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As filed with the Securities and Exchange Commission on January 16, 1998
Registration No. 333-13775
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
POST-EFFECTIVE
AMENDMENT NO. 1
TO
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------------
LITHIUM TECHNOLOGY CORPORATION
(Exact name of issuer as specified in its charter)
Delaware 13-3411148
(State or other Jurisdiction of) (IRS Employer Identification No.)
5115 Campus Drive
Plymouth Meeting, PA 19462
(Address of principal executive offices)
1994 STOCK INCENTIVE PLAN;
DIRECTORS STOCK OPTION PLAN
(Full title of the plans)
THOMAS R. THOMSEN
Chairman and Chief Executive Officer
Lithium Technology Corporation
5115 Campus Drive
Plymouth Meeting, PA 19462
(Name and address of agent for service)
(610) 940-6090
(Telephone number, including area code, of agent for service)
------------------------------------------------------------
Copy to:
THOMAS P. GALLAGHER
Gallagher, Briody & Butler
212 Carnegie Center
Suite 402
Princeton, New Jersey 08540
(609) 452-6000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of
this registration statement.
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EXPLANATORY NOTE
This Registration Statement contains two parts. The first part contains
a prospectus prepared in accordance with the requirements of Part I of Form S-3
(in accordance with Section C of the General Instructions to Form S-8) which
covers reoffers and resales of shares of Common Stock of the Registrant which
were issued to certain employees of the Registrant pursuant to the Registrant's
1994 Stock Incentive Plan and which may be issued upon the exercise of vested
stock options granted to certain officers and directors of the Registrant who
may be deemed affiliates of the Registrant, pursuant to Registrant's 1994 Stock
Incentive Plan and the Registrant's Directors Stock Option Plan. The second part
contains information required pursuant to Part II of Form S-8 and certain items
required pursuant to Part II of Form S-3. Pursuant to the Note to Part I of Form
S-8, the Plan Information specified by Part I is being separately provided to
the plan participants as specified in Rule 428(b)(1) and is not being filed with
the Securities and Exchange Commission.
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PROSPECTUS
LITHIUM TECHNOLOGY CORPORATION
1,462,198 Shares
Common Stock
This Prospectus is being used in connection with the offering, from
time to time, by certain stockholders (the "Selling Stockholders") of Lithium
Technology Corporation (the "Company") of 1,462,198 shares of
Common Stock of the Company (the "Shares") consisting of shares which were
issued to certain employees of the Company pursuant to the Company's 1994 Stock
Incentive Plan (the "1994 Plan") and shares which are issuable upon the exercise
of vested stock options granted to certain officers and directors of the Company
who may be deemed affiliates of the Company, pursuant to the 1994 Plan and the
Directors Stock Option Plan (the "Directors Plan). These persons may offer these
Shares for sale as principals for their own accounts at any time and from time
to time in the over-the-counter market or otherwise at prices prevailing at the
time of sale or in private sales and at prices to be negotiated. The Selling
Stockholders, upon sale of the Shares, will receive the entire proceeds from
such sale. The Company will not receive any of the proceeds from the sale of the
Shares, but will receive funds upon the exercise of the stock options.
THE COMMON STOCK OF THE COMPANY IS TRADED ON THE OTC BULLETIN BOARD UNDER THE
SYMBOL "LITH".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THESE SECURITIES ARE SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND SHOULD NOT
BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF HIS/HER ENTIRE INVESTMENT.
SEE "RISK FACTORS" ON PAGES 6 TO 13 OF THIS PROSPECTUS.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION OTHER THAN AS CONTAINED HEREIN IN CONNECTION WITH THE OFFER
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 PERSON. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER OR SOLICITATION BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION MAY NOT BE LAWFULLY MADE.
The Date of this Prospectus is January 16, 1998
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Available Information.................................................... 3
Incorporation of Certain Documents by Reference.......................... 3
The Company.............................................................. 4
Safe Harbor Statement.................................................... 6
Risk Factors............................................................. 6
Use of Proceeds......................................................... 13
Selling Stockholders.................................................... 14
Plan of Distribution.................................................... 15
Legal Matters........................................................... 16
Experts................................................................. 16
</TABLE>
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (the "Registration Statement") on Form
S-8 under the Securities Act of 1933, as amended (the "Securities Act"), for the
registration of the Shares offered hereby.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information with
the Commission. The reports, proxy statements and other information filed by the
Company with the Commission can be inspected and copied at the public reference
facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices
at 7 World Trade Center, New York, New York 10048 and the Northwestern Atrium
Center, 500 West Madison Street, Room 1400, Chicago, Illinois 60661. Copies of
such material also can be obtained from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates.
In addition, the Commission maintains a Web site (http://www.sec.gov) that will
contain certain subsequently filed reports, proxy and information statements and
other information regarding the Company.
This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the Shares, reference is made to the Registration
Statement and the exhibits filed therewith. The Company will provide without
charge to each person who receives this Prospectus upon written or oral request
of such person, a copy of the information that was incorporated by reference in
this Prospectus (not including exhibits to the information that is incorporated
by reference, unless the exhibits themselves are specifically incorporated by
reference). All such requests should be directed to the Company at 5115 Campus
Drive, Plymouth Meeting, PA 19462, Attention: Secretary, or by telephone at
(610) 940-6090 (ext. 109). Statements contained in this Prospectus as to the
contents of any document filed as an exhibit to the Registration Statement are
qualified in all respects by reference to the exhibit for a complete statement
of its terms and conditions.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents which have been filed by the Company with the
Commission, are hereby incorporated by reference in this Prospectus and made a
part hereof:
(i) the Company's Annual Report on Form 10KSB for the year ended
December 31, 1996 (the "Form 10-KSB");
(ii) the Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1997, June 30, 1997 and September 30,
1997;
(iii) the Company's Current Reports on Form 8-K dated January 14,
1997, February 4, 1997, February 25, 1997, March 18, 1997,
April 8, 1997, August 21, 1997, September 22, 1997, December
11, 1997 and December 23, 1997; and
(iv) the description of the Common Stock which is contained in the
Company's Form 8-A Registration Statement filed with the
Commission on January 24, 1990, including any amendments or
reports filed for the purpose of updating such description.
