As filed with the Securities and Exchange Commission on November 30, 2006
Registration No. 333-138109
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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ACORN FACTOR, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 7371 22-2786081
(State or Other Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
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200 Route 17
Mahwah, New Jersey 07430
(201) 529-2626
(Address, Including Zip Code, and Telephone Number, Including Area Code,
of Registrant's Principal Executive Offices)
John A. Moore
President and Chief Executive Officer
Acorn Factor, Inc.
200 Route 17
Mahwah, New Jersey 07430
(201) 529-2026
(Name, Address, Including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
COPIES TO
Sheldon Krause, Esq
Eilenberg Krause & Paul LLP
11 East 44th Street, 17th Floor
New York, New York 10017
(212) 986-9700
Approximate date of commencement of proposed sale of the securities
to the public: From time to time after the effective date of this registration
statement.
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, check the following box. |X|
If this form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, check the following
box and list the Securities Act registration statement number of 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 number of the earlier effective registration statement for the
same offering. |_|
If this form is a post-effective amendment filed pursuant to Rule
462(d) 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. |_|
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CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed
Offering Maximum
Title of Each Class of Amount Price Per Aggregate Amount of
Securities to be Registered To be Registered Security(1) Offering Price(1) Registration Fee(4)
--------------------------------------- ---------------- ---------------- ----------------- -------------------
Common Stock, par value $0.01 per share 1,216,135 $3.28 $3,988,922.80 $427
Common Stock, par value $0.01 per share 424,039(2) $3.28 $1,390,847.92 $149
Common Stock, par value $0.01 per share 120,000(3) $3.28 $ 393,600.00 $ 42
Total $5,773,370.72 $618
(1) Estimated solely for purposes of calculating the filing fees pursuant to
Rule 457(c) under the Securities Act of 1933. Based on the average of the
high and low prices per share reported on the OTC Bulletin Board on
October 18,2006.
(2) Represents 424,039 shares of common stock issuable upon the exercise of
warrants.
(3) Represents 120,000 shares of common stock issuuable upon the exercise of
an option.
(4) Previously paid.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. Holders
may not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and 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 November ___, 2006
PROSPECTUS
ACORN FACTOR, INC.
(formerly Data Systems & Software Inc.)
----------
1,760,174 Shares of Common Stock
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This prospectus covers the offer and sale of up to 1,760,174 shares
of our common stock from time to time by certain selling security holders named
in this prospectus.
The shares being offered by the selling security holders include:
o 1,216,135 shares of common stock currently held by the selling
security holders;
o 424,039 shares of common stock issuable upon the exercise of
outstanding warrants; and
o 120,000 shares of common stock issuable upon the exercise of
an outstanding option.
We are not offering any shares of common stock.
The selling security holders will receive all of the net proceeds
from sales of the common stock registered hereby and will pay all underwriting
discounts and selling commissions, if any, applicable to those sales. We will
not receive any proceeds from sales of any of these shares. However, we will
receive the exercise price of the warrants and the option to the extent they are
not exercised subject to their cashless exercise provisions.
The selling security holder may periodically sell the shares
directly or through agents, underwriters or dealers. The shares may be sold:
o in the over-the-counter market, in privately negotiated
transactions or otherwise;
o directly to purchasers or through agents, brokers, dealers or
underwriters; and
o at market prices prevailing at the time of sale, at prices
related to the prevailing market prices, or at negotiated
prices.
If required, each time the selling securityholder sells shares of
common stock, we will provide a prospectus supplement that will contain specific
information about the terms of that transaction. We urge you to carefully read
this prospectus and any accompanying prospectus supplement before you make an
investment decision.
Our common stock is listed on the OTC Bulletin Board under the
symbol "ACFN." On October 18, 2006, the closing price of our common stock was
$3.25.
Investing in our securities involves certain risks. You should consider
the "Risk Factors" beginning on page 1 in deciding whether to buy any shares of
our common stock.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these securities or
determined if this prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
The date of this prospectus is _______ ___, 2006
TABLE OF CONTENTS
PAGE
----
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS........................ 1
RISK FACTORS............................................................. 1
USE OF PROCEEDS.......................................................... 3
SELLING SECURITY HOLDERS................................................. 4
PLAN OF DISTRIBUTION..................................................... 8
LEGAL MATTERS............................................................ 10
EXPERTS.................................................................. 10
WHERE YOU CAN FIND MORE INFORMATION...................................... 11
The terms "ACFN," the "Company," "we," "our" and "us" refer to Acorn
Factor, Inc. and its subsidiaries unless the context suggests otherwise. The
term "you" refers to a prospective purchaser of our common stock.
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain statements contained in, or incorporated by reference in,
this prospectus are forward-looking in nature. These statements can be
identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," or "anticipates," or the negatives thereof
or comparable terminology, or by discussions of strategy. You are cautioned that
our business and operations are subject to a variety of risks and uncertainties
and, consequently, our actual results may materially differ from those projected
by any forward-looking statements. Certain of these risks and uncertainties are
discussed below under the heading "Risk Factors." We make no commitment to
revise or update any forward-looking statements in order to reflect events or
circumstances after the date any such statement is made.
RISK FACTORS
Investing in us entails substantial risk. You should consider the
following risks and other information contained in this prospectus, information
incorporated by reference, and information that we file with the Securities and
Exchange Commission from time to time. The information in this prospectus is
complete and accurate as of this date, but the information may change after the
date of this prospectus.
GENERAL FACTORS
We have a history of operating losses and decreasing cash available for
operations.
We have a history of operating losses, although these losses and our
use of cash to fund our operating activities have decreased over the years. In
2003, 2004 and 2005, we had operating losses of $5.2 million, $2.6 million and
$2.2 million, respectively. Cash used in operations in 2003, 2004, 2005 and in
the nine months ended September 30, 2006 was $1.0 million, $0.1 million, $1.7
million and $1.1 million, respectively.
Loss of the services of a few key employees could harm our operations.
We depend on our key management, technical employees and sales
personnel. The loss of certain managers could diminish our ability to develop
and maintain relationships with customers and potential customers. The loss of
certain technical personnel could harm our ability to meet development and
implementation schedules. The loss of certain sales personnel could have a
negative effect on sales to certain current customers. Most of our significant
employees are bound by confidentiality and non-competition agreements. We do not
maintain a "key man" life insurance policy on any of our executives or
employees. Our future success also depends on our continuing ability to
identify, hire, train and retain other highly qualified technical and managerial
personnel. If we fail to attract or retain highly qualified technical and
managerial personnel in the future, our business could be disrupted.
A failure to integrate our new management may adversely affect us.
We appointed a new chief financial officer and chief accounting
officer in December 2005 and a new president and chief executive officer in
March 2006. Any failure to effectively integrate our new management and any new
management controls, systems and procedures they may implement, could materially
adversely affect our business, results of operations and financial condition.
RISKS RELATED TO THE RT SOLUTIONS AND IT SOLUTIONS SEGMENTS
Failure to accurately forecast costs of fixed-priced contracts could reduce our
margins.
When working on a fixed-price basis, we undertake to deliver
software or integrated hardware/software solutions to a customer's
specifications or requirements for a particular project. The profits from these
projects are primarily determined by our success in correctly estimating and
thereafter controlling project costs. Costs may in fact vary substantially as a
result of various factors, including underestimating costs, difficulties with
new technologies and economic and other changes that may occur during the term
of the contract. If, for any reason, our costs are substantially higher than
expected, we may incur losses on fixed-price contracts.
