As filed with the Securities and Exchange Commission on November 20, 1995.
Registration No. 33-_______
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT
ON
FORM S-3
UNDER
THE SECURITIES ACT OF 1933
TOP SOURCE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 84-1027821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
No.)
2000 PGA Boulevard, Suite 3200, Palm Beach Gardens, FL 33408
(407) 775-5756
(Address, including zip code, and telephone number,including area code, of
registrant's principal executive offices)
Mr. Stuart Landow, President
TOP SOURCE TECHNOLOGIES, INC.
2000 PGA Boulevard, Suite 3200
Palm Beach Gardens, FL 33408
(407) 775-5756
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copy to:
Michael D. Harris, Esq.
Cohen, Chernay, Norris, Weinberger & Harris
712 U.S. Highway One, Fourth Floor
P.O. Box 13146
North Palm Beach, Florida 33408-7146
(407) 844-3600
Approximation 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.
The combined Prospectus contained herein also relates to Registration
Statement File Numbers 33-68092 and 33-89590.
CALCULATION OF REGISTRATION FEE
Proposed Proposed
maximum maximum
Title of each class offering aggregate Amount of
of securities Amount to be price per offering registration
to be registered registered share price fee
Common Stock 302,000 $8.1875(1) $2,472,625 $ 852.63
($.001 par value)
TOTAL REGISTRATION FEE $ 852.63
(1) Estimated solely for the purpose of computing the registration fee
based on the average of the high and low price of the Registrant's
common stock in the consolidated reporting system on the American
Stock Exchange on November 16, 1995.
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.
TOP SOURCE TECHNOLOGIES, INC.
CROSS REFERENCE SHEET
Form S-3 Item Numbers and Caption Heading in
Prospectus
1. Forepart of the Registration Statement and
Outside Front Cover of Prospectus . . . Cover Page of Form S-3
and Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus . . . . . . . . . . . . . . . Inside Front and Outside
Back Cover Pages of
Prospectus
3. Summary Information, Risk Factors . . . . Not Applicable and
and Ratio of Earning to Fixed Charges Risk Factors
4. Use of Proceeds . . . . . . . . . . . . . Cover Page of Prospectus
5. Determination of Offering Price . . . . . Cover Page of Prospectus
6. Dilution . . . . . . . . . . . . . . . . . Recent Developments
7. Selling Security Holders . . . . . . . . . Selling Stockholders
8. Plan of Distribution . . . . . . . . . . . Cover Page of Prospectus
and Plan of Distribution
9. Description of Securities to be Registered Documents Incorporated by
Reference
10. Interests of Named Experts and Counsel . . Legal Matters and Experts
11. Material Changes . . . . . . . . . . . . . Not Applicable
12. Incorporation of Certain Information By Reference
Documents Incorporated by Reference
13. Disclosure of Commission Position on . . Part II
Indemnification for Securities Act Liabilities
14. Other Expenses of Issuance and Distribution
Part II
15. Indemnification of Directors and Officers Part II
16. Exhibits and Financial Statement Schedules Part II
17. Undertakings . . . . . . . . . . . . . . . Part II
Preliminary Prospectus dated November 20, 1995
Subject to Completion
PROSPECTUS
TOP SOURCE TECHNOLOGIES, INC.
This Prospectus relates to an aggregate of 804,783 shares of common
stock (including shares of common stock underlying options, warrants and
convertible notes), $.001 par value per share and 20,200 warrants
exercisable at $4.00 (collectively the "Securities") of Top Source
Technologies, Inc. (the "Company") being offered for sale by certain
securityholders of the Company (the "Selling Stockholders"). Of the
804,783 shares of common stock covered by this Prospectus, a total of
302,000 shares underlie 9% Senior Subordinated Convertible Notes ("Notes")
sold to managed accounts of the Company's principal stockholder. Because
the Notes are not convertible until on or after June 9, 1996 at $10.00 per
share, the number of shares of common stock held by the Company's principal
stockholders and percentages do not give effect to conversion of the Notes.
However, the _______ Selling Stockholders' table does include the shares of
common stock underlying the Notes. See "Selling Stockholders."
Collectively, the shares of common stock being offered by the Selling
Stockholders is 2.9% of the shares outstanding as of November 2, 1995.
Prior to this offering, the Company's officers, directors and principal
stockholders beneficially own 25.9% of the Company's common stock assuming
exercise of vested options and warrants. Upon completion of this offering
and assuming all shares offered hereby are sold, the Company's officers,
directors and principal stockholders will beneficially own 25.5% of the
Company's common stock assuming exercise of their vested options and
warrants. The Company's principal stockholder, Ganz Capital Management,
Inc. ("Ganz Capital") is a registered investment advisor. As the result of
investment power over the accounts of its clients, it and its affiliates,
including two funds under common control with Ganz Capital, are the
beneficial owners of 4,803,194 shares of common stock, which includes
22,100 shares of common stock underlying unexercised warrants. On November
3, 1995, the closing price of the Company's common stock on the American
Stock Exchange was $8.56. All of the Securities are offered for the
respective accounts of the Selling Stockholders as listed in this
Prospectus under "Selling Stockholders". This Prospectus will also
cover sales of less than 500 shares by donees and pledgees of the Selling
Stockholders. The Company will receive none of the proceeds from the
sale of the shares of common stock by the Selling Stockholders.
However, the Company will receive a maximum of approximately $516,515
in connection with the exercise of 193,000 options and 80,700 warrants,
the underlying shares of which are covered by this Prospectus.
Such proceeds will be used for general corporate purposes.
Additionally, to the extent that Notes are converted, the Company will
not have to repay the principal of such Notes up to a maximum of
$3,020,000. All of the expenses of this offering, estimated at
$31,052.63, will be borne by the Company.
The Company has been advised by the Selling Stockholders that the
Securities may be offered and sold from time to time by or on behalf of the
Selling Stockholders, in or through transactions or distributions
(including crosses and block transactions) on the American Stock Exchange
or in the over-the-counter market at market prices prevailing at the time
of sale, or at negotiated prices, and in connection therewith commissions
may be paid to brokers. Brokers participating in such transactions may act
as agents for the Selling Stockholders. The Selling Stockholders, and any
brokers participating in this offering may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, and any commissions
received by them may be deemed to be underwriting compensation.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE
"RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith is required to file reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy statements and other information concerning the Company
can be inspected and copied at the Public Reference Room maintained by the
Commission at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's regional offices at 500 West Madison Street, Suite
1400, Chicago, Illinois 60604-2511, and 7 World Trade Center, 13th Floor,
New York, New York 10048. Copies of this material may also be obtained
from the Public Reference Section of the Commission, 450 Fifth Street N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and
other information concerning the Company can also be inspected at the
offices of the American Stock Exchange, Inc., 86 Trinity Place, New York,
New York 10006.
The Company has filed with the Commission three Registration
Statements under the Securities Act of 1933 with respect to the Securities
offered by this Prospectus. This Prospectus does not contain all the
information set forth in the Registration Statements certain parts of which
are omitted in accordance with the rules of the Commission. For further
information with respect to the Company and the Securities offered hereby,
reference is made to the Registration Statements including the exhibits.
Statements contained in this Prospectus as to the contents of any contract
or other document are not necessarily complete and, where the contract or
other document has been filed as an exhibit to the Registration Statements
each such statement is qualified in all respects by reference to the
applicable document filed with the Commission.