All documents and reports subsequently filed by the Company pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination
of the offering of the Shares shall be deemed to be incorporated herein by
reference and to be a part hereof from the date of filing of such documents or
reports. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or
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superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded, except as so modified
or superseded, shall not be deemed to constitute a part of this Prospectus.
THE COMPANY
Lithium Technology Corporation ("LTC") together with its wholly-owned
subsidiary, Lithion Corporation ("Lithion"), collectively referred to as the
"Company", is an advanced development stage company in the process of
commercializing a unique, solid-state, lithium-polymer rechargeable battery. The
Company is engaged in research and development activities to further develop and
exploit this battery technology and also holds various patents relating to such
batteries. The Company believes that its battery technology, which is currently
in the prototype development phase, is capable of providing up to four times the
performance of current rechargeable batteries. The Company's objective is the
commercialization of such technology, inclusive of moving from laboratory scale
product prototypes and related demonstration manufacturing processes to full
scale market introduction, achieving cost competitiveness, and constructing a
large scale manufacturing facility. The Company's commercialization focus is on
the rapidly growing portable electronics market segment (notebook and palmtop
computers and wireless communications devices). The Company's patented and
proprietary composite cell construction and low-cost manufacturing process are
equally applicable to lithium metal polymer technology or lithium-ion polymer
technology. The Company intends to pursue both chemistries for specific portable
electronics applications.
The Company has generated no revenues and has no commercial operations
to date. The Company has been unprofitable since inception and expects to incur
substantial additional operating losses over the next several years. The Company
does not expect to generate any sales in commercial quantities in the near term.
The challenge facing the Company is the commercialization of its
battery product. Commercialization is the process by which the Company will move
from laboratory-scale product prototypes and related manufacturing processes to
the construction of a manufacturing plant for full-scale market introduction.
The Company's strategy is to commercialize its solid-state,
lithium-polymer, rechargeable battery with primary focus on high performance
portable electronic products (notebook computers and wireless communications
devices). These market segments are large, growing rapidly, and demand high
performance batteries with a thin, flat form factor and long run times. There
can be no assurance, however, that the Company will be able to achieve the
technological breakthroughs that will be necessary in order to ultimately
achieve commercialization and/or obtain financings or generate revenues in order
to sustain the Company's on-going research and development phase or to undertake
the design and construction of the Demonstration Manufacturing Facility (DMF)
discussed herein and other manufacturing-related facilities.
The Company's development and commercialization plan currently has the
following milestones:
(i) hand-made cell samples tested by potential strategic partners in
1995 (accomplished);
(ii) installation of a Demonstration Manufacturing Facility (DMF)
continuous flow coating and laminating unit in first quarter of 1996
(accomplished);
(iii) upgrade of the DMF and distribution of DMF-made lithium-ion
polymer cell samples to selected Original Equipment Manufacturers (OEMs)
customers in early 1997 (accomplished);
(iv) distribution of prototype battery packs to selected OEMs in late
1997;
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(v) initial commercial production of hand assembled battery packs using
DMF-made cells for OEMs in early 1998, ramping up to 20,000 notebook computer
batteries per month and generating sales of $6 million in 1998;
(vi) installation of a pilot manufacturing facility in early 1998;
(vii) expansion of the pilot manufacturing facility in late 1998 by
automating the backend assembly; and
(viii) construction of a second tier manufacturing capability once
market demand exceeds initial manufacturing capacity.
The Company estimates that completion of phases (iv) through (vii)
through the end of 1998 will cost approximately $22 million in capital
expenditures and operating costs. There can be no assurances that the Company
will meet these development milestones on the time schedule outlined above.
As indicated above, during March 1996, a continuous flow
coating/laminating line -- referred to as the Demonstration Manufacturing
Facility (DMF) -- was installed by the Company. This line is being used to
further define the Company's manufacturing technology, to sharpen manufacturing
cost estimates, and then serve as the initial production facility for battery
cells which will be manually assembled into battery packs for Original Equipment
Manufacturer (OEM) customers. Thereafter, based on design data obtained from the
DMF, the Company must successfully construct a larger pilot manufacturing line
reflecting the cost, quality, reliability, and performance required for the
various target market applications. It is anticipated that the pilot
manufacturing line and associated equipment will cost approximately $7.5 million
to construct in the 1998 time frame. The pilot manufacturing line, according to
the Company's current strategy, will be located within the Company's existing
facility in Plymouth Meeting, Pennsylvania. Construction of the pilot
manufacturing line will require approximately 12 months. Ultimately, the pilot
manufacturing line would be replaced with a larger scale second tier
manufacturing line housed in the Company's existing facility, which could be
expanded if necessary. During the next twelve months after the date hereof, the
Company expects to incur expenses of approximately $2 million for the purchase
of equipment based on the Company's current strategies and subject to the
uncertainties discussed herein and the availability of capital. The Company
intends to finance the overall estimated $22 million total capital equipment and
operating expense required to bring the Company to the initial commercial
production stage at approximately the end of 1998 (which $22 million includes
the aforementioned estimated $7.5 million cost of the pilot manufacturing
facility and $2 million for equipment purchases) by means of private and/or
public equity or debt financings during the next two years.