1
Hostilities in the Middle East region may slow down the Israeli hi-tech market
and may harm our Israeli operations; our Israeli operations may be negatively
affected by the obligations of our personnel to perform military service.
Both our RT Solutions and IT Solutions Segments are currently
conducted in Israel. Accordingly, political, economic and military conditions in
Israel may directly affect these segments of our business. Any increase in
hostilities in the Middle East involving Israel could weaken the Israeli hi-tech
market, which may result in a significant deterioration of the results of our
Israeli operations. In addition, an increase in hostilities in Israel could
cause serious disruption to our Israeli operations if acts associated with such
hostilities result in any serious damage to our offices or those of our
customers or harm to our personnel.
Many of our employees in Israel are obligated to perform military
reserve duty. In the event of severe unrest or other conflict, one or more of
our key employees could be required to serve in the military for extended
periods of time. In the past, there were numerous call-ups of military
reservists to active duty, and it is possible that there will be additional
call-ups in the future. Our Israeli operations could be disrupted as a result of
such call-ups for military service.
Exchange rate fluctuations could increase the cost of our Israeli operations.
The sales in this segment stem from our Israeli operations and a
significant portion of those sales are in New Israeli Shekels ("NIS"). In
addition, many transactions that are linked to the dollar are settled in NIS.
The dollar value of the revenues of our operations in Israel will decrease if
the dollar is devalued in relation to the NIS during the period from the
invoicing of a transaction to its settlement. In addition, significant portions
of our expenses in those operations are in NIS, so that if the dollar is
devalued in relation to the NIS, the dollar value of these expenses will
increase.
One of our major customers has a history of operating deficits and may implement
cost-cutting measures that may have a material adverse effect on us.
In 2005, 17% of the software consulting and development segment's
sales (13% and 11% in 2004 and 2003, respectively) and 8% of its billed
receivables and unbilled work-in-process at December 31, 2005 (3% at December
31, 2004) were related to the Clalit Health Fund. The Clalit Health Fund is the
largest HMO in Israel and one of the largest in the world. The fund has a
history of running at a deficit, which in the past has required numerous cost
cutting plans and periodic assistance from the Israeli government. Should the
fund have to institute additional cost cutting measures in the future, which may
include restructuring of its terms of payment, this could have a material
adverse effect on the performance of this segment.
We have sold our outsourcing business, which in the past provided our Israeli
operations with a steady cash flow; our Israeli operations may be hindered by
future cash flow problems.
In August 2005, we sold our outsourcing business, which in the past
provided our Israeli operations with a steady cash flow stream, and, in
conjunction with bank lines of credit, helped to finance our Israeli operations.
Our present operations, as we are currently structured, places a greater
reliance on our meeting project milestones in order to generate cash flow to
finance our operations. Should we encounter difficulties in meeting significant
project milestones, resulting cash flow difficulties could have a material
adverse effect on our operations.
If we are unable to keep pace with rapid technological change, our results of
operations, financial condition and cash flows may suffer.
Some of our RT and IT solutions are characterized by rapidly
changing technologies and industry standards and technological obsolescence. Our
competitiveness and future success depends on our ability to keep pace with
changing technologies and industry standards on a timely and cost-effective
basis. A fundamental shift in technologies in could have a material adverse
effect on our competitive position. Our failure to react to changes in existing
technologies could materially delay our development of new products, which could
result in technological obsolescence, decreased revenues, and/or a loss of
market share to competitors. To the extent that we fail to keep pace with
technological change, our revenues and financial condition could be materially
adversely affected.
2
RISKS RELATED TO OUR COMVERGE INVESTMENT
We may need to invest additional funds in Comverge in order to avoid dilution of
our holdings.
We currently own approximately 23% of Comverge's outstanding capital
stock (64% of Comverge's common shares and approximately 7% its preferred
shares). On October 5, 2006, Comverge filed a registration statement on Form S-1
for the sale of additional shares. Should Comverge complete the sale of shares
pursuant to the registration statement, our position in Comverge would be
substantially diluted.
Our shares of Comverge common stock may in certain events not share ratably with
the Comverge preferred stock.
While we currently hold approximately 23% of Comverge's outstanding
stock, we hold only 7% of the outstanding preferred stock of Comverge. In
certain events, including a merger of sale of the assets of Comverge, the
holders of the Comverge preferred stock would generally be entitled to receive a
preference payment equal to a multiple of their investment in Comverge before
any amounts are paid to the holders of the Comverge common stock. Since the
majority of our Comverge shares holdings consist of common stock, we may not
share ratably with Comverge's other major shareholders.
RISKS RELATED TO OUR SECURITIES
There is only a limited trading market for our common stock and it is possible
that you may not be able to sell your shares easily.
There is currently only a limited market for our common stock. Our
common stock trades on the OTC Bulletin Board under the symbol "ACFN" with,
until recently, very limited trading volume. We cannot assure you that a
substantial trading market will be sustained for our common stock.
Our share price may decline due to the large number of shares of our common
stock eligible for future sale in the public market including the shares of the
selling security holders.
A substantial number of shares of our common stock are, or could
upon exercise of options or warrants, become eligible for sale in the public
market as described below. Sales of substantial amounts of our shares of common
stock in the public market, or the possibility of these sales, may adversely
affect our stock price.
o As of September 30, 2006 there were 664,039 warrants with a weighted
average exercise price of $2.81 and 2,099,035 options with a
weighted average exercise price of $2.42 per share, presently
exercisable, which if exercised for cash would result in the
issuance of an additional 2,763,074 shares of common stock.
o The selling security holders under this registration statement may
sell up to 1,760,174 shares of our common stock, including 424,039
shares which may be issued upon the exercise of warrants held by the
selling security holders and 120,000 shares which may be issued upon
the exercise of an option by a selling security holder.
The holders of the above options and warrants may be expected to
exercise their rights and sell shares of our common stock at a time when we
would, in all likelihood, be able to obtain needed capital through a new
offering of securities on terms more favorable than those provided by these
warrants and options.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the
selling security holders. To the extent that the warrants or option are
exercised by the selling security holders for cash, rather than by cashless
exercise, we will receive proceeds constituting the exercise price of such
warrants or option, less warrant solicitation fees in the case of the warrants,
if applicable. Any such proceeds received by us through warrant or option
exercises will be used for working capital.
3
SELLING SECURITY HOLDERS
On July 31, 2006, we completed a private placement to investors of
1,200,003 million shares of common stock and warrants to purchase an additional
300,005 shares of common stock. This prospectus covers the sale by the selling
security holders from time to time of 1,200,003 million shares issued in the
private placement and the 420,006 shares issuable upon exercise of the warrants
issued in the private placement, which warrant shares include 120,001 issued to
First Montauk Securities Corp, and its agents and assignees, as partial
consideration for its role as placement agent and 120,000 shares issuable upon
exercise of an option.
The warrants issued in the private placement have an exercise price
of $2.78 and are exercisable through July 31, 2011.
On July 20, 2006 we engaged Bibicoff & Associates to provide
investor relations services. In connection with the engagement we issued to
Bibicoff & Associates an option to purchase 120,000 shares of common stock. Of
the 120,000 shares, 40,000 vested on August 1, 2006 and the remainder vest 5,000
shares per month thereafter. The option is exercisable through July 31, 2011 at
an exercise price of $2.80 per share.
On August 29, 2006 we completed a private placement of 16,132 shares of
common stock and warrants to purchase an additional 4,033 shares. The warrants
have an exercise pirce of $2.78 per share and are exercisable through July 31,
2011.
