As filed with the Securities and Exchange Commission on July 9, 1998
Registration No. 333-44591
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------
Amendment No. 2
to
Form SB-2
Registration Statement Under The Securities Act of 1933
RIPE TOUCH GREENHOUSES, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 0100 84-1342754
-------- ---- ----------
(State or Jurisdiction (Primary Standard Industrial (IRS Employer
of Incorporation or Classification Code Number) Identification Number)
Organization)
Stanley Abrams
President
Ripe Touch Greenhouses, Inc.
4871 N. Mesa Drive 4871 N. Mesa Drive
Castle Rock, Colorado 80104 Castle Rock, Colorado 80104
(303) 688-9805 (303) 688-9805
- -------------------------------------- ------------------------------------
(Address and telephone number of (Name, address and telephone number of
principal executive offices and agent for service)
principal place of business)
Copies to:
David H. Lieberman, Esq. Michael Beckman, Esq.
Blau, Kramer, Wactlar & Lieberman, P.C. Beckman, Millman and Sanders, P.C.
100 Jericho Quadrangle, Suite 225 116 John Street
Jericho, New York 11753 New York, New York 10038
(516) 822-4820 (212) 227-6777
(516) 822-4824 Fax (212) 227-1486 Fax
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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 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 [X].
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=============================================================================================================
Proposed Proposed Maximum
Title of Each Class of Amount to be Maximum Offering Aggregate Offering Amount of
Securities to be Registered Registered(1) Price Per Security Price (1) Registration Fee
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par value(2) 825,500 $6.00 $4,953,000 $1,461
- -------------------------------------------------------------------------------------------------------------
Class A Warrants(3) 825,500 $.20 $165,100 $49
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value,
underlying Class A Warrants(4)(9) 825,500 $6.00 $4,953,000 $1,461
- -------------------------------------------------------------------------------------------------------------
Representative's Securities 125,000 $.001 $125 --
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value
contained in Representative's
Securities (6)(9) 125,000 $7.20 $900,000 $266
- -------------------------------------------------------------------------------------------------------------
Class A Warrants contained in
Representative's Securities(6)(9) 125,000 $.26 $32,500 $10
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value
underlying Class A Warrants
contained in Representative's
Securities (7)(9) 125,000 $7.20 $900,000 $266
- -------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value,
owned by Selling
Securityholders (8)(9) 316,500 $6.00 $1,899,000 $560
- -------------------------------------------------------------------------------------------------------------
Total $13,802,725 $4,073 *
- =========== ======
*Previously paid
=============================================================================================================
<FN>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457 under the Securities Act of 1933, as amended.
(2) Includes up to 123,750 shares of Common Stock which may be purchased by the
Representative to cover over-allotments, if any.
(3) Includes up to 123,750 redeemable Common Stock Class A Purchase Warrants
which may be purchased by the Representative to cover over-allotments, if
any.
(4) Reserved for issuance upon exercise of the Common Stock Purchase Warrants.
(5) Issued to the Representative entitling the Representative to purchase one
share of Common Stock ("Representative's Stock Warrants") and one Common
Stock Class A Purchase Warrant ("Representative's Warrants") for each ten
of such securities sold in the offering.
(6) Reserved for issuance upon exercise of Representative's Securities.
(7) Reserved for issuance upon exercise of the Warrants underlying the
Representative's Warrants.
(8) Represents shares of Common Stock offered by Selling Securityholders.
(9) Pursuant to Rule 416, there is also being registered such additional
securities as may become issuable pursuant to the anti-dilution provisions
of the Warrants.
</FN>
</TABLE>
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED JULY 9, 1998
PRELIMINARY PROSPECTUS
RIPE TOUCH GREENHOUSES, INC.
825,000 Units
Ripe Touch Greenhouses, Inc. (the "Company"), a Delaware corporation is
offering 825,000 units (the "Units"). Each Unit consists of one share of common
stock (the "Common Stock"), $.001 par value, and one Redeemable Common Stock
Class A Purchase Warrant (the " Warrants" or "Class A Warrants"). The Common
Stock and the Class A Warrants comprising each Unit will not trade separately
from the Unit until the earlier of ninety (90) days from the date of this
Prospectus or the determination by Millennium Securities Corp. ("Millennium"),
in its sole discretion, to permit such separate trading. At the time such
separate trading is permitted, the Units may be delisted from separate trading
on the Nasdaq Small Cap Stock Market. See "Description of Securities."
The Class A Warrants shall be exercisable commencing on the date of this
Prospectus. Each Class A Warrant entitles the holder to purchase one share of
Common Stock, at $10.00 per share, during the three year period commencing on
the date of this Prospectus. See "Description of Securities." The Warrants are
redeemable by the Company, for $.01 per Warrant, on not less than thirty (30)
nor more than sixty (60) days' written notice if the average closing bid price
per share of Common Stock is at least $12.00 per share during a period of twenty
(20) consecutive trading days ending not earlier than three (3) days on the date
the Warrants are called for redemption. Any redemption of the Warrants during
the one year period commencing on the date of this Prospectus shall require the
consent of Millennium. See "Description of Securities."
Prior to this offering, there has been no public market for the Units,
Common Stock or Warrants. The price of the Units, Common Stock and exercise
price of the Warrants have been determined by negotiations between the Company
and Millennium Securities Corp. For additional information regarding the factors
considered in determining the initial public offering prices, see
"Underwriting".
The Company has applied for quotation of the Units, Common Stock and the
Warrants on the Nasdaq SmallCap Stock Market. There can be no assurance that
these securities will be approved for listing or, if approved, that an active
trading market will develop. See "Risk Factors".
The registration statement of which this Prospectus forms a part also covers
the offering of an aggregate of 316,500 shares of Common Stock (the "Private
Placement Shares") owned by certain private placement investors (collectively
referred to as the "Private Placement Lenders" or the "Selling
Securityholders"). See "Selling Securityholders". The shares of Common Stock
owned by certain of the Selling Security Holders and registered hereunder may
not be sold or transferred for twenty-four (24) months from the date of this
Prospectus, subject to earlier release at the sole discretion of the
Representative. See "Selling Securityholders" and "Description of Securities."
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK AND IMMEDIATE SUBSTANTIAL DILUTION IN THE SECURITIES OFFERED HEREBY. SEE
"RISK FACTORS" ON PAGE 7 AND "DILUTION" PAGE 13.
-------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==================================================================================================
Price to Public Underwriting Discounts and Commissions(1) Proceeds to Company (2)
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Unit $6.20 $.62 $5.58
- --------------------------------------------------------------------------------------------------
Total $5,115,000 $511,500 $4,603,500
==================================================================================================
<PAGE>
<FN>
(1) Does not include additional compensation to be received by the
Representative in the form of (i) a non-accountable expense allowance of
three percent of the gross proceeds of this Offering ($153,450) and (b) a
Security, purchasable at a nominal price, giving it the right to acquire
125,000 Units at an initial exercise price of $8.06 per Unit (the
"Representative's Purchase Option"). In addition, the Company has agreed to
indemnify the Underwriters against certain liabilities, including
liabilities under the Securities Act of 1933, as amended (the "Act") See
"Underwriting."
(2) Before deducting other offering expenses payable by the Company estimated
at $500,000, including the Representative's non-accountable expense
allowance in the amount of $153,450. See "Use of Proceeds" and
"Underwriting".
(3) For the purpose of covering over-allotments, if any, the Company has
granted to the Representative an option, exercisable within forty-five days
of the date hereof, to purchase an additional 123,750 Units, upon the same
terms and conditions as the Units offered hereby. If such over-allotment
option is exercised in full, the Total Price to Public will be $5,882,250,
the Total Underwriting Discount will be $588,225 and the Total Proceeds to
the Company will be $5,294,025. See "Underwriting."
</FN>
</TABLE>
The securities are offered, subject to prior sale, when, as and if accepted
by the Representative named herein and subject to approval of certain legal
matters by counsel for the Representative. It is expected that the delivery of
the certificates representing Common Stock and Class A Warrants will be made on
or about ______, 1998 at the offices of Millennium Securities Corp.
MILLENNIUM SECURITIES CORP.
The date of this Prospectus is , 1998
<PAGE>
[Photographs of the Company's project)
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT
STABILIZE, MAINTAIN , OR OTHERWISE EFFECT THE PRICE OF THE COMMON STOCK AND/OR
THE CLASS A WARRANTS, INCLUDING OVER-ALLOTMENT AND OTHER STABILIZING
TRANSACTIONS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".
The Company intends to furnish its shareholders and holders of Class A
Warrants with annual reports containing audited financial statements, examined
by an independent public accounting firm, and such interim reports as it may
determine to furnish or as may be required by law.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements, including the notes thereto, appearing
elsewhere in this Prospectus. Unless otherwise indicated, the information in
this Prospectus does not give effect to the exercise of the over-allotment
option described under "Underwriting" or the exercise of any other options,
warrants or other convertible securities. All references herein to the Company
include its predecessor unless the context otherwise requires. Except for
historical information contained in this Prospectus, the matters discussed are
forward looking statements that involve risks and uncertainties. Among the
factors that could cause actual results to differ materially are the following:
the effect of business and economic conditions; the impact of competitive
products and pricing; capacity and supply constraints or difficulties; product
development, commercialization or technological difficulties; and the regulatory
and trade environment.
The Company
Ripe Touch Greenhouses, Inc. (the "Company") has been formed to construct
and operate greenhouses in the United States for the production and sale of
hydroponic, naturally vine ripened tomatoes. The first proposed greenhouse will
be located on 200 acres of land in Colorado. This facility will be powered by
three 1,000HP Thermal Combustors to be purchased from an affiliated party using
alternate fuel sources, such as used tires. The combustors will generate the
heat for the greenhouse as well as the steam necessary to produce five megawatts
of electricity. In addition to revenues from the sale of tomatoes, the Company
anticipates receiving revenue from the sale of electricity generated in excess
of the greenhouse requirements and the sale of recyclables created during the
generation of electricity, including carbon black. The construction of the
Colorado greenhouse and power generation facility is intended to be financed
through a construction loan in the amount of $14,000,000 (the "Construction
Loan") with Heritage Financial Corporation and the sale of approximately
$4,103,500 (net) of common stock and warrants in an initial public offering
under applicable federal and state securities laws.
The Colorado project intends to employ the services of several outside
professional groups. The Company has entered into an agreement with Village
Farms of Colorado, Inc. ("Village Farms"), which operates greenhouses throughout
the United States to design and manage the construction of the greenhouse
facility as well as manage, grow and sell the tomatoes. Tri State Power
Generation Company has entered into a thirty (30) year electrical power contract
with the Company wherein they will be purchasing the electricity generated from
the Company's power generation facility. Stone & Webster Engineering Corporation
has completed their due diligence study and will be acting as a consultant to
oversee an engineered procurement contract ("EPC") to guarantee the successful
construction and completion of the greenhouse, both on time and on budget. The
Company is compiling bids from various vendors and anticipates finalizing the
EPC by December 31, 1997. For its initial energy source, the Company has entered
into agreements with (i) El Paso County, Colorado for the supply of
approximately 2,000,000 tires per year and (ii) with Dave Mehring, a tire
broker, to provide an additional 2,000,000 used tires annually to fuel the
Thermal Combustors.
The Company was incorporated under the laws of the State of Delaware on
October 26, 1995. The Company's executive offices are located at 4871 N. Mesa
Drive, Castle Rock, Colorado 80104 and its telephone number is (303) 688-9805.
See "Risk Factors", "Management" and "Certain Transactions" for a
discussion of certain factors that should be considered in evaluating the
Company and its business.
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Securities Offered by the Company(1)
Common Stock . . . . . . . . . . . 825,000 shares
Warrants . . . . . . . . . . . . . 825,000 warrants
Price Per Share of Common Stock . . $6.00
Price Per Warrant . . . . . . . . . $0.20
Shares of Common Stock Outstanding
After Offering (2)(3). . . . . . . 4,663,750 Shares
Use of Proceeds . . . . . . . . . . For repayment of notes issued in private
placements, for construction of the greenhouse,
purchase of machinery, and for working capital
and general corporate purposes. See "Use of
Proceeds".
Proposed Nasdaq Small Cap Stock
Market Symbols (4)
Common Stock. . . . . . . . . . . RTGI
Warrants. . . . . . . . . . . . . RTGIW
Risk Factors. . . . . . . . . . . . Purchase of securities being offered hereby
involves a significant degree of risk, including
intense competition, rapid growth, and dependence
on key personnel, among others. See "Risk
Factors".
- -----------------
<FN>
(1) Does not include (a) 316,500 Private Placement Shares offered by
Selling Securityholders, which securities were acquired in connection
with a private placement financing of the Company from September
through December 1996 and in May through October 1997, and (b)
3,489,750 shares of Common Stock owned by the Investors. See "Selling
Securityholders".
(2) Assumes no exercise of: (i) the Representative's over-allotment option
to purchase up to 123,750 shares of Common Stock and 123,750 Class A
Warrants; (ii) the Class A Warrants offered hereby; (iii) the
Representative's Purchase Option to purchase up to 125,000 shares of
Common Stock and 125,000 Class A Warrants; (iv) the Class A Warrants
purchasable by the Representative upon exercise of the
Representative's Purchase Option; and (v) options issuable under the
Company's 1996 Long Term Incentive Plan. See "Description of
Securities and "Underwriting".
(3) See "Dilution".
(4) Although the Company will be applying for initial quotation of the
Common Stock and Class A Warrants on the Nasdaq SmallCap Market, there
can be no assurance that the Company will be approved for listing
these securities or, if approved, that it will be able to continue to
meet the requirements for continued quotation or that a public trading
market will develop or be sustained. See "Risk Factors - Absence of
Public Market; Negotiated Offering Price".
</FN>
</TABLE>
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following summary financial information concerning the Company, other than
the as adjusted balance sheet data, has been derived from the financial
statements included elsewhere in this Prospectus and should be read in
conjunction with such financial statements and the notes thereto. See "Financial
Statements".
Balance Sheet Data:
<TABLE>
<CAPTION>
September 30, December December
1997 31, 1996 31, 1995
------------ ---------- --------
<S> <C> <C> <C>
Total assets $1,550,634 $1,075,145 $98,224
Current liabilities 2,092,160 1,466,248 257,641
Long-term liabilities net of current
portion 223,930 16,646 -
Stockholders' equity (deficit) (765,456) (407,749) (159,417)
Statement of Operations Data:
Nine Months Fiscal Year Nine Months
Ended Ended Ended
September 30, December December
1997 31, 1996 31, 1995
------------- ----------- -----------
Net sales 132,786 - -
Net loss (716,708) (708,434) (162,417)
Loss per Common Share (.18848) (.20235) (.05414)
Common Shares Outstanding 3,802,500 3,501,000 3,000,000
</TABLE>
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of
risk. Only those persons able to lose their entire investment should purchase
these securities. Prospective investors, prior to making an investment decision,
should carefully read this prospectus and consider, along with other matters
referred to herein, the following risk factors:
Need for Additional Financing; Uncertainty of Initial Public Offering. The
Company anticipates that the proceeds of this offering will enable it to
initiate preliminary activities to prepare for the construction and operation of
greenhouses. However, the Company will require approximately $16,700,000 gross
proceeds to construct and commence operations of its greenhouse and
co-generation facility. In addition to the proceeds of this offering, the
Company has secured an agreement with a lending institution to loan the Company
approximately $15,000,000 the "Construction Loan". The funding of the
Construction Loan would be concurrently with and contingent upon the completion
of this offering, and is dependent, among other things, upon the lending
institution reaching agreement with Stone & Webster Engineering Company or an
alternative suitable party on the construction contract, including the lender's
liquidated damage requirements.
No Operating History; Dependence on Outside Contractors. The Company has no
operating history in the greenhouse or cogeneration industries and will be
dependent on Village Farms to operate the greenhouse. Although the Company has
entered into a ten year lease arrangement with Village Farms, in the event
Village Farms ceases to operate the greenhouse on behalf of the Company, the
Company will be required to hire personnel experienced in the operation,
management and marketing of the greenhouse and there is no assurance that it
will be successful in attracting such personnel. The loss of services of Village
Farms could likely have a material adverse effect on the Company.
Development Stage Company. The Company may be deemed a development stage
business. The Company is subject to all the general risks inherent in, and the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with establishing any new business and operations. The
Company is currently operating with inadequate working capital and is dependent
on the proceeds of this offering, the Construction Loan, and the IPO to commence
and maintain operations. There is no assurance that the Company, even with such
funds, will successfully commence operations or maintain operations at a level
sufficient for an investor to obtain a return on the shares of Common Stock or
Class A Warrants.
Price Fluctuations in U.S. Market for Tomatoes. The price of tomatoes
fluctuates from season to season based on supply and demand. The wholesale price
of homegrown tomatoes is substantially higher in the fall and winter months when
there is a shortage of premium tomatoes. There is no assurance that the U.S.
market will provide sufficient revenue and earnings to permit on-going
operations or that the Company will be able to successfully penetrate existing
non-U.S. markets for these products. There is no assurance the Company will ever
generate sufficient revenue to meet on-going cash requirements.