The Company does not currently have sufficient cash to achieve all its
development and production objectives, including the 1998 installation of the
pilot manufacturing line and repayment of long term liabilities if not converted
to equity and $2 million for equipment purchases. The Company believes that as
of September 30, 1997 it has sufficient capital resources to meet the Company's
operational needs and satisfy the Company's obligations through approximately
June 1999 based on the Company's current strategies and subject to the
uncertainties discussed herein. In order to raise sufficient capital for its
future growth, and repayment of long term liabilities if not converted to
equity, the Company will be required to sell additional debt or equity
securities. Such new capital is planned to be sought from several sources,
including strategic partners. Although the Company has no commitments for new
capital as of the date hereof, the Company has signed a Letter of Intent with
one of the world's largest personal computer (PC) manufacturers to provide the
Company's proprietary lithium-ion polymer batteries for a specific notebook
computer application, beginning this year. Since May 1997, the PC manufacturer
has been testing lithium-ion polymer cell samples produced on the Company's
pilot line, and the Company has been working the past few months on the
customized multiple cell battery prototypes. Under the terms of the definitive
agreement being negotiated, the Company would continue development of a
customized prototype battery pack during the first half of 1998, leading to
initial commercial production later in the year. As part of the agreement, the
PC manufacturer would make a $1 million equity investment in the Company, which
would be in addition to its earlier $500,000 investment in the Company as part
of the September 22, 1997 Convertible Note transaction. With the signing of the
Letter of Intent, the PC manufacturer is in the process of releasing $100,000 of
the $1 million to the Company.
The Company is a corporation organized under the laws of the State of
Delaware on December 28, 1995. The Company's predecessor -- Lithium Technology
Corporation (a Nevada corporation) -- merged with and into the Company in a
reincorporation merger that became effective on February 8, 1996. The principal
executive office of the Company is located at 5115 Campus Drive, Plymouth
Meeting, PA 19462 and its telephone number is (610) 940- 6090.
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SAFE HARBOR STATEMENT
The Private Securities Litigation Reform Act of 1995 provides a new
"safe harbor" for certain forward-looking statements. Statements contained in
this Prospectus that are not historical facts are forward looking statements
that involve risks and uncertainties that could cause actual results to differ
materially from those stated in the forward-looking statements. Factors that
could cause actual results to differ materially include, among others: general
economic conditions, changes in laws and government regulations, the Company's
ability to complete the commercialization of its battery technology, the
Company's ability to successfully raise sufficient capital and the market
acceptance of the Company's batteries.
RISK FACTORS
THE SHARES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF
RISK. AN INVESTMENT IN THE COMPANY IS SUITABLE ONLY FOR PERSONS WHO CAN AFFORD
TO SUSTAIN THE LOSS OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS, PRIOR TO
MAKING AN INVESTMENT DECISION, SHOULD CAREFULLY CONSIDER, ALONG WITH OTHER
MATTERS REFERRED TO HEREIN, THE FOLLOWING RISK FACTORS. THERE IS NO ASSURANCE
THAT THE PROPOSED BUSINESS OF THE COMPANY DESCRIBED HEREIN WILL BE COMMERCIALLY
VIABLE. IN ADDITION, ACTUAL RESULTS OF THE DEVELOPMENT ACTIVITIES, TECHNOLOGICAL
DEVELOPMENTS, MARKET AND COMPETITIVE CONDITIONS, RESULTS OF OPERATIONS AND OTHER
FACTORS MAY REQUIRE SIGNIFICANT MODIFICATIONS OF ALL OR PART OF THE PROPOSED
BUSINESS. INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING:
Company is at an Early Stage of Development. The Company currently has
no commercial products available for sale. The Company has generated no revenues
and has no commercial operations to date. The Company has been unprofitable
since inception and expects to incur substantial additional operating losses
over the next few years. The Company does not expect to generate any sales in
commercial quantities in the near term. No assurance can be given that the
Company will be able to complete development, engineering or commercialization
successfully, or that the Company will be able to develop products for
commercial sale or that, if developed, they can be produced in commercial
quantities or at acceptable costs or be successfully marketed. The likelihood of
the Company's future success must be considered in light of the risks, expenses,
difficulties and delays frequently encountered in connection with the operation
and development of a relatively early stage business and development activities
generally.
Obstacles to Development of Commercial Products. There can be no
assurance that the Company will be able to achieve the technological
breakthroughs that will be necessary in order to ultimately achieve
commercialization and/or obtain financings or generate revenues in order to
sustain the Company's on-going research and development phase or to undertake
the design and construction of the Demonstration Manufacturing Facility
discussed herein and other manufacturing-related facilities.
The Company does not currently have sufficient cash to achieve all its
development and production objectives, including the 1998 installation of the
pilot manufacturing line and repayment of long term liabilities if not converted
to equity and $2 million for equipment purchases. In order to raise sufficient
capital for its future growth, and repayment of long term liabilities if not
converted to equity, the Company will be required to sell additional debt or
equity securities. In addition, there can be no assurance that the Company will
be able to meet the technological objectives and/or satisfy the capital
requirements that the Company believes are necessary to convert battery
technology into successful commercial products. There can be no assurance that
the Company's products will generate any revenues, will not encounter technical
problems when used, will be successfully marketed, will be produced at a
competitive cost, or will achieve customer acceptance or, if commercial products
are developed and revenues produced, that the Company will be profitable. The
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likelihood of the success of the Company must be weighed against the problems,
expenses, difficulties, complications and delays frequently encountered in
developing and marketing a new product.