We issued the securities to the selling security holders without
registration under the Securities Act of 1933 (the "Securities Act") in reliance
upon the exemption provided by Section 4(2) of the Securities Act for
transactions not invloving a public offering. Prior to issuance, each selling
security holder represented to us that it was an accredited investor, as defined
in Rule 501 of Regulation D under the Securities Act, and that it was acquiring
the securities for investment purposes only and not with a view to, or sale in
connection with, any distibution thereof.
The term "selling security holder" includes (i) each person and
entity that is identified in the table below (as such table may be amended from
time to time by means of an amendment to the registration statement of which
this prospectus forms a part) and (ii) any transferee, donee, pledgee or other
successor of any person or entity named in the table that acquires any of the
shares of common stock covered by this prospectus in a transaction exempt from
the registration requirements of the Securities Act of 1933 and that is
identified in a supplement or amendment to this prospectus.
We have listed below:
o the name of each selling security holder;
o the number of shares of common stock beneficially owned by the
selling security holder as of the date of this prospectus;
o the maximum number of shares of common stock being offered by each
of them in this offering; and
o the number of shares of common stock to be owned by the selling
security holder after this offering (assuming sale of such maximum
number of shares) and the percentage of the class which such number
constitutes (if one percent or more).
The footnotes to the table identify each selling security holder that is a
registered broker-dealer or an affiliate of a registered broker-dealer.
Except as otherwise noted below, during the last three years, no selling
security holder has been an officer, director or affiliate of our company, nor
has any selling security holder had any material relationship with our company
or affilliates during that period. Each selling security holder represented at
the closing of the private placement that it did not have any contract,
undertaking, agreement or arrangement with any person to sell, transfer, pledge,
hypothecate, grant any option to purchase or otherwise dispose of any of the
securities. The selling security holders purchased the securities in the
ordinary course of business, to the best of our knowledge.
The shares of common stock being offered hereby are being registered to
permit public secondary trading, and the selling security holders are under no
obligation to sell all or any portion of their shares included in this
prospectus. The information contained in the following table is derived from our
books and records, as well as from our transfer agent. The following table
assumes the sale of all securities covered by this prospectus.
4
Percentage of
Shares
Shares Shares Beneficially
Beneficially Beneficially Owned After
Owned Prior to Shares Being Owned After Completion of
Selling Security Holder Offering Offered Offering Offering*
---------------------------------------------------- -------------- ------------ ------------ -------------
David Garceu & Carmen Garceu JT TEN 431,510(1) 141,510(2) 290,000 3.09%
William J. Stegeman 141,510 141,510(3) 0 **
Justin Ort 270,507 125,000(4) 145,507 1.55%
Harvey Bibicoff 303,058 213,750(5) 89,308 **
Dimitrios Balodimos 93,750 93,750(6) 0 **
Jerome Belson 70,755 70,755(7) 0 **
Jonathan Kamen 62,500 62,500(8) 0 **
Michael J. Tobin & Rose Marie Tobin JT TEN 190,170 47,170(9) 143,000 1.52%
Kevin T. Tolbert 47,170 47,170(10) 0 **
Randall McCathren 47,170 47,170(11) 0 **
Carmine T. Santandrea & Barbara J. Santandrea JT TEN 47,170 47,170(12) 0 **
Edward Zale & Roberta Zale JT TEN 47,170 47,170(13) 0 **
Aledarmme, LLC(14) 47,169 47,169(15) 0 **
Brigitte Ferrada Stetson 43,750 43,750(16) 0 **
Morton A. Gruber & Edna G. Gruber JT TEN 65,125 40,125(17) 25,000 **
Awerks Trust (Alan J Werksman TTE) 35,625 35,625(18) 0 **
Warren M. Duffy 35,378 35,378(19) 0 **
Hank J. Wolfert & Susie L. Wolfert JT TEN 405,499(20) 28,444(21) 377,055 4.02%
Primum Capital, LLC(22) 23,750 23,750(23) 0 0
Joseph W. Benson 23,585 23,585(24) 0 **
Nathan Steinberg 173,585 23,585(25) 150,000 1.56%
Deborah Mengrone 23,585 23,585(26) 0 **
MIN Capital Corp Retirement Trust(27) 23,585 23,585(28) 0 **
Andrew Brown 21,250 21,250(29) 0 **
Harvey Brown & Barbara Brown JT TEN 21,250 21,250(30) 0 **
Warren S. Cohen & Susan E. Cohen JT TEN 18,963 18,963(31) 0 **
Michael Soloman(32) 18,750 18,750(33) 0 **
Ian Wallin 30,000 12,500(34) 17,500 **
Lori Freeman 11,875 11,875(35) 0 **
Albert L. Fierro & Kathleen E. Fierro JT TEN(36) 11,793(37)
5
Percentage of
Shares
Shares Shares Beneficially
Beneficially Beneficially Owned After
Owned Prior to Shares Being Owned After Completion of
Selling Security Holder Offering Offered Offering Offering*
---------------------------------------------------- -------------- ------------ ------------ -------------
L. Rowe Driver 11,793 11,793(38) 0 **
Martin Leibowitz Revocable Trust 11,793 11,793(39) 0 **
Michael S. Goodman(40) 11,793 11,793(41) 0 **
Frank I. Goodman 11,793 11,793(42) 0 **
Robert Bradshaw 11,793 11,793(43) 0 **
Samuel M. Zentman(44) 39,121(45) 6,621(46) 32,500 **
Sheldon Krause(47) 41,500(48) 25,000(48) 16,500 **
First Montauk Securities Corp.(49) 72,488 72,488(50) 0 **
Ernest Pellegrino(51) 16,175 16,175(52) 0 **
Victor K. Kurylak(53) 15,019 15,019(54) 0 **
Oppenheimer & Co. Inc.(55) 16,318 16,318(56) 0 **
----------
* Based upon 9,385,027 shares outstanding.
** Less than 1%.
(1) Includes 290,000 shares held in IRA, pension fund, and profit sharing
plan.
(2) Includes 28,302 shares issuable upon exercise of warrants to purchase
Common Stock.
(3) Includes 28,302 shares issuable upon exercise of warrants to purchase
Common Stock.
(4) Includes 25,000 shares issuable upon exercise of warrants to purchase
Common Stock.
(5) Includes 18,750 shares issuable upon exercise of warrants to purchase
Common Stock and 120,000 shares issuable upon the exercise of an option to
purchase Common Stock. Of the shares, 40,000 vested on July 20, 2006, the
remainder vest 5,000 per month, every month thereafter. The option is
exercisable until July 31, 2011 and has an exercise price of $2.80 per
share.
(6) Includes 18,750 shares issuable upon exercise of warrants to purchase
Common Stock.
(7) Includes 14,151 shares issuable upon exercise of warrants to purchase
Common Stock.
(8) Includes 12,500 shares issuable upon exercise of warrants to purchase
Common Stock.
(9) Includes 9,434 shares issuable upon exercise of warrants to purchase
Common Stock.
(10) Includes 9,434 shares issuable upon exercise of warrants to purchase
Common Stock.
(11) Includes 9,434 shares issuable upon exercise of warrants to purchase
Common Stock.
(12) Includes 9,434 shares issuable upon exercise of warrants to purchase
Common Stock.
(13) Includes 9,434 shares issuable upon exercise of warrants to purchase
Common Stock.
(14) Voting and dispositive control of the securities are exercised jointly by
the following persons who are members of Aledarmme: Elizabeth G. Brown,
Alexander F. Giacco, Jr., Marissa G. Rath, and Mary G. Walsh. Richard J.
Giacco, a Director of the Company is also a member of the company.
