As filed with the Securities and Exchange Commission on April 16, 1998
Registration No. 333-25465
===========================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
POST-EFFECTIVE AMENDMENT No. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Earth Sciences, Inc.
(Exact name of registrant as specified in its charter)
Colorado 84-0503749
(State of incorporation) (IRS Employer Identification
No.)
910 12th Street, Golden, Colorado 80401
(Address of principal executive offices, including Zip Code)
(Registrant's telephone number, including area code): (303) 279-7641
Mark H. McKinnies
910 12th Street, Golden, Colorado 80401
(303) 279-7641
(Name, address, including zip code and telephone number,
including area code, of agent for service of process)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC---------------
: : As soon as practicable after the effective date of this Registration
Statement. 2,693,954 Shares registered hereunder are being withdrawn from
this Registration Statement. The remaining 342,400 shares will continue to be
offered for sale by the Selling Shareholders.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
[ ]
<PAGE> 1
CALCULATION OF REGISTRATION FEE
______________________________________________________________________________
Proposed
Title of each class Proposed maximum
of securities to be Amount to be maximum offer- aggregate Amount of
registered registered ing price offering registration
per share price fee
______________________________________________________________________________
Common Stock, $.01
par value:
Issued and out-
standing 234,020 Shares $ 2.75 (1) $ 643,555 (1) $ 195.02
Issuable upon
conversion of
Debentures 2,463,334 Shares $ 1.50 (2) $3,695,001 (2) $2,052.78
Issuable upon
exercise of
options 339,000 Shares $ 2.74 (3) $ 928,860 (3) $ 281.47
______________________________________________________________________________
Totals 3,036,354 Shares $5,267,416 $2,529.27
______________________________________________________________________________
(1) Based on the average price of the Common Stock on NASDAQ's SmallCapSM
Market on April 14, 1997. The resulting fee is calculated pursuant to section
(c) of Rule 457 of Regulation C.
(2) Based on the maximum number of shares that could be issued pursuant this
Registration Statement and the terms of the Debentures with respect to the
conversion price. The resulting fee is calculated pursuant to section (g) of
Rule 457 of Regulation C.
(3) Based on the weighted average exercise price of the options. The
resulting fee is calculated pursuant to section (g) of Rule 457 of Regulation
C.
The fee was paid with the initial filing on April 18, 1997.
THIS POST EFFECTIVE AMENDMENT TO THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR ON
SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY
DETERMINE.
<PAGE> 2
Common Stock Removed From Registration
The offering of 3,036,354 shares of common stock, par value $.01 per share
(the "Common Stock") of Earth Sciences, Inc. (the "Company") registered with
the Securities and Exchange Commission (the "SEC") pursuant to a registration
statement on Form S-3, declared effective July 23, 1997, File No. 333-25465
(the "Registration Statement") is hereby amended. Of the 3,036,354 shares
registered for sale thereunder, 2,693,954 shares have either been sold or
withdrawn from sale. Accordingly, pursuant to this post-effective amendment,
the Company hereby amends its Registration Statement to remove such 2,693,954
shares of Common Stock from registration with the SEC under the Securities Act
of 1933, as amended. The remaining 342,400 shares registered under the
Registration Statement shall continue to be available for sale by the Selling
Shareholders named in such Registration Statement.
The PROSPECTUS is hereby amended to read as follows:
Dated April 16, 1998
EARTH SCIENCES, INC.
342,400 SHARES OF COMMON STOCK
All of the shares of Common Stock, par value $0.01 per share ("Common
Stock") of Earth Sciences , Inc., a Colorado corporation (the "Company"),
offered hereby are being offered for resale by certain selling shareholders
(the "Selling Stockholders") as described more fully below under "SELLING
STOCKHOLDERS". The shares of Common Stock offered hereby by the Selling
Stockholders consist of (i) 279,000 shares issuable upon exercise of options
at prices ranging from $1.50 per share to $4.00 per share and (ii) 63,400
shares of Common Stock currently issued and outstanding. See "SELLING
STOCKHOLDERS".
The Selling Stockholders will offer their Common Stock through or to
securities brokers or dealers designated by them in the over-the-counter
market or in other transactions negotiated by the Selling Stockholders. Any
such sale of Common Stock by Selling Stockholders must be accompanied by, or
follow the delivery of, a prospectus filed with a current registration
statement relating to the Common Stock being offered, unless a Selling
Stockholder elects to rely on Rule 144 or another exemption from the
registration requirements in connection with a particular transaction. The
Selling Stockholders and any broker, dealer, or agent that participates with
the Selling Stockholders in the sale of Common Stock offered hereby may be
deemed "underwriters" within the meaning of the Securities Act of 1933, as
amended ( the "Securities Act"), and any commission or discounts received by
them and any profit on the resale of the Common Stock purchased by them may be
deemed to be underwriting commissions under the Securities Act. (See "SELLING
STOCKHOLDERS" and "PLAN OF DISTRIBUTION").