Need for Additional Capital; Uncertainty of Additional Funding. While
the Company's operating plan seeks to minimize the Company's capital
requirements, commercialization of the Company's battery technology will require
substantial amounts of additional capital. Subject to the availability of
necessary capital, the Company expects that research and development and
production expenses will increase significantly as it continues to advance its
battery technology and develop products for commercial applications. The
Company's working capital and capital requirements will depend upon numerous
factors, including, without limitation, the progress of the Company's research
and development program, the levels and resources that the Company devotes to
the development of manufacturing and marketing capability, technological
advances, the status of competitors, the Company's continuing compliance with
the conditions contained in the September 22, 1997 Note Purchase Agreement
described herein, and the ability of the Company to establish collaborative
arrangements with other companies to provide research and development funding to
the Company and to manufacture and market the Company's products.
The Company believes that it has sufficient capital resources to meet
the Company's needs and satisfy the Company's obligations through approximately
June 1999 based on the Company's current operational strategies and subject to
the uncertainties discussed herein. The Company does not currently have
sufficient cash to achieve all its development and production objectives,
including the 1998 installation of the pilot manufacturing line and repayment of
long-term liabilities.
In order to raise sufficient capital for its future
growth and repayment of the September 22, 1997 Convertible Notes described
herein, the Company will be required to sell additional debt or equity
securities. Such new capital is planned to be sought from several sources,
including strategic partners. Although the Company has no commitments for new
capital as of the date hereof, the Company has signed a Letter of Intent with
one of the world's largest personal computer (PC) manufacturers to provide the
Company's proprietary lithium-ion polymer batteries for a specific notebook
computer application, beginning this year. Since May 1997, the PC manufacturer
has been testing lithium-ion polymer cell samples produced on the Company's
pilot line, and the Company has been working the past few months on the
customized multiple cell battery pack prototypes. Under the terms of the
definitive agreement being negotiated, the Company would continue development of
a customized prototype battery pack during the first half of 1998, leading to
initial commercial production later in the year. As part of the agreement, the
PC manufacturer would make a $1 million equity investment in the Company, which
would be in addition to its earlier $500,000 investment in the Company as part
of the September 22, 1997 Convertible Note transaction. With the signing of the
Letter of Intent, the PC manufacturer is in the process of releasing $100,000 of
the $1 million to the Company.
Issuance of additional capital may result in further dilution to the
Company's existing stockholders. There can be no assurances that additional
capital will be available to the Company on a timely basis or on acceptable
terms. If the Company is unable to raise sufficient capital, it will be forced
to curtail research and development expenditures which, in turn, will delay, and
could prevent, the completion of the commercialization process.
History of Losses. The Company has generated no revenues and has no
commercial operations to date. The Company has been unprofitable since
inception and expects to incur substantial additional operating losses over the
next several years. The Company does not expect to generate any sales in
commercial quantities in the near term. The Company's aggregate accumulated net
loss from the date of inception to September 30, 1997 is $23,257,000. The
Company spent approximately $4,627,000 on research and development activities
from the date of inception to September 30, 1997. The Company expects to incur
substantial additional losses because of the research and development expenses
necessary for the development of a commercially feasible rechargeable
lithium-polymer battery.
RISK OF NEW PRODUCTS AND TECHNOLOGIES; PRODUCT LIABILITY. The proposed
marketing of the Company's proposed products have inherent risks. Even if a
proposed product is successfully developed, manufactured and marketed, the
occurrence of warranty liability and/or product liability, or retraction of
market acceptance due to failure of a proposed product or failure of such
product to meet expectations could prevent the Company from ever becoming
profitable. Failure of a proposed product to operate as expected could lead to
potential liability suits. The Company does not currently have product liability
insurance. The Company intends to obtain appropriate product liability insurance
at the point in time when the Company places products in distributor or end-user
applications. Development of new technologies for manufacture is frequently
subject to unforeseen expenses, difficulties and complications and in some cases
such development cannot be accomplished.
TIME LAPSE FROM START OF OPERATIONS TO COMMERCIAL SALES. There will be
a period of time before any product resulting from the Company's development
efforts can be commercially marketed, sold and delivered. There can be no
assurances as to when, if ever, the proposed products can be commercially
marketed, sold and delivered. In addition, because of such development period
and other potential delays, other companies may develop and commence production
of similar products prior to the Company commencing commercial production.
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COMPANY'S MANUFACTURING EXPERIENCE IS LIMITED; DEPENDENCE ON SUPPLIERS.
The Company currently has no capacity for, or experience in, manufacturing
lithium-polymer rechargeable batteries in commercial quantities. In order for
the Company to be successful in the commercial market, its products must be
manufactured to meet high quality standards in commercial quantities at
competitive prices. The development of such manufacturing technology and
processes will require extensive lead times and the commitment of significant
financial and engineering resources of the Company and others. There can be no
assurance that the Company will successfully develop this technology or these
processes or obtain access to these resources. Moreover, there can be no
assurance that the Company will be able to successfully implement the quality
control measures necessary for commercial manufacturing.
There is no assurance fully committed sources of supply can be located
or that they will provide sufficient supplies at a reasonable cost for the
proposed products. Even if an acceptable supplier can be found, termination of
the services of such supplier could result in interruptions of the ability to
manufacture the products until an alternative source can be secured. The Company
will thus be dependent on third parties in order to timely manufacture the
proposed products in sufficient quantities, at the required specifications, and
at low enough prices to meet the Company's proposed sales prices for its
proposed products.