(15) Includes 9,434 shares issuable upon exercise of warrants to purchase
Common Stock.
(16) Includes 8,750 shares issuable upon exercise of warrants to purchase
Common Stock.
(17) Includes 8,025 shares issuable upon exercise of warrants to purchase
Common Stock.
(18) Includes 7,125 shares issuable upon exercise of warrants to purchase
Common Stock.
(19) Includes 7,076 shares issuable upon exercise of warrants to purchase
Common Stock.
(20) Includes 377,055 shares held individually by Hank J. Wolfert.
(21) Includes 5,689 shares issuable upon exercise of warrants to purchase
Common Stock.
(22) Voting and dispositive control of the securities are exercised by Richard
B. Kobusch, Jr., president of Primum Capital, LLC.
(23) Includes 4,750 shares issuable upon exercise of warrants to purchase
Common Stock.
6
(24) Includes 4,717 shares issuable upon exercise of warrants to purchase
Common Stock.
(25) Includes 4,717 shares issuable upon exercise of warrants to purchase
Common Stock.
(26) Includes 4,717 shares issuable upon exercise of warrants to purchase
Common Stock.
(27) Voting and dispositive control are exercised jointly by Robert Friedman
and Leonard Friedman, Trustees.
(28) Includes 4,717 shares issuable upon exercise of warrants to purchase
Common Stock.
(29)Includes 4,250 shares issuable upon exercise of warrants to purchase Common
Stock.
(30) Includes 4,250 shares issuable upon exercise of warrants to purchase
Common Stock.
(31) Includes 3,793 shares issuable upon exercise of warrants to purchase
Common Stock.
(32) Selling security holder is an affiliate of a registered broker dealer who
(i) purchased the shares being registered for resale in the ordinary
course of business and (ii) at the time of the purchase, the selling
security holder had no agreements or understandings, directly or
indirectly, with any person to distribute the securities.
(33) Includes 3,750 shares issuable upon exercise of warrants to purchase
Common Stock.
(34) Includes 2,500 shares issuable upon exercise of warrants to purchase
Common Stock.
(35) Includes 2,375 shares issuable upon exercise of warrants to purchase
Common Stock.
(36) Selling security holder is an affiliate of a registered broker dealer who
(i) purchased the shares being registered for resale in the ordinary
course of business and (ii) at the time of the purchase, the selling
security holder had no agreements or understandings, directly or
indirectly, with any person to distribute the securities.
(37) Includes 2,359 shares issuable upon exercise of warrants to purchase
Common Stock.
(38) Includes 2,359 shares issuable upon exercise of warrants to purchase
Common Stock.
(39) Includes 2,359shares issuable upon exercise of warrants to purchase Common
Stock.
(40) Selling security holder is an affiliate of a registered broker dealer who
(i) purchased the shares being registered for resale in the ordinary
course of business and (ii) at the time of the purchase, the selling
security holder had no agreements or understandings, directly or
indirectly, with any person to distribute the securities.
(41) Includes 2,359 shares issuable upon exercise of warrants to purchase
Common Stock.
(42) Includes 2,359 shares issuable upon exercise of warrants to purchase
Common Stock.
(43) Includes 2,359 shares issuable upon exercise of warrants to purchase
Common Stock.
(44) Mr. Zentman is a member of the Board of Directors of the Company and its
Audit Committee.
(45) Includes (i) 7,500 currently exercisable options (ii) 25,000 options that
will vest on September 15, 2006, and (iii) 1,324 shares issuable upon
exercise of warrants to purchase Common Stock.
(46) Includes 1,324 shares issuable upon exercise of warrants to purchase
Common Stock.
(47) Mr. Krause serves as Secretary and General Counsel to the Company.
(48) Includes 10,000 currently exercisable options
(49) Includes 4,033 shares issuable upon exercise of warrants to purchase
Common Stock.
(50) First Montauk is a registered broker dealer and NASD member brokerage
firm. First Montauk is a wholly-owned subsidiary of First Montauk
Financial Corp., a reporting company under the Securities Exchange Act of
1934.
(51) Represents 72,488 shares issuable upon the exercise of warrants to
purchase Common Stock, issued to First Montauk as partial consideration
for its services as placement agent in the Company's recently completed
private offering.
(52) Affiliate of a registered broker dealer. Mr. Pellegrino is Director of
Corporate Finance of First Montauk Securities Corp.
(53) Represents 16,175 shares issuable upon the exercise of warrants to
purchase Common Stock assigned to Mr. Pellegrino by First Montauk
Securities Corp.
(54) Affiliate of a registered broker dealer. Mr. Kurylak is President and CEO
of First Montauk Securities Corp.
(55) Represents 15,019 shares issuable upon the exercise of warrants to
purchase Common Stock assigned to Mr. Kurylak by First Montauk Securities
Corp.
(56) Registered broker dealer and wholly owned subsidiary of Oppenheimer
Holdings Inc., a reporting company under the Securities Exchange Act of
1934.
(57) Represents 16,318 shares issuable upon the exercise of warrants to
purchase Common Stock, which warrants represent 6.5% of the shares placed
by Oppenheimer and Co. as selling agent in the private placement pursuant
to a selling agent agreement entered into with First Montauk.
7
PLAN OF DISTRIBUTION
Plan of Distribution
On and after the date of this prospectus, the selling security
holders may, from time to time, sell any or all of their shares of common stock
on any stock exchange, market or trading facility on which shares of our common
stock are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling security holders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in which the
broker-dealer solicits a purchaser;
o block trades in which the broker-dealer will attempt to sell
the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
o an exchange distribution in accordance with the rules of the
applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling securityholder to
sell a specified number of such shares at a stipulated price
per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling security holders may also sell shares under Rule 144
under the Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling security holders may arrange
for other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling security holders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The selling security holder and any broker-dealers or agents that
are involved in selling the shares of our common stock may be deemed to be
"underwriters" within the meaning of the Securities Act in connection with such
sales. In such event, any commissions received by such broker-dealers or agents
and any profit on the resale of the shares of our common stock purchased by them
may be deemed to be underwriting commissions or discounts under the Securities
Act. The selling security holders have informed us that it does not have any
agreement or understanding, directly or indirectly, with any person to
distribute our common stock.
Certain of the selling security holders are registered
broker-dealers or affiliates of registered broker dealers as indicated under
"Selling Security Holders." Any selling security holder that is a registered
broker-dealer or its affiliate will be considered an "underwriter" within the
meaning of the Securities Act in connection with the sale of securities pursuant
to this prospectus and any commissions received by such broker-dealer and any
profit on the resale of the shares purchased by it may be deemed to be
underwriting commissions or discounts under the Securities Act.
First Montauk Securities Corp, Inc. is a registered broker dealer
and NASD member firm. First Montauk Securities Corp served as placement agent in
our recently completed private placement offering, and received, in addition to
cash commissions, warrants to purchase an aggregate of 120,001 shares of our
common stock with an exercise price of $2.78 per share (the "First Montauk
Securities Corp Warrants"). Of these warrants to purchase 120,001 shares of our
common stock, First Montauk Securities Corp assigned 31,194 to its officers and
16,318 to Oppenheimer & Co., a registered broker dealer and NASD member firm, as
allowed under NASD Rule 2710 (g)(2). The warrants to purchase 16,318 shares of
our common stock assigned to Oppenheimer & Co., were assigned as partial
compensation for its participation as selling agent in the private placement
pursuant to an agreement between First Montauk Securities Corp. and Oppenheimer
& Co. The registration statement of which this prospectus forms a part includes
the shares underlying the warrants held by First Montauk Securities Corp, its
officers, and Oppenheimer & Co.