The Company will provide without charge to each person, including
any beneficial owner, to whom a copy of this Prospectus is delivered, upon
written or oral request of such person, a copy of any or all of the
information that has been incorporated by reference in this Prospectus
(other than exhibits). Requests should be directed to the Company at its
principal executive offices, 2000 PGA Boulevard, Suite 3200, Palm Beach
Gardens, Florida 33408, telephone (407) 775-5756.
DOCUMENTS INCORPORATED BY REFERENCE
On October 6, 1992, the Company's change of domicile merger from
Colorado to Delaware became effective. Top Source, Inc., a Colorado
corporation merged into its wholly-owned subsidiary Top Source
Technologies, Inc., formerly known as Top Source, Inc., a Delaware
corporation. The specifics of the merger are described in the Form 8-B
filed with the Commission on November 14, 1992, which is specifically
incorporated by reference into this Prospectus. As a result of the change
of domicile merger, the Form 8-A which is incorporated by reference herein,
was filed with the Commission by the Company's predecessor, Top Source,
Inc., a Colorado corporation.
The following documents filed with the Commission are hereby
specifically incorporated by reference into this Prospectus:
(a) The Company's annual report on Form 10-K for the fiscal year
ended September 30, 1994 and all amendments thereto including
Amendment No. 1 to Form 10-K filed May 4, 1995, Amendment No. 2
to Form 10-K filed May 31, 1995 and Amendment No. 3 to Form 10-K
filed September 28, 1995.
(b) The Company's quarterly reports on Form 10-Q for the quarters
ended December 31, 1994, March 31, 1995 and June 30, 1995, and
Amendment No. 1 to Form 10-Q for the quarters ended December 31,
1994 and March 31, 1995, each filed September 28, 1995, and
Amendment No. 1 to Form 10-Q for the quarter ended June 30, 1995
filed October 30, 1995;
(c) The Company's proxy statement dated January 20, 1995 filed
pursuant to Section 14 of the Exchange Act;
(d) The Company's report on Form 8-K filed September 28, 1995;
(e) The Company's report on Form 8-K filed May 3, 1995;
(f) The Company's report on Form 8-K filed January 6, 1995;
(g) The Company's reports on Form 8-K filed July 20, 1993, Form 8-K/A
No. 1 filed August 9, 1993, Form 8-K/A No. 2 filed September 7,
1993, Form 8-K/A No. 3 filed November 16, 1993 and Form 8-K/A
No. 4 filed December 22, 1993;
(h) The description of the Company's common stock which is contained
in the registration statement on Form 8-A filed on March 12,
1992, File No. 1-11046, including any amendments or reports filed
for the purpose of updating such description;
(i) The description of the Company's Shareholders' Rights Plan which
is contained in the registration statement on Form 8-A filed on
May 10, 1995, File No. 1-11046, as amended by Amendment No. 1 on
Form 8-A/A filed on July 17, 1995 and any other amendments or
reports filed for the purpose of updating such description;
(j) The description of the Company's change of domicile merger which
is contained in the registration statement on Form 8-B filed on
November 14, 1992 and any amendments and reports thereto; and
(k) All other reports filed by the Company pursuant to Section 13(a)
or 15(d) of the Exchange Act since September 30, 1994.
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus. Any statement contained in
a document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained in this Prospectus
or in any other subsequently filed document which also is or is deemed to
be incorporated by reference in this Prospectus or in a supplement hereto
modifies or supersedes such statement. Any statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.
RISK FACTORS
The Securities offered hereby involve a high degree of risk,
including, but not necessarily limited to the risk factors described below.
Each prospective investor should carefully consider the following risk
factors inherent in and affecting the business of the Company and this
offering before making an investment decision.
HISTORICAL LOSSES AND ANTICIPATED LOSS FOR FISCAL 1995. Although the
Company reported net income of approximately $2.0 million for fiscal 1994
as a result of an approximately $2.3 million income tax benefit consisting
primarily of the reduction in the valuation allowance, since inception it
has never earned income from operations. For fiscal 1994, the Company lost
$486,294 from operations and at September 30, 1994 had an accumulated
deficit of approximately $9.6 million. For the fiscal years ended
September 30, 1993 and 1992, the Company sustained net losses of
approximately $3.6 and $2.1 million, respectively. See Item 8. "Financial
Statements and Supplementary Data" of the Form 10-K, as amended, for the
year ended September 30, 1994, which is incorporated by reference in this
Prospectus. The Company reported net losses from operations for the
quarters ended December 31, 1994, March 31, 1995 and June 30, 1995, and
expects to report a comparable quarterly loss from operations in the fourth
quarter. There can be no assurances that the Company will be profitable
from operations in the future.
DIFFICULTIES IN INTRODUCTION OF ON-SITE OIL ANALYZER. The Company has
commenced marketing a new product (the "Roll-Out") which is a unique on-
site oil analyzer ("OSA"). The Company has developed the OSA in
conjunction with Thermo Jarrell Ash Corporation ("TJA"), a subsidiary of
Thermo Instrument Systems Inc., for use in the petrochemical, automotive
and equipment service industries. The Company began its Roll-Out of the
OSAs in December 1994. The Company believes that the OSAs represent a
substantial future opportunity and, accordingly, it is devoting significant
resources to supporting its introduction. In the initial Roll-Out, the
Company and its customers encountered hardware and software difficulties
which resulted in the Company suspending the Roll-Out. To support the
Roll-Out, TJA has shifted assembly to a Western assembly plant and devoted
resources to correcting the initial design problems. Similarly, the
Company has devoted substantial effort to enhance operating and analytical
software. By mid-August 1995, the Company began the resumption of the
Roll-Out. As of the date of this Prospectus, two non-functioning OSAs have
been returned to TJA and credits issued, and a large majority of the
remaining 14 units delivered have been retrofitted. Moreover, TJA has
shipped the first three improved OSAs assembled by TJA at its Western
assembly plant. Although three retrofitted units are currently generating
revenue, the amounts are not currently material. Pending continued
successful operation of the first three units, the Company has been
notified by a multinational oil company, which has installed two OSAs used
in process control at two parts of a refinery and one for equipment
maintenance, that it wishes to use OSAs at nine of its refineries and
expand the OSAs to other parts of the refineries. The Company will be
required to recruit additional personnel to assist in the installation of
OSAs at other refineries and in the expansion to other parts of the
refineries. Expansion will require additional analytical software
development in order to properly test new petrochemical products. The
analytical software has successfully been developed for this new process
control application. The Company is awaiting the refinery's construction
of an equipped trailer and completion of the reliability evaluations.
Additionally, the Company is continuing to modify marketing approaches in
order to stimulate other initial customers to increase their utilization of
the OSAs. The Company is expending significant amounts in developing and
rolling-out the OSAs which is adversely affecting operating results during
the current fiscal year and caused a significant loss during 1995. As
disclosed in the first risk factor, the Company expects to report a loss
from operations for fiscal 1995 on a consolidated basis. This is partially
due to a conscious decision by the Company to invest significantly greater
amounts of expenses to accelerate the deployment of OSAs. There can be no
assurance that over a sustained period the OSAs will generate a substantial
increase in revenue for the Company or create income from operations.
UNCERTAINTY OF PRODUCT DEVELOPMENT. The OSAs are complex instruments
utilizing hardware and software developed by TJA and software developed by
the Company over more than a two year period. The OSAs underwent beta
testing during fiscal 1994 and, as a result, various changes were made to
meet the particular requirements of OSA customers and to correct problems
that were discovered. Beta testing refers to the process through which
early versions of a new product are shipped to customers so as to further
refine the product. As is common with sophisticated computer software and
complex instruments, developmental difficulties or problems only become
apparent subsequent to widespread commercial use. Problems which may arise
in the operation of OSAs could have a material adverse effect upon the
Company's future operations. As stated in the risk factor immediately
above, the initial OSAs contained first-stage hardware and software
problems which the Company has been working to eliminate during the current
fiscal year. Continued modifications have been made to correct design
problems in the hardware. Although the Company believes that the OSAs are
now fully operational based upon performance over the last several months,
no assurances can be given that these design problems have been corrected.
