Filed with the Securities and Exchange Commission on June 9, 1997.
Securities Act Registration No. 333-_______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
GUM TECH INTERNATIONAL, INC.
----------------------------
(Exact Name of Registrant
As Specified In Its Charter)
Utah 2067 87-0842806
- ------------------------------- --------------------------- --------------
(State or other jurisdiction of Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code No.) I.D. Number)
4205 North 7th Avenue, Suite 300
Phoenix, Arizona 85013
(602) 277-0606
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(Address, including zip code, and telephone
number, including area code, of Registrant's principal
executive offices)
Gerald N. Kern, Chief Executive Officer
Gum Tech International, Inc.
4205 North 7th Avenue, Suite 300
Phoenix, Arizona 85013
(602) 277-0606
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(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies of all communications to:
Gary A. Agron, Esq.
Law Office of Gary A. Agron
5445 DTC Parkway, Suite 520
Englewood, Colorado 80111
(303) 770-7254
(303) 770-7257 (fax)
Approximate date of commencement of proposed sale to public: As soon as
practicable after the effective date of the Offering.
<PAGE>
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
(ii)
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
================================================================================================================================
Title of each class of Amount to Proposed Proposed Amount of
securities to be registered be registered maximum maximum registration
offering aggregate fee
price per offering
unit(1) price(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, no par 460,000 $9.81 $4,512,600 $1,368
value, underlying IPO Shares
Common Stock Purchase
Warrants
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par 532,632 $9.81 $5,225,120 $1,583
value, underlying Shares
Subordinated Con-
vertible Notes
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par 120,000 $9.81 $1,177,200 $ 357
value per share, under- Shares
lying Representative's
Unit Warrants
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock Purchase 40,000 $9.81 $ 392,400 $ 119
Warrants included in Warrants
Representative's
Unit Warrants
- --------------------------------------------------------------------------------------------------------------------------------
Common Stock, no par 40,000 $9.81 $ 392,400 $ 119
value, underlying Shares
Common Stock Purchase
Warrants included in
Representative's
Unit Warrants
- --------------------------------------------------------------------------------------------------------------------------------
Totals . . . . . . . . . . . . . $11,699,720 $3,546
================================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based on the closing price per share of the Common
Stock on the NASDAQ National Market on June 4, 1997 of $9.81 per share.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
(iii)
<PAGE>
<TABLE>
<CAPTION>
CROSS REFERENCE SHEET
BETWEEN ITEMS OF FORM S-3 AND THE PROSPECTUS
Item
No. Prospectus Caption or Page
--- --------------------------
<S> <C> <C>
1 Forepart of the Registration Statement and Facing Page; Cross-Reference Sheet;
Outside Front Cover Page of Prospectus Outside Front Cover Page of
Prospectus
2 Inside Front and Outside Back Cover Inside Front and Outside Back Cover
Pages of Prospectus Pages of Prospectus
3 Summary Information, Risk Factors and Outside Front Cover Page of
Ratio of Earnings to Fixed Charges Prospectus; Risk Factors
4 Use of Proceeds Use of Proceeds
5 Determination of Offering Price *
6 Dilution *
7 Selling Security Holders Selling Stockholders
8 Plan of Distribution Plan of Distribution
9 Description of Securities to be Registered *
10 Interests of Named Experts and Counsel Legal Matters; Experts
11 Material Changes *
12 Incorporation of Certain Information by Inside Front Cover Page of
Reference Prospectus
13 Disclosure of Commission Position on *
Indemnification for Securities Act
Liabilities
* Not Applicable
</TABLE>
(iv)
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO THE REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH
STATE.
SUBJECT TO COMPLETION, DATED JUNE 9, 1997
PROSPECTUS
GUM TECH INTERNATIONAL, INC.
620,000 Shares of Common Stock Upon
Exercise of Common Stock Purchase Warrants
532,632 Shares of Common Stock
Upon Conversion of Subordinated Convertible Notes
40,000 Common Stock Purchase Warrants
This Prospectus covers the sale of an aggregate of 1,152,632 shares of the
no par value common stock ("Common Stock") of Gum Tech International, Inc. (the
"Company") comprised of (i) 620,000 shares upon exercise of Common Stock
Purchase Warrants ("Purchase Warrants") issued in the Company's initial public
offering ("IPO Offering") and (ii) 532,632 shares upon conversion of
subordinated convertible notes ("Convertible Notes") together with 40,000 Common
Stock Purchase Warrants (the "Warrants"), each Warrant entitling the holder to
purchase one share of Common Stock at $7.50 per share at any time until April
24, 2001. The securities are held by certain selling stockholders (the "Selling
Stockholders"). See "Selling Stockholders." The Company will not receive any
part of the proceeds from the sale of securities by the Selling Stockholders,
although it will receive any funds tendered upon exercise of the Purchase
Warrants.
The Selling Stockholders may sell the Common Stock and Warrants from time
to time directly or indirectly through designated agents in open market
transactions, including block trades, on the NASDAQ National Market (the
"National Market"), in negotiated public or private transactions or in a
combination of any such methods of sale or through dealers or underwriters to be
determined at the time of sale. To the extent required, the Common Stock or
Warrants to be sold, the name of the Selling Stockholders, purchase price,
offering price, the name of any agent, dealer or underwriter, and any applicable
commission or discount with respect to a particular offer or sale will be set
forth in an accompanying prospectus supplement. The aggregate proceeds to the
Selling Stockholders from sales of the Common Stock or Warrants will be the
purchase price of the Common Stock or Warrants sold less the aggregate agents'
commissions and underwriters' discounts, if any. All other distribution expenses
of the offering will be paid for by the Company. See "Plan of Distribution."
