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REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
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 2000
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 AND CHIEF EXECUTIVE OFFICER
6400 CONGRESS AVENUE, SUITE 2000, BOCA RATON, FLORIDA 33487
(561) 241-5251
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
CARTER STRONG, ESQ.
JOHN P. FOLEY, ESQ.
ARENT FOX KINTNER PLOTKIN & KAHN, PLLC
1050 CONNECTICUT AVENUE, N.W.
WASHINGTON, DC 20036
(202) 857-6000
Approximate date of commencement of proposed sale to the public: From time to
time after this 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]
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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 under Rule 462(c) pursuant to
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.[ ]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT OFFERING AGGREGATE AMOUNT OF
REGISTERED TO BE REGISTERED PRICE PER UNIT (1)(2) OFFERING PRICE REGISTRATION FEE
---------- ---------------- --------------------- ---------------- -----------------
<S> <C> <C> <C> <C>
Common Stock, $0.001 par
value per share 2,341,214 $6.5938 $15,437,496 $4,075.50
</TABLE>
(1) The common stock that may be offered by this Registration Statement
includes 107,500 shares issuable upon exercise of options and 50,000 shares
issuable upon exercise of warrants.
(2) Estimated solely for the purpose of computing the amount of the
registration fee based on the average of the high and low sale prices of
the common stock as reported on The Nasdaq National Market on April 18,
2000 under Rule 457(c).
THE REGISTRANT AMENDS THIS REGISTRATION STATEMENT ON THE DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON THE DATE AS THE COMMISSION ACTING UNDER SAID SECTION 8(a), MAY
DETERMINE.
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Subject to Completion, dated April 21, 2000
PRELIMINARY PROSPECTUS
QUESTRON TECHNOLOGY, INC.
2,341,214 SHARES
COMMON STOCK
Up to 2,341,214 shares of our common stock may be offered for sale by
the selling stockholders listed on page 10. Some shares of common stock
are owned outright by selling stockholders, and some shares are
issuable upon the exercise by selling stockholders of options or
warrants.
Our common stock is listed on The Nasdaq National Market under the
symbol "QUST." On April 18, 2000, the last sale price of our common
stock on The Nasdaq National Market was $6.75 per share.
INVESTING IN QUESTRON COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 6 THAT YOU SHOULD CONSIDER BEFORE INVESTING.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION,
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ___________, 2000
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YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
DIFFERENT INFORMATION. THIS PROSPECTUS IS AN OFFER TO SELL ONLY THE REGISTERED
SECURITIES COVERED BY THIS PROSPECTUS. IT IS NOT AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE THE
OFFER OR SALE IS NOT PERMITTED. THE DELIVERY OF THIS PROSPECTUS DOES NOT IMPLY
THAT THE INFORMATION IN THIS PROSPECTUS IS CORRECT AS OF ANY DATE OTHER THAN THE
DATE OF THIS PROSPECTUS.
In this prospectus, "Questron," "we," "our" and "us" refer to Questron
Technology, Inc. and its subsidiaries and affiliates.
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<CAPTION>
TABLE OF CONTENTS
<S> <C>
THE COMPANY............................................................................................4
RISK FACTORS...........................................................................................6
Dependence on major customers - we derive a substantial portion of our revenue
from major customers, and, therefore, the loss of even one of these customers
could significantly and negatively impact our operating results.........................6
We are vulnerable to customer industry risks and cyclicality..................................6
Substantial leverage -our substantial indebtedness could adversely affect our
financial health.......................................................................6
Risks associated with acquisitions -businesses which we have acquired, or those
we may acquire in the future, could perform below our expectations, increase our
liabilities and limit resources necessary to manage our existing business...............7
Dependence on third-party suppliers and manufacturers -delays in establishing
relationships with new suppliers and manufacturers of our products could
severely diminish our operations........................................................7
We face significant competition...............................................................7
Product liability; claims exposure............................................................8
We are dependent on our inventory management and information systems..........................8
We depend on key management...................................................................8
Management control............................................................................9
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS..........................................................9
USE OF PROCEEDS........................................................................................9
SELLING STOCKHOLDERS...................................................................................9
PLAN OF DISTRIBUTION..................................................................................11
LEGAL MATTERS.........................................................................................12
EXPERTS...............................................................................................13
WHERE YOU CAN FIND MORE INFORMATION...................................................................13
</TABLE>
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THE COMPANY
We provide original equipment manufacturers with supply management
solutions and inventory logistics management services for C inventory items,
which are typically low cost, high volume related products (commonly referred to
as "C Items"). These services include in-plant bin-stock replenishment, kitting,
technical support, quality assurance and other similar programs.