CHANGING TECHNOLOGY; COMPETITIVE FACTORS. The OSAs represent a
technological breakthrough affecting the oil analysis industry. Oil
analysis is a 50-year old technology which is widely used for diagnostic
and preventative maintenance programs for equipment by various industries.
It is also used for quality control and pipeline monitoring in the
petroleum industry. The Company currently operates three oil analysis
laboratories and believes it is one of the largest providers of such
laboratory based service in the United States. Essentially, the OSAs
analyze oil at the end user's location thereby avoiding the need to send
petroleum samples to a central laboratory (including the laboratories
operated by the Company). The OSAs utilize complex computer software.
Although the Company believes that it has a significant advantage over
potential competitors as a result of over two years of research and
development in conjunction with TJA and the proprietary nature of the
resulting technology, no assurance can be given that either a comparable or
more advanced on-site oil analyzer will not be developed in the future by
one or more third parties.
PATENTS AND PROPRIETARY INFORMATION. Historically, the Company
generated almost all of its revenue from products subject to patents and
patent applications exclusively licensed to the Company. During fiscal
1995, the Company anticipates that approximately 70% of its revenue came
from its Overhead Sound Systems ("OSS"). The Company's OSS is covered by a
patent license limited to the United States and Canada. For the OSAs, one
United States design patent was issued in May 1995 which has been assigned
to the Company, and in November 1995 the Company was notified that the
United States Patent and Trademark office allowed two additional United
States patents. In addition, steps have been taken to protect trade
secrets through appropriate confidentiality agreements. The failure by the
Company or TJA to obtain patents and protect their respective trade secrets
could have a material adverse effect on the Company by increasing the
likelihood of competition. In addition, other companies may independently
develop equivalent or superior technologies and may obtain patent or
similar rights with respect to them. Although the Company believes that
the hardware and software technology for the OSAs has been independently
developed by it and TJA, and that such technology does not infringe on the
patents or violate the proprietary rights of others, there can be no
assurance that the OSAs will not be determined to infringe upon the patents
or proprietary rights of others, or that patents or proprietary rights of
others will not have a material adverse effect on the ability of the
Company to commercialize the OSAs. Patent and technology disputes are
common with high technology products and services and litigation costs can
be high.
DEPENDENCE ON THIRD-PARTY MANUFACTURER. The Company and TJA recently
entered into an agreement for the development, manufacture and marketing of
the OSAs. Under this agreement, TJA has the exclusive manufacturing rights
for the OSAs and the Company has the exclusive marketing rights for the
automotive, petrochemical and equipment service industries. The Company's
ability to meet commitments for delivery of the OSAs is partially dependent
upon TJA's ability and willingness to manufacture OSAs in a workmanlike and
timely manner. As stated above, there have been problems resulting from
assembly and software defects that delayed the Company's Roll-Out of the
OSAs. There can be no assurance that such delays will not occur in the
future or that operational problems with the OSAs will not occur. The
Company's prospects could be adversely affected to the extent any such
problems result in failures by the Company to meet customer orders on a
timely basis or failures to deliver OSAs that provide the contracted-for
services. Additionally, due to the proprietary technology of the OSAs, the
Company may not be able to locate other qualified third party manufacturers
in the event that TJA fails to comply with the agreement.
NEED TO MANAGE GROWTH. The Company anticipates that it will grow
substantially during the fiscal year which began October 1, 1995. In order
to support such growth, the Company must recruit new personnel to support
the Roll-Out of the OSAs. The Company is seeking persons with the
appropriate technical expertise to develop and engineer changes to the OSAs
designed to serve the petrochemical industry and to supervise the
installation of OSAs at customer sites. Additionally, the Company needs to
add persons to sell and market the OSAs. In addition to the anticipated
growth resulting from the need to properly support the OSAs, the Company
has moved into a new and larger Detroit, Michigan area assembly facility to
meet increased orders for its OSS. The Company's success depends in part
on its ability to manage this growth, integrate the operations of its three
analysis laboratories and substantially expand its OSS assembly operation.
The Company has retained a new chief financial officer and made substantial
reductions in personnel and other expenses designed to reverse the
substantial operating losses that the Company has incurred. No assurances
can be given that the Company will be able to manage this growth and
achieve operating profits. See "Recent Developments". RELIANCE ON MAJOR
CUSTOMER. The Company has traditionally relied upon
Chrysler and in fiscal 1995, the Company estimates that approximately 70%
of the Company's net revenue came from Chrysler. Although the Company
anticipates that Chrysler will remain its single largest customer during
fiscal 1996, if the OSA Roll-Out is successful, this reliance upon Chrysler
will be materially lessened during fiscal 1996 and in subsequent years
Chrysler will account for increasingly lower percentages of the Company's
revenue. However, there can be no assurance that the revenue from OSAs
will increase as expected. For that reason, the loss of Chrysler as a
customer, or impairment of the Company's reputation with the industries it
serves, could have a material adverse effect upon the Company. No
assurance can be given that the Company will supply Chrysler with OSS units
in the future.
GOVERNMENTAL REGULATION. The Company's industrial oil analysis
laboratories routinely dispose of used oil in the ordinary course of
business and as such are subject to federal, state and local regulations.
To handle this oil disposal, UTG hires a licensed, insured third party.
The Company believes that UTG and its predecessors are and have been in
material compliance with all rules and regulations of the federal, state
and local environmental agencies. Environmental compliance costs are not
expected to have a material effect on the financial condition and results
of operations of the Company. However, in the event of significant changes
in statutes or regulations or unforeseen problems in connection with the
storage of the used oil, the transportation of the used oil or the disposal
thereof, site environmental compliance costs may have a material adverse
affect on the Company.
NEW TECHNOLOGIES AND OTHER CONSIDERATIONS. In order to expand its
current product line, the Company may continue to seek new technologies and
products. This aspect of the Company's business involves a number of
special risks. Because of these risks, the Company will seek capital input
and strategic partners in order to reduce the risks to investors. Also,
the Company will seek to avoid substantial and long-term expense associated
with the necessary research and development. Assuming that the Company is
able to enter into agreements with such partners and that those partners
will be able to carry out the necessary research and development, there is
the risk that the technologies will not perform as expected or be cost
effective. Assuming successful research and development, there remains the
risks of being able to market the products and locate industry partners or
others able to manufacture the products according to stringent quality
control standards and in a viable economic manner. There can be no
assurance that the Company will be able to successfully locate such
technologies and if so, will be able to find strategic partners able to
develop and market new technologies. Finally, there is the risk that while
the Company is seeking to commercialize a new technology, a competitor will
develop technologies which are more commercially viable thereby reducing
the viability of the Company's products.