The First Montauk Securities Corp Warrants expire on July 31, 2011.
The 120,001 shares of common stock issued or issuable upon conversion of the
First Montauk Securities Corp Warrants are restricted from sale, transfer,
assignment, pledge or hypothecation or be the subject of any hedging, short
sale, derivative, put, or call transaction that would result in the effective
economic disposition of the securities by any person for a period of 180 days
immediately following the effective date of the Registration Statement of which
this prospectus forms a part except as permitted under NASD Rule 2710 (g)(1) and
(2).
8
In addition to fees paid to First Montauk Securities Corp as
placement agent in the private placement, they are also entitled to the payment
of a warrant solicitation fee equal to 5% of the exercise price of the warrants
exercise by the selling security holders, excluding themselves, their officers,
and Oppenheimer and Co. Such fees shall be paid in accordance with the
applicable rules of the NASD. Further, the Company agreed that for a period of
18 months following the closing of the private placement, First Montauk would be
entitled to receive at each closing of any other equity financing, convertible
debt financing or any instrument convertible into shares of common stock from
any source contacted by First Montauk on the Company's behalf during the private
placement and disclosed to the Company in writing or from any investor who
purchases shares in the private placement (i) a cash transaction fee in the
amount of 10% of the amount of the gross proceeds received by the Company from
any such financing, (ii) a non-accountable expense allowance of 1% of the amount
of gross proceeds received by the Company from any such financing and (iii)
additional placement agent warrants. These fees and additional warrants are not
payable in connection with the resale of any securities covered by this
prospectus and were granted to First Montauk at the commencement of the private
placement. These additional compensation rights were granted to First Montauk
because the parties acknowledged that the sources of financing brought to the
Company by First Montauk were valuable business assets and the property of First
Montauk, and therefore First Montauk was entitled to compensation in the event
that the Company used these business assets to obtain additional financing.
First Montauk Securities Corp has indicated to us its willingness to
act as selling agent on behalf of certain of the selling security holders named
in the Prospectus under "Selling Security Holders." that purchased our privately
placed securities. All shares sold, if any, on behalf of selling security holder
by First Montauk Securities Corp would be in transactions executed by First
Montauk Securities Corp on an agency basis and commissions charged to its
customers in connection with each transaction shall not exceed a maximum of 4%
of the gross proceeds. First Montauk Securities Corp does not have an
underwriting agreement with us and/or the selling security holders and no
selling security holders are required to execute transactions through First
Montauk Securities Corp. Further, other than their existing brokerage
relationship as customers with First Montauk Securities Corp, no selling
security holder has any pre-arranged agreement with First Montauk Securities
Corp to sell their securities through First Montauk Securities Corp. No NASD
member firm shall be entitled to receive more than 8% compensation determined
under NASD rules (specifically NASD Rule 2710) in connection with the resale of
the securities by the selling security holders.
NASD Notice to Members 88-101 states that in the event a selling
shareholder intends to sell any of the shares registered for resale in this
Prospectus through a member of the NASD participating in a distribution of our
securities, such member is responsible for insuring that a timely filing is
first made with the Corporate Finance Department of the NASD and disclosing to
the NASD the following:
o it intends to take possession of the registered securities or to
facilitate the transfer of such certificates;
o the complete details of how the selling security holders shares are
and will be held, including location of the particular accounts;
o whether the member firm or any direct or indirect affiliates thereof
have entered into, will facilitate or otherwise participate in any
type of payment transaction with the selling security holders,
including details regarding any such transactions; and
o in the event any of the securities offered by the selling security
holders are sold, transferred, assigned or hypothecated by any
selling security holder in a transaction that directly or indirectly
involves a member firm of the NASD or any affiliates thereof, that
prior to or at the time of said transaction the member firm will
timely file all relevant documents with respect to such
transaction(s) with the Corporate Finance Department of the NASD for
review.
We have advised the selling security holders that the
anti-manipulation rules of Regulation M under the Exchange Act may apply to
sales of shares in the market and to the activities of the selling security
holders and their affiliates. In addition, we will make copies of this
Prospectus available to the selling security holders for the purpose of
satisfying the Prospectus delivery requirements of the Securities Act.
9
We have entered into agreements with the selling security holders
providing registration rights and are required to pay all fees and expenses
incident to the registration of the shares of our common stock that are covered
by this prospectus, but not including underwriting discount, concessions,
commissions or fees of the selling security holders. We have agreed to indemnify
the selling security holders against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act, that arise out of
or are based upon an untrue statement or alleged untrue statement or omission or
alleged omission in this registration statement (or any supplement or amendment)
except if the untrue statement or omission is from information furnished to us
by the selling security holders in writing specifically for use in this
registration statement (or any supplement or amendment).
LEGAL MATTERS
The validity of the shares of Common Stock which may be offered
pursuant to this prospectus has been passed upon by Eilenberg Krause & Paul LLP,
counsel to the Company. Sheldon Krause, a partner of Eilenberg Krause & Paul
LLP, is our Secretary and General Counsel.
EXPERTS
The financial statements incorporated in this prospectus by reference to
Amendment No. 2 on Form 10-K/A to our Annual Report on Form 10-K for the year
ended December 31, 2005, have been so incorporated in reliance on the report of
Kesselman & Kesselman, a member of PricewaterhouseCoopers International Limited,
an independent registered public accounting firm, given on the authority of said
firm as experts in auditing and accounting. The financial statements of
Comverge, Inc., an equity affiliate, which have been incorporated in this
prospectus by reference to Amendment No. 2 on Form 10-K/A to our Annual Report
on Form 10-K for the year ended December 31, 2005, have been so incorporated in
reliance upon the report of PricewaterhouseCoopers LLP, an independent
registered public accounting firm, given on the authority of said firm as
experts in auditing and accounting.
INFORMATION INCORPORATED BY REFERENCE
The SEC 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 infornation incorporated by reference is
considered to be a part of this prospectus.
We incorporate by reference the following documents:
o Our Annual Report on Form 10-K for the fiscal year ended December
31, 2005 filed on April 11, 2006, as amended by Amendment No. 1 on
Form 10-K/A filed on June 1, 2006, and as further amended by
Amendment No. 2 on Form 10-K/A filed on October 19, 2006;
o Our Quarterly Report on Form 10-Q for the three months ended March
31, 2006, filed on May 19, 2006;
o Our Quarterly Report on Form 10-Q for the three months ended June
30, 2006, filed on August 11, 2006;
o Our Quarterly Report on Form 10-Q for the three months ended
September 30, 2006, filed on November 20, 2006.
o The description of our common stock contained in our registration
statement on Form 8-A, declared effective by the SEC in February 11,
1992;
o Our Current Report on Form 8-K/A filed on May 12, 2006;
o Our Current Reports on Form 8-K filed on May 16, 2006, July 20,
2006, July 28, 2006, August 4, 2006, August 23, 2006, September 22,
2006, October 11, 2006, October 12, 2006, and November 3, 2006.
You may request a free copy of these documents by writing to Terri
MacInnis, Director of Investor Relations, Bibicoff & Associates, Inc. 15165
Ventura Blvd., #425, Sherman Oaks, CA 91403, or by calling 818.379.8500.
10
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the Securities
Exchange Act of 1934. Accordingly, we file annual, quarterly and special
reports, proxy statements and other information with the SEC. You may read and
copy any document that we file at the SEC's public reference room at 450 Fifth
Street, N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room. You can obtain copies of our
SEC filings at prescribed rates from the SEC Public Reference Section at 450
Fifth Street, N.W., Washington, D.C. 20549. Our SEC filings are also available
to you free of charge at the SEC's web site at http://www.sec.gov.