MARKET ACCEPTANCE. To be successful, the Company's batteries must gain
broad market acceptance. There can be no assurance that such market acceptance
will be achieved or sustained. In addition, the Company's lithium-polymer
batteries can best be optimized when configured to the requirements of each
application. To determine such requirements, the Company will be dependent upon
OEMS in the portable consumer electronics and telecommunications markets into
whose products the Company's batteries will be incorporated. No assurances can
be given that the Company will receive adequate assistance from OEMs to
successfully commercialize its products. Furthermore, no assurances can be given
that the perceived safety risks associated with lithium will not impede
acceptance of the Company's batteries by OEMs or end users.
COMPANY IS DEPENDENT ON PATENTS AND PROPRIETARY RIGHTS. The Company's
ability to compete effectively will depend on its ability to maintain the
proprietary nature of its technology and manufacturing processes through a
combination of patent and trade secret protection, non-disclosure agreements and
licensing agreements. The Company currently holds 22 U.S. patents and three
foreign patents covering key elements of its technology. In addition, the
Company has patent applications pending in the United States and in foreign
countries, including the European Community and Japan. The Company intends to
continue to file patent applications covering important features of its
technology. There can be no assurance, however, that patents will issue from any
of these pending applications or, if patents issue, that the claims allowed will
be sufficiently broad to protect the Company's technology, or that issued
patents will not be challenged or invalidated or that any of its issued patents
will afford protection against a competitor. Litigation, or participation in
administrative proceedings, may be necessary to protect the Company's patent
position. Such litigation can be costly and time consuming and there can be no
assurance that the Company would be successful if such litigation were
instituted. The invalidation of patents owned by or licensed to the Company
could have a material adverse effect on the Company. In addition, patent
applications filed in foreign countries are subject to laws, rules and
procedures that differ from those of the United States. Thus, there can be no
assurance that foreign patent applications related to patents issued in the
United States will be granted. Furthermore, even if these patent applications
are granted, some foreign countries provide significantly less patent protection
than the United States. In the absence of patent protection, and despite the
Company's reliance upon its proprietary confidential information, competitors of
the Company may be able to use innovations similar to those used by the Company
to design and manufacture products directly competitive with the Company's
lithium-polymer rechargeable batteries. In addition, no assurance can be given
that patents issued to the Company will not be infringed upon or designed around
by others or that others will not obtain patents that the Company will need to
license or design around. Moreover, to the extent any of the Company's products
are covered by third party patents, development and marketing of such products
by the Company could require a license under such patents.
Despite the Company's efforts to safeguard and maintain its proprietary
rights, there can be no assurance that the Company will be successful in doing
so. While the Company believes its patents to be unique from those of its
competitors, competition in lithium battery research and development is intense,
and there can be no assurance that the Company's competitors will not
independently develop or patent technologies that are substantially equivalent
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or superior to the Company's technology. Moreover, if the issues were to be
placed before a court, the Company cannot be certain that such a court would
determine that the Company was the first creator of inventions covered by its
issued patents or pending patent applications or that it was the first to file
patent applications for such inventions. If the Company is found to be
infringing third party patents, there can be no assurance that it will be able
to obtain the required licenses from the holders of such patents on acceptable
terms, if at all. Failure of the Company to obtain necessary licenses could
result in delays in the introduction of the Company's lithium-polymer
rechargeable battery and in costly attempts to design around such patents, or
could foreclose the development, manufacture or sale of the Company's products.
The Company could also incur substantial costs in defending itself in patent
infringement suits brought by others and in prosecuting patent infringement
suits against infringers.
The Company also relies on trade secrets and proprietary know-how that
it seeks to protect, in part, through non-disclosure and confidentiality
agreements with its employees, consultants, strategic partners and potential
strategic partners. There can be no assurance that these agreements will not be
breached, that the Company would have adequate remedies for any breach or that
the Company's trade secrets will not otherwise become known or be independently
developed by competitors.
GOVERNMENT REGULATIONS, SAFETY, ENVIRONMENTAL COMPLIANCE. The Company's
products incorporate lithium, which is known to cause explosions and fires if
not properly handled. Although the Company believes that its batteries do not
present safety risks, there can be no assurance that safety problems will not
develop in the future. The Company intends to incorporate safety policies in its
manufacturing processes designed to minimize safety risks, although there can be
no assurance that an accident in its facilities will not occur. Any accident,
whether occasioned by the use of a battery or the Company's manufacturing
operations, could result in significant production delays or claims for damages
resulting from injuries, which would adversely affect the Company's operations
and financial condition.
Prior to the commercial introduction of the Company's batteries into a
number of markets, the Company will seek to obtain approval of its products by
one or more of the organizations engaged in testing product safety, such as
Underwriters Laboratories. Such approvals could require significant time and
resources from the Company's technical staff and, if redesign were necessary,
result in a delay in the introduction of the Company's products.
Pursuant to the regulations of the United States Department of
Transportation ("DOT"), a permit is required to transport lithium across state
lines. The International Air Transport Association ("IATA") similarly regulates
the international shipment of lithium. Although the Company believes that DOT
has granted permits for, and IATA has allowed, the transport of rechargeable
lithium-based batteries to be shipped or used by the general public, there can
be no assurance that DOT or IATA will grant such a permit to the Company or that
changes in such regulations, or in their enforcement, will not impose costly
requirements or otherwise impede the transport of lithium. In addition, the DOT
and IATA approval processes will require significant time and resources from the
Company's technical staff and if redesign were necessary, could delay the
introduction of the Company's products.
Various regulatory agencies will have jurisdiction over the operation
of any manufacturing facilities established by the Company. Because of the risks
generally associated with the use of lithium, the Company expects rigorous
enforcement. No assurance can be given that the Company will not encounter any
difficulties in complying with applicable health and safety regulations.