The Selling Stockholders and any broker-dealers, agents or underwriters
that participate with the Selling Stockholders in the distribution of the Common
Stock or Warrants may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), and any commission
received by them and any profit on the resale of the Common Stock or Warrants
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
The Common Stock is listed on the National Market under the symbol "GUMM."
On June 4, 1997, the closing sales price of the Common Stock as reported on the
National Market was $9.81 per share.
PURCHASE OF THE COMMON STOCK AND WARRANTS IS SPECULATIVE, INVOLVES A HIGH
DEGREE OF RISK AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS
OF THEIR ENTIRE INVESTMENT. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
-----------
The date of this Prospectus is _____________, 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C., a Registration Statement on Form S-3 (the
"Registration Statement") under the 1933 Act with respect to the securities
offered hereby. This Prospectus does not contain all the information set forth
in the Registration Statement, certain items of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and the securities offered by this Prospectus, reference
is made to such Registration Statement and the exhibits thereto. Statements
contained in this Prospectus as to the contents of any contract or other
documents are not necessarily complete, and in each instance reference is made
to the copy of such contract or other document filed as an exhibit to the
Registration Statement for a full statement of the provisions thereof; each such
statement contained herein is qualified in its entirety by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and, in accordance therewith, files
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information may be inspected and copied at
public reference facilities of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549; Northwest Atrium Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661; 7 World Trade Center, New York, New York 10048;
and 5670 Wilshire Boulevard, Los Angeles, California 90036. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street N.W., Washington, D.C. 20549 at prescribed rates.
The Company furnishes annual reports to its stockholders which include
audited financial statements. The Company may also furnish quarterly financial
statements to its stockholders and such other reports as may be authorized by
its Board of Directors.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed or will be filed with the
Commission are incorporated herein by reference:
(1) The Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1996;
(2) The Company's Quarterly Report on Form 10-QSB for the three months
ended March 31, 1997;
(3) The Company's Quarterly Report on Form 10-QSB for the three months
ended September 30, 1996;
(4) The Company's Quarterly Report on Form 10-QSB for the three months
ended June 30, 1996;
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<PAGE>
(5) Proxy Statement for the Annual Meeting of Stockholders of the
Company held June 13, 1997;
(6) Description of the Common Stock contained in the Company's
Registration Statement on Form SB-2 declared effective under the
Securities Act, on November 8, 1996; File Number 333-14667;
(7) All other documents subsequently filed by the Company pursuant to
Sections 12, 13(a), 13(c), 14 and 15(d) of the 1934 Act.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering made hereby shall be deemed to be incorporated
by reference in this Prospectus and to be a part hereof from the date of the
filing of such documents. Any statement contained in this Prospectus, in a
supplement to this Prospectus or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed supplement to this Prospectus or in any document
that also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company hereby undertakes to provide without charge to each person to
whom a copy of this Prospectus has been delivered, on the written or oral
request of any such person, a copy of any or all of the documents referred to
above which have been or may be incorporated in this Prospectus by reference,
other than exhibits to such documents unless such exhibits are specifically
incorporated by reference in such documents. Written or oral requests for such
copies should be directed to Jeffrey L. Bouchy, Senior Vice President and Chief
Financial Officer, Gum Tech International, Inc., 4205 North 7th Avenue, Suite
300, Phoenix, Arizona 85013, telephone (602) 277-0606.
3
<PAGE>
BUSINESS OF THE COMPANY
The Company was organized in 1991 to develop, market and distribute
specialty chewing gum products under its own brand names and on a private label
basis for other chewing gum marketers. The Company's current chewing gum
products contain ingredients which it claims (i) promote weight loss (under the
"ChromaTrim" and "CitrusSlim" brand names), (ii) contribute to energy and
endurance (under the "Buzz Gum", "Power Gum" and "Love Gum" brand names), (iii)
alleviate certain premenstrual symptoms (under the "Repose" brand name), (iv)
promote oral hygiene and breath freshness (under the "DentaHealth" brand name)
and provide antioxidant vitamins. The Company manufactures its chewing gum
products in a 28,000 square foot leased facility in Phoenix, Arizona.
The Company's business strategy is to (i) manufacture its own chewing gum
products and the private label chewing gum products of other chewing gum
marketers in greater quantities and at lower costs, (ii) increase revenues by
(a) expanding its marketing efforts for existing chewing gum products, (b)
developing new chewing gum products through its own research and development
facilities and (c) further developing its private label business, and (iii)
expand its distribution and customer base by adding over-the-counter ("OTC")
non-prescription medications (such as antacids, cough suppressants, pain
relievers and the like) to its chewing gum products. The Company has not yet
commenced the distribution or marketing of any OTC chewing gum products but
expects (but cannot assure) that it will do so in 1997.
The Company markets its chewing gum products through wholesale distributors
who distribute primarily to natural food stores and through other brokers,
marketers and distributors to convenience stores and independent grocery and
drug stores. The Company also markets to chain grocery, drug and club stores and
to larger private label customers who market under their own brand names.
Some of the Company's specialty chewing gum products are subject to
regulation by the United States Food and Drug Administration ("FDA"). If the FDA
concludes that certain chewing gum products are "drugs" under applicable FDA
regulations or if the Company commences marketing of OTC chewing gum products,
the FDA may restrict or remove any or all of the Company's chewing gum products
from the market if such products violate FDA rules or regulations.
