As filed with the Securities and Exchange Commission on
April 16, 1999
Reg. No. 333-72473
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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PCC GROUP, INC.
(Exact name of issuer as specified in its charter)
California 95-3815164
(State or other jurisdiction of (I.R.S.
Employer incorporation or organization) Identification No.)
163 University Parkway
Pomona, California 91768
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Jack Wen
Chief Executive Officer
PCC Group, Inc.
163 University Parkway
Pomona, California 91768
(Name and address of agent for service)
(909) 869-6133
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copy to:
Istvan Benko, Esq.
Stuart Teng, Esq.
Troy & Gould Professional Corporation
1801 Century Park East, Suite 1600
Los Angeles, California 90067
(310) 553-4441
Approximate date of commencement of proposed sale to public:
From time to time after this registration statement becomes
effective.
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. [ ]
The Registrant hereby amends this registration statement on the
date or dates as may be necessary to delay its effective date
until the Registrant shall file a further amendment which
specifically states that this registration statement shall
thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this registration statement
shall become effective on the date as the Commission, acting
pursuant to said Section 8(a), may determine.
The information contained in this prospectus is not yet complete,
and it may be supplemented or amended in the final version. A
registration statement for the securities described in this
prospectus has been filed with the Securities and Exchange
Commission. The selling shareholders may not sell these
securities, or accept offers to buy them, until the registration
statement becomes effective. These securities will not be sold
in any state where their offer or sale, or solicitations of
offers to buy them, would be unlawful prior to their registration
or qualification under the securities laws of any state.
PROSPECTUS
PCC GROUP, INC.
681,266 Shares of Common Stock
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Our common stock is traded on the Nasdaq SmallCap Market under
the symbol "PCCG." On April 14, 1999, the closing price of our
common stock was $5.50 per share.
An investment in the common stock involves a high degree of risk.
Before investing in the common stock, you should consider
carefully the risks described under "Risk Factors" beginning on
page 2.
The selling shareholders are offering these shares of common
stock, and they will receive all the proceeds from this offering.
The selling shareholders will determine the offering price.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the common
stock or passed upon the adequacy or accuracy of this prospectus.
Any representation to the contrary is a criminal offense.
The date of this prospectus is April 15, 1999.
PROSPECTUS SUMMARY
The following summary is not complete and does not contain
all of the information that is important to you. To fully
understand this offering, you should read the entire prospectus
and the documents incorporated by reference.
General Information About Us
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During the past 16 years, we have been primarily
engaged in the wholesale distribution of computer hardware
products and components. The computer hardware products and
components that we resell include hard disk drives, CD-ROM
drives, monitors, keyboards, computer enhancement components, and
a variety of other computer parts and accessories. We purchase
these products in large volume directly from the manufacturers
and then sell the products to personal computer assemblers and
other resellers. Until recently, we have not marketed any
products directly to end-user customers. In December 1998, we
introduced a new internet website through which we are now
offering personal computer parts and products directly to the
public.
We are a California corporation, and were formed by a
merger in September 1989, of PC Craft, Inc., a Delaware
corporation, with and into WMD Micro Distributors, Inc., a
California corporation organized in 1983. At the time of the
merger, WMD Micro Distributors, Inc. changed its name to PCC
Group, Inc. All references to "our," "us" or "we" refer to both
PCC Group, Inc. and our major subsidiary. Our principal
executive offices are located at 163 University Parkway, Pomona,
California 91768, and our telephone number is (909) 869-6133
The Offering
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Common stock offered . . . . . . . . 681,266 shares(1)
Common stock to be outstanding
after the offering . . . . . . . 3,447,605 shares(1)(2)
Use of proceeds from the sale of
common stock in this offering . . All of the proceeds will be
received by the selling shareholders.
We will not receive any of the
proceeds from this offering, but will
bear estimated expenses of
approximately $30,000.
Nasdaq SmallCap Market Symbol . . . PCCG
__________________
(1) The number of shares the holders of our 8% convertible
preferred stock can acquire upon the conversion of the preferred
stock will depend upon the purchase price of the common stock
prior to the conversion. The number of shares being offered by
this prospectus assumes that the maximum number of shares
possible are issued upon the conversion of the preferred stock
and also assumes that all of the warrants are exercised.
(2) The number of outstanding shares is based upon the total
number of outstanding shares of common stock on April 14, 1999,
and assumes that the maximum number of shares issuable under the
8% convertible preferred stock and warrants are issued.
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RISK FACTORS
The following risks are not all of the risks of an investment in
this offering. In addition to the risks described below, you
should read and consider carefully the risks described in our
Annual Reports on Form 10-K for the year ended September 30,
1998, as well as in our subsequent SEC filings, all of which are
incorporated herein by reference.