Federal, state and local regulations impose various environmental
controls on the storage, use and disposal of certain chemicals and metals used
in the manufacture of lithium-polymer batteries. Although the Company believes
its activities will conform to current environmental regulations, there can be
no assurances that changes in such regulations will not impose costly equipment
or other requirements. Any failure by the Company to adequately control the
discharge of hazardous wastes could also subject it to future liabilities.
9
<PAGE> 12
COMPETITION; TECHNOLOGICAL OBSOLESCENCE. Competition in the battery
industry is intense with a large number of companies offering or seeking to
develop technology and products similar to those of the Company. The industry
consists of development stage companies and major domestic and international
companies, many of which have financial, technical, marketing, sales,
manufacturing, distribution and other resources significantly greater than those
of the Company. There can be no assurance that the Company will be successful in
competing with such entities. Furthermore, there can be no assurance that
competitors will not succeed in developing products or technologies that would
render the Company's technology and products obsolete or in obtaining market
acceptance of products more rapidly than the Company.
DEPENDENCE ON KEY PERSONNEL. The Company's success will to a large
degree be dependent on its ability to retain the services of its key executives
and research scientists, in particular, the services of Thomas R. Thomsen (the
Chief Executive Officer of the Company), David Cade (the President and Chief
Operating Officer), and Dr. George Ferment (the Executive Vice President of
Operations and Chief Technical Officer). Loss of the services of Mr. Thomsen,
Mr. Cade or Dr. Ferment or any key executives or research scientists could have
a material adverse effect upon the ability of the Company to commercialize the
rechargeable battery technology or to develop its business. The Company
currently has no "key-man" life insurance. The Company's success will, to a
large degree, be dependent on its ability to retain the services of its key
executives and research scientists. The ability of the Company to pursue
effectively its business strategy will also depend upon, among other factors,
the successful recruitment and retention of additional highly skilled and
experienced managerial, marketing, engineering and technical personnel. There
can be no assurance that the Company will be able to retain or recruit such
personnel.
RISKS RELATING TO GROWTH AND EXPANSION. Rapid growth of the Company's
business may significantly strain the Company's management, operational and
technical resources. If the Company is successful in obtaining rapid market
penetration of its products, the Company will be required to deliver large
volumes of quality products to its customers on a timely basis at a reasonable
cost to those customers. The Company has no experience in delivering large
volumes of its rechargeable batteries or in manufacturing commercial quantities
of rechargeable batteries. There can be no assurance, however, that the
Company's business will achieve rapid growth or that its efforts to expand its
manufacturing and quality control activities will be successful or that it will
be able to satisfy commercial scale production requirements on a timely and
cost-effective basis. The Company will also be required to continue to improve
its operational, management and financial systems and controls. Failure to
manage growth effectively could have an adverse effect on the business of the
Company.
PENDING LITIGATION. In August 1996, civil actions were commenced
against the Company by a former director of the Company, and by the Company's
former legal counsel. The former director's complaint seeks monetary damages
amounting to approximately $4,500,000 and specific performance of registration
rights of certain warrants of the Company that have not been registered and to
which he claims entitlement. The Company has declared such warrants and related
documents void. The complaint of the Company's former counsel alleges
non-payment of legal fees for services rendered. The Company has included the
unpaid legal fees in accounts payable, however, it believes these actions to be
without merit and intends to vigorously defend both actions. Accordingly, the
Company has filed its own lawsuit against the former counsel alleging fraud,
legal malpractice and conflict of interest flowing from the fraudulent issuance
of the aforementioned warrants. In addition, the complaint alleges violations of
federal securities laws, the Racketeering Influenced and Corrupt Organization
Act ("RICO") and fiduciary duties owed by counsel to the Company. The complaint
also includes similar allegations against the former director, flowing from the
fraudulent issuance of warrants to him.
LACK OF DIVIDENDS. The Company has never paid a cash dividend on any
class of its capital stock and does not anticipate paying any dividends in the
foreseeable future. It is anticipated that future earnings, if any, will be
retained to finance the development and expansion of the Company's business.
10
<PAGE> 13
TRADING AND VOLATILITY OF COMMON STOCK. The outstanding shares of the
Common Stock of the Company are quoted on the OTC Bulletin Board, and on
December 15, 1997, the closing bid price was $0.98 per share and the closing ask
price was $0.99 per share. There can be no assurance that the existing market
for the Company's Common Stock will be maintained or that the holders of Common
Stock will be able to sell the Common Stock should they so desire.
The market price of the Common Stock has fluctuated significantly since
January 1, 1994 and may continue to be highly volatile. Factors such as delays
by the Company in achieving development goals, inability of the Company to
commercialize or manufacture its products, fluctuation in the Company's
operating results, changes in earnings estimates by analysts, announcements of
technological innovations or new products by the Company or its competitors,
perceived changes in the markets for various OEM applications incorporating the
Company's products, the announcement or termination of relationships with
strategic alliance partners or OEMs, and general market conditions may cause
significant fluctuations in the market price of the Common Stock. The market
prices of the stock of many high technology companies have fluctuated
substantially, often unrelated to the operating or research and development
performance of the specific companies. Such market fluctuations could adversely
affect the market price for the Company's Common Stock.
CONTROL BY EXISTING SHAREHOLDERS. The existing officers and directors
of the Company as of December 15, 1997 controlled approximately 23.2% of the
outstanding Common Stock (including shares that may be acquired upon the
exercise of options that are exercisable or will become exercisable through
March 28, 1998). As a result, they will be able to exert significant influence
on the Company. In addition, one shareholder beneficially owns approximately
9.9% of the outstanding Common Stock (including shares that may be obtained upon
the exercise of Warrants that are exercisable or could become exercisable within
60 days) and another shareholder beneficially owns approximately 3.8% of the
outstanding Common Stock (excluding approximately 540,000 shares covered by a
voting proxy granted by such shareholder to two of the Company's officers). As a
result, such shareholders may be able to exert significant influence on the
Company.
Potential Dilution, Change-in-Control and Significant Leverage of the
Company in Connection with Outstanding Convertible Notes. In October 1996, the
Company sold $1.75 million principal amount of Convertible Notes, $1,505,000 of
which were outstanding as of September 30, 1997. The Company did not repay the
$1.75 million principal of the Convertible Notes on the original March 24, 1997
maturity date and, accordingly, pursuant to the terms of the Convertible Note
Agreements, the Company and the Convertible Note Purchasers placed in escrow an
additional 6,201,550 shares of the Company's Common Stock, 6,043,550 of which
were held in escrow as of September 30, 1997 (the "Escrowed Shares"). The
Escrowed Shares are not considered to be issued and outstanding securities
pending actual payment for such shares. On August 18, 1997, the Company and the
Convertible Note Purchasers agreed to a change in the certain terms of the
Convertible Notes including the following; (i) the Convertible Note Purchasers
will be permitted to sell certain quantities of the Escrowed Shares at then
current market prices, the proceeds of which will be deemed to reduce the
outstanding principal amount owed on the Convertible Notes; (ii) once the
principal amount of the Convertible Notes is repaid either through sales of the
Escrowed Shares or by the Company's repayment of the Convertible Notes, 12.5%
of any remaining Escrowed Shares will be delivered to the Convertible Note
Purchasers, and the remaining 87.5% will be retired by the Company (subject to
adjustment depending on the occurrence of certain events); (iii) the
Convertible Notes may be prepaid by the Company, provided that the Company
issue 250,000 of the Escrowed Shares to the Convertible Note Purchasers; and
(iv) certain weekly issuances of shares of the Company's Common Stock. The
amendments to the Convertible Notes also provide that if the Convertible Note
Purchasers' resale exemption from registration is not available due to a change
in the law, then the Company must file a registration statement with the
Securities and Exchange Commission covering shares of the Company's Common
Stock held by the Convertible Note Purchasers. As of December 15, 1997, the
$1,505,000 principal amount of the Convertible Notes, which was outstanding at
September 30, 1997, has been repaid in full through the sale of 2,005,158
Escrowed Shares. An additional 505,510 Escrowed Shares were issued to the
Convertible Noteholders pursuant to the 12.5% sharing arrangement and to pay
accrued interest. The remaining 3,532,882 Escrowed Shares will be returned to
the Company.
11
<PAGE> 14
On September 22, 1997, the Company entered into a Senior Secured
Convertible Note Purchase Agreement (the "Note Purchase Agreement") for the sale
of $5.5 million of the Company's Senior Secured Convertible Notes (the "Senior
Notes"), which proceeds will be disbursed to the Company over a ten month
period. Interest accrues at 8.5% and is payable, at the Company's election in
cash or the Company's Common Stock. The principal of the Notes is payable on or
before July 1, 2002. The Senior Notes are convertible into the Company's Common
Stock at a conversion price of $.28 per share. The holders of the Senior Notes
have two demand registration rights and "piggyback" registration rights, subject
to conditions set forth in the Note Purchase Agreement.
All assets of the Company are pledged as security for the Senior Notes.
The Senior Notes are secured by a first priority security interest in favor of
the Senior Noteholder as to substantially all of the Company's assets other than
the Company's intellectual property. The Company's obligations under the Senior
Notes are guaranteed by the Company's subsidiary, Lithion Corporation, and the
Company pledged its interest in the shares of the Lithion Corporation as
security for repayment of the Senior Notes.
The number of shares which may be issued to the holders of the Senior
Notes could be approximately 19.64 million shares of Common Stock, assuming
conversion in full of the Senior Notes without giving effect to any antidilution
provisions. As of December 15, 1997, the Company had 21,016,361 shares of Common
Stock outstanding. Accordingly, the issuance of such a significant number of
additional shares to the holders of the Senior Notes would result in a change in
control of the Company. In addition, as a result of such issuance the
stockholders of the Company may incur a substantial dilution of their equity
interest.
As a result of the issuance of the Senior Notes, the Company has, and
will continue to have, significant debt service obligations. In order to repay
the Senior Notes, the Company will be required to sell additional debt or equity
securities. The degree to which the Company is leveraged could have important
consequences to shareholders of the Company, including the following: (i) the
Company's ability to obtain additional financing in the future for repayment of
indebtedness, working capital, capital expenditures, general corporate purposes
or other purposes may be impaired; (ii) a substantial portion of the Company's
cash flow from operations must be dedicated to the payment of principal and
interest on its indebtedness, thereby reducing the funds available to the
Company for its operations; and (iii) if the Company should default the Senior
Noteholder could foreclose on substantially all of the Company's assets other
than the Company's intellectual property.
In order to raise sufficient capital for its future growth and
repayment of the September 22, 1997 Senior Notes described herein, the Company
will be required to sell additional debt or equity securities. There can be no
assurance that the Company's will be able to raise such capital or will be able
to meet all of its obligations under its indebtedness.