Increasingly, original equipment manufacturers are outsourcing C Items
inventory logistics management functions. Our goal is to take advantage of this
trend. We concentrate on customers who produce high-end products with
significant product sophistication. 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:
o eliminate process costs relating to the planning, purchasing and
expediting of C Items;
o reduce carrying costs, including labor, financing and overhead
charges;
o reduce parts shortages, which can lead to costly production line
stoppages;
o reduce product costs; o consolidate their supplier base; and o
potentially consolidate the number of parts used.
Inventory items classified as C Items generally have much lower values
than the end products being made by original equipment manufacturers. They are
also complex due to the multiplicity of items and volume of parts, and are labor
intensive in their preparation for the production line. We manage C Items, with
state-of-the-art technology, ranging from sourcing and procurement of parts to
the direct deployment of parts to the manufacturing floor. We provide these
services utilizing a fully integrated on-line real-time computer system linking
all of our sales and distribution centers, offering electronic data interchange,
bar coding, consolidated billing options and "just in time" delivery programs.
Our customers include companies in the following industries:
o industrial equipment manufacturing;
o military aerospace;
o commercial aerospace;
o contract manufacturing;
o furniture;
o transportation;
o telecommunications;
o medical electronics;
o computer and computer networking;
o semiconductor fabrication equipment; and
o consumer products.
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We supply a wide range of products which include:
o fasteners;
o spacers and standoffs;
o plastic components;
o cable ties and accessories;
o drawer slides;
o connectors;
o design/prototype components; and
o other custom fabricated C Items.
We were incorporated in Delaware in 1983 and changed our name to
Questron Technology, Inc. in 1996. Together with our direct and indirect
subsidiaries, we currently have approximately 445 employees and operate 32
facilities in 18 states and two in Mexico. We intend to continue our expansion
through both internal growth and acquisitions. Our executive offices are located
at 6400 Congress Avenue, Suite 2000, Boca Raton, Florida 33487 and our telephone
number is (561) 241-5251.
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RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN OUR SECURITIES.
DEPENDENCE ON MAJOR CUSTOMERS - WE DERIVE A SUBSTANTIAL PORTION OF OUR REVENUE
FROM MAJOR CUSTOMERS, AND, THEREFORE, THE LOSS OF EVEN ONE OF THESE CUSTOMERS
COULD SIGNIFICANTLY AND NEGATIVELY IMPACT OUR OPERATING RESULTS
Our customer base consists of over 6,000 customers. Over 90% of our
sales are recurring sales to existing customers. For the year ended December 31,
1999, on a proforma basis, our ten largest customers accounted for approximately
31% of our sales. No single customer contributed more than 5.6%. Customers may
terminate these sales arrangements on short notice, and none of our customers is
obligated to continue to use our services, acquire our products or pay existing
prices. This exposes us to significant financial risk should one or more major
customers terminate or significantly alter their business relationship with us.
WE ARE VULNERABLE TO CUSTOMER INDUSTRY RISKS AND CYCLICALITY
We sell a significant percentage of our products and services to
customers in industries that experience fluctuations in demand because of
changes in economic conditions, consumer demand and other factors beyond our or
their control. As a result, we may be unable to increase or maintain our level
of sales in periods of economic stagnation or downturn in our customers'
industries.