Availability of Raw Materials for Providing Heat and Electricity. The
primary raw materials anticipated by the Company to be used in its thermal
<PAGE>
combustion operations are previously used rubber tires and water. The Company
believes that suitable previously used rubber tires are readily available from a
wide variety of sources, including El Paso County, Colorado, who has agreed to
provide 2,000,000 tires per year and a tire broker who has agreed to provide the
approximately 2,000,000 tires needed each year to operate the Thermal Combustor.
While the Company does not anticipate any difficulties in obtaining sufficient
quantities of used rubber tires to be used in its operations, no assurance can
be given in this regard. In the event that sufficient quantities of rubber tires
are not available, or if the prices thereof become uneconomical and in the
further event that the Company does not find suitable alternative fuel sources,
the Company's business operations and financial condition would be materially
adversely affected. See "Business-Raw Materials".
Default under Existing Note Obligations. The Company's outstanding note
obligations with respect to its initial bridge financing in the sum of
$1,062,500 were due and payable on September 30, 1997. The Company has requested
in writing that the noteholders extend the due date to January 31, 1998. To
date, noteholders owing $675,000 principal amount of the notes have so extended
the due date. In the event the remaining noteholders do not extend the due date
and demand payment, the Company does not have sufficient funds to make such
payment. The failure to make payment, if payment is demanded by noteholders,
could substantially impair the ability of the Company to proceed with a public
offering.
Competition. There are a limited number of hydroponic greenhouse tomatoes
grown in the United States, there are numerous farmers and/or distributors of
tomatoes. The tomato market is quite mature, and is serviced by a large number
of competitors, several of which dominate the marketplace. The Company
anticipates that its primary competition will be from greenhouse growers in
California and Florida where growing conditions are favorable and whose growers
have access to extensive highway systems and inexpensive fuel. Many of these
competitors, which include Campbell's Soup, Archer Daniels Midland and
Weyerhauser have been in existence for many years, have extensive marketing
budgets, established market shares, wide name recognition and existing
franchise, dealer or other distribution networks and have greater financial,
personnel and administrative resources than the Company. The Company also
anticipates competition from premium tomato growers in Holland and Israel which
are imported for domestic use. If the Company is successful, there is no
assurance that other U.S. or foreign tomato growers will not seek to engage in
the growing of hydroponic greenhouse tomatoes. While the Company believes that
the primary area of competition in its industry is quality, and that it competes
favorably in this regard, there is no assurance that the Company will be able to
compete successfully against established producers or any new entrants into its
industry or that consumers will differentiate between the Company's tomatoes and
its competitors tomatoes. See "Business-Competition".
No Assurance of Profitability. The Company is non-operational at the
present time. Although the Company believes that its operations will be
successful, and that the Company will become profitable, no assurance can be
given in this regard.
Environmental and Other Governmental Regulation. As a producer of power,
the Company is subject to federal, state and local rules and regulations. The
Company's commencement of operations will be dependent upon it obtaining all
necessary permits and approvals from federal, state and local governmental
authorities. Although the Company believes it has all requisite permits and does
not anticipate any difficulty or delays in obtaining any future necessary
permits or approvals, no assurance can be given in this regard. If the Company
were to experience significant delays in or denials of any necessary permits or
approvals, the commencement and maintenance of the Company's proposed greenhouse
operations could be delayed or suspended, and its business and results of
operations would be materially adversely affected. While the Company believes
that its combustion operations will comply with all applicable environmental
laws and regulations, no assurance can be given that compliance with
<PAGE>
environmental laws, regulations or other restrictions, including any new laws or
regulations, will not impose additional costs on the Company which could
adversely affect its financial performance and results of operations. See
"Business-Government Regulation".
Discretion In Application of Proceeds. Management of the Company has
certain discretion over the use and expenditure of a significant portion of
proceeds of this offering. The Company intends to use the funds raised in this
offering for the construction of the greenhouse, construction of the
cogenerator, repayment of indebtedness, and for working capital and general
corporate purposes. Although the Company does not contemplate changes in the
allocated use of proceeds, to the extent the Company finds changes are necessary
or appropriate in order to address changed circumstances and/or opportunities,
management may find it necessary to adjust the use of the Company's capital,
including the proceeds of this offering. As a result of the foregoing, the
success of the Company may be substantially dependent upon the discretion and
judgment of the management of the Company with respect to the application and
allocation of the net proceeds hereof. See "Use of Proceeds".
Possible Need for Additional Financing. The Company believes that its
existing capital resources, together with the proceeds of this offering and the
Construction Loan, will enable it to maintain its operations and working capital
requirements for at least the next twelve (12) months, without taking into
account any internally generated funds from operations. However, the Company may
require additional funds thereafter to maintain or expand its operations.
Adequate funds for this purpose on terms favorable to the Company, whether
through equity financing, debt financing, or other sources, may not be available
when needed. The Company's inability to obtain adequate financing could have a
material adverse effect on the Company.
No Credit Facility. The Company has no credit facility or other access to
debt financing, other than the Construction Loan. Accordingly, the Company's
business could be materially adversely affected in the event that it has a need
for funds that it may not be able to obtain through a debt or equity financing.
Product Liability. The Company's business exposes it to potential liability
which is inherent in the marketing and distribution of food products. The
Company maintains $5,000,000 of general and personal injury insurance. If any
product liability claim is made and sustained against the Company and is not
covered by insurance, the Company's business and prospects could be materially
adversely affected. See "Business-Product Liability".
Control by Present Stockholders. As of the date of this Prospectus, the
current officers and directors (the "Management Stockholders") and 5%
stockholders own a majority of the outstanding shares of Common Stock and, after
completion of this offering, will own 60% of the outstanding shares of Common
Stock. Accordingly, although there are no relationships or agreements between
the non-officer 5% stockholders and the Company, these stockholders will be able
to significantly influence the election of the Company's directors, any increase
in the Company's authorized and outstanding capital stock and the other policies
of the Company. See "Principal Stockholders".
Dependence on Key Personnel. The Company's business expansion plans are
dependent in part upon the abilities of Stanley Abrams, its President, and James
Woodley, its Secretary and Treasurer. Although each of Mr. Abrams and Mr.
Woodley have entered into employment agreements with the Company, there can be
no assurance that they will remain in the employ of or continue to provide
services to the Company. The loss of the services of such persons could have an
adverse effect on the Company. The Company maintains a $1,000,000 life insurance
policy with respect to the life of Stanley Abrams, the proceeds of which are
payable to the Company. See "Management - Employment Agreements".
<PAGE>
Absence of Public Market; Negotiated Offering Price. Prior to the offering,
there has been no market for the Common Stock or Class A Warrants. Although the
Company anticipates that upon completion of this offering, the Common Stock and
Class A Warrants will be approved for quotation on the Nasdaq SmallCap Market,
there can be no assurance that these securities will be approved for quotation
or, if approved, that an active market will develop for the Common Stock or the
Class A Warrants or, if developed, that it can be maintained. In addition, the
Common Stock and Class A Warrants will be separately traded immediately. The
initial public offering price of the Common Stock and the exercise price of the
Class A Warrants have been established by negotiations between the Company and
the Representative and will not necessarily bear any relationship to the
Company's book value, assets, past operating results, financial condition, or
other established criteria of value. See "Underwriting".
Dependence of Warrant Holders on Maintenance of Current Registration
Statement; Possible Loss of Value of Warrants. In order for holders of the Class
A Warrants to exercise such warrants there must be a current registration
statement (or an exemption therefrom) in effect with the Securities and Exchange
Commission ("Commission") and with the various state securities authorities in
the States where warrant holders reside. The Company has undertaken to use its
best efforts to keep (and intends to keep) the registration statement effective
with respect to the Class A Warrants for as long as the Class A Warrants remain
exercisable. However, maintenance of an effective registration statement will
subject the Company to substantial continuing expenses for legal and accounting
fees, and there can be no assurance that the Company will be able to maintain a
current registration statement through the period during which the Class A
Warrants remain exercisable. The Class A Warrants may become unexercisable and
deprived of value by the Company's inability to maintain an effective
registration statement (or an exemption therefrom) with respect to the
underlying shares or by the non-qualification of the underlying shares in the
jurisdiction of such holder's residence. See "Description of Securities -- Class
A Warrants".
Potential Adverse Effect of Redemption of Class A Warrants. The Class A
Warrants may be redeemed by the Company at a price of $.01 per warrant, at any
time, on not less than thirty (30) days' nor more than sixty (60) days' prior
written notice provided that the closing bid price of the Common Stock for all
twenty (20) consecutive trading days ending within three (3) days of the notice
of redemption has equaled or exceeded $12.00 and further provided that any
redemption during the one year period commencing on the date of this Prospectus
shall require the consent of the Representative. Redemption of the Class A
Warrants could force the warrant holders to exercise the warrants at a time when
it may be disadvantageous for the holders to do so or to sell the Class A
Warrants at their then current market price when the holders might otherwise
wish to hold the Class A Warrants for possible appreciation. Any holders who do
not exercise warrants prior to their expiration or redemption, as the case may
be, will forfeit the right to purchase the shares of Common Stock underlying the
Class A Warrants. See "Description of Securities -- Class A Warrants".
Substantial and Immediate Dilution. Purchasers of the Common Stock offered
hereby will incur immediate substantial dilution in the net tangible book value
of approximately $5.44 per share. The present shareholders of the Company have
acquired their respective equity interests at a cost substantially below the
offering price. Accordingly, the public investors will bear a disproportionate
risk of loss per share. See "Dilution".
<PAGE>
No Dividends on Common Stock. The Company has never declared or paid any
dividends on its shares of Common Stock. The Company intends to utilize its
earnings, if any, to facilitate the expansion of its business for the
foreseeable future. Accordingly, it has no intention of declaring or paying
dividends on its Common Stock for the foreseeable future. See "Dividend Policy".
Possible Dilutive Effect of the Issuance of Substantial Amounts of
Additional Shares Without Stockholder Approval. After this offering, the Company
will have an aggregate of approximately 3,761,250 shares of Common Stock
authorized but unissued and not reserved for specific purposes including
1,575,000 shares of Common Stock unissued but reserved for issuance pursuant to
(i) exercise of the Class A Warrants, (ii) the Company's Long Term Incentive
Plan, (iii) exercise of the Representative's Purchase Option, and (v) exercise
of the Representative's over-allotment option. All of such shares may be issued
without any action or approval by the Company's shareholders. Any shares issued
would further dilute the percentage ownership of the Company held by the
investors in this offering. The terms on which the Company could obtain
additional capital during the life of these securities may be adversely affected
because of such potential dilution and because the holders thereof might be
expected to convert or exercise them if the market price of the Common Stock
exceeds their conversion or exercise price. See "Description of Securities",
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources" and "Underwriting".
Potential Anti-Takeover Effects of Delaware Law and Certificate of
Incorporation; Possible Issuances of Preferred Stock. Certain provisions of
Delaware law and the Company's Certificate of Incorporation and By-laws could
make more difficult a merger, tender offer or proxy contest involving the
Company, even if such events could be beneficial to the interests of the
shareholders. These provisions include Section 203 of the Delaware General
Corporation Law, the classification of the Company's Board of Directors into
three classes and the requirement that 66 2/3% of the stockholders of the
Company entitled to vote thereon approve certain transactions, including mergers
and sales or transfers of all or substantially all the assets of the Company.
Such provisions could limit the price that certain investors might be willing to
pay in the future for shares of the Company's Common Stock or preferred stock.
In addition, the Company's Certificate of Incorporation allows for the issuance
of up to 500,000 shares of preferred stock by the Board of Directors without
shareholder approval on such terms as the Board may determine. The rights of the
holders of Common Stock and preferred stock will be subject to, and may be
adversely affected by, the rights of the holders of additional or other classes
of preferred stock that may be issued in the future. Moreover, although the
ability to issue other classes of preferred stock may provide flexibility in
connection with possible acquisitions and other corporate purposes, such
issuance may make it more difficult for a third party to acquire, or may
discourage a third party from acquiring, a majority of the voting stock of the
Company. The Company has not issued any shares of preferred stock and has no
current plans to issue any shares of any classes of capital stock other than as
described herein. See "Description of Capital Stock".
Limitations on Personal Liability of Directors. The Company's Certificate of
Incorporation and By-laws contain provisions which reduce the potential personal
liability of directors for certain monetary damages and provide for indemnity of
directors and other persons. The Company is unaware of any pending or threatened
litigation against the Company or its directors that would result in any
liability for which such director would seek indemnification or similar
protection. The Company has entered into Indemnification Agreements with certain
of its officers and directors. The Indemnification Agreements provide for
reimbursement for all direct and indirect costs of any type or nature whatsoever
(including attorneys' fees and related disbursements) actually and reasonably
incurred in connection with either the investigation, defense or appeal of a
Proceeding, (as defined) including amounts paid in settlement by or on behalf of
an indemnitee thereunder.
<PAGE>
Penny Stock Regulation. The Commission has adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks." Penny
stocks generally are equity securities with a price of less than $5.00 (other
than securities registered on certain national securities exchanges or quoted on
the NASDAQ system, provided that current price and volume information with
respect to transactions in such securities is provided by the exchange or
system). The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized
risk disclosure document prepared by the Securities and Exchange Commission that
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with other
information. In addition, the penny stock rules require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the
broker-dealer must make a special written determination that the penny stock is
a suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction. These disclosure requirements may have the effect
of reducing the level of trading activity in the secondary market for a stock
that becomes subject to the penny stock rules. If the Company's Common Stock
becomes subject to the penny stock rules, investors in this offering may find it
more difficult to sell their Common Stock in the event it becomes otherwise
freely resalable.
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Common Stock and Class
A Warrants offered hereby (after deducting underwriting discounts and estimated
offering expenses) are estimated to be $4,103,500 ($5,382,250 if the
Representative's over-allotment option is exercised in full). These proceeds,
together with the $15,000,000 net proceeds to be received from Heritage
Financial Corporation, and excluding the exercise price of any Warrants, are
intended to be utilized substantially as follows:
<TABLE>
<CAPTION>
Approximate Approximate
Application of Proceeds Amount Percentage
----------------------- ----------- -----------
<S> <C> <C>
Working capital and general corporate purposes . $3,803,500 20.0%
Greenhouse Construction. . . . . . . . . . . . . $4,800,000 25.1%
Cogenerator Construction . . . . . . . . . . . . $6,800,000 35.6%
Miscellaneous expenses related to Greenhouse
and cogenerator construction. . . . . . . . . $1,900,000 9.9%
Repayment of Indebtedness. . . . . . . . . . . . $1,800,000 9.4%
----------- ------
$19,103,500 100.0%
</TABLE>
Miscellaneous expenses related to greenhouse and cogenerator construction
include professional fees such as engineering, financial and legal costs of
approximately $165,000, construction loan interest of approximately $700,000,
consulting fees of approximately $320,000 and additional working capital of
approximately $715,000.
The amounts set forth above, other than for repayment of Notes and
repayment of indebtedness, are estimates. The actual amount expended to finance
any category of expenses may be increased or decreased by the Company's Board of
Directors, in its discretion, if required by the operating experience of the
Company or if a reapportionment or redirection of funds, including acquisitions
consistent with the business strategy of the Company, is deemed to be in the
best interest of the Company. The Company has no specific plans, arrangements,
understandings or commitments with respect to any such acquisition at the
present time. See "Risk Factors -- Discretion in Application of Proceeds".
If the Representative exercises the over-allotment option in full, the
Company will realize additional net proceeds of approximately $1,278,750, which
will be used for working capital and general corporate purposes.
The net proceeds to the Company from this offering, together with the
proceeds from the Construction Loan, are expected to be adequate to fund the
Company's working capital needs for at least the next twelve (12) months. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Liquidity and Capital Resources". Pending use of the proceeds from
this offering as set forth above, the Company may invest all or a portion of
such proceeds in short-term, interest-bearing securities, U.S. Government
securities, money market investments and short-term, interest-bearing deposits
in major banks.
<PAGE>
DILUTION
As of September 30, 1997, the net negative tangible book value of the
Company was ($827,927) or ($.22) per share of Common Stock. Net negative
tangible book value per share represents the amount the liabilities exceed the
amount of total tangible assets divided by 3,838,750 , the number of shares of
Common Stock outstanding on September 30, 1997. See "Capitalization". Thus, as
of September 30, 1997, the net negative tangible book value per share of Common
Stock owned by the Company's current stockholders would have increased by
$4,400,050 or $0.98 per share after giving effect to this offering without any
additional investment on their part and the purchasers of the Units offered
hereby would have incurred an immediate dilution of $5.44 per share from the
offering price. The following table illustrates this per share dilution:
<TABLE>
<S> <C> <C>
Public Offering price per share of
Common Stock Offered hereby (1) . . . . . . . . . . . . . $6.20
Net tangible book value per share before offering. . . . . . (.22)
Increase per share attributable to new investors. . . . . .98
---
Adjusted net tangible book value per share
after this offering. . . . . . . . . . . . . . . . . . . . $0.76
-----
Dilution per share to new investors. . . . . . $5.44
=====
</TABLE>
The following table summarizes the relative investments of investors
pursuant to this offering and the current shareholders of the Company:
<TABLE>
<CAPTION>
Current Public
Stockholders Investors Total (2)
------------ --------- ---------
<S> <C> <C> <C>
Number of Shares of Common Stock Purchased . . . . . 3,838,750 825,000 4,663,750
Percentage of Outstanding Common Stock After
Offering. . . . . . . . . . . . . . . . . . . . 82% 18% 100%
Gross Consideration Paid . . . . . . . . . . . . . . 863,000 5,115,000 5,978,000
Percentage of Consideration Paid . . . . . . . . . . 14% 86% 100%
Average Consideration Per Share of Common Stock. . . $.22 $6.20 $1.69
</TABLE>
If the over-allotment option is exercised in full, the new Common Stock
investors will have paid $5,882,250 and will hold 948,750 shares of Common
Stock, representing 87% of the total consideration and 20% of the total number
of outstanding shares of Common Stock. See "Description of Securities" and
"Underwriting".
