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As filed with the Securities and Exchange Commission on July 11, 1997
Registration No. 333-27649
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
Amendment Number 1 to
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
_________________________
CASMYN CORP.
(Exact name of Registrant as specified in its charter)
Colorado 84-0987840
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1335 Greg Street
Unit #104
Sparks, Nevada 89431
(702) 331-5524
(Address, including Zip Code, and Telephone Number, Including
Area Code of Registrant's Principal Executive Offices)
_________________________
Amyn Dahya
President
1335 Greg Street
Unit # 104
Sparks, Nevada 89431
(702) 331-5524
(Name, Address, including Zip Code, and Telephone Number, Including Area Code,
of Agent for Service)
_________________________
Copy to:
David L. Ficksman, Esq.
Loeb & Loeb LLP
1000 Wilshire Boulevard, Suite 1800
Los Angeles, California 90017
(213) 688-3698
_________________________
Approximate date of commencement of proposed sale to the public: As soon
as practicable 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. [_]
_________________________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================
PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED(1)(2) PER SHARE(3) OFFERING PRICE(3) FEE
<S> <C> <C> <C> <C>
Common Stock, $.04 par
value per share 6,284,046 $7.125 $44,773,828 $13,568
============================================================================================================
</TABLE>
(1) Includes the registration for resale of the following: (i) all shares of
Common Stock issuable upon conversion of 834,667 shares of the Registrant's
8% Convertible Preferred Stock issued in a private placement in April,
1997; (ii) all shares of Common Stock issuable upon conversion of 110,000
shares of the Registrant's 8% Convertible Preferred Stock issuable upon the
exercise of warrants issued in connection with the foregoing private
placement; (iii) all shares of Common Stock issuable upon conversion of
shares of Registrant's 8% Convertible Preferred Stock issuable as dividends
in respect of shares of the Registrant's 8% Convertible Preferred Stock;
(iv) 870,571 shares of Common Stock originally issued in other private
placements; and (v) 1,339,189 shares of Common Stock (subject to
adjustment) issuable upon exercise of options and warrants issued in other
private placements. Estimated solely for purposes of calculating the
registration fee in connection with this Registration Statement; assumes
that all shares of the Registrant's 8% Convertible Preferred Stock are
converted into shares of Common Stock based on a market price of $7.125 per
share of Common Stock (the last reported sales price reported by NASDAQ on
July 7, 1997). In addition to the estimated number of shares set forth in
the table, the amount to be registered includes a presently indeterminate
number of shares issuable upon conversion of or otherwise in respect of
Registrant's 8% Convertible Preferred Stock.
(2) In the event of a stock split, stock dividend or similar transaction
involving the Common Stock of the Registrant, in order to prevent dilution,
the number of shares of Common Stock registered hereby shall be
automatically increased to cover the additional shares of Common Stock in
accordance with Rule 416 under the Securities Act of 1933, as amended.
(3) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(c) using the average of the high and low sale
prices reported on the Nasdaq SmallCap Market for the Registrant's Common
Stock on July 7, 1997.
_________________________
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.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO 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 THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion Dated July 11, 1997
PROSPECTUS
CASMYN CORP.
6,284,046 SHARES OF COMMON STOCK*
All of the shares ("Shares") of Common Stock, par value $.04 per share
("Common Stock") of Casmyn Corp., a Colorado corporation ("Casmyn" or the
"Company"), are being offered by certain securityholders of the Company (the
"Selling Shareholders"). The Company will not receive any of the proceeds from
the sale of the Shares offered hereby. All expenses of this offering will be
paid for by the Company except for commissions, fees and discounts of any
underwriters, brokers, dealers or agents retained by the Selling Shareholders.
See "Selling Shareholders" and "Plan of Distribution" for information relating
to the Selling Shareholders and this offering. The Common Stock Company is
traded on the NASDAQ SmallCap Market under the symbol "CMYN." On July 7, 1997,
the last reported sale price of the Common Stock, as reported on the NASDAQ
SmallCap Market, was $7.125 per share.
*The Shares offered hereby for resale are: (i) 870,571 shares of
Common Stock that were issued in private placements in 1996; (ii) 1,339,189
shares (subject to adjustment) of Common Stock issuable upon exercise of options
and warrants issued in private placements; (iii) all such currently
indeterminate number of shares of Common Stock issuable upon conversion of
834,667 shares of the Company's 8% Convertible Preferred Stock, par value $.10
and liquidation preference $25 per share (the "Convertible Preferred Stock")
issued in a private placement in April 1997; (iv) all such currently
indeterminable number of shares of Common Stock issuable upon conversion of
110,000 shares of the Convertible Preferred Stock issuable upon the exercise of
warrants (the "Convertible Preferred Stock Warrants") issued in connection with
the April private placement; and (v) all such currently indeterminate number of
shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock issuable as dividends in respect of the Convertible Preferred Stock and
the Convertible Preferred Stock Warrants. The number of shares of Common Stock
issuable in connection with the transactions referred to in (iii), (iv) and (v)
above and offered for resale hereby is an estimate based upon the market price
of the Common Stock set forth above, is subject to adjustment and could be
materially less or more than such estimated amount depending upon factors which
cannot be predicted by the Company at this time, including, among others, the
future market price of the Common Stock and the decision by the holders of the
Convertible Preferred Stock as to when to convert such shares. If, however,
such market price of the Common Stock were used to determine the number of
shares issuable as of the first dates on which all the Convertible Preferred
Stock may be converted, the Company would be obligated to issue a total of
approximately 4,074,286 shares of Common Stock if all shares of Convertible
Preferred Stock outstanding or issuable upon
<PAGE>
the exercise of Convertible Preferred Stock Warrants were converted on such
dates. This presentation is not intended to constitute a prediction as to the
future market price of the Common Stock or as to when holders will elect to
convert shares of Convertible Preferred Stock into shares of Common Stock. See
"Risk Factors - Effect of Conversion of Convertible Preferred Stock, Potential
Common Stock Adjustment" and "Description of Capital Stock."
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK.
THESE SECURITIES SHOULD BE PURCHASED ONLY BY THOSE PERSONS WHO CAN AFFORD A LOSS
OF THEIR ENTIRE INVESTMENT. (SEE "RISK FACTORS" ON PAGE 3)
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
____________________________
The date of this Prospectus is ____________, 1997.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934 (the "Exchange Act"). In accordance with the
Exchange Act, the Company files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). The reports,
proxy statements and other information can be inspected and copied at the public
reference facilities that the Commission maintains at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
located at 7 World Trade Center, 13th Floor, New York, New York 10048, and 500
West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of these
materials can be obtained at prescribed rates from the Public Reference Section
of the Commission at the principal offices of the Commission, 450 Fifth Street,
N.W., Washington, D.C. 20549. These reports, proxy statements and other
information may also be obtained from the Web site that the Commission maintains
at http:\\www.sec.gov.
The Company has filed with the Commission a registration statement on
Form S-3 (herein, together with all amendments and exhibits, referred to as the
"Registration Statement") under the Securities Act of 1933 (the "Securities
Act"). This Prospectus does not contain all of the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is hereby made to the Registration Statement.
____________________________
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated in this Prospectus by reference:
1. The Company's Annual Report on Form 10-K/A for the year ended
September 30, 1996; and
2. The Company's Quarterly Reports on Form 10-Q for the quarters
ended December 31, 1996 and March 31, 1997.
3. The Company's report on Form 8-K dated October 1, 1996.
4. The Company's report on Form 8-K dated October 15, 1996.
All other documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and
prior to the filing of a post-effective amendment which indicates that all
securities offered have been sold or which deregisters all securities then
remaining unsold, shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing such documents.
The Company will provide without charge to each person to whom a copy
of this Prospectus is delivered, upon the written or oral request of any such
person, a copy of
3
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any or all of the documents that are incorporated by reference, other than
exhibits to such documents not specifically incorporated by reference. Requests
for such copies should be directed to Mr. Dennis Welling, Casmyn Corp., 1800-
1500 West Georgia Street, Vancouver, British Columbia V6G 2Z8.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded for purposes of this Prospectus to
the extent that a statement contained herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
RISK FACTORS
IN EVALUATING AN INVESTMENT IN SHARES OF COMMON STOCK OF THE COMPANY,
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY, AMONG OTHER THINGS, THE
FOLLOWING RISK FACTORS.
LIMITED OPERATING HISTORY UNDER CURRENT MANAGEMENT
The Company has only been operating under its current management since
March 1994. Since that time, it has engaged in limited business operations and
is still in the process of acquiring and developing mineral properties and
technologies for its business, and it has been operating with losses. There is
no assurance that the Company will be able to generate the revenues necessary to
be profitable or that it will be successful if forced to seek additional funds
for further development of its current mining properties and technologies.
RELIANCE ON OUTSIDE FINANCING
The Company's management believes that in the long term it will be
able to generate revenues sufficient to fund its operations and continue with
its proposed business plans. However, to complete current projects under
development and should the Company expand its operations and/or make
acquisitions that would require substantial sums of money, it will have to seek
additional debt or equity financing. Since inception, the Company's operations
have been financed in substantial part through private sales of the Company's
securities and private loans. There can be no assurance that such financing
would be available on terms acceptable to the Company, as and when needed. The
ability of the Company to obtain financing will depend on, among other factors,
political stability in those countries in which the Company does business, the
price (and trends of prices) of minerals and the market perception of mining
stocks.
4
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RELIANCE UPON OFFICERS AND DIRECTORS
The Company is wholly dependent, at present, upon the personal efforts
and abilities of its officers and directors. The loss of one or more of its
officers or directors could have a material adverse effect on the Company's
operating results. The Company does not maintain key man life insurance on its
officers and directors. While the Company will solicit business through its
officers and directors, there can be no assurance as to the volume of business,
if any, which the Company may obtain, or that its operations will prove to be as
profitable as presently anticipated.