The Growth Rate of Personal Computer Sales Has Been Declining
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We believe that the growth rate of worldwide personal
computer sales has declined and may remain below the growth rate
from prior years for the foreseeable future. As a result, we
could experience decreased demand for our products and increased
competition. This decline in the growth rate could adversely
affect our business.
We Must Frequently Distribute New Products
- ------------------------------------------
Due to the dynamic nature of the personal computer industry,
we are frequently required to distribute new products and product
enhancements. The success of new product introductions is
dependent on a number of factors, including market acceptance,
management of inventory levels, availability of products in
appropriate quantities, and risk that new products may have
defects. Accordingly, we cannot determine the effect that new
product introductions will have on our sales or results of
operations.
We May Have Excess or Obsolete Inventory
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We acquire inventory in advance of product shipments.
Because forecasting the desirable level of inventory is
difficult, we may forecast incorrectly and stock excess inventory
of particular products. Furthermore, the value of our inventory
may decrease due to price reductions by competitors, obsolescence
due to technological change, and product quality problems. In
our financial statements, we have attempted to accurately
indicate the value of our inventory assets by reducing their
value with a reserve for obsolescence. Although we believe we
have appropriately accounted for obsolescence, we may need to
further reduce the value of our inventory on our financial
statements due to future unanticipated obsolescence or other
inventory problems. Significant declines in inventory value due
to obsolescence or other inventory problems may have a material
adverse effect on our business.
We Face Substantial Competition From Major Distributors of
Personal Computer
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Components
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The wholesale personal computer components distribution
industry is highly competitive and is characterized by aggressive
pricing practices, low gross margins, frequent introduction of
new products, short product life cycles, price sensitivity on the
part of consumers, and a large number of competitors.
Competition is based primarily on product availability, price,
credit availability, speed of delivery, and breadth and depth of
product lines and services. We are limited in our ability to
raise prices due to the intense price competition and the extreme
price sensitivity of consumers. We expect that our business will
continue to be adversely affected by industry-wide pricing
pressures and downward pressures on gross margins as personal
computers and computer components become cheaper . Many of our
competitors have greater financial, marketing, manufacturing, and
technological resources, broader product lines and larger
customer bases and are more capable of operating with low gross
margins. If we fail to compete effectively, our business will
be adversely affected.
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Our Internet Commerce Operations Are New And Will Face Stiff
Competition
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Our internet operations are expected to comprise only a
small portion of our revenues, and these operations are not
expected to be profitable in the near future. We have only
limited experience in internet commerce. Furthermore, we will
experience substantial competition in our new internet retail
operations. There already are a number of major internet-focused
computer retailers, including several well-financed, prominent
public companies. In addition, we will also compete against
various computer manufacturers who operate their own retail
websites. There is no assurance that we will be able to compete
with these other internet companies.
We Operate on Low Profit Margins Which Exposes us to Losses
- -----------------------------------------------------------
As a result of price competition, we have low gross profit
and operating margins. These low margins magnify the impact of
variations in net sales and operating costs on our operating
results. Our goal is to partially offset the effects of low
margins by increasing our net sales, trying to make large volume
purchases at a discount, and reducing expenses as a percentage of
net sales. We cannot assure you that we will be able to make
purchases with large volume discounts or otherwise increase our
margins.
We Are Dependent on Third-Party Suppliers
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Although some components essential to our business are
generally available from multiple sources, some products are
currently obtained from single sources. If the supply of single-
source products were to be delayed or curtailed, our business
could be adversely affected.
We Are Dependent on Third-Party Computer Resellers
- --------------------------------------------------
A number of uncertainties may affect the marketing and
distribution of our products. Currently, our primary means of
distribution is through third-party computer resellers. The
resellers include value added resellers, system integrators, and
dealers. Our business and financial results could be adversely
affected if the financial condition of these resellers weakened
or if resellers discontinued the distribution of our products.
We Are Dependent on Key Personnel
- ---------------------------------
Our success depends to a significant extent upon the
continued service of key marketing, sales, and executive
personnel, and on our ability to continue to attract, retain and
motivate qualified personnel. The competition for qualified
employees is intense, and the loss of the services of one or more
of these key personnel could adversely affect us. We do not
maintain key man life insurance on any of our executives.
Our Stock Price May be Volatile
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The market price of our common stock has been, and may
continue to be, highly volatile. Factors such as new product
announcements by us or competitors, quarterly fluctuations in our
operating results, and general conditions in the computer market
may have a significant impact on the market price of our common
stock. In particular, if we were to report operating results
that did not meet the expectations of research analysts, the
market price of our common stock could be materially adversely
affected. The stock prices of high technology companies,
particularly those engaged in internet commerce, have experienced
above average volatility in recent years. For example, the price
of our common stock during the last fiscal year has flucuated
between a low of $2.50 and a high of $7.50.
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We Do Not Expect to Pay Dividends on Our Common Stock
- -----------------------------------------------------
We do not plan to pay dividends on our common stock for the
foreseeable future. All earnings, other than dividends paid on
preferred stock, will be retained for operations and for the
development of our business. Our ability to pay dividends in the
future is dependent on our financial condition and on limitations
on the payment of dividends contained in California law.
We May Experience Year 2000 Interruptions
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We use a number of computer software programs and operating
systems in our internal operations, including applications used
in order processing, inventory management, distribution,
financial business systems and various administrative functions.
We hired a consultant to conduct an independent audit of our
internal software applications to determine if it contains source
code that is able to interpret the upcoming calendar year 2000.
Based on the independent audit, we believe that our computers are
able to handle dates beyond the year 2000. Accordingly, we do
not anticipate that we will incur material expenses to make our
computer software programs and operating systems year 2000
compliant. However, unanticipated costs necessary to update
software, or potential systems interruptions, may exceed our
present expectations and have a material adverse effect on our
business. In addition, failure by our key suppliers, customers
or service providers to make their computer software programs and
operating systems year 2000 compliant could have a material
adverse effect on us. While we are not aware of any known third
party problems that will not be corrected, we only have limited
knowledge of their year 2000 state of readiness.
Conversion of the 8% Convertible Preferred Stock May Result in
Dilution
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The conversion of our 8% convertible preferred stock could
result in substantial dilution to our shareholders and a related
decline in the market price of our common stock. The 1,600
shares of 8% convertible preferred stock are convertible into
shares of common stock at a conversion price that is based on the
trading price of the common stock prior to the date of the
conversion. As a result, the exact number of shares that the
preferred stock will be converted into cannot be known until all
of the shares are converted. The more shares that are issued
upon the conversion, the more the interest owed by our existing
shareholders is diluted. For example, if the shares of 8%
convertible preferred stock are converted when the trading price
of the common stock on Nasdaq is about $8.00, the number of
shares issued upon a conversion would be about 200,000. Under
this first scenario, the former preferred shareholders would own
6.7% of the then outstanding shares of common stock, based on the
number of outstanding shares on April 14, 1999. However, if the
shares of 8% convertible preferred stock are converted when the
trading price of the common stock on Nasdaq is about $2.93, the
number of shares issued upon a conversion would be about 546,000,
and the percentage owned by these shareholders would be 16.5% of
the then outstanding shares of common stock, based on the number
of outstanding shares on April 14, 1999. This dilution may cause
the price of you stock to decrease. In addition, because the
shares of common stock into which the preferred stock is
convertible are registered for resale under this prospectus, the
resale of these shares could further depress the trading price of
our common stock.
Third Parties May Engage in Short Selling in Anticipation of
Conversion
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Because of the potential for substantial dilution and
decline in the market price of our common stock upon conversion
of the 8% convertible preferred stock, third parties may engage
in significant short selling of our common stock in anticipation
of the conversion. The potential issuance of the shares of
common stock issuable upon the conversion of the 8% convertible
preferred stock could cause
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investors to sell their shares, thereby depressing the stock
price. Short selling could aggravate a decline in our stock
price. The decrease in the stock price would result in more
shares of common stock being issued upon the conversion of the 8%
convertible preferred, thereby creating the very problem that
could cause some investors to sell their shares. In addition, if
we decided to issue new securities at a time when our stock price
was depressed by short selling, existing shareholders would
experience additional dilution.
We May Issue Additional Shares of Preferred Stock With Priority
Rights Over
- ---------------------------------------------------------------------------
The Common Stock
- ----------------
Our articles of incorporation permit our board of directors
to designate the terms of, and to issue, up to 5,000,000 shares
of preferred stock without further shareholder approval. The
issuance of additional series of preferred stock by our board of
directors could adversely affect the rights of the holders of our
common stock by establishing additional classes of preferred
stock that have preferential rights over the common stock. The
preferences could include priority in the payment of dividends,
priority upon liquidation, and special voting rights. In
addition, the issuance of additional series of preferred stock in
the future could make it more difficult for a third party to
attempt a takeover, tender offer, or removal of existing
management, even if the action would be in the best interests of
the existing shareholders.
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational requirements of the
Securities Exchange Act of 1934 and, as result, file reports,
proxy statements, and other information with the Securities and
Exchange Commission. You may read and copy the reports, proxy
statements, and other information that we file at the public
reference facilities maintained by the Securities and Exchange
Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the following regional
offices: 7 World Trade Center, New York, New York 10048, and
Northwestern Atrium Center, 500 W. Madison Street, Suite 1400,
Chicago, Illinois 60661. Please call the Securities and
Exchange Commission at 1-800-SEC-0330 for further information on
the public reference rooms. The Securities and Exchange
Commission maintains a web site at http://www.sec.gov which
contains our reports, proxy statements, and other information
that we file electronically with the Securities and Exchange
Commission. You can also inspect our reports, proxy statements
and other information at the offices of the Nasdaq Stock Market.