ANTI-TAKEOVER CONSIDERATIONS. In 1993, the Company's stockholders
approved five amendments to the Company's Certificate of Incorporation (the
"1993 Amendments"). Additionally, on December 13, 1994, the Company's
Board of Directors (without seeking stockholder approval) adopted a
Shareholder Rights Plan (the "Rights Plan"), collectively, the "Anti-
Takeover Provisions". The 1993 Amendments consist of: (i) empowering the
Board of Directors, without further action by the stockholders, to issue up
to 5,000,000 shares of preferred stock in one or more series, with such
designations, preferences, special rights, qualifications, limitations and
restrictions as the Board may determine; (ii) establishing a classified
Board of Directors whereby election of the directors is staggered and each
year approximately one-third of the directors are elected for a three year
term; (iii) requiring a super-majority vote to remove directors for "cause"
of either: (1) 75% of the stockholders or (2) 66-2/3% of the stockholders
and the majority of the "disinterested directors"; (iv) providing that
stockholder action taken by written consent in lieu of a meeting
is prohibited unless such consent is signed by the holders of at least
two-thirds of the stock; and (v) restricting stockholder nomination
of directors to any stockholder with the power to vote at least 10%
of the outstanding voting securities of the Company who timely
complies with specific notice procedures. In connection with the Rights
Plan, the Board declared a dividend of one Preferred Stock Purchase
Right (the "Rights") for each outstanding share of the Company's common
stock. The Rights permit the holders (stockholders of the Company)
to purchase Series A Junior Preferred Stock. Holders of Rights have the
right to acquire stock of the Company or an "acquiring entity" at half
of market value. The Rights only become exercisable in the event, with
certain exceptions, an acquiring party becomes beneficial owner of 15%
percent or more (or 20% percent or more in the case of stockholders
who beneficially owned more than 10% as of December 13, 1994) of the
Company's voting stock. These Rights may be redeemed by the Company at
$.01 per Right prior to the close of business on the 10th day after a
public announcement that beneficial ownership of ownership of 15% or
more (or 20% or more in the case of beneficial owners of 10% or more
on December 13, 1994) of the Company's voting stock has been accumulated
by single acquirer or group (with certain exceptions), under specified
circumstances. The Anti-Takeover Provisions may make it more difficult or
discourage a proxy contest or the assumption of control by a holder of
a substantialblock of the Company's common stock because it is more
difficult to remove the incumbent Board. Thus, the Anti-Takeover Proposals
have the effect of: (i) entrenching incumbent management, and (ii)
discouraging a third party from making a tender offer at a premium over
the market price or otherwise attempting to obtain control of the Company
even though such an attempt could be desired by a substantial member of
the Company's stockholders. The Anti-Takeover Provisions were not intended
to prevent a takeover of the Company on terms which are beneficial to the
stockholders and will not do so. They may, however, deter an attempt to
acquire the Company in a manner or on terms that the Board of Directors
determines not to be in the best interest of its stockholders.
DEPENDENCE ON KEY PERSONNEL. While in the past the Company has been
dependent upon certain members of its management team and key consultants,
it has taken steps to reduce this dependence. It has exposed certain key
middle management members to the duties of key executive officers and
caused such middle management members to develop relationships with key
customers, suppliers and other persons. As a result of these steps, the
Company believes that it has lessened its dependence upon key personnel and
accordingly it has reduced the key man life insurance policies so that the
Company now owns $900,000 policies insuring the lives of Messrs. Stuart
Landow and Christer Rosen, President and Executive Vice President,
respectively, of the Company.
COMPETITION. Competition in the automotive business and the oil
analysis business is intense; however, the Company is not selling and has
no intention to sell its products and services directly to consumers. With
regard to the Company's OSS business, it believes it has no significant
competition. The Company holds patents on the overhead mounting system.
If a customer chooses to use such system it must come to the Company. The
primary factor involved in whether or not a customer will choose to use an
overhead mounting system rather than a traditional speaker system is cost.
In this regard, the Company believes that its OSS system results in a
reduced cost of production. With regard to UTG's industrial oil analysis
business, significant competition exists. However, the Company believes
its extensive database of tests provides it with a significant competitive
edge. However, due to service problems, which arose in connection with,
and price competition which became evident after, the Company's 1993 oil
analysis acquisitions and the consolidation of two distinct operations,
UTG lost business from existing customers. While the Company believes it
offers viable products/services and meets the needs of its customers in all
aspects of its business, there can be no assurance that other products and
services superior to those of the Company will not be developed or offered
in the future by competitors.
OUTSTANDING OPTIONS AND WARRANTS. There are outstanding vested
options (including options which vest in the 60 days following the date of
this Prospectus) and currently exercisable warrants to purchase 2,458,408
shares of the Company's common stock some of which are exercisable below
the current market price1. The range of the exercise prices is from
approximately $.28 to $8.75 per share. The following represents the number
of outstanding vested options and currently exercisable warrants
outstanding at November 2, 1995 and their exercise prices:
No. of Options Approximate
or Warrants Exercise Price
5,000 Options $.28
805,000 Options .53
30,000 Options .56
100,000 Options 1.50
50,000 Options 1.78
500,000 Options 2.065
300,000 Options 2.13
44,000 Options 2.19
16,000 Options 2.38
25,000 Options 2.69
50,000 Options 3.13
25,000 Options 3.38
5,000 Options 3.50
67,500 Options 4.75
18,000 Options 6.125
197,500 Options 6.50
12,833 Options 6.625
75,000 Options 6.75
15,625 Options 6.9375
10,000 Options 7.50
6,250 Options 8.25
20,000 Options 8.75
60,500 Warrants2 1.00
20,200 Warrants3 4.00
For the life of all such options and warrants, the holders thereof
will have the opportunity to profit from a rise in the market price of the
Company's common stock, with a resulting dilution in the interest of
holders of common stock. The terms on which the Company will be able to
obtain additional capital during the life of such options and warrants may
be adversely affected, and the holders of such options and warrants may be
expected to exercise their rights at a time when the Company would, in all
likelihood, be able to obtain any needed capital by a new offering of
securities on terms more favorable to the Company than those provided by
such options and warrants.
POSSIBLE VOLATILITY OF COMMON STOCK PRICES. The stock market has from
time to time experienced significant price and volume fluctuations that may
1 There are an additional 542,042 unvested options which are
not currently exercisable.
2 The shares underlying these warrants may be offered
for sale pursuant to this Prospectus.
3 These warrants and the shares underlying them may be
offered for sale pursuant to this Prospectus. be
unrelated to the operating performance of any
particular company. Moreover, the Company's common
stock has historically been subject to periodic
price and volume swings which have been unrelated to the
Company's results of operations. Various factors and
events including future announcements of
technological innovations or new products by the Company
or its competitors, developments or disputes
concerning, among other things, patents or
proprietary rights, publicity regarding actual or
potential results relating to products under development
by the Company or its competitors, regulatory
developments in the United States, and economic and
other external factors, as well as fluctuations in
the Company's financial results, may have a significant
impact on the market price of the shares of common stock
and the Company's business.
POTENTIAL FUTURE SALES. As of November 2, 1995 the Company had issued
and outstanding 27,773,977 shares of common stock, of which 4,060,286
shares were "restricted securities", as that term is defined under Rule 144
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"). In addition to the 804,783 shares covered by this Prospectus, a
total of 3,784,699 outstanding shares of restricted common stock may
currently be publicly sold under Rule 144 and a total of up to 2,057,000
shares of common stock underlying outstanding options may be sold under
three current Registration Statements under Form S-8 permitting immediate
resale. Future sales of shares made pursuant to registration statements,
under Rule 144 or under Regulation S may have an adverse effect on the then
prevailing market price of the common stock and adversely affect the
Company's ability to obtain future financing in the capital markets. In
this regard, for the first 10 months of calendar 1995, average daily volume
of the Company's common stock has been approximately 112,000 shares.