CONFLICTS OF INTEREST
The Company has in the past obtained and anticipates obtaining certain
of its services and has shared and anticipates sharing management and facilities
from companies of which certain of its officers, directors and principal
shareholders are officers, directors and/or principal shareholders. All such
services and facilities will be obtained by the Company at terms which the
Company believes are competitive in the marketplace and at least as favorable to
the Company as would be obtained by a third party. The Company has also
advanced, and anticipates that it will continue to advance over the near term,
funds to Vector Environmental Technologies, Inc. ("VETI") in which the Company
owns 31.2% of the outstanding equity. As of June 30, 1997, VETI was indebted to
the Company in the approximate amount of $3,500,000.
UNPROFITABILITY
Despite the business experience of the officers, directors and
principal shareholders of the Company, the Company has been operating at a loss
and has not been profitable since 1994, when Mr. Amyn Dahya, the Company's
President, acquired majority ownership. The Company had net income of $47,060
for the fiscal year ended September 30, 1994 and net losses of $3,042,428,
$8,321,326 and $2,596,107 for the fiscal years ended September 30, 1995 and 1996
and the six months ended March 31, 1997, respectively. There can be no assurance
the Company will be profitable in the future, or that such profitability, if
attained, will be sufficient to permit the Company to be successful in the
future or to expand or continue to operate.
COMPETITION
Competition includes large established mining companies having
substantial capabilities and greater financial and technical resources than the
Company. Therefore, the Company may be unable to acquire future potential
mining properties on terms it considers acceptable. The Company also competes
with other mining companies in the recruitment and retention of qualified
employees.
5
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GOVERNMENTAL APPROVAL/REGULATIONS
The mining operations of the Company, through its wholly-owned
subsidiaries Casmyn Mining Corporation and Casmyn Mining Zimbabwe [Private]
Limited, are conducted primarily through its offices located in South Africa and
Zimbabwe. Casmyn Mining Corporation is qualified to do business in South Africa
which include permits to allow the Company to conduct exploration activities on
optioned properties and, as such, is subject to the laws of that country.
Casmyn Mining Zimbabwe [Private] Ltd. received approval from the Zimbabwe
Investment Centre to carry out exploration and mining activities and from the
Zimbabwe Reserve Bank to purchase 100% of the shares of a group of five (5)
private mining companies in Zimbabwe (See "The Company").
COMPLIANCE WITH ENVIRONMENTAL LAWS
The mining operations of the Company in South Africa are directed at
determining the presence of economically viable mineral deposits on properties
under option. It is the Company's intention, once such mineral deposits are
discovered, to identify a joint venture partner to develop and operate the
mining properties. Under the South Africa Minerals Act, 1991, the Company and/or
its joint venture partner are responsible for development of an environmental
impact assessment and an environmental management program for the proposed
mining venture which must be approved prior to the start of exploration and/or
mining operations. On January 31, 1996, the Company acquired various gold mining
properties and processing facilities in Zimbabwe and has begun mining and
processing gold at those facilities. The Company is also engaged in an
exploration program in Zambia that consists mainly of geophysics, soil sampling
and core drilling. The Company believes that it is in compliance with the
environmental laws of the countries in which it operates. The Company estimates
that should it be determined not to be in compliance with the environmental laws
of any of the above countries, the cost of correcting the non-compliance and any
related fines would not be material to the Company and would not result in
material delays in any of the Company's operations and exploration programs.
RISK OF DEVELOPMENT AND POSSIBILITY OF INADEQUATE INSURANCE COVERAGE,
CONSTRUCTION AND MINING OPERATIONS
In connection with the development of a mineral resource property, the
ability to meet cost estimates and construction and production time estimates
cannot be assured. Technical considerations, delay in obtaining governmental
approvals, inability to obtain financing or other factors could cause delays in
developing mineral resource properties. Additionally, the business of mineral
mining is subject to a variety of risks and hazards, including environmental
hazards, industrial accidents, flooding and the discharge of toxic chemicals.
The Company has obtained insurance in amounts it considers to be adequate to
protect itself against certain of these risks of mining and processing.
However, the Company may become subject to liability for certain hazards for
which it cannot obtain insurance or which it may elect not to obtain insurance
against because of premium cost or other reasons.
EXPLORATION PROGRAMS
A major part of the Company's business is the exploration of its
existing properties and the evaluation and pursuit of potential new prospects at
the exploration stage.
6
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Substantial expenditures may be incurred in an attempt to establish the economic
feasibility of mining operations by identifying mineral deposits and
establishing reserves through drilling and other techniques, designing
facilities and planning mining operations. The economic feasibility of a project
depends on numerous factors, including the cost of mining and production
facilities required to extract the desired minerals, the total mineral deposits
that can be mined using a given facility and the market price of the minerals at
the time of sale. There is no assurance that existing or future exploration
programs or acquisitions will result in the identification of deposits that can
be mined profitably. The Company generally acquires the rights to explore for
mineral resources on various parcels of land through option agreements
negotiated with the property owner. The agreements generally have a term of one
year with the right to extend on a year to year basis. The Company is in the
process of determining the potential for economically viable mineral resources
on properties under option and will either renew or cancel options based upon
this determination.
To date, the Company's properties and exploration programs in South
Africa and Zambia have not indicated the presence of proven commercially viable
mineral deposits.
UNCERTAINTY OF RESERVE ESTIMATE CALCULATIONS
Uncertainty exists in the determination of proven and probable gold
reserves due to assumptions made as to cost of production and world gold prices.
Additionally, while the Company continues its exploration program at its
Zimbabwe properties to identify new reserves to replace those currently being
depleted, there is no assurance that the Company will be able to find such new
reserves.
MARKET FACTORS AND VOLATILITY
Active international markets have historically existed for gold.
There has been an active market for diamonds, copper, cobalt and uranium which
are of a commodity nature. As such, the Company anticipates no barriers to the
sale of these minerals. Prices of certain minerals have fluctuated widely,
particularly in recent years, and are affected by numerous factors beyond the
control of the Company. Future mineral prices cannot be accurately predicted.
A significant decline in the price of gold being produced or expected to be
produced by the Company could have a material adverse effect on the Company.
However, the Company will attempt to reduce its exposure to losses from such
price decreases through hedging.
NO CASH DIVIDENDS
The Company has never paid and has no present plans to pay any cash
dividends on its common stock. The Company currently intends to retain its
earnings to finance the growth and development of its business.
CERTAIN TAX CONSIDERATIONS
The Company is predominantly invested in foreign subsidiaries. Those
subsidiaries are subjected to tax imposed on them in the foreign jurisdictions
in which they operate and in which they are organized. Further, their income is
subject to US federal and state income taxes when distributed, deemed
distributed or otherwise attributed to, the Company, which is a US corporation.
Complex US tax rules apply for purposes of determining the calculation of those
US taxes, the availability of a credit for any foreign taxes imposed on the
foreign subsidiaries or the Company and the timing of the imposition of US tax.
7
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Normally, all foreign income earned by a US multinational eventually
will be subject to US tax. Income earned by a foreign branch of a US company is
taxable currently in the United States, and income earned by a foreign
subsidiary could be subject to US tax either in the year distributed to the US
as a dividend or in the year earned by means of Subpart F, foreign personal
holding company or other federal tax rules requiring current recognition of
certain income earned by foreign subsidiaries.
Income earned in foreign countries often is subject to foreign income
taxes. In order to relieve double taxation, the US federal tax law generally
allows US corporations a credit against their US tax liability in the year the
foreign earnings become subject to US tax in the amount of the foreign taxes
paid on those earnings. The credit is limited, however, under complex limitation
rules, to, in general, the US (pre-credit) tax imposed on the US corporation's
foreign source income. Further, complex rules exist for allocating and
apportioning interest, research and development expenses and certain other
expense deductions between US and foreign sources. Limiting provisions of the
source rules decrease the amount of foreign source income many US multinationals
can generate. Reduced foreign source income results in a smaller foreign tax
credit limitation, as the limitation is based on the ratio of foreign source net
income to total net income.
These rules can prevent US multinationals from crediting all of the
foreign taxes they pay. To the extent that foreign taxes are not creditable,
foreign source income bears a tax burden higher than the US tax rate.
GENERAL POLITICAL RISKS AND RISK OF CURRENCY EXCHANGE RATE FLUCTUATIONS
The Company is actively engaged in exploration and production
activities in Zimbabwe, Zambia and South Africa. These countries may be subject
to a substantially greater degree of social, political and economic instability
than is the case in the United States and Western European countries. Such
instability may result from, among other things, the following: (i) popular
unrest associated with demands for improved political, economic and social
conditions; and (ii) ethnic, religious and racial disaffection. Such social,
political and economic instability could significantly disrupt the Company's
business. In addition, there may be the possibility of nationalization, asset
expropriations or future confiscatory levels of taxation affecting the Company.
In the event of nationalization, expropriation or other confiscation, the
Company may not be fairly compensated for its loss and could lose its entire
investment in the country involved.
The economies of individual countries in which the Company does
business may differ favorably or unfavorably and significantly from the U.S.
economy in such respects as the rate of growth of GDP or gross national product,
rate of inflation, currency depreciation, capital reinvestment, resource self-
sufficiency, structural unemployment and balance of payments position.
8
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Governments in certain foreign countries in which the Company does
business participate to a significant degree, through ownership interests or
regulation, in their respective economies. Action by these governments could
have a significant adverse effect on the Company's business.
