director's adoption of the shareholder rights plan discussed below,
Questron filed a certificate of designation, dated October 23, 1998, creating
the class of Series A Junior Participating Preferred Stock. See "Description of
Securities -- General" above.
Series IV Common Stock Purchase Warrants
Questron currently has 3,900,000 Series IV common stock purchase 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.
Series IV common stock purchase warrants only can be exercised when there
is a current effective registration statement covering the shares of common
stock underlying the warrants. If Questron 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 Series IV common stock purchase 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. If Questron 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 Questron, holders of the warrants are not entitled
to participate in Questron's assets.
Shareholder Rights
On October 23, 1998, the board of directors of Questron (1) created a
Series A junior participating preferred stock, par value $.01 per share, of
Questron, and (2) declared a dividend of one preferred share purchase right for
each outstanding share of common stock of Questron. The dividend was paid to
stockholders of record on November 16, 1998. Each preferred share purchase right
entitles the registered holder to purchase from Questron one one-thousandth of a
share of Series A junior participating preferred stock at a price of $30 per one
one-thousandth of a share of such Series A participating preferred stock,
subject to adjustment.
Rights
The description and terms of the preferred share purchase rights are set
forth in a rights agreement, dated as of October 23, 1998, which may be amended
from time to time, between Questron and American Stock Transfer & Trust Company,
as rights agent. The rights agreement
-13-
775555.6
<PAGE>
provides that, until the earlier to occur of (1) 10 days following a public
announcement that a person or group of affiliated or associated persons (with
certain exceptions, an "Acquiring Person") has acquired beneficial ownership of
15% or more of the outstanding shares of common stock of Questron or (2) 10
business days (or such later date as may be determined by action of the board of
directors of Questron prior to such time as any person or group of affiliated
persons becomes an Acquiring Person) following the commencement of, or
announcement of an intention to make, a tender offer or exchange offer the
consummation of which would result in the beneficial ownership by a person or
group of 15% or more of the outstanding shares of common stock of Questron (or
earlier expiration of the preferred share purchase rights), the preferred share
purchase rights will be transferred with and only with the common stock.
Junior Preferred
The description and terms of the Series A junior participating preferred
stock are set forth in a certificate of designation of the Series A junior
participating preferred stock, as filed with the Secretary of State of the State
of Delaware on November 5, 1998. The certificate of designation provides that up
to 10,000 shares of Series A participating preferred stock may be issued, which
shares shall be entitled to receive dividends, subordinated to all other series
of stock of Questron, when and if declared by Questron's board of directors.
Transfer Agent and Registrar
The transfer agent and registrar for the common stock, preferred 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-
775555.6
<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 (1) certain selling
securityholders of Questron of up to 1,250,000 Series IV common stock purchase
warrants held by such selling security holders, (2) up to 143,750 shares of
common stock issuable in connection with the exercise of a certain underwriter's
unit purchase option, (3) up to 100,000 Series IV common stock purchase warrants
issuable in connection with the exercise of a certain underwriter's unit
purchase option, and (4) up to 100,000 shares of common stock issuable upon
exercise of a like number of Series IV common stock purchase warrants, which
common stock purchase warrants are issuable in connection with the exercise of a
certain underwriter's unit purchase option. The Series IV common stock purchase
warrants and shares of common stock will be registered under the Securities Act
of 1933, as amended, and are expected to become eligible for trading on or about
the date of this Prospectus. Sales of the Series IV common stock purchase
warrants and shares of common stock, or even the potential of such sales, will
likely have an adverse effect on the market price of the common stock. Questron
will not receive any proceeds from the sale of the Series IV common stock
purchase warrants and shares of common stock other than the exercise price of
$5.75 per share of common stock which is subject to certain adjustments. Such
amount is payable upon exercise of the Series IV common stock purchase warrants
($7,762,500 if all Series IV common stock purchase warrants covered by the
alternate prospectus are exercised).
-15-
775555.6
<PAGE>
LEGAL MATTERS
The legality of the securities registered hereby has been passed upon for
Questron by Gould & Wilkie, One Chase Manhattan Plaza, 58th Floor, New York, New
York 10005.
EXPERTS
Questron'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
Questron's Certificate of Incorporation limits the liability of its
directors. As permitted by the Delaware General Corporation Law, directors will
not be liable to Questron for monetary damages arising from a breach of their
fiduciary duty as directors in certain circumstances. Such limitation does not
affect liability (1) for any breach of the director's duty of loyalty to the
Company or its stockholders; (2) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3) pursuant
to Section 174 of the Delaware General Corporation Law (relating to unlawful
payment of dividends or unlawful stock purchase or redemption); or (4) 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 of the Delaware General Corporation Law permits indemnification
of directors, officers, agents and controlling persons of a corporation under
certain conditions and subject to certain limitations. Article VIII of
Questron's Certificate of Incorporation and Article VII of Questron's Bylaws
provide for the indemnification of directors, officers and other authorized
representatives of Questron to the maximum extent permitted by the Delaware
General Corporation Law. 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
-16-
775555.6
<PAGE>
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by such person in connection therewith.
Questron's Certificate of Incorporation and Bylaws provide that Questron
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 of 1933, as amended, may be permitted to directors, officers
or persons controlling Questron pursuant to the foregoing provisions, Questron
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
of 1933, as amended, and is therefore unenforceable.
-17-
775555.6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
================================================ ================================================
- - ------------------------------------------------ ------------------------------------------------
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 4,143,750 Shares of Common Stock
representations must not be relied upon as
having been authorized by the Company or any of and
the Underwriters. This Prospectus does not
constitute an offer to sell, or a solicitation 100,000 Series IV Common Stock
of an offer to buy any of the securities offered Purchase Warrants
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 QUESTRON
in the facts set forth in this Prospectus or in
the affairs of the Company since the date TECHNOLOGY,
hereof.
INC.
------------------------------------
TABLE OF CONTENTS
Page
----
Explanatory Note............................
Where You Can Find More Information.........
Forward-Looking Information................. ---------------------
Prospectus Summary..........................
Risk Factors................................ PROSPECTUS
Use of Proceeds.............................
Plan of Distribution........................ ---------------------
Description of Securities...................
Concurrent Sales............................
Legal Matters...............................
Experts.....................................
Limitation of Liability and ___________ , 1999
Indemnification Matters.....................
------------------------------------
- - ------------------------------------------------ ------------------------------------------------
================================================ ================================================
</TABLE>
775555.6
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement is filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
Subject to Completion, dated _______, 1999
QUESTRON TECHNOLOGY, INC.
1,350,000 Series IV Common Stock Purchase Warrants
and
243,750 Shares of Common Stock
This Prospectus relates to the possible resale from time to time on a
continuous basis of up to (1) 1,250,000 of our Series IV common stock purchase
warrants held by certain selling securityholders, (2) up to 143,750 shares of
common stock issuable in connection with the exercise of a certain underwriter's
unit purchase option, (3) up to 100,000 Series IV common stock purchase warrants
issuable in connection with the exercise of a certain underwriter's unit
purchase option, and (4) up to 100,000 shares of common stock issuable upon
exercise of a like number of Series IV common stock purchase warrants, which
common stock purchase warrants are issuable in connection with the exercise of a
certain underwriter's unit purchase option. The Series IV common stock purchase
warrants and the shares of common stock are being offered by the securityholders
identified in this Prospectus. We issued the Series IV common stock purchase
warrants and the shares of common stock to the selling securityholders pursuant
to an exchange agreement upon cancellation of rights under prior agreements.
These Series IV common stock purchase warrants and the shares of common stock
offered by the selling securityholders may be distributed in (1) transactions on
the Nasdaq SmallCap Market, (2) in privately negotiated transactions or (3) a
combination of such methods of sale, at fixed prices which may be (a) changed,
(b) at market prices prevailing at the time of sale, (c) at prices related to
such prevailing market prices or (d) at negotiated prices. The selling
securityholders may effect such transactions by selling their Series IV common
stock purchase warrants or shares of common stock to or through broker-dealers.
Such broker-dealers may receive compensation in the form of discounts,
concession or commissions from the selling securityholders or the purchasers of
the Series IV common stock purchase warrants or shares of common stock 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,
with respect to the securities offered. Any profits realized or commissions
received by them may be deemed underwriting compensation.
Questron will not receive any of the proceeds from the sale of the Series
IV common stock purchase warrants except for those sold in connection with the
exercise of a certain underwriter's unit purchase option. To the extent the
underwriter involved in Questron's final prospectus to which this post-effective
amendment relates exercises its option to acquire (1) up to 143,750 shares of
common stock, and (2) up to 100,000 Series IV common stock purchase warrants, we
anticipate that the proceeds of this transaction will be used for working
capital purposes. All costs incurred in the registration of the Series IV common
stock purchase warrants are being borne by Questron. The Series IV common stock
purchase warrants will be offered for sale from time to time on terms to be
determined at the time of sale by the selling securityholders.
Nasdaq SmallCap Market
Security Trading Symbol:
-------- ----------------------
Common Stock QUST
Series IV Common Stock Purchase Warrants QUSTW
An investment in the securities offered hereby involves a high degree of
risk. You should consider investing in these securities only if you can afford a
complete loss. See "Risk Factors" beginning on page 7.
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.
--------------------------
The date of this Prospectus is ___________ , 1999.
775555.6
<PAGE>
The Offering
Securities Offered..................... 243,750 shares of common stock and
1,350,000 Series IV common stock
purchase warrants exercisable at an
exercise price of $5.75 per share of
Questron's common stock, subject to
certain adjustments.
Use of Net Proceeds.................... If the lead underwriter of Questron's
March 1997 public offering determines
to exercise its option to acquire up
to 143,750 shares of common stock and
up to 100,000 Series IV common stock
purchase warrants, Questron will
receive $990,000 in proceeds. We will
not receive any of the proceeds from
the sale of the Series IV common stock
purchase warrants by the selling
securityholders. Any proceeds we
receive from the exercise of the
Series IV common stock purchase
warrants will be used for working
capital purposes. See "USE OF
PROCEEDS."
Nasdaq Symbol--Common Stock............ QUST
Nasdaq Symbol--Warrants................ QUSTW
Alt-6
775555.6
<PAGE>
USE OF PROCEEDS
To the extent the lead underwriter of Questron's March 1997 public offering
determines to exercise its option to acquire (1) up to 143,750 shares of common
stock, and (2) up to 100,000 Series IV common stock purchase warrants, we
anticipate that the proceeds of this transaction will be used for working
capital purposes. If the lead underwriter exercises such option, we will receive
$990,000 in proceeds.
PLAN OF DISTRIBUTION
We have been advised that the selling securityholders or pledgees, donees,
transferees of or other successors in interest to the Series IV common stock
purchase warrants and/or shares of common stock, may sell their Series IV common
stock purchase warrants and/or shares of common stock, as the case may be, 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 their Series IV
common stock purchase warrants and/or shares of common stock 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 Series IV common stock purchase warrants and/or shares of
common stock 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).
We have advised the selling securityholders that the anti-manipulative
rules under Regulation M under the Securities Exchange Act of 1934, as amended,
may apply to their sales in the market and has informed them of the need for
delivery of copies of this Prospectus. We are 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 Series IV common stock purchase
warrants and/or shares of common stock 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 of 1933, as amended, in which case the
commissions received by any such broker-dealer or agent and profit on any resale
of the Series IV common stock purchase warrants and/or shares of common stock
may be deemed to be underwriting commissions under the Securities Act of 1933,
as amended. The commissions received by a broker-dealer or agent may be in
excess of customary compensation. When we are notified by the selling
securityholders that any material arrangement has been entered into with a
broker-dealer, agent or underwriter for the sale of Series IV common stock
purchase warrants and/or shares of common stock through a block trade, special
offering, exchange distribution or secondary distribution or purchases by a
broker or a dealer, we will cause to be filed a supplemental prospectus, if
required, disclosing the terms of the offering of the Series IV common stock
purchase warrants and/or shares of common stock, including the name or 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 which the securities may be listed. We will receive no part of the
proceeds from the sale of any Series IV common stock purchase warrants and/or
shares of common stock offered hereunder.
Any or all of the sales or other transactions involving the Series IV
common stock purchase warrants and/or shares of common stock described above,
whether effected by the selling securityholders,
Alt-11
775555.6
<PAGE>
any broker-dealer or others, may be made pursuant to this Prospectus. In
addition, any Series IV common stock purchase warrants and/or shares of common
stock that qualify for sale pursuant to Rule 144 under the Securities Act of
1933, as amended, 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 Series IV common stock purchase warrants and/or shares of common
stock may be sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain states the Series IV common stock
purchase warrants and/or shares of common stock 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.
All costs and expenses associated with registering the Series IV common
stock purchase warrants and/or shares of common stock being offered by this
Prospectus with the Securities and Exchange Commission will be paid by us. Such
costs and expenses are estimated to be approximately $37,000.
Together with the selling securityholders, we may agree to indemnify
certain persons including broker-dealers or others, against certain liabilities
in connection with any offering of the Series IV common stock purchase warrants
and/or shares of common stock, including liabilities under the Securities Act of
1933, as amended.
The selling securityholders may elect to sell all, a portion or none of the
Series IV common stock purchase warrants and/or shares of common stock offered
by them hereunder.
Alt-11.1
775555.6
<PAGE>
SELLING SECURITYHOLDERS
This Prospectus relates to the sale of an aggregate of 1,350,000 Series IV
common stock purchase warrants and 243,750 shares of common stock.
The following table sets forth certain information with respect to the
selling securityholders. The Series IV common stock purchase warrants and shares
of common stock 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>
Shares of Percentage
Common Shares of of Total Warrants
Stock Common Common that may be
owned Stock Stock Warrants offered Warrants
prior to owned after Outstanding owned prior pursuant to owned after
this this after this to this this this
Selling Securityholders(1) Offering(2) Offering (3) Offering Offering Offering Offering(4)
- - -------------------------- ----------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gulfstream Financial Group, 1,713,606 274,958 36.17% 1,000,000 1,000,000 0
Inc.(5)
6400 Congress Avenue
Suite 200A
Boca Raton, FL 33487
Phillip D. Schwiebert (6) 123,505 113,339 0.3% 250,000 250,000 0
c/o Questron Distribution
Logistics, Inc.
386 Railroad Court
Milpitas, CA 95035
Victoria Loewenstern
Irrevocable Trust
6700 North Andrews
Suite 401
Fort Lauderdale, FL 33309(7) 23,957 0 0 16,666 16,666 0
Brett Loewenstern
Irrevocable Trust
6700 North Andrews
Suite 401
Fort Lauderdale, FL 33309(7) 23,959 0 0 16,667 16,667 0
Stephanie Loewenstern
Irrevocable Trust
6700 North Andrews
Suite 401
Fort Lauderdale, FL 33309(7) 23,957 0 0 16,666 16,666 0
Akiva Merchang Group, Inc.
6700 North Andrews
Suite 401
Fort Lauderdale, FL 33309(7) 71,875 0 0 50,000 50,000 0
</TABLE>
- - ------------------
(1) The figures in the Selling Securityholders Table reflect ownership as of
December 31, 1998, based upon information provided by the respective
selling securityholders.
(2) For the purpose of this calculation, the number of shares of common stock
outstanding includes shares of common stock issued on July 2, 1998 upon
conversion of the Series B preferred stock previously held by each selling
securityholders. Assumes no exercise of the Series IV common stock purchase
warrants offered under this Prospectus.
(3) Assumes sale of all shares of common stock registered in this Prospectus,
even though the selling securityholders are under no obligation known to us
to sell any shares of common stock at this time.
(4) Assumes sale of all Series IV common stock purchase warrants registered in
this prospectus, even though the selling securityholders are under no
obligation known to us to sell any Series IV common stock purchase warrants
at this time.
(5) Dominic A. Polimeni, the Chairman, Chief Executive Officer and President of
Questron, is an officer, director and 50% stockholder of Gulfstream
Financial Group, Inc. In addition, Robert V. Gubitosi, a director of
Questron since 1996, is a Managing Director of Gulfstream Financial Group,
Inc. and Joan Gubitosi, Mr. Gubitosi's wife, is a 50% stockholder of
Gulfstream Financial Group, Inc. All costs incurred by us in connection
with the registration of the Series IV common stock purchase warrants are
being borne by us.
(6) Phillip Schwiebert is an employee and officer of Questron.
(7) These securities were originally issued to Biltmore Securities, Inc.,
which acted as an underwriter for Questron in connection with its public
offering in March 1997.
Alt-14
775555.6
<PAGE>
CONCURRENT SALES
As of the date of this Prospectus, there is a registration statement, which
had previously been filed under the Securities Act of 1933, as amended, and
subsequently declared effective by the Securities and Exchange Commission,
covering the concurrent offering of (1) up to 1,150,000 shares of common stock
issuable upon exercise of a like number of Series IV common stock purchase
warrants; (2) up to 1,500,000 shares of common stock issuable upon exercise of a
like number of Series IV common stock purchase warrants which were sold by one
of the selling securityholders to third parties; (3) up to 1,250,000 shares of
common stock issuable upon exercise of a like number of Series IV common stock
purchase warrants held by certain selling securityholders; (4) up to 143,750
shares of common stock issuable in connection with the exercise of a certain
underwriter's unit purchase option; (5) up to 100,000 Series IV common stock
purchase warrants issuable in connection with the exercise of a certain
underwriter's unit purchase option; and (6) up to 100,000 shares of common stock
issuable upon exercise of a like number of Series IV common stock purchase
warrants which common stock purchase warrants are issuable in connection with
the exercise of a certain underwriter's unit purchase option.
Sales of any of the above-mentioned shares of common stock or Series VI
common stock purchase 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 this concurrent offering, the freely tradeable common
stock will be increased by up to 4,143,750 shares of common stock upon exercise
of the Series VI common stock purchase warrants and the unit purchase option, if
any.
Alt-15
775555.6
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
================================================ ================================================
- - ------------------------------------------------ ------------------------------------------------
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 1,350,000 Series IV
Underwriters. This Prospectus does not constitute Common Stock
an offer to sell, or a solicitation of an offer Purchase Warrants
to buy, any of the securities offered hereby in and
any jurisdiction where, or to any person to 243,750 Shares
whom, it is unlawful to make such offer or of
solicitation. Neither the delivery of this Common Stock
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
----
Explanatory Note...........................
Where You Can Find More Information........
Forward-Looking Information................
Prospectus Summary.........................
Risk Factors............................... QUESTRON
Use of Proceeds............................
Plan of Distribution....................... TECHNOLOGY,
Description of Securities..................
Selling Securityholders.................... INC.
Concurrent Sales...........................
Legal Matters..............................
Experts.................................... -----------------------------
Limitation of Liability and PROSPECTUS
Indemnification Matters..................
----------------------------- -----------------------------
______________ , 1999
================================================ ================================================
- - ------------------------------------------------ ------------------------------------------------
</TABLE>
775555.6
<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 Questron 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 Questron.
Item 15. Indemnification of Directors and Officers
-----------------------------------------
Section 145 ("Section 145") of the Delaware General Corporation Law permits
indemnification of directors, officers, agents and controlling persons of a
corporation under certain conditions and subject to certain limitations. Article
VIII of Questron's Certificate of Incorporation and Article VII of Questron's
Bylaws provide for the indemnification of directors, officers and other
authorized representatives of Questron to the maximum extent permitted by the
Delaware General Corporation Law. 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.
775555.6
<PAGE>
Section 102(b)(7) of the Delaware General Corporation Law 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."
Questron also maintains directors and officers liability insurance for the
benefit of its officers and directors.
775555.6
<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.
775555.6
<PAGE>
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 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, as amended, 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 Securities Act of 1933, as amended, 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 Securities
Act of 1933, as amended, and will be governed by the final adjudication of such
issue.
775555.6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, 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. 2 to this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized in Boca Raton, Florida
on March 12, 1999.
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, as amended,
this Post-Effective Amendment No. 2 to this Registration Statement has been
signed by the following persons in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Dominic A. Polimeni Chairman, President, March 12, 1999
- - ----------------------- Chief Executive Officer and
Dominic A. Polimeni Director (Principal Executive
Officer)
/s/ Milton M. Adler Treasurer, Secretary, March 12, 1999
- - ----------------------- Controller and Director
Milton M. Adler (Principal Financial Officer and
Principal Accounting Officer)
/s/ Robert V. Gubitosi Director March 12, 1999
- - -----------------------
Robert V. Gubitosi
/s/ Frederick W. London Director March 12, 1999
- - -----------------------
Frederick W. London
/s/ William J. McSherry, Jr. Director March 12, 1999
- - ----------------------------
William J. McSherry, Jr.
775555.6
<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.
775555.6
Exhibit 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this amendment to
the 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."
/s/ Moore Stephens, P.C.
MOORE STEPHENS, P.C.
Certified Public Accountants
New York, New York
March 12, 1999
775555.6