NO DIVIDENDS. The Company intends to retain future earnings, if any,
to finance its growth. Accordingly, any potential investor who anticipates
the need for current dividends from his investment should not purchase any
of the shares offered hereby.
RECENT DEVELOPMENTS
The Company's OSA line of credit with the First Union National Bank
requires the Company, among other things, to pay TJA $1.9 million in order
to be able to draw on the line. To date, the Company has paid approximately
$1.2 million. To meet the remainder of its obligation to First Union
National Bank and to fund OSA operating costs, in June 1995, the Company
sold approximately $2 million of Notes to clients of Ganz Capital, the
Company's principal stockholder. The Company closed the balance of the
Note offering on October 12, 1995 raising aggregate gross proceeds of
$3,020,000 including the approximately $2,000,000 previously received. The
Notes pay 9% per annum interest and are convertible on or after June 9,
1996 into shares of the Company's common stock at $10.00 per share.
Pursuant to this Prospectus, the Company is registering the shares of
common stock underlying the Notes to permit public sale in the event of
conversion.
The Company has increased its working capital line of credit with the
First Union National Bank (the "Bank") by $250,000 to $1,500,000 and as of
November 14, 1995 had no balance outstanding. The Company has not used
this line of credit since June 1, 1995. The Company has expanded its bank
facility in order to be able to finance the Roll-Out of the OSAs and
purchase OSAs from TJA based upon orders received from customers.
In May 1995, the United States Patent Office issued a design patent
covering the Company's OSAs which has been assigned to the Company by Mr.
Carlton Joyce, the inventor. Mr. Joyce is President of the Company's OSA
subsidiary and a member of the Company's Board of Directors. Further, in
November 1995 the Company was notified that the United States Patent and
Trademark Office allowed two additional patent applications relating to OSA
technology.<PAGE>
Effective June 30, 1995, the Company hired Mr. David
Natan as its new Vice President of Finance (chief financial officer)
replacing Mr. James P. Samuels. Mr. Natan had been Chief Financial Officer
of MBf USA, Inc. since November 1992. From August 1987 through
October 1992, Mr. Natan was Treasurer and Controller of Jewel Masters,
Inc. Mr. Natan receives a salary at the annual rate of $125,000 per
year and a $600 per month automobile allowance. He also received a grant
of 93,750 incentive and non-qualified stock options exercisable at $6.9375
per share. In addition, the Company's chief accounting officer, Mr. W.
Earl Somerville, resigned as of mid-August 1995. The Company recently
hired a new Controller at a savings of approximately $50,000 per year.
In August 1995, the Company commenced a program which at current
operating levels will reduce expenditures by approximately $1,750,000 over
the next 12 months. To the extent new employees are added to support the
OSA Roll-Out, these savings will be reduced. Because the Company intends
to closely monitor the OSA Roll-Out and only add new employees as is
warranted by the OSA business, the Company cannot predict the cost of such
new employees. However, it is anticipated that such costs would be less
than incremental OSA revenue although no assurances can be given. Much of
the savings will occur through the reduction of personnel employed by UTG.
Additionally, the Company's former chief financial officer (Mr. James P.
Samuels) had also been president of UTG. In August 1995, he resigned as
president of UTG and as an employee of the Company. The Company is seeking
to hire a general manager for UTG's oil analysis laboratories. As the
result of these personnel cuts, the Company will incur non-recurring
payroll expenses of approximately $200,000 in the quarter ended September
30, 1995 of which approximately $100,000 represents cash outlays expended
during the quarter. Approximately $100,000 was accrued at September 30,
1995 which will be paid by December 31, 1995.
From July 1995 through September 19, 1995, a total of 376,560 stock
options were exercised primarily by terminated employees raising gross
proceeds of $1,527,588 and as of September 19, 1995, the Company's cash
balance was approximately $1,500,000. This balance does not give effect to
the receipt of an additional $960,000 in Note proceeds as of October 12,
1995.
In mid-August 1995, the Company resumed the Roll-Out of its OSAs by
delivering retrofitted units and new units. See "Risk Factors -
Difficulties in Introduction of On-Site Analyzer". Although no assurances
can be given, the initial results appear promising and the OSAs are working
as anticipated. Additionally, an OSA has been delivered to a second multi-
national oil company.
SELLING STOCKHOLDERS
TABLE OF SELLING STOCKHOLDERS
The following tables set forth information furnished by the selling
stockholders listed in the tables which follow, collectively referred to as
the "Selling Stockholders", with respect to the number of shares of the
Company's common stock, warrants exercisable at $4.00 per share and shares
of common stock underlying the warrants and Notes owned by each Selling
Stockholder on the date of this Prospectus, the shares offered hereby, and
the number and percentage of outstanding shares to be owned by each Selling
Stockholder after the offering. Up to 234,783 shares of common stock and
20,200 warrants exercisable at $4.00 per share may be offered for sale by
the Selling Stockholders on the January 12, 1994 table, up to 68,000 shares
of common stock may be offered for sale by the Selling Stockholders on the
November 13, 1995 table and up to 302,000 shares of common stock issuable
upon conversion of the Notes (on or after June 9, 1996) may be offered for
sale by the Selling Stockholders on the ______________, 1995 table pursuant
to this Prospectus. Except as indicated in the footnotes to the tables
of Selling Stockholders, no Selling Stockholder has held any position,
office, or had a material relationship with the Company within the
past three years.
SECURITIES CONTAINED IN THE REGISTRATION STATEMENT
DECLARED EFFECTIVE JANUARY 12, 1994
Percentage
Ownership Securities Ownership Owned
Selling Prior to Being After After
Stockholder Offering Offered Offering Offering
Appleton Associates
Shares of Common Stock 64,000 64,000 None 0
British Far East Ltd.
Shares of Common Stock 14,583 14,583 None 0
Underlying Options
Comegys, Robert4
Shares of Common Stock 5,000 5,000 None 0
Durham, Dee4
Shares of Common Stock 3,000 3,000 None 0
Gosman, Abraham D.5
$4.00 Warrants 8,100 8,100 None 0
Shares of Common Stock 8,100 8,100 None 0
Underlying Warrants
Griffin, Marvin4
Shares of Common Stock 4,000 4,000 None 0
Hochberg, Samuel and Brenda
$4.00 Warrants 1,600 1,600 None 0
Shares of Common Stock 1,600 1,600 None 0
Underlying Warrants
Joyce, Carlton S.
Shares of Common Stock370,0006 170,000 200,000 *
Learn, David4
Shares of Common Stock 4,000 4,000 None 0
Muller, Paul E.4
Shares of Common Stock 7,000 7,000 None 0
Orman, Margaret Palmbaum
$4.00 Warrants 4,900 4,900 None 0
Shares of Common Stock 4,900 4,900 None 0
Underlying Warrants
Palmbaum, Paul R. Trust
Shares of Common Stock 2,000 2,000 None 0
$4.00 Warrants 1,600 1,600 None 0
Shares of Common Stock 1,600 1,600 None 0
Underlying Warrants
R. Weil & Associates
Shares of Common Stock 136,000 136,000 None 0
Rodriguez, Mario F.
Shares of Common Stock 5,000 5,000 None 0
$4.00 Warrants 4,000 4,000 None 0
Shares of Common Stock 4,000 4,000 None 0
Underlying Warrants
4 An employee of the Company. Consists of shares underlying
options.
5 Held in a discretionary account managed by Ganz Capital which has
investment power but not voting power over these shares.
6 Mr. Joyce is a director of the Company and President of the
Company's OSA subsidiary. Consists of 200,000 shares which may
be sold pursuant to Rule 144 and 170,000 shares underlying
options, 100,000 of which are currently vested.