The Company's Common Stock is traded in the over-the-counter market and is
quoted on NASDAQ's SmallCapSM Market ("Nasdaq") under the symbol "ESCI". On
April 3, 1998, the closing price of the Common Stock on Nasdaq was $1.50 per
share.
THE ACQUISITION AND OWNERSHIP OF THE COMMON STOCK INVOLVE A HIGH DEGREE OF
RISK. THE COMMON STOCK SHOULD BE PURCHASED ONLY BY INVESTORS WHO ARE ABLE TO
AFFORD THE RISK OF LOSS OF THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS"
BEGINNING ON PAGE 6 OF THIS PROSPECTUS).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
<PAGE> 3
Price Offering Proceeds to Proceeds to
to Commissions(2) Selling Company(3)
Public(1) Stockholders
By Selling Stockholders
Per Share ........ $ 1.50 $ -- $ 1.50 $ --
TOTAL ........... $ 513,600 $ -- $ 513,600 $ --
(1) The price per share for the securities offered by the Selling
Stockholders is estimated at the closing sales price quoted by Nasdaq for the
Common Stock at $1.50 on April 3, 1998. The Common Stock may be offered at
the current market price, which may vary through the period during which the
securities may be offered, or at such other prices as may be negotiated by the
Selling Shareholder and the purchaser at the time of sale.
(2) The securities to be sold by Selling Stockholders may be sold by them or
through or to securities brokers or dealers, which sales may involve the
payment of commissions by the Selling Stockholders.
(3) Does not reflect expenses of this offering payable by the Company
estimated at $7,000 nor the receipt by the Company of approximately $808,000
on exercise of options. (See "PLAN OF DISTRIBUTION" below).
The Company will not receive any proceeds from the sale of Common Stock
by the Selling Stockholders. However, the Company would receive proceeds upon
exercise of options held by the Selling Stockholder prior to the sale of
Common Stock issuable on such exercise. (See "USE OF PROCEEDS"). In
connection with this offering, the Company estimates that it will incur costs
of approximately $7,000 for legal, accounting, printing, and other costs. Any
separate costs of Selling Stockholders will be borne by them. Commissions or
discounts paid in connection with the sale of securities by the Selling
Stockholders will be determined by negotiations between them and the broker-
dealer through or to which the securities are to be sold and may vary
depending on the broker-dealers' commission or mark up schedule, the size of
the transaction, and other factors. (See "PLAN OF DISTRIBUTION" below.)
The Selling Stockholders and any broker, dealer, or agent that
participates with the Selling Stockholders in the sale of the Common Stock
offered hereby may be deemed "underwriters" within the meaning of the
Securities Act of 1933, as amended ( the "Securities Act"), and any commission
or discounts received by them and any profit on the resale of the Common Stock
purchased by them may be deemed to be underwriting commissions under the
Securities Act. (See "SELLING STOCKHOLDERS" and "PLAN OF DISTRIBUTION").
AVAILABLE INFORMATION
The Company is subject to the reporting requirements of the Securities
Exchange Act of 1934, as amended, and accordingly files reports, proxy
statements, and other information with the Securities and Exchange Commission
(the "Commission"). Such reports, proxy statements, and other information
filed with the Commission are available for inspection and copying at the
public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street N.W., Judiciary Plaza, Washington, D.C. 20549, and at certain of
the Commission's regional offices located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60604; and 7 World Trade
Center, New York, New York 10048, upon payment of the charges prescribed
therefor by the Commission.
The Company is also subject to the electronic filing requirements of the
Commission. The commission maintains a Web site that contains reports, proxy
and information statements, and other information regarding issuers that file
electronically. The address of the Web site is http://www.sec.gov.
The Common Stock of the Company is currently traded in the over-the-counter
market and is quoted on NASDAQ, SmallCap Market. Reports, proxy statements
and other information filed by the Company therewith can be inspected at the
National Association of Securities Dealers, Inc. 1735 K Street N.W.,
Washington , D.C. 20006.
<PAGE> 4
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company (File No. 0-6088) with the
Commission are incorporated herein by reference.
1. The Company's annual report on Form 10-KSB for the year ended
December 31, 1997 ("1997 10-KSB").
2. A description of the Company's Common Stock contained in the
Registration Statement on Form 8-A as declared effective by the Securities and
Exchange Commission.
3. All documents filed by the Company pursuant to Section 13(a), 13(c),
14 and 15(d) of the Exchange Act subsequent to the date of this Prospectus and
prior to the termination of the offering of the Common Stock shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a Prospectus is delivered, upon written or oral
request of such person, (i) a copy of the Company's annual and quarterly
reports as filed with the Commission, and/or (ii) a copy of any or all of the
documents which are incorporated by reference herein, other than exhibits to
such documents which are not specifically incorporated by reference therein.