The Company is actively engaged in business activities in Vietnam
through its investment in Vector Environmental Technologies, Inc. The political
situation in Vietnam involves certain risks. The government of Vietnam exercises
control over licensing, importing and exporting, which may impact on the
Company's ability to carry out its business. The legal climate remains unsettled
with many ambiguous regulations. The financial system remains underdeveloped,
and relies on high interest rates to attract deposits, though a great deal of
wealth is held in nonfinancial assets. The role of the state in the economy is
significant and is likely to remain so.
The value of the assets of the Company as measured in dollars also may
be affected favorably or unfavorably by fluctuations in currency rates and
exchange control regulations. Some of the currencies of countries in which the
Company does business have experienced devaluations relative to the dollar, and
major adjustments have been made periodically in certain of such currencies.
Also, certain of these countries face serious exchange constraints. Further, the
Company may incur costs in connection with conversions between various
currencies. Foreign exchange dealers realize a profit based on the difference
between the prices at which they are buying and selling various currencies.
Thus, a dealer normally will offer to sell a foreign currency to the Company at
one rate, while offering a lesser rate of exchange should the Company desire
immediately to resell that currency to the dealer. The Company conducts its
foreign currency exchange transactions either on a spot (i.e., cash) basis at
the spot rate prevailing in the foreign currency exchange market, or through
entering into forward, futures or options contracts to purchase or sell foreign
currencies or through entering into currency swap transactions. If the foreign
currency hedging engaged in by the Company does not protect the Company against
adverse changes in exchange rates, the Company's net assets (including accrued
income and realized capital gains) and distributions would be affected by
fluctuations in the value of the local currency. The Company does not currently
have any foreign exchange hedge contracts in place.
DILUTIVE EFFECT OF OPTIONS AND WARRANTS; SHARES AVAILABLE FOR FUTURE SALE.
As of July 7, 1997, the Company had granted options to purchase an
aggregate of approximately 2,121,000 shares at exercise prices ranging form $.04
to $21.00 per share, and warrants to purchase an aggregate of approximately
1,239,000 shares, of Common Stock at exercise prices ranging from approximately
$8.00 per share to $13.00 per share. In the event that all such options and
warrants are exercised for cash, the aggregate proceeds to the Company would be
approximately $27,349,000. To the extent that the stock options and warrants are
exercised, material dilution of the ownership interest of the Company's present
shareholders will occur. The Company also expects that in the ordinary course of
its business it will issue additional warrants and grant additional stock
options including, but not limited to, options granted pursuant to its Employee
and Director's Stock Option Plans. Investors should note that the recent trading
prices of the Common Stock significantly exceeds the Company's book value per
share for financial accounting purposes. In addition, this prospectus covers the
resale of an estimated 6,284,046 shares of Common Stock pertaining to presently
restricted shares and shares of Common Stock issuable upon the exercise of
presently outstanding warrants and the conversion of the Convertible Preferred
Stock (subject to the assumptions set forth on the cover page of this Prospectus
related to future market prices of the Common Stock and conversion elections
made by holders of the Convertible Preferred Stock). During the
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effectiveness of this registration statement, such shares will be eligible for
resale in the public market without restriction under the Securities Act. Sales
of substantial amounts of Common Stock by shareholders, or the perception that
such sales could occur, could adversely affect the market price for the Common
Stock. See "-- Effect of Conversion of Convertible Preferred Stock; Potential
Common Stock Adjustment," "Description of Capital Stock" and "Shares Available
for Future Sale."
EFFECT OF CONVERSION OF CONVERTIBLE PREFERRED STOCK; POTENTIAL COMMON STOCK
ADJUSTMENT.
The Company's Convertible Preferred Stock entitles the holders thereof
to convert such shares into shares of Common Stock. The exact number of shares
of Common Stock issuable upon conversion of all of the Convertible Preferred
Stock and offered hereby cannot currently be estimated but, the amount of such
issuances of Common Stock will vary inversely with the market price of the
Common Stock. The holders of Common Stock will be materially diluted by
conversion of the Convertible Preferred Stock which dilution will depend on,
among other things, the future market price of the Common Stock and the
decisions by holders of shares of Convertible Preferred Stock as to when to
convert such shares which will affect, among other things, the number of shares
of Convertible Preferred Stock issuable as dividends (and ultimately the number
of shares of Common Stock). On July 7, 1997, the last reported sales price of
the Common Stock on the NASDAQ SmallCap Market was $7.125 per share. If such
market price were used to determine the number of shares of Common Stock
issuable as of the first date on which all of the outstanding shares of
Convertible Preferred Stock may be converted, the Company would issue a total of
approximately 4,074,300 shares of Common Stock if all such shares, including
shares of Convertible Preferred Sock issuable upon the exercise of the
outstanding Convertible Preferred Stock Warrants were converted at such time. To
the extent the market price per share of the Common Stock is lower or higher
than $7.125 as of any date on which outstanding shares of Convertible Preferred
Stock are converted, the Company would issue more or less shares of Common Stock
than reflected in such estimate, and such difference could be material. The
number of shares of Common Stock issuable upon conversion of the Convertible
Preferred Stock will increase as the market price of the Common Stock decreases
(and decrease as such market price increases). The number of shares of Common
Stock may also increase should holders of Convertible Preferred Stock continue
to hold such shares, thereby causing the discount to market price applicable
upon conversion of such shares to increase and the number of shares of
Convertible Preferred Stock issued as dividends to increase. The holders of the
outstanding shares of Convertible Preferred Stock also possess certain
registration rights, including the right to include all of the shares of Common
Stock that such holders may desire to sell in certain underwritten public
offerings by the Company. The terms of the Convertible Preferred Stock do not
provide for any limit on the number of shares of Common Stock which the Company
may be required to issue in respect thereof. Stock market volatility, whether
related to the stock market generally or the Company specifically, and if
coincident in time with conversions of Convertible Preferred Stock, will
10
<PAGE>
impact directly the number of shares of Common Stock issuable upon conversion
thereof. Additionally, if the Company issues Common Stock or securities
convertible into or exercisable for Common Stock or other convertible securities
at an effective price per share which is lower than the conversion price of the
shares of Convertible Preferred Stock at that time, the Company is required to
issue upon conversion of the shares of Convertible Preferred Stock an additional
number of shares of Common Stock necessary to reduce the effective conversion
price to such lower issue price (subject to certain exceptions pertaining to
shareholder approved option plans).
RESTRICTIONS ON TRANSFER.
Following conversion of the Convertible Preferred Stock into shares of
Common Stock, the holders of such shares of Common Stock will be limited on
resales of such shares to the greatest of: (i) 10% of the average daily trading
volume of the Common Stock for the five trading days preceding any such sale
date; (ii) 25,000 shares; and (iii) 10% of the trading volume for the Common
Stock on the date of any such sale. Such limitations on transfer would limit
the ability of an investor to sell shares of Common Stock received upon
conversion of the Convertible Preferred Stock in excess of such levels in one
transaction and delay the time over which an investor could sell their entire
holdings of such shares of Common Stock. See "Description of Capital Stock --
Preferred Stock."
POSSIBLE ISSUANCE OF ADDITIONAL SHARES OF PREFERRED STOCK WITHOUT SHAREHOLDER
APPROVAL.
The Company's Articles of Incorporation authorizes the issuance of
"blank check" Preferred Stock with such designations, rights and preferences as
may be determined from time-to-time by the Company's Board of Directors.
Accordingly, the Board is empowered, without approval by holders of the Common
Stock, to issue additional shares of Preferred Stock with dividend,
liquidations, redemption, conversion, voting or other rights which could
adversely affect the voting power or other rights of the holders of the Common
Stock. It was pursuant to this authority that the shares of the Convertible
Preferred Stock were issued. In the event of issuance, Preferred Stock could be
used, under certain circumstances, as a method of discouraging, delaying or
preventing a change in control of the Company. The Company may issue additional
shares of Preferred Stock in the future to raise capital. See "Description of
Capital Stock."
THE COMPANY
The business activities of the Company center around mineral resource
development. The primary focus to date has been the acquisition and exploration
of mineral resource properties in Zimbabwe, Zambia and South Africa. The
Company has acquired certain mineral properties in South Africa, a prospecting
license in Zambia and is presently
11
<PAGE>
conducting mining operations on its Zimbabwe mining properties. In addition, the
Company has positioned itself in the environmental industry through an equity
investment in VETI. VETI is currently focused primarily on the development,
manufacture, sales and management of water treatment equipment and facilities,
principally in Vietnam and North America.
On January 31, 1996, the Company acquired 100% of the shares of a
group of five (5) private mining companies (the "Acquired Companies") controlled
by the Muir Family in Zimbabwe: E.W.B. Properties (Private) Limited:
Matabeleland Minerals (Private) Limited, Greenhorn Mines (Private) Limited,
Morven Mining (Private) Limited, Motapa Minerals (Private) Limited and Turk
Mines (Private) Limited. The Acquired Companies own mining claims controlling
gold and silver mineral rights on properties that lie within the Bubi Greenstone
Belt, which is one of the largest greenstone formations in Zimbabwe and include
numerous shafts, mining equipment and mineral processing mills with a total
capacity of 1,000 tonnes per day. Also, on January 31, 1996, the Company
purchased the assets of the Dawn Mine property in Zimbabwe. The group of mines
making up the Dawn Mine property had produced over 340,000 ounces of gold at an
average grade of 0.48 ounces of gold per tonne. The Dawn Mine is located in
close proximity to the Turk mine and mill and will be operated under a mine plan
which includes the Turk mine and other mining properties in the area owned by
the Company. Through the acquisition of the Acquired Companies, the Company owns
a 100% interest in 18 past producing gold mines that have produced in excess of
1,000,000 ounces of gold since mining commenced in the early 1900's. The Company
believes that, through the modernization of the physical plant and
implementation of advanced mining technologies, significant increases in gold
recovery can be realized. In addition, the Company is expanding its gold
reserves through the application of advanced exploration techniques. Mr. P.