- --------
(1) Assumes no exercise of (i) the Representative's over-allotment option to
purchase up to 123,750 shares of Common Stock; (ii) the Class A Warrants
offered hereby; (iii) the Representative's Purchase Option to purchase up
to 125,000 shares of Common Stock; (iv) the Class A Warrants purchasable by
the Representative upon exercise of the Representative's Purchase Option;
or (v) any options to purchase shares of Common Stock issuable under the
Company's 1996 Incentive Plan. See "Description of Securities",
"Management" and "Underwriting".
<PAGE>
CAPITALIZATION
The following table sets forth the cash and capitalization of the Company
as of September 30, 1997 and the as adjusted capitalization which gives effect
to the consummation of this offering as if it occurred on September 30, 1997.
This table should be read in conjunction with the financial statements and
related notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
Before After
Offering Offering (1)
---------- ------------
DEBT:
<S> <C> <C>
Notes payable (including
short-term portion). . . . . . . . . . . . . $1,838,639 $1,838,639
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred Stock, $.01 par value; 500,000 . . . - -
shares authorized; none issued and outstanding
and none issued and outstanding as adjusted
Common Stock, $.001 par value; 10,000,000
shares authorized;3,838,750 issued and
outstanding; 4,663,750 shares issued
and outstanding, as adjusted . . . . . . . . 3,839 4,664
Paid-in Capital. . . . . . . . . . . . . . . . 854,514 5,247,314
Retained Earnings (Deficit). . . . . . . . . . (1,617,559) (1,617,559)
Total Stockholders' Equity (Deficit) . . . . . (759,206) 3,634,419
Total Debt and Stockholders' Equity
(Deficiency) . . . . . . . . . . . . . . . . 1,079,433 7,763,808
- -----------
<FN>
(1) Assumes no exercise of: (i) the Representative's over-allotment option
to purchase up to 123,750 shares of Common Stock and 123,750 Class A
Warrants; (ii) the Class A Warrants offered hereby; (iii) the
Representative's Purchase Option to purchase up to 125,000 shares of
Common Stock and 125,000 Class A Warrants; (iv) the Class A Warrants
purchasable by the Representative upon exercise of the Representative's
Purchase Option; and (v) options issuable under the Company's 1996 Long
Term Incentive Plan. See "Description of Securities and "Underwriting".
</FN>
</TABLE>
<PAGE>
DIVIDEND POLICY
Holders of the Company's Common Stock are entitled to dividends when, as and
if declared by the Board of Directors out of funds legally available therefor.
The Company has never declared or paid any cash dividends and currently does not
intend to pay cash dividends in the foreseeable future on the shares of Common
Stock. The Company intends to retain earnings, if any, to finance the
development and expansion of its business. Payment of future dividends on the
Common Stock will be subject to the discretion of the Board of Directors and
will be contingent upon future earnings, if any, the Company's financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends on the Common Stock will
ever be paid.
<PAGE>
SELECTED FINANCIAL DATA
The following unaudited selected financial information concerning the
Company, other than the as adjusted balance sheet and statement of operations
data, has been derived from the financial statements included elsewhere in this
Prospectus and should be read in conjunction with such financial statements and
the notes thereto. See "Financial Statements".
The selected financial data should be read in conjunction with and is
qualified in its entirety by, the Company's financial statements, related notes
and other financial information included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
Balance Sheet Data:
September 30, 1997
------------------
<S> <C>
Total assets $1,550,634
Current liabilities 2,092,160
Long-term liabilities net of current portion 223,930
Stockholders' equity (deficit) (765,456)
Statement of Operations Data:
Inception to
September 30, 1997
------------------
Net sales 132,786
Net loss (1,587,559)
Loss per Common Share (.43)
Common Shares Outstanding 3,802,000
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the historical
financial statements of the Company included elsewhere in this Prospectus.
Business Summary
- ----------------
The Company is a Delaware corporation organized in October 1995. The
Company has been formed to construct and operate greenhouses in the United
States for the production and sale of hydroponic, naturally vine ripened
tomatoes. The first proposed greenhouse will be located on 200 acres of land in
Colorado and will be powered by three 1,000 HP Thermal Combustors using
alternate fuel sources, such as used tires.
The Company has signed a lease agreement with Village Farms, a Delaware
corporation, to lease the twenty acre facility. Village Farms will make both a
fixed and variable payment to the Company under the lease agreement. The fixed
payment will be made monthly, while the variable payment will be made on a
quarterly basis. Under the lease, the Company will provide utilities to the
greenhouse, heat and electric, at no charge to Village Farms, and Village Farms
will provide all personnel, operating capital, growing expertise, management
expertise, and marketing expertise. The Village Farms brand name is owned by
Agro Power Development, Inc. of New Jersey. They currently have a market share
of over 200 acres and approximately 100 million pounds of production for 1998.
The Company has also entered into a thirty year contract with Tri-State
Power Generation Company to purchase the electricity generated by the Company's
power generation facility.
For its ongoing source, the Company has entered into agreements with (i) El
Paso County, Colorado for the supply of approximately 2,000,000 tires per year;
and (ii) Dave Mehring, a tire broker, to provide an additional 2,000,000 used
tires annually to fuel the Thermal Combustor.
The Company plans to finance the facility through the proceeds of this
offering and through the sale of approximately $15,000,000 of ten year notes to
a national lending institution. The Company has received an initial commitment
letter subject to certain terms and conditions, including the successful
completion of the public offering of securities contemplated hereby. The Company
has also employed the services of Stone & Webster Engineering Corporation to act
as a consultant in providing an Engineered Procurement contract (EPC) to
guarantee the successful construction and completion of the project, both on
time and on budget.
Liquidity and Capital Resources
- -------------------------------
In the Company's brief history, it has experienced substantial cash flow
difficulties since it has been required to expend monies in preparation of the
construction of the greenhouse and cogenerator facility. To date the Company has
expended $600,893 for such purpose. At December 31, 1995, December 31, 1996 and
September 30, 1997 respectively, the Company's current liabilities of $257,641;
$1,466,248 and $2,092,160, substantially exceeded its current assets of $1,855,
$91,516 and $287,210 and capital deficits of $159,417; $407,749 and $765,456.
Financing activities have generated $1,870,853 from inception through
September 30, 1997 from the issuance of common stock, proceeds from bridge loans
and net loans from stockholders. See "Risk Factors - Default under Existing Note
Obligations."
<PAGE>
The Company believes that the proceeds received from this offering,
together with its $15,000,000 construction loan, will be sufficient to construct
and operate a greenhouse and cogenerator plant until such time as the Company
achieves internally generated funds.
Results of Operations
- ---------------------
Revenue Recognition. Revenues from operations are recognized as billed to
The Tire Broker and El Paso County for tire tipping fees. At this time there are
no revenues from the power purchase agreement with Tri-State Power Generation
Company or from the sale of tomatoes. These revenues will be recognized from
metered billings in the electrical contract and from bills of lading when
tomatoes are shipped from the site.
Nine Months Ended September 30, 1997. Revenues received from tire tipping
fees totaled $132,786 while the cost of shredding these tires totaled $156,238,
leaving a net loss of ($23,452). Selling, General and Administrative costs
consisted of $284,866 and interest cost totaled $408,390, leaving a net loss of
$716,708 for the nine month period.
The Company's activities since its inception in October, 1995 have been
developmental in that it has been necessary to accomplish certain objectives to
prepare the facility for construction. More specifically, it has obtained the
necessary permits required to permit operations and retained Stone and Webster
to determine that the Company had a viable project. The Company purchased the
land upon which the facility is to be constructed and has obtained water well
permits, air permits, certificate of designation, special use permits and
rezoning of the land.
These activities have taken approximately nine months to accomplish and
certain activities would have been farther along except for funding. The
engineering accomplishments are vast, and the EPC contract should be completed
by the end of November, 1997. This EPC contract will delineate the entire
project with a firm price and time line for completion.
The Company had operating expenses for the period of inception through
December 31, 1996 and September 30, 1997 of $714,708 and $441,104 and net
interest expenses of $156,143 and $408,390 with a net loss of $870,851 and
$716,708 for the period.
Seasonality
- -----------
Until the tomato production goes into effect, there will be no effect on
the Company by seasonality or weather conditions. At such time, the Company will
be affected to the extent that its tomatoes will sell for higher prices in the
winter months than in the summer.
Inflation
- ---------
Inflation has not been a material factor in the Company's operations to
date.
<PAGE>
BUSINESS
General
Ripe Touch Greenhouses, Inc. (the "Company") has been formed to construct
and operate greenhouses in the United States for the production and sale of
hydroponic, naturally vine ripened tomatoes. The first proposed greenhouse is to
be located on 200 acres of land in Colorado. This facility will be powered by
three 1,000HP Thermal Combustors to be purchased from an affiliated party using
alternate fuel sources, such as used tires. The combustors will generate the
heat for the greenhouse as well as the steam necessary to produce five megawatts
of electricity. In addition to revenues from the sale of tomatoes, the Company
anticipates receiving revenue from the sale of electricity generated in excess
of the greenhouse requirements and the sale of recyclables created during the
generation of electricity, including carbon black. The construction of the
Colorado greenhouse and power generation facility is intended to be financed
through a construction loan in the amount of $15,000,000 (the "Construction
Loan") with Heritage Financial Corporation and the sale of approximately
$4,103,500 (net) of common stock and warrants in an initial public offering
under applicable federal and state securities laws.
The Colorado project intends to employ the services of several outside
professional groups. The Company has entered into an agreement with Village
Farms, which operates greenhouses throughout the United States, to design and
manage the construction of the greenhouse facility as well as manage, grow and
sell the tomatoes. Tri State Power Generation Company has entered into a thirty
(30) year electrical power contract with the Company wherein they will be
purchasing the electricity generated from the Company's power generation
facility. Stone & Webster Engineering Corporation has completed their due
diligence study and will be acting as a consultant to oversee an engineered
procurement contract ("EPC") to guarantee the successful construction and
completion of the greenhouse, both on time and on budget. The Company is
compiling bids from various vendors and anticipates finalizing the EPC by
December 31, 1997. For its initial energy source, the Company has entered into
agreements with (i) El Paso County, Colorado for the supply of approximately
2,000,000 tires per year and (ii) Dave Mehring, a tire broker, to provide an
additional 2,000,000 used tires annually to fuel the Thermal Combustors.
The Company was incorporated under the laws of the State of Delaware on
October 26, 1995. The Company's executive offices are located at 4871 N. Mesa
Drive, Castle Rock, Colorado 80104 and its telephone number is (303) 688-9805.
Industry Overview
The United States greenhouse industry is growing rapidly but it is still
relatively small when compared to the greenhouse industry in many parts of
Europe and Asia. This is, in part, due to the growing conditions in California
and Florida which, coupled with an extensive highway system and inexpensive
fuel, have provided fresh crops at reasonable prices in the United States.
Based on industry reports, the entire acreage devoted to greenhouse
vegetable production in the United States is approximately 900 acres. By
comparison, in the Netherlands, over 23,000 total acres are dedicated to
greenhouse production with 13,500 of such acres devoted to vegetable crops.
England and Wales have 2,960 acres dedicated to greenhouse production of
vegetables, and Canada 710 acres. In the United States, dietary trends away from
the consumption of red meat and toward the consumption of fresh vegetables has
caused the consumption of fresh vegetables to rise considerably over the past
ten (10) years with a willingness to pay premium prices for premium products, of
<PAGE>
which in the opinion of the Company vine-ripened tomatoes are a part. Thus, the
premium tomato market, as a specialty niche within the 40 billion dollar
supermarket vegetable business, appears to have significant growth potential.
National Perspective
In the United States, approximately $40 billion of fresh produce is sold
each year at the retail level. This does not include production for the food
service industry or processed foods. Four east coast metropolitan areas
(Baltimore/D.C., Boston/Providence, New York and Philadelphia) sell
approximately $3.72 billion in produce through supermarket chains, including
approximately $170,000,000 in tomatoes.
Most major supermarket chains have sold greenhouse grown tomatoes, lettuce,
cucumbers and herbs continuously during the past ten years. More recently, major
food service companies such as Sysco, P.Y.A., Monarch and Marriott have used
greenhouse-grown vegetables. When McDonald's started their salad program, they
looked at greenhouse production to supplement their West Coast buying.
Based on industry reports, currently there are fewer than 100 acres of
greenhouse tomato production located between the mid-Atlantic states through New
England. The proximity to the populated markets of the northeast corridor makes
the east coast corridor very attractive as a distribution center.
Given location, climactic conditions, population centers and consumer
trends of the major marketing areas, the Company views tomatoes as the most
appropriate crop for large scale greenhouse production in most areas. The
Company believes that an important selling feature with a food chain buyer is
high quality vine ripened tomatoes during the off season. In the northeast area,
local field production would be a competing factor only six to eight weeks
during the late summer months and it is the Company's opinion that once
reliable, year-round production is demonstrated, local produce buyers will
forego the field product to maintain a year-round supply.
Field Competition
In terms of pounds produced, field-grown tomatoes represent over 95% of all
tomatoes consumed in the United States. For most of the year, the field-grown
tomato is the green variety sprayed with gases, shipped from Florida,
California, or Mexico. Gassing the tomatoes causes them to ripen; however, the
Company believes that the flavor of a gassed tomato does not compare favorably
with that of a vine ripened tomato. During all but six to eight weeks of the
year, most regions of the United States do not have vine-ripened tomatoes
available on the shelf unless it is a greenhouse grown product.
In terms of price differential, the greenhouse tomato has historically
called upon the consumer to pay a premium price for its product. During the past
eight to ten years, the price differential between the two tomato varieties has
been narrowed since (a) the U.S. greenhouse grower is consistently becoming a
better producer with better quality and increased yields per square foot through
advanced labor management techniques, and (b) many retailers have shown a
willingness to keep the premium product on the shelf during the winter months
with a reduced markup.
In summary, superior appearance and taste, coupled with a shrinking price
differential between the greenhouse tomato and the gassed-green tomato, make the
field grown produce less of a competitor today than approximately five years
ago.
<PAGE>
Import Competition
Of the four billion pounds of tomatoes consumed in the United States each
year, one billion pounds is imported from Mexico. However, the Mexican tomatoes
are all picked "dead-green" and gas-ripened once they reach their U.S.
destination. Additionally, Mexican tomatoes may have pesticides and chemicals
that are no longer allowed in the U.S.
The most significant import competition comes from Holland (approximately
900,000,000 lbs) with Canada a distant second. There is also a small percentage
of other imports from various offshore points. In some cases the varieties grown
are only for a highly specified and small market niche. The bulk of the Dutch
product is sold in 3.5 and 7 kilogram flats and most of the flats are freighted
as cargo on wide-bodied aircraft. Some importers use ocean freight which takes
approximately twelve (12) days in transit. Depending on the time of the year,
the air freight costs between $.40 and $.60 per pound or up to $9.24 per flat of
tomatoes. Further, there are very few, if any, U.S. retailers who work directly
with the Dutch auction system, which means that there is at least one and often
two middlemen to compensate.
Shelf life is also an issue. A Dutch tomato is transported from the grower
to the central auction warehouse. Those destined for the U.S. market must then
be transported to the air carrier's warehouse, flown to the U.S. port of entry
(usually New York City) and stored at the carrier's warehouse where they undergo
U.S. customs and USDA inspection. From the airport, the tomatoes are shipped to
a U.S. wholesaler and finally on to the local retailers.
A U.S. tomato producer should have at least a $.60 per pound competitive
edge over a Dutch grower. Generally, it is superior growing expertise resulting
in increased yields and a strong brand name recognition that allow the Dutch
growers to compete against domestic tomatoes.
Greenhouse Operations and Management Agreement
The Company has entered into a lease agreement with Village Farms, which
operates greenhouses throughout the United States. Under this agreement, the
Company intends to construct a Venlo style glass greenhouse of modular type
construction similar to those in Holland, which will include such equipment and
materials necessary to operate the greenhouse. In addition, the Company will own
and operate a 5 megawatt power generation facility which will include the scrap
rubber tires and other products for fuel to fire three 1000HP Thermal Combustors
to generate steam to provide the necessary heat and electricity for the
greenhouse. The Company has signed a lease agreement with Village Farms, a
Delaware corporation, to lease the twenty acre facility. Village Farms will make
both a fixed and variable payment to the Company under the lease arrangement.