The annual reports on Form 10-KSB include audited financial statements of the
Company. Requests should be directed to Earth Sciences, Inc., 910 12th
Street, Golden, Colorado 80401, Attention: Investor Relations (telephone
303-279-7641).
_________________________________
No person is authorized to give any information or make any representation not
contained in this prospectus and, if given or made, such information should
not be relied upon as having been authorized.
THE COMPANY
Earth Sciences, Inc. (the "Company") is a diversified mineral exploration and
development company specializing in chemical processing, air pollution control
and mineral exploration. Production of purified phosphate products in Calgary
commenced in June 1997. The Company was incorporated under the name of
Colorado Central Mines, Inc. in Colorado in 1957. Current activities of the
Company include (1) the operation of its recently modified solvent extraction
facility in Calgary, Alberta for production of purified phosphate products;
(2) continued exploration activities for gold and diamond resources in
Venezuela (3) flue gas conditioning technology for coal-fired boilers and
other applications provided through ADA Environmental Solutions LLC ("ADA"), a
majority-owned subsidiary, and (4) maintenance of its position in several
mineral resources and prospects in the Western US.
The Company's solvent extraction facility in Calgary, Alberta, recovered
uranium from phosphoric acid during the period from 1983 through 1987.
Uranium oxide production was suspended in the fall of 1987 when the adjacent
fertilizer plant from which the facility received its feed stock suspended
operations. The contract under which the uranium was sold was modified in
1990 to allow unrestricted alternative use of the facility. Revamp of the
facility to allow production of purified phosphate products was completed in
1997. The Calgary facility is routinely producing technical grade phosphoric
acid and steps are underway for production of food grade product targeted for
the end of the second quarter in 1998. Production and sales of products have
been increasing monthly as the Company establishes and expands its market
<PAGE> 5
position. The Company intends to pursue the recovery of other valuable
elements in the feed stock once routine production and cash flow are achieved.
Initial investigation of such recovery potential is estimated to cost between
$20,000-$50,000 and is expected to be funded out of internally generated cash
flow.
The principal executive offices of the Company are located at 910 12th Street,
Golden, Colorado 80401, and its telephone number is (303) 279-7641.
FORWARD-LOOKING STATEMENTS
In addition to historical information, this Prospectus and the documents
incorporated herein by reference contain forward-looking statements. The
forward-looking statements contained herein are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
in the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, those discussed in the section entitled "RISK
FACTORS" set forth below. Investors are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's analysis only
as of the date of such statements. The Company undertakes no obligation to
publicly revise these forward-looking statements to reflect events or
circumstances that arise after the date of such statements.
RISK FACTORS
An investment in the Shares is speculative and involves a high degree of risk.
In analyzing the offering, prospective investors should read this entire
Prospectus and the information incorporated herein by reference, and carefully
consider, among others, the following risk factors in addition to the other
information set forth elsewhere in this Prospectus.
Specific Risks Related to the Company
No Dividends. The Company has paid no cash dividends on its Common Stock and
has no present intention of paying cash dividends in the foreseeable future.
It is the present policy of the Board of Directors to retain all earnings to
provide for the growth of the Company. Payments of cash dividends in the
future will depend, among other things, upon the Company's future earnings,
requirements for capital improvements, the operating and financial conditions
of the Company and other factors deemed relevant by the Board of Directors.
Lack of Profitability. While the Company reported net income in fiscal 1995,
the Company's operating history has resulted in losses from operations in the
fiscal years ending December 31, 1988 through 1994, in 1996, and 1997. While
certain of the Company's operations may be profitable during a given fiscal
year, the Company's operations as a whole may be unprofitable due to
exploration and development costs on properties from which no revenue is
derived, to continuing corporate general and administrative costs and to
interest expense associated with long term debt.
Dilutive Effect of Issuance of Additional Shares on Current Shareholders. The
Board of Directors has the authority to authorize the offer and sale of
additional securities without the vote of or notice to existing shareholders,
and it is likely that additional securities will be issued to provide future
financing or in connection with acquisitions. The issuance of additional
securities could dilute the percentage interests and per share book value of
existing shareholders, including persons purchasing securities in this
offering.
Volatility of Price for Common Stock. The market price for shares of the
Company's Common Stock may be highly volatile depending on news announcements
or changes in general market conditions. In recent years the stock market has
experienced extreme price and volume fluctuations.