You can read and print press releases, financial statements, our most
recent annual and quarterly reports and additional information about us, free of
charge, at our web site at http://www.acornfactor.com.
This prospectus is a part of a registration statement on Form S-1 filed by
us with the SEC under the Securities Act of 1933. This prospectus does not
contain all of the information set forth in the registration statement, certain
parts of which are omitted in accordance with the rules and regulations of the
SEC. For further information with respect to us and the shares of our common
stock offered hereby, please refer to the registration statement. The
registration statement may be inspected at the public reference facilities
maintained by the SEC at the addresses set forth above. Statements in this
prospectus about any document filed as an exhibit are not necessarily complete
and, in each instance, you should refer to the copy of such document filed with
the SEC. Each such statement is qualified in its entirety by such reference.
11
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution.
The Registrant will pay all expenses incident to the offering and sale to
the public of the shares being registered other than any commissions and
discounts of underwriters, dealers or agents and any transfer taxes. Such
expenses are set forth in the following table. All of the amounts shown are
estimates except the SEC registration fee.
SEC registration fee ................................................ $ 618
Legal fees and expenses ............................................. 35,000
Accounting fees and expenses ........................................ 4,000
Miscellaneous expenses .............................................. 2,500
-------
Total ............................................................... $42,118
=======
Item 14. Indemnification of Directors and Officers.
The Certificate of Incorporation, as amended, and the Amended Bylaws of
the Registrant provide that the Registrant shall indemnify its officers,
directors and certain others to the fullest extent permitted by the General
Corporation Law of Delaware ("DGCL"). Section 145 of the DGCL provides that the
Registrant, as a Delaware corporation, is empowered, subject to certain
procedures and limitations, to indemnify any person against expenses (including
attorney's fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any threatened, pending or
completed action, suit or proceeding (including a derivative action) in which
such person is made a party by reason of his being or having been a director,
officer, employee or agent of the Registrant (each, an "Indemnitee"); provided
that the right of an Indemnitee to receive indemnification is subject to the
following limitations: (i) an Indemnitee is not entitled to indemnification
unless he acted in good faith and in a manner that he reasonably believed to be
in or not opposed to the best interests of the Company, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe such conduct
was unlawful and (ii) in the case of a derivative action, an Indemnitee is not
entitled to indemnification in the event that he is judged to be liable to the
Company (unless and only to the extent that the court determines that the
Indemnitee is fairly and reasonably entitled to indemnification for such
expenses as the court deems proper). The statute provides that indemnification
pursuant to its provisions is not exclusive of other rights of indemnification
to which a person may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors, or otherwise.
Pursuant to Section 145 of the DGCL, the Registrant has purchased
insurance on behalf of its present and former directors and officers against any
liability asserted against or incurred by them in such capacity or arising out
of their status as such.
In accordance with Section 102(b)(7) of the DGCL, the Certificate of
Incorporation of the Registrant eliminates personal liability of the
Registrant's directors to the Registrant or its stockholders for monetary
damages for breach of their fiduciary duties as a director, with certain limited
exceptions set forth in Section 102(b) (7) of the DGCL.
The Registrant has entered into an indemnification agreement with all of
its present officers and directors and plans to enter into such agreements with
all future officers and directors. The terms of the agreement require that the
Registrant maintain a minimum level of insurance coverage for claims against
officers and directors and that the Registrant indemnify the officer and/or
director against claims against them that arise in their service on behalf of
the Registrant.
Item 15. Recent Sales of Unregistered Securities.
In July 2006, we completed a private placement of our Common Stock,
resulting in the issuance of 1,200,003 shares of Common Stock. In connection
with the closing, we entered into subscription agreements with certain
accredited investors for the purchase of the shares at a purchase price of $2.65
per share, resulting in gross proceeds of $3,180,000. By the terms of the
subscription agreements, each subscriber, in addition to the Common Stock
purchased, received a warrant exercisable for the purchase of 25% of the number
of shares purchased, resulting in the issuance of warrants to purchase 300,005
shares. The warrants are exercisable for shares of our Common Stock for a period
of five years at an exercise price of $2.78 per share and are redeemable by us
in certain circumstances.
II-1
In connection with the offering, we retained a registered
broker-dealer to serve as placement agent. In accordance with the terms of the
agreement, the placement agent received a 7% selling commission, 3% management
fee, and 1% advisory fee of the gross proceeds of the offering. In addition, the
placement agent received warrants with the same terms as those issued to the
subscribers exercisable for the purchase of 10% of the number of shares
purchased in the offering.
Out of the gross proceeds received at the closings, we paid the
placement agent commissions and expenses of approximately $350,000 and incurred
legal and other costs of approximately $133,000. In addition, we issued to the
placement agent warrants to purchase 120,001 shares of Common Stock on the same
terms as those issued to the subscribers.
On August 8, 2006 we engaged Bibicoff & Associates to provide
investor relations services. In connection with the engagement we issued to
Bibicoff & Associates an option to purchase 120,000 shares.
On August 29, 2006 we issued 16,132 shares of common stock and a
warrant to purchase 4,033 shares in a private placement.
On October 3, 2006, we engaged the services of financial advisors.
In connection with the engagement we issued warrants to purchase 50,000 shares.
The issuance and sale of the above securities were made to
accredited investors in reliance upon the exemption provided in Section 4(2) of
the Securities Act.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits -- See Exhibit Index on page II-5.
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 hereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in this Registration Statement.
Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar
value of securities offered would not exceed that which
was registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) To include any material information 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 herein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-2
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser:
i. If the registrant is relying on Rule 430B
(230.430B of this chapter):
A. Each prospectus filed by the registrant
pursuant to Rule 424(b)(3) shall be deemed
to be part of the registration statement as
of the date the filed prospectus was deemed
part of and included in the registration
statement; and
B. Each prospectus required to be filed
pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement
in reliance on Rule 430B relating to an
offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) (Section 230.415(a)(1)(i),
(vii), or (x) of this chapter) for the
purpose of providing the information
required by section 10(a) of the Securities
Act of 1933 shall be deemed to be part of
and included in the registration statement
as of the earlier of the date such form of
prospectus is first used after effectiveness
or the date of the first contract of sale of
securities in the offering described in the
prospectus. As provided in Rule 430B, for
liability purposes of the issuer and any
person that is at that date an underwriter,
such date shall be deemed to be a new
effective date of the registration statement
relating to the securities in the
registration statement to which that
prospectus relates, and the offering of such
securities at that time shall be deemed to
be the initial bona fide offering thereof.
Provided, however, that no statement made in
a registration statement or prospectus that
is part of the registration statement or
made in a document incorporated or deemed
incorporated by reference into the
registration statement or prospectus that is
part of the registration statement will, as
to a purchaser with a time of contract of
sale prior to such effective date, supersede
or modify any statement that was made in the
registration statement or prospectus that
was part of the registration statement or
made in any such document immediately prior
to such effective date; or
ii. If the registrant is subject to Rule 430C (Section
230.430C of this chapter), each prospectus filed
pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than
registration statements relying on Rule 430B or
other than prospectuses filed in reliance on Rule
430A (Section 230.430A of this chapter),, shall be
deemed to be part of and included in the
registration statement as of the date it is first
used after effectiveness. Provided, however, that
no statement made in a registration statement or
prospectus that is part of the registration
statement or made in a document incorporated or
deemed incorporated by reference into the
registration statement or prospectus that is part
of the registration statement will, as to a
purchaser with a time of contract of sale prior to
such first use, supersede or modify any statement
that was made in the registration statement or
prospectus that was part of the registration
statement or made in any such document immediately
prior to such date of first use.