SUBSTANTIAL LEVERAGE - OUR SUBSTANTIAL INDEBTEDNESS COULD ADVERSELY AFFECT OUR
FINANCIAL HEALTH
As of December 31, 1999, our total indebtedness was approximately $89.6
million, representing 72.2% of our total capitalization. In March 2000, $5
million of notes issued as consideration for acquisitions were redeemed for
450,000 shares of our common stock. Subject to restrictions in our senior credit
facility, we may incur up to $10.6 million of additional borrowings under the
senior credit facility. Our indebtedness could:
o increase our vulnerability to adverse economic and industry
conditions;
o limit our ability to fund capital expenditures, future acquisitions,
working capital and other general corporate requirements;
o require us to dedicate a substantial portion of our cash flow from
operations to payments of indebtedness, which would reduce our ability
to fund capital expenditures, future acquisitions, working capital and
other general corporate requirements;
o place us at a competitive disadvantage to competitors with less debt;
and
o limit, along with the financial and other restrictive covenants in our
existing senior credit facility, among other things, our ability to
borrow any additional funds, or to borrow on acceptable terms.
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RISKS ASSOCIATED WITH ACQUISITIONS - BUSINESSES WHICH WE HAVE ACQUIRED, OR THOSE
WE MAY ACQUIRE IN THE FUTURE, COULD PERFORM BELOW OUR EXPECTATIONS, INCREASE OUR
LIABILITIES AND LIMIT RESOURCES NECESSARY TO MANAGE OUR EXISTING BUSINESS
Before March 1997, we derived our revenues primarily through our wholly
owned subsidiary, Questron Distribution Logistics, Inc. After March 1, 1997, we
experienced a period of rapid growth and expansion through the acquisitions of
Comp Ware, Inc., doing business as Webb Distribution, California Fasteners,
Inc., Integrated Material Systems, Inc., Power Components, Inc., Fas-Tronics,
Inc., Fortune Industries, Inc., B&G Supply Company, Inc., Capital Fasteners,
Inc., Olympic Fasteners & Electronic Hardware and AFCOM Action Threaded
Products, Inc. Our growth and profitability depend on our ability to integrate
successfully acquired businesses and assets into our existing operations and to
expand successfully our customer base, which we may not accomplish. On March 31,
2000, we acquired RSD Sales, Co. Inc. The acquired businesses may have
characteristics, deficiencies or liabilities unknown to us, which could diminish
the benefits we derive from them. In addition, the integration of these
companies could place disproportionate demands on our management, operational
and financial resources. Some of our senior management personnel have recently
joined us. Our ability to manage growth successfully will require us to continue
to improve our operational, management and financial systems and controls. If
our management is unable to manage growth effectively, our business, results of
operations and financial condition could be materially and adversely affected.
The successful integration of these and future acquisitions depends on a number
of factors, including:
o the effective and timely initiation and development of customer
relationships;
o our ability to maintain the quality of services we provide to our
customers; and
o the recruitment, motivation and retention of qualified personnel.
DEPENDENCE ON THIRD-PARTY SUPPLIERS AND MANUFACTURERS - DELAYS IN ESTABLISHING
RELATIONSHIPS WITH NEW SUPPLIERS AND MANUFACTURERS OF OUR PRODUCTS COULD
SEVERELY DIMINISH OUR OPERATIONS
Our C Items are purchased from third-party suppliers and manufacturers.
While there are numerous available sources of supply for required products and
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 delivery. Failure by 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.
WE FACE SIGNIFICANT COMPETITION
The inventory logistics management services market for C Items is
highly competitive, and we expect competition in each of these businesses to
increase. Our competitors include Park-Ohio Holdings Corp., Honeywell, Inc.,
Textron, Inc. and Pentacon, Inc. Increased competition could result in price
reductions, reduced margins and loss of market share, all of which could
materially and adversely affect our business, operating results and financial
condition. Many of our current and potential competitors have significantly
greater financial, technical, marketing and other resources than we have. We
cannot assure you that we will be able to compete successfully with existing or
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new competitors or that the competitive pressure we face will not materially and
adversely affect our business, operating results and financial condition.
PRODUCT LIABILITY; CLAIMS EXPOSURE
We maintain product liability insurance to protect us from product
liabilities. We have had only one product liability lawsuit against us in the
past four years. That litigation was settled without any payment by us. We
cannot assure you that premiums will not increase or that claims will not arise
in the future, or that our insurance coverage will be adequate. Any product
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.