The fixed payment will be made monthly, while the variable payment will be made
on a quarterly basis. Under the lease, the Company will provide utilities to the
greenhouse, heat and electric, at no charge to Village Farms, and Village Farms
will provide all personnel, operating capital, growing expertise, management
expertise, and marketing expertise. The Village Farms brand name is owned by
Agro Power Development, Inc. of New Jersey. They currently have a market share
of over 200 acres and approximately 100 million pounds of production for 1998.
<PAGE>
The Company had previously entered into an agreement with Colorado
Greenhouse LLC for the operation of the proposed greenhouse. This agreement was
subsequently terminated. The Company does not have any continuing contractual
relationship with Colorado Greenhouse LLC or any affiliated entity.
.
Power Purchase Agreement
The Company has entered into a thirty year power purchase agreement with
Tri-State Power Generation Company ("Tri-State"). Under this agreement the
Company will install and operate a waste fuel fired generation facility in the
county of El Paso, Colorado. Tri-State, through its own electronic power system,
generates, purchases and transmits power and energy for wholesale to its member
distribution cooperatives. Tri-State has agreed to purchase the entire net
output of capacity and energy from the Company and in return the Company has
agreed to sell and deliver said energy and capacity solely to Tri-State.
Further, Tri-State may terminate the agreement if certain minimum
deliveries are not maintained by the Company. Tri-State will pay the Company a
purchase price based on the number of megawatt hours supplied to Tri-State
multiplied by an energy rate (as defined) which shall be adjusted each year.
The Process
The Company's facility will be differentiated from other cogeneration
projects in the United States involving greenhouses. First, the facility will be
powered by tire derived fuel consisting of shredded rubber tires rather than
natural gas or oil, which will only be used as back-up. Second, the facility
will be owned by the Company not leased by a power company, so that profits, if
any, will remain within the Company. Third, the Company's facility is intended
to have four sources of income: (1) the sale of tomatoes, (2) the sale of
electricity, (3) a tipping fee for receiving the used tires, and (4) the sale of
recyclables such as carbon black.
The facility is intended to create a more profitable operation than a
typical greenhouse because the external charges typical of cogeneration
facilities, i.e., thermal heat and electricity, are being generated directly by
Company owned machinery and equipment. The thermal heat, which an operator such
as Village Farms usually records as a line item expense, will be provided "free"
to Village Farms by the Company's facility. The electricity, which is
customarily charged to Village Farms, will be "offset" against the electrical
income generated by the Company power facility. The Company facility will make
an initial investment of several hundred thousand dollars to drill three wells
at the site so that the usual and customary charge for water will be absorbed in
the electrical offset. All of the water used at the site will be treated and
recycled through a boiler or fed to the tomato plants through the drip system.
All rain and runoff water will be collected in a holding/cooling pond which will
be located on the site, thus insuring that no water will be wasted.
<PAGE>
The power producing process begins with the arrival of a truck load of used
car and truck tires which are off loaded and sorted by the tire broker. The
Company will receive a tipping fee for each tire delivered to the site. The
scrap tires are then loaded onto a conveyor belt which takes the tires to a
shredder which shreds the tires into approximately one inch square pieces of
rubber. These tire shreds, which are now called tire derived fuel (TDF) are then
moved into storage bins. As the power house facility requires fuel, the shredded
tires are conveyed to the power house where they are gasified to generate a heat
source.
This patented process is owned by Waste Conversion Systems, Inc., the
supplier of three 1000HP Thermal Combustors. These three units each is intended
to generate 33 million BTU's per hour or 33 thousand pounds of steam per hour.
As the TDF is fed to the Thermal Combustors, they turn from a solid into a gas
through a process known as gasification. The solid tires smoke and gasify the
Thermal Combustor's primary chamber and flow into its secondary chamber where
super heated air is introduced, causing the smoke and gases to ignite and form a
horizontal flame. This flame burns into a water tube boiler and turns the water
in the boiler into steam. The steam is then transmitted into steam turbines
which will generate five megawatts of electricity, with the spent steam being
used by the greenhouse facility as needed to heat the greenhouse. Ash produced
in the process is made up of silica and steel, which can then be resold. In
addition, a baghouse, which catches the particles out of the air, will collect
carbon black which can also be sold.
The "Process" is expected to use over three million tires per year to
produce the electricity and steam needed by the greenhouse facility. Tires will
be stock piled to insure that the power house will not run out of tires. It is
anticipated that there will be sufficient TDF stored on site to fuel the
Company's facility for six months. The "Process" will also maintain a large
propane tank as a backup against unscheduled mechanical downtime during the
cooler months.
Properties
The Company's cogeneration greenhouse will be built on a contiguous two
hundred 200 acre site. (the "Project Site") The Project Site is located two
miles west of the town of Calhan, Colorado which is approximately 24 miles east
of Colorado Springs, Colorado on Highway 24. The Project Site will provide
adequate land to build and operate the greenhouse, administrative offices,
packing house, solid fuel handling and water storage facilities. The land has
been rezoned under a land use permit to accommodate the solid fuel storage and
shredding operation of used rubber tires, as they are currently treated as a
waste stream commodity. The purchase price for the land was $340,000.
Legal Matters
The Company is not involved in any material pending legal proceedings.
Employees
The Company employs two people, both of whom are located in the Company's
Castle Rock, Colorado headquarters and serve in administrative capacities. None
of the Company's employees are represented by a labor union. The Company
considers its relationships with its employees to be satisfactory.
<PAGE>
Seasonality
The tomato industry generally experiences its highest volume during the
spring and summer months and the lowest volume in the winter months.
MANAGEMENT
Directors and Executive Officers
The following persons are the current executive officers and directors of
the Company:
<TABLE>
<CAPTION>
Name Age Position
---- --- --------
<S> <C> <C>
Stanley Abrams 57 President and Director
James Woodley 50 Secretary-Treasurer and Director
Arthur Rosenberg 57 Director
</TABLE>
Stanley Abrams has been President and a director of the Company since its
inception. Mr. Abrams has also been Chief Executive Officer, President and a
director of Waste Conversion Systems, Inc. ("WSC"), a publicly traded company
which owns the intellectual property used in the thermal combustors which are
used in the Company's operations, for more than the past five years. Mr. Abrams
is also Chief Executive Officer, President and a director of Nathaniel, Ltd.
("Nathaniel"), the exclusive domestic and international manufacturer and
marketer of the thermal combustors manufactured by WSC.
James Woodley has been Secretary, Treasurer and a director of the Company
since its inception. Mr. Woodley graduated from Pennsylvania State University in
1969 with a degree in Economics and Business Administration. He has been
employed as an accountant with several companies from 1969 to 1977. From 1978 to
1986, he was President of Unique Concepts, a Denver area home builder and
warehouse management company. From December 1986 to January 1989, he was Vice
President of Finance for Essex Management, Inc., Englewood, Colorado; from
January 1989 to July 1980, he was controller for International Training Corp.,
Denver, Colorado. He joined Waste Conversion as Chief Financial Officer in July
1990 and has served on the board since September, 1992. Mr. Woodley is Secretary
Treasurer and a director of Nathaniel Ltd.
Arthur Rosenberg has been a director of the Company since November 1997.
Mr. Rosenberg has been a practicing attorney for more than the past ten years.
Since June 1, 1987, he has been Vice President of Acquisitions of The Associated
Companies, a residential land and commercial developer located in Bethesda,
Maryland. Mr. Rosenberg also is a director of EcoTyre Technologies, Inc., a
publicly-owned manufacturer of remolded tires and Mike's Original, Inc., a
publicly-owned distributor of super-premium ice cream.
<PAGE>
Executive Compensation
The following table sets forth the cash and other compensation paid or
accrued by the Company for the fiscal year ended December 31, 1996 and during
the period from inception through December 31, 1995 to the Company's chief
executive officer.
<TABLE>
<CAPTION>
Long Term
Annual Compensation Compensation
---------------------------------------------------------- ------------
Securities
Name and Other Annual Underlying All Other
Principal Position Year Salary Bonus Compensation(1) Options Compensation
- ------------------ ------- ------- ----- --------------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Stanley Abrams 1996(2) $85,000 - - - -
President (Chief 1995(3) 14,167 - - - -
Executive Officer)
James Woodley 1996(2) 75,000 - - - -
1995(3) 12,500 - - - -
<FN>
(1) The value of all perquisites provided to the Company's officers did not
exceed the lesser of $50,000 or 10% of the officer's salary and bonus.
(2) Represents the fiscal year ended December 31, 1996.
(3) Represents the period from the Company's inception on October 25, 1995
through December 31, 1995.
</FN>
</TABLE>
Employment Agreements
The Company has entered into an employment agreement with Stanley Abrams
pursuant to which Mr. Abrams has agreed to serve as the President of the
Company, at a minimum annual base salary of $95,000. This employment agreement
is for an initial term of three (3) years commencing upon the closing of the
IPO. The agreement also provides that Mr. Abrams will be paid 3% of the
Company's pre-tax earnings (up to a maximum payment of $125,000 with respect to
the Company's fiscal year ending December 31, 1997) during the term thereof upon
the Company achieving certain financial results. The employment agreements
provide that if the employee is terminated after the initial term other than for
"cause" (as defined), or dies or becomes permanently disabled, the Company will
pay to the employee certain severance payments.
The Company has entered into an employment agreement with James Woodley
pursuant to which Mr. Woodley has agreed to serve as the Secretary and Treasurer
of the Company, at a minimum annual base salary of $75,000. This employment
agreement is for an initial term of three (3) years commencing upon the closing
of the IPO. The agreement also provides that Mr. Woodley will be paid 3% of the
Company's pre-tax earnings (up to a maximum payment of $125,000 with respect to
the Company's fiscal year ending December 31, 1997) during the term thereof upon
the Company achieving certain financial results. The employment agreements
provide that if the employee is terminated after the initial term other than for
"cause" (as defined), or dies or becomes permanently disabled, the Company will
pay to the employee certain severance payments.
<PAGE>
Both of the above agreements contain restrictions on the employees engaging
in competition with the Company for the term thereof and for one year thereafter
and provisions protecting the Company's proprietary rights and information. Each
agreement also provides for the payment of three times the employee's previous
year's total compensation, less $1.00, upon the termination of his employment in
the event of a change in control of the Company which adversely affects his
working conditions. For those purposes, a change in control is defined to mean
(a) a person (as such term is defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended) other than a current director or
officer of the Company becoming the beneficial owner, directly or indirectly, of
30% of the voting power of the Company's outstanding securities or (b) the
members of the Board of Directors at the beginning of any two-year period
ceasing to constitute at least a majority of the Board of Directors unless the
election of any new director during such period has been approved in advance by
two-thirds of the directors in office at the beginning of such two-year period.
Consulting Agreement
The Company has entered into a consulting agreement as of November 1, 1996
with Srotnac Group, LLC ("Srotnac"). Under this agreement, Srotnac has agreed
to provide business operations and management consulting services to the Company
in exchange for a consulting fee at the annual rate of $125,000 for the first
year of the agreement, $75,000 during the second year of the agreement, $100,000
during the third year of the agreement and $95,000 for each year thereafter. The
consulting agreement with Srotnac expires three years from the effective date of
this offering. Pursuant to the agreement, Srotnac and its principals are
restricted from engaging in competition with the Company for the term thereof
and for one year thereafter, and contains provisions protecting the Company's
trade secrets and proprietary rights and information. The Company may terminate
the services of Srotnac under the consulting agreement upon thirty (30) days'
written notice for a material breach by Srotnac of the non-competition,
confidentiality and proprietary rights clauses.
1996 Long Term Incentive Plan
In May 1996, the Company adopted The Ripe Touch Greenhouses, Inc. 1996 Long
Term Incentive Plan (the "1996 Incentive Plan") in order to motivate qualified
employees of the Company, to assist the Company in attracting employees and to
align the interests of such persons with those of the Company's stockholders.
The 1996 Incentive Plan provides for the grant of "incentive stock options"
within the meaning of the Section 422 of the Internal Revenue Code of 1986, as
amended, "non-qualified stock options," restricted stock, performance grants and
other types of awards to officers, key employees, consultants and independent
contractors of the Company and its affiliates.
The 1996 Incentive Plan, which will be administered by the Board of
Directors or a committee thereof, authorizes the issuance of a maximum of
350,000 shares of Common Stock which may be either newly issued shares, treasury
shares, reacquired shares, shares purchased in the open market or any
combination thereof. If any award under the 1996 Incentive Plan terminates,
expires unexercised, or is canceled, the shares of Common Stock that would
otherwise have been issuable pursuant thereto will be available for issuance
pursuant to the grant of new awards. To date, the Company has granted no options
under this plan.
<PAGE>
Personal Liability and Indemnification of Directors
The Company's Certificate of Incorporation and By-laws contain provisions
which reduce the potential personal liability of directors for certain monetary
damages and provide for indemnity of directors and other persons. The Company is
unaware of any pending or threatened litigation against the Company or its
directors that would result in any liability for which such director would seek
indemnification or similar protection.
Such indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Because directors liability
insurance is only available at considerable cost and with low dollar limits of
coverage and broad policy exclusions, the Company does not currently maintain a
liability insurance policy for the benefit of its directors, although the
Company may attempt to acquire such insurance in the future. The Company
believes that the substantial increase in the number of lawsuits being
threatened or filed against corporations and their directors and the general
unavailability of directors liability insurance to provide protection against
the increased risk of personal liability resulting from such lawsuits have
combined to result in a growing reluctance on the part of capable persons to
serve as members of boards of directors of companies, particularly of companies
which intend to become public companies. The Company also believes that the
increased risk of personal liability without adequate insurance or other
indemnity protection for its directors could result in overcautious and less
effective direction and management of the Company. Although no directors have
resigned or have threatened to resign as a result of the Company's failure to
provide insurance or other indemnity protection from liability, it is uncertain
whether the Company's directors would continue to serve in such capacities if
improved protection from liability were not provided.
The provisions affecting personal liability do not abrogate a director's
fiduciary duty to the Company and its stockholders, but eliminate personal
liability for monetary damages for breach of that duty. The provisions do not,
however, eliminate or limit the liability of a director for failing to act in
good faith, for engaging in intentional misconduct or knowingly violating a law,
for authorizing the illegal payment of a dividend or repurchase of stock, for
obtaining an improper personal benefit, for breaching a director's duty of
loyalty (which is generally described as the duty not to engage in any
transaction which involves a conflict between the interests of the Company and
those of the director) or for violations of the federal securities laws. The
provisions also limit or indemnify against liability resulting from grossly
negligent decisions including grossly negligent business decisions relating to
attempts to change control of the Company.
The provisions regarding indemnification provide, in essence, that the
Company will indemnify its directors against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred in connection with any action, suit or proceeding arising out of the
director's status as a director of the Company, including actions brought by or
on behalf of the Company (shareholder derivative actions). The provisions do not
require a showing of good faith. Moreover, they do not provide indemnification
for liability arising out of willful misconduct, fraud, or dishonesty, for
"short-swing" profits violations under the federal securities laws, or for the
receipt of illegal remuneration. The provisions also do not provide
indemnification for any liability to the extent such liability is covered by
insurance. One purpose of the provisions is to supplement the coverage provided
by such insurance. However, as mentioned above, the Company does not currently
provide such insurance to its directors, and there is no guarantee that the
Company will provide such insurance to its directors in the near future,
although the Company may attempt to obtain such insurance.
<PAGE>
These provisions diminish the potential rights of action which might
otherwise be available to shareholders by limiting the liability of officers and
directors to the maximum extent allowable under Delaware law and by affording
indemnification against most damages and settlement amounts paid by a director
of the Company in connection with any shareholders derivative action. However,
the provisions do not have the effect of limiting the right of a shareholder to
enjoin a director from taking actions in breach of his fiduciary duty, or to
cause the Company to rescind actions already taken, although as a practical
matter courts may be unwilling to grant such equitable remedies in circumstances
in which such actions have already been taken. Also, because the Company does
not presently have directors liability insurance and because there is no
assurance that the Company will procure such insurance or that if such insurance
is procured it will provide coverage to the extent directors would be
indemnified under the provisions, the Company may be forced to bear a portion or
all of the cost of the director's claims for indemnification under such
provisions. If the Company is forced to bear the costs for indemnification, the
value of the Company's stock may be adversely affected.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that such indemnification, in the opinion of the Commission, is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of October 31, 1997 of (i) each person known by the Company to
beneficially own 5% or more of the Company's outstanding Common Stock, (ii) each
of the Company's executive officers, directors and director nominees, and (iii)
all of the Company's executive officers and directors as a group. Except as
otherwise indicated, all shares of Common Stock are beneficially owned, and
investment and voting power is held, by the persons named as owners.