The Company was incorporated in Utah in February 1991 as a specialty
chewing gum products marketer under the name Nekros International Marketing,
Inc. with office and warehouse facilities initially located in Ogden, Utah. In
November 1994, control of the Company changed and between May 1995 and November
1995, the Company raised funds to establish a new management team, develop
additional chewing gum products, build inventories and purchase chewing gum
manufacturing equipment. In April 1996 the Company sold to the public 460,000
Units of its securities at $18.00 per Unit in the IPO Offering, each Unit
consisting of three shares of Common Stock and one Common Stock Purchase Warrant
(the "IPO Warrants") to purchase an additional share of Common Stock at any time
until April 24, 2001 at $7.50 per share. In connection with the IPO Offering,
4
<PAGE>
the Company issued to the Representative of its underwriters (the "IPO
Representative") Unit Warrants to purchase an aggregate of 40,000 Units,
consisting of 120,000 shares of Common Stock and 40,000 Warrants identical to
the IPO Warrants. The Common Stock underlying the 460,000 IPO Warrants, together
with the 160,000 shares issuable upon exercise of the Unit Warrants
(collectively the "Purchase Warrants") issued to the IPO Representative are
being registered hereby. The Company is also registering hereby the 40,000
Warrants issued to the IPO Representative and 532,632 shares issuable upon
conversion of $2,530,000 of subordinated convertible notes ("Convertible Notes")
issued by the Company in February 1997.
The Company's executive offices are located at 4205 North 7th Avenue, Suite
300, Phoenix, Arizona 85013, telephone (602) 277-0606, and its warehouse and
manufacturing facility is located at 246 East Watkins, Phoenix, Arizona 85004.
5
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider the
following risk factors and other information contained in this Prospectus before
making an investment in the Common Stock. Information contained in this
Prospectus includes "forward-looking statements" which can be identified by the
use of forward-looking terminology such as "believes", "expects", "may",
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. No assurance can be given
that the future results addressed by the forward-looking statements will be
achieved. The following matters constitute cautionary statements identifying
important factors with respect to such forward-looking statements, including
certain risks and uncertainties, that could cause actual results to vary
materially from the future results addressed in such forward-looking statements.
Other factors could also cause actual results to vary materially from the future
results addressed in such forward-looking statements.
Limited Operating History; Recent Losses. The Company began operations in
February 1991, and has a limited operating history upon which potential
investors may evaluate its performance. Although the Company reported net income
of $497,471 for the year ended December 31, 1995 and $541,575 for the three
months ended March 31, 1997, it reported a significant loss for the year ended
December 31, 1996 of $2,635,895 and can give no assurance that future operations
will be profitable. The likelihood of the Company's success must be considered
relative to the problems, difficulties, complications and delays frequently
encountered in connection with the development and operation of a new business
and the competitive environment in which the Company intends to operate.
Significant Number of Shares Eligible for Immediate and Future Sales. Sales
of substantial amounts of Common Stock in the open market or the availability of
such shares for sale could adversely affect the market price for the Common
Stock. All 4,948,740 shares of the Company's Common Stock outstanding have
either been registered for public sale or are salable under Rule 144 promulgated
under the Securities Act and therefore, all such shares may be immediately sold
by the holders, subject only to an April 24, 1996 agreement between the holders
of 2,877,565 shares (all of which have been registered) and the IPO
Representative in which the holders agreed not to sell or otherwise dispose of
their shares of Common Stock until April 24, 1998 without the prior written
consent of the IPO Representative. The IPO Representative may release these
shares without notice at any time. Moreover, 1,152,632 shares underlying the
Purchase Warrants, Convertible Notes and Warrants are being registered hereby
and 1,200,000 shares underlying the Company's 1995 Stock Option Plan have been
previously registered. Following exercise or conversion, as the case may be, all
of the 1,152,632 shares may be sold by the holders at any time subject to the
Company's right through January 1998 to restrict public sale of the 532,632
shares issuable upon conversion of the Convertible Notes.
6
<PAGE>
Unproven Markets for Certain of the Company's New Products; No Assurance of
Consumer Acceptance. The Company recently introduced a number of new chewing gum
products including three new chewing gum products (Repose, DentaHealth and Vita
A-C-E), which the Company claims alleviate certain premenstrual symptoms,
promote oral hygiene and provide antioxidant vitamins, respectively. There can
be no assurance that a market exists for any of these chewing gum products, or
that consumers will purchase these or any other new product offerings of the
Company in sufficient amounts to justify continued production.
Significant Fixed Costs for and Underutilization of Manufacturing Facility.
The Company estimates that the fixed costs associated with its Phoenix, Arizona
manufacturing facility approximate $130,000 per month and that only 15% of the
facility's total capacity is currently being utilized. These fixed costs
contributed to significant losses reported by the Company for the year ended
December 31, 1996 and will continue to significantly contribute to losses until
the Company increases utilization of the facility.
Competition. The distribution and sale of chewing gum products are highly
competitive and consists primarily of three multi-billion dollar United
States-based multinational companies (Wm. Wrigley Jr. Company, Warner Lambert
Company and Nabisco Food Group, Inc.) which own most of the chewing gum brands,
large specialty chewing gum manufacturers, such as The Topps Company ("Bazooka"
brand chewing gum) and Marvel Holdings, Inc. ("Double Bubble" brand chewing
gum), and small specialty chewing gum marketers, such as the Company. The
Company does not have the capital resources, marketing and distribution
networks, manufacturing facilities, personnel, product name recognition or
advertising budget to introduce chewing gum brands intended to compete with the
multinational chewing gum manufacturers or the large specialty chewing gum
marketers.