(6) That, for the purpose of determining liability of the
registrant under the Securities Act of 1933 to any purchaser in the initial
distribution of the securities: The undersigned registrant undertakes that in a
primary offering of securities of the undersigned registrant pursuant to this
registration statement, regardless of the underwriting method used to sell the
securities to the purchaser, if the securities are offered or sold to such
purchaser by means of any of the following communications, the undersigned
registrant will be a seller to the purchaser and will be considered to offer or
sell such securities to such purchaser:
i. Any preliminary prospectus or prospectus of the
undersigned registrant relating to the offering
required to be filed pursuant to Rule 424;
II-3
ii. Any free writing prospectus relating to the
offering prepared by or on behalf of the
undersigned registrant or used or referred to by
the undersigned registrant;
iii. The portion of any other free writing prospectus
relating to the offering containing material
information about the undersigned registrant or
its securities provided by or on behalf of the
undersigned registrant; and
iv. Any other communication that is an offer in the
offering made by the undersigned registrant to the
purchaser.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with 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 such Act and will
be governed by the final adjudication of such issue.
II-4
EXHIBIT INDEX
No.
-----
3.1 Certificate of Incorporation of the Registrant, with amendments thereto
(incorporated herein by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-1 (File No. 33-70482) (the "1993
Registration Statement")).
3.2 Certificate of Ownership and Merger of Acorn Factor, Inc. into the
Registrant, dated September 15, 2006 (incorporated herein by reference
to Exhibit 3.1 to the Registrant's Current Report on Form 8-K dated
September 15, 2006).
3.3 By-laws of the Registrant (incorporated herein by reference to Exhibit
3.2 to the Registrant's Registration Statement on Form S-1 (File No.
33-44027) (the "1992 Registration Statement")).
3.4 Amendments to the By-laws of the Registrant adopted December 27, 1994
(incorporated herein by reference to Exhibit 3.3 of the Registrant's
Current Report on Form 8-K dated January 10, 1995).
4.1 Specimen certificate for the Common Stock (incorporated herein by
reference to Exhibit 4.2 to the 1992 Registration Statement).
4.2 Warrant to Purchase Common Stock of the Registrant, dated October 12,
1999 (incorporated herein by reference to Exhibit 4.4 to the
Registrant's Annual Report on Form 10-K for the year ended December 31,
2000 (the "2000 10-K")).
4.3 Securities Purchase Agreement, dated as of June 11, 2002, by and among
the Registrant, Databit, Inc. and Laurus Master Fund, Ltd. ("Laurus")
(including the forms of convertible note and warrant) (incorporated
herein by reference to Exhibit 10.1 to the Registrant's Current Report
on Form 8-K dated June 11, 2002).
4.4 Purchase and Security Agreement, dated as of December 4, 2002, made by
and between Comverge ("Comverge") and Laurus (incorporated herein by
reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K
dated December 5, 2002 (the "December 2002 8-K")).
4.5 Convertible Note, dated December 4, 2002, made by and among Comverge,
Laurus and, as to Articles III and V only, the Registrant (incorporated
herein by reference to Exhibit 10.2 to the December 2002 8-K).
4.6 Common Stock Purchase Warrant, dated December 5, 2002, issued by the
Registrant to Laurus (incorporated herein by reference to Exhibit 10.3
to the December 2002 8-K).
4.7 Registration Rights Agreement, dated as of December 4, 2002, by and
between the Registrant and Laurus (incorporated herein by reference to
Exhibit 10.4 to the December 2002 8-K).
4.8 Form of Warrant (incorporated herein by reference to Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended June
30, 2006).
#5.1 Opinion of Eilenberg Krause & Paul LLP.
10.1 Employment Agreement between the Registrant and George Morgenstern,
dated as of January 1, 1997 (incorporated herein by reference to Exhibit
10.1 to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1997 (the "1997 10-K")).
10.2 Employment Agreement between the Registrant and Yacov Kaufman, dated as
of January 1, 1999 (incorporated herein by reference to Exhibit 10.22 of
the Registrants Annual Report on Form 10-K for the year ended December
31, 1999 (the "1999 10-K")).
10.3 1991 Stock Option Plan (incorporated herein by reference to Exhibit 10.4
to the 1992 Registration Statement).
10.4 1994 Stock Incentive Plan, as amended. (incorporated herein by reference
to Exhibit 10.4 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 2004(the "2004 10-K")).
10.5 1994 Stock Option Plan for Outside Directors, as amended (incorporated
herein by reference to Exhibit 10.5 to the Registrant's Form 10-K for
the year ended December 31, 1995 (the "1995 10-K")).
10.6 1995 Stock Option Plan for Non-management Employees, as amended
(incorporated herein by reference to Exhibit 10.6 to the 2004 10-K).
II-5
10.7 Agreement dated January 26, 2002, between the Registrant and Bounty
Investors LLC (incorporated herein by reference to Exhibit 10.12 to the
2000 10-K).
10.8 Lease Agreement, dated February 5, 2002, between Duke-Weeks Realty
Limited Partnership and Comverge, Inc. (incorporated herein by reference
to Exhibit 10.13 to the 2000 10-K).
10.9 Share Purchase Agreement, dated as of November 29, 2001, by and among
the Registrant, Decision Systems Israel Ltd., Endan IT Solutions Ltd.,
Kardan Communications Ltd., Neuwirth Investments Ltd., Jacob Neuwirth
(Noy) and Adv. Yossi Avraham, as Trustee for Meir Givon (incorporated
herein by reference to Exhibit 10.1 to the Registrant's Current Report
on Form 8-K dated December 13, 2001).
10.10 Registration Rights Agreement, dated as of December 13, 2002, by and
among the Registrant, Kardan Communications Ltd. and Adv. Yossi Avraham,
as Trustee for Meir Givon (incorporated herein by reference to Exhibit
10.2 to the Registrant's Current Report on Form 8-K dated December 13,
2001).
10.11 First Amendment to Employment Agreement, dated as of May 17, 2002, by
and between the Registrant and George Morgenstern (incorporated herein
by reference to Exhibit 10.23 to the Registrant's Annual Report on Form
10-K for the year ended December 31, 2001).
10.12 Agreement, dated as of February 25, 2003, between the Registrant and
J.P. Turner & Company, L.L.C. (incorporated herein by reference to
Exhibit 10.25 to the Registrant's Annual Report on Form 10-K for the
year ended December 31, 2002 (the "2002 10-K").
10.13 Second Amendment to Employment Agreement, dated as of March 12, 2002,
between the Registrant and George Morgenstern (incorporated herein by
reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended March 31, 2002).
10.14 Amendment to Employment Agreement, dated as of June 1, 2002, between the
Registrant and Yacov Kaufman (incorporated herein by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended September 30, 2002).
10.15 Preferred Stock Purchase Agreement, dated as of April 7, 2003, by and
among Comverge, the Registrant and the other investors named therein
(incorporated herein by reference to Exhibit 10.29 to the 2002 10-K).
10.16 Investors' Rights Agreement, dated as of April 7, 2003, by and among
Comverge, the Registrant and the investors and Comverge management named
therein (incorporated herein by reference to Exhibit 10.30 to the 2002
10-K).
10.17 Co-Sale and First Refusal Agreement, dated as of April 7, 2003, by and
among Comverge, the Registrant and the investors and stockholders named
therein (incorporated herein by reference to Exhibit 10.31 to the 2002
10-K).