WE ARE DEPENDENT ON OUR INVENTORY MANAGEMENT AND INFORMATION SYSTEMS
We operate an inventory management information system that is used to
purchase, monitor and allocate inventory throughout our facilities. We depend on
our management information system to provide real-time information used to
monitor:
o sales activities;
o credit approval;
o inventory levels;
o stock balancing;
o vendor returns; and
o order fulfillment.
Any disruption in the operation of our management information system could have
a material adverse effect on our financial condition, liquidity and results of
operations.
WE DEPEND ON KEY MANAGEMENT
Our success depends upon the efforts, abilities and expertise of our
executive officers and other senior managers, including Dominic A. Polimeni, our
Chairman and Chief Executive Officer, as well as the presidents of our operating
units. The loss of the services of these individuals or other key individuals
could have a material adverse effect on our financial condition, liquidity and
results of operations.
Our success also depends largely on our ability to attract and retain
highly-skilled technical, managerial, sales and marketing personnel. While our
employees enter into confidentiality agreements, they generally do not enter
into non-competition agreements. If we are unable to hire and retain the
necessary personnel, our development of productivity enhancements and new
services likely would be adversely affected. We cannot assure you that we will
succeed in retaining our key personnel and in attracting and retaining the
personnel we require to continue our growth strategy.
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MANAGEMENT CONTROL
Management owns approximately 52% of our outstanding common stock.
Accordingly, management has the ability to direct many of our affairs and
actions, including actions requiring stockholder approval.
CAUTIONARY NOTE ON FORWARD-LOOKING STATEMENTS
This prospectus may contain forward-looking statements based on our
current expectations, assumptions, estimates and projections about us and our
industry. Forward-looking statements relate to future events or to our future
financial performance. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "could," "believes," "estimates," "predicts," "potential" or
similar expressions. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of factors more
fully described in the "Risk Factors" section and elsewhere in this prospectus.
Although we believe that the expectations reflected in any
forward-looking statements are reasonable, we cannot guarantee future events or
results. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's view only as of the date
of this prospectus. Except as required by law, we undertake no obligation to
update any forward-looking statement, even if new information becomes available
or other events occur.
USE OF PROCEEDS
We will not receive any proceeds from the sale of common stock by the
selling stockholders. The selling stockholders will retain all proceeds. If
warrants or options are exercised by selling stockholders, we will receive an
exercise price which will be used for general corporate purposes.
SELLING STOCKHOLDERS
This prospectus covers:
(i) Restricted shares of our common stock owned by certain selling
stockholders;
(ii) Shares of our common stock issuable on the exercise of warrants
by certain selling stockholders;
(iii) Shares of our common stock issuable on the exercise of options
by certain selling stockholders.
Except as noted below, none of the selling stockholders has, within the past
three years, had any position, office or other material relationship with us.
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The following table sets forth the names of the selling stockholders,
the number of shares of common stock owned beneficially by the selling
stockholders as of March 23, 2000 and the number of shares that may be offered
under this prospectus.
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED PRIOR OFFERED OWNED AFTER THE
NAME OF STOCKHOLDER TO THE OFFERING OFFERING(1)
NUMBER PERCENT(2) NUMBER PERCENT
<S> <C> <C> <C> <C> <C> <C>
Malcolm Tallmon(3) 662,040 8.23 37,500 624,540 7.76
Greg Fitzgerald(4) 429,279 5.34 131,501 297,778 3.70
Valerie Fitzgerald(5) 429,279 5.34 131,501 297,778 3.70
Rudy Petric(6) 228,219 2.84 135,000 93,219 1.16
James R. Gilchrist(7) 376,093 4.67 376,093 0 *
Robert S. Diehl(8) 394,619 4.90 394,619 0 *
Albion Alliance 238,000 2.96 238,000 0 *
Mezzanine Fund LP(9)
Inletside & Co.(9) 170,000 2.11 170,000 0 *
The Equitable Life 170,000 2.11 170,000 0 *
Assurance Society of
the United States(9)
IBJ Whitehall Bank & 102,000 1.27 102,000 0 *
Trust Co.(9)
Gerald Ablan 291,530 3.62 129,978 161,552 2.01
Charles Godzer 291,530 3.62 129,978 161,552 2.01
Robert Lehman 11,264 * 5,022 6,242 *
William Hackett 11,264 * 5,022 6,242 *
James Mraz 198,219 2.46 135,000 63,219 *
Janney Montgomery 27,000 * 27,000 0 *
Scott LLC(10)
William J. Barrett(11) 9,500 * 9,500 0 *
Herbert M. Gardner(12) 9,500 * 9,500 0 *
Andrew D. Shiftan(13) 4,000 * 4,000 0 *
</TABLE>
(1) Assumes the sale of all shares offered by this prospectus and no other
purchases or sales of Questron's common stock. See "Plan of Distribution."