Potential Dilution from Shares Issuable Upon Exercise of Outstanding
Options and Warrants. At September 30, 1997, there were outstanding stock
options to purchase an aggregate of 1,726,000 shares of common stock at
exercise prices ranging from $0.501 to $2.56 per share. Of this amount, options
to purchase 1,378,000 shares were exercisable as of such date. Additionally, at
September 30, 1997, there were outstanding warrants to purchase 3,940,000
shares of common stock at exercise prices ranging from $0.40 to $3.60 per
share, including approximately 987,000 warrants issuable pursuant to
anti-dilution provisions of existing warrant agreements primarily from the sale
of the Senior Notes. Of the warrants outstanding, 3,940,000 are immediately
exercisable. To the extent that the outstanding stock options and warrants are
exercised, substantial additional dilution to the interests of the Company's
stockholders will occur. Moreover, the terms upon which the Company will be
able to obtain additional equity capital may be adversely affected since the
holders of such outstanding securities can be expected to exercise them at a
time when the Company would, in all likelihood, be able to obtain any needed
capital on terms more favorable to the Company than those provided in the
outstanding options or warrants. As noted above, the Company plans to proceed
in raising additional capital through private placement of its equity
securities and possible corporate alliances, either or both of which are likely
to result in further dilution to the Company's existing stockholders.
12
<PAGE> 15
SHARES ELIGIBLE FOR FUTURE SALES. Of the 17,759,000 shares of Common
Stock outstanding as of September 30, 1997, approximately 7.2 million shares are
"restricted securities" as defined by Rule 144, a substantial number of which
the Company believes are currently eligible for resale under Rule 144. The
restricted securities may be resold in the future only pursuant to registration
under the Securities Act, an exemption from the registration provisions of the
Securities Act, or pursuant to Rule 144. The sale of restricted shares under
Rule 144 or otherwise, may have a depressive effect on the market price of the
Common Stock, and such sales, if substantial, might also adversely affect the
Company's ability to raise additional capital.
POTENTIAL ANTI-TAKEOVER EFFECT OF AUTHORIZED PREFERRED STOCK. The
Company is authorized to issue 100,000 shares of $0.01 par value preferred stock
with the rights, preferences, privileges and restrictions thereof to be
determined by the Board of Directors of the Company. Preferred Stock can thus be
issued without the vote of the holders of Common Stock. Rights could be granted
to the holders of preferred stock which could reduce the attractiveness of the
Company as a potential takeover target, make the removal of management more
difficult, or adversely impact the rights of holders of Common Stock. No
preferred stock is currently outstanding, and the Company has no present plans
for the issuance thereof of any shares of preferred stock.
USE OF PROCEEDS
The Company will not receive any of the proceeds from the sale of
Shares being sold by the Selling Stockholders, but will receive funds upon the
exercise of stock options held by the Selling Stockholders granted under the
Plans.
13
<PAGE> 16
SELLING STOCKHOLDERS
The following table lists the Selling Stockholders with respect to the
Shares being offered hereunder which have been acquired by the Selling
Stockholders or may hereafter be acquired by them upon the exercise of options
granted under the 1994 Plan or the Director's Plan. The table sets forth
information with respect to the number of shares of Common Stock beneficially
owned by each as of December 15, 1997 plus shares underlying options which will
vest through March 22, 1998; the number of shares to be offered pursuant to this
Prospectus; and the percentage of outstanding shares of Common Stock to be
beneficially owned by each after the sale of the Shares hereby.
<TABLE>
<CAPTION>
Number of Shares Number of Shares
of Common Stock Number of Beneficially Owned Upon
Beneficially Shares Offered Completion of the Offering
Owned Prior to pursuant to this ---------------------------
Name Offering Prospectus Number Percent
---- -------- ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Thomas R. Thomsen(1)(2) 1,015,850(5) 410,000 605,850 2.9%
David J. Cade(1)(2) 345,882 345,882 0 0
George R. Ferment(1)(2) 345,244 345,244 0 0
Stephen F. Hope(1) 1,631,829 5,000 1,626,829 7.7%
Ralph Ketchum(1) 472,596 15,000 457,596 2.2%
Gerald Labush(1) 276,653 11,667 264,986 1.3%
John McKey, Jr.(1) 570,868 11,667 559,201 2.7%
William D. Walker(2) 622,859(6) 105,085 517,774 2.5%
Kirby W. Beard(3) 89,074 6,113 82,961 *
Jay M. Forlino(3) 16,656 2,155 14,501 *
Andrew Manning(3) 98,189 11,062 87,127 *
James A. Elsner(4) 193,323 193,323 0 0
</TABLE>
(1) Director of the Company.
(2) Executive Officer of the Company.
(3) Non-executive employee of the Company.
(4) Former employee of the Company.
(5) Includes 359,227 shares of Common Stock which are covered by a voting
proxy granted by a shareholder to Mr. Thomsen.
(6) Includes 183,227 shares of Common Stock which are covered by a voting
proxy granted by a shareholder to Mr. Walker.
* Less than 1%
14
<PAGE> 17
PLAN OF DISTRIBUTION
The Shares offered hereby may be sold by the Selling Stockholders or by
pledgees, donees, transferees or other successors in interest. Such sales may be
made in the over-the-counter market, in privately negotiated transactions, or
otherwise, at prices and at terms then prevailing, at prices related to the
then-current market price, or at negotiated prices. The Shares may be sold by
one or more of the following methods, without limitation: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the shares as agent
but may position and resell a portion of the block as principal to facilitate
the transaction; (b) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus including
resale to another broker or dealer; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer. In
effecting sales, brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. Such brokers or dealers may
receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act, in connection with such sales. Any gain realized
by such a broker or dealer on the sale of shares which it purchases as a
principal may be deemed to be compensation to the broker or dealer in addition
to any commission paid to the broker by a Selling Stockholder. In addition, any
securities covered by this Prospectus that qualify for sale pursuant to Rule 144
might be sold under Rule 144 rather than pursuant to this Prospectus.
The Selling Stockholders have been advised that during the time each is
engaged in distribution of the shