As filed with the Securities and Exchange Commission on December 24, 1996
Registration No. 33-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
NOXSO CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-1118334
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2414 Lytle Road
Bethel Park, PA 15102
(412) 854-1200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Lewis G. Neal
President
NOXSO Corporation
2414 Lytle Road
Bethel Park, Pennsylvania 15102
(412) 237-2250
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
David J. Hirsch, Esq.
Doepken Keevican & Weiss Professional Corporation
37th Floor, USX Tower
600 Grant Street
Pittsburgh, Pennsylvania 15219
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this registration statement as
determined by market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [ ]
<PAGE>
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 for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Proposed Maximum
Title of each class of Amount to Maximum Aggregate Amount of
Securities to be registered be Registered Offering Price Offering Price (1) Registration Fee
Per Share (1)
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<S> <C> <C> <C> <C>
Common Stock, par value
$.01 per share. . . . . . . . 463,299 shares $2.47 $1,144,349 $346.77
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) at $2.47 per share on the basis of the average of the
high and low reported sales prices on December 18, 1996.
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 December 24, 1996
PROSPECTUS
463,299 Shares
NOXSO CORPORATION
Common Stock
(par value $.01 per share)
----------------
This Prospectus relates to 463,299 shares (the "Shares") of common stock,
par value $.01 per share (the "Common Stock"), of NOXSO Corporation, a Virginia
corporation (the "Company"), which may be offered and sold from time to time by
the selling stockholders named herein (the "Selling Stockholders"). See "Selling
Stockholders." This Prospectus does not relate to the sale or issuance by the
Company of any Common Stock. The Company will not receive any proceeds from the
sale of Common Stock by the Selling Stockholders.
The distribution of the Shares by the Selling Stockholders will be effected
directly by means of ordinary brokers' transactions or, in cash or exchange
transactions, to one or more institutional purchasers or through sales agents in
one or more transactions by means of ordinary brokers' transactions, block
transactions (which may involve crosses) in accordance with the rules of Nasdaq,
privately negotiated transactions or a combination of such methods of sale, in
each case at market prices prevailing at the time of sale or at negotiated
prices acceptable to the Selling Stockholders. See "Plan of Distribution." The
Company will pay the expenses of registration of the Shares.
The Company's Common Stock is traded on the Nasdaq Small Cap Market System
under the symbol "NOXSO." The last sale price of the Common Stock on December
18, 1996 as reported on the Nasdaq Small Cap System was $2.47.
The securities offered hereby involve a high degree of risk. See "Risk Factors."
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------------
THE INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO
<PAGE>
THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THE PROSPECTUS SHALL NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER,
SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION
UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
----------------
The date of this Prospectus
is __________, 199___
2
<PAGE>
TABLE OF CONTENTS
Page
----
Available Information .............................................3
Incorporation of Certain Documents ................................4
The Company....................................................... 5
Risk Factors...................................................... 6
Use of Proceeds...................................................11
Selling Stockholders..............................................12
Plan of Distribution..............................................13
Legal Matters.....................................................13
Experts...........................................................13
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company with the Commission can be
inspected and copied at the public reference facilities maintained by the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and should be
available at the Commission's Regional Offices at Seven World Trade Center, 13th
Floor, New York, New York 10048, and 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661. Copies of such material also can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
"web site" that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission.
The address of such site is "http://www.sec.gov".
In addition, the Company's Common Stock is traded on the Nasdaq Small Cap
Market System under the symbol "NOXSO" and such documents described herein can
also be inspected by contacting the Market Operations Department of Nasdaq at 80
Merritt Boulevard, Trumbull, Connecticut 06611.
This Prospectus constitutes a part of a Registration Statement filed by the
Company with the Commission under the Securities Act of 1933, as amended (the
"Securities Act"). This Prospectus omits certain of the information contained in
the Registration Statement in accordance with the rules and regulations of the
Commission. Reference is hereby made to the Registration Statement and related
exhibits for further information with respect to the Company and the Common
Stock. Statements contained herein concerning the provisions of any document are
not necessarily complete and, in each instance, reference is made to the copy of
such document filed as an exhibit to the Registration Statement or otherwise
filed with the Commission. Each such statement is qualified in its entirety by
such reference.
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<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission by the Company (File No.
0-17454) pursuant to the Exchange Act are incorporated by reference in this
Prospectus:
1. Annual Report on Form 10-K for the Year ended June 30, 1996.
2. Quarterly Report on Form 10-Q for the Quarter ended September 30,
1996.
3. The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A filed on February 1, 1989.
Each document filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the Common Stock pursuant hereto shall be
deemed to be incorporated by reference in this Prospectus and to be a part of
this Prospectus from the date of filing of such document. Any statement
contained in this Prospectus or in a document incorporated or deemed to be
incorporated by reference in this Prospectus shall be deemed to be modified or
superseded for purposes of the Registration Statement and this Prospectus to the
extent that a statement contained in this Prospectus, or in any subsequently
filed document that also is or is deemed to be incorporated by reference in this
Prospectus, 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 the Registration Statement or this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus is delivered, upon the request of any such person, a copy of any
or all of the documents which are incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such copies should be directed
to NOXSO Corporation, 2414 Lytle Road, Bethel Park, Pennsylvania 15102 to the
attention of Rita E. Bolli, Director of Investor Relations, telephone (412)
854-1200.
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THE COMPANY
NOXSO Corporation (the "Company") is a development stage company
incorporated in Virginia on August 28, 1979. The principal executive offices of
the Company are located at 2424 Lytle Road, Bethel Park, Pennsylvania 15102.
The Company is principally engaged in developing, testing, and marketing a
process that is a dry post-combustion emission control technology which uses a
regenerable sorbent to remove a high percentage of sulfur dioxides ("SO2") and
nitrogen oxides ("NOx"), pollutants which cause "acid rain" and ground level
ozone from flue gas generated by burning fossil fuel (the "NOXSO Process"). The
Federal Clean Air Act and regulations thereunder regulate emission of these
pollutants by imposing a limitation on the amount of each pollutant that a
generator (in this case, a power plant) may release into the atmosphere.
Amendments to the Clean Air Act adopted in 1990 will force drastic cuts in SO2
emissions and place caps on nationwide SO2 and NOx emissions from fossil fuel
boilers. Since inception, the Company has dedicated substantially all its
resources to the acquisition, development and testing of the NOXSO Process.
The NOXSO Process is distinguishable from current conventional flue gas
desulfurization processes in that it does not use liquids or slurries in a
"scrubber" and does not generate quantities of solid waste requiring disposal.
More importantly, it captures and removes nitrogen oxides as well as sulfur
oxides while conventional "scrubbers" capture and remove sulfur oxides only.
Upon completion of the NOXSO Process, the sulfur is recovered (and can be sold),
and the nitrogen is released into the atmosphere. In demonstrations conducted to
date, between 70% and 95% of the nitrogen oxide emissions and in excess of 95%
of the sulfur oxide emissions were simultaneously removed.
In August 1994, the Company entered into a Project Agreement (the "Alcoa
Project Agreement") with Alcoa Generating Corporation ("Alcoa") for the design,
construction, and operation of a proposed demonstration facility (the "NOXSO
Commercial Demonstration Facility") at Alcoa's Warrick Generating Station in
Newburgh, Indiana (the "Alcoa Project"). The project definition and design
phases of the Alcoa Project have been completed by the Company, and the
construction phase was commenced in June 1995. The Company has received all
necessary approvals from the U.S. Department of Energy (" DOE") to proceed to
complete the Alcoa Project. As a part of the approval, the DOE, which had
previously agreed to provide funding for development of a full-scale commercial
demonstration of the NOXSO Process, increased the funding for its share of costs
for the project from $33 million to $41.1 million. The Company is currently
negotiating to obtain financing for its share of project costs. See "Risk
Factors-Immediate Need for Additional Financing".
In April 1995, the Company entered into a License, Construction, Lease and
Sulfur Supply Agreement (the "Olin Agreement") with Olin Corporation ("Olin").
Under the Olin Agreement, the Company is constructing a complementary facility
(the "Olin Facility") at Olin's plant in Charleston, Tennessee, that is to
convert elemental sulfur which, after the Alcoa Project is completed, is to be
generated as a by-product of the Alcoa Project, into liquid sulfur dioxide (the
"Olin Project").
5
<PAGE>
The Company is also engaged in utilizing its engineering expertise to
develop other technologies, processes, sorbents and facilities that can be used
to assist in complying with environmental laws, although all such efforts are at
this time developmental in nature. The Company also from time to time performs
research and development for others on a project basis. In addition, the Company
is offering construction management services to others through its 70%- owned
subsidiary, PROJEX, Inc.
RISK FACTORS
An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Shares should not be purchased by persons who cannot afford the
possibility of loss of their entire investment. Prospective investors should
carefully consider the following risk factors in evaluating an investment in the
Company.
Immediate Need for Additional Financing
The Alcoa Project Agreement requires that the Company have in hand by a
designated date financial resources available for the performance of its
obligations under the Alcoa Project Agreement of at least $35 million in
addition to funds provided by the DOE. If such financing is not in hand by the
designated date, Alcoa has the right, at its option, to terminate its
obligations under the Alcoa Project Agreement. The designated date under the
Alcoa Project Agreement, which was originally October 31, 1996, has recently
been extended by Alcoa to January 31, 1997. The Company does not believe that
Alcoa will extend the date beyond January 31, 1997.
The funds needed, in excess of those available from the DOE, to complete
the proposed demonstration facility are to be provided from equity capital and
the proceeds of a series of bonds. On September 16, 1996, the Indiana
Development Finance Authority (the "Authority") adopted resolutions approving
the issuance of $40 million of Bonds (the "Bonds") to fund the Alcoa Project.
The Company is still seeking to resolve certain concerns of representatives of
the Authority and has been informed by those representatives that the Authority
intends to perform additional due diligence regarding the Company and its
ability to repay the Bonds should project revenues be insufficient to fully
repay the Bonds.
In order to satisfy conditions to the issuance of the Bonds, among other
things, the Company must obtain additional equity capital of approximately $5
million prior to January 31, 1997. Of the additional equity capital, $2.5
million is to be used to fund one-half of a supplemental reserve to secure the
Bonds. The remainder is to be used to repay a portion of certain outstanding
indebtedness of the Company (i) to Olin in respect of a loan in the amount of
$1,874,000 bearing interest at the rate of 10% per annum, (ii) to Praxair, Inc.
("Praxair"), an air products company that has agreed to defer payment of the
$2,700,000 balance owed for work done by Praxair in connection with the Olin
Project and (iii) in respect of a short term commercial loan in the amount of
$250,000 bearing interest a rate of 9.75% used to satisfy costs related to
obtaining a letter of credit. The maturities of the loan from Olin and the short
term commercial loan have been extended to January 31, 1997. Under the Company's
agreement with Praxair, the Company has agreed to pay late charges of .3% a week
from the date of each outstanding invoice and to assign
6
<PAGE>
revenues it is entitled to receive under the Olin Agreement to Praxair until the
Company's obligations to Praxair are paid in full.
An additional condition to issuance of the Bonds is that the County of
Warrick, Indiana must fund or irrevocably commit to fund, in cash or by causing
a letter of credit or its equivalent to be issued, $2.5 million to fund the
other half of the supplemental reserve. In addition, the Company has not entered
into a final agreement with the issuer of a direct-pay letter of credit required
to support and secure the Bonds.
In addition to the equity capital required to satisfy conditions to the
issuance of the Bonds, the Company expects it will be necessary to raise
additional equity capital, which it will use to pay the costs of the NOXSO
Commercial Demonstration Facility, enabling it to lower the amount of Bonds that
the Authority must issue to finance the NOXSO Commercial Demonstration Facility.
The Company intends to seek to raise the required $5 million of equity
capital and additional equity capital through private placements of its common
stock and/or subordinated debt securities that are convertible into common
stock, the terms of which placements are presently being negotiated and are
contingent upon the satisfactory completion of due diligence and other
conditions. Any shares issued in the private placements or upon conversion of
subordinated debt securities are expected to contain restrictions on resale in
accordance with federal securities laws and, thus, are expected to be sold at a
discount to the market price of freely tradeable shares.
There can be no assurance that the Company can raise the required or
additional equity capital or that the Bonds can be sold prior to January 31,
1997, the date by which the Alcoa Agreement, as amended, presently requires that
the Company have in hand financial resources available for the performance of
its obligations under the Alcoa Project Agreement of at least $35 million in
addition to funds to be provided by the DOE. If such financing is not in hand by
that date, Alcoa has the right, at its option, which the Company expects it to
exercise, to terminate its obligations under the Alcoa Project Agreement.
At December 20, 1996 negotiations regarding funding are in process. If such
funding is not secured, the Company may not be able to complete a full-scale
demonstration facility and repay its outstanding indebtedness. In addition, if
the Company is unable to fund its share of project costs or timely complete the
Alcoa Project, the Company expects to lose its DOE funding. This matter raises
substantial doubt about the Company's ability to continue as a going concern. If
the Company is unable to continue as a going concern, the Company's ability to
recover its construction in progress is uncertain.
Failure of the Alcoa Project to Perform as Expected; Termination of the Alcoa
Project Agreement
The Alcoa Project represents the first full-scale commercial demonstration
of the NOXSO Process. Payments to the Company under the Alcoa Project Agreement
will consist of SO2 Allowances ("Allowances"). Allowances are granted to
generators of SO2 under a program established by the Environmental Protection
Agency ("EPA") under the Clean Air Act amendments of 1990 and allow generators
to generate one ton of SO2 emissions during the year
7
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of use. Allowances which are not expended in a year can be applied to future use
or sold to others to permit them to emit SO2. No system similar to the SO2
allowance system has yet been adopted relating to NOx emissions. If such a
system is adopted, the Alcoa Project Agreement contemplates that the Company
receive a to-be-agreed-upon benefit relating to NOx allowances.
The Company contemplates generating cash flow by selling Allowances which
it earns under the Alcoa Project Agreement. Because commercial feasibility of
the NOXSO Process has not yet been fully demonstrated, it is possible that the
Alcoa Project will not perform as expected, which could substantially reduce the
number of Allowances that the Company receives under the Alcoa Agreement or
which could result in a termination by Alcoa of the Alcoa Project Agreement. A
substantial reduction in the number of Allowances that the Company receives
under the Alcoa Project Agreement could have a material impact on the cash flows
that the Company intends to use to service the Bonds.
If the NOXSO Process does not work as expected or, in certain other
instances, including if there is a cessation in the Allowance program or some
other legislative change or event that results in a substantial reduction in the
Allowances available to Alcoa, Alcoa has the right to terminate the Alcoa
Project Agreement. Alcoa also has the right, subject to certain conditions to
terminate the agreement if it ceases to operate the unit at its Newburgh,
Indiana plan (Unit Number 2) that is to provide the flue gas stream to be
treated at the NOXSO Commercial Demonstration Facility; under certain
circumstances, the Company has the right to treat the flue gas from a different
unit at Alcoa's Newburgh plant if Alcoa ceases to operate Unit Number 2.
Termination of the Alcoa Project Agreement would in all likelihood result in
acceleration of the Company's obligations with respect to the Bonds, which the
Company would likely be unable to pay, and would in addition in all likelihood
make it impossible for the Company to market or sell the NOXSO Process to other
parties.
Because the Alcoa Project represents the first full-scale commercial
demonstration of the NOXSO Process, expenses to operate and maintain the project
may exceed the Company's expectations even if the project otherwise performs in
accordance with those expectations. In such event, the Company would have to use
cash generated from other operations to fund those expenses. The Company, as a
development-stage company, does not at this time have other significant
operations that would provide such cash flow, and unless it develops such
operations and/or is able to effectively market the NOXSO Process (which may not
be possible if as a result of the additional expense of operation, the NOXSO
Process fails to operate effectively and economically as compared to competing
technologies), the Company may be unable to generate revenues to fund such
costs.
In addition, the market for Allowances is not well-developed, having
developed since the implementation of the amendments to the 1990 Clean Air Act
in 1995, and there can be no certainty that the market price for Allowances will
be in accordance with Company's expectations. In such event, the funds that the
Company currently expects to receive from the sale of earned Allowances will not
be available to service the Bonds.
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Matters Relating to the Olin Agreement
If the Olin Facility fails to perform and provide Olin with sulfur dioxide
in accordance with the specifications set forth in the Olin Agreement, Olin will
not be required to pay to the Company $3 million annually for 16,000 short tons
of elemental sulfur, which will most likely make it impossible for the Company
to service the Bonds.
Although the Company expects to pay for elemental sulfur to satisfy its
obligations under the Olin Agreement until April 1998, the month that the Alcoa
Project is scheduled to be operational, it does not expect to pay for elemental
sulfur after said month. If the NOXSO Commercial Demonstration Facility fails to
produce elemental sulfur commencing in May 1998 in such quantities as will
enable it to be used to satisfy the Company's obligation to deliver to Olin
16,000 short tons of elemental sulfur per year pursuant to the Olin Agreement,
the Company will be required to purchase additional elemental sulfur for
delivery to Olin. Based on historical prices for elemental sulfur, it is
anticipated that the cost of elemental sulfur purchased in the open market will
be approximately 12% to 25% of the consideration the Company is to receive from
Olin under the Olin Agreement. Such an expenditure, if required for any
significant period of time after April 1998, could have a material adverse
impact on the cash flows that the Company intends to use to service the Bonds.
In addition, if the Company fails to substantially complete the Olin
Facility by April 1, 1997, Olin will have the right to terminate the Olin
Agreement.
Revenues to Serve as Security for Bonds
Revenues from the NOXSO Commercial Demonstration Facility and the Olin
Facility will be required to be held in trust to secure repayment of the Bonds
until they are paid in full in the year 2011. Accordingly, those revenues will
not be available to the Company to pay its ordinary operating expenses and to
provide for its cash flow needs, other than those specifically related to the
Alcoa Project or the Olin Project. As a result, the Company will have to find
other sources of funds to provide for its ordinary operating and cash flow
needs. Consequently, even if the NOXSO Commercial Demonstration Facility
operates sufficiently well to enable the Company to service the Bonds, if it
fails to meet the expectations of the Company's prospective customers or to
operate effectively and economically as compared to competing technologies, the
Company may be unable to generate revenues to meet its other needs or,
ultimately, to establish the NOXSO Process as a viable competitor in the
marketplace.
Net Losses and Accumulated Deficit
The Company has incurred substantial net losses in each year of its
operations. To date, the Company has not derived any revenues from operations.
All revenues to date have consisted of research funding, government grants,
reimbursement of project costs and interest income, aggregating $8.5 million
through September 30, 1996. As a result of the significant expenses incurred
from inception through September 30, 1996 in connection with the acquisition,
development and testing of the NOXSO Process, as well as general and
administrative expenses that have been incurred, the Company had an accumulated
deficit of $12.0 million at September
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30, 1996. Since inception through June 30, 1996, the Company's total costs and
expenses were $20.5 million, including $7.7 million relating to salaries and
benefits. The Company anticipates that it will continue to incur losses at least
through 1997, and there can be no assurance that it will be able to achieve
revenue growth or profitability on an ongoing basis in the future.
Competition
The market for pollution control equipment is directly impacted by
environmental laws and regulations. Federal, state, and local governments have
enacted laws which set required reductions in pollutant emissions levels for
certain industries or specific source category within an industry by specific
dates. The market for the NOXSO Process and the competition for a share of the
market is, therefore, dependent upon deadlines set by regulators and commercial
readiness of the NOXSO system.
The pollution control business is highly competitive. Numerous companies
are engaged in the construction of flue gas desulfurization systems, and there
are a few companies now engaged in the development of regenerable systems
(systems which, like the NOXSO Process, do not produce sludge for disposal). At
this time, however, the market is dominated by companies marketing lime and
limestone systems (sludge producing systems).
Many of the companies engaged in the development or construction of flue
gas emission control systems are well-established in this field. The dominant
companies in the United States include General Electric, Babcock & Wilcox
Company, Asea Brown Boveri, Wheelabrator, Joy Bischoff and Pure Air. The Company
does not intend to construct pollution control facilities itself, but will seek
to license the technology to major engineering firms engaged in the design and
construction of pollution control equipment.
A variety of clean coal technologies in addition to the NOXSO Process
exists. The Company believes that where high removal levels of both sulfur and
nitrogen oxides are required (currently the Northeast United States) and where
there is a premium on minimizing solid waste, the NOXSO Process provides
advantages over other competing systems, either currently in commercial use or
under development. However, various factors may favor other technologies or
solutions to satisfy the requirements of the Clean Air Act. It is not clear how
or to what levels NOx emissions will be required to be reduced under the Clean
Air Act. Furthermore, the NOXSO Process creates substantial material-handling
issues, requires the use of corrosion-resistant materials and requires a
significant initial capital expenditure which, in some instances, may exceed
installation costs for alternative processes.
In addition to direct competition from other companies engaged in
development of flue gas desulfurization systems, the Company's process, because
it relates to coal and high sulfur oil, is in competition with other available
energy sources such as gas, nuclear energy and solar, geothermal and wind power.
To the extent that any of these energy sources becomes more desirable or that
coal becomes less desirable as an energy source, for political, environmental,
economic or other reasons, the ability of the NOXSO Process to compete
effectively may be adversely affected.
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Accordingly, the NOXSO Process will compete with a number of different
technologies on the basis of technical and economic viability. In addition to
being able to meet any required emission standards on an operating basis, the
NOXSO Process treatment facility must be operationally cost efficient compared
to alternative technologies.
No Dividends
The Company has not paid any cash dividends on its Common Stock and does
not expect to declare or pay any cash dividends for the foreseeable future. Any
payment of dividends will be at the discretion of the Board of Directors and
will depend on the earnings and financial requirements of the Company as well as
other factors, including without limitation restrictions imposed by Virginia
corporate law and restrictions anticipated to be imposed in the indenture
pursuant to which the Bonds will be issued.
Shares Eligible for Future Sale
The Company is currently in the process of offering approximately 1.8
million shares in private placements to accredited investors. All such shares
when issued would be "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and in the future may be sold in compliance with Rule 144 or pursuant to another
exemption or pursuant to a registration statement filed under the Securities
Act. Rule 144 provides generally that a person holding restricted securities for
a period of two years may sell such securities in brokerage transactions subject
to certain volume and other limitations. Rule 144 also permits, under certain
circumstances, the sale of shares without any volume limitation by a person who
is not an affiliate of the Company who has satisfied a three-year holding
period. The terms of such private placements will require the Company to
register for resale the shares issued in such private placements. Such sales or
the perception that such sales might occur could adversely affect prevailing
market prices for the Common Stock and the ability of the Company to raise
equity capital.
Dependence on Key Personnel
The Company's success depends on a number of key management, technical and
operational personnel for the management of operations and the continued
development of the NOXSO Process. The loss of one or more of these people could
have an adverse effect on the Company's business and results of operations. The
Company depends on its continued ability to attract and retain highly skilled
and qualified personnel. There can be no assurance that the Company will be
successful in attracting and retaining such personnel.
USE OF PROCEEDS
The Common Stock sold pursuant to this Prospectus will be sold by the
Selling Stockholders for their own accounts, and the Company will not receive
proceeds from such sales.
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SELLING STOCKHOLDERS
The table below sets forth information regarding the Selling Stockholders
as of December 18, 1996: (i) the name of each Selling Stockholder (none of which
other than Ms. Bolli, who is the Company's Manager of Marketing, have had
positions, offices or other material relationships with the Company during the
past three years), (ii) the number of shares of Common Stock owned beneficially
or of record by such Selling Stockholder, (iii) the number of shares of Common
Stock offered by such Selling Stockholder and (iv) the number of shares of
Common Stock to be owned by such Selling Stockholder after completion of the
offering, assuming all of the Shares being offered hereby are sold.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Ownership After
Name of Selling Number of Shares Number of Shares Offering
Stockholder Owned Prior to Being Offered Number Percent
Offering of Shares of Class
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Duck Partners L.P. 93,458(1) 93,458 0 0(2)
J.M. Hull Associates, 126,610(1) 126,610 0 0(2)
L.P.
Hull Overseas, Ltd. 93,458(1) 93,458 0 0(2)
Donald B. Marburger 145,773 145,773 0 0
Rita E. Bolli 12,000(3) 4,000 8,000(3) Less than 1%
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(1) J. Mitchell Hull is a general partner of Duck Partners L.P. and J. M. Hull
Associates L.P. and a director of Hull Overseas, Ltd. Thus, shares owned by any
of Duck Partners L.P., J.M. Hull Associates L.P. and Hull Overseas, Ltd. (the
"Hull Entities") (aggregating 313,526) may be deemed to be beneficially owned by
each of them. Of the shares owned prior to the Offering by Duck Partners L.P.,
J.M. Hull Associates L.P. and Hull Overseas, Ltd., 46,729, 63,305 and 46,729,
respectively are shares issuable on exercise of Warrants exercisable at a price
of $4.28 per share (the "Warrants").
(2) Assumes that the Warrants are exercised and the shares issuable on exercise
thereof are sold in the Offering.
(3) Of the shares owned by Ms. Bolli prior to and after the Offering, 3,000 are
shares issuable on exercise of options granted under the Company's 1990 Stock
Option Plan.
The Shares of Common Stock offered hereby were sold to the Hull Entities
and Mr. Marburger in private placements and to Ms. Bolli pursuant to an employee
stock option plan. Under the Subscription Agreement pursuant to which 145,773
shares of Common Stock were issued to Mr. Marburger, the Company agreed to use
its best efforts to file a registration statement with respect to such shares
and to cause such registration statement to be declared effective. Under the
Subscription Agreement pursuant to which 156,763 shares, and Warrants to
purchase an additional 156,763 shares, were issued to the Hull Entities, the
Company agreed to include such shares under certain circumstances in a
registration statement filed by the Company.
12
<PAGE>
PLAN OF DISTRIBUTION
The Shares may be offered and sold by the Selling Stockholders pursuant to
this Prospectus from time to time directly by means of ordinary brokers'
transactions or, in cash or exchange transactions, to one or more institutional
purchasers or through sales agents by means of (i) ordinary brokers'
transactions, (ii) block transactions (which may involve crosses) in accordance
with the rules of Nasdaq, in which the Selling Stockholders' agents may attempt
to sell the Shares as agent but may position and resell all or a portion of the
Shares as principal, (iii) privately negotiated transactions or (iv) a
combination of any such methods of sale, in each case at market prices
prevailing at the time of sale or at negotiated prices acceptable to the Selling
Stockholders. In connection therewith, distributors' or sellers' commissions may
be paid or allowed which will not exceed those customary in the types of
transactions involved. If any sales agent of the Selling Stockholders purchases
the Shares as principal, it may resell such shares by any of the methods of sale
described above.
The can be no assurance that the Selling Stockholders will sell any or all
of the Shares offered hereunder.
LEGAL MATTERS
The validity of the Common Stock being offering hereby will be passed upon
for the Company by Doepken Keevican & Weiss Professional Corporation,
Pittsburgh, Pennsylvania.
EXPERTS
The financial statements and the related financial statement schedule
incorporated in this prospectus by reference from the Company's Annual Report on
Form 10-K for the year ended June 30, 1996 have been audited by Arthur Andersen
LLP, independent public accountants, as indicated in their report with respect
thereto which is incorporated herein by reference, and have been so incorporated
in reliance upon the authority of said firm as experts in giving said report.
Reference is made to said report which includes an explanatory paragraph
discussing the Company's ability to continue as a going concern.
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the expenses in connection with the issuance
and distribution of the Common Stock being registered. All of the amounts shown
are estimates, except the SEC registration fee.
Registration fee ............................. $346.77
Blue Sky fees and expenses .................
Printing and engraving expenses ..............
Legal fees and expenses ......................
Accounting fees and expenses .................
Miscellaneous ................................
-------
Total .................................... $
Item 15. Indemnification of Directors and Officers.
The Articles of Incorporation of the Company, as amended (the "Articles")
provide that each director and officer (and his heirs, executors and
administrators) shall be indemnified by the Company against reasonable costs and
expenses incurred by him in connection with any action, suit, or proceeding to
which he may be made a party by reason of his being or having been a director or
officer of the Company, except in relation to any action, suit or proceeding in
which he has been adjudged liable because of negligence or misconduct (which is
to mean willful misfeasance, bad faith, gross negligence, or reckless disregard
of the duties involved in the conduct of his office). In the absence of an
adjudication which expressly absolves the director or officer of liability to
the Company or its stockholders for negligence and misconduct, or in the event
of a settlement, each director and officer (and his heirs, executors and
administrators) is to be indemnified by the Company against payments made,
including reasonable costs and expenses, (i) upon the prior determination by a
resolution of two-thirds of those members of the Board of Directors of the
Company who are not involved in the action, suit or proceeding that the director
or officer has no liability by reason or negligence or misconduct, or (ii) if a
majority of the members of the Board of Directors of the Company are involved in
the action, suit or proceeding, upon determination made by a written opinion of
independent counsel. The Articles of Incorporation also provide that such a
determination by the Board of Directors or by independent counsel, and the
payments of amounts by the Company on the basis thereof, shall not prevent a
stockholder from challenging such indemnification by appropriate legal
proceedings on the grounds that the person indemnified was liable to the Company
or its security holders by reason of negligence or misconduct. The Articles
provide that the rights and indemnification contained in the Articles shall not
be exclusive of any other rights to which the officers and directors may be
entitled according to law.
II-1
<PAGE>
Article 10 of the Virginia Stock Corporation Act (the "VSCA") authorizes
the indemnification of an individual made party to a proceeding because he is or
was a director or officer of a corporation against liability incurred in the
proceeding (including the obligation to pay a judgment, settlement, penalty,
fine, including any excise tax assessed with respect to an employee benefits
plan, or reasonable expenses (including counsel fees) incurred with respect to
the proceeding) if (i) such individual conducted himself in good faith and
believed, in the case of conduct in his official capacity with the corporation,
that his conduct was in its best interests and, in all other cases, that his
conduct was at least not opposed to its best interests; and (ii) in the case of
any criminal proceeding, that he had no reasonable cause to believe his conduct
was unlawful. Indemnification is not permitted in connection with a proceeding
by or in the right of the corporation in which the director or officer was
adjudged liable to the corporation or, in connection with any other proceeding
charging improper personal benefit to him, in which he was adjudged liable on
the basis that improper benefit was improperly received by him.
The above discussion of the Articles and Article 10 of the VSCA is only a
summary and is qualified in its entirety by the full text of each of the
foregoing.
Item 16. Exhibits.
List of Exhibits
The following exhibits are included as a part of this Registration Statement or
incorporated herein by reference.
Exhibit No. Document Description
----------- --------------------
5.1 Opinion of Doepken Keevican & Weiss Professional
Corporation (to be filed by amendments)
23.1 Consent of Arthur Andersen LLP
23.2 Consent of Doepken Keevican & Weiss Professional
Corporation to be (to be included in Exhibit 5.1)
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(a) (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement (or the most
recent post-effective
II-2
<PAGE>
amendment thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the Registration
Statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this
section do not apply if the Registration Statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the Registrant
pursuant to section 13 or section 15(d) of the Securities Exchange Act
of 1934 that are incorporated by reference in the Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
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 which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Pittsburgh, Commonwealth of Pennsylvania on the 20th
day of December, 1996.
NOXSO CORPORATION
By: /s/ Lewis G. Neal
--------------------
Lewis G. Neal
President
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Lewis G. Neal and John L. Haslbeck, and each of
them, with full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities to sign any
or all amendments to this Registration Statement, including post-effective
amendments, and to file the same with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorneys-in-fact and agents, and each of them, full power and
authority to do and perform each and every act and thing requisite and necessary
to be done in connection therewith, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents of any of them, or any substitute or substitutes,
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Name/Signature Title Date
-------------- ----- ----
<S> <C> <C>
President, Director December 20, 1996
/s/ Lewis G. Neal (Principal Executive Officer)
------------------------
Lewis G. Neal
Vice President, Treasurer, December 20, 1996
/s/ John L. Haslbeck Director (Principal Financial and
------------------------- Accounting Officer)
John L. Haslbeck
/s/ Robert M. Long Secretary, Director December 20, 1996
-------------------------
Robert M. Long
/s/ Stephen C. Voss Director December 20, 1996
--------------------------
Stephen C. Voss
</TABLE>
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
- ----------- ----------- ----
23.1 Consent of Arthur Andersen LLP
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our report dated September 6, 1996,
(except with respect to the matters discussed in Note 8, as to which the date is
October 11, 1996), included in NOXSO Corporation's Form 10-K for the year ended
June 30, 1996 and to all references to our Firm included in this registration
statement.
ARTHUR ANDERSEN LLP
Pittsburgh, Pennsylvania
December 23, 1996