Bekker, Consulting Geologist, an independent consultant, has calculated that the
Company has in excess of 1,020,000 ounces of proven and probable gold reserves
for the mines owned by the Company. As of July 7, 1997, the Company was
operating three (the Turk, Dawn and Lonely mines) of the 18 mines acquired.
RECENT DEVELOPMENTS
On April 14, 1997, the Company completed a private placement offering
of 834,667 shares of the Company's newly established Convertible Preferred Stock
and received aggregate net proceeds therefrom of approximately $16,700,000
(after cash fees to the placement agent and the Company's financial advisor and
estimated transaction expenses but without giving effect to the conversion of
approximately $2,087,000 principal amount of Convertible Debentures into
Convertible Preferred Stock). The Company has used the proceeds as
follows:
<TABLE>
<S> <C>
Short-term Investments to support Turk Mine $14,500,000
Zimbabwe Mine Expansion 400,000
Zambia Exploration Project 350,000
Loan to Affiliate 500,000
South Africa Exploration 200,000
Working Capital 750,000
-----------
Total $16,700,000
===========
</TABLE>
The Convertible Preferred Stock has a liquidation preference of $25.00
per share, is non-voting and is entitled to quarterly dividends of 8% per annum,
first payable on July 31, 1997, which dividends are to be paid in additional
shares of Convertible Preferred Stock, valued at $25.00 per share. Commencing on
the 91st day after the date of issuance (or on such earlier date as the
registration statement in connection with the Convertible Preferred Stock is
declared effective by the Commission),
12
<PAGE>
10% (or such larger percentage as is determined by the Company, in its sole
discretion) of the shares of the Convertible Preferred Stock held by each holder
will become convertible, and thereafter on the successive monthly anniversaries
an equal number of shares of Convertible Preferred Stock held by such holder
will become convertible (on a cumulative basis). The Convertible Preferred Stock
will be convertible at a discount to the Common Stock ranging from 8.5% to 39%,
depending upon the date on which such shares are converted. This discount is
considered to be an additional preferred stock dividend. For the year ending
September 30, 1997, the Company will record a charge to its returned earnings
and a corresponding credit to preferred stock of approximately $983,000 as the
initial discount assuming no conversion of Convertible Preferred Stock to Common
Stock prior to September 30, 1997. The amount of the additional discount to be
recorded will be measured at the percentage discount in effect at the balance
sheet date and will vary depending upon the number of shares converted to Common
Stock. As the discount rate increases, the additional discount will be
recognized as a further charge to retained earnings and a credit to preferred
stock. Assuming no conversion of Convertible Preferred Stock during the fiscal
year ended September 30, 1998, the Company estimates that the charge to retained
earnings and corresponding credit to preferred stock would be approximately
$12,212,000 for the fiscal year ended September 30, 1998. These amounts are
recognized as a return to the Preferred Stockholders and a reduction of income
available to Common Stockholders.
The exact number of shares of Common Stock issuable upon conversion of
the Convertible Preferred Stock cannot be determined and will depend upon, among
other things, the future market price of the Common Stock at the date of
conversion and the decisions by holders of shares of Convertible Preferred Stock
as to when to convert such shares. The placement agent in the private placement
transaction was issued five-year warrants to purchase 110,000 shares of
Convertible Preferred Stock at $25.00 per share and received 7.5% of the gross
proceeds from the issuance and sale of the Convertible Preferred Stock as cash
consideration for such services. See "Risk Factors -- Effect of Conversion of
Convertible Preferred Stock; Potential Common Stock Adjustment" and "Description
of Capital Stock."
In connection with the private placement of the Convertible Preferred
Stock, the holder of the Company's $5,000,000 Convertible Debentures converted
$2,086,675 principal amount of such Debentures into 83,467 shares of the
Convertible Preferred Stock and the remaining $2,913,325 principal amount into
594,856 shares of the Company's Common Stock.
SHARES AVAILABLE FOR FUTURE SALE
In general, Rule 144 under the Securities Act, as recently amended by
the Commission ("Rule 144"), provides that a person who is an affiliate of the
Company or who has beneficially owned shares that were issued and sold in
reliance upon exemptions from registration under the Securities Act ("Restricted
Shares") for at least one year is entitled to sell within any three-month period
a number of shares that does not exceed the greater of one percent (1%) of the
then outstanding shares of Common Stock or the average weekly trading volume.
Sales under Rule 144 are also subject to certain manner-of-sale provisions,
notice requirements and the availability of current public information about the
Company. However, a person who is not deemed to have been an "affiliate" of the
Company at any time during the three months preceding a sale, and who has
beneficially owned Restricted Shares for at least two years, is entitled to sell
such shares under Rule 144(k) without regard to volume limitations, manner-of-
sale provisions, notice requirements or the availability of current public
information about the Company.
Of the approximately 20,887,000 shares of Common Stock estimated to be
outstanding (on a fully diluted basis including shares issuable upon the
exercise of outstanding warrants and options) upon completion of this offering
(subject to the assumptions set forth or referred to on the cover page of this
Prospectus related to future market prices of the
13
<PAGE>
Common Stock and conversion elections made by holders of the Convertible
Preferred Stock), approximately 15,472,235 shares (including for this purpose an
estimated 4,074,286 shares of Common Stock issuable upon conversion of the
Convertible Preferred Stock and Convertible Preferred Stock Warrants) will have
been registered under Securities Act and/or otherwise freely tradeable, and
approximately 2,204,444 shares are saleable subject to compliance with the
requirements of Rule 144 except for the holding period. Additionally,
approximately 596,132 shares of Common Stock will be tradeable subject to the
one year holding period restrictions under, and compliance with the other
requirements of, Rule 144 discussed above. Additionally, 1,339,189 shares of
Common Stock issuable upon the exercise of presently outstanding options and
warrants are being registered herewith. Approximately 1,275,000 shares of common
stock issuable upon the exercise of presently outstanding options have not been
registered.
Each of Amyn Dahya, the Company's Chief Executive Officer and
President, and Dahya Holdings, Inc., a corporation in which Mr. Dahya is an
officer, a director and minority shareholder, has agreed for the 13-month period
following the issuance of the Convertible Preferred Stock not to sell, and not
to permit any of their affiliates to sell, more than 25,000 shares of Common
Stock without the prior consent of the placement agent of the Convertible
Preferred Stock.
No predictions can be made as to the effect that sales of Common Stock
under Rule 144, pursuant to a registration statement or otherwise, or the
availability of shares of Common Stock for sale, will have on the market price
prevailing from time to time. Nevertheless, sales of substantial amounts of
Common Stock in the public market, or the perception that such sales could
occur, could adversely affect prevailing market prices and could impair the
Company's future ability to raise capital through an offering of its equity
securities. Further, certain of the share amounts set forth above under the
caption "Shares Available for Future Sale" are estimates only based on recent
market prices, are subject to adjustment, and could be materially less or more
than such estimated amounts depending upon factors which cannot be predicted at
this time, including, among others, the future market price per share of the
Common Stock and conversion elections made by holders of the Convertible
Preferred Stock. See "Risk Factors -- Dilutive Effect of Options and Warrants;
Shares Available for Future Sale," and "-- Effect of Conversion of Convertible
Preferred Stock; Potential Common Stock Adjustment."
SELLING SHAREHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Common Shares to be offered hereby as of May 20,
1997, and as adjusted to reflect the sale of the Shares offered hereby, by the
Selling Shareholders. The information in the table concerning the Selling
Shareholders who may offer Common Shares hereunder from time to
14
<PAGE>
time is based on information provided to the Company by such securityholders,
except for the assumed conversion ratio of shares of the Convertible Preferred
Stock into Common Stock, which is based solely on the assumption discussed or
referenced in footnote (1) to the table. Information concerning such Selling
Shareholders may change from time to time and any changes of which the Company
is advised will be set forth in a Prospectus Supplement to the extent required.
See "Plan of Distribution."