Risks Related to the Exploration and Development of Minerals
Nature of Mineral Exploration and Development; No Proven Commercially Viable
Reserves Yet Discovered on the Company's Mineral Properties. Exploration for
minerals is highly speculative and may involve greater risks than many other
businesses. Many exploration programs, including those which
<PAGE> 6
have been conducted by the Company, do not result and have not resulted in the
discovery of mineralization and any mineralization discovered may not be of
sufficient quantity or quality to be profitably mined. The Company's mineral
exploration and development activities are subject to all of the operating
hazards and risks normally incident to such activities, such as encountering
unusual or unexpected formations, environmental pollution, personal injury and
flooding. All of these factors may result in losses in relation to the
amounts spent, which are not recoverable. With the exception of the San Luis
gold mine (where mining operations have been terminated as described below in
"Termination of Mining at the San Luis Gold Mine"), no commercially viable
reserves have yet been discovered on the Company's mineral properties.
Competition and Scarcity of Mineral Lands. Many companies and individuals are
engaged in mineral exploration and development, including large, established
mining companies with substantial capabilities and long earnings records.
There is a limited amount of desirable mineral lands available for claim
staking, lease or other acquisition in the United States ("US"), Venezuela and
other areas where the Company contemplates conducting exploration activities.
The Company may be at a competitive disadvantage in acquiring mineral
properties since it must compete with these individuals and companies, many of
which have greater financial resources and larger technical staffs than the
Company. From time to time, specific properties or areas, which would
otherwise be attractive to the Company for exploration or acquisition, are
unavailable due to their previous acquisition by other companies.
Fluctuation in the Price of Minerals. The market price of minerals is
extremely volatile and beyond the control of the Company. Gold prices are
generally influenced by basic supply/demand fundamentals. The market dynamics
of supply/demand can be heavily influenced by economic policy, i.e., central
banks sales/purchases, political unrest, conflicts between nations, and
general perceptions about inflation. Fluctuating metal prices may have a
significant impact on the Company's results of operations and operating cash
flow. Furthermore, if the price of a mineral should drop dramatically, the
value of the Company's properties which are being explored or developed for
that mineral could also drop dramatically, and the Company might not be able
to recover its investment in those properties. The decision to put a mine
into production, and the commitment of the funds necessary for that purpose,
must be made long before the first revenues from production will be received.
During the last five years, the average annual market price of gold has
fluctuated between $280 per ounce and $384 per ounce. Price fluctuations
between the time that such a decision is made and the commencement of
production can change completely the economics of the mine. Although it is
possible to protect against price fluctuations by hedging in certain
circumstances, the volatility of mineral prices represents a substantial risk
in the mining industry generally which no amount of planning or technical
expertise can eliminate. The Company is not involved in, nor does it expect
to enter into any hedging activities
Environmental Controls. Compliance with environmental quality requirements
and reclamation laws imposed by federal, state, provincial, and local
governmental authorities may necessitate significant capital outlays, may
materially affect the economics of a given property, or may cause material
changes or delays in the Company's intended activities. The Secretary of the
Interior has directed the BLM to propose amendments to surface management
regulations that impose more stringent reclamation and environmental
protection requirements on mining operations. The extent of the changes, if
any, which may be made by the BLM is not presently known, and the potential
impact on the Company as a result of future regulatory action is difficult to
predict. New or different environmental standards imposed by any governmental
authority in the future may adversely affect the Company's activities.
Uncertainty of Title. Several of the Company's mining properties which are in
the United States are unpatented mining claims to which the Company, or those
under which the Company holds its rights, has only possessory title. Because
title to unpatented mining claims is subject to inherent uncertainties, it is
difficult to determine conclusively ownership of such claims. Since a
substantial portion of all mineral exploration, development and mining in the
United States now occurs on unpatented mining claims, this uncertainty is
inherent in the mining industry. In addition, in order to retain title to an
unpatented mining
<PAGE> 7
claim, a claim holder must have met annual assessment work requirements ($100
per claim) through September 1, 1992 and must have complied with stringent
state and federal regulations pertaining to the filing of assessment work
affidavits. Moreover, after September 1, 1992, the right to locate or
maintain a claim generally is conditional upon payment to the United States of
a rental fee of $100 per claim per year for each assessment year instead of
performing assessment work. State law may, in some instances, still require
performance of assessment work.
The present status of the Company's properties as unpatented mining claims
located on public lands of the U.S. allows the claimant the exclusive right to
mine and remove valuable minerals, such as precious and base metals and
industrial minerals, found therein, and also to use the surface of the land
solely for purposes related to mining and processing the mineral-bearing ores.
However, legal ownership of the land remains with the U.S. Accordingly, with
an unpatented claim, the U.S. retains many of the incidents of ownership of
land, the U.S. regulates use of the surface, and the Company remains at risk
that the claims may be forfeited either to the U.S. or to rival private
claimants due to failure to comply with statutory requirements as to locations
and maintenance of the claims. If there exists a valuable deposit of
locatable minerals (which is the requirement for the unpatented claim to be
valid in the first place), and provided certain levels of work and
improvements have been performed on an unpatented mining claim, the Mining Law
of 1872 authorizes claimants to then seek to purchase the full title to the
claim, thereby causing the claim to become the private property of the
claimant. Such full ownership expands the claimant's permissible uses of the
property (to any use authorized for private property) and eliminates the need
to comply with maintenance and reporting requirements necessary to protect
rights in an unpatented claim. At present there is a statutory moratorium in
effect prohibiting the Department of Interior from accepting and processing
new applications for purchase of fee title to mining claims. The moratorium
is likely to continue indefinitely but does not affect the ability to hold and
develop valuable deposits by means of unpatented mining claims.
Proposed Legislation Affecting the Mining Industry. For the last several
Congressional sessions, bills have been repeatedly introduced in the U.S.
Congress that would supplant or radically alter the provisions of the Mining
Law of 1872. As of March 31, 1998, no such bills have passed, although a
number of differing and sometimes conflicting bills are now pending. If
enacted, such legislation could substantially increase the cost of holding
unpatented mining claims and could impair the ability of companies to develop
mineral resources on unpatented mining claims. Under the terms of certain
proposed legislation, the ability of companies to obtain a patent on
unpatented mining claims would be nullified or substantially impaired.
Moreover, certain forms of such proposed legislation contain provisions for
the payment of royalties to the federal government in respect of production
from unpatented mining claims, which could adversely affect the potential for
development of such claims and the economics of operating existing mines on
federal unpatented mining claims. The Company's financial performance could
therefore be affected adversely by passage of such legislation. It is
impossible to predict at this point what any legislated royalties might be,
but a potential three to four percent gross royalty, assuming a gold price of
$300 per ounce, would have an approximated $9 to $12 per ounce impact on the
Company's costs of any production from unpatented mining claims.
Uncertainty of Funding for Exploration. The Company has funded much of its
exploration and acquisition activities through joint venture arrangements,
which minimize the cost of such activities to the Company and allow it to
explore and acquire a greater number of properties than it would otherwise be
able to explore or acquire on its own. The Company has also funded a portion
of its exploration activities without joint venture participation, resulting
in increased costs to the Company. The Company has been successful in raising
such funds for its exploration activities. Additional funding from existing
partners or third parties, however, may be necessary to conduct detailed and
thorough evaluations of, and to develop certain properties. The Company's
ability to obtain this financing will depend upon, among other things, the
price of gold and the industry's perception of its future price. Therefore,
availability of funding is dependent largely upon factors outside of the
Company's control, and cannot be accurately predicted. The Company does not
know from what sources it will derive any required funding. If the Company is
not
<PAGE> 8
able to raise additional funds (as to which there can be no assurance), it
will not be able to fund certain exploration activities on its own.
Uncertainty of Development and Operating Property Economics and Ore Grades at
Development Properties. Decisions as to whether any of the mineral
development properties which the Company now holds or which it may acquire in
the future contain commercially minable deposits, and whether such properties
should therefore be sold or brought into production, depend upon the results
of exploration programs and/or feasibility analyses and the recommendations of
duly qualified engineers or geologists. Such decisions involve consideration
and evaluation of several significant factors, including, but not limited to,
the (a) costs of bringing a property into production, including exploration
and development work, preparation of production feasibility studies and
construction of production facilities, (b) availability and costs of
financing, (c) ongoing costs of production, (d) market prices for the mineral
to be produced, and (e) the amount and grades of reserves or mineralized
material. There can be no assurance that any of the development properties
now held by the Company, or which may be acquired by the Company, contains a
commercially minable mineral deposit, and therefore no assurance that the
Company will ever generate a positive cash flow from the sale of or production
operations on such properties. In addition, once a property is sold with a
retained royalty or placed into production, risks still exist that the amount
and grade of its reserves will not actually be as predicted. To the extent
that lower amounts and/or grades of reserves are experienced, costs per unit
produced and profitability can be adversely affected. Depending upon the
extent of such an effect in any of the Company's properties, the Company could
incur a writedown on its investment in any such property.
Termination of Mining at the San Luis Gold Mine. Royalty income from the San
Luis gold mine has been the only significant source of income for the Company
during the period from 1990 through 1996. The mine was leased to and operated
by Battle Mountain Gold Co. ("BMGC"). As reported to the Company by BMGC,
mining was completed at the end of October, 1996. The Company's royalty
income from the property ceased shortly after that time.
Risks Related to the Production and Sale of Purified Phosphate Products and
ADA
Uncertain Commercial Viability of Solvent Extraction Process. The solvent
extraction process developed by the Company for the production of purified
phosphoric acid ("PPA") has not been proven on a continuing commercial basis
at the Calgary plant. Although the Company has performed numerous bench-scale
and pilot plant test of the process, there can be no assurances that the
process will yield satisfactory results when employed on a continuing
commercial scale.
Limited Experience in Marketing Industrial Chemicals and Lack of Long-term
Sales Contracts. The growth and profitability of operations at the Company's
solvent extraction facility in Calgary will be dependent upon, among other
things, the sale of purified phosphate products to chemical distributors and
customers. The Company has limited experience in marketing industrial
chemicals and is relying on consultants and others to initiate and maintain
sales contacts. PPA is not typically sold under long-term contracts, and the
Company does not have any long-term commitments to purchase its planned
products. There can be no assurances that the Company will be successful in
its future sales efforts.
Supply of Raw Materials. The growth and profitability of operations at the
Company's solvent extraction facility in Calgary will be dependent upon, among
other things, the availability of sufficient raw materials at reasonable
prices. The Company has negotiated a renewable annual supply contract with
Farmland Industries ("Farmland") and a supply arrangement with Agrium U.S.
Inc. ("Agrium") to supply the estimated requirement of superphosphoric acid
("SPA"). The contract with Farmland contains provisions that allow extension
of the contract in the future or termination upon a 90 day written notice.
There can be no assurances that the Company will be able to extend this
contract and supply arrangement in the future and/or obtain sufficient
quantities of SPA at reasonable prices.
<PAGE> 9
Ability to Expand Geographically. The growth and profitability of operations
at the Company's solvent extraction facility in Calgary will be dependent
upon, among other things, the ability to become the predominate supplier of
PPA in the geographic region surrounding Calgary and on the US West Coast, and
to sell on an increasing basis to the Minneapolis/Chicago area. There can be
no assurance that the Company's efforts to expand sales can be accomplished on
a profitable basis.
Competition. The Company's purified phosphate products will be sold in
markets that are highly competitive. The principal competitive factors
include product quality, price and distribution capabilities. There can be no
assurances that the Company will be able to compete successfully against
current and future competitors based on these factors. The Company will
compete with several domestic and international producers, many of whom have
substantially greater financial, production, distribution and marketing
resources than the Company. Increased competition could result in price
reductions, reduced margins and loss of market share, all of which could have
a material adverse affect on the Company's business, financial condition and
results of operations.
Effect of Potential Lack of Demand for ADA's Services. If there is no demand,
or the demand is less than projected, for ADA's services for flue gas
conditioning, the Company will not recognize the synergies expected from its
acquisition, because ADA will not be able to utilize the Company's purified
phosphate products.
THE OFFERING
Common Stock outstanding prior to the offering ...... 19,989,589 Shares
Common Stock offered by the Selling Shareholders...... 342,400 Shares (1)
Common Stock to be outstanding after the offering..... 20,268,589 Shares (2)
- -----------------------------------
(1) Of the 342,400 shares of Common Stock offered by the Selling
Stockholders, 63,400 shares are currently issued and outstanding, and 279,000
shares represent shares issuable on exercise of options for gross proceeds to
the Company of $808,010, if all such options were exercised.
(2) Includes up to 279,000 shares of Common Stock issuable on the exercise
of outstanding options at an exercise price of $1.50 to $4.00 per share.
USE OF PROCEEDS
The options held by Selling Stockholders must be exercised into shares of
Common Stock prior to the resale of the Common Stock offered by the Selling
Stockholders pursuant to this offering. Proceeds received by the Company on
the exercise of outstanding options, totaling $808,010, if all options held by
Selling Stockholders are exercised, will be used by the Company to pay general
and administrative expenses, to the extent not funded from operating revenue,
and for additional working capital. There can be no assurances that any of
the outstanding options will be exercised to provide any proceeds therefrom to
the Company.
SELLING STOCKHOLDERS
The following table provides certain information, as of the date of this
prospectus, respecting the Selling Stockholders, the shares of Common Stock
held by them or to be held, to be sold, and to be held following the offering,
assuming the sale by such Selling Stockholders of all Shares of Common Stock
offered.
<PAGE> 10
Shares Owned
Securities Owned Prior to the Offering (1) After Offering (1)
Common Shares to
Selling Stockholders Stock (2) Options (3) be Offered Number %
______________________________________________________________________________
Augustin Chan 400 5,000 5,400 0 -
Glenn Coleman 100 - 100 0 -
Corporate Relations
Group, Inc.(4) 0 240,000 240,000 0 -
Brian Donnelly 1,100 20,000 21,100 0 -
Charlene Donnelly 200 - 200 0 -
Doug Falconer 100 - 100 0 -
Roland Gallant 100 - 100 0 -
John Goodhand 200 5,000 5,200 0 -
Frederick Hofmann 100 4,000 4,100 0 -
Daryl Lukan 150 - 150 0 -
Brian Manning 100 - 100 0 -
Frank Roe 150 - 150 0 -
Larry Shupenio 100 - 100 0 -
Ramon Sifontes 10,000 - 10,000 0 -
Franklin J. Stermole 60,000 - 50,000 10,000 *
Greg Woolverton 200 - 200 0 -
Christy Zapp 1,205 5,000 5,400 805 *
______________________________________________________________________________
Totals 74,205 279,000 342,400 10,805 *
==============================================================================
* Less than one percent
(1) Shares owned prior to the offering include all shares of Common Stock
owned by the Selling Stockholder. Shares owned after the offering assume the
sale of all shares of Common Stock offered pursuant to this offering.