<TABLE>
<CAPTION>
Amount and Nature Percentage Ownership (5)
Name and Address of of Shares Before After
Beneficial Owner Beneficially Owned* Offering Offering
- -------------------- ------------------ --------- -----------
<S> <C> <C> <C>
Stanley Abrams (1) 600,000 15.0% 13.0%
James Woodley (1) 375,000 9.9% 8.0%
Arthur Rosenberg - - -
Srotnac Group, LLC (2) 462,000 12.4% 9.9%
Double G Foods, Inc. (3) 375,000 9.9% 8.0%
W & L Acquisition Corp. (4) 375,000 9.9% 8.0$
All officers and directors
as a group (3 persons) 975,000 25.0% 21.0%
* less than one percent (1%) unless otherwise indicated.
<FN>
(1) The address for each of these persons is 4871 N. Mesa Drive, Castle Rock,
Colorado 80104.
(2) The address for Srotnac Group, LLC is P.O. Box 473, Babylon Village, New
York 11702. Steven A. Cantor is the managing member and principal
stockholder of Srotnac Group, LLC.
(3) The address for Double G Foods, Inc. is 193 Elm Place, Mineola, New York
11501.
(4) The address for W & L Acquisition Corp. is 248 E. 31st Street, New York,
New York 10016.
(5) Assumes no exercise of: (i) the Representative's over-allotment option to
purchase up to 123,750 shares of Common Stock and 123,750 Class A Warrants;
(ii) the Class A Warrants offered hereby; (iii) the Representative's
Purchase Option to purchase up to 125,000 shares of Common Stock and
125,000 Class A Warrants; (iv) the Class A Warrants purchasable by the
Representative upon exercise of the Representative's Purchase Option; and
(v) options issuable upon the Company's 1996 Long Term Incentive Plan. See
"Description of Securities" and "Underwriting."
</FN>
</TABLE>
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company is a party to a purchase order for the purchase of three
thermal combustors (the "Purchase Order") from Nathaniel, Ltd., a Colorado
corporation ("Nathaniel"). Stanley Abrams and James Woodley are the officers and
directors of Nathaniel. Messrs. Abrams and Woodley collectively own all of the
outstanding stock of Nathaniel. The Purchase Order is for three Thermal
Combustors for an aggregate purchase price of $1,275,000. Approximately $20,000
from the proceeds of this offering will be paid to Nathaniel for preliminary
engineering fees. The remaining $1,255,000 will be paid from the proceeds of the
Construction Loan and the IPO. Nathaniel, pursuant to a distributor agreement,
is the exclusive manufacturer and marketer of the thermal combustors for Waste
Conversion Systems, Inc. ("WCS"). WCS owns the United States patents and
marketing rights for the Thermal Combustors to be utilized in the Company's
business. Stanley Abrams and James Woodley are officers and directors of WCS.
Pursuant to their distributor agreement, WCS will receive royalty payments in
connection with the sale of the thermal combustors by Nathaniel to the Company
pursuant to the Purchase Order. Nathaniel also holds a $50,000 principal amount
demand promissory note payable by the Company at an annual interest rate of 8%.
Pursuant to the consulting agreement between the Company and SAC Consulting
Group, Ltd., SAC Consulting Group, Ltd. is owed $125,000, none of which has been
paid.
In September 1996, the Company loaned Steven A. Cantor $125,000. The loan
is repayable on or before September 27, 1999, at the option of Mr. Cantor, and
bears interest at a rate of 8% per year.
SELLING SECURITYHOLDERS
This Prospectus may also be used for the possible offering of additional
shares of Common Stock owned by the Selling Securityholders. Certain other
Selling Securityholders have agreed that the shares of Common Stock owned by
such persons registered for resale hereunder under may not be sold for
twenty-four (24) months from the date of this Prospectus without the prior
written consent of the Representative. The Company will not receive any proceeds
from such sales. The Representative may release such restriction at any time
after completion of this offering. although there are no understandings or
arrangements in this regard. The resale of the securities by the Selling
Securityholders is subject to Prospectus delivery and other requirements of the
Securities Act.
The Shares are being offered by the following persons in the amounts set
forth below:
<TABLE>
<CAPTION>
Beneficial Number Beneficial
Ownership of Shares Ownership
Stockholder Prior to Offering Offered After Offering
----------- ----------------- --------- --------------
<S> <C> <C> <C>
Jones Enterprises 42,500 37,500 0.835%
Louis Solferino 42,500 37,500 0.835%
Brett Abrams 32,500 32,500 0.639%
<PAGE>
Vosavu Pty., Ltd. 32,500 32,500 0.639%
RLP Holdings Inc. 20,000 20,000 0.393%
Robert LaRusso 20,000 20,000 0.393%
Barbara Rubenfeld 20,000 20,000 0.393%
Barry & Deena Silberman 5,000 5,000 0.098%
Jamie Silberman 5,000 5,000 0.098%
Eric Shenker 5,000 5,000 0.098%
Paul Greenstein 20,000 20,000 0.393%
Michael Ring 10,000 10,000 0.197%
Gary L. Spieler & Yaffa Spieler 10,000 5,000 0.197%
Yaffa Spieler 10,000 5,000 0.197%
Scott M. Sosnik 10,000 5,000 0.197%
Sosnik & Co. 10,000 5,000 0.197%
Glen E. and Karen S. Erfman 5,000 5,000 0.098%
Ralph Ridge 2,500 2,500 0.049%
Ralph H. Grills, Jr. FLP 7,500 7,500 0.147%
John E. Lecomte 10,000 10,000 0.197%
Sally Miglio 5,000 5,000 0.098%
Sol Adler 5,000 5,000 0.098%
Onyx Packaging 42,500 5,000 0.835%
Midon Restaurant 42,500 5,000 0.835%
Moshe Isaac Foundation 20,000 20,000 0.393%
Richard Banach Profit Sharing 10,000 2,500 0.197%
Barry Weintraub 5,000 5,000 0.098%
Barbara Banach 10,000 7,500 0.197%
Dale Lucore 4,000 4,000 0.079%
------- ------- ------
464,000 349,000 9.118%
- -------
<FN>
*less than 1% unless otherwise indicated
</FN>
</TABLE>
The securities offered hereby may be sold from time to time directly by
the Selling Securityholders. Alternatively, the Selling Securityholders may from
time to time offer such securities through underwriters, dealers or agents. The
distribution of securities by the Selling Securityholders may be effected in one
or more transactions that may take place on the over-the-counter market,
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more broker-dealers for resale of such shares as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders in connection with such sales of securities. The Selling
Securityholders and intermediaries through whom such securities are sold may be
deemed "underwriters" within the meaning of the Securities Act with respect to
the securities offered, and any profits realized or commissions received may be
deemed underwriting compensation. The Company is not aware of any present
intentions of any Selling Stockholders to engage in any transactions with either
of the Representatives of this offering.
<PAGE>
At the time a particular offer of securities is made by or on behalf of a
Selling Securityholder, to the extent required, a prospectus will be distributed
which will set forth the number of shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents, if
any, the purchase price paid by any underwriter for shares purchased from the
Selling Securityholder and any discounts, commissions or concessions allowed or
reallowed or paid to dealers, and the proposed selling price to the public.
Under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the regulations thereunder, any person participating in a
distribution of the securities of the Company offered by this Prospectus may not
simultaneously engage in market-making activities with respect to such
securities of the Company during the applicable restricted period (one or five
business days) before the day of pricing of this offering, and until the
distribution is over. In addition, and without limiting the foregoing, the
Selling Securityholders will be subject to applicable provisions of the Exchange
Act and the rules and regulations thereunder, including without limitation,
Regulation M, and Rules 100 through 105 thereunder, in connection with
transactions in such securities, which provisions may limit the time of
purchases and sales of such securities by the Selling Securityholders.
Sales of securities by the Selling Securityholders or even the potential
of such sales would likely have an adverse effect on the market prices of the
securities offered hereby. As of the date of this Prospectus, the freely
tradeable securities of the Company (the "public float") will be (i) 825,000
shares of Common Stock, and (ii) 825,000 Class A Warrants.
DESCRIPTION OF SECURITIES
Capital Stock
The Company's authorized capital stock consists of 10,000,000 shares of
Common Stock, $.001 par value per share and 500,000 shares of Preferred Stock,
$.01 par value per share.
Common Stock
General. The Company has 10,000,000 authorized shares of Common Stock,
3,838,750 of which were issued and outstanding prior to the offering. All shares
of Common Stock currently outstanding are validly issued, fully paid and
non-assessable, and all shares which are the subject of this Prospectus, when
issued and paid for pursuant to this offering, will be validly issued, fully
paid and non-assessable.
Voting Rights. Each share of Common Stock entitles the holder thereof to
one vote, either in person or by proxy, at meetings of shareholders. The
Company's Board consists of three classes each of which serves for a term of
three years. At each annual meeting of the stockholders the directors in only
one class will be elected. The holders are not permitted to vote their shares
cumulatively. Accordingly, the holders of more than fifty percent (50%) of the
issued and outstanding shares of Common Stock can elect all of the Directors of
the Company. See "Principal Stockholders".
Dividend Policy. All shares of Common Stock are entitled to participate
ratably in dividends when and as declared by the Company's Board of Directors
out of the funds legally available therefor. Any such dividends may be paid in
cash, property or additional shares of Common Stock. The Company has not paid
any dividends since its inception and presently anticipates that all earnings,
<PAGE>
if any, will be retained for development of the Company's business and that no
dividends on the shares of Common Stock will be declared in the foreseeable
future. Payment of future dividends will be subject to the discretion of the
Company's Board of Directors and will depend upon, among other things, future
earnings, the operating and financial condition of the Company, its capital
requirements, general business conditions and other pertinent facts. Therefore
there can be no assurance that any dividends on the Common Stock will be paid in
the future. See "Dividend Policy".
Miscellaneous Rights and Provisions. Holders of Common Stock have no
preemptive or other subscription rights, conversion rights, redemption or
sinking fund provisions. In the event of the liquidation or dissolution, whether
voluntary or involuntary, of the Company, each share of Common Stock is entitled
to share ratably in any assets available for distribution to holders of the
equity of the Company after satisfaction of all liabilities, subject to the
rights of holders of Preferred Stock.
Shares Eligible for Future Sale. Upon completion of this offering, the
Company will have 4,663,750 shares of Common Stock outstanding (4,787,500 shares
if the Representative's over-allotment option is exercised in full). Of these
shares, the 825,000 shares sold in this offering (948,750 shares if the
Representative's over-allotment option is exercised in full) will be freely
tradeable without restriction or further registration under the Securities Act,
except for any shares purchased by an "affiliate" of the Company (in general, a
person who has a control relationship with the Company) which will be subject to
the limitations of Rule 144 adopted under the Securities Act. Another 349,000
shares are registered under the registration statement of which this Prospectus
forms a part and are freely saleable under the Securities Act, but may not be
transferred for twenty-four (24) months from the date of this prospectus or at
such earlier date as may be permitted by the Representative. All of the
remaining shares are deemed to be "restricted securities," as that term is
defined under Rule 144 promulgated under the Securities Act.
In general, under Rule 144 as effective on April 29, 1997, subject to the
satisfaction of certain other conditions, commencing ninety (90) days after the
effective date of the registration statement of which this prospectus is a part,
a person, including an affiliate of the Company (or persons whose shares are
aggregated), who has owned restricted shares of Common Stock beneficially for at
least one year is entitled to sell, within any three-month period, a number of
shares that does not exceed the greater of 1% of the total number of outstanding
shares of the same class or the average weekly trading volume of the Company's
Common Stock on all exchanges and/or reported through the automated quotation
system of a registered securities association during the four calendar weeks
preceding the date on which notice of the sale is filed with the Commission.
Sales under Rule 144 are also subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. A person who has not been an affiliate of the Company for at least the
three months immediately preceding the sale and who has beneficially owned
shares of Common Stock for at least two years is entitled to sell such shares
under Rule 144 without regard to any of the limitations described above.
3,501,000 of the shares of restricted stock presently outstanding have
been held at least one year. Accordingly, commencing following the completion of
the offering all 3,501,000 shares would be eligible for resale pursuant to Rule
144. However, pursuant to the terms of the Underwriting Agreement, certain
Selling Securityholders owning an aggregate of 212,500 shares of Common Stock
have agreed not to sell any of their shares for a period of twenty-four (24)
months following the date of this prospectus without the prior written consent
of the Representative. The sale of any substantial number of these shares in the
public market could adversely affect prevailing market prices following the
offering.
<PAGE>
No predictions can be made as to the effect, if any, that sales of shares
under Rule 144 or otherwise or the availability of shares for sale will have on
the market, if any, prevailing from time to time. Sales of substantial amounts
of the Common Stock pursuant to Rule 144 or otherwise may adversely affect the
market price of the Common Stock or the Warrants offered hereby.
Class A Warrants
The Class A Warrants offered hereby will be issued in registered form
under a warrant agreement (the "Warrant Agreement") between the Company and
American Stock Transfer & Trust Company, as Warrant Agent (the "Warrant Agent").
The following summary of the provisions of the Warrants is qualified in its
entirety by reference to the Warrant Agreement, a copy of which is filed as an
exhibit to the registration statement of which this Prospectus is a part.
Rights to Purchase Common Stock. Each Class A Warrant will be separately
tradeable and will entitle the registered holder thereof to purchase one share
of Common Stock (subject to adjustment as described below) for a period of three
years commencing on the effective date of this Prospectus at a price of $10.00
per share of Common Stock. A holder of Class A Warrants may exercise such
warrants by surrendering the certificate evidencing such warrants to the Warrant
Agent, together with the form of election to purchase on the reverse side of
such certificate properly completed and executed and the payment of the exercise
price and any transfer tax. If less than all of the warrants evidenced by a
warrant certificate are exercised, a new certificate will be issued for the
remaining number of warrants. Holders of the Class A Warrants may sell the Class
A Warrants if a market exists rather than exercise them. However, there can be
no assurance that a market will develop or continue as to such Class A Warrants.
For a holder of a warrant to exercise the Class A Warrants, there must be
a current registration statement on file with the Commission and various state
securities commissions. The Company will be required to file post-effective
amendments to the registration statement when events require such amendments.
While it is the Company's intention to file post-effective amendments when
necessary, there is no assurance that the registration statement will be kept
effective. If the registration statement is not kept current for any reason, the
Class A Warrants will not be exercisable, and holders thereof may be deprived of
value. Moreover, if the shares of Common Stock underlying the Class A Warrants
are not registered or qualified for sale in the state in which a Class A Warrant
holder resides, such holder might not be permitted to exercise the Class A
Warrants. If the Company is unable to qualify the Common Stock underlying such
Class A Warrants for sale in certain states, holders of the Company's Class A
Warrants in those states will have no choice but to either sell such Class A
Warrants or allow them to expire.
The Company has authorized and reserved for issuance a number of
underlying shares of Common Stock sufficient to provide for the exercise of the
Class A Warrants. When issued, each share of Common Stock will be fully paid and
nonassessable.
Class A Warrant holders will not have any voting or other rights as
shareholders of the Company unless and until Class A Warrants are exercised and
shares issued pursuant thereto.
Redemption Rights. Any or all of the Class A Warrants may be redeemed by
the Company at a price of $.01 per warrant, upon the giving of not less than 30
days' nor more than 60 days' written notice at any time after the date of this
Prospectus, provided that the closing bid price of the Common Stock for all
twenty (20) consecutive trading days ending three (3) days of the notice of
redemption has equaled or exceeded $12.00 per share. The right to purchase the
Common Stock represented by the Class A Warrants so called for redemption will
be forfeited unless the Class A Warrants are exercised prior to the date
<PAGE>
specified in the foregoing notice of redemption. Any redemption of the Class A
Warrants during the one year period commencing on the date of this Prospectus
shall require the consent of the Representative.
Adjustments. The exercise price and the number of shares of Common Stock
issuable upon the exercise of each Class A Warrant are subject to adjustment in
the event of a stock dividend, recapitalization, merger, consolidation or
certain other events.
For the life of the Class A Warrants, the holders thereof are given the
opportunity, at nominal cost, to profit from a rise in the market price of the
Common Stock of the Company. The exercise of the Class A Warrants will result in
the dilution of the then book value of the Common Stock of the Company held by
the public investors and would result in a dilution of their percentage
ownership of the Company. The terms upon which the Company may obtain additional
capital may be adversely affected through the period that the Class A Warrants
remain exercisable. The holders of these Class A Warrants may be expected to
exercise them at a time when the Company would, in all likelihood, be able to
obtain equity capital on terms more favorable than those provided for by the
Class A Warrants.
First Private Placement
From September through October 1996, the Company issued an aggregate of
42.5 Private Placement Units, each Private Placement Unit consisting of a
$25,000 principal amount of Private Placement Notes and 5,000 Private Placement
Shares for aggregate gross proceeds of $1,062,500. The proceeds from the sale of
the Private Placement Units were used to pay pre-engineering expense and to fund
working capital. The Company also has registered under the registration
statement of which this prospectus forms a part, 126,500 of the Private
Placement Shares included in the Private Placement Units. The Private Placement
Shares are not transferable until the earlier of twenty-four (24) months
following the date of this prospectus or at such earlier date as may be
permitted by the Representative. See "Underwriting".