15
<PAGE>
<TABLE>
<CAPTION>
COMMON SHARES COMMON SHARES
BENEFICIALLY COMMON SHARES TO BENEFICIALLY
OWNED PRIOR TO BE SOLD IN THE OWNED AFTER
THE OFFERING(1) OFFERING(1) THE OFFERING
NAME OF SELLING
SHAREHOLDER NUMBER PERCENT NUMBER PERCENT
--------------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
IBK Capital Corp.(2) 25,000 * 25,000 -0- *
Maple Leaf Trust(2)(3) 75,000 * 75,000 -0- *
Credit Suisse Asset 60,000 * 60,000 -0- *
Management(2)(4)
NCL Investments 75,000 * 75,000 -0- *
Limited(2)(3)
La Compagnie 22,500 * 22,500 -0- *
Financiere(2)(5)
Nordic Resources, Corp.(2) 25,000 * 25,000 -0- *
Roth Investor Relations, 10,000 * 10,000 -0- *
Inc.(2)
Bismillah Children's 1,807,750 13.4% 200,000 1,607,750 12.0%
Foundation(2)
Marshall Auerback(6) 25,000 * 25,000 -0- *
Douglass Hughes(6) 3,500 * 3,500 -0- *
Tanguy de la 15,000 * 15,000 -0- *
Rochebrochard(2)
La Compagnie Financiere 5,000 * 5,000 -0- *
Edmond de Rothschild
Banque(2)
Equitable Life Assurance 150,000 1.1% 150,000 -0- *
Society(2)
Cedef Finance(2) 5,000 * 5,000 -0- *
Lion Mining(2) 15,000 * 15,000 -0- *
GFM International 20,000 * 20,000 -0- *
Investors(2)
The Prudential Insurance 15,000 * 15,000 -0- *
Co. of America(2)
Executronics Ltd. (2) 5,000 * 5,000 -0- *
Invesco(2) 10,000 * 10,000 -0- *
Mercury Asset 50,000 * 50,000 -0- *
Management(2)
Woodbridge Capital(2) 5,000 * 5,000 -0- *
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
COMMON SHARES COMMON SHARES
BENEFICIALLY COMMON SHARES TO BENEFICIALLY
OWNED PRIOR TO BE SOLD IN THE OWNED AFTER
THE OFFERING(1) OFFERING(1) THE OFFERING
NAME OF SELLING
SHAREHOLDER NUMBER PERCENT NUMBER PERCENT
--------------- ------ ------- ------ ------
<S> <C> <C> <C> <C> <C>
Princeton Research(7) 80,000 * 80,000 -0- *
Art Beroff(8) 75,000 * 75,000 -0- *
Rickel & Associates, Inc.(9) 150,000 1.1% 150,000 -0- *
Pondel Parsons & 20,000 * 20,000 -0- *
Wilkinson(10)
Deere Park Capital 172,516 1.3% 172,516 -0- *
Management
Grove Limited Partnership 12,941 * 12,941 -0- *
JMG Capital Partners 43,140 * 43,140 -0- *
Merced Partners Limited 86,259 * 86,259 -0- *
Partnership
Lakeshore International Ltd. 215,644 1.6% 215,644 -0- *
CC Investments 172,516 1.3% 172,516 -0- *
Global Bermuda Limited 215,644 1.6% 215,644 -0- *
Partnership
Elliott Associates, L.P. 517,543 3.7% 517,543 -0- *
SIL Nominees 172,516 1.3% 172,516 -0- *
Edmond O'Donnell 17,253 * 17,253 -0- *
Linda Cappello(11) 230,739 1.7% 230,739 -0- *
Gerard K. Cappello(12) 155,264 1.1% 155,264 -0- *
Lawrence K. 135,856 1.0% 135,856 -0- *
Fleischman(13)
Orvalor(14) 1,445,345 10.4% 602,370 842,975 6.3%
Sogelux Gold Mine(15) 187,000 1.4% 150,000 37,000 *
Orgef(16) 976,265 7.1% 332,735 643,530 4.8%
Naturagef(17) 393,137 2.9% 298,637 94,500 *
MF Commodity(18) 45,000 * 45,000 -0- *
Karpnale Investment Pte. 86,259 * 86,259 -0- *
Ltd.
ProFutures Special Equities 120,762 * 120,762 -0- *
Fund
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
COMMON SHARES COMMON SHARES
BENEFICIALLY COMMON SHARES TO BENEFICIALLY
OWNED PRIOR TO BE SOLD IN THE OWNED AFTER
THE OFFERING(1) OFFERING(1) THE OFFERING
NAME OF SELLING
SHAREHOLDER NUMBER PERCENT NUMBER PERCENT
--------------- ------ ------- ------ -------
<S> <C> <C> <C> <C> <C>
Crisostomo B. Garcia 51,756 * 51,756 -0- *
Trustee
Theodore Meisel 17,253 * 17,253 -0- *
Strome Offshore Limited 336,404 2.4% 336,404 -0- *
Strome Susskind Hedgecap 189,767 1.4% 189,767 -0- *
Fund
Strome Partners L.P. 181,141 1.3% 181,141 -0- *
Strome Susskind Hedgecap 43,140 * 43,140 -0- *
Fund
The Cheryl K. Strome 43,140 * 43,140 -0- *
Living Trust
Strome Family Foundation 34,505 * 34,505 -0- *
Strome Global Income 17,253 * 17,253 -0- *
Fund
Mark Strome 17,253 * 17,253 -0- *
Fortune Fund Ltd. 86,259 * 86,259 -0- *
RGC International 258,772 1.9% 258,772 -0- *
Investors, LDC
Trust Co. of America FBO 82,809 * 82,809 -0- *
Perspective Advisory
Company
Total 6,284,046
=========
</TABLE>
- ----------
*Represents less than 1% of the outstanding Common Stock.
(1) Except as specifically indicated in the footnotes, such beneficial
ownership represents an estimate of the number of shares of Common Stock
issuable upon the conversion of shares of the Convertible Preferred Stock
beneficially owned by such person (either directly or through the exercise
of the Convertible Preferred Stock Warrants), assuming the last reported
sales price of $7.125 per share of Common Stock on July 7, 1997 was used to
determine the number of shares of Common Stock issuable as of the first
dates on which the Convertible Preferred Stock may be converted and that
all
18
<PAGE>
dividends on shares of the Convertible Preferred Stock are paid in
additional shares of Convertible Preferred Stock. The actual number of
Shares offered hereby is subject to adjustment and could be materially less
or more than the estimated amount indicated depending upon factors which
cannot be predicted by the Company at this time, including, among others,
application of the conversion provisions based on market prices prevailing
at the actual date of conversion and the number of shares of Convertible
Preferred Stock (and ultimately the number of shares of Common Stock)
issuable as dividends on the Convertible Preferred Stock. This presentation
is not intended to constitute a prediction as to the future market price of
the common Stock or as to when holders will elect to convert shares of
Convertible Preferred Stock into shares of Common Stock. The shares of
Convertible Preferred Stock (other than the shares of Convertible Preferred
Stock issued as dividends) and the Convertible Preferred Stock Warrants
were issued in the April Private Placement. See "Risk Factors--Effect of
Conversion of Convertible Preferred Stock" and "Description of Capital
Stock."
(2) Represents beneficial ownership of shares of Common Stock issued in or
issuable pursuant to the exercise of warrants issued in other private
placements.
(3) Includes 25,000 shares issuable upon exercise of presently exercisable
warrants.
(4) Includes 20,000 shares issuable upon exercise of presently exercisable
warrants.
(5) Includes 7,500 shares issuable upon exercise of presently exercisable
warrants.
(6) Represents shares issued upon the exercise of common stock options not
previously registered.
(7) Represents 80,000 shares issuable upon exercise of presently exercisable
options.
(8) Represents shares issuable upon exercise of 20,000 currently exercisable
options and 55,000 options which vest in the future.
(9) Represents shares issuable upon exercise of 50,000 currently exercisable
warrants and 100,000 warrants which vest in the future.
(10) Represents shares issuable upon exercise of 5,000 currently exercisable
options and 15,000 options which vest in the future.
(11) Includes 213,486 shares issuable upon the conversion of 49,500 placement
agent warrants.
19
<PAGE>
(12) Includes 142,326 shares issuable upon the conversion of 33,000 placement
agent warrants.
(13) Includes 118,603 shares issuable upon the conversion of 27,500 placement
agent warrants.
(14) Common Shares owned beneficially before the offering consist of:
<TABLE>
<S> <C>
Shares issued in private placements 447,090
Shares issued in lieu of interest 14,384
Shares issuable upon exercise of presently exercisable warrants 220,000
Shares issued upon conversion of convertible debenture 475,885
Shares issuable upon conversion of convertible debenture preferred stock 287,986
---------
Total 1,445,345
=========
Common shares to be sold in the offering:
Shares issued in private placements 80,000
Shares issued in lieu of interest 14,384
Shares issuable upon exercise of presently exercisable warrants 220,000
Shares issuable upon conversion of convertible preferred stock 287,986
---------
Total 602,370
=========
(15) Common shares owned beneficially before the offering consist of:
Shares issued in private placements 137,000
Shares issuable upon exercise of presently exercisable warrants 50,000
-------
Total 187,000
=======
Common shares to be sold in the offering:
Shares issued in private placements 100,000
Shares issuable upon exercise of presently exercisable warrants 50,000
-------
Total 150,000
=======
(16) Common shares owned beneficially before the offering consist of:
Shares issued in private placements 524,559
Shares issued in lieu of interest 3,596
Shares issuable upon exercise of presently exercisable warrants 257,143
Shares issued upon conversion of convertible debenture 118,971
Shares issuable upon conversion of convertible preferred stock 71,996
-------
Total 976,265
=======
</TABLE>
20
<PAGE>
<TABLE>
<S> <C>
Common shares to be sold in the offering:
Shares issued in lieu of interest 3,596
Shares issuable upon exercise of presently exercisable warrants 257,143
Shares issuable upon conversion of convertible preferred stock 71,996
-------
Total 332,735
=======
(17) Common shares owned beneficially before the offering consist of:
Shares issued in private placements 293,591
Shares issuable upon exercise of presently exercisable warrants 99,546
-------
Total 393,137
=======
Common shares to be sold in the offering:
Shares issued in private placements 199,091
Shares issuable upon exercise of presently exercisable warrants 99,546
-------
Total 298,637
=======
(18) Common shares owned beneficially before the offering consist of:
Shares issued in private placements 30,000
Shares issuable upon exercise of presently exercisable warrants 15,000
------
Total 45,000
======
Common shares owned beneficially before the offering consist of:
Shares issued in private placements 30,000
Shares issued in lieu of interest 15,000
------
Total 45,000
======
</TABLE>
21
<PAGE>
DESCRIPTION OF CAPITAL STOCK
The Company's Articles of Incorporation, as amended, authorizes the
issuance of shares of capital stock, of which 300,000,000 shares are designated
as Common Stock, par value $0.04 per share, and 20,000,000 shares are designated
as Preferred Stock, par value $0.10 per shares, of which 2,500,000 have been
designated as shares of First Convertible Preferred Stock. On April 14, 1997,
834,667 shares of Convertible Preferred Stock were issued in a Private
Placement.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share of
Common Stock on all matters submitted to a vote of shareholders. There are no
cumulative voting rights. The rights, privileges and preferences of the holders
of Common Stock are subject to the rights of the holders of the Convertible
Preferred Stock and of any shares of Preferred Stock that may be designated and
issued by the Company in the future. Subject to the restrictions contained in
Preferred Stock issued by the Company, holders of Common Stock are entitled to
received dividends when and if declared by the Board of Directors out of legally
available funds. Upon any liquidation, dissolution or winding up of the Company,
subject to the rights of holders of shares of Preferred Stock, holders of Common
Stock are entitled to share pro rata in any distribution to the shareholders.