Percentage figures respecting the securities owned after the offering give
effect to the exercise of all options by that Selling Stockholder.
(2) Includes 10,805 shares of Common Stock held by Selling Stockholders not
offered in this offering.
(3) Consists of (i) options to purchase 240,000 shares of Common Stock at
exercise prices ranging from $2.40 per share to $4.00 per share by an
unrelated third party; (ii) options to purchase 10,000 shares of Common Stock
at an exercise price of $1.50 by an individual performing contract services
for the Company in Calgary; and (iv) options to purchase 29,000 shares at an
exercise price of $1.69 by five individuals who are performing services for
the Company in Golden and Calgary.
(4) Corporate Relations Group, Inc. is a wholly-owned subsidiary of Stratcom
Media Ltd., a public company; its president is Joseph H. Landis.
PLAN OF DISTRIBUTION
This Prospectus relates to the public offer and sale by certain shareholders
(the "Selling Stockholders") of 63,400 shares of Common Stock currently held
by Selling Stockholders and 279,000 shares of Common Stock of the Company
issuable on exercise of options.
The Common Stock to be sold by the Selling Stockholders may be sold by them
from time to time directly to purchasers. Alternatively, the Selling
Stockholders may, from time to time, offer the Common Stock through dealers or
brokers, who receive compensation in the form of commissions from the Selling
Stockholders and/or the purchasers of the Common Stock for whom they act as
agents. As of the date hereof, no Selling Stockholder has advised the Company
that it has entered into any agreement or understanding with any dealer or
broker for the offer or sale of the Common Stock. The Selling Stockholders
may enter into such agreements or understandings in the future. The Selling
Stockholders may also offer some or all of the Common Stock through market
transactions on Nasdaq, on which the Company's Common Stock is traded. Sales
of the Common Stock through brokers may be made by any method of trading
authorized by Nasdaq, including block trading in negotiated transactions.
Without
<PAGE> 11
limiting the foregoing, such brokers may act as dealers purchasing any or all
of the Common Stock covered by this Prospectus. Sales of Common Stock are, in
general, expected to be made at the market price prevailing at the time of
each such sale; however, prices in negotiated transactions may differ
considerably. No Selling Shareholder has advised the Company that it
anticipates paying any consideration, other than usual and customary broker's
commissions, in connection with sales of the Common Stock. The Selling
Stockholders are acting independently of the Company in making decisions with
respect to the timing, manner and size of each sale.
DESCRIPTION OF COMMON STOCK
The authorized capital stock of the Company consists of 25,000,000 shares of
Common Stock, $0.01 par value per share. All of the issued and outstanding
stock of the Company is fully paid and nonassessable. Holders of Common Stock
are entitled to receive dividends, when and if declared by the Board of
Directors, out of funds legally available therefore and to share ratably in
the net assets of the Company upon liquidation. Holders of Common Stock do
not have preemptive rights to subscribe for additional shares, nor are there
any redemption or sinking fund provisions associated with the Common Stock.
There are currently 19,989,589 shares of Common Stock outstanding owned by
approximately 3,000 persons and/or entities.
Holders of Common Stock are entitled to one vote per share on all matters
requiring a vote of the shareholders. Since the Common Stock does not have
cumulative voting rights in electing directors, the holders of more than a
majority of the outstanding shares of Common Stock voting for the election of
directors can elect all of the directors whose terms expire that year, if they
so choose.
LEGAL MATTERS
Certain legal matters with respect to the legality of the securities offered
hereby and the organization and existence of the Company have been passed upon
for the Company by Parcel, Mauro & Spaanstra, P.C., 1801 California Street,
Suite 3600, Denver, Colorado 80202.
EXPERTS
The consolidated financial statements which are incorporated by reference in
this prospectus by reference from the Company's Annual Report on Form 10-KSB,
as for the year ended December 31, 1997, have been audited by Hein +
Associates LLP, certified public accountants, as stated in their report, which
are incorporated herein by reference, and have been so incorporated in
reliance upon such report given the authority of that firm as experts in
accounting and auditing.
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses payable by the
Registrant in connection with the sale and distribution of the securities
being registered. All of the amounts shown are estimated except for the
Securities and Exchange Commission registration fee. The Selling Stockholders
will not be paying any of these expenses.
SEC registration fee $ 1,596.19
Printing and mailing expenses $ 1,000.00
Legal fees and expenses $ 2,000.00
Accounting fees and expenses $ 2,000.00
----------
Total $ 6,596.19
========================================
Item 15. Indemnification of Directors and Officers.
Article 7-109 of the Colorado Business Corporation Act authorizes the
indemnification of directors and officers against liability incurred by reason
of being a director or officer and against expenses (including attorney's
fees), judgments, fines and amounts paid in settlement and reasonably incurred
in connection with any action seeking to establish such liability, in the case
of third-party claims, if the officer or director acted in good faith and in a
manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and in the case of actions by or in the right of the
corporation, if the officer or director acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and if such officer or director shall not have been adjudged
liable to the corporation, unless a court otherwise determines.
Indemnification is also authorized with respect to any criminal action or
proceeding where the officer or director also had no reasonable cause to
believe his conduct was unlawful.
The above discussion of the Colorado Business Corporation Act is only a
summary and is qualified in its entirety by the full text of the foregoing.
Article VIII of the Registrant's Bylaws provides as follows:
Each past, present and future director and officer of the corporation
shall be indemnified by the corporation against all expenses, penalties, and
liabilities, including attorneys' fees, reasonably incurred by or imposed upon
him in connection with any actual or threatened claim, demand, action or
proceeding, whether civil or criminal, or in connection with any settlement
thereof, to which he may be made a party, or in which he may become involved,
by reason of his being or having been a director or officer of the
corporation, whether or not he is a director or officer at the time such
expenses, penalties or liabilities are incurred, except in cases where he
shall be finally adjudged in such action or proceeding to be liable for
willful misconduct in the performance of his duties as such director or
officer. The right of indemnification herein provided shall be in addition
to, and not exclusive of, all other rights to which such director or officer
may be entitled and the right of indemnification herein provided shall inure
to the benefit of the personal representatives of deceased directors and
officers.
<PAGE> 13
Item 16. Exhibits.
Exhibit
Number Description
3.1 Amended and Restated Certificate of Incorporation of the
Company (1)
3.2 Bylaws of the Company, as amended (2)
4.1** Specimen Common Stock Certificate
5.1** Opinion of by Parcel, Mauro & Spaanstra, P.C. as to legality of
the shares
23.1* Consent of Hein + Associates LLP
23.2** Consent of by Parcel, Mauro & Spaanstra, P.C. (contained in
Exhibit 5.1)
* Filed herewith.
** Previously filed.
- ------------------------------------------------------------------------------
(1) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1996.
(2) Incorporated by reference from the Company's Annual Report on Form 10-KSB
for the year ended December 31, 1993.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933 (the "Act"), each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered that remain unsold at the termination
of the offering.
(4) That, for purposes of determining liability under the Act, each
filing of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 (and where applicable, each
filing of an employee benefit plan's annual report pursuant to section 15(d)
of the Securities Exchange Act of 1934) that is incorporated by reference in
the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, insofar as indemnification for liabilities arising under the
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the
Registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
<PAGE> 14
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant hereby certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement and any amendment thereto to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Golden,
State of Colorado on April 16, 1998.
EARTH SCIENCES, INC.
Date: April 16, 1998 /s/ Ramon E. Bisque
-----------------------------------------------
Ramon E. Bisque
Principal Executive Officer
Date: April 16, 1998 /s/ Mark H. McKinnies
-----------------------------------------------
Mark H. McKinnies
President, Principal Financial and
Accounting Officer
Pursuant to the requirements of the Securities Exchange Act of 1933, as
amended, this Registration Statement and any amendment thereto has been signed
below by the following persons in the capacities and on the dates indicated.
Date: April 16, 1998 /s/ Ramon E. Bisque
-----------------------------------------------
Ramon E. Bisque, Director
Date: April 16, 1998 /s/ Duane N. Bloom
-----------------------------------------------
Duane N. Bloom, Director
Date: April 16, 1998 /s/ Michael D. Durham
-----------------------------------------------
Michael D. Durham, Director
Date: April 16, 1998 /s/ Robert H. Lowdermilk
-----------------------------------------------
Robert H. Lowdermilk, Director
Date: April 16, 1998 /s/ Mark H. McKinnies
-----------------------------------------------
Mark H. McKinnies, Director
<PAGE> 15
Exhibit 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated March 24,
1998 accompanying the financial statements of Earth Sciences, Inc. to Post
Effective Amendment No. 1 to Form S-3 Registration Statement, File No. 333-
25465, of Earth Sciences, Inc. and to the use of our name and the statements
with respect to us, as appearing under the heading "Experts" in the
Registration Statement.
/s/ Hein + Associates LLP
HEIN + ASSOCIATES
Denver, Colorado
April 14, 1998
<PAGE> 16