The Securities and Exchange Commission allows us to incorporate
by reference the information we file with it, which means that we
can disclose important information to you by referring you to
those documents. The information that we incorporate by
reference is considered to be part of this prospectus, and later
information that we file with the Securities and Exchange
Commission will automatically update and supersede this
information. We incorporate by reference the documents listed
below and any future filings made with the Securities and
Exchange Commission under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934:
* Annual report on form 10-K for the fiscal year ended
September 30, 1998, as amended by amendment no. 1 on form 10-K/A,
filed under Section 13(a) of the Securities Act of 1934.
* Quarterly report on form 10-Q for the fiscal quarter
ended December 31, 1998.
* The description of our common stock contained in the
registration statement on form 8-A, dated March 12, 1985.
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This prospectus is part of a registration statement we filed
with the Securities and Exchange Commission (registration no. 333-
72473). You may request a free copy of any of the above filings
by writing or calling:
PCC Group, Inc.
Attn: Don Johnson, Chief Financial Officer
163 University Parkway
Pomona, California 91768
(909) 869-6133
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION
Some of the information in this prospectus, or incorporated
by reference, may contain forward-looking statements which
involve known and unknown risks and uncertainties. These risks
and uncertainties may cause our actual results, performance or
achievements to be materially different from the future results,
performance or achievements stated or implied by the statements.
These statements discuss future revenue and expenditure
expectations in addition to anticipated strategies and events.
When considering the forward-looking statements, you should keep
in mind the risk factors and other cautionary statements
contained in this prospectus.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the
common stock offered under this prospectus, and all of the net
proceeds will belong solely to the selling shareholders. We
will, however, receive the exercise price of the warrants if the
warrants are exercised. We will bear the costs and expenses of
registration of shares offered by the selling shareholders, which
we currently estimate to be about $30,000.
RECENT DEVELOPMENTS
Sale of 8% Convertible Preferred Stock
- --------------------------------------
On January 19, 1999, we sold 750 shares of 8% convertible
preferred stock for a total price of $750,000. In addition, the
buyers of the 750 shares have agreed to purchase an additional
850 shares of the 8% convertible preferred stock, for $850,000
and on the same terms, immediately before the registration
statement is declared effective by the Securities and Exchange
Commission. The buyers of the 1,600 shares are JMG Capital
Partners, L.P. and Triton Capital Investments, Ltd.--each buyer
will have purchased 800 shares. In carrying out our obligation
under a registration rights agreement, we are registering 546,266
shares of common stock for possible resale upon the conversion of
the 8% convertible preferred stock. The actual number of shares
that will be issued will depend upon the price of the common
stock prior to the conversion date and may, therefore, be less
than 546,266 shares.
Terms of New Preferred Stock
- ----------------------------
Our articles of incorporation authorize the issuance of
5,000,000 shares of preferred stock, which may be issued in one
or more series. The board may determine or alter the rights,
preferences, privileges, and restrictions on any wholly unissued
series of preferred stock. Furthermore, the board may fix the
number of shares in a series of preferred stock and determine its
designation.
On January 14, 1999, the board of directors established and
designated 1,600 shares of a new series of preferred stock as 8%
convertible preferred stock. The stated value of this stock is
$1,000 per
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share. The following is a summary of the significant terms of
the 8% convertible preferred stock. However, the following is
only a summary, and you may wish to review the certificate of
determination of the 8% convertible preferred stock, a copy of
which you can obtain from us upon request. In addition, a copy
of the certificate of determination of the 8% convertible
preferred stock has been filed with the Securities and Exchange
Commission and is available for your review on the Securities and
Exchange Commission website.
Rank. The 8% convertible preferred stock ranks prior to the
common stock; any other currently outstanding shares of preferred stock;
and any class or series of stock created in the future, except
for stock that is deemed of equal rank.
Dividends. The holders of 8% convertible preferred stock
are entitled to receive preferential cash dividends of 8% per annum,
compounded annually on the stated value per share. This dividend
is payable semi-annually on January 1 and July 1, commencing July
1, 1999. Furthermore, this dividend must be paid in full before
any dividend or other distribution is made on the common stock or
other class of stock that is junior to the 8% convertible
preferred stock.
Liquidation Preference. The holders of 8% convertible
preferred stock have a liquidation preference. Upon a liquidation,
each share of 8% convertible preferred stock must first receive an
amount equal to the stated value and all accrued and unpaid dividends,
before other shareholders can receive any distribution. Furthermore, a
merger, sale of assets and some changes in control are considered
liquidations for which the holders will be entitled to receive
120% of the liquidation preference.