(2) Based on 8,045,881 issued and outstanding shares of Questron's common stock
as of March 23, 2000.
(3) Mr. Tallmon has been Vice President of Questron since September 1999. From
June 1998 until September 1999, Mr. Tallmon was President and General
Manager of Fortune Industries, Inc., our wholly owned subsidiary.
(4) Includes 20,000 shares of Questron's common stock issuable on exercise of
options. Mr. Fitzgerald has been President of Questron Aerospace Logistics,
a division of Questron Distribution Logistics, Inc., our wholly owned
subsidiary, since September 1999. From
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June 1998 until September 1999, Mr. Fitzgerald was President and General
Manager of Fas-Tronics, Inc., our wholly owned subsidiary.
(5) Includes 20,000 shares of Questron's common stock issuable on exercise of
options. Ms. Fitzgerald has been an employee of Questron Aerospace
Logistics, a division of Questron Distribution Logistics, Inc., our wholly
owned subsidiary, since September 1999. From June 1998 until September
1999, Ms. Fitzgerald was an employee of Fas-Tronics, Inc., our wholly owned
subsidiary.
(6) Includes 30,000 shares of Questron's common stock issuable on exercise of
options. Mr. Petric has been an employee of Questron Distribution
Logistics, Inc., our wholly owned subsidiary, since June 1999.
(7) Includes 180,000 shares held by James R. Gilchrist, Trustee of James R.
Gilchrist Revocable Trust under Agreement dated June 25, 1999. Mr.
Gilchrist has been Northeast and Mid-Atlantic Regional Vice President of
Questron Distribution Logistics, Inc., our wholly owned subsidiary, since
June 1999.
(8) Since March 31, 2000, Mr. Diehl has been President of RSD Sales Co., Inc.,
our indirect wholly owned subsidiary.
(9) The selling stockholder obtained its restricted stock in connection with
the issuance to Questron of $20 million of 14.5% of senior subordinated
notes due June 30, 2005 (the "Notes"). These shares are subject to a
lock-up agreement which restricts the ability of this selling stockholder
to sell its shares until January 1, 2001.
(10) Includes 27,000 shares of Questron's common stock issuable on exercise of
the warrants. The warrants were issued pursuant to an agency agreement
pursuant to which Janney Montgomery Scott Inc. ("JMS") acted as exclusive
agent for the purpose of finding qualified purchasers for the Notes.
(11) Includes 9,500 shares of Questron's common stock issuable on exercise of
the warrants. The warrants were issued pursuant to an agency agreement
pursuant to which JMS acted as exclusive agent for the purpose of finding
qualified purchasers for the Notes.
(12) Includes 9,500 shares of Questron's common stock issuable on exercise of
the warrants. The warrants were issued pursuant to an agency agreement
pursuant to which JMS acted as exclusive agent for the purpose of finding
qualified purchasers for the Notes.
(13) Includes 4,000 shares of Questron's common stock issuable on exercise of
the warrants. The warrants were issued pursuant to an agency agreement
pursuant to which JMS acted as exclusive agent for the purpose of finding
qualified purchasers for the Notes.
* Less than 1%.
PLAN OF DISTRIBUTION
The selling stockholders may sell the common stock offered by this
prospectus from time to time directly to purchasers. The selling stockholders
may also sell the common stock from time to time to or through underwriters,
dealers, brokers or other agents. The selling stockholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. The selling stockholders and underwriters, dealers, brokers
or other agents may engage in hedging transactions with respect to the common
stock. In those transactions, common stock may be sold or delivered to cover
short positions resulting from the transactions.
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The common stock offered by this prospectus may be sold from time to
time in one or more transactions at a fixed offering price, which may be
changed, or at varying prices determined at the time of sale or at negotiated
prices. The prices will be determined by the selling stockholders or by
agreement between the selling stockholders and their underwriters, dealers,
brokers or other agents.
Any underwriters, dealers, brokers or other agents to or through whom
common stock offered by this prospectus is sold may receive compensation in the
form of underwriting discounts, concessions, commissions or fees from the
selling stockholders or from purchasers of common stock for whom they act as
agent or to whom they sell as principal, or both. The compensation to a
particular underwriter, broker, dealer or other agent may be in excess of
customary commissions. In addition, the selling stockholders and any
underwriters, dealers, brokers or other agents may be considered underwriters
under the Securities Act, and any profits on the sale of common stock by them
and any discounts, commissions or concessions received by any of them may be
considered underwriting discounts and commissions under the Securities Act. The
selling stockholders will select any underwriter, broker, dealer or other agent
in connection with the sale of the common stock. The underwriters, brokers,
dealers or other agents may have other business relationships with us and our
subsidiaries or affiliates in the ordinary course of business. We cannot
currently estimate the amount of any discounts, commissions, concessions or
fees. We do not know of any existing arrangements between the selling
stockholders and any underwriter, dealer, broker or other agent.
To comply with some states' securities laws, if applicable, the common
stock offered by this prospectus may be sold in those states only through
brokers or dealers. In addition, in some states the common stock may not be sold
unless it has been registered or qualified for sale in those states or an
exemption from registration or qualification is available and complied with.
We have agreed to pay all of the expenses incurred in connection with
the preparation and filing of this prospectus and the related registration
statement, including the fees and expenses in connection with the registration
or qualification of the common stock offered for sale under state securities
laws.
The selling stockholders may also resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 of the Securities Act,
provided these open market transactions meet the criteria and conform to the
requirements of this Rule.
We will make copies of this prospectus available to the selling
stockholders and we have informed them of the need for delivery of copies of
this prospectus to purchasers at or prior to the time of any sale of common
stock offered by this prospectus.
LEGAL MATTERS
The validity of the common stock offered under this prospectus will be
passed upon for us by Arent Fox Kintner Plotkin & Kahn, PLLC, 1050 Connecticut
Avenue, N.W., Washington, D.C. 20036-5339.
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EXPERTS
The consolidated financial statements of Questron at December 31, 1999
and 1998 and for the years then ended included in Questron's Annual Report (Form
10-K) have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon included therein and incorporated herein by reference.
Such consolidated financial statements are incorporated herein by reference in
reliance upon such report given on the authority of such firm as experts in
accounting and auditing.
The financial statements of Questron at December 31, 1997
incorporated in this registration statement by reference to the Annual Report
(Form 10-K) for the year ended December 31, 1999 have been incorporated in
reliance on the report of Moore Stephens, P.C., independent accountants,
given on the authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the information filing requirements of the Securities
Exchange Act of 1934 and we file reports, proxy statements and other information
with the Securities and Exchange Commission. You may read and copy these
reports, proxy statements and other information at the SEC's public reference
room located at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the SEC's
regional offices located at Seven World Trade Center, Suite 1300, New York, New
York 10048 and 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You
may obtain information on the operation of the SEC's public reference rooms by
calling the SEC at 1800-SEC-0330. The SEC maintains an Internet site that
contains reports, proxy and other information regarding issuers, including
Questron, who file electronically with the SEC. The address of that site is
http://www.sec.gov.
Our common stock is traded and listed on the Nasdaq National Market.
You may also read our reports, proxy statements and other information we file
with the SEC at the offices of the Nasdaq National Market, 1735 K Street, N.W.,
Washington, DC 20006-1506.
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act of 1933, relating to the common stock to be sold under this
prospectus. This prospectus does not contain all the information in the
registration statement. We have omitted parts of it in accordance with the SEC's
rules and regulations. For further information, you should refer to the
registration statement including its exhibits and amendments.
The SEC permits us to incorporate by reference in this prospectus some
information that is contained in other documents we file with the SEC. This
means that we may disclose important information by referring you to other
documents that contain the information, including documents that we file after
the date of this prospectus. The information that is incorporated by reference
is considered to be part of this prospectus.
13
<PAGE>
We incorporated by reference the following documents:
1. Our Annual Report on Form 10-K for the year ended December 31,
1999;
2. Our Proxy Statement dated October 1, 1999 and filed on October 1,
1999 in connection with our October 28, 1999 Annual Meeting of
Stockholders;
3. The description of our common stock set forth in our Form 8-A
filed on March 27, 1985; and
4. All documents that we file under Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and
before termination of this offering.
Information in this prospectus may add to, update or change information
in a previously filed document incorporated by reference in this prospectus. In
that case, you should rely on the information in this prospectus. Information in
a document filed after the date of this prospectus may add to, update or change
information in this prospectus or in a previously filed document incorporated by
reference in this prospectus. In that case, you should rely on the information
in the later filed document.
At your request, we will provide you without charge a copy of the
documents incorporated by reference in this prospectus, including exhibits which
are specifically incorporated by reference in the documents. You may request a
copy of the documents incorporated by reference by writing or telephoning us at
Questron Technology, Inc., Attention: Secretary, at our principal executive
offices located at 6400 Congress Avenue, Suite 2000, Boca Raton, FL 33487,
telephone (561) 241-5251.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the
registrant. All amounts other than the SEC registration fee are estimated.
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee $4,075.50
Accounting fees and expenses 6,000.00
Legal fees and expenses 20,000.00
Printing and engraving 1,000.00
Transfer agent and registrar fees 100.00
Miscellaneous 500.00
---------
Total $31,675.50
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law, as amended,
provides that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at its request in that capacity in another
corporation or business association, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Section 102(b)(7) of the Delaware General Corporation Law, as amended, permits a
corporation to provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
except for liability (a) for any breach of the director's duty of loyalty to the
corporation or its stockholders, (b) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (c) under
Section 174 of the Delaware General Corporation Law, or (d) for any transaction
from which the director derived an improper personal benefit. Article VIII of
our Certificate of Incorporation and Article VII of our 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.
The registrant has in effect a directors' and officers' liability
insurance policy under which the directors and officers of the registrant are
insured against loss arising from claims made against them due to wrongful acts
while acting in their individual and collective capacities as directors and
officers, subject to specified exclusions.
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<PAGE>
ITEM 16. EXHIBITS.
EXHIBIT NO. DESCRIPTION
5 Opinion of Arent Fox Kintner Plotkin & Kahn, PLLC concerning
legality of securities being registered.
23 Consents of experts and counsel: (a) Arent Fox Kintner Plotkin &
Kahn, PLLC (included in Exhibit 5). (b) Ernst & Young LLP. (c) Moore
Stephens, P.C.
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; and
(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.
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<PAGE>
(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.
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<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
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized in Boca Raton, Florida on April 21, 2000.
QUESTRON TECHNOLOGY, INC.
(Registrant)
By: /s/DOMINIC A. POLIMENI
----------------------
Name: Dominic A. Polimeni
Title: Chairman and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
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, Chief Executive April 21, 2000
- ----------------------------------------
Dominic A. Polimeni Officer and Director (Principal
Executive Officer)
/s/ ROBERT V. GUBITOSI President, Chief Financial April 21, 2000
- ----------------------------------------
Robert V. Gubitosi Officer,Treasurer and Director
(Principal Financial Officer and
Principal Accounting Officer)
Vice President and Director April , 2000
- ----------------------------------------
Douglas D. Zadow
/s/ MILTON M. ADLER Director April 21, 2000
- ----------------------------------------
Milton M. Adler
/s/ FREDERICK W. LONDON Director April 21, 2000
- ----------------------------------------
Frederick W. London
/s/ WILLIAM J. MCSHERRY, JR. Director April 21, 2000
- ----------------------------------------
William J. McSherry, Jr.
</TABLE>
II-4
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
5 Opinion of Arent Fox Kintner Plotkin & Kahn, PLLC concerning
legality of securities being registered.
23 Consents of experts and counsel:
(a) Arent Fox Kintner Plotkin & Kahn, PLLC (included in Exhibit 5).
(b) Ernst & Young LLP.
(c) Moore Stephens, P.C.
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<PAGE>
Exhibit 5
[Letterhead of Arent Fox Kintner Plotkin & Kahn, PLLC]
April 21, 2000
The Board of Directors
Questron Technology, Inc.
6400 Congress Avenue, Suite 2000,
Boca Raton, Florida 33487
Gentlemen:
We have acted as counsel to Questron Technology, Inc., a Delaware corporation
(the "Company"), with respect to the Company's Registration Statement on Form
S-3, filed by Company with the Securities and Exchange Commission (the
"Commission") for the registration of (i) an aggregate of 2,183,714 shares of
Common Stock, $0.001 par value per share (the "Shares"), of the Company and (ii)
an aggregate of 157,500 shares of Common Stock issuable upon the exercise of
warrants and options held by stockholders and employees of the Company (the
"Warrant and Option Shares"), all of which Shares and Warrant and Option Shares,
if and when sold, will be sold by various stockholders of the Company (the
"Selling Stockholders").
We have examined signed copies of the Registration Statement as filed with the
Commission. We have also examined and relied upon minutes of meetings of the
stockholders and the Board of Directors of the Company as provided to us by the
Company, stock record books of the Company as provided to us by the Company, the
Certificate of Incorporation and Bylaws of the Company, each as restated and/or
amended to date, and other documents that we have deemed necessary for purposes
of rendering the opinions set forth below.
In our examination of the foregoing documents, we have assumed the genuineness
of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us
as copies, the authenticity of the originals of any latter documents and the
legal competence of all signatories to the documents.
We assume that appropriate action will be taken, prior to the offer and sale of
the Shares or Warrant and Option Shares to register and qualify the Shares or
Warrant and Option Shares for sale under all applicable state securities or
"blue sky" laws.
We express no opinion as to the laws of any state or jurisdiction other than the
state laws of the District of Columbia, the Delaware General Corporation Law and
statute and the federal laws of the United States of America. To the extent that
any other laws govern the matters as to which we are
II-6
<PAGE>
opining, we have assumed that these laws are identical to the laws of the
District of Columbia, and we are expressing no opinion as to whether this
assumption is reasonable or correct.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Shares have been duly authorized and are validly issued, fully paid and
nonassessable;
2. The Warrant and Option Shares have been duly authorized, and when issued
upon exercise of the warrants and options, respectively, in accordance with
the terms of the warrants and options, respectively, will be validly
issued, fully paid and nonassessable.
It is understood that this opinion is to be used only in connection with the
offer and sale of the Shares or the Warrant and Option Shares while the
Registration Statement is in effect.
We are opining only as to the matters expressly set forth in this opinion, and
no opinion should be inferred as to any other matters. This opinion is based
upon currently existing statutes, rules, regulations and judicial decisions, and
we disclaim any obligation to advise you of any change in any of these sources
of law or subsequent legal or factual developments which might affect any
matters or opinions set forth in this opinion.
We consent to the filing of this opinion with the Commission as an exhibit to
the Registration Statement in accordance with the requirements of Item 601(b)(5)
of Regulation S-K under the Securities Act of 1933 and to the use of our name in
the Registration Statement and in the related Prospectus under the caption
"Legal Matters." In giving our consent, we do not admit that we are in the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 or the rules and regulations of the Commission.
Very truly yours,
Arent Fox Kintner Plotkin & Kahn, PLLC
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<PAGE>
Exhibit 23(b)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in
the Registration Statement (Form S-3) and related Prospectus of Questron
Technology, Inc. for the registration of 2,341,214 shares of its common stock
and to the incorporation by reference therein of our report dated March 15,
2000, with respect to the consolidated financial statements and schedules of
Questron Technology, Inc. at December 31, 1999 and 1998 and for the years then
ended included in its Annual Report (Form 10-K) for the year ended December 31,
1999.
ERNST & YOUNG LLP
New York, New York
April 19, 2000
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<PAGE>
Exhibit 23(c)
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of Questron Technology, Inc. (the "Company") of our report
dated February 24, 1998, on our audit of the consolidated financial statements
of the Company and its subsidiaries, as of December 31, 1997, included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1999. We
also consent to the reference to our firm under the caption "Experts."
MOORE STEPHENS, P.C.
New York, New York
April 20, 2000
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