Holders of Common Stock do not have preemptive or other subscription rights.
There are no redemption or sinking fund provisions applicable to the Common
Stock.
The Company has warrants outstanding to purchase 357,143 shares of
Common Stock at a price of $8.50 which expire on October 1, 1997. Additionally,
the Company has warrants outstanding to purchase 882,046 shares of Common Stock
at prices ranging from $8.00 to $13.00 per share expiring on dates ranging from
March 29, 1998 to May 12, 1999.
PREFERRED STOCK
The Company's Board of Directors, without the approval of the holders
of the Common Stock, is authorized to designate for issuance up to 20,000,000
shares of Preferred Stock, in such series and with such rights, privileges and
preferences as the Board of Directors may from time to time determine. As of
the date of this Prospectus, 2,500,000 of such shares have been designated as
First Series Preferred Stock, 834,667 of which are issued and outstanding as of
the date of this Prospectus and 110,000 of which are subject to Convertible
Preferred Stock Warrants, none of which had been exercised as of the date of
this Prospectus.
The Convertible Preferred Stock Warrants to purchase a total of
110,000 shares of Convertible Preferred Stock are exercisable at a price of
$25.00 per share and expire on April 15, 2002.
CONVERTIBLE PREFERRED STOCK
Each share of Convertible Preferred Stock is entitled to receive
dividends, payable commencing July 31, 1997 and thereafter quarterly on
September 30, December 31, March 31 and June 30 of each year, when and as
declared by the Company's Board of Directors, at the rate of 8% per annum in
preference to any payment made on any shares of Common Stock or any other class
or series of capital stock of the Company ranking junior to the Convertible
Preferred Stock. Any dividend payable after the date of issuance of the
22
<PAGE>
Convertible Preferred Stock shall be paid, in additional shares of Convertible
Preferred Stock valued at $25.00 per share. Each share of Convertible Preferred
Stock is also entitled to a liquidation preference ("Liquidation Preference") of
$25.00 per share, plus any accrued but unpaid dividends, in preference to any
other class or series of capital stock of the Company, other than the
Convertible Preferred Stock and any other class or series of capital stock which
is entitled to priority over the Convertible Preferred Stock. A consolidation of
merger of the Company with or into any other corporation, or sale of all or
substantially all of the assets of the Company, will, at the option of the
holders of the Convertible Preferred Stock, be deemed a liquidation if the
shares of stock of the Company (along with all derivative securities)
outstanding immediately prior to such transaction represent immediately after
such transaction less than a majority of the voting power of the surviving
corporation (or the acquiror of the Company's assets in the case of a sale of
assets). If the option is exercised, the holders of the Convertible Preferred
Stock will be entitled to receive, in cash, immediately upon the occurrence of
such transaction, an amount per share equal to the liquidation preference
divided by the difference between 100% and the Applicable Percentage (as defined
below).
At any time, the Company may require a portion of the shares of the
Convertible Preferred to be converted into Common Stock ("Required Conversion")
upon notice (the "Notice"), provided that not more than one Notice may be given
in any period of thirty days. A Notice may not be given unless (A) the low
trading price of Common Stock on each of the ten trading days preceding the
Notice date has been equal to or greater than $14.00 per share (subject to
adjustment for stock split, stock dividends and like capital adjustments), and
(B) the shares of Common Stock issuable upon conversion are registered under the
Securities Act, such stock is listed and traded on NASDAQ or on a national
securities exchange, and there is available for delivery upon resale of such
shares a prospectus meeting the requirements of the Securities Act. The number
of Convertible Preferred Shares which the Company may require to be converted
may not exceed the quotient obtained by dividing the average dollar volume for
the twenty trading days immediately prior to the date of Notice by 25. The
conversion price upon Required Conversion is 61% of the lowest trading price
during the Look Back Period (as defined below) in effect as of the date of the
Notice, but not more than the Conversion Cap (as defined below) if the
Conversion Cap has then been determined.
Except as otherwise provided by applicable law, holders of shares of
Convertible Preferred Stock have no voting rights.
Commencing the earlier of (i) 91 days after the date of issuance and
(ii) the date that a registration statement registering the shares of Common
Stock issuable upon conversion of the Convertible Preferred Stock (including
such shares issuable upon exercise of the Convertible Preferred Stock Warrants)
is declared effective by the Securities and Exchange Commission, 10% (or such
larger percentage as is determined by the Company in its sole discretion) of the
number of shares of Convertible Preferred Stock held of record by each holder on
such day will become convertible into shares of Common Stock, and thereafter
23
<PAGE>
on the successive monthly anniversaries of such day an equal number of such
shares of Convertible Preferred stock will become convertible (on a cumulative
basis). The number of shares of Common Stock issuable upon conversion of shares
of Convertible Preferred Stock will equal the Liquidation Preference of the
shares being converted divided by the then-effective conversion price applicable
to the Common Stock (the "Conversion Price"). Notwithstanding the foregoing, all
the Convertible Preferred Shares will be fully convertible upon the happening of
certain events and conditions, including a change of control transaction; the
filing of bankruptcy; the failure of the Company to timely file its Form 10-K or
Form 10-Q; the failure or unwillingness of the Company's independent auditors to
express a customary opinion on the Company's financial statements within 90 days
after the end of the Company's fiscal year or shall express a "going concern"
qualification; the Common Stock shall cease to be listed on either NASDAQ or
National Securities Exchange; or there shall occur a material breach by the
Company of any of its obligations under the Preferred Stock Investment
Agreements pursuant to which the Convertible Preferred Stock was originally
issued.
The Conversion Price as of any Conversion Date will be the lowest
trading price of the Common Stock for the consecutive trading days in the
Lookback Period, reduced by the Applicable Percentage. The "Lookback Period"
represents the number of consecutive trading days beginning at 15 days through
the last day of the third month after the date of issuance of the Convertible
Preferred Stock increasing by 3 consecutive trading days each month thereafter,
ending at 60 consecutive trading days following the last day of the seventeenth
month after the issuance of the Convertible Preferred Stock. The "Applicable
Percentage" is dependent upon the amount of time which has passed from original
issuance to the date of measurement, being 8.5% through the fourth month and
from the fifth month through the end of the eighteenth month being 9.5%, 11%,
12%, 13.5%, 15%, 16.5%, 18%, 19.5%, 22%, 24.5%, 28.5%, 32.5%, 36.5% and 39%,
respectively. At any date more than eighteen months after the date of issuance,
the Conversion Price will be the lesser of (a) 61% of the average closing price
of the Common Stock for all the trading days during the 18th month (the
"Conversion Cap") or (b) 61% of the Conversion Price determined as aforesaid.
The Conversion Price is at all times also subject to adjustment for customary
anti-dilution events such as stock splits, stock dividends and reorganizations.
Additionally, if the Company issues Common Stock or securities convertible into
or exercisable for Common Stock or other convertible securities at an effective
price per share which is lower than the conversion price of the shares of
Convertible Preferred Stock at that time, the Company is required to issue upon
conversion of the shares of Convertible Preferred Stock an additional number of
shares of Common Stock necessary to reduce the effective conversion price to
such lower issue price (subject to certain exceptions pertaining to shareholder
approved option plans). Notwithstanding the foregoing, no holder of Convertible
Preferred Stock will be entitled to convert any share of Convertible Preferred
Stock into shares of Common Stock if, following such conversion, the holder and
its affiliates (within the meaning of the Securities Exchange Act of 1934) will
be beneficial owners (as defined in Rule 13d-3 thereunder) of 10% or more of the
outstanding shares of Common Stock.
24
<PAGE>
Notwithstanding the foregoing, if and so long as Depressed Price
Condition (as hereinafter defined) exists, (i) the number of consecutive trading
days in the Lookback Period will be three days, (ii) the conversion price will
be the average of the low trading prices for the consecutive trading days in the
Lookback Period reduced by the Applicable Percentage and (iii) the Company may
at its option, exercised by written notice (the "Cash Conversion Notice") given
to the holders of the Convertible Preferred Stock five days prior to the
effective date specified in such Notice (the "Effective Date") require that any
shares of Convertible Preferred Stock converted on the Effective Date, or
thereafter while such Cash Conversion Notice remains in effect, will receive in
lieu of Common Stock cash in an amount per share equal to the Liquidation
Preference divided by the difference between 100% and the Applicable Percentage
in effect on the Conversion Date (the "Cash Conversion Price"). The Cash
Conversion Notice may specify a price range within which such Notice shall be
effective. The upper limit of the range so specified may not exceed $6.00. The
Cash Conversion Notice will cease to be effective (i) if the Depressed Price
Condition ceases to exist, (ii) 30 days after its Effective Date, or (iii) if
the Company fails to make payment of the Cash Conversion Price to any holder
entitled thereto. A "Depressed Price Condition" shall be deemed to exist on any
date if during the twenty consecutive trading days immediately prior to such
date the average closing price of the Common Stock is less than $6 per share
(adjusted for stock splits, stock dividends and like capital adjustments).
In addition, following conversion of the Convertible Preferred Stock
into shares of Common Stock, the holders of such shares of Common Stock will be
limited on resales of such shares to the greatest of: (i) 10% of the average
daily trading volume of the Common Stock for the five trading days preceding any
such sale date; (ii) 25,000 shares; and (iii) 10% of the trading volume for the
Common Stock on the date of any such sale.
The exact number of shares issuable upon conversion of all of the
Convertible Preferred Stock and offered hereby cannot currently be estimated
but, generally, such issuances of Common Stock will vary inversely with the
market price of the Common Stock. The holders of Common Stock ownership interest
will be materially diluted by conversion of the Convertible Preferred Stock,
which dilution will depend on, among other things, the future market price of
the Common Stock and the conversion elections made by holders of the Convertible
Preferred Stock. Investors should review carefully the material under "Risk
Factors -- Effect of Conversion of Convertible Preferred Stock; Potential Common
Stock Adjustment" as well as the other information contained or incorporated by
reference in this Prospectus.
GENERAL
Under applicable Colorado law and the Company's Articles of
Incorporation, the Company's Board of Directors has the authority, without
further action by the shareholders, to issue additional shares of preferred
stock in one or more series and to fix the rights, preferences, privileges and
restrictions granted to or imposed upon any series of
25
<PAGE>
unissued preferred stock and to fix the number of shares constituting any series
and the designation of such series, without any further vote or action by the
shareholders. Issuance of additional shares of preferred stock may adversely
affect the rights, privileges and preferences afforded the holders of Common
Stock, including a decrease in the amount available for distribution to holders
of the Common Stock in the event of a liquidation or payment of preferred
dividends. The issuance of additional shares of preferred stock, and shares of
Common Stock into which such preferred stock may be converted, may, among other
things, have the effect of delaying, deferring or preventing a change in control
of the Company, discouraging tender offers for the Company and inhibiting
certain equity issuances until substantially all such shares are converted or
redeemed. The Company currently has no plans to designate and/or issue any
additional shares of preferred stock, except those issuable pursuant to the
Convertible Preferred Stock Warrants.
COLORADO LAW AND LIMITATIONS ON CHANGES IN CONTROL
Under Section 7-106-205 of the Colorado Business Corporation Act (the
"Act"), a corporation may create and issue rights, options, warrants or
convertible securities entitling the holders thereof to purchase, receive or
acquire shares of the corporation or assets or debts or other obligations of the
corporation (collectively, "Rights"). The Board of Directors is authorized to
determine the terms upon which the Rights are issued, their form and content,
and the consideration, if any, for which shares, assets, or debts or other
obligations of the corporation are to be issued pursuant to the Rights. In the
absence of fraud in the transaction, the judgment of the Board of Directors as
to adequacy of consideration received for such Rights is conclusive. The terms
determined by the Board of Directors under this Section for Rights issued to any
shareholders, by way of distribution or otherwise, may, without limitation: (a)
preclude or limit any significant shareholder from exercising, converting,
transferring or receiving Rights; (b) impose conditions upon the exercise,
conversion, transfer or receipt of Rights by any significant shareholder that
differ from those imposed on other holders of the same class of Rights; or (c)
provide that, upon exercise or conversion, any significant shareholder shall be
entitled to receive securities, obligations, or assets, the terms and nature of
which may differ from the securities, obligations, or assets to be received by
the other holders of the same class of Rights. The Section defines "significant
shareholder" as any person owning, or offering to acquire, directly or
indirectly, a number or percentage, as specified by the Board of Directors, of
the outstanding voting shares of the corporation, or any transferee of such
person.
The Company's bylaws require advance notice of any action (including
nomination of directors) to be proposed at any annual or special meeting of
shareholders and set forth other specific procedures that a shareholder must
follow to properly bring any business in front of such a meeting. In addition,
the bylaws provide that a special meeting of the Company's shareholders may only
be called by the Chairman of the Board, the President, a Vice President of the
Company or by shareholders representing 10% of the outstanding shares entitled
to vote at the meeting. A director may be removed from office at any time,
26
<PAGE>
with or without cause by shareholders, but only by the affirmative vote of the
holders of at least a majority of the shares then entitled to vote at an
election of directors. Any amendment of the bylaws may be made by the Board of
Directors. Amendments to the Articles requires the affirmative vote of the
shareholders.
These bylaw provisions, the provisions authorizing the Board of
Directors to issue preferred stock without shareholder approval and the
provisions of Section 7-106-205 of the Act could have the effect of delaying,
deferring or preventing a change in control of the Company or the removal of
existing management.
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's Articles of Incorporation provides that the Board of
Directors shall have the power to:
(a) Indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action (other than an
action by or in the right of the Company) by reason of fact that he is or was a
director, officer, employee or agent of the Company or is or was serving at the
request of Company as a director, officer, employee or agent of another entity
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action if he acted in good
faith and in a manner he reasonably believed to be in the best interests of the
Company and, with respect to any criminal action or proceedings, had no
reasonable cause to believe his conduct was unlawful.
(b) 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 Company to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee or agent of the Company or is or
was serving at the request of the Company as a director, officer, employee or
agent of the Company against expenses actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in the best interests of
the Company, but not indemnification shall be made in respect of any claim if
such individual has been adjudged to be liable for negligence or misconduct in
the performance of his duty to the Company except and only to the extent that
the court in which such action or suit was brought determines upon application
that, despite the adjudication of liability, but in view of all circumstances of
the case, such person is fairly and reasonably entitled to indemnification for
such expenses which such court deems proper.
(c) Indemnify a director, officer, employee or agent of the Company to
the extent such person has been successful on the merits in the defense of any
action, suit or proceeding referred to in subparagraph (a) or subparagraph (b)
above or in defense of any
27
<PAGE>
claim, issue or matter therein, against expenses actually and reasonably
incurred by him in connection therewith.
(d) Authorize indemnification under Subparagraphs (a) or (b) above
(unless ordered by a court) in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because he has met the applicable standard of conduct such set
forth in subparagraphs (a) or (b).
(e) Authorize payment of expenses incurred in defending a civil or
criminal action, suit or proceeding advance of the final disposition of such
action, suit or proceeding as authorized in subparagraph (d) above, upon receipt
of an undertaking by or on behalf of the director, officer, employee or agent to
repay such amount unless it is ultimately determined that he is entitled to be
indemnified by the Company as authorized above.
(f) Purchase or maintain insurance on behalf of any person who is or
was a director, officer, employee or agent of Company or who is or was serving
at the request of the Company as a director, officer, employee or agent of
another entity against any liability asserted against him or incurred by him in
any such capacity or arising out of the status of such.
The foregoing indemnification is not deemed to be exclusive of any
other rights to which those indemnified may be entitled.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock and the
Convertible Preferred Stock is American Securities Transfer, Denver, Colorado.
PLAN OF DISTRIBUTION
The Selling Shareholders have advised the Company that the sale or
distribution of the Common Stock may be effected directly to purchasers by the
Selling Shareholders or by pledgees, donees, transferees or other successors in
interest, as principals or through one or more underwriters, brokers, dealers or
agents from time to time in one or more transactions (which may involve crosses
or block transactions) (i) on any stock exchange, in the Nasdaq SmallCap Market,
or in the over the counter market, (ii) in transactions otherwise than on any
stock exchange or in the over-the-counter market, or (iii) through the writing
of option (whether such options are listed on an options exchange or otherwise)
on, or settlement of short sales of, the Common Stock. The shares may also be
sold pursuant to Rule 144. Any of such transactions may be effected at a market
prices prevailing at the time of sale, at prices related to such prevailing
market prices, at varying prices determined at the time of sale or at negotiated
or fixed prices, in each case as
28
<PAGE>
determined by the Selling Shareholder or by agreement between the Selling
Shareholder and underwriters, brokers, dealers or agents, or purchasers. If the
Selling Shareholders effect such transactions by selling Common Stock to or
through underwriters, brokers, dealers or agent, such underwriters, brokers,
dealers or agents may receive compensation in the form of discounts, concessions
or commissions from the Selling Shareholders or commissions from purchaser of
Common Stock for whom they may act as agent (which discounts, concessions or
commissions as to particular underwriters, brokers, dealers or agents may be in
excess of those customary in the types of transactions involved). The Selling
Shareholders and any brokers, dealers or agents that participate in the
distribution of the Common Stock may be deemed to be underwriters, and any
profit on the sale of Common Stock by them and any discounts, concessions or
commissions received by any such underwriters, brokers, dealers or agents may be
deemed to be underwriting discounts and commissions under the Securities Act.
Under the securities laws of certain states, the Common Stock, may be
sold in such states only through registered or licensed brokers or dealers. In
addition, in certain states the Common Stock may not be sold unless the Common
Stock has been registered or qualified for sale in such state or an exemption
from registration or qualification is available and is complied with.
The Company will pay all the expenses incident to the registration,
offering and sale of the Common Stock to the public hereunder other than
commissions, fees and discounts of underwriters, brokers, dealers and agents.
The Company has agreed to indemnify the Selling Shareholders and their
controlling persons against certain liabilities, including liabilities under the
Securities Act. The Company estimates that the expenses of the offering to be
borne by it will be approximately $84,000. The Company will not receive any
proceeds from the sale of any of the Common Stock by the Selling Shareholders.
Cappello & Laffer Capital Corp. acted as placement agent in connection
with the placement of the Convertible Preferred Stock which has been or will be
converted into the Common Stock offered hereby, and said firm received a fee and
warrants from the Company in connection therewith. Griffin Capital acted as the
Company's financial advisor and received a fee for its services.
The Company has informed the Selling Shareholders that the anti-
manipulation provisions of Regulation M under the Exchange Act may apply to
purchases and sales of Common Stock by the Selling Shareholders, and that there
are restrictions on market-making activities by persons engaged in the
distribution of the Common Stock. The Company has also advised the Selling
Shareholders that if a particular offer of Common Stock is to be made on terms
constituting a material change from the information set forth above with respect
to the Plan of Distribution, then to the extent required, a Prospectus
Supplement must be distributed setting forth such terms and related information
as required.
29
<PAGE>
USE OF PROCEEDS
This Prospectus relates to Shares of Common Stock that may be offered
and sold from time to time by the Selling Shareholders. See "Plan of
Distribution." There will be no proceeds to the Company from previously
completed private placements of common stock and from the conversion of the
Convertible Preferred Stock. The Company would receive $13,601,722 in proceeds
(net of approximately $84,000 which is the estimated cost of this offering) from
the exercise of warrants issued in other private placements and the Convertible
Preferred Stock Warrants. Such proceeds are expected to be used for mineral
property development, general corporate purposes, advances and/or investment in
VETI and purchase of the Company's Common Stock.
FORWARD LOOKING STATEMENTS
Statements contained in this Prospectus (including certain of the
documents incorporated by reference herein) that are not based on historical
facts are forward-looking statements subject to uncertainties and risks
including, but not limited to, product demand and acceptance, economic
conditions, government intervention, the impact of competition and pricing,
results of financing efforts, and other risks described in this Prospectus
(including certain of the documents incorporated by reference herein).
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon
for the Company by Loeb & Loeb LLP, 1000 Wilshire Boulevard, Suite 1800, Los
Angeles, California 90017.
EXPERTS
The consolidated financial statements of the Company and Vector
Environmental Technologies, Inc. incorporated in this prospectus by reference
from the Company's Annual Report on Form 10-K/A for the year ended September 30,
1996 have been audited by Deloitte & Touche LLP, independent auditors, as stated
in their reports, which are incorporated herein by reference, and have been so
incorporated in reliance upon the reports of such firm given upon their
authority as experts in accounting and auditing.
The independent consultant who has calculated the Company's gold
reserves is Mr. Pierre Gerard van Ginkel Bekker, B Sc Geology, Consulting
Geologist.
30
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY OF THE
UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY THE SHARES BY ANYONE IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON
MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL CREATE ANY IMPLICATION THAT
THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS
DATE.
________________________________
TABLE OF CONTENTS
<TABLE>
<S> <C>
Available Information........................................................ 3
Incorporation of Certain Information by Reference............................ 3
Risk Factors................................................................. 4
The Company.................................................................. 11
Recent Developments.......................................................... 12
Shares Available for Future Sale............................................. 13
Selling Shareholders......................................................... 14
Description of Capital Stock................................................. 22
Plan of Distribution......................................................... 28
Use of Proceeds.............................................................. 30
Forward Looking Statements................................................... 30
Legal Matters................................................................ 30
Experts...................................................................... 30
</TABLE>
6,284,046 SHARES
CASMYN CORP.
COMMON STOCK
_______________________
PROSPECTUS
_______________________
, 1997
----------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses payable by the registrant in connection with
the registration, issuance and distribution of the Common Stock offered hereby
are as follows:
<TABLE>
<S> <C>
SEC Registration Fee.................................. $13,568
Legal Fees and Expenses............................... 35,000
Accounting Fees and Expenses.......................... 25,000
"Blue Sky" Fees and Expenses (including legal fees)... 5,000
Miscellaneous Expenses................................ 5,000
Total $83,568
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Pursuant to the By-Laws of the corporation, the Company has agreed to
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his/her position, if he/she acted in good faith
and in a manner he/she reasonably believed to be in the best interest of the
corporation and, in certain cases, may advance expenses incurred in defending
any such proceeding. To the extent that the officer or director is successful on
the merits in any such proceeding as to which such person is to be indemnified,
the Company must indemnify him/her against all expenses incurred, including
attorney's fees. With respect to a derivative action, indemnity may be made only
for expenses actually and reasonably incurred in defending the proceeding, and
if the officer or director is judged liable, only by a court order. The
indemnification is intended to be to the fullest extent permitted by Colorado
law.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to officers, directors or
persons controlling the Company, pursuant to the foregoing provisions, the
Company has been informed that, in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in said
Act and is, therefore, unenforceable.
II-1
<PAGE>
ITEM 16. EXHIBITS
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<C> <S>
*4.1 Form of Certificate for 8% Convertible Preferred Stock
*4.2 Articles of Amendment to the Articles of Incorporation of the
Company
*4.3 Form of Preferred Stock Investment Agreement dated April 11, 1997
*4.4 Form of Stock Purchase Warrant
**5.1 Opinion of Loeb & Loeb LLP
**23.1 Consent of Deloitte & Touche LLP
**23.2 Consent of Loeb & Loeb LLP (included in Exhibit 5.1)
**23.3 Consent of PGvG Bekker, Consulting Geologist
</TABLE>
_____________
*Previously filed
**Filed herewith
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(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 to such information in the registration statement.
II-2
<PAGE>
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(4) 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.
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 Securities Act of 1933 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 proceedings) 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
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Sparks,
State of Nevada, on the 10th day of July, 1997.
CASMYN CORP.
By /s/ Amyn S. Dahya
---------------------
Amyn S. Dahya
President 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 the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE CAPACITY DATE
--------- -------- ----
<S> <C> <C>
/s/ Amyn S. Dahya President, Chief Executive July 10, 1997
- --------------------------- Officer and Director
Amyn S. Dahya
/s/ Douglas C. Washburn Vice President, Secretary, July 10, 1997
- --------------------------- Treasurer
Douglas C. Washburn (Principal Financial Officer)
/s/ Hanif S. Dahya Director July 10, 1997
- -------------------------
Hanif S. Dahya
/s/ Sandro Kunzle Director July 10, 1997
- -------------------------
Sandro Kunzle
</TABLE>
II-4
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Dennis E. Welling Controller (Principal July 10, 1997
- ------------------------- Accounting Officer)
Dennis E. Welling
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequential
Exhibit No. Description of Exhibit Page No.
- ----------- ---------------------- --------
<C> <S> <C>
*4.1 Form of Certificate for 8% Convertible Preferred Stock
*4.2 Articles of Amendment to the Articles of Incorporation
of the Company
*4.3 Form of Preferred Stock Investment Agreement
dated April 11, 1997
*4.4 Form of Stock Purchase Warrant
**5.1 Opinion of Loeb & Loeb LLP
**23.1 Consent of Deloitte & Touche LLP
**23.2 Consent of Loeb & Loeb LLP (included in Exhibit 5.1)
**23.3 Consent of PGvG Bekker, Consulting Geologist
</TABLE>
_____________
*Previously filed
**Filed herewith
<PAGE>
Exhibit 5.1
[LETTERHEAD OF LOEB & LOEB LLP]
WRITER'S DIRECT DIAL NUMBER
213-688-3698
July 11, 1997
Board of Directors
Casmyn Corp.
1500 West Georgia Street, 18th Floor
Vancouver, B.C. V6G 2Z6
Re: Registration Statement on Form S-3
----------------------------------
Gentlemen:
We have acted as counsel to Casmyn Corp., Inc., a Colorado corporation
("Company"), in connection with the preparation and filing with the Securities
and Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Act"), of the Company's registration statement on Form S-3
(together with all amendments, the "Registration Statement"). The Registration
Statement relates to the registration under the Act of 6,284,046 shares of the
Company's common stock ("Common Stock").
In rendering this opinion, we have reviewed the Registration
Statement, as well as a copy of the Company's Articles of Incorporation and
Bylaws, each as amended to date. We have also reviewed such documents and such
statutes, rules and judicial precedents as we have deemed necessary for the
opinions expressed herein.
In rendering this opinion, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of documents
submitted to us as originals, the conformity to original documents of documents
submitted to us as certified or photostatic copies, and the authenticity of
originals of such photostatic copies.
Based upon and in reliance upon the foregoing, and subject to the
qualifications and limitations herein set forth, we are of the opinion that the
shares of Common Stock have
<PAGE>
Board of Directors
Casmyn Corp.
July 10, 1997
Page 2
been duly and validly authorized and, when sold, will be legally issued, fully
paid and nonassessable.
This opinion is limited to the corporate law of Colorado, and we
express no opinion with respect to the laws of any other jurisdiction.
We consent to the filing of this opinion with the Commission as an
exhibit to the Registration Statement.
This opinion may not be used, circulated, quoted or otherwise referred
to for any purpose without our prior written consent and may not be relied upon
by any person or entity other than the Company, its successors and assigns, and
investors in this Offering. This opinion is based upon our knowledge of law and
facts as of its date. We assume no duty to communicate to you with respect to
any matter which comes to our attention hereafter.
Sincerely,
LOEB & LOEB LLP
By /s/ David L. Ficksman
----------------------
A Partner of the Firm
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 1 to
Registration Statement No. 333-27649 of Casmyn Corp. on Form S-3 of our reports
on the consolidated financial statements of Casmyn Corp. and Vector
Environmental Technologies, Inc. dated December 21, 1996, appearing in the
Annual Report on Form 10-K/A of Casmyn Corp. for the year ended September 30,
1996 and to the reference to us under the heading "Experts" in the Prospectus,
which is part of this Registration Statement.
/s/ DELOITTE & TOUCHE LLP
Reno, Nevada
July 11, 1997
Exhibit 23.1
<PAGE>
INDEPENDENT CONSULTANTS' CONSENT
I consent to the use of my name under the heading "EXPERTS" in the Prospectus,
which is part of this Registration Statement.
/s/ PG V G Bekker
Pretoria, South Africa
July 11, 1997
Exhibit 23.3