10.18 Voting Agreement, dated as of April 7, 2003, by and among Comverge, the
Registrant and the other investors named therein (incorporated herein by
reference to Exhibit 10.32 to the 2002 10-K).
10.19 Letter Agreement, dated as of April 1, 2003, by and between the
Registrant and Laurus (incorporated herein by reference to Exhibit 10.33
to the 2002 10-K).
10.20 Employment Agreement dated as of August 19, 2004 and effective as of
January 1, 2004 by and between the Registrant and Shlomie Morgenstern
(incorporated herein by reference to Exhibit 10.1 to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended September 30, 2004).
10.21 Restricted Stock Award Agreement dated as of August 19, 2004, by and
between the Registrant and Shlomie Morgenstern (incorporated herein by
reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form
10-Q for the quarter ended September 30, 2004).
10.22 Stock Option Agreement dated as of August 19, 2004, by and between
Shlomie Morgenstern and the Registrant (incorporated herein by reference
to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q for
the quarter ended September 30, 2004).
10.23 Second Amended and Restated Co-Sale And First Refusal Agreement dated as
of October 26, 2004, by and among Comverge, Inc., the Registrant and
other persons party thereto (incorporated herein by reference to Exhibit
10.4 to the Registrant's Quarterly Report on Form 10-Q for the quarter
ended September 30, 2004).
II-6
10.24 Third Amendment to Employment Agreement, dated as of December 30, 2004,
between the Registrant and George Morgenstern (incorporated herein by
reference to Exhibit 10.34 of the Registrant's Annual Report on Form
10-K for the year ended December 31, 2004 (the "2004 10-K").
10.25 Form of Stock Option Agreement to employees under the 1994 Stock
Incentive Plan(incorporated herein by reference to Exhibit 10.35 of the
2004 10-K).
10.26 Form of Stock Option Agreement under the 1994 Stock Option Plan for
Outside Directors (incorporated herein by reference to Exhibit 10.36 of
the 2004 10-K).
10.27 Form of Stock Option Agreement under the 1995 Stock Option Plan for
Nonmanagement Employees (incorporated herein by reference to Exhibit
10.37 of the 2004 10-K).
10.28 Stock Option Agreement dated as of December 30, 2004 by and between
George Morgenstern and the Registrant (incorporated herein by reference
to Exhibit 10.38 of the 2004 10-K).
10.29 Stock Option Agreement dated as of December 30, 2004 by and between
Yacov Kaufman and the Registrant (incorporated herein by reference to
Exhibit 10.39 of the 2004 10-K).
10.30 Stock Option Agreement dated as of December 30, 2004 by and between
Sheldon Krause and the Registrant (incorporated herein by reference to
Exhibit 10.35 of the 2004 10-K).
10.31 Stock Purchase Agreement dated as of March 9, 2006 by and between
Shlomie Morgenstern, Databit Inc., and the Registrant (incorporated
herein by reference to Exhibit 10.1 to the Registrant's Current Report
on Form 8-K dated March 10, 2006 (the "March 2006 8-K")).
10.32 Termination and Release Agreement dated as of March 9, 2006 by and
between Shlomie Morgenstern and the Registrant (incorporated herein by
reference to Exhibit A to Exhibit 10.1 to the March 2006 8-K).
10.33 Amendment Agreement to GM Employment Agreement dated as of March 9, 2006
by and between George Morgenstern and the Registrant (incorporated
herein by reference to Exhibit B to Exhibit 10.1 to the March 2006 8-K).
10.34 Amendment Agreement to Purchaser Option Agreements and Restricted Stock
Award Agreement dated as of March 9, 2006 by and between Shlomie
Morgenstern and the Registrant (incorporated herein by reference to
Exhibit C to Exhibit 10.1 to the March 2006 8-K).
10.35 Amendment Agreement to GM Option Agreements and Restricted Stock
Agreement dated as of March 9, 2006 by and between George Morgenstern
and the Registrant (incorporated herein by reference to Exhibit D to
Exhibit 10.1 to the March 2006 8-K).
10.36 Consulting Agreement dated as of March 9, 2006 by and between George
Morgenstern and the Registrant (incorporated by reference to Exhibit E
to Exhibit 10.1 to the March 2006 8-K).
10.37 Form of Consent Agreement (incorporated herein by reference to Exhibit F
to Exhibit 10.1 to the March 2006 8-K.).
10.38 Form of Subscription Agreement (incorporated herein by reference to
Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006).
10.39 Placement Agent Agreement between First Montauk Securities Corp. and the
Registrant dated June 13, 2006 (incorporated herein by reference to
Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q for the
quarter ended June 30, 2006).
10.40 Form of Common Stock Purchase Agreement (incorporated herein by
reference to Exhibit 10.1 to the Registrant's Current Report on Form 8-K
dated August 17, 2006 ( the "August 2006 8-K")).
10.41 Form of Note Purchase Agreement with Form of Convertible Promissory Note
attached (incorporated herein by reference to Exhibit 10.2 to the August
2006 8-K).
10.42 Form of Stock Purchase Agreement (incorporated herein by reference to
Exhibit 10.3 to the August 2006 8-K).
10.43 Form of Investors' Rights Agreement (incorporated herein by reference to
Exhibit 10.4 to the August 2006 8-K).
II-7
10.44 Form of Non-Plan Option Agreement (incorporated herein by reference to
Exhibit 10.5 to the August 2006 8-K).
14.1 Code of Ethics of the Registrant (incorporated herein by reference to
Exhibit 14.1 to the Registrant's Annual Report on Form 10-K for the year
ended December 31, 2003).
21.1 List of subsidiaries (incorporated herein by reference to Exhibit 21.1
to the Registrant's Annual Report on Form 10-K for the year ended
December 31, 2005)
#23.1 Consent of Kesselman & Kesselman CPA.
#23.2 Consent of PricewaterhouseCoopers LLP.
23.3 Consent of Eilenberg Krause & Paul LLP (included in Exhibit 5.1 hereto).
----------
# This Exhibit is filed or furnished herewith.
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to its Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
Township of Mahwah, New Jersey, on this 30th day of November, 2006.
ACORN FACTOR, INC.
By: /s/ JOHN A. MOORE
-------------------------------------
John A. Moore
President and Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints John A. Moore
and George Morgenstern, jointly and severally, as attorneys-in-fact, each with
the power of substitution, in any and all capacities, to sign any amendment to
this Registration Statement and to file the same, with exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting to sale attorneys-in-fact, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes they
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact or any of them, or their, his or her substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this registration
statement has been signed below by the following persons on the dates indicated
in the capacities indicated.
Signature Title Date
-------------------------- ------------------------------- -----------------
/s/ GEORGE MORGENSTERN
--------------------------
George Morgenstern Chairman of the Board; Director November 30, 2006
/s/ JOHN A. MOORE
--------------------------
John A. Moore President and Chief Executive November 30, 2006
Officer;
Director (Principal Executive
Officer)
/s/ MICHAEL BARTH
--------------------------
Michael Barth Chief Financial Officer November 30, 2006
(Principal Financial Officer
and Principal Accounting
Officer)
/s/ RICHARD RIMER
--------------------------
Richard Rimer Director November 30, 2006
/s/ RICHARD J. GIACCO
--------------------------
Richard J. Giacco Director November 30, 2006
/s/ KEVIN P. WREN
--------------------------
Kevin P. Wren Director November 30, 2006
/s/ SAMUEL ZENTMAN
--------------------------
Samuel Zentman Director November 30, 2006