As filed
with the Securities and Exchange Commission on February 9,
2007
Registration
No. 333-
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_______________________
FORM
S-8
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
_______________________
ACORN
FACTOR, INC.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
22-2786081
|
|
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
|
|
200
Route 17, Mahwah, New Jersey
|
07430
|
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
2006
Stock Option Plan for Non-Employee Directors
2006
Stock Incentive Plan
Non-Plan
Option Agreements
(Full
title of the plans)
____________
JOHN
A. MOORE
CHIEF
EXECUTIVE OFFICER
ACORN
FACTOR, INC.
200
ROUTE 17
MAHWAH,
NEW JERSEY 07430
(Name
and
address of agent for service)
(201)
529-2026
(Telephone
number, including area code, of agent for service)
COPY
TO:
SHELDON
KRAUSE, ESQ.
EILENBERG
KRAUSE & PAUL LLP
11
EAST 44TH STREET
NEW
YORK, NEW YORK 10017
(212)
986-9700
_____________
CALCULATION
OF REGISTRATION FEE
|
Title
of Securities to be Registered
|
Amount
to
be
Registered
|
Proposed
Maximum
Offering
Price
per Share(3)
|
Proposed
Maximum
Aggregate
Offering
Price (3)
|
Amount
of
Registration
Fee
|
|||||||||
|
Common
Stock par value $0.01 per share
|
915,000(1
|
)
|
$
|
2.84
|
$
|
2,598,600
|
$
|
278.05
|
|||||
|
Common
Stock par value $0.01 per share
|
600,000(2
|
)
|
$
|
2.65 | $ | 1,590,000 | $ | 170.13 | |||||
|
Total
|
1,515,000 | $ | 4,188,600 | $ | 448.18 | ||||||||
| (1) |
Represents
shares issuable upon exercise of non-plan options previously granted
to
officers and directors of the Registrant, its subsidiaries and
equity
affiliates, and other persons who may be deemed to be affiliates
of the
Registrant.
|
| (2) |
Represents
(a) shares issuable upon exercise of options available for grant
or
pursuant to the grant of other stock-based awards available for
grant
under the 2006 Stock Incentive Plan and (b) shares issuable upon
exercise
of options available for grant under the 2006 Stock Option Plan
for
Non-Employee Directors
|
| (3) |
Pursuant
to Rule 457 under the Securities Act of 1933, (i) with respect
to the
915,000 shares that may be issued upon the exercise of non-plan
option grants, computed based upon Rule 457(h) using the weighted
average
exercise price of the options granted (which range from $2.60-$3.35
per
share) and (ii) with respect to 400,000 shares that may be issued
upon
exercise of options available for grant or pursuant to other stock-based
awards available for grant under the 2006 Stock Incentive Plan
and 200,000
shares that may be issued upon exercise of options available for
grant
under the 2006 Stock Option Plan for Non-Employee Directors, computed
based upon Rule 457(c) using the average of the high and low sales
prices
of the common stock as reported on the NASD OTC Bulletin Board
on February
7, 2007.
|
PART
I
INFORMATION
REQUIRED IN THE SECTION 10(a) PROSPECTUS
EXPLANATORY
NOTE
As
permitted by the instructions to Form S-8, this Registration Statement omits
the
information set forth in Part I of that Form.
PART
II
INFORMATION
REQUIRED IN THE REGISTRATION STATEMENT
Item
3. Incorporation of Documents by Reference.
The
following documents filed with the Securities and Exchange Commission (the
“Commission”) by the Registrant, Acorn Factor, Inc., a Delaware corporation (the
Company"), pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), are incorporated by reference in this registration
statement:
| – |
Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2005
(filed on April 11, 2006).
|
| – |
Amendment
No. 1 to Our Annual Report on Form 10-K for the fiscal year ended
December
31, 2005, on Form 10-K/A (filed on June 1, 2006).
|
| – |
Amendment
No. 2 to Our Annual Report on Form 10-K for the fiscal year ended
December
31, 2005, on Form 10-K/A (filed on October 19, 2006).
|
| – |
Our
Quarterly Report on Form 10-Q for the three months ended March 31,
2006
(filed on May 19, 2006).
|
| – |
Our
Quarterly Report on Form 10-Q for the three months ended June 30,
2006,
(filed on August 11, 2006).
|
| – |
Our
Quarterly Report on Form 10-Q for the three months ended September
30,
2006, (filed on November 20, 2006)
|
| – |
Our
Current Report on Form 8-K/A filed on May 12,
2006;
|
| – |
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, November 3, 2006, January 3, 2007 and January
9,
2007.
|
| – |
The
description of Our Common Stock which is contained in its Registration
Statement on Form 8-A declared effective on February 11,
1992.
|
All
documents subsequently filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all shares offered hereby have been sold or
which
deregisters all shares then remaining unsold, shall be deemed to be incorporated
by reference in this registration statement and to be a part hereof from
the
date of filing of such documents. Any statement contained in a previously
filed
document incorporated or deemed to be incorporated by reference herein shall
be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement
so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this registration statement.
Item
4. Description of Securities.
Not
applicable.
Item
5. Interests of Named Experts and Counsel.
The
validity of the shares of common stock registered by this registration statement
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.
Item
6. 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 each of its
present officers and directors and plans to enter into such agreement 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
7. Exemption from Registration Claimed.
Not
applicable.
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2 -
Item
8. Exhibits.
|
Exhibit
No.
|
|
|
4.1
|
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).
|
|
4.2
|
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).
|
|
4.3
|
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).
|
|
4.4
|
Amendment
to the By-laws of the Registrant (incorporated herein by reference
to
Exhibit 3.3 to the Registrant’s Current Report on Form 8-K dated January
10, 1995)
|
|
5.1
|
Opinion
of Eilenberg Krause & Paul LLP.
|
|
23.1
|
Consent
of Eilenberg Krause & Paul LLP (included in Exhibit
5.1).
|
|
23.2
|
Consent
of Kesselman & Kesselman .
|
|
23.3
|
Consent of PriceWaterhouseCoopers LLP. |
|
24.1
|
Power
of Attorney (included on the signature page to this registration
statement).
|
Item
9. 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;
provided,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference 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.
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3 -
(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.
(5) 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
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 ,
,
or as
part of a registration statement in reliance on Rule 430B relating
to an
offering made pursuant to ,
,
or 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, 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, 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.
|
-
4 -
| i. |
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
| 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) The
undersigned Registrant hereby undertakes that, for purposes of determining
any
liability under the Securities Act of 1933, each filing of the Registrant's
annual reports pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act
of
1934) that is incorporated by reference in this Registration Statement shall
be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be
the initial bona fide offering thereof.
(h) 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.
-
5 -
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies
that
it has reasonable grounds to believe that it meets all the requirements for
filing on Form S-8 and has duly caused this registration statement to be
signed
on its behalf by the undersigned, thereunto duly authorized, in the Township
of
Mahwah, New Jersey, on this 9th day of February, 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
/s/
John A. Moore
|
Chairman
of the Board
|
February
9, 2007
|
||
|
John
A. Moore
/s/
Michael Barth
|
President
and Chief Executive Officer; Director
(Principal
Executive Officer)
|
February
9, 2007
|
||
|
Michael
Barth
/s/
Samuel M. Zentman
|
Chief
Financial Officer (Principal Financial Officer
and
Principal Accounting Officer)
|
February
9, 2007
|
||
|
Samuel
M. Zentman
/s/
Kevin P. Wren
|
Director
|
February
9, 2007
|
||
|
Kevin
P. Wren
/s/
Richard Rimer
|
Director
|
February
9, 2007
|
||
|
Richard
Rimer
/s/
Richard J. Giacco
|
Director
|
February
9, 2007
|
||
|
Richard
J. Giacco
|
Director
|
February
9, 2007
|
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.
PROSPECTUS
1,515,000
SHARES OF COMMON STOCK
ACORN
FACTOR, INC.
This
prospectus relates to the offer and sale from time to time of up to 1,515,000
shares of our common stock by the selling security holders named in this
prospectus. The shares include 915,000 shares issuable upon the exercise
of
non-plan options previously granted to officers and directors of the Company,
its subsidiary, equity affiliates and other persons that may be deemed to
be
affiliates of the Company, 200,000 shares that may subsequently be issued
pursuant to the exercise of options available for grant under the Company’s 2006
Stock Option Plan for Non-Employee Directors and 400,000 shares that may
be
issued upon exercise of options or pursuant to other stock-based awards
available for grant under the 2006 Stock Incentive Plan.
Our
common stock trades on the NASD Over-the-Counter Bulletin under the symbol
“ACFN.” On February 7, 2007, the closing sale price of the common stock was
$3.65 per share.
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 February 9, 2007
TABLE
OF
CONTENTS
| SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS |
1
|
| RISK FACTORS |
1
|
| USE OF PROCEEDS |
3
|
| SELLING SECURITY HOLDERS |
4
|
| PLAN OF DISTRIBUTION |
5
|
|
|
|
| LEGAL MATTERS |
6
|
| EXPERTS |
6
|
| INFORMATION INCORPORATED BY REFERENCE |
6
|
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 the date of this prospectus, 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.
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.
| – |
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.
|
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 form the sale of the shares by the selling security
holders. We will receive proceeds upon exercise of the options by the selling
security holders. All proceeds received by us through option exercises will
be
used for working capital.
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3 -
SELLING
SECURITY HOLDERS
The
selling security holders may sell up to 1,515,000 shares of our common stock
pursuant to this prospectus. These shares include 915,000 shares issuable
upon
the exercise of non-plan options previously granted to officers and directors
of
the Company, its subsidiary, equity affiliates, and other persons who may
be
deemed to be affiliates of the Company, 200,000 shares that may subsequently
be
issued pursuant to the exercise of options available for grant under the
Company’s 2006 Stock Option Plan for Non-Employee Directors and 400,000 shares
that may be issued to officers, directors or other persons who may be deemed
to
be affiliates of the Company, upon exercise of options or pursuant to other
stock-based awards available for grant under the 2006 Stock Incentive Plan.
As
permitted by Form S-8, as further selling security holders become known to
the
Company they will be added by prospectus supplement(s) pursuant to Rule 424(b)
under the Securities Act of 1933.
The
table
below (1) identifies each selling security holder, (2) shows the number of
shares beneficially owned by selling security holder prior to the offering,
(3)
shows the number of shares that the selling security holder may sell in this
offering pursuant to this prospectus, and (4) shows the number and percentage
of
shares that the selling security holder will beneficially own upon completion
of
the offering. All of these shares represent shares that may hereafter be
acquired pursuant to outstanding non-plan option grants.
|
Selling
Security Holder
|
No.
of Shares
Beneficially
Owned
Before
Sale(1)
|
No.
of
Shares
Being
Offered
|
No.
of Shares
Beneficially
Owned
Upon
Completion
of
Offering(1)
|
Percentage
of
Shares
Beneficially
Owned
After
Completion
of
Offering
|
||||
|
Michael
Barth(2)
|
59,000
|
50,000
|
9,000
|
*
|
||||
|
Richard
Giacco(3)
|
25,000
|
25,000
|
0
|
*
|
||||
|
John
A. Moore(4)
|
780,877
|
400,000
|
380,877
|
4%
|
||||
|
Richard
Rimer(5)
|
125,000
|
125,000
|
0
|
*
|
||||
|
Kevin
Wren(6)
|
25,000
|
25,000
|
0
|
*
|
||||
|
Samuel
Zentman(7)
|
71,621
|
57,500
|
14,121
|
*
|
||||
|
Sheldon
Krause(8)
|
66,500
|
25,000
|
41,500
|
*
|
||||
|
George
Morgenstern(9)
|
482,054
|
7,500
|
474,554
|
4.9%
|
||||
|
Andy
Roesch (10)
|
150,000
|
150,000
|
0
|
*
|
_______________________
*
Less
than 1%, based upon 9,453,659 shares outstanding on November 15,
2006.
| (1) |
Beneficial
ownership is determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934.
|
| (2) |
Mr.
Barth is the Chief Financial Officer of both the Company and its
majority-owned subsidiary dsIT Solutions Ltd. The shares being
offered by
Mr. Barth consist of shares issuable upon the exercise by Mr. Barth
of an
option to purchase 50,000 shares. The option
has vested as to one-third the remaining two-thirds shall vest
on each or
December 31, 2007 and 2008. The option is exercisable through July
31,
2011.
|
| (3) |
Mr.
Giacco is a member of the board of directors of the Company. The
shares
being offered by Mr. Giacco consist of shares issuable upon the exercise
by Mr. Giacco of an option to purchase 25,000 shares. The option
vests as
to one-third on each of October 3, 2007, 2008, and 2009 and is exercisable
through October 3, 2013.
|
| (4) |
Mr.
Moore is President and Chief Executive Officer, and a member
of the board
of directors of the Company. The shares being offered by Mr.
Moore consist
of (i) shares issuable upon the exercise by Mr. Moore of an option
to
purchase 200,000 shares which has previously vested as to one
half and
will vest as to the other half upon the earlier of the Company’s shares
achieving a five day average closing market price of $5.00 or
greater per
share or March 30, 2009, and is exercisable through March 31,
2011 and
(ii) shares issuable upon the exercise by Mr. Moore of an option
to
purchase 200,000 shares which vested on September 30, 2006 and
is
exercisable through March 31,
2011.
|
-
4 -
| (5) |
Mr.
Rimer is a member of the board of directors of the Company. The shares
being offered by Mr. Rimer consist of (i) shares issuable upon the
exercise by Mr. Rimer of an option to purchase 25,000 shares, which
vests
as to one-third on each of October 3, 2007, 2008, and 2009 and is
exercisable though October 3, 2013, and (ii) shares issuable upon
the
exercise of an option to purchase 100,000 shares which vested as
to
one-quarter on the date of grant and which vests as to the remaining
three-quarters upon the satisfaction of certain performance criteria
and
which is exercisable through November 30,
2013.
|
| (6) |
Mr.
Wren is a member of the board of directors of the Company. The
shares being offered by Mr. Wren consist of shares issuable upon
the
exercise by Mr. Wren of an option to purchase 25,000 shares. The
option
vests as to one-third on each of October 3, 2007, 2008, and 2009
and is
exercisable through October 3,
2013.
|
| (7) |
Dr.
Zentman is a member of the board of directors of the Company. The
shares
being offered by Dr. Zentman consist of shares issuable upon the
exercise
by Dr. Zentman of (i) an option to purchase 25,000 shares vesting
as to
one-third on each of October 3, 2007, 2008, and 2009 and exercisable
through October 3, 2013, (ii) an option to purchase 7,500 shares
vesting
on October 3, 2008 and exercisable through October 3, 2013, and (iii)
an
option to purchase 25,000 shares which has vested and is exercisable
through March 30, 2011.
|
| (8) |
Mr.
Krause is Secretary and General Counsel to the Company. The shares
being
offered by Mr. Krause consist of shares issuable upon the exercise
by Mr.
Krause of an option to purchase 25,000 shares. The option vests as
to
one-third on each of July 31, 2007, 2008 and 2009 and is exercisable
through July 31, 2013.
|
| (9) |
Mr.
Morgenstern is the Chairman of the board of directors of the Company.
The
shares being offered by Mr. Morgenstern consist of shares issuable
upon
the exercise by Mr. Morgenstern of an option to purchase 7,500 shares,
vesting on October 3, 2007 and exercisable through October 3,
2013.
|
| (10) |
Mr.
Roesch is managing director of Paketeria GmbH a company in which
the
Company has made a substantial investment. In connection with Mr.
Roesch’s
continued employment with Paketeria, he was granted an option to
purchase
150,000 shares of the Company’s common stock. The shares being offered by
Mr. Roesch consist of the shares issuable upon the exercise of
this
option. The option previously vested with respect to one-third
and will
vest with respect to another third upon the execution of a license
agreement for the 75th Paketeria store and with respect to the
final third
upon the execution of a license agreement for the 115th Paketeria
store.
The option is exercisable through November 7,
2011.
|
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:
| – |
ordinary
brokerage transactions and transactions in which the broker-dealer
solicits a purchaser;
|
| – |
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;
|
| – |
purchases
by a broker-dealer as principal and resale by the broker-dealer for
its
account;
|
| – |
an
exchange distribution in accordance with the rules of the applicable
exchange;
|
| – |
privately
negotiated transactions;
|
| – |
short
sales;
|
| – |
broker-dealers
may agree with the selling security holders to sell a specified number
of
such shares at a stipulated price per share;
|
-
5 -
| – |
a
combination of any such methods of sale; and
|
| – |
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 holders 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.
The
selling security holders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and,
if they
default in the performance of the their secured obligations, the pledgees
or
secured parties may offer and sell the shares of common stock from time to
time
under this prospectus, or under an amendment to this prospectus under Rule
424(b) or other applicable provision in or under the Securities Act of 1933
amending the list of selling security holders to include the pledgee, transferee
or other successors in interest as selling stockholders under this
prospectus.
The
selling security holders and any other person participating in the sale of
common stock will be subject to the Securities Exchange Act of 1934. The
Securities Exchange Act of 1934 rules include, without limitation, Regulation
M,
which may limit the timing of purchases and sales of any of the common stock
by
the selling security holders and any other such person. In addition, Regulation
M may restrict the ability of any person engaged in the distribution of the
common stock and the ability of any person or entity to engage in the
market-making activities with respect to the common stock.
We
have
agreed to pay substantially all expense incidental to the registration, offering
and sale of the common stock offered pursuant to this prospectus to the public,
other than commissions, fees and discounts of underwriters, brokers, dealers
and
agents.
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.
-
6 -
We
incorporate by reference the following documents:
| – |
Our
Annual Report on Form 10-K for the fiscal year ended December 31,
2005
(filed on April 11, 2006).
|
| – |
Amendment
No. 1 to Our Annual Report on Form 10-K for the fiscal year ended
December
31, 2005, on Form 10-K/A (filed on June 1, 2006).
|
| – |
Amendment
No. 2 to Our Annual Report on Form 10-K for the fiscal year ended
December
31, 2005, on Form 10-K/A (filed on October 19, 2006).
|
| – |
Our
Quarterly Report on Form 10-Q for the three months ended March 31,
2006
(filed on May 19, 2006).
|
| – |
Our
Quarterly Report on Form 10-Q for the three months ended June 30,
2006,
(filed on August 11, 2006).
|
| – |
Our
Quarterly Report on Form 10-Q for the three months ended September
30,
2006, (filed on November 20, 2006)
|
| – |
Our
Current Report on Form 8-K/A filed on May 12,
2006;
|
| – |
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, November 3, 2006, January 3, 2007 and January
9,
2007.
|
| – |
The
description of Our Common Stock which is contained in its Registration
Statement on Form 8-A declared effective on February 11,
1992.
|
All
documents subsequently filed by the Company pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, prior to the filing of a post-effective
amendment which indicates that all shares offered hereby have been sold or
which
deregisters all shares then remaining unsold, shall be deemed to be incorporated
by reference in this registration statement and to be a part hereof from
the
date of filing of such documents. Any statement contained in a previously
filed
document incorporated or deemed to be incorporated by reference herein shall
be
deemed to be modified or superseded for purposes of this registration statement
to the extent that a statement contained herein or in any other subsequently
filed document which also is incorporated or deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement
so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this registration statement.
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.
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 with the SEC at the SEC’s public reference room at 100 F
Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330
for
further information on the public reference room. 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-8 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.
-
7 -