<PAGE> 1
Registration No.
333-43881
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
AMENDMENT NO. 1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
PDG ENVIRONMENTAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-2677298
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number
300 OXFORD DRIVE
MONROEVILLE, PA 15146
(412) 856-2200
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
JOHN C. REGAN WITH A COPY TO: JAMES D. CHIAFULLO, ESQ.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER THORP, REED & ARMSTRONG
300 OXFORD DRIVE ONE RIVERFRONT CENTER
MONROEVILLE, PA 15146 PITTSBURGH, PA 15222
(412) 856-2200 (412) 394-7743
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: No later
than five (5) business days after the effective date of this Registration
Statement
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
-----
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CALCULATION OF REGISTRATION FEE
- ------------------------------------------------------------------------------------------
TITLE OF EACH AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE* OFFERING PRICE FEE*
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 894,660 $1.625 $1,453,823 $467.78
par value $0.02
per share
</TABLE>
- ----------------
*Estimated solely for the purpose of calculating the registration fee pursuant
to Rule 457(c) of the Securities Act of 1933 and is based upon the average of
the bid and asked price of the Common Stock on the NASDAQ Stock Market on
February 17, 1998.
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> 2
PDG ENVIRONMENTAL, INC.
CROSS-REFERENCE SHEET
Between Items of Form S-3 and Prospectus
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ITEM PROSPECTUS
NO. ITEM IN FORM S-3 HEADING
- ---- ---------------- ----------
<S> <C> <C>
1. Forepart of the Registration Front Cover, Cross-
Statement and Outside Front Reference Sheet
Cover Page of Prospectus
2. Inside Front and Outside Back Available Information,
Cover Pages of Prospectus Incorporation of Certain
Documents by Reference
and Table of Contents
3. Summary of Information, Risk Summary of Information;
Factors and Ratio of Earnings Risk Factors
to Fixed Charges
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Not Applicable
6. Dilution Not Applicable
7. Selling Securityholders Selling Securityholders
8. Plan of Distribution Plan of Distribution
9. Description of Securities to be Description of Company's
Registered Capital Stock
10. Interests of Named Experts and Not Applicable
Counsel
11. Material Changes Recent Developments
12. Incorporation of Certain Incorporation of Certain
Information by Reference Documents by Reference
13. Disclosure of Commission Not Applicable
Position on Indemnification for
Securities Act Liabilities
</TABLE>
<PAGE> 3
PROSPECTUS
894,660
PDG ENVIRONMENTAL, INC.
Common Stock
The shares (the "Shares") of Common Stock, par value $.02 per share
("Common Stock") of PDG Environmental, Inc. (the "Company") covered by this
prospectus are shares issuable upon the exercise of warrants to purchase Common
Stock (the "Warrants") owned by the selling securityholders named herein (the
"Selling Securityholders"). The Company will not receive any of the proceeds
from the sale of the Shares. The Common Stock is traded on the NASDAQ stock
market under the symbol "PDGE." On February 17, 1998, the bid price of the
Common Stock on the NASDAQ over-the-counter market was $1.625 per share.
The Selling Securityholders may offer the Shares from time to time,
depending upon market conditions and other factors, in one or more transactions
on the NASDAQ over-the-counter market, at market prices prevailing at the time
of sale, at prices related to such prevailing market prices, at negotiated
prices or at fixed prices, and the Selling Securityholders may enter into
arrangements to pledge shares from time to time in connection with financing
arrangements. The Shares may be offered from time to time in any manner
permitted by law, including through underwriters, dealers or agents, or directly
to one or more purchasers. To the extent required, a prospectus supplement will
be distributed which will set forth the number of Shares being offered and the
terms of the offering, including the names of any underwriters, any discounts,
commissions and other items constituting compensation to underwriters, dealers
or agents, the public offering price and any discounts, commissions or
concessions allowed or reallowed or paid by underwriters to dealers. See "PLAN
OF DISTRIBUTION."
SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN MATTERS THAT SHOULD BE CONSIDERED
BY PROSPECTIVE INVESTORS.
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.
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
<PAGE> 4
securities may not be sold nor may offers to buy be accepted prior to the time
the registration statement becomes effective. This Prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of the 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.
-------------------------
February 24, 1998
<PAGE> 5
No dealer, salesman or other person has been authorized to give any information
or to make any representations, other than those contained in this Prospectus,
in connection with the offering made hereby, and if given or made, such
information or representations must not be relied upon. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy any securities
other than the securities offered hereby, nor does it constitute an offer to
sell or a solicitation of an offer to buy any securities (including the
securities offered hereby) in any jurisdiction to any person to whom it is
unlawful to make any such offer or solicitation. Neither the delivery of this
Prospectus nor any offer, solicitation or sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of the Company since the date hereof or that the information herein is
correct as of any time subsequent to its date.
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"). These reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549; and at the following regional
offices of the Commission: Chicago Regional Office, Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511, and New York
Regional Office, 7 World Trade Center, New York, New York 10048. Copies of such
material also can be obtained upon written request addressed to the Public
Reference Section of the Commission, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, the Commission
maintains a web site that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the
Commission, including the Company. The address of the Commission's web site is
http://www.sec.gov. The Company's Common Stock is traded on the over-the-counter
market and quoted on NASDAQ and such reports, proxy and information statements
and other information can also be inspected at the public reference facilities
maintained by NASDAQ at 1735 K Street N.W., Washington, D.C. 20006 at prescribed
times.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act of 1933, as amended (the "Securities Act"), with
respect to the Common Stock offered
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hereby (including all amendments and supplements thereto, the "Registration
Statement"). This Prospectus, which forms a part of the Registration Statement,
does not contain all the information set forth in the Registration Statement,
certain parts of which have been omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of certain documents are not necessarily complete and, in each
instance, reference is made to the copy of any 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. The Registration
Statement and the exhibits thereto can be inspected and copied at the public
reference facilities and regional offices referred to above.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission pursuant to the Exchange Act are incorporated herein by reference and
made a part of this Prospectus: (i) the annual report on Form 10-K for the
fiscal year ended January 31, 1997; (ii) the quarterly report on Form 10-QSB for
the quarter ended April 30, 1997 dated June 9, 1997, (iii) the quarterly report
on Form 10-QSB for the quarter ended July 31, 1997 dated September 12, 1997,
(iv) the quarterly report on Form 10-QSB for the quarter ended October 31, 1997
dated December 9, 1997, (v) the registration statement on Form S-8 dated
September 10, 1997 and (vi) the Proxy Statement for the Company's 1997 Annual
Meeting of Stockholders dated June 5, 1997 filed on May 30, 1997.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the termination of the offering of the securities covered hereby shall be deemed
to be incorporated by reference into this Prospectus and to be a part hereof
from the date of filing of such documents.
Any statement contained herein or in a document or information incorporated
or deemed to be incorporated herein by reference shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any subsequently filed document which also is, or is
deemed to be, incorporated herein by reference, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as modified or superseded, to constitute a part of this Prospectus.
iv
<PAGE> 7
The Company undertakes to provide, without charge, to each person,
including any beneficial owner, to whom a copy of this Prospectus is delivered,
upon the written or oral request of such person, a copy of any or all of the
foregoing documents or information referred to above that has been or may be
incorporated by reference in the Prospectus (excluding exhibits to such
documents unless such exhibits are specifically incorporated by reference).
Requests should be directed to Corporate Secretary, PDG Environmental, Inc., 300
Oxford Drive, Monroeville, Pennsylvania 15146, telephone (412) 856-2200.
v
<PAGE> 8
TABLE OF CONTENTS
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PAGE
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<S> <C>
Summary Information.............................................................................. 1
The Company............................................................................. 1
The Offering............................................................................ 1
Risk Factors..................................................................................... 2
The Company...................................................................................... 5
Price Range of Common Stock...................................................................... 6
Dividends........................................................................................ 7
Use of Proceeds.................................................................................. 7
Selling Securityholders.......................................................................... 7
Plan of Distribution............................................................................. 8
Description of the Company's Capital Stock....................................................... 10
Recent Developments.............................................................................. 12
Legal Matters.................................................................................... 14
Experts.......................................................................................... 14
</TABLE>
vi
<PAGE> 9
SUMMARY INFORMATION
The following summary is qualified in its entirety by the more detailed
information and financial statements (including the notes thereto) set forth
elsewhere in, or incorporated by reference into, this Prospectus.
THE COMPANY
The Company is a holding company with its principal place of business at
300 Oxford Drive, Monroeville, Pennsylvania 15146. Its telephone number is (412)
856-2200. Through its operating subsidiaries, the Company provides asbestos
abatement contracting services to the public and private sectors. The Company's
asbestos abatement contracting service includes the removal and disposal of
asbestos as well as construction of enclosures to surround asbestos containing
areas and encapsulation of asbestos with approved sealants. This service is
principally performed by the Company in commercial, governmental and
institutional buildings, schools and industrial facilities on a contract basis.
THE OFFERING
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<CAPTION>
<S> <C>
Securities Offered 894,660 shares of Common Stock, to be
registered for issuance upon the exercise of
Warrants held by the Selling Securityholders.
Number of Shares of
Common Stock Outstanding 6,474,412(1)
NASDAQ Symbol "PDGE"
</TABLE>
(1) As of February 23, 1998
1
<PAGE> 10
RISK FACTORS
1. HISTORY OF NET LOSSES. The Company reported net losses for two of its
last three fiscal years. There can be no assurance that the Company will be
profitable in future periods.
2. CONTRACT ESTIMATING. A significant amount of the Company's business is
done on a contract basis as a result of competitive bidding. The Company must
estimate the costs involved with the applicable job prior to submitting a bid
and therefore, if awarded the job, bears the risk if actual costs exceed the
estimated amounts.
3. COMPETITION. The Company competes with numerous firms in the asbestos
abatement business, some of which have resources exceeding those of the Company.
The asbestos abatement market is a relatively mature industry with little growth
potential.
4. ASBESTOS ABATEMENT SERVICES. Asbestos abatement services may expose the
Company's employees and others to dangerous elements, and although the Company
takes extensive precautions, the Company may not avoid liability to persons so
exposed.
5. CYCLICAL BUSINESS. The Company's asbestos abatement business is affected
by the timing of large contracts; thus, backlogs and income are subject to
fluctuation.
6. INSURANCE AND BONDING. The Company maintains an insurance and bonding
program consistent with the Company's financial priorities; however, there can
be no assurance that this program will be adequate or that it will be available
to the Company in the future. The lack of an adequate insurance and bonding
program could have a material and adverse effect upon the ability of the Company
to secure and perform contracts.
7. GOVERNMENTAL REGULATION. Demand for asbestos abatement services is
related to various federal, state and local laws and substantial regulation
under the laws of governmental agencies, including the Environmental Protection
Agency, various state agencies and county and local authorities acting in
conjunction with such federal and state entities. Governmental authorities have
the power to enforce compliance with those regulations and to obtain injunctions
or impose fines in the case of violations. In the future, the Company may be
required under those regulatory requirements to increase capital and operating
expenditures in order to maintain current operations or initiate new operations.
Under certain circumstances, the Company may be required to curtail certain
operations until a particular problem
2
<PAGE> 11
is remediated or to undertake other corrective measures. Amendments to current
laws and regulations governing the Company's operations or more stringent
implementation thereof could have a material adverse effect on the Company or
require substantial capital expenditures to comply with such laws and
regulations.
8. ADVERSE REGULATORY CHANGES. The Company has no control over governmental
regulation of the environment. Current regulations could change resulting in the
need for the Company to incur significant costs over the budgeted amounts in
order to comply with such regulations. Alternatively, the regulatory environment
could relax, due, for example, to political or economic pressures, which could
reduce the demand for the Company's services.
9. RELIANCE ON MANAGEMENT. The Company is dependent on its senior
management to make all material decisions with respect to the management of the
Company. There is a shortage of qualified similar personnel in the industries in
which the Company competes. The Company and Mr. Regan are parties to an
employment agreement, dated October 1, 1995, relating to the employment of Mr.
Regan as the Chief Executive Officer of the Company. The employment agreement is
for an initial term of five years, unless it is earlier terminated as provided
in the agreement. After the initial five-year period, the agreement may be
terminated by the Company at any time or by Mr. Regan upon giving the Company
six months' prior written notice of his intent to terminate the agreement. The
agreement provides that the Company may terminate Mr. Regan for cause at any
time without any further payments to Mr. Regan. If, however, Mr. Regan's
employment is terminated as a result of his death or disability or without
cause, Mr. Regan is entitled to continued payments of salary and benefits as
provided in the employment agreement. A termination without cause under the
employment agreement includes a change in control of the Company, a change in
Mr. Regan's offices or positions with the Company, or a reduction in the amount
of annual salary or benefits to be paid to Mr. Regan under the agreement. The
Company maintains key-men insurance on the Chief Executive Officer.
10. DIVIDEND ON COMMON STOCK PROHIBITED. By the terms of the Company's
certificate of incorporation, no dividend may be paid on the Common Stock so
long as the current arrearage of approximately $141,000 (as of October 31, 1997)
on the Company's Series A Preferred Stock ("Preferred Stock") is not paid. The
Company does not anticipate the payment of a dividend on any class of stock in
the foreseeable future. (See "DESCRIPTION OF THE COMPANY'S CAPITAL STOCK.")
3
<PAGE> 12
11. VOTING CONTROL. At the time of this offering the directors and officers
of the Company as a group beneficially own approximately 45.7% of the voting
securities of the Company.
12. IMPACT OF LITIGATION. The Company has been named in a purported class
action suit involving the purchase by persons and entities of the Common Stock
of the Company's wholly-owned subsidiary, ICHOR Corporation (formerly known as
PDG Remediation, Inc.) ("ICHOR") from February, 1995 through May 23, 1995. In
February 1995, approximately 40% of ICHOR's Common Stock was sold in a public
offering, including shares offered by the Company as well as shares offered
directly by ICHOR. The action alleges that the defendants, including the
Company, ICHOR, the directors and certain officers of ICHOR and the underwriters
of the public offering violated certain federal securities laws. The Company
believes that the allegations are without merit or that there are meritorious
defenses to the allegations, and intends to defend the action vigorously. If,
however, the plaintiff is successful in its claims, a judgment rendered against
the Company and the other defendants would likely have a material adverse effect
on the business and operations of the Company. (See "RECENT DEVELOPMENTS-
LITIGATION.")
4
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THE COMPANY
The Company is a holding company which, through its wholly-owned operating
subsidiaries, is engaged primarily in providing asbestos abatement services to
the private and public sectors.
Asbestos Abatement
The sole business of the Company is to provide asbestos abatement
contracting services to the public and private sectors. The asbestos abatement
industry developed due to the increased public awareness in the early 1970s of
the health risks associated with asbestos, which was extensively used in
building construction. Through its operating subsidiaries, the Company has
expertise in all types of asbestos abatement including removal and disposal,
enclosure (constructing structures around the asbestos containing area) and
encapsulation (spraying asbestos containing materials with an approved sealant).
Asbestos abatement is principally performed in commercial buildings, government
and institutional buildings, schools and industrial facilities.
The Company's operating subsidiaries provide asbestos abatement services on
a project contract basis. Individual projects are competitively bid. However,
most contracts with private owners are ultimately negotiated. The majority of
contracts undertaken are on a fixed price basis. The length of the contracts is
typically less than one year; however, larger projects may require two or three
years to complete. The loss of a single customer would not have a material
adverse effect on the Company as bid opportunities for new work are constantly
becoming available.
The Company's asbestos abatement operations have been generally
concentrated in the Northeastern, Mid-Atlantic and Southern portions of the
United States. The majority of the Company's national marketing efforts are
performed by members of senior management located in the headquarters facility
in Monroeville, Pennsylvania. Regional marketing and project operations are also
conducted through branch offices located in New York City, New York; Pittsburgh
and Philadelphia, Pennsylvania; Fort Lauderdale, Florida; Rock Hill, South
Carolina; Houston, Texas; Phoenix, Arizona and Atlanta, Georgia. Since the
Company and its subsidiaries are able to perform asbestos abatement work
throughout the year, the Company's business is not considered seasonal in
nature, although it is affected by the timing of large contracts.
5
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The Company, through its operating subsidiaries, is licensed and/or
certified in all jurisdictions where required in order to conduct its asbestos
abatement operations. In addition, certain management and staff members are
licensed and/or certified by various governmental agencies as asbestos abatement
supervisors and workers.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is traded (Symbol: PDGE) on the OTC Bulletin
Board since September 1996. Prior to that it was listed for trading on the
NASDAQ Small Cap Market. The information presented for the following periods
reflects the high and low bid information as reported by the OTC Bulletin Board
and NASDAQ.
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Period High Low
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<S> <C> <C>
Fiscal 1996
- -----------
1st Quarter $1.31 0.78
2nd Quarter 0.91 0.50
3rd Quarter 0.69 0.31
4th Quarter 0.59 0.25
Fiscal 1997
- -----------
1st Quarter $0.63 $0.31
2nd Quarter 1.00 0.31
3rd Quarter 0.83 0.31
4th Quarter 0.47 0.25
Fiscal 1998
- -----------
1st Quarter $0.81 $0.42
2nd Quarter 0.87 0.56
3rd Quarter 1.12 0.71
4th Quarter 2.18 1.06
</TABLE>
At May 30, 1997, the Company had approximately 2,210 stockholders of record
of its Common Stock and 3 shareholders of its Preferred Stock. At February 17,
1998 the bid price reported on the OTC Bulletin Board for the Common Stock was
$1.625. No public market exists for the Company's Preferred Stock.
6
<PAGE> 15
DIVIDENDS
The Company has not historically declared or paid dividends with respect to
its Common Stock and does not anticipate paying a dividend on its Common Stock
in the foreseeable future. The Company's ability to pay dividends is limited due
to limitations imposed by the terms of the Company's Series A Preferred Stock,
which require that dividends in arrears must be paid to holders of the Series A
Preferred Stock, prior to the payment of dividends to holders of Common Stock.
USE OF PROCEEDS
The shares of Common Stock to which this Prospectus relates are being
reserved for issuance upon the conversion of the Warrants. The proceeds received
by the Company from the exercise of the Warrants will be utilized for general
corporate purposes. The Company will not receive any proceed from the sale of
the underlying shares by the Selling Shareholders. See "PLAN OF DISTRIBUTION"
below.
SELLING SECURITYHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of Common Stock by the Selling Securityholders as of the
date of this offering and as adjusted to reflect the sale of the Common Stock
offered hereby by the Selling Securityholders.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering After Offering
----------------- --------------
Number of Shares
Selling Number of Being Offered
Securityholder Shares Percent Hereby Number of Shares Percent
<S> <C> <C> <C> <C> <C>
Drummond Financial
Corporation(1) 802,500 12.4% 802,500 0 0.00%
Jacob Minger 6,160 * 6,160 0 0.00%
David Jordon 25,000 * 25,000 0 0.00%
Barry Zelin 25,000 * 25,000 0 0.00%
F.D. Townsen 18,000 * 18,000 0 0.00%
Thomas O. Gephart 18,000 * 18,000 0 0.00%
</TABLE>
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* Less than 1%
7
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(1)Drummond Financial Corporation's Schedule 14A for the 1998 Annual
Meeting of Shareholders filed on December 10, 1997, sets forth information with
respect to the stock ownership of each person known by Drummond Financial
Corporation to own beneficially more than 5% of the stock. Neither the Company
nor any of its officers, directors or controlling shareholders are affiliated
with or have a direct or indirect ownership (beneficial or otherwise) interest
in Drummond.
PLAN OF DISTRIBUTION
The holders of Warrants are entitled to the issuance of one share of the
Company's Common Stock for each Warrant held upon the payment of the respective
exercise price associated with the Stock Warrant. See "DESCRIPTION OF THE
COMPANY'S CAPITAL STOCK."
The Selling Securityholders have informed the Company that, following the
exercise of the Warrants, the distribution of the Shares may be effected from
time to time in transactions (i) in the over-the-counter market, or (ii) in
transactions otherwise than in the over-the-counter market. The Selling
Securityholders have also informed the Company that they do not have any
arrangement at this time with any particular underwriter, broker or dealer but
expect to sell the Shares of Common Stock through one or more brokers. Any of
such transactions may be effected at market prices prevailing at the time of
sale, at prices related to such prevailing market prices, at negotiated prices
or at fixed prices. If a Selling Securityholder effects such transactions by
selling Shares to or through underwriters, brokers, dealers or agents, such
underwriters, brokers, dealers or agents may receive compensation in the form of
discounts, concessions or commissions from the Selling Securityholders or
commissions from purchasers of Shares for whom they may act as agent, which
discounts, concessions or commissions as to particular underwriters, brokers,
dealers or agents might be in excess of those customary in the types of
transactions involved. The Selling Securityholders and any brokers, dealers or
agents that participate in the distribution of the Shares might be deemed to be
underwriters, and any profit on the sale of Shares by them and any discounts,
concessions or commissions received by any such underwriters, brokers, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. The Company will not receive any of the proceeds from the sale
of any of the Shares by the Selling Securityholders.
At the time a particular offer of Shares is made, a Prospectus Supplement,
to the extent required, will be distributed which will set forth the aggregate
amount of Shares being offered,
8
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the purchase price, the amount of expenses of the offering and the terms of the
offering, including the name or names of any underwriters, brokers, dealers or
agents, any discounts, commissions and other items constituting compensation
from the applicable Selling Securityholders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers.
Under the Exchange Act and applicable rules and regulations promulgated
thereunder, any person engaged in a distribution of any of the Shares may not
simultaneously engage in market-making activities with respect to the Shares for
a period, depending upon certain circumstances, of either two days or nine days
prior to the commencement of such distribution. In addition and without limiting
the foregoing, the Selling Securityholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations promulgated
thereunder, including without limitation Rules 10b-6 and 10b-7, which provisions
may limit the timing of purchases and sales of any of the Shares by the Selling
Securityholders.
Under the securities laws of certain states, the Shares may be sold in such
states only through registered or licensed brokers or dealers. In addition, in
certain states the Shares may not be sold unless the Shares have been registered
or qualify for sale in such state or an exemption from registration or
qualification is available and is complied with.
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DESCRIPTION OF THE COMPANY'S CAPITAL STOCK
General Description of the Company's Capital Stock
The Company is authorized to issue two classes of stock, designated
respectively, "Preferred Stock" and "Common Stock." The Company is authorized to
issue thirty million (30,000,000) shares of Common Stock, par value $.02, and
five million (5,000,000) shares of Cumulative Convertible Series A Preferred
Stock, par value $.01. As of December 23, 1997, there were 6,474,212 shares of
Common Stock issued and outstanding and 167,338 shares of Preferred Stock issued
and outstanding.
The Common Stock is traded on the over-the-counter market and quoted on the
OTC Bulletin Board under the symbol "PDGE." There is no public market for the
Preferred Stock.
Description of the Common Stock
The holders of shares of Common Stock are entitled to cast one vote for
each share held at all stockholder meetings for all purposes, including the
election of directors. No dividends may be paid to holders of shares of Common
Stock unless and until all cumulative dividends payable on the Series A
Preferred Stock, including all such dividends in arrears, are paid. As of
October 31, 1997, dividends of $141,000 are in arrears on the Series A Preferred
Stock.
The Company has not paid a dividend on its Common Stock since becoming a
public company. The Company does not anticipate paying a dividend on its Common
Stock in the foreseeable future, as the Company is prohibited from doing so
because it must first pay the arrearage on the dividends payable on the Series A
Preferred Stock.
The holders of the Series A Preferred Stock and the Common Stock vote
together for all purposes as a single class with the holders of the Series A
Preferred Stock entitled to vote that number of votes equal to the number of
shares of Common Stock into which their shares of Series A Preferred Stock are
then convertible. See "Description of Series A Preferred Stock" following for a
description of additional voting rights of the holders of the Series A Preferred
Stock. There are no cumulative voting rights available to the Company's
stockholders. As a result, the holders of just over 50% of the voting control of
the Company can assure the election of all of the directors of the Company.
Currently, the directors and officers of the Company as a group possess 45.7% of
the voting control of the Company, with
10
<PAGE> 19
John C. Regan, the Company's Chairman and Chief Executive Officer and Treasurer,
controlling 32.3%. As a result, Mr. Regan can as a practical matter greatly
impact any vote. The Board of Directors of the Company is not classified as all
members currently are elected annually.
The Company has various stock option plans and arrangements with its
employees and directors pursuant to which a total of 1,925,750 shares of Common
Stock are reserved to be issued at various prices. Of that number, options to
purchase a total of 594,545 shares of Common Stock had been granted as of
February 23, 1998. In addition, the Company has issued warrants to purchase an
additional 894,660 shares of the Company's Common Stock with 802,500 warrants
issued to Drummond Financial Corporation ("Drummond") in connection with various
financing agreements. All outstanding warrants are being registered as part of
this Registration Statement. The exercise price of the Drummond warrants are
from $0.75 to $1.25 per share. Of the remaining warrants, 6,160 warrants are at
an exercise price of $0.50 per share, 50,000 warrants are at an exercise price
of $2.00 per share, and 36,000 warrants are at an exercise price of $2.50 per
share. Additionally, 560,143 common stock rights for the issuance of the
Company's Common Stock are outstanding at October 31, 1997. The issuance of
Common Stock may be granted to holders of the stock rights upon the attainment
of certain specified levels of profitability and the approval of the Company's
Board of Directors. Other than the securities discussed in the aforementioned
sections and shares of Series A Preferred Stock outstanding, no other preemptive
or preferential rights to purchase or subscribe for any shares of Common Stock
have been issued or granted by the Company.
Description of the Series A Preferred Stock
The Series A Preferred Stock ranks senior to the Common Stock with respect
to dividend rights and rights on liquidation, winding-up and dissolution of the
Company. No class or series of stock of the Company may be issued which is
senior or pari passu to the Series A Preferred Stock without the affirmative
vote of the holders of at least a majority of the outstanding shares of Series A
Preferred Stock.
The holders of shares of Series A Preferred Stock shall be entitled to
receive cumulative dividends payable at the rate of $0.20 per share per annum.
Such dividends shall be payable when, as and if declared by the Board of
Directors of the Company quarterly on the fifteenth day of January, April, July
and October. Dividends on each outstanding share of Series A Preferred Stock are
cumulative and shall accrue for any quarter in which a dividend is
11
<PAGE> 20
not declared and paid. No dividends have been paid since 1991 and as a result
the cumulative dividends in arrears with respect to the Series A Preferred Stock
totaled $141,000 at October 31, 1997. It is expected that dividends on the
Series A Preferred Stock will continue to accrue, unpaid, into the foreseeable
future.
In the event of any liquidation, dissolution or winding-up of the Company,
holders of Series A Preferred Stock shall be entitled to be paid out of the
assets of the Company an amount in cash equal to $10.00 per share plus any
arrears in dividends payable on the Series A Preferred Stock.
The shares of Series A Preferred Stock are convertible, at the option of
the holder thereof, at any time or from time to time, at the rate of four (4)
shares of Common Stock for each share of Series A Preferred Stock (the "Series A
Conversion Rate") plus an additional number of shares of Common Stock equal to
the cash value of any dividend arrearage payable on the Series A Preferred Stock
convertible at the rate of $2.50 per share of Common Stock. The Series A
Conversion Rate and the $2.50 per share conversion price with respect to the
conversion of any arrearage in dividends payable on the Series A Preferred Stock
are both subject to adjustment in certain circumstances. Currently, each share
of Series A Preferred Stock is convertible into 4.34 shares of Common Stock. In
addition, in certain circumstances, the Company may, at its option, redeem the
Series A Preferred Stock.
The holders of Series A Preferred Stock and the Common Stock vote together
as a single class with the holders of Series A Preferred Stock entitled to vote
that number of votes equal to the number of shares of Common Stock into which
their shares of Series A Preferred Stock are then convertible.
RECENT DEVELOPMENTS
Litigation.
On June 30, 1995, an action, caption Klein v. PDG Remediation, Inc., et al., No.
CIV-4954 (DAB), was filed in the United States District Court for the Southern
District of New York asserting federal securities law claims against the
Company, the directors and certain officers of ICHOR, ICHOR and the underwriters
of ICHOR's initial public offering. The Klein action is brought as a purported
class action on behalf of the named plaintiff and all persons and entities who
purchased ICHOR's common stock from February 9, 1995, the effective date of the
initial public offering, through May 23, 1995. The plaintiff alleges that the
12
<PAGE> 21
defendants violated Sections 11 and/or 15 of the Securities Act of 1933, as
amended, and Section 12(2) of the Securities Exchange Act of 1934, as amended,
by issuing or participating in the issuance of the registration statement and
prospectus which contained material misstatements or omissions, and that the
purported class members purchased shares of common stock in reliance on the
allegedly false and misleading registration statement and prospectus.
Specifically, plaintiff alleges that the defendants knew or should have known
that the Florida reimbursement program in which ICHOR then participated was
operating at a deficit and was being revised to eliminate funding of remediation
activities for lower priority sites. The plaintiff sought certification of the
action as a class action and recision of the purchase of shares of common stock
by members of the purported class or statutory damages, as well as interest,
attorneys' fees and other costs and expenses. The Company believes that the
plaintiff's allegations are without merit or that there are meritorious defenses
to the allegation, and intends to defend the action vigorously. On September 1,
1995, an answer was filed on behalf of the Company, ICHOR and ICHOR's officers
and directors which generally denied the plaintiff's claims.
By letter dated December 5, 1995, the plaintiff requested a pre-motion
conference on a motion for class certification. By letter dated December 6,
1995, the underwriter's counsel requested a pre-motion conference on a motion to
dismiss the complaint. In December 1995, the underwriter defendants filed a
notice of motion to dismiss and a memorandum of law in support of the motion.
The motion to dismiss was denied in September 1996. The parties have negotiated
a stipulation concerning class certification, and the court has certified a
class. Notice of the Court's certification of the class was sent to potential
class members in August 1997.
The action is still in the discovery stage.
Acquisition.
On December 29, 1997, the Company completed the acquisition of the business of
American Environmental Abatement Corporation ("AEAC") located in Phoenix,
Arizona. The Company purchased the fixed assets of AEAC, assumed AEAC's
contracts in progress and retained AEAC's employees. The transaction was
effective as of November 30, 1997 and will be accounted for as a purchase of
assets.
13
<PAGE> 22
LEGAL MATTERS
Matters in connection with the legality of the shares of Common Stock offered
hereby have been passed upon by Thorp, Reed & Armstrong, Pittsburgh,
Pennsylvania.
EXPERTS
The consolidated financial statements of PDG Environmental, Inc. appearing in
PDG Environmental Inc.'s Annual Report (Form 10-K) for the year ended January
31, 1997 have been audited by Ernst & Young LLP, independent auditors, as set
forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
14
<PAGE> 23
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The expenses payable by the Registrant in connection with the securities
being registered (other than underwriting discounts and commissions, of which
there are none) are estimated as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee $ 437
Accounting Fees and Expenses 2,500
Printing and Photocopying 200
Counsel Fees and Expenses 3,500
Miscellaneous Expenses 200
------
Total Expenses $6,837
======
</TABLE>
Item 15. Indemnification of Directors and Officers.
At the Annual Meeting on June 25, 1991, the Company's stockholders approved
a Certificate of Amendment (the "Amendment") to the Company's Certificate of
Incorporation to provide for indemnification rights of directors, officers,
employees and agents as permitted by the Delaware General Corporation Law
("DGCL") and to clarify the limitation of liability of the Company's directors
pursuant to the DGCL. In addition, the Board of Directors amended the By-Laws of
the Company to provide for the indemnification of the directors, officers,
employees and agents of the Company to the fullest extent permissible pursuant
to Section 145 of the DGCL.
The Amendment provided additional protection to directors, officers and
other persons consistent with the indemnification provisions of Section 145 of
the DGCL. As permitted by the DGCL, the Amendment provided that the Company
shall indemnify its directors and officers against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Company -- a "derivative action"), if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best interests of the
Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard of
care is applicable in the case of derivative action, except that indemnification
only extends to expenses (including attorneys' fees) incurred in
II-1
<PAGE> 24
connection with the defense or settlement of such an action and court approval
is required before there can be any indemnification where the person seeking
indemnification has been found to be liable to the Company.
As further permitted by the DGCL, the Amendment provides that the Company
will pay the litigation expenses of a director or officer as they are incurred.
Under the Amendment, directors and officers would be given advance assurance
that their litigation expenses will be paid by the Company subject to their
agreement to repay any such amounts if it is ultimately determined that they are
not entitled to be indemnified.
The Amendment provides for indemnification only as authorized in the
specific case upon a determination that the person seeking indemnity has met the
applicable standard of conduct. Said determination can be made by the majority
vote of disinterested members of the Board of Directors, by independent legal
counsel or by the stockholders.
The indemnification requirements might have a significant adverse effect on
the Company and its stockholders in the event of a substantial judgment or
settlement with respect to a director or officer entitled to indemnification.
II-2
<PAGE> 25
Item 16. Index to Exhibits
3.1 Certificate of Incorporation of the Company and all amendments thereto,
filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K for the
year ended January 31, 1997, are incorporated herein by reference.
3.2 Certificate of Amendment to the Certificate of Incorporation of the
Company, approved by stockholders on June 25, 1991, filed as Exhibit 3(a)
to the Company's Quarterly Report on Form 10-Q for the quarter ended July
31, 1991, is incorporated herein by reference.
3.3 Amended and Restated By-laws of the Company, filed as Exhibit 4.2 to the
Company's registration statement on Form S-8 of securities under the PDG
Environmental, Inc. Amended and Restated Incentive Stock Option Plan as of
June 25, 1991, are incorporated herein by reference.
5. Opinion of Thorp, Reed & Armstrong, counsel to the Company, as to the
legality of the securities being registered.
23.1 Consent of Ernst & Young, independent auditors.
23.2 Consent of Thorp, Reed & Armstrong, counsel the Company (included in
Exhibit 5).
24. Powers of Attorney of certain directors and certified copy of
resolutions of the Company's Board of Directors conferring on John C.
Regan, the authority to sign this Registration Statement on Form S-3.
II-3
<PAGE> 26
Item 17. Undertakings
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 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.
The undersigned registrant hereby undertakes 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; and (iii) to include any material information with
respect to the plan of distribution not previously disclosed in the Registration
Statement or any material change in such information in the Registration
Statement.
Provided, however, that the undertaking set forth in the above paragraph
under clauses (i) and (ii) thereof shall not apply if the information required
to be included in a post-effective amendment by those clauses is contained in
periodic reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934.
The undersigned registrant hereby undertakes 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.
The undersigned registrant hereby undertakes 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.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers
II-4
<PAGE> 27
or persons controlling the registrant pursuant to the provisions set forth under
Item 15 hereof, 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.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by referenced in
the prospectus to provide such interim financial information.
II-5
<PAGE> 28
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, and the State of Pennsylvania, on this
24th day of February, 1998.
PDG ENVIRONMENTAL, INC.
(Registrant)
By: /s/ John C. Regan
-------------------------------
John C. Regan
Chairman of the Board and Chief
Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in their
capacities on the dates indicated.
John C. Regan /s/ John C. Regan
Chairman of the Board -------------------------------
and Chief Executive Officer February 24, 1998
Richard A. Bendis Director
Edgar Berkey Director
Edwin J. Kilpela Director
By: /s/ John C. Regan
-------------------------------
John C. Regan
Attorney-in-Fact
February 24, 1998
II-6
<PAGE> 1
Exhibit 5.1
[THORP REED & ARMSTRONG LETTERHEAD]
PDG Environmental, Inc. FEBRUARY 23, 1998
300 Oxford Drive
Monroeville, Pennsylvania 15146
Ladies and Gentlemen:
We have acted as counsel for PDG Environmental, Inc., a Pennsylvania corporation
(the "Company"), in connection with the Company's Registration Statement on Form
S-3 (the "Registration Statement"), as amended, relating to the registration
under the Securities Act of 1933, as amended, of 894,660 shares (the "Shares"),
par value $.02 per share, of the Company's common stock ("Common Stock")
reserved for issuance upon the exercise of stock warrants ("Warrants") granted
to certain parties, as described in the Registration Statement.
In connection with this opinion, we have examined a copy of the Registration
Statement, copies of the Company's certificate of incorporation and by-laws,
and such other instruments and documents as we have deemed necessary as a basis
for the opinion hereinafter expressed. In rendering such opinion, we have
assumed that all signatures on all documents examined by us are genuine, that
all documents submitted to us as originals are authentic, that all documents
submitted to us as copies are true and correct copies of the originals thereof
and that all information submitted to us was accurate and complete.
Based on the foregoing, and subject to the assumptions and limitations herein
set forth, we are of the opinion that the Shares to be issued upon exercise of
Warrants, as described in the Registration Statement, when issued in accordance
with the terms of the Warrants, will be validly issued, fully paid and
non-assessable.
This opinion letter is limited in all respects to the applicable laws of the
Commonwealth of Pennsylvania and the United States of America and the general
corporate laws of the State of Delaware.
We hereby consent to the filing of this opinion letter as an exhibit to the
Registration Statement.
Very truly yours,
/s/ THORP REED & ARMSTRONG
One Riverfront Center
Pittsburgh, PA 15222-4895
412 394 7711
412 394 2555 Fax
<PAGE> 1
Exhibit 23.1
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Amendment No. 1 to the Registration Statement (Form S-3 No. 333-43881) and
related Prospectus of PDG Environmental, Inc. for the registration of 894,660
Common Shares and to the incorporation by reference therein of our report dated
May 15, 1997, with respect to the consolidated financial statements of PDG
Environmental, Inc. included in its Annual Report (Form 10-K Amendment No. 1)
for the year ended January 31, 1997, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Pittsburgh, Pennsylvania
February 23, 1998
<PAGE> 1
Exhibit 24.1
POWER OF ATTORNEY
-----------------
KNOW BY ALL MEN BY THESE PRESENT, the undersigned director of PDG
ENVIRONMENTAL, INC., a Delaware Corporation, does make, constitute and appoint
JOHN C. REGAN, with full power and authority to act as his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead in any and
all capacities, to sign the Registration Statement (Amendment No. 1) on Form S-3
for the registration of 894,660 shares of Common Stock par value $0.02 per
share, and to file such Registration Statement, so signed, with all exhibits
thereto, with the Securities and Exchange Commission, hereby further granting
unto said attorney-in-fact full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the premises
as fully to all intents and purposes as he might or could do in person; the
undersigned hereby ratifies and confirms all that said attorney and agent, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
12th day of February, 1998.
/s/ EDGAR BERKEY (SEAL)
- ------------------------------------
Edgar Berkey, Director
<PAGE> 2
POWER OF ATTORNEY
-----------------
KNOW BY ALL MEN BY THESE PRESENT, the undersigned director of PDG
ENVIRONMENTAL, INC., a Delaware Corporation, does make, constitute and appoint
JOHN C. REGAN, with full power and authority to act as his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead in any and
all capacities, to sign the Registration Statement (Amendment No. 1) on Form S-3
for the registration of 894,660 shares of Common Stock par value $0.02 per
share, and to file such Registration Statement, so signed, with all exhibits
thereto, with the Securities and Exchange Commission, hereby further granting
unto said attorney-in-fact full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the premises
as fully to all intents and purposes as he might or could do in person; the
undersigned hereby ratifies and confirms all that said attorney and agent, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal this
12th day of February, 1998.
/s/ EDWIN J. KILPELA (SEAL)
- --------------------------------------
Edwin J. Kilpela, Director
<PAGE> 3
POWER OF ATTORNEY
-----------------
KNOW BY ALL MEN BY THESE PRESENT, the undersigned director of PDG
ENVIRONMENTAL, INC., a Delaware Corporation, does make, constitute and appoint
JOHN C. REGAN, with full power and authority to act as his true and lawful
attorney-in-fact and agent, for him and in his name, place and stead in any and
all capacities, to sign the Registration Statement (Amendment No. 1) on Form S-3
for the registration of 894,660 shares of Common Stock par value $0.02 per
share, and to file such Registration Statement, so signed, with all exhibits
thereto, with the Securities and Exchange Commission, hereby further granting
unto said attorney-in-fact full power and authority to do and perform any and
all acts and things requisite and necessary to be done in and about the premises
as fully to all intents and purposes as he might or could do in person; the
undersigned hereby ratifies and confirms all that said attorney and agent, shall
do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set his hand and seal
this 12th day of February, 1998.
/s/ RICHARD A. BENDIS (SEAL)
- --------------------------------------
Richard A. Bendis, Director