Second Private Placement
During May 1997, the Company issued an aggregate of 20 Second Private
Placement Units, each Second Private Placement Unit consisting of a $25,000
principal amount of Second Private Placement Notes and 5,000 Second Private
Placement Shares for aggregate gross proceeds of $500,000. The proceeds from the
sale of the Second Private Placement Units were used to pay promotional expenses
incurred in connection with entering new markets and maintaining existing
markets and to fund working capital. The Second Private Placement Shares are not
transferable until the earlier of twenty-four (24) months following the date of
this prospectus or at such earlier date as may be permitted by the
Representative. See "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Underwriting".
The Second Private Placement Notes bear interest at a rate equal to 12%
per annum, payable one year after the issuance of the Second Private Placement
Notes and monthly in arrears thereafter. The Second Private Placement Notes
mature on the earlier of (i) June 30, 1998, or (ii) the closing date of this
offering; provided, that the maturity of the Second Private Placement Notes will
be further accelerated upon an Event of Default (as defined therein).
<PAGE>
Additional Private Issuances
From July through October 1997, the Company received $608,750 in
connection with the private placement of its securities in consideration for the
issuance of 191,500 shares of Common Stock and notes aggregating $481,250 (the
"Notes"). The proceeds from these sales were used to fund working capital
requirements.
The Notes bear interest at a rate equal to 12% per annum, payable on the
earlier of (i) June 30, 1998, or (ii) the closing date of this offering;
provided, that the maturity of the Notes will be accelerated upon an Event of
Default (as defined therein).
Preferred Stock
The Company's Certificate of Incorporation, as amended, authorizes the
issuance of up to 500,000 shares of preferred stock, par value $.01 per share.
Currently there are no shares of preferred stock issued or outstanding.
The issuance of Preferred Stock by the Board of Directors could adversely
affect the rights of holders of shares of Common Stock by, among other things,
establishing preferential dividends, liquidation rights or voting power. The
issuance of Preferred Stock could be used to discourage or prevent efforts to
acquire control of the Company through the acquisition of shares of Common
Stock.
Certain Provisions of the Certificate of Incorporation
The Company's Certificate of Incorporation contains certain provisions
which may be deemed to be "anti-takeover" in nature in that such provisions may
deter, discourage or make more difficult the assumption of control of the
Company by another entity or person. In addition to the ability to issue
Preferred Stock, these provisions are as follows:
A vote of 66-2/3% of the stockholders is required by the Certificate of
Incorporation in order to approve certain transactions including mergers and
sales or transfers of all or substantially all of the assets of the Company.
The Company's By-laws provide that the members of the Board of Directors
of the Company be classified into three classes: Class I (which consists of
Stanley Abrams) will serve until the Company's 1997 Annual Meeting of
Stockholders. Class II (which consists of James Woodley) will serve until the
Company's 1998 Annual Meeting of Stockholders. Class III (which consists of
Arthur Rosenberg) will serve until the Company's 1999 Annual Meeting of
Stockholders. After their initial staggered terms, the term of each class will
run for three years and expire at successive annual meetings of stockholders.
Accordingly, it is expected that it would take a minimum of two annual meetings
of stockholders to change a majority of the Board of Directors. Further,
directors may only be removed for cause prior to the expiration of their term of
office.
The Delaware General Corporation Law further contains certain
anti-takeover provisions. Section 203 of the Delaware General Corporation Law
provides, with certain exceptions, that a Delaware corporation may not engage in
any of a broad range of business combinations with a person who owns 15% or more
of the corporation's outstanding voting stock (an "interested stockholder") for
<PAGE>
a period of three years from the date that such person became an interested
stockholder unless: (i) the transaction resulting in a person's becoming an
interested stockholder, or the business combination is approved by the board of
directors of the corporation before the person becomes an interested
stockholder; (ii) the interested stockholder acquires 85% or more of the
outstanding voting stock of the corporation (excluding shares owned by persons
who are both officers and directors of the corporation, and shares held by
certain employee stock ownership plans); or (iii) the business combination is
approved by the corporation's board of directors and by the holders of at least
66 2/3% of the corporation's outstanding voting stock at an annual or special
meeting, excluding shares owned by the interested stockholder.
Transfer Agent
The transfer agent and registrar for the Company's Common Stock is
American Stock Transfer and Trust Company, 6201 15th Avenue, Brooklyn, New York
11219.
UNDERWRITING
Subject to the terms and conditions contained in the underwriting
agreement between the Company and the Underwriters named below, for which
Millennium Securities Corp. is acting as Representative (a copy of which
agreement is filed as an exhibit to the Registration Statement of which this
Prospectus forms a part), the Company has agreed to sell to each of the
Underwriters named below, and each of such Underwriters has severally agreed to
purchase the number of shares of Common Stock and Warrants set forth opposite
its name. All 825,000 shares of Common Stock and 825,000 Warrants offered must
be purchased by the Underwriters if any are purchased. The shares of Common
Stock and Warrants are being offered by the Underwriters subject to prior sale,
when, as and if delivered to and accepted by the Underwriters and subject to
approval of certain legal matters by counsel and to certain other conditions.
<TABLE>
<CAPTION>
Number Number
Underwriter of Shares of Warrants
----------- --------- -----------
<S> <C> <C>
------- -------
Total 825,000 825,000
======= =======
</TABLE>
The Representative has advised the Company that the Underwriters propose
to offer the shares of Common Stock and the Warrants to the public at the
offering prices set forth on the cover page of this prospectus. The
Representative has further advised the Company that the Underwriters propose to
offer the Securities through members of the National Association of Securities
Dealers, Inc. ("NASD"), and may allow a concession, in their discretion to
certain dealers who are members of the NASD and who agree to sell the Securities
in conformity with the NASD Conduct Rules. Such concessions shall not exceed the
amount of the underwriting discount that the Underwriters are to receive.
The Company has granted the Underwriters an option, exercisable for
forty-five (45) days from the date of this Prospectus, to purchase up to 123,750
shares of Common Stock and 123,750 Warrants, at the public offering prices less
the underwriting discounts set forth on the cover page of this Prospectus. The
Underwriters may exercise this option solely to cover over-allotments in the
sale of the shares of Common Stock and Warrants offered hereby.
<PAGE>
The Company has agreed to indemnify the Representative against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments it may be required to make in respect thereof. It is the position of
the Commission that indemnification for liabilities under the Securities Act is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
The Company has agreed to pay the Representative a non-accountable expense
allowance of 3% of the aggregate offering price (of which $50,000 has already
been received) with respect to the Common Stock and Class A Warrants offered
hereby (and any securities purchased pursuant to the Representative's
over-allotment option). Under certain circumstances, the expenses previously
paid by the Company are nonrefundable if the offering is terminated or otherwise
does not proceed.
The Company has also agreed to pay the Representative a consulting fee of
$50,000 for financial consulting services to be performed over a period of two
(2) years.
Upon the exercise after one year following the date of this offering of
any Warrant included in the Units, the Company has agreed to pay the
Representative a fee of 3% of the aggregate exercise price of such warrant if
(i) the market price of the Company's Common Stock is greater than the exercise
price of such Warrant on the date of exercise; (ii) the exercise of such Warrant
was solicited by the Representative and the holder of such Warrant so states in
writing and designates in writing that the Representative is entitled to receive
such compensation, (iii) such Warrant is not held in a discretionary account;
and (iv) the solicitation of such Warrant was not in violation of Regulation M,
and Rules 100 through 105 thereunder promulgated under the Exchange Act.
The Company has agreed to sell to the Representative or its designees, at
a price of $250, warrants (the "Representative's Warrants") to purchase 125,000
shares of Common Stock of the Company at an exercise price of $7.80 per share
and 125,000 Warrants at an exercise price of $.26 per warrant. Other than a
higher exercise price and the redemption feature, the Warrants underlying the
Representative's Warrants are identical in all respects to the Warrants offered
to the public hereby, as to which they will be treated pari passu with the
public Warrants. The Warrants issuable upon exercise of the Representative's
Warrants will entitle the holder to purchase shares of Common Stock at a price
of $7.80 per share or 120% of the then exercise price of the Warrants offered to
the pubic hereby, for a period of three years commencing on the date hereof. The
Representative's Warrants will not be transferable for one year from the date
hereof except to officers and partners of the Underwriters or members of the
selling group and are exercisable during the four year period commencing one
year from the date of this Prospectus. Any profit realized upon any resale of
the Representative's Warrants or upon the sale of the underlying securities
thereof may be deemed to be an additional underwriter's compensation. The
Company has agreed to register (or file a post-effective registration amendment
with respect to any registration statement registering) the Representative's
Warrant and the underlying securities under the Securities Act at its expense on
one occasion during the five years following the date of this Prospectus and at
the expense of the holders thereof. The Company has also agreed to "piggy-back"
registration rights for the holders of the Representative's Stock Warrants and
the Representative's Warrants and the underlying securities at the Company's
expense during the six (6) years following the date of this Prospectus.
<PAGE>
The Company has also agreed, for a period of not less than two years
commencing on the date of this offering, at the request of the Representative,
to nominate and use its best efforts to elect a designee of the Representative
to the Board of Directors of the Company or to appoint a designee of the
Representative as a non-voting observer of the Board of Directors. The
Representative has not yet exercised its right to designate such person.
The foregoing does not purport to be a complete statement of the terms and
conditions of the Underwriting Agreement and related documents, copies of which
are on file at the offices of the Representative, the Company and the
Commission, and forms of which have been filed as an exhibit to the Registration
Statement of which this Prospectus is a part.
The Representative has informed the Company that the Representative does
not intend to confirm sales to any accounts over which it exercises
discretionary authority.
The Company, and its officers and directors, have agreed not to offer,
pledge, sell, contract to sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any securities of the Company for a period
of twenty-four (24) months after the date of this Prospectus, without the prior
written consent of the Representative, except pursuant to the exercise of the
Representative's over-allotment option, or the exercise of the Warrants or
currently outstanding stock options.
Prior to this offering, there has been no market for the Common Stock or
the Warrants. Although the Company will apply to list the Common Stock and the
Warrants on the Nasdaq SmallCap Stock Market, there can be no assurance that an
active trading market will develop for the Common Stock or the Warrants, or, if
developed, that it will be maintained. In addition, the Common Stock and the
Warrants will be separately transferable immediately.
The initial public offering price has been arbitrarily determined by
negotiations between the Company and the Representative. Among the factors
contained in determining the initial public offering price, in addition to
prevailing market conditions, were the Company's capital structure, estimates of
its business potential and earnings prospects, an assessment of its management,
and the consideration of the above factors in relation to market valuation of
companies in related businesses.
In connection with the Second Private Placement, the Company paid
Millennium Securities Corp., one of the underwriters, as Placement Agent, 3% of
the gross proceeds of the entire offering as a non-accountable expense allowance
and a 10% commission on the sales of the Second Private Placement Units.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be
passed upon for the Company by the law firm of Blau, Kramer, Wactlar &
Lieberman, P.C., Jericho, New York. The law firm of Beckman & Millman, P.C., New
York, New York will pass on certain aspects of this offering on behalf of the
Representative. Employees of Blau, Kramer, Wactlar & Lieberman, P. C. own an
aggregate of 225,000 shares of Common Stock.
<PAGE>
EXPERTS
The audited financial statements of the Company for the fiscal year ended
December 31, 1996 and the fiscal period ended December 31, 1995, are included
herein and in the registration statement in reliance upon the report, which
report includes an emphasis paragraph regarding the ability of the Company to
continue as a going concern, of Bailey, Saetveit & Co., P.C., independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.
AVAILABLE INFORMATION
The Company has filed with the Commission a registration statement on Form
SB-2, pursuant to the Securities Act, with respect to the securities offered by
this Prospectus. This Prospectus does not contain all of the information set
forth in said registration statement, and the exhibits thereto. For further
information with respect to the Company and the securities offered hereby,
reference is made to said registration statement and exhibits which may be
inspected without charge at the Commission's principal office at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549.
As of the date of this Prospectus, the Company will be subject to the
informational requirements of the Securities Exchange Act of 1934, as amended,
and, in accordance therewith, shall file reports and other information with the
Commission. Such reports and other information can be inspected and copied at
the public reference facilities maintained by the Commission at Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and at its following regional
offices: Suite 788, 1375 Peachtree St. N.E., Atlanta, Georgia 30367,
Northwestern Atrium Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois
60621-2511 and 7 World Trade Center, 13th Floor, New York, New York 10048. Also,
copies of such material can be obtained at prescribed rates from the Public
Reference Section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, or at the Commission's Web site located at
http:\\www.sec.gov.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Financial Statements
and
Independent Auditors' Report
December 31, 1996 and 1995
and
September 30, 1997 and 1996
Unaudited Stub Periods
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Index to Financial Statements
Independent Auditors' Report 1
Balance Sheets 2
Statements of Loss 3
Statements of Stockholders' Deficit 4-5
Statements of Cash Flows 6
Notes to Financial Statements 7-14
<PAGE>
Independent Auditors' Report
To the Board of Directors and
Stockholders of Ripe Touch Greenhouses, Inc.
Castle Rock, Colorado
We have audited the accompanying balance sheets of Ripe Touch Greenhouses, Inc.
(a development stage company) as of December 31, 1996 and December 31 1995, and
the related statements of loss, stockholders' deficit, and cash flows for the
year ended December 31, 1996 and for the period from October 26, 1995
(inception) to December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Ripe Touch Greenhouses, Inc. as
of December 31, 1996 and December 31, 1995, and the results of its operations
and its cash flows for the year ended December 31, 1996 and for the period from
October 26, 1995 (inception) to December 31, 1995 in conformity with generally
accepted accounting principles.
As discussed in note 15 to the financial statements, the Company has been in the
development stage since its inception, October 26, 1995. Realization of its
assets is dependent upon the Company's ability to successfully complete both its
initial public offering and closing of long-term financing, and the success of
future operations. The unpredictability of these future events raise substantial
doubt about the Company's ability to continue as a going concern. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
April 26, 1997
Bailey Saetveit & Co., P.C.