Conversion Rights. Beginning on May 19, 1999, each holder
of the 8 % convertible preferred stock may convert up to 20% of the 8%
convertible preferred stock into shares of common stock. After
each additional 30 days, the holder will be entitled to convert
another 20% of the 8% convertible preferred stock, until all of
it is convertible. The 8% convertible preferred stock will be
converted into common stock using the following formula:
shares of common stock = # of shares of 8% convertible
due upon conversion preferred stock X $1,000
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conversion price
The conversion price is the lower of the (a) average of the three
lowest closing sales prices as reported by Nasdaq for the 22
consecutive trading days immediately preceding the conversion
date, and (b) 125% of the lowest closing sales price of a share
of common stock reported on Nasdaq on the date that this
registration statement is declared effective. Our transfer agent
must issue the common stock certificates to the holders of the 8%
convertible preferred stock within five days of conversion. If
the common stock certificates are not issued on time, we must pay
the preferred stock holders $25 per day for each 10 shares of
common stock that are not issued on time. After ten days, the $25
amount increases to $100 per day.
Limitation of Conversion Rights. We will not have the
obligation to convert the 8% convertible preferred stock to the extent
the issuance of shares of common stock would result in the holder
becoming a beneficial owner of more than 5% of the outstanding
shares of common stock within the meaning of Section 13(d) of the
Securities Exchange Act of 1934.
Furthermore, Nasdaq rules prohibit us from issuing
convertible securities that would convert into more than 20% of
the common stock outstanding on the date the convertible security
is issued, unless shareholder approval is obtained. We are under
no obligation, however, to seek shareholder approval in
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the event the 20% limitation is triggered, and we do not
currently intend to ask for shareholder approval. Furthermore,
based on Nasdaq's current interpretation of its rules about
obtaining shareholder approval after convertible preferred stock
is issued, it is not likely that obtaining shareholder approval
would, in any event, permit us to issue more than the 546,266
shares of common stock.
Because there were 2,731,339 shares of common stock
outstanding on January 19, 1999, the date the 8% convertible
preferred stock was issued, only 546,266 shares of common stock
may be issued . Therefore, only 546,266 shares of common stock
are covered for resale by this prospectus, except for additional
shares issuable as a result of stock splits, stock dividends or
similar adjustments. The shares of common stock that we are not
permitted to issue because of this limitation, will be cashed out
using the following formula:
cash-out amount = excess shares of common stock X conversion
price X 1.25
The following table shows how the 20% limitation would operate
under a series of different conversion prices if the holders
desired to convert all of the 8% convertible preferred stock.
Shares of Common Excess Shares
Stock Issued of Common Stock Cash Payment
Conversion Price Upon Conversion Not Issued for Excess Shares
- ---------------------------------------------------------------------------
$16 100,000 0 0
$8 200,000 0 0
$4 400,000 0 0
$2 546,266 253,734 $634,335
$1 546,266 1,053,734 $1,317,168
For example, consider the example of a $2.00 conversion price in
above table. According to the conversion formula, we would divide
the $1,600,000 amount to be converted by the $2.00 conversion
price. This results in 800,000 shares of common stock. Because
of the 20% restriction, however, we may only issue 546,266 shares
of common stock. The holders of the 8% convertible preferred
stock would be compensated in cash for the excess shares of
common stock that could not be issued. In this example, the
253,734 excess shares of common stock would be multiplied by the
$2.00 conversion price and again multiplied by 1.25, resulting in
a cash payment of $634,335.
Redemption. At any time, upon 20 days notice, we may redeem all
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or a portion of the 8% convertible preferred stock. The redemption
price shall be 120% of the stated value of the shares to be
redeemed plus any accrued and unpaid dividends. If we redeem
less than all of the 8% convertible preferred stock, we will
redeem each holder's shares in a pro rata manner. The holders,
however, may choose to convert the 8% convertible preferred stock
into shares of common stock prior to the redemption date.
Voting Rights. The holders of the 8% convertible preferred stock
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have no voting power unless required by law. We may not, however,
change the terms of the 8% convertible preferred stock, increase
the authorized number of shares, or make some other changes to
the holders' rights without the consent of a majority of the
holders.
Registration Rights. In connection with the sale of the 8%
- -------------------
convertable preferred stock, we also entered into a registration
rights agreement with the purchasers of those preferred shares.
The registration rights agreement requires us
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to prepare this registration statement to register the shares of
common stock that can be issued upon the conversion of the
preferred stock. The registration rights agreement requires us
to bear all costs of this registration and also requires us to
indemnify each of the holders of the 8% convertible preferred
stock for liabilities that the holders may incur as a result of
any material misstatements or omissions we may have made in this
prospectus.
SELLING SHAREHOLDERS
All of the shares offered under this prospectus will be
offered by the selling shareholders. Except as indicated below,
none of the selling shareholders has held any position or office
or had any other material relationship with us within the past
three years. The following table shows the beneficial ownership
of our common stock for each of the selling shareholders on April
14, 1999. The table assumes that the selling shareholders will
sell all of the shares and that the selling shareholders will
make no other purchases or sales of our common stock. However,
the selling shareholders are not obligated to sell their shares
at any time or at any price. Therefore, we cannot state with
certainty the number of shares of common stock that will be owned
by each of the selling shareholders upon the termination of this
offering. The number of shares of common stock that each holder
may own may also change due to adjustments made by reason of any
stock splits or other anti-dilution adjustments.
The registered shares of common stock for JMG Capital
Partners, L.P. and Triton Capital Investments, Ltd. would be
issuable to them upon conversion of our 8% convertible preferred
stock.. Nasdaq's rules and the terms of the 8% convertible
preferred stock limit the number of shares issuable upon
conversion to 546,266 shares of common stock. Therefore, only
546,266 shares of common stock are registered under this
prospectus for these selling shareholders.
In connection with the private placement of 8% convertible
preferred stock, we issued a warrant Pacific Continental
Securities, Corp. The warrant is for 100,000 shares of common
stock and has an exercise price of $8.765625 per share for the
first 50,000 shares of common stock and $10.51875 per share for
the second 50,000 shares of common stock. The expiration date is
January 19, 2001. The number of shares subject to the warrant
and the exercise price will be adjusted due to stock dividends,
subdivisions, combinations, and similar events. Furthermore, the
warrant holder is entitled to receive dividends and distributions
as if the holder had exercised the warrant.
Shares of
Shares of Common Stock Number of Common Stock
Beneficially Owned Shares of Beneficially Owned
Prior to the Offering Common After the Offering
Name of ----------------------- Stock ------------------
Selling Shareholder Number Percentage(1) Offered Number Percentage(1)
- ----------------------------------------------------------------------------
JMG Capital
Partners, L.P. 273,133(2) 9.0% 273,133 0 0%
Triton Capital
Investments, Ltd. 273,133(2) 9.0% 273,133 0 0%
Pacific Continental
Securities Corp. 100,000 3.5% 100,000 0 0%
Summit Marketing 35,000(3) 1.3% 35,000 0 0%
& Public Relations
, Inc.
- -----------------------------
(1) The number of outstanding shares used to calculate the
percentage is based on 2,766,339 shares of common stock
outstanding on April 14, 1999.
(2) These shares are issuable to each selling shareholder upon
the conversion of our 8% convertible preferred stock. Because
the number of shares of common stock issuable upon the conversion
of the 8%
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convertible preferred stock is based on the future trading price
of our common stock, we cannot currently determine how many
shares of common stock will actually be issued upon conversion.
Therefore, the number of shares owned by the selling shareholder
noted in this table assumes a conversion for 546,266 shares, the
maximum number of shares issuable.
(3) As payment for services performed, we issued 10,000 shares
of common stock to Summit Marketing & Public Relations, Inc.. In
addition, we granted a warrant to purchase 25,000 shares of
common stock to Summit Marketing on February 8, 1999. This
warrant has an exercise price of $5.25 per share and expires on
December 31, 1999. The warrant will be adjusted in the event of
stock splits, stock dividends, and similar events.
In 1998, we entered into a consulting agreement with Summit
Marketing & Public Relations, Inc. pursuant to which Summit
Marketing agreed to assist us in issuing press releases and in
disseminating information about us. Except for this agreement,
we have not had any other dealings with Summit Marketing during
the past three years. Prior to their purchase of our 8%
convertible preferred stock, we have had not any relationship
with either of JMG Capital Partners, L.P. or Triton Capital
Investments, Ltd. On October 8, 1998, we entered into a
corporate finance services agreement with Pacific Continental
Securities Corp., which agreement is the only relationship we
have had with Pacific Continental during the past three years.
PLAN OF DISTRIBUTION
We are registering the shares of common stock on behalf of
the selling shareholders. The term selling shareholders includes
donees and pledgees selling shares received from a named selling
shareholder after the date of this prospectus. We will pay all
costs, expenses, and fees in connection with the registration of
the shares. The selling shareholders will pay all brokerage
commissions and other selling expenses.
The shares may be sold by the selling shareholders, or
subject to applicable law, by pledgees, donees, distributees,
transferees or other successors in interest. These sales may be
made on the Nasdaq SmallCap Stock Market, in another over-the-
counter market, or on a national securities exchange. In
addition, the selling shareholders may sell any of the shares
covered by this prospectus under Section 4(1) of the Securities
Act of 1933 or Rule 144. The shares may be sold in one or more of
the following types of transactions:
* a block trade in which the broker-dealer attempts to
sell the shares as agent but may position and resell a portion of
the block as principal to facilitate the transaction
* purchases by a broker or dealer as principal and resale
by the broker or dealer for its account under this prospectus
* an exchange distribution under the rules of an exchange
*ordinary brokerage transactions and transactions in which
the broker solicits purchasers
* face-to-face transactions between sellers and purchasers
without a broker-dealer. Brokers or dealers may arrange for
other brokers or dealers to participate in the resales.
The selling shareholders may enter into hedging transactions
with broker-dealers. These broker-dealers may engage in short
sales of the shares registered under this prospectus in the
course of hedging the positions they assume with selling
shareholders. The selling shareholders may also sell shares
short and deliver the shares to close out short positions. The
selling shareholders may also enter into option or other
transactions with broker-dealers which require the selling
shareholder to deliver the shares registered under this
prospectus to the broker-dealer, which the broker-dealer may
resell under this prospectus.
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<PAGE>
The selling shareholders may also pledge the shares
registered under this prospectus to a broker or dealer, and the
broker or dealer may sell the pledged shares under this
prospectus.
Brokers, dealers or agents may receive compensation in the
form of commissions, discounts or concessions from selling
shareholders. The brokers or dealers and any other participating
brokers or dealers may be considered underwriters under of the
Securities Act of 1933, in connection with the sales.
Furthermore, any commission, discount or concession may be
considered underwriting discounts or commissions under the
Securities Act of 1933. We have agreed to indemnify each selling
shareholder against some liabilities, including liabilities
arising under the Securities Act of 1933. The selling
shareholders may agree to indemnify any agent, dealer, or broker-
dealer against some liabilities, including liabilities arising
under the Securities Act of 1933.
Because selling shareholders may be considered underwriters
under Section 2(11) of the Securities Act of 1933, the selling
shareholders will be subject to prospectus delivery requirements.
We has informed the selling shareholders that the anti-
manipulative provisions of Regulation M under the Securities
Exchange Act of 1934 may apply to their sales in the market.
If we are notified by a selling shareholder that any
material arrangement has been entered into with a broker-dealer
for the sale of shares through a block trade, special offering,
exchange distribution or secondary distribution, or a purchase by
a broker or dealer, a supplement to this prospectus will be
filed, if required, under Rule 424(b) of the Securities Act of
1933. We would disclose the following information:
* the name of each selling shareholder and participating
broker-dealer
* the number of shares involved
* the price at which the shares were sold
* the commissions paid or discounts or concessions allowed
to the broker-dealer that the broker-dealer did not conduct any
investigation to verify the information in this prospectus
* other facts material to the transaction
In addition, if we are notified by a selling shareholder that a
donee or pledgee intends to sell more than 500 shares, a
supplement to this prospectus will be filed.
LEGAL MATTERS
Troy & Gould Professional Corporation, Los Angeles,
California, has rendered an opinion that the shares of common
stock covered by this prospectus have been duly and validly
issued, fully paid and nonassessable.
EXPERTS
Our consolidated financial statements, which were included
in its annual report on form 10-K for the year ended September
30, 1998, have been audited by BDO Seidman, LLP, independent
certified public accountants. The accountant's report is
included in the form 10-K and is incorporated by reference into
this prospectus. These consolidated financial statements have
been incorporated by reference into this prospectus in reliance
upon the accountant's report, given upon the authority of the
firm as experts in accounting and auditing.
11
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We have not authorized anyone to
give any information or make any
representations, other than those
contained in this prospectus, in
connection with this offering of
common stock. You must not rely on
any unauthorized information or
representations. Only the shares 681,266 Shares
described within this prospectus
are being offered, and only under PCC GROUP, INC.
circumstances and in jurisdictions
where it is lawful to do so. The Common Stock
information contained in this
prospectus is current only as of
its date.
------------------
TABLE OF CONTENTS
PROSPECTUS
------------------
Prospectus Summary . . . . . . . . . . 1
General Information About Us . . . 1
The Offering . . . . . . . . . . 1
Risk Factors . . . . . . . . . . . . . 2
Where You Can Find More Information . . 5 April 16, 1999
Caution Regarding Forward-Looking
Information . . . . . . . . . . . . . 6
Use of Proceeds . . . . . . . . . . . . 6
Recent Developments . . . . . . . . . . 6
Selling Shareholders . . . . . . . . . 9
Plan of Distribution . . . . . . . . .10
Legal Matters . . . . . . . . . . . . .11
Experts . . . . . . . . . . . . . . . .11
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF REGISTRATION AND DISTRIBUTION
The following table sets forth the estimated expenses of PCC
Group, Inc. in connection with the offering described in this
registration statement.
Securities and Exchange Commission registration fee . . . $1,286
Nasdaq listing fees . . . . . . . . . . . . . . . . . . . $7,500
Accountants' fees and expenses . . . . . . . . . . . . . $500
Legal fees and expenses . . . . . . . . . . . . . . . . . $19,500
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . $1,214
-------
Total . . . . . . . . . . . . . . . . . . . . . . . $30,000
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 317 of the California Corporations Code ("Section
317") provides that a California corporation may indemnify any
person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or proceeding,
whether civil, criminal, administrative or investigative (other
than action by or in the right of the corporation) by reason of
the fact that he is or was a director, officer, employee, or
agent of the corporation or is or was serving at the request of
the corporation as a director, officer, employee or agent of
another corporation or enterprise, against expenses, judgments,
fines and amounts paid in settlement actually and reasonably
incurred by him in connection with an action or proceeding if he
acted in good faith and in a manner he reasonably believed to be
in or not opposed to the best interest of the corporation, and,
with respect to any criminal action or proceeding, had no cause
to believe his conduct was unlawful.
Section 317 also provides that a California corporation may
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment
in its favor by reason of the fact that the person acted in any
of the capacities set forth above, against expenses actually and
reasonably incurred by him in connection with the defense or
settlement of an action or suit if he acted under similar
standards, except that no indemnification may be made in respect
to any claim, issue or matter as to which the persons shall have
been adjudged to be liable to the corporation unless and only to
the extent that the court in which an action or suit was brought
shall determine that despite the adjudication of liability, the
person is fairly and reasonably entitled to be indemnified for
the expenses which the court shall deem proper.
Section 317 provides further that to the extent a director
or officer of a California corporation has been successful in the
defense of any action, suit or proceeding referred to in the
previous paragraphs or in the defense of any claim, issue or
matter therein, he shall be indemnified against expenses actually
and reasonably incurred by him in connection therewith; that
indemnification authorized by Section 317 shall not be deemed
exclusive of any other rights to which the indemnified party may
be entitled; and that the corporation may purchase and maintain
insurance on behalf of a director or officer of the corporation
against any liability asserted against him or incurred by him in
any capacity as a director or officer or arising out of his
status as a director or officer whether or not the corporation
would have the power to indemnify him against the liabilities
under Section 317.
ITEM 16. EXHIBITS
The following exhibits are filed herewith or incorporated by
reference as a part of this registration statement:
4.1 Form of certificate of determination of Rights, Preferences,
Privileges and Restriction of 8% Convertible Preferred Stock.*
4.2 Securities Purchase Agreement, dated January 19, 1999,
between PCC Group, Inc. and the purchasers of the 8% Convertible
Preferred Stock.*
4.3 Registration Rights Agreement, dated January 19, 1999,
between the PCC Group, Inc. and the purchasers of the 8% Convertible
Preferred Stock.*
4.4 Form of Warrant issued to Pacific Continental Securities
Corp.*
4.5 Form of Common Stock Purchase Warrant issued to Summit
Marketing & Public Relations, Inc.*
5.1 Opinion of Troy & Gould Professional Corporation (to be
included in a pre-effective amendment)
23.1 Consent of BDO Seidman, LLP
23.2 Consent of Troy & Gould Professional Corporation (contained
in Exhibit 5.1 hereof).
24 Power of Attorney.*
- -----------------------------------
* Previously filed and incorporated by reference.
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of the registration
statement (or the most recent post-effective amendment thereof)
which, individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement.
(iii) To include any material information with
respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such
information in the registration statement.
PROVIDED, HOWEVER, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the registration statement is on Form S-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 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference into 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.
(b) The undersigned Registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the Registrant's annual 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 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.
(c) 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 such 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.
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 Amendment No. 1 to registration statement on
Form S-3 to be signed on its behalf by the undersigned, thereunto
duly authorized in the City of Pomona, State of California, on
April 15, 1999.
PCC GROUP, INC.
BY: /s/ Jack Wen
--------------------------------
Jack Wen, Chief Executive Officer
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.
Signature Title Date
- --------- ----- ----
/s/ Jack Wen Chairman of the Board and April 15,1999
- ----------------------- Chief Executive Officer
Jack Wen (Principal Executive
Officer)
/s/ Donald Johnson Vice President and April 15, 1999
- ----------------------- Chief Financial Officer
Donald Johnson (Principal Financial and
Principal Accounting
Officer)
* Director April 15, 1999
- -----------------------
Gary L. Blum
* Director April 15, 1999
- -----------------------
George Rodda, Jr.
* By: /s/ Jack Wen
- -----------------------
Jack Wen
as Attorney-In-Fact
INDEX TO EXHIBITS
-----------------
23.1 Consent of BDO Seidman, LLP
EXHIBIT 23.1
Consent of Independent Certified Public Accountants
---------------------------------------------------
PCC Group, Inc.
Pomona, California
We hereby consent to the incorporation by reference in the
prospectus constituting a part of this Registration Statement on
Form S-3/A of our report dated December 8, 1998, relating to the
audit of the consolidated financial statements of PCC Group,
Inc., appearing in the Company's Annual Report on Form 10-K for
the year ended September 30, 1998.
We also consent to the reference to us under the caption
"Experts" in the prospectus.
Los Angeles, California
April 16, 1999