* Less than 1%.
SECURITIES CONTAINED IN THE REGISTRATION STATEMENT
DECLARED EFFECTIVE NOVEMBER 13, 1995
Percentage
Ownership Securities Ownership Owned
Selling Prior to Being After After
Stockholder Offering Offered Offering Offering
Bryan & Yen PSP7
Shares of Common Stock 10,000 10,000 None 0
Underlying $1.00 Warrants
Endonic Assn. Pension
Shares of Common Stock 5,000 5,000 None 0
Underlying $1.00 Warrants
Horowitz, Judith
Shares of Common Stock 6,000 6,000 None 0
Kaplan, Larry I.
Shares of Common Stock 20,000 20,000 None 0
Underlying $1.00 Warrants
Katims, Dr. and Weissman, Dr.7
Shares of Common Stock 4,000 4,000 None 0
Underlying $1.00 Warrants
MLH Holding Limited Partnership
Shares of Common Stock 20,000 20,000 None 0
Underlying $1.00 Warrants
Philadelphia Heart Pension
Shares of Common Stock 1,500 1,500 None 0
Underlying $1.00 Warrants
Speilman, Scott R., IRA
Shares of Common Stock 1,500 1,500 None 0
7 Held in a discretionary account managed by Ganz Capital which has
investment power but not voting power over these shares.
SECURITIES CONTAINED IN THE REGISTRATION STATEMENT
DECLARED EFFECTIVE _____________, 199___
Percentage
Ownership Securities Ownership Owned
Selling Prior to Being After After
Stockholder Offering Offered Offering Offering
Batrus & Co.8
Shares of Common Stock 5,000 5,000 None 0
Broad, Norman - Account G8
Shares of Common Stock 2,000 2,000 None 0
Nations Bank Trust Co.
NA C/F Lois England 8%
Charitable Remainder Annuity Trust8
Shares of Common Stock 12,500 12,500 None 0
Nations Bank Trust Co.
NA C/F Richard England 8%
Charitable Remainder Annuity Trust8
Shares of Common Stock 12,500 12,500 None 0
Futernick, Morris Family Foundation8
Shares of Common Stock 3,500 3,500 None 0
The Ganz Family Foundation8,9
Shares of Common Stock 7,250 3,500 3,750 *
Ganz, Elinor, IRA #1 8,10
Shares of Common Stock 53,100 12,500 40,600 *
The Nancy and Charles Ganz Family
Supporting Foundation8,11
Shares of Common Stock 3,750 2,500 1,250 *
Ganz, Pauline Revocable Trust8
Shares of Common Stock 4,500 2,500 2,000 *
Gillman, Arthur M.D.
Joyce S. Gillman Co-Trustees,
Revocable Living Trust U/A
DTD 4-01-948
Shares of Common Stock 4,000 4,000 None 0
Goldstein, Bernice8
Shares of Common Stock 10,000 10,000 None 0
Green Haft Trust F/B/O Richard J. Haft8
Shares of Common Stock 12,500 12,500 None 0
Haft, Richard J.8
Shares of Common Stock 2,000 2,000 None 0
Haft-Gillman, Joyce8
Shares of Common Stock 2,500 2,500 None 0
Harvith, Erwin Trust U/A
DTD 6-28-72
Sylvia Harvith Trustee8
Shares of Common Stock 3,000 3,000 None 0
Horowitz, Bernice and Arthur8
Shares of Common Stock 3,500 3,500 None 0
Calhoun & Company FBO Lewis A.
Imermn Suc. Trustee U/A FBO
Juditz Horowitz8
Shares of Common Stock 3,500 3,500 None 0
Kane Investments8
Shares of Common Stock 2,500 2,500 None 0
Kaplan, Donald A. Revocable Trust #3
Albert S. Reidel Under Trust 11-12/858
Shares of Common Stock 5,000 5,000 None 0
Kaplan, Donald A. IRA8
Shares of Common Stock 5,000 5,000 None 0
Lipschutz, Frank Trust8
Shares of Common Stock 14,500 14,500 None 0
Lipschutz, May Trust8
Shares of Common Stock 12,000 12,000 None 0
Mac & Company8
Shares of Common Stock 3,500 3,500 None 0
The Louise and Morton Macks
Family Foundation8
Shares of Common Stock 5,000 5,000 None 0
Marshall, Elaine T., Trustee8
Shares of Common Stock 10,000 10,000 None 0
Marshall, E. Pierce, Successor
Trustee Eleanor P. Marshall
Trust Dtd 12/26/798
Shares of Common Stock 10,000 10,000 None 0
Budd and Nanette Mayer Foundation, Inc.8
Shares of Common Stock 2,000 2,000 None 0
The Peggy Meyerhoff
Pearlstone Fdn U/A 9/5/918
Shares of Common Stock 2,000 2,000 None 0
Pearlstone Family Fund8
Shares of Common Stock 15,000 15,000 None 0
Pearlstone Family Fund8
Shares of Common Stock 15,000 15,000 None 0
Pearlstone Foundation for Jewish Living8
Shares of Common Stock 15,000 15,000 None 0
Pearlstone Institute for Living Judaism8
Shares of Common Stock 15,000 15,000 None 0
Dean Witter C/F FBO
Reagan, Kaaren, IRA8
Shares of Common Stock 2,500 2,500 None 0
Smith Barney R/O Custodian for
Roberson, Clive E., M.D.8
Shares of Common Stock 14,000 14,000 None 0
Schreiber, Alice A.8
Shares of Common Stock 2,500 2,500 None 0
Slade, Inc.8
Shares of Common Stock 12,500 12,500 None 0
Slavin, Richard, IRA R/O8
Shares of Common Stock 2,500 2,500 None 0
Slavin, Richard and Jane8
Shares of Common Stock 3,500 3,500 None 0
Steinberg, Joy, Trustee
Joy Steinberg Rev. Trust Dtd 2/5/928
Shares of Common Stock 2,500 2,500 None 0
Steinberg, Milton, Trustee
Milton Steinberg Rev. Trust Dtd 2/5/928
Shares of Common Stock 2,500 2,500 None 0
Sorenson, Harvey R., Trustee
Eleanor P. Marshall Stevens
Charitable Trust Investment Partnership8
Shares of Common Stock 1,500 1,500 None 0
Sorenson, Harvey R., Trustee
Eleanor P. Marshall Stevens
Charitable Trust Investment Partnership8
Shares of Common Stock 8,500 8,500 None 0
Tecce, Frederick D.8
Shares of Common Stock 10,000 10,000 None 0
Thomas, R.J.8
Shares of Common Stock 7,500 7,500 None 0
Vision Associates8
Shares of Common Stock 3,000 3,000 None 0
8 Consists of shares of common stock underlying Notes. The Notes
may not be converted and shares issued prior to June 9, 1996.
Currently, the Notes are held in a discretionary account managed
by Ganz Capital which has investment power over these securities.
If the Notes are converted at a time when the account is still
managed by Ganz Capital, it will not have voting power over these
securities.
9 Mr. Ganz, president of Ganz Capital, the Company's principal
stockholder, is a co-trustee and beneficiary of the foundation.
10 Ms. Ganz is a director of Ganz Capital, the Company's principal
stockholder.
11 Mr. Ganz is president of Ganz Capital, the Company's principal
stockholder.