Englewood, Colorado
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Balance Sheets
<TABLE>
<CAPTION>
September December December
30, 1997 31, 1996 31, 1995
(Unaudited) (Audited) (Audited)
----------- --------- ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 214,992 $ 72,012 $ 985
Accounts receivable - related party (net of allowance
for doubtful accounts of $0 in 1997, 1996 and 1995) 47,218 19,504
Deferred offering costs 25,000 -- 870
----------- ----------- -----------
Total current assets 287,210 91,516 1,855
----------- ----------- -----------
Property and equipment - net 608,449 492,366 15,000
----------- ----------- -----------
Other assets:
Construction in progress 492,504 338,039 71,516
Prepaid offering costs 34,375 74,375 --
Deposits 100,000 50,000 --
Up-front long-term debt financing fees 25,000 25,000 5,000
Organization costs (net of amortization of $1,924, $1,171
and $166 in 1997, 1996 and 1995, respectively) 3,096 3,849 4,853
----------- ----------- -----------
654,975 491,263 81,369
----------- ----------- -----------
$ 1,550,634 $ 1,075,145 $ 98,224
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 20,959 $ 225,574 $ --
Bridge loans payable (net of discount of $133,463 in 1997,
$279,745 in 1996, and $0 in 1995) 1,429,037 782,755 --
Note payable - related party -- 50,000 117,000
Accounts payable 316,138 274,873 110,509
Accrued expenses 326,026 133,046 30,132
----------- ----------- -----------
Total current liabilities 2,092,160 1,466,248 257,641
----------- ----------- -----------
Long-term debt 223,930 16,646 --
----------- ----------- -----------
Commitments and contingencies -- -- --
Stockholders' deficiency
Preferred stock, 500,000 shares of $.01 par value
authorized, no shares issued or outstanding -- -- --
Common stock, 10,000,000 shares of $.001 par value
authorized, 3,802,500, 3,501,000, and 3,000,000
shares issued and outstanding as of June 30,
1997, December 31, 1996, and 1995, respectively 3,803 3,501 3,000
Additional paid-in capital 818,300 459,601 --
Deficit accumulated during the development stage (1,587,559) (870,851) (162,417)
----------- ----------- -----------
Total stockholders' deficit (765,456) (407,749) (159,417)
----------- ----------- -----------
$ 1,550,634 $ 1,075,145 $ 98,224
=========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statements of Loss
<TABLE>
<CAPTION>
For the For the
period from period from
inception For the nine month period ended inception
(October 26, September 30, For the year (October 26,
1995) to Sep- ------------------------------- ended De- 1995) to De-
tember 30, 1997 1997 1996 cember 31, 1996 cember 31, 1995
(Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
--------------- ----------- ----------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Sales $ 132,786 $ 132,786 $ -- $ -- $ --
Cost of sales 185,592 156,238 2,500 29,354 --
----------- ----------- ----------- ----------- -----------
Gross profit (52,806) (23,452) (2,500) (29,354) --
----------- ----------- ----------- ----------- -----------
General and administrative expenses:
Officers wages and benefits 333,667 131,915 129,180 173,045 28,707
Consulting fees 483,065 89,567 120,400 272,227 121,271
Rent expense 41,400 16,200 16,200 21,600 3,600
Travel and entertainment 29,402 15,197 5,783 14,205 --
Legal and accounting 21,870 11,050 -- 10,820 --
Automobile expense 25,298 10,790 3,631 14,254 254
Telephone 14,043 6,831 3,859 7,004 208
Miscellaneous 10,760 2,274 3,172 8,414 72
Postage & Delivery 6,767 289 -- 6,478 --
Office supplies and equipment 2,025 -- -- 2,025 --
Amortization 1,923 753 -- 1,004 166
----------- ----------- ----------- ----------- -----------
Total general and admin-
istrative expense 970,220 284,866 282,225 531,076 154,278
----------- ----------- ----------- ----------- -----------
Loss from operations (1,023,026) (308,318) (284,725) (560,430) (154,278)
----------- ----------- ----------- ----------- -----------
Other income (expenses)
Interest income 1,175 -- 541 1,175 --
Interest expense (565,708) (408,390) (36,133) (149,179) (8,139)
----------- ----------- ----------- ----------- -----------
(564,533) (408,390) (35,592) (148,004) (8,139)
----------- ----------- ----------- ----------- -----------
Loss before income taxes (1,587,559) (716,708) (320,317) (708,434) (162,417)
Income tax expense -- -- -- -- --
----------- ----------- ----------- ----------- -----------
Net loss $(1,587,559) $ (716,708) $ (320,317) $ (708,434) $ (162,417)
=========== =========== =========== =========== ===========
Shares outstanding 3,802,500 3,802,500 3,409,500 3,501,000 3,000,000
----------- ----------- ----------- ----------- -----------
Loss per share $ (0.41750) $ (0.18848) $ (0.09395) $ (0.20235) $ (0.05414)
=========== =========== =========== =========== ===========
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
For the period from inception (October 26, 1995) to December 31, 1995, year
ended December 31, 1996, and
the "unaudited" nine month period ended September 30, 1997
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------- --------------------- Additional
Date of Number $.01 Number $.001 Paid-in Accumulated
Transaction of Shares Par Value of Shares Par Value Capital Deficit
----------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, October 25, 1995 (inception) -- $ -- -- $ -- $ -- $ --
Stock issued for services in connection 10/26/95 -- -- 2,775,000 2,775 -- --
with formation of the Company
($0.001 per share)
Stock issued for legal services 10/26/95 -- -- 225,000 225 -- --
($0.001 per share)
Net loss for the period ended
December 31, 1995 12/31/95 -- -- -- -- -- (162,417)
----- --------- --------- --------- ---------- -----------
Balances, December 31, 1995 (audited) -- -- 3,000,000 3,000 -- (162,417)
----- --------- --------- --------- ---------- -----------
Stock issued for cash 8/2/96 -- -- 132,500 133 132,368 --
($1.00 per share)
Stock issued for consulting services 9/27/96 -- -- 152,000 152 151,848 --
($1.00 per share)
Stock issued in connection with 9/27/96 -- -- 125,000 125 124,875 --
issuance of bridge loans
($1.00 per share)
Legal costs of private placement 9/30/96 -- -- -- -- (40,898) --
Stock issued in connection with 11/1/96 -- -- 80,000 80 79,920 --
issuance of bridge loans
($1.00 per share)
Stock issued in connection with 12/16/96 -- -- 7,500 7 7,492 --
issuance of bridge loans
($1.00 per share)
Stock issued in connection with 12/18/96 -- -- 4,000 4 3,996 --
land purchase ($1.00 per share)
Net loss for the year ended
December 31, 1996 12/31/96 -- -- -- -- -- (708,434)
----- --------- --------- --------- ---------- -----------
Balances, December 31, 1996 (audited) -- -- 3,501,000 3,501 459,601 (870,851)
----- --------- --------- --------- ---------- -----------
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statement of Stockholders' Deficit
For the period from inception (October 26, 1995) to December 31, 1995, year
ended December 31, 1996, and
the "unaudited" nine month period ended September 30, 1997
"Continued"
<TABLE>
<CAPTION>
Preferred Stock Common Stock
--------------------- --------------------- Additional
Date of Number $.01 Number $.001 Paid-in Accumulated
Transaction of Shares Par Value of Shares Par Value Capital Deficit
----------- --------- --------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Stock issued in connection with 6/18-9/30/97 -- -- 100,000 100 99,900 --
issuance of bridge loans
($1.00 per share)
Stock issued for consulting services 7/1/97 -- -- 27,500 28 27,472 --
($1.00 per share)
Stock issued for consulting services 8/15/97 -- -- 100,000 100 99,900 --
($1.00 per share)
Stock issued in connection with 8/20/97 -- -- 4,000 4 3,996 --
land purchase ($1.00 per share)
Stock issued for cash 8/22-9/9/97 -- -- 57,500 58 114,943 --
($2.00 per share)
Stock issued for cash 9/15/97 -- -- 12,500 12 12,488 --
($1.00 per share)
Net loss for the nine month period
ended September 30, 1997 9/30/97 -- -- -- -- -- (716,708)
----- --------- --------- --------- ---------- -----------
Balances, September 30, 1997 (unaudited) -- $ -- 3,802,500 $ 3,803 $ 818,300 $(1,587,559)
----- --------- --------- --------- ---------- -----------
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(A Development Stage Company)
Statements of Cash Flows
<TABLE>
<CAPTION>
For the For the
period from period from
inception For the nine month period ended inception
(October 26, September 30, For the year (October 26,
1995) to Sep- ------------------------------- ended De- 1995) to De-
tember 30, 1997 1997 1996 cember 31, 1996 cember 31, 1995
(Unaudited) (Unaudited) (Unaudited) (Audited) (Audited)
--------------- ------------------------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss $(1,587,559) $(716,708) $(320,317) $ (708,434) $(162,417)
Adjustments to reconcile net loss to
net cash used by operating activities:
Stock issued for services 282,500 127,500 152,000 152,000 3,000
Depreciation and amortization 72,214 58,615 754 13,433 166
Amortization of discount 380,287 299,407 -- 80,880
Net change in assets and liabilities:
Accounts receivable - related party (47,218) (27,714) (5,935) (18,634) (870)
Prepaid/deferred offering costs (59,375) 15,000 -- (74,375) --
Deposits (100,000) (50,000) -- (50,000) --
Accounts payable 316,138 41,265 140,622 164,364 110,509
Accrued expenses 326,026 192,980 62,575 102,914 30,132
----------- --------- --------- ----------- ---------
Net cash used by operating activities (416,987) (59,655) 29,699 (337,852) (19,480)
----------- --------- --------- ----------- ---------
Cash flows from investing activities:
Capitalized organizational costs (5,019) -- -- -- (5,019)
Purchase of property and equipment (310,740) (169,945) -- (125,795) (15,000)
Construction in progress (492,504) (154,465) (228,534) (266,523) (71,516)
----------- --------- --------- ----------- ---------
Net cash used by investing activities (808,263) (324,410) (228,534) (392,318) (91,535)
----------- --------- --------- ----------- ---------
Cash flows from financing activities:
Up-front long-term debt financing fees (25,000) -- (20,000) (20,000) (5,000)
Net loans from related parties -- (50,000) (117,000) (67,000) 117,000
Proceeds from bridge loans 1,562,500 500,000 625,000 1,062,500 --
Discount on bridge loans in connection
with issuance of stock (513,750) (153,125) (125,000) (360,625) --
Proceeds from long-term debt 250,000 250,000 -- -- --
Payments on long-term debt (365,110) (247,330) -- (117,780) --
Legal fees charged to proceeds from
private placement (40,898) -- (40,898) (40,898) --
Issuance of common stock 572,500 227,500 257,500 345,000 --
----------- --------- --------- ----------- ---------
Net cash provided by financing
activities 1,440,242 527,045 579,602 801,197 112,000
----------- --------- --------- ----------- ---------
Net increase in cash and cash equivalents 214,992 142,980 380,767 71,027 985
----------- --------- --------- ----------- ---------
Cash and cash equivalents, beginning of period -- 72,012 985 985 --
----------- --------- --------- ----------- ---------
Cash and cash equivalents, end of period $ 214,992 $ 214,992 $ 381,752 $ 72,012 $ 985
=========== ========= ========= =========== =========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest $ 8,575 $ 6,354 $ -- $ 2,221 $ --
=========== ========= ========= =========== =========
Income taxes $ -- $ -- $ -- $ -- $ --
=========== ========= ========= =========== =========
</TABLE>
See notes to financial statements.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES
Development Stage Activities
Ripe Touch Greenhouses, Inc. (the "Company"), is a Delaware corporation
and has been in the development stage since its formation on October
26, 1995. The Company plans to construct and operate a greenhouse
outside of Colorado Springs, Colorado for production and sale of
hydroponic, naturally vine ripened tomatoes. The facilities will be
powered by three 1,000 BHP thermal combustors using used tires as a
fuel source. The combustors will generate the heat for the greenhouse
as well as the steam necessary to produce five megawatts of
electricity. In addition to revenues from the sale of tomatoes, the
Company anticipates receiving revenue from the sale of electricity
generated in excess of the greenhouse requirements.
The construction of the greenhouse and purchase of the thermal
combustors is intended to be financed through the sale of approximately
$15 million of ten year notes to a lending institution and the sale of
approximately $5 million of common stock in the Company's initial
public offering.
Accounting Method
The Company records income and expenses on the accrual method. As of
September 30, 1997 the Company had earned $132,786 in revenues
associated with the tire tipping fees.
Fiscal Year
The Company has selected December 31 as its fiscal year end.
Property and Equipment and Related Depreciation
Property and equipment are recorded at cost. Depreciation is provided
using the straight-line method. The Company uses an estimated useful
life of 5 years to depreciate machinery and equipment.
Deferred Offering Costs
Costs associated with the Company's private placement have been charged
to additional paid-in capital. The Company had prepaid certain costs
associated with its proposed public offering which are included in
other assets. It is the Company's policy to classify costs associated
with the proposed offering to deferred offering costs and charge
against the proceeds upon completion of the offering.
Loss Per Share
Loss per share was computed assuming all shares outstanding at the end
of the period were outstanding during the entire period.
Organization Costs
Costs incurred in organizing the Company have been capitalized and are
being amortized over a sixty-month period.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
1. SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Income Taxes
Deferred income tax assets and liabilities are computed annually for
differences between the financial statement and tax bases of assets and
liabilities that will result in taxable or deductible amounts in the
future based on enacted tax laws and rates applicable to the periods in
which the differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets
to the amount expected to be realized. Income tax expense is the tax
payable or refundable for the period plus or minus the change during
the period in deferred tax assets and liabilities.
Cash Equivalents
The Company considers all highly liquid debt instruments purchased with
an original maturity of three months or less to be cash equivalents.
Advertising Costs
The Company expenses non-direct advertising costs as incurred. The
Company has not incurred any direct response advertising costs since
its inception that should be capitalized and deferred to future
periods. Total advertising costs for the period ended September 30,
1997 and the years ended December 31, 1996 and 1995 were $0, $128 and
$0, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
2. STOCKHOLDERS' EQUITY
As of September 30, 1997, 3,802,500 shares of the Company's $.001 par
value common stock were issued and outstanding. The outstanding shares
include 312,500 shares which were issued in connection with the
Company's private placement memorandums where $1,562,500 was raised in
return for stock and $1,048,750 in bridge notes (note 8) payable (net
of $513,750 discount).
On July 25, 1996, the Company restated its certificate of
incorporation. The restated certificate changes the number of shares
the Company is authorized to issue from 5,000 shares of $.01 par value
common stock to 10,500,000 shares, consisting of 10,000,000 shares of
common stock with a par value of $.001 and 500,000 shares of preferred
stock with a par value of $.01. Accordingly, the Company has restated
the number of shares outstanding as of inception from 5,000 common
shares to 3,000,000.
3. PROPOSED PUBLIC OFFERING
The Company has entered into a firm underwriting agreement with
Millennium Securities, Corp. ("Underwriter"). Pursuant to the terms of
the firm underwriting agreement, the Underwriter has agreed to purchase
between 825,000 and 948,750 units. A unit consists of one share of
common stock and one warrant to purchase common stock at $10.00 per
share for three years, unless earlier redeemed.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
3. PROPOSED PUBLIC OFFERING, CONTINUED
The Underwriter is to receive an expense allowance of 3% of the gross
proceeds, an underwriting discount of 10%, plus $50,000. In addition,
the Underwriter will receive for the purchase price of $100 the option
to purchase 125,000 units consisting of 125,000 shares and 125,000
Class A warrants of the Company at $8.06 per unit exercisable for a
period of four years from the date of the underwriting.
Each share of the 825,000 shares of common stock being offered by the
Company in its initial public offering comes with one detachable, non
voting Class A warrant. Each Class A warrant entitles the registered
holder to purchase one share of common stock for a period of three
years commencing on the effective date of the offering at a price of
$10.00 per share. Class A warrants are subject to redemption by the
Company at a price of $.01 per warrant after given written notice at
any time after the date of the prospectus, provided that the closing
bid price of the common stock for a period of 20 consecutive trading
days ending within three days of the notice of redemption has equaled
or exceeded $12.00 per share.
4. PROPERTY AND EQUIPMENT
Following is a summary of property and equipment at September 30, 1997,
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- -------
<S> <C> <C> <C>
Land $ 188,045 $ 119,045 $15,000
Building 104,946 -- --
Machinery and equipment 385,750 385,750 --
--------- --------- -------
678,741 504,795 15,000
Less accumulated depreciation (70,292) (12,429) --
--------- --------- -------
$ 608,449 $ 492,366 $15,000
========= ========= =======
</TABLE>
Depreciation expense for the periods ended September 30, 1997 and 1996
and the years ended December 31, 1996 and 1995 was $57,862, $0, $12,429
and $0, respectively.
5. CONSTRUCTION IN PROGRESS
The Company anticipates total construction costs of its facilities will
be approximately $16.6 million. As of September 30, 1997, December 31,
1996 and 1995, the Company had incurred preliminary engineering and
construction management costs of $492,504, $338,039 and $71,516,
respectively.
The Company was issued a special use permit by the state of Colorado on
June 21, 1996 and obtained approval of its designated land use from El
Paso County, Colorado in October 1996.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
6. LONG-TERM DEBT
Long-term debt at September 30, 1997 and December 31, 1996 consists of
the following:
<TABLE>
<CAPTION>
September 30, December
1997 31, 1996
--------- ---------
<S> <C> <C>
Doich International
Payable in monthly principal and interest installments of
$20,000 at prime plus 2% through January 1998. The note
is collateralized by the Company's tire shredder -- $ 242,220
Colorado Housing and Finance Authority ("CHAFA")
In May 1997 the Company refinanced its note with Doich
International with CHAFA. The note is payable in monthly
principal and interest installments of $2,531 at 4% through
May 2007. The note is collateralized by the Company's tire
shredder 244,889 --
Less current maturities (20,959) (225,574)
--------- ---------
Long-term debt $ 223,930 $ 16,646
========= =========
</TABLE>
Interest expense related to long-term debt for the periods ended
September 30, 1997 and 1996, and year ended December 31, 1996 was
$6,181, $0 and $2,221, respectively.
Current maturities of long-term debt as of December 31, 1996 and
September 30, 1997 are as follows:
<TABLE>
<CAPTION>
Year ending Year ending
December 31, September 30,
------------ -------------
<S> <C> <C>
1997 $ 225,574
1998 16,646 $ 20,959
1999 -- 21,813
2000 -- 22,702
2001 -- 23,627
2002 -- 24,590
thereafter -- 131,198
------------ ------------
$ 242,220 $ 244,889
============ ============
</TABLE>
7. LONG-TERM INCENTIVE PLAN
The Company has a long-term incentive plan. Under the plan, the Company
may issue stock options, stock appreciation rights, restricted stock,
performance grants, and any other type of award deemed to be consistent
with the purpose of the plan to key employees and other key persons
performing services for the Company. The Company may issue an aggregate
of not more than 350,000 common shares, subject to modification in the
event of a change in the Company's capitalization. As of September 30,
1997, the Company had not issued any common shares in connection with
its long-term incentive plan.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
8. BRIDGE NOTES PAYABLE
Bridge notes payable at September 30, 1997 and December 31, 1996
consist of the following:
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
12% unsecured bridge notes, principal and interest due at
maturity which is the earlier of September 30, 1997 or the
effective date of the Company's initial public offering. The
notes were issued in connection with the Company's first
private placement memorandum. On October 24, 1997 the
Company extended the maturity date of the notes to
January 31, 1998. $ 1,062,500 $ 1,062,500
12% unsecured bridge notes, principal and interest due at
maturity which is the earlier of June 30, 1998 or the
effective date of the Company's initial public offering. The
notes were issued in connection with the Company's second
private placement memorandum. 500,000 --
Less: discount on notes as of September 30, 1997 and
December 31, 1996 (net of amortization of $299,407 and
$80,880, respectively) (133,463) (279,745)
----------- -----------
Bridge notes payable $ 1,429,037 $ 782,755
=========== ===========
</TABLE>
Interest expense related to bridge notes payable for the periods ended
September 30, 1997 and 1996, and year ended December 31, 1996 was
$106,628, $617 and $28,030, respectively.
9. NOTES PAYABLE - RELATED PARTIES
Notes payable - related parties consist of the following at September
30, 1997, December 31, 1996 and 1995:
<TABLE>
<CAPTION>
1997 1996 1995
---------- ------- --------
<S> <C> <C> <C>
Nathaniel, Ltd.
The Company has an unsecured promissory note
payable on demand with interest at 8%. $ -- $50,000 --
Shareholder
The Company has an unsecured promissory note
payable on demand with interest at 8%. -- -- 117,000
---------- ------- --------
Notes payable - related parties $ -- $50,000 $117,000
========== ======= ========
</TABLE>
Interest expense relating to notes payable - related parties for the
periods ended September 30, 1997 and 1996, and years ended December 31,
1996 and 1995 was $0, $7,947, $7,947 and $189, respectively.
10. INCOME TAXES
The Company's income tax expense for the periods ended September 30,
1997 and 1996, and years ended December 31, 1996 and 1995 are as
follows:
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
10. INCOME TAXES, CONTINUED
<TABLE>
<CAPTION>
September 30, September 30, December 31, December 31,
1997 1996 1996 1995
--------- --------- --------- --------
<S> <C> <C> <C> <C>
Current income tax expense
Federal $ -- $ -- $ -- $ --
State -- -- -- --
--------- --------- --------- --------
Current provision for income tax expense (benefits) -- -- -- --
--------- --------- --------- --------
Deferred income tax expense (benefits)
Federal (241,200) (103,400) (228,800) (43,400)
State (37,300) (16,000) (35,400) (8,100)
Less valuation allowance 278,500 119,400 264,200 51,500
--------- --------- --------- --------
Deferred provision for income taxes (benefits) -- -- -- --
--------- --------- --------- --------
Total provision for income taxes (benefits) $ -- $ -- $ -- $ --
========= ========= ========= ========
</TABLE>
As of September 30, 1997 and 1996, December 31, 1996 and 1995, the
Company's deferred tax assets were offset entirely by its valuation
allowances.
11. RELATED PARTY TRANSACTIONS
Rent
The Company rents office space from both its president and
secretary/treasurer at a cost of $800 and $1,000 per month on a
month-to-month basis, respectively. Rent expense was $16,200, $16,200,
$21,600 and $3,600 for the periods ended September 30, 1997 and 1996,
and years ended December 31, 1996 and 1995, respectively. At September
30, 1997, December 31, 1996 and 1995 accrued liabilities included
unpaid rents of $41,400, $25,200 and $3,600, respectively.
Accounts Receivable
The Company had accounts receivable from a company under common
control.
Notes Payable
The Company had notes payable to a shareholder and a Company under
common control (note 9).
Purchase of Thermal Combustors
The Company is affiliated with Waste Conversion Systems, Inc. through
common ownership. The Company plans to purchase its thermal combustors
from a distributor of Waste Conversion Systems, Inc. at a cost of
approximately $1,275,000.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Continued
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
12. COMMITMENTS AND CONTINGENCIES
Power Purchase Agreement
The Company has a power purchase agreement with Tri-State Generation
and Transmission Association, Inc. ("Tri-State"). The agreement will
allow the Company to sell its entire output of capacity and energy
(projected to be 5,000 kw) to Mountain View Electric Association, Inc.
("Mountain View"), a cooperative of Tri-State. The agreement calls for
a capacity rate of $10.07 per kw for a 30 year term, to be extended at
the option of the parties for two successive terms of 15 consecutive
years. The agreement is cancelable at Tri-State's option if certain
minimum deliveries are not maintained by the Company. Under the terms
of the agreement the contract is terminated unless power is delivered
by April 30, 1998.
During 1995 the Company incurred $100,438 in consulting fees with
Citizens Lehman Power ("Citizens"). The fees were related to the
formation of the above power purchase agreement with Tri-State
Generation and Transmission Association, Inc. Balances of $118,490,
$118,490 and $108,389, including interest charges were due as of
September 30, 1997, December 31, 1996 and 1995, respectively, and
accordingly, have been included in accounts payable.
In addition to the full satisfaction of the above liability, management
intends to issue 20,000 shares of the Company's common stock to
Citizens in recognition of their cooperation in sustaining from
collection proceedings, accordingly, a $20,000 liability has been
recorded in accounts payable.
Tire Shredding Agreement
On April 15, 1997, the Company entered into two agreements with an
individual and his controlled corporation. Under the terms of the
agreement the individual is to receive 100,000 shares of common stock
for past services which the Company has valued at $100,000. In
addition, the agreement requires the Company issue stock options to the
individual for 100,000 shares exercisable for two years at the initial
public offering price. In addition, the Company has agreed to reimburse
the individual's controlled corporation up to $10,000 per month for
salaries and other expenses to operate and maintain a tire shredding
operation at the Company's facilities. The Company has also agreed to
pay fees to this individual and his company for consulting and other
services of $3,000 per month when power generation begins. The tire
shredding agreement has an initial period of 5 years with a required
renewal subject to binding arbitration. The consulting agreement has an
initial period of 10 years. Under the terms of the consulting agreement
the individual will make a good faith effort to supply used tires to
the Company.
Consulting Agreement
The Company has a three year consulting agreement with a shareholder.
The agreement requires an annual compensation of $125,000 for the first
year, $75,000 for the second year, and $100,000 for the third year to
be paid to the shareholder.
<PAGE>
RIPE TOUCH GREENHOUSES, INC.
(a Development Stage Company)
Notes to Financial Statements, Concluded
December 31, 1996 and 1995
(Information as of and for the nine month period ended September 30, 1997 is
unaudited)
12. COMMITMENTS AND CONTINGENCIES, CONTINUED
Officer Employment Contracts
The Company has contracts with its president and secretary/treasurer
for services through November 1998. The contracts require $95,000 to be
paid to the president and $75,000 to be paid to the secretary/treasurer
annually during the contract period. In addition, the officers may
receive 3% of the Company's pre-tax income, not to exceed certain
limits.
Land Clean-up Fund
As a condition of El Paso County, Colorado's acceptance of the
Company's designated land use (note 5), the Company is to establish a
$100,000 clean-up fund. As of September 30, 1997 this fund was fully
funded.
Going Concern
The Company has been in the development stage since its inception,
October 26, 1995. As shown in the accompanying financial statements,
the Company incurred a net loss of $1,587,559 for the period from
inception (October 26, 1995) to September 30, 1997. As of September 30,
1997, current liabilities exceeded current assets by $1,804,950. Those
factors, as well as the uncertainties regarding the ability of the
Company to obtain long-term financing, and the successful completion of
its initial public offering create an uncertainty about the Company's
ability to continue as a going concern. The financial statements do not
include any adjustments that might be necessary if the Company is
unable to continue as a going concern.
In view of these matters, realization of the assets in the accompanying
balance sheet is dependent upon success of its future operations and
obtaining long-term financing for its greenhouse project, which in turn
is dependent upon the successful completion of the Company's initial
public offering. Management believes that actions presently being taken
to satisfy the Company's financial requirements provide the opportunity
for the Company to continue as a going concern.
13. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Non-cash investing and financing activities for the nine months ended
September 30, 1997 and 1996, year ended December 31, 1996, and period
ended December 31, 1995 are as follows:
<TABLE>
<CAPTION>
September 30, September 30, December 31, December 31,
1997 1996 1996 1995
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
Equipment acquired by long-term debt $ -- $ -- $360,000 $ --
Land acquired by common stock issuance 4,000 -- 4,000 --
-------- -------- -------- ------
Total non-cash investing activities $ 4,000 $ -- $364,000 $ --
======== ======== ======== ======
Stock issued for consulting services $127,500 $152,000 $152,000 $3,000
======== ======== ======== ======
</TABLE>
<PAGE>
No dealer, salesperson or any other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained in this Prospectus. Any information or presentations
not herein contained, if given or made, must not be relied upon as having been
authorized by the Company. This Prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any security other than the securities
offered by this Prospectus, nor does it constitute an offer to sell or a
solicitation of an offer to buy the securities by any person in any jurisdiction
where such offer or solicitation is not authorized, or in which the person
making such offer is not qualified to do so, or to any person to whom it is
unlawful to make such offer or solicitation. The delivery of this Prospectus
shall not, under any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof.
- ---------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary . . . . . . . . 3
Risk Factors . . . . . . . . . . . 6
Use of Proceeds. . . . . . . . . . 12
Dilution . . . . . . . . . . . . . 13
Capitalization . . . . . . . . . . 14
Dividend Policy. . . . . . . . . . 15
Selected Financial Data. . . . . . 16
Management's Discussion and Analysis and
of Financial Condition and Results of
Operations . . . . . . . . . . . 17
Business . . . . . . . . . . . . . 19
Management . . . . . . . . . . . . 24
Principal Stockholders . . . . . . 28
Certain Relationships and
Related Transactions. . . . 29
Selling Securityholders. . . . . . 30
Description of Securities. . . . . 32
Underwriting . . . . . . . . . . . 36
Legal Matters. . . . . . . . . . . 39
Experts. . . . . . . . . . . . . . 39
Available Information. . . . . . . 39
Index to Financial Statements
Independent Auditor's Report
</TABLE>
Until , 1998 (90 days after the commencement of the offering), all dealers
effecting transactions in the Units, whether or not participating in this
distribution, may be required to deliver a Prospectus. This delivery requirement
is in addition to the obligation of dealers to deliver a Prospectus when acting
as Representatives and with respect to their unsold allotments or subscriptions.
<PAGE>
825,000 Units
\
RIPE TOUCH GREENHOUSES, INC.
---------------
PROSPECTUS
---------------
MILLENNIUM SECURITIES CORP.
, 1998
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 24. Indemnification of Directors and Offices
See "Management -- Personal Liability and Indemnification of Directors".
Item 25. Other Expenses of Issuance and Distribution
The estimated expenses of the distribution, all of which are to be borne by
the Company, are as follows:
<TABLE>
<S> <C>
SEC Registration Fee. . . . . . . . . . . . . . . . . $4,073
NASD Filing Fee . . . . . . . . . . . . . . . . . . . *
Blue Sky Fees and Expenses. . . . . . . . . . . . . . 35,000
Transfer Agent Fees . . . . . . . . . . . . . . . . . 5,000
Accounting Fees and Expenses. . . . . . . . . . . . . *
Legal Fees and Expenses . . . . . . . . . . . . . . . *
Printing and Engraving. . . . . . . . . . . . . . . . 60,000
Representative's Non-Accountable
Expense Allowance. . . . . . . . . . . . . . . . . *
Miscellaneous . . . . . . . . . . . . . . . . . . . . *
------------
Total. . . . . . . . . . . . . . . . . . . . . . . $ 450,000
============
- ---------
<FN>
* To be filed by amendment
</FN>
</TABLE>
Item 26. Recent Sales of Unregistered Securities
1. In October 1995, the Company issued an aggregate of 2,775,000 shares of
Common Stock to founding stockholders. This was a transaction by the issuer not
involving any public offering which was exempt from the registration
requirements under the Securities Act pursuant to Section 4(2) thereof.
2. In August 1996, the Company issued 225,000 shares of its Common Stock in
consideration of for services rendered. This transaction by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.
3. In August 1996, the Company issued 152,000 shares of its Common Stock to
a consultant at a price of $1 per share. This transaction by the Company did not
involve any public offering and was exempt from the registration requirements
under the Securities Act pursuant to Section 4(2) thereof.
4. In August 1996, the Company issued 132,500 shares of its common stock to
four individuals. These transactions by the Company did not involve any public
offering and was exempt from the registration requirements under the Securities
Act pursuant to Section 4(2) thereof.
<PAGE>
5. In August through September 1996, the Company sold $1,062,500 principal
amount of First Private Placement Units, each Second Private Placement Unit
consisted of one $25,000 principal amount of 12% promissory notes and 5,000
shares of Common Stock, to 25 persons, all of whom are deemed accredited
pursuant to Rule 501 of Regulation D, in private transactions by the issuer not
involving any public offering which were exempt from registration requirements
under the Securities Act pursuant to Section 4(2) thereof and Rule 506 of
Regulation D promulgated pursuant thereto.
6. In May 1997, the Company sold $50,000 principal amount of Second Private
Placement Units, each Second Private Placement Unit consisted of one $25,000
principal amount of 12% promissory notes and 5,000 shares of Common Stock, to 1
persons, (all of whom are deemed accredited pursuant to Rule 501 of Regulation
D, in private transactions by the issuer not involving any public offering which
were exempt from registration requirements under the Securities Act pursuant to
Section 4(2) thereof and Rule 506 of Regulation D promulgated pursuant thereto.
7. From July through October 1997 the Company sold an aggregate of 191,500
shares of Common Stock for an aggregate consideration of $608,750 to 33 persons,
all of whom are deemed accredited pursuant to Rule 501 of Regulation D, in
private transactions by the issuer not involving any public offering which were
exempt from registration requirements under the Securities Act pursuant to
Section 4(2) thereof and Rule 506 of Regulation D promulgated pursuant thereto.
Item 27. Exhibits.
1.1 Form of Underwriting Agreement.*
1.2 Form of Agreement Among Underwriters.*
1.3 Form of Selling Agreement.*
3.1 Certificate of Incorporation of the Registrant.*
3.2 By-laws of the Registrant.*
4.1 Specimen Common Stock Certificate.**
4.2 Form of Warrant Agreement (including Warrant Certificate).**
4.3 Form of Representative's Purchase Option.**
5.1 Form of Opinion and Consent of Blau, Kramer, Wactlar & Lieberman, P.C.
regarding the legality of the securities being registered.**
10.1 1996 Long Term Incentive Plan.*
10.2 Employment Agreement dated November 1, 1997 between the Registrant and
Stanley Abrams.**
10.3 Employment Agreement dated November 1, 1997 between the Registrant and
James Woodley.**
10.4 Consulting Agreement dated as of November 1, 1996 between the Registrant
and Srotnac Group, LLC.*
10.5 Operations and Maintenance Agreement dated April 1, 1997 between the
Registrant and David Mehring.*
10.6 Lease Agreement dated as of January 29, 1998 between Registrant and Village
Farms of Colorado, Inc.*
10.7 Agreement dated November 25, 1996 between Registrant and El Paso County.*
10.8 Agreement dated March 22, 1995 between Registrant and Tri State Power
Generation and Transmission Association, Inc.*
10.9 Equipment Purchase Agreement dated December 14, 1995 between Registrant and
Nathaniel Ltd.*
10.10 Form of First Private Placement Note.*
10.11 Form of First Private Placement Unit Subscription Agreement .*
10.12 Form of Second Private Placement Note.*
10.13 Form of Second Private Placement Unit Subscription Agreement .*
<PAGE>
10.14 Form of Additional Private Placement Subscription Agreement.*
10.15 Form of Additional Private Placement Note.*
23.1 Consent of Blau, Kramer, Wactlar & Lieberman, P.C. (included in
Exhibit 5.1).**
23.2 Consent of Bailey, Saetveit & Co., P.C.
25.1 Powers of Attorney.*
- -------
* To be filed by Amendment
** Previously filed
Item 28. Undertakings.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the small
business issuer pursuant to the foregoing provisions, or otherwise, the small
business issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the small business issuer of expenses incurred or paid by a director, officer or
controlling person of the small business issuer 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 small business
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
Registrant hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and
(iii)Include any additional or changed material information on the plan of
distribution.
(2) For determining any liability under the Securities Act, treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
(3) File a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) For determining any liability under the Securities Act, treat the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the small business issuer under Rule 424(b)(1), or
(4) or 497(h) under the Securities Act as part of this registration
statement as of the time the Commission declared it effective.
(5) Provide to the underwriter at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names
as required by the underwriter to permit prompt delivery to each
purchaser.
<PAGE>
Certain Selling Securityholders have agreed not to sell or transfer the
shares of Common Stock owned by them and registered hereunder for twenty-four
(24) months from the date of this Prospectus. The Representative and the
Underwriters have indicated that in the event they enter into transactions with
any of the Selling Securityholders, or waive the lock-ups applicable to such
Selling Securityholders securities under the following circumstances, disclosure
will be provided in the following manners: (i) if such transactions involve from
five (5) percent up to ten (10) percent of the registered Selling
Securityholders' securities, to file "Sticker" supplements pursuant to Rule
242(c) of the Securities Act and (ii) if such transactions involve over ten (10)
percent of the registered Selling Securityholders securities, to file a
post-effective amendment to the registration statement of which this Prospectus
forms a part.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, in Castle Rock,
Colorado on the 9th day of July, 1998.
Ripe Touch Greenhouses, Inc.
By: /s/ Stanley Abrams
----------------------------
Stanley Abrams, President
(Chief Executive Officer)
POWER OF ATTORNEY
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the capacities
indicated on July 9, 1998.
Signatures Title
---------- -----
/s/ Stanley Abrams
- ----------------------------- President (Chief Executive
Stanley Abrams Officer), and Director
*
- ----------------------------- Secretary, Treasurer and Director
James Woodley
*
- ----------------------------- Director
Arthur Rosenberg
/s/ Stanley Abrams
- -----------------------------
*By Stanley Abrams, Attorney-in-fact