FDA and Other Government Regulation. The Company's chewing gum products
manufactured by it or by others for it are subject to regulation by the FDA
including regulations with respect to labeling of products, approval of
ingredients in products, claims made regarding products and disclosure of
product ingredients. In addition, the Federal Trade Commission ("FTC") has
jurisdiction over advertising of the Company's products. Moreover, if the FDA
concludes that any of the Company's chewing gum products are "drugs" under
applicable FDA regulations or otherwise violate FDA rules or regulations, the
FDA may (i) require that manufacture of such products be in accordance with FDA
"good manufacturing practices" (which prescribe specific requirements and
procedures for the manufacture of FDA regulated products), or (ii) restrict or
remove such products from the market. Such action may be taken against the
Company and any entity which manufactures products for the Company. Any OTC
chewing gum products offered by the Company will be subject to marketing
permission and ongoing intensive regulation by the FDA.
On April 1, 1994 the Company received a Warning Letter from the FDA
indicating that the Company's Buzz Gum chewing gum products were mislabeled. In
June 1994 the Company revised its labeling and so notified the FDA. No further
action was taken by the FDA.
7
<PAGE>
The Company's chewing gum manufacturing facilities are subject to
regulation by various governmental agencies, including state and local
licensing, zoning, land use, construction and environmental regulations and
various health, sanitation, safety and fire codes and standards. Suspension of
certain licenses or approvals, due to failure to comply with applicable
regulations or otherwise, could interrupt the Company's manufacturing
operations. Should the Company elect to manufacture OTC chewing gum products,
its manufacturing facilities will also be subject to inspection and regulation
by the FDA.
No Assurance of Scientific Proof. Under FDA and FTC rules, the Company is
required to obtain scientific data to support any health claims it makes
concerning its products, although no pre-clearance or filing is required to
market the products. The Company has obtained such scientific data for all its
products and employs two individuals to gather and organize the scientific data
when required. The Company has not provided nor been requested to provide any
scientific data to the FDA. The marketing of certain of the Company's chewing
gum products involves claims that such products assist in weight loss, alleviate
certain premenstrual symptoms, promote dental hygiene and the like. There can be
no assurance that the scientific data obtained by the Company in support of such
claims will be deemed acceptable by the FDA or FTC, should either agency request
any such data in the future.
No Assurance of Proprietary Protection. The Company considers some of its
chewing gum formulations and processes to be proprietary in nature and relies
upon a combination of non-disclosure agreements, other contractual restrictions
and trade secrecy laws to protect such proprietary information. There can be no
assurance that these steps will be adequate to prevent misappropriation of the
Company's proprietary information or that the Company's competitors will not
independently develop chewing gum formulations and processes that are
substantially equivalent or superior to the Company's. The Company holds certain
trademark and trade name protection for some of its chewing gum products and has
applied for trademark and trade name protection on other products. There can be
no assurance that the Company will be able to successfully defend its trademarks
or trade names against claims from or use by competitors or obtain trademark or
trade name protection for new products.
Risks of New Product Development. The Company may experience difficulties
that could delay or prevent the introduction of new chewing gum products. The
Company may be dependent in the near future upon chewing gum products that are
currently being developed by it. If the Company is unable to develop new chewing
gum products on a timely basis, the Company's business, operating results and
financial condition could be materially adversely affected.
Risks Associated with Expansion. The Company intends to continue to expand
its manufacturing and marketing operations. Expansion will place substantial
strains on the Company's newly retained management and its operational,
accounting and information systems. Successful management of growth will require
the Company to improve its financial controls, operating procedures and
management information systems, and to train, motivate and manage its employees.
8
<PAGE>
The Company's failure to manage growth effectively would have a material adverse
effect on its results of operations and its ability to execute its business
strategy.
Dependence Upon Management Personnel and Executive Officers; Management
Changes. The Company's operations are dependent upon its ability to hire and
retain qualified management personnel and upon the continued services of its
executive officers. The loss of services of any of the Company's executive
officers, whether as a result of death, disability or otherwise, would have a
material adverse effect upon the business of the Company. The Company has
experienced significant management changes in 1995 and 1996 including the
appointment of a new Chief Executive Officer and President in August 1996. The
Company has entered into employment agreements with its current executive
officers and has applied for key man life insurance upon certain of their lives.
Fluctuations in Operating Results. The Company's operating results have
varied and will continue to vary from period to period as a result of the amount
its manufacturing facilities are utilized, the purchasing patterns of consumers,
the timing of new product introductions by the Company and its competitors and
variations in sales and competitive pricing. Unanticipated events, including
delays in developing, manufacturing or marketing new chewing gum products, could
have an adverse effect on the Company's operating results and could also result
in significant fluctuations in operating results in future periods.
Need for Additional Financing. The Company will be required to seek
additional debt or equity financing in the future in order to fund anticipated
expansion of its manufacturing and marketing activities. There can be no
assurance that such additional financing will be available to the Company on
acceptable terms, or at all. Any future equity financing may involve substantial
dilution to the interests of the Company's stockholders.
Product Liability. The Company is subject to significant liability should
use or consumption of its products cause injury, illness or death. Although the
Company carries product liability insurance, there can be no assurance that its
insurance will be adequate to protect the Company against product liability
claims or that insurance coverage will continue to be available to the Company
on reasonable terms.
No Dividends. The Company does not intend to pay any cash dividends on its
Common Stock in the foreseeable future. Earnings, if any, will be used to
finance growth.
Possible Volatility of Securities Prices. The market price of the Common
Stock has been highly volatile and may continue to be volatile in the future.
Factors such as the Company's operating results or public announcements by the
Company or its competitors may have a significant effect on the market price of
the Company's securities. In addition, market prices for securities of many
small capitalization companies have experienced wide fluctuations in response to
variations in quarterly operating results, general economic indicators and other
factors beyond the control of the Company. The registration of the securities
offered hereby could increase the volatility of the Common Stock by increasing
the number of shares of publicly traded Common Stock outstanding.
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Control by Management; Authorization and issuance of Preferred Stock;
Prevention of Changes in Control. The Company's officers and directors own
approximately 20.7% of the issued and outstanding shares of Common Stock
(assuming exercise by them of outstanding stock options and common stock
purchase warrants), and can as a practical matter continue to elect all of the
Company's directors and control the affairs of the Company. The Company's
Certificate of Incorporation authorizes the issuance of up to 1,000,000 shares
of Preferred Stock with such rights and preferences as may be determined from
time to time by the Board of Directors. Accordingly, under the Certificate of
Incorporation, the Board of Directors may, without shareholder approval, issue
Preferred Stock with dividend, liquidation, conversion, voting, redemption or
other rights which could adversely affect the voting power or other rights of
the holders of the Common Stock. The issuance of any shares of Preferred Stock
having rights superior to those of the Common Stock may result in a decrease in
the value or market price of the Common Stock and could be used by the Board of
Directors as a device to prevent a change in control of the Company. The Company
has no other anti-takeover provisions in its Certificate of Incorporation or
Bylaws. Holders of the Preferred Stock may have the right to receive dividends,
certain preferences in liquidation, and conversion rights.
Elimination of Director Liability. The Company's Certificate of
Incorporation contains a provision eliminating a director's liability to the
Company or its stockholders for monetary damages for a breach of fiduciary duty,
except in circumstances involving a financial benefit to a director, the
intentional infliction of harm of the Company or certain wrongful acts, such as
the breach of a director's duty of loyalty or acts or omissions which involve
intentional misconduct or a knowing violation of criminal law. The Company's
Bylaws contain provisions obligating the Company to indemnify its directors and
officers to the fullest extent permitted under Utah law. These provisions could
serve to insulate officers and directors of the Company against liability for
actions which damage the Company or its stockholders.
Maintenance Criteria for NASDAQ Securities. The National Association of
Securities Dealers, Inc. ("the NASD"), which administers NASDAQ, recently made
changes in the criteria for continued NASDAQ eligibility. In order to continue
to be included in NASDAQ, a company must maintain $2 million in total assets, a
$200,000 market value of its public float and $1 million in total capital and
surplus. In addition, continued inclusion requires two market-makers, at least
300 holders of the Common Stock and a minimum bid price of $1 per share;
provided, however, that if a company falls below such minimum bid price, it will
remain eligible for continued inclusion in NASDAQ if the market value of the
public float is at least $1 million and the Company has $2 million in capital
and surplus. The Company's failure to meet these maintenance criteria in the
future may result in the discontinuance of the inclusion of its securities in
NASDAQ. In such event, trading, if any, in the securities may then continue to
be conducted in the non-NASDAQ over-the-counter market in what are commonly
referred to as the electronic bulletin board and the "pink sheets." As a result,
an investor may find it more difficult to dispose of or to obtain accurate
quotations as to the market value of the securities. In addition, the Company
10
<PAGE>
would be subject to a rule promulgated by the Commission that, if the Company
fails to meet criteria set forth in such rule, imposes various sales practice
requirements on broker-dealers who sell securities governed by the rule to
persons other than established customers and accredited investors. For these
types of transactions, the broker-dealer must make a special suitability
determination for the purchaser and have received the purchaser's written
consent to the transactions prior to sale. Consequently, the rule may have an
adverse effect on the ability of broker-dealers to sell the securities, which
may affect the ability of purchasers in the Offering to sell the securities in
the secondary market.
Disclosure Related to Penny Stocks. The Commission has recently adopted
rules that define "penny stock." In the event that any of the Company's
securities are characterized in the future as penny stock, broker-dealers
dealing in the securities will be subject to the disclosure rules for
transactions involving penny stocks which require the broker-dealer among other
things to (i) determine the suitability of purchasers of the securities and
obtain the written consent of purchasers to purchase such securities and (ii)
disclose the best (inside) bid and offer prices for such securities and the
price at which the broker-dealer last purchased or sold the securities. The
additional burdens imposed upon broker-dealers may discourage them from
effecting transactions in penny stocks, which could reduce the liquidity of the
securities offered hereby.
11
<PAGE>
USE OF PROCEEDS
The Company will not receive any part of the proceeds from the sale of
Common Stock by the Selling Stockholders, although it will receive any funds
tendered upon exercise price of the Purchase Warrants (amounting to up to
$4,440,000), which will be added to the Company's working capital. The Company
may also realize the cancellation of up to $2,530,000 of debt if the Convertible
Notes are converted into Common Stock by the holders thereof.
SELLING STOCKHOLDERS
This Prospectus covers the sale of an aggregate of 1,152,632 shares of
Common Stock comprised of (i) 532,632 shares upon exercise of Common Stock
Purchase Warrants ("Purchase Warrants") and (ii) 620,000 shares upon conversion
of subordinated convertible notes ("Convertible Notes") together with 40,000
Common Stock Purchase Warrants (the "Warrants"), each entitling the holder to
purchase one share of Common Stock at $7.50 per share at any time until April
24, 2001. The securities are held by certain selling stockholders (the "Selling
Stockholders").
An aggregate of 460,000 of the Purchase Warrants are estimated by the
Company to be held by over 100 beneficial Purchase Warrantholders who acquired
the securities in the Company's IPO Offering or in the aftermarket and are not
listed below. Set forth below is the name of all other Selling Stockholders
(none of whom are officers, directors or principal stockholders of the Company),
the number of Purchase Warrants, Warrants, Convertible Notes and underlying
shares of Common Stock owned by each Selling Stockholder as of this date, the
number of shares of Common Stock and Warrants which may be offered by the
Selling Stockholders pursuant to this Prospectus, and the number of underlying
shares of Common Stock to be owned by each Selling Stockholder upon completion
of the offering if all underlying shares are sold. All securities are owned
beneficially and of record. The address of each Selling Stockholder is in care
of the Company at 4205 North 7th Avenue, Suite 300, Phoenix, Arizona 85013.
Following exercise of the Warrants or conversion of the Convertible Notes, the
Common Stock listed below may be offered for sale by the Selling Stockholders
from time to time in open market transactions at prevailing market prices and at
customary commission rates. See "Plan of Distribution."
12
<PAGE>
<TABLE>
<CAPTION>
Number of Number of
Securities Securities
Name of Owned Prior Being Number of Securities
Selling Stockholder to the Offering Offered Owned After the Offering
- ------------------- --------------- ---------- ------------------------
<S> <C> <C> <C>
Kensington Securities, Inc. 40,000 Warrants 40,000 Warrants -0-
and 120,000 Shares and 120,000 Shares
underlying the underlying the
Purchase Warrants Purchase Warrants
Myron Ace 52,632 Shares 52,632 -0-
Upon Conversion of
Convertible Note
Eric Butlein 21,053 Shares 21,053 -0-
Upon Conversion of
Convertible Note
Donald Bullerdick 13,158 Shares 13,158 -0-
Upon Conversion of
Convertible Note
Paul J. Creamer 52,632 Shares 52,632 -0-
Upon Conversion of
Convertible Note
Nancy J. and Julie Dhonau 21,053 Shares 21,053 -0-
Upon Conversion of
Convertible Note
Harmon Burns IRA-RQ 78,947 Shares 78,947 -0-
Upon Conversion of
Convertible Note
Jerry Friedman 52,632 Shares 52,632 -0-
Upon Conversion of
Convertible Note
Harvey and July Kleiner 13,158 Shares 13,158 -0-
Upon Conversion of
Convertible Note
Ronald J. Likas 31,579 Shares 31,579 -0-
Upon Conversion of
Convertible Note
Theodore M. Luntz 21,053 Shares 21,053 -0-
Upon Conversion of
Convertible Note
Polaris Holdings, Ltd. 80,000 Shares 80,000 -0-
Upon Conversion of
Convertible Note
13
<PAGE>
Adam Schewitz Trust 5,263 Shares 5,263 -0-
Upon Conversion of
Convertible Note
Max Schewitz Trust 5,263 Shares 5,263 -0-
Upon Conversion of
Convertible Note
L&D&S Schewitz Trust 15,789 Shares 15,789 -0-
Upon Conversion of
Convertible Note
Sarah Schewitz Trust 5,263 Shares 5,263 -0-
Upon Conversion of
Convertible Note
Donald Wall 10,526 Shares 10,526 -0-
Upon Conversion of
Convertible Note
Zippo Manufacturing, 52,632 Shares 52,632 -0-
Zahara, Inc. Upon Conversion of
Convertible Note
</TABLE>
14
<PAGE>
PLAN OF DISTRIBUTION
The Common Stock underlying the Purchase Warrants, Convertible Notes and
Warrants (as well as the Warrants themselves) may be sold from time to time by
the Selling Stockholders in open market transactions, including block trades on
the National Market, in negotiated public or private transactions or in a
combination of any such methods of sale. Alternatively, the Selling Stockholders
may from time to time upon exercise or conversion offer the Common Stock through
underwriters, dealers or agents, who may receive compensation in the form of
underwriting discounts, concessions or commissions from the Selling Stockholders
or the purchasers of the Common Stock or Warrants for whom they may act as
agent. The Selling Stockholders (excluding the holders of the IPO Warrants) and
any such underwriters, dealers or agents that participate in the distribution of
the Common Stock or Warrants may be deemed to be underwriters, and any profit on
the sale of the Common Stock or Warrants by them and any discounts, commissions
or concessions received by any such underwriters, dealers or agents might be
deemed to be underwriting discounts and commissions under the Securities Act. At
the time a particular offer of the Common Stock or Warrants is made, to the
extent required, a Prospectus Supplement will be distributed that will set forth
the aggregate amount of Common Stock or Warrants being offered and the terms of
the offering, including the name or names of any underwriters, dealers or
agents, any discounts, commissions and other items constituting compensation
from the Selling Stockholders and any discounts, commissions or concessions
allowed or reallowed or paid to dealers, including the proposed selling price to
purchasers. The Company will not receive any of the proceeds from the sale by
the Selling Stockholders of the Common Stock offered hereby, although it will
receive any funds tendered upon exercise of the Purchase Warrants, which will be
added to the Company's working capital. All of the distribution expenses of the
offering (other than sales commissions and discounts) will be paid by the
Company.
The Common Stock and Warrants may be sold from time to time in one or more
transactions at a fixed offering price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices.
The Company has agreed to indemnify in certain circumstances the Selling
Stockholders (excluding the holders of the IPO Warrants) and any underwriter,
selling brokers, dealer managers or similar persons who participate in the
distribution of the Common Stock, if any, and certain persons related to the
foregoing persons, against certain liabilities, including liabilities under the
Securities Act. The Selling Stockholders (excluding the holders of the IPO
Warrants) have agreed to indemnify in certain circumstances the Company and
certain persons related to the Company against certain liabilities, including
liabilities under the Securities Act.
In order to comply with certain states' securities laws, if applicable, the
Common Stock and Warrants will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In addition, in certain states the
Common Stock may not be sold unless it has been registered or qualified for sale
in such state or an exemption from registration or qualification is available
and is complied with.
15
<PAGE>
LEGAL MATTERS
Gary A. Agron, Englewood, Colorado, has acted as counsel to the Company in
connection with the offering.
EXPERTS
The financial statements of the Company included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996 which are
incorporated by reference in the Registration Statement of which this Prospectus
forms a part, have been audited by Angell & Deering, independent auditors, as
stated in their report appearing therein, and have been so included herein in
reliance upon such report given upon the authority of that firm as experts in
accounting and auditing.
16
<PAGE>
- ---------------------------------------- -----------------------------------
No dealer, salesman or other person has
been authorized to give any information
or to make any representations other
than contained in this Prospectus in
connection with the Offering described
herein, and if given or made, such
information or representations must not 620,000 Shares of
be relied upon as having been authorized Common Stock Upon Exercise of
by the Company. This Prospectus does not Common Stock Purchase Warrants
constitute an offer to sell, or the 532,632 Shares of
solicitation of an offer to buy, the Common Stock Upon Conversion of
securities offered hereby to any person Subordinated Convertible Notes
in any state or other jurisdiction in 40,000 Common Stock Purchase Warrants
which such offer or solicitation is
unlawful. Neither the delivery of this
Prospectus nor any sale hereunder shall,
under any circumstances, create any
implication that there has been no GUM TECH INTERNATIONAL, INC.
change in the affairs of the Company
since the date hereof.
Page
----
Available Information............ 2
Incorporation of Certain --------------
Documents by Reference......... 2
Business of the Company.......... 4 PROSPECTUS
Risk Factors..................... 6
Use of Proceeds.................. 12 --------------
Selling Stockholders............. 12
Plan of Distribution............. 15
Legal Matters.................... 16 , 1997
Experts.......................... 16 --------
- ----------------------------------------- ----------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution.(1)
SEC Registration Fee............................. $ 3,546
Printing Expenses................................ 3,000
Legal Fees and Expenses.......................... 12,500
Accounting Fees.................................. 3,000
Miscellaneous Expenses........................... 7,954
-------
TOTAL............................................ $30,000
(1) All expenses are estimated except the SEC Registration fee.
ITEM 15. Indemnification of Directors and Officers.
Article 5 of the Registrant's Bylaws provides as follows:
"ARTICLE 5. INDEMNIFICATION OF DIRECTORS,
OFFICERS, AGENTS AND EMPLOYEES
5.1 Indemnification of Directors and Officers. The corporation shall
indemnify any individual made a party to a proceeding because the individual is
or was a director or officer of the corporation, against liability incurred in
the proceeding, but only if such indemnification is both (i) determined
permissible and (ii) authorized, as such are defined in subsection (a) of this
section 5.1 (Such indemnification is further subject to the limitation specified
in subsection 5.1(c).)
5.1(a) Determination and Authorization. The corporation shall not
indemnify a director or officer under this section unless:
(1) a determination has been made in accordance with the procedures
set forth in section 16-10a-906(2) of the Act that the director
or officer met the standard of conduct set forth in subsection
(b) below; and
(2) payment has been authorized in accordance with the procedures set
forth in section 16-10a-906(4) of the Act based on a conclusion
that the expenses are reasonable, the corporation has the
financial ability to make the payment, and the financial
resources of the corporation should be devoted to this use rather
than some other use by the corporation.
II-1
<PAGE>
5.1(b) Standard of Conduct. The individual shall demonstrate that:
(1) his or her conduct was in good faith; and
(2) he or she reasonably believed that his or her conduct was in, or
not opposed to, the corporation's best interests; and
(3) in the case of any criminal proceeding, he or she had no
reasonable cause to believe his or her conduct was unlawful.
5.1(c) No Indemnification in Certain Circumstances. The corporation
shall not indemnify a director or officer under this Section 5.1 of Article 5:
(1) in connection with a proceeding by or in the right of the
corporation in which the director or officer was adjudged liable
to the corporation; or
(2) in connection with any other proceeding charging that the
director or officer derived an improper personal benefit, whether
or not involving action in his or her official capacity, in which
proceeding he or she was adjudged liable on the basis that he or
she derived an improper personal benefit.
5.1(d) Indemnification in Derivative Actions Limited. Indemnification
permitted under this section 5.1 in connection with a proceeding by or in the
right of the corporation is limited to reasonable expenses incurred in
connection with the proceeding.
5.2 Advance of Expenses for Directors and Officer. If a determination is
made, following the procedures of section 16-10a-906(2) of the Act, that the
director or officer has met the following requirements and if an authorization
of payment is made following the procedures and standards set forth in section
16-10a-906(4) of the Act, then the corporation shall pay for or reimburse the
reasonable expenses incurred by a director or officer who is a party to a
proceeding in advance of final disposition of the proceeding, if:
5.2(a) the director or officer furnishes the corporation a written
affirmation of his or her good faith belief that he or she has met the standard
of conduct described in section 5.1;
II-2
<PAGE>
5.2(b) the director or officer furnishes the corporation a written
undertaking, executed personally or on his or her behalf, to repay the advance
if it is ultimately determined that he or she did not meet the standard of
conduct; and
5.2(c) a determination is made that the facts then known to those
making the determination would not preclude indemnification under section 5.1 of
these bylaws or Part 9 of the Act.
5.3 Indemnification of Agents and Employees Who Are Not Directors or
Officers. The board of directors may indemnify and advance expenses to any
employee or agent of the corporation who is not a director or officer of the
corporation to any extent consistent with public policy, as determined by the
general or specific actions of the board of directors.
5.4 Insurance. By action of the board of directors, notwithstanding any
interest of the directors in such action, the corporation may purchase and
maintain liability insurance on behalf of a person who is or was a director,
officer, employee, fiduciary or agent of the corporation, against any liability
asserted against or incurred by such person in that capacity or arising from
such person's status as a director, officer, employee, fiduciary or agent,
whether or not the corporation would have the power to indemnify such person
under the applicable provisions of the Act."
ITEM 16. Exhibits.
-----------
(a) Exhibits
Exhibit No. Title
----------- -----
2.01 Articles of Incorporation of the Registrant (1)
2.02 Bylaws of the Registrant (1)
5.02 Opinion of Gary A. Agron (including consent)
23.08 Consent of Gary A. Agron (See 5.02, above)
23.09 Consent of Angell & Deering
(1) Incorporated by reference to the Registrant's Registration Statement on Form
SB-2, file number 333-870, declared effective on April 24, 1996.
II-3
<PAGE>
ITEM 17. Undertakings.
------------
The Registrant hereby undertakes:
(a) That insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant, 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 of whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
(b) That subject to the terms and conditions of Section 13(a) of the
Securities Exchange Act of 1934, it will file with the Securities and Exchange
Commission such supplementary and periodic information, documents and reports as
may be prescribed by any rule or regulation of the Commission heretofore or
hereafter duly adopted pursuant to authority conferred in that section.
(c) That any post-effective amendment filed will comply with the applicable
forms, rules and regulations of the Commission in effect at the time such
post-effective amendment is filed.
(d) 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 the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
II-4
<PAGE>
(e) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in Phoenix, Arizona, on June 5, 1997.
GUM TECH INTERNATIONAL, INC.
By /s/ Gerald N. Kern
------------------------------
Gerald N. Kern
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Richard Ratcliff Chairman of the Board of Direc- June 5, 1997
- ----------------------- tors and Senior Vice President
Richard Ratcliff
/s/ Gerald N. Kern Chief Executive Officer, June 5, 1997
- ----------------------- President and Director
Gerald N. Kern
/s/ Lester Goldstein Executive Vice President of June 5, 1997
- ----------------------- Operations
Lester Goldstein
/s/ Gary S. Kehoe Chief Operating Officer and June 5, 1997
- ----------------------- Director
Gary S. Kehoe
/s/ Richard Bernstein Vice President of Sales and June 5, 1997
- ----------------------- Marketing and Director
Richard Bernstein
/s/ Jeffrey L. Bouchy Senior Vice President, Secretary, June 5, 1997
- ------------------------ Treasurer, Chief Financial Officer
Jeffrey L. Bouchy (Principal Accounting Officer)
- ------------------------ Director ------------
William G. Meris
- ------------------------ Director ------------
Robert J. Kwait
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Title
- ----------- -----
2.01 Articles of Incorporation of the Registrant (1)
2.02 Bylaws of the Registrant (1)
5.02 Opinion of Gary A. Agron (including consent)
23.08 Consent of Gary A. Agron (See 5.02, above)
23.09 Consent of Angell & Deering
EXHIBIT 5.02
June 5, 1997
Gum Tech International, Inc.
4205 North 7th Avenue, Suite 300
Phoenix, Arizona 85013
Gentlemen:
We have assisted in the preparation and filing by Gum Tech International,
Inc. (the "Company") of a Registration Statement on Form S-3 (the "Registration
Statement") with the Securities and Exchange Commission relating to 1,152,632
shares of no par value Common Stock underlying certain Common Stock Purchase
Warrants (the "Purchase Warrant Stock") and 40,000 Common Stock Purchase
Warrants (the "Warrants").
We have examined such records and documents and have made such examination
of laws as we considered necessary to form a basis for the opinions set forth
herein. In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals, and the
conformity with the originals of all documents submitted to us as copies
thereof.
Based upon and subject to the foregoing, we are of the opinion that the
Purchase Warrant Stock and Warrants have been duly authorized and reserved for
issuance, and such Purchase Warrant Stock and Warrants, when issued in
accordance with the terms thereof, against payment therefor, will be duly and
validly issued, fully paid and nonassessable.
The foregoing assumes that all requisite steps will be taken to comply with
the requirements of the Securities Act of 1933, as amended, and applicable state
laws relating to the offer and sales of securities.
We consent to the filing of a copy of this opinion in the Registration
Statement and the use of our opinion in connection therewith.
Very truly yours,
Gary A. Agron
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-3 of Gum Tech International, Inc., of our report dated
January 24, 1997, except for Note 12 as to which the date is March 6, 1997,
relating to the financial statements of Gum Tech International, Inc. for the
years ended December 31, 1996 and 1995, and the reference to our firm under the
caption "Experts" in the Prospectus contained in said Registration Statement.
Angell & Deering
Certified Public Accountants
Denver, Colorado
June 6, 1997