*Less than 1 %.<PAGE>
PLAN OF DISTRIBUTION
All of the Securities are offered for the respective accounts of the
Selling Stockholders as listed in this Prospectus under "Selling
Stockholders". The Company will receive none of the proceeds from the sale
of the shares of common stock by the Selling Stockholders. However, the
Company will receive a maximum of $516,515 in connection with the exercise
of 193,000 options and 20,200 warrants, the underlying shares of which are
covered by this Prospectus. Such proceeds will be used for general
corporate purposes.
The Company has been advised by the Selling Stockholders that the
Securities may be offered and sold from time to time by or on behalf of the
Selling Stockholders, in or through transactions or distributions
(including crosses and block transactions) on the American Stock Exchange,
or in the over-the-counter market at market prices prevailing at the time
of sale, or at negotiated prices, and in connection therewith commissions
may be paid to brokers. Brokers participating in such transactions may act
as agents for the Selling Stockholders. The Selling Stockholders, and any
brokers participating in this offering may be deemed to be "underwriters"
within the meaning of the Securities Act, and any commissions received by
them may be deemed to be underwriting compensation.
LEGAL MATTERS
The legality of the securities to be offered hereby will be passed
upon for the Company by Cohen, Chernay, Norris, Weinberger & Harris, 712
U.S. Highway One, Fourth Floor, North Palm Beach, Florida 33408-7146.
Attorneys employed by that law firm are the beneficial owners of 36,000
shares of common stock.
EXPERTS
The financial statements and schedules of Top Source Technologies,
Inc. incorporated by reference in this Prospectus and elsewhere in the
registration statement have been audited by Arthur Andersen LLP,
independent certified public accountants, as indicated in their report with
respect thereto, and are included herein in reliance upon the authority of
said firm as experts in accounting and auditing in giving said report.
The financial statements of Spectro/Metrics, Inc. incorporated by
reference in this Prospectus and elsewhere in the registration statement
have been audited by Williams, Cook & Reed, P.C., independent public
accountants as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said report.
This Prospectus does not con-
stitute an offer to sell or a
solicitation of an offer to
No dealer, salesperson or buy any security other than
other person has been autho- the securities offered by this
rized to give any information Prospectus, or an offer to
or to make any representations sell or a solicitation of an
other than those contained in offer to buy any securities by
this Prospectus, and, if given any person in any jurisdiction
or made, such information or in which such offer or solic-
representations must not be itation would be unlawful.
relied upon as having been au- Neither the delivery of this
thorized by the Company or any Prospectus nor any sale made
of the Selling Stockholders. hereunder shall, under any
circumstances, imply that
the information in this
Prospectus is correct as of
any time subsequent to the
date of this Prospectus.
TOP SOURCE TECHNOLOGIES, INC.
804,783 SHARES
________________
OF
TABLE OF CONTENTS
COMMON STOCK
Page AND
Available Information . 4 20,200 WARRANTS
Documents Incorporated by
Reference . . . . . . 6
Risk Factors . . . . . 9
Recent Developments . . 23 ________________
Selling Stockholders . 26
Plan of Distribution . 34 PROSPECTUS
Legal Matters . . . . . 35 ________________
Experts . . . . . . . . 36
_________, 1995
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses in connection with
the issuance and distribution of the securities being registered. All of
the amounts shown are estimates except the Commission registration fee.
Such expenses will be paid by the Company. None of these expenses will be
paid by the Selling Stockholders.
Registration fee . . . . . . . . . . . . . . . $ 852.63
Printing expenses . . . . . . . . . . . . . . . $ 100.00
Accounting fees and expenses . . . . . . . . . $ 15,000.00
Legal fees and expenses (other than Blue Sky) . $ 15,000.00
Blue Sky fees and expenses . . . . . . . . . . $ -0-
Miscellaneous . . . . . . . . . . . . . . . $ 100.00
Total . . . . . . . . . . . . . . . . . . $ 31,052.63
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's certificate of incorporation provides that the Company
shall indemnify its current and former officers and directors against
expenses reasonably incurred by or imposed upon them in connection with or
arising out of any action, suit or proceeding in which they may be involved
or to which they may be made parties by reason of their being or having
been a director or officer of the Company, or at its request, of any other
corporation which it is a stockholder or creditor and from which such
officers and directors are not entitled to be indemnified by (whether or
not they continue to be directors or officers at the time of imposing or
incurring such expense), except in respect of matters as to which they
shall be finally adjudged in such action, suit or proceeding liable for
negligence or misconduct. In the event of settlement of any such action,
suit or proceeding, indemnification shall be provided only in connection
with such matters covered by the settlement as to which the Company is
advised by counsel that the persons to be indemnified did not commit a
breach of duty. The foregoing right of indemnification shall not be
exclusive of other rights to which such persons may be entitled.
In addition, the Company has entered into indemnification agreements
with its executive officers and directors. These agreements provide that
the Company shall indemnify its executive officers and directors, if by
reason of their corporate status, they are or are threatened to be made
parties to any third-party proceedings, to the fullest extent provided by
Delaware law. The agreements provide for indemnification against expenses,
judgments, penalties, fines and amounts paid in settlement, actually and
reasonably incurred by them or on their behalf in connection with such
proceeding or any claim, issue or matter therein if (i) they acted in good
faith; (ii) they reasonably believed in the case of conduct in their
official capacity with the Company that their conduct was in the Company's
best interests or in all other cases, that their conduct was at least not
opposed to the Company's best interests; (iii) with respect to any criminal
proceeding, they had no reasonable cause to believe their conduct was
unlawful; and (iv) with respect to an employee benefit plan they reasonably
believed their conduct to be in the best interests of the participants
and/or beneficiaries of the plan. The indemnification agreements also
provide indemnification in direct and derivative actions provided such
officers or directors acted in good faith and in a manner they reasonably
believed to be not opposed to the best interests of the Company. Such
officers or directors are not entitled to indemnification in
connection with any proceeding charging improper personal benefits to such
officers or directors, whether or not involving action in their official
capacity, in which they were judged liable on the basis that personal
benefit was improperly received by them.
INSOFAR AS INDEMNIFICATION FOR LIABILITIES ARISING UNDER THE SECURI-
TIES ACT OF 1933 MAY BE PERMITTED TO DIRECTORS, OFFICERS 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 THE ACT AND IS THEREFORE UNENFORCEABLE.
ITEM 16. EXHIBITS.
4. Form of Common Stock Certificate1
5. Opinion of Cohen, Chernay, Norris, Weinberger & Harris
24. Consent of Arthur Andersen LLP
24.1 Consent of Williams, Cook & Reed, P.C.
24.2 Consent of Cohen, Chernay, Norris, Weinberger & Harris2
28. Employment Agreement of T.A. Cox3
28.1 Employment Agreement of Stuart Landow4
28.2 First Amendment to Stock Purchase Agreement between Top Source,
Inc., Carlton S. Joyce and Patricia P. Joyce and United Testing
Group, Inc. 5
28.3 Employment Agreement of Carlton S. Joyce5
28.4 Employment Agreement of David Natan6
28.5 First Amendment to Employment Agreement of Carlton S. Joyce5
28.6 Loan Agreement dated November 22, 1994 between Top Source Technolo-
gies, Inc. and On-Site Analysis, Inc. and First Union National Bank
of Florida7
28.7 Loan Agreement dated April 13, 1995 between Top Source Technologies,
Inc. and On-Site Analysis, Inc. and First Union National Bank of
Florida7
28.8 Lease Agreement dated February 10, 1995 for Michigan facility7
28.9 Note Purchase Agreement dated June 9, 1995, among Top Source Tech-
nologies, Inc., Ganz Management, Inc. and certain purchasers8
1 Contained in the Registration Statement on Form 8-A filed March 12,
1992.
2 Contained in Opinion of Cohen, Chernay, Norris, Weinberger & Harris.
3 Contained in the Registration Statement on Form S-3 filed on August
31, 1993.
4 Contained in Exhibit 2.4 of Form 8-K/A No. 3 filed on November 16,
1993.
5 Contained in Amendment No. 3 to the Registration Statement on Form S-3
filed on January 11, 1994.
6 Contained in Amendment No. 3 to the Registration Statement on Form S-3
filed on September 27, 1995.
7 Contained in Amendment No. 1 to the Registration Statement on Form S-3
filed on May 4, 1995.
8 Contained in the Form 10-Q for the period ended June 30, 1995 filed on
August 14, 1995.
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;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement.
Provided, however, that paragraphs (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 amend-
ment 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 Securi-
ties 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.
(5) 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 forego-
ing provisions (see Item 15 above), or otherwise, the Registrant
has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Regis-
trant in the successful defense of any action, suit or proceed-
ing) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Regis-
trant 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 indemnifica-
tion by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirement for filing on Form S-3 and has duly caused
this Registration Statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Palm Beach Gardens,
Florida, on this 20th day of November 1995.
TOP SOURCE TECHNOLOGIES, INC.
By:/s/ Stuart Landow
Stuart Landow, President
(Chief Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-3 has been signed by the following persons
in the capacities and on the dates indicated.
Name Title Date
/s/Stuart Landow Director November 20, 1995
Stuart Landow
/s/Christer Rosen Director November 20, 1995
Christer Rosen
/s/David Natan Vice President of Finance, November 20, 1995
David Natan Treasurer and Director
(Principal Financial Officer,
and Principal Accounting Officer)
/s/Ronald P. Burd Director November 20, 1995
Ronald P. Burd
/s/Carlton S. Joyce Director November 20, 1995
Carlton S. Joyce
/s/Arthur S. Kirsch Director November 20, 1995
Arthur S. Kirsch
Name Title Date
/s/Clinton D. Lauer Director November 20, 1995
Clinton D. Lauer
/s/Paul F Moore Director November 20, 1995
Paul F. Moore
/s/Mani A. Sadeghi Director November 20, 1995
Mani A. Sadeghi
EXHIBIT INDEX
EXHIBIT NO.
4. Form of Common Stock Certificate1
5. Opinion of Cohen, Chernay, Norris, Weinberger & Harris
24. Consent of Arthur Andersen LLP
24.1 Consent of Williams, Cook & Reed, P.C.
24.2 Consent of Cohen, Chernay, Norris, Weinberger & Harris2
28. Employment Agreement of T.A. Cox3
28.1 Employment Agreement of Stuart Landow4
28.2 First Amendment to Stock Purchase Agreement between Top Source,
Inc., Carlton S. Joyce and Patricia P. Joyce and United Testing
Group, Inc. 5
28.3 Employment Agreement of Carlton S. Joyce5
28.4 Employment Agreement of David Natan6
28.5 First Amendment to Employment Agreement of Carlton S. Joyce5
28.6 Loan Agreement dated November 22, 1994 between Top Source Technolo-
gies, Inc. and On-Site Analysis, Inc. and First Union National Bank
of Florida7
28.7 Loan Agreement dated April 13, 1995 between Top Source Technologies,
Inc. and On-Site Analysis, Inc. and First Union National Bank of
Florida7
28.8 Lease Agreement dated February 10, 1995 for Michigan facility7
28.9 Note Purchase Agreement dated June 9, 1995, among Top Source Tech-
nologies, Inc., Ganz Management, Inc. and certain purchasers8
1 Contained in the Registration Statement on Form 8-A filed March 12,
1992.
2 Contained in Opinion of Cohen, Chernay, Norris, Weinberger & Harris.
3 Contained in the Registration Statement on Form S-3 filed on August
31, 1993.
4 Contained in Exhibit 2.4 of Form 8-K/A No. 3 filed on November 16,
1993.
5 Contained in Amendment No. 3 to the Registration Statement on Form S-3
filed on January 11, 1994.
6 Contained in Amendment No. 3 to the Registration Statement on Form S-3
filed on September 27, 1995.
7 Contained in Amendment No. 1 to the Registration Statement on Form S-3
filed on May 4, 1995.
8 Contained in the Form 10-Q for the period ended June 30, 1995 filed on
August 14, 1995.
EXHIBIT 5
EXHIBIT 24
EXHIBIT 24.1
November 20, 1995
Top Source Technologies, Inc.
2000 PGA Blvd., Suite 3200
Palm Beach Gardens, FL 33408
RE: TOP SOURCE TECHNOLOGIES, INC./SEC
Dear Sirs:
You have advised us that Top Source Technologies, Inc. (the "Company") is
filing with the United States Securities and Exchange Commission a Registration
Statement on Form S-3, with respect to 302,000 shares of common stock, par
value $.001 per share.
In connection with the filing of this Registration Statement, you have
requested us to furnish you with our opinion as to the legality of (i) such of
the Company's shares as are presently outstanding; and (ii) such securities as
shall be offered by the Company itself pursuant to the Prospectus which is part
of the Registration Statement.
You have advised us that as of November 2, 1995 the Company's authorized
capital consists of 50,000,000 shares of common stock, par value $.001, of which
27,773,977 shares have been issued. You have further advised us that the
Company has received valid consideration for the issuance of these shares.
After having examined the Company's certificate of incorporation, bylaws,
minutes, Restated Note Purchase Agreement and the financial statements
incorporated by reference in the Prospectus, we are of the opinion that the
302,000 shares of common stock to be offered by the Selling Stockholders
pursuant to the Registration Statement and accompanying Prospectus, upon
conversion of the 9% Senior Convertible Notes issued by the Company for valid
consideration, will be fully paid and nonassessable, duly authorized and validly
issued.
We consent to the use of our name in the Prospectus under the caption
"Legal Matters".
Very truly yours,
COHEN, CHERNAY, NORRIS,
WEINBERGER & HARRIS
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
As independent certified public accountants, we hereby consent to the
incorporation by reference in this registration statement of our report dated
August 25, 1993 on the Oil Analysis Business of Professional Service Industries,
Inc. included in the Company's Form 8-K/A No. 2, filed September 7, 1993, Form
8-K/A No. 3 filed November 16, 1993 and Form 8-K/A No. 4 filed December 22, 1993
and our report dated December 28, 1994 (except with respect to the matter
discussed in Note 22, paragraph 2, as to which the date is June 9, 1995) on the
Company included in Top Source Technologies, Inc.'s Amendment No. 1 to Form 10-K
filed May 4, 1995, Amendment No. 2 to Form 10-K filed May 31, 1995 and
Amendment No. 3 to Form 10-K filed September 28, 1995 for the year ended
September 30, 1994 and to all references to our Firm included in this
registration statement.
Fort Lauderdale, Florida ARTHUR ANDERSEN LLP
November 20, 1995<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our report dated August 6, 1993
(August 24, 1993 with respect to Note 5) on the financial statements of
Spectro/Metrics, Inc. included in Top Source Technologies, Inc.'s Forms 8-K/A
No. 1, 8-K/A No. 2,
8-K/A No. 3, and 8-K/A No. 4 filed August 11, 1993, September 9, 1993, November
18, 1993, and December 27, 1993, respectively, and all references to our Firm
included in the registration statement.
WILLIAMS, COOK & REED, P.C.
Atlanta, Georgia,
November 20, 1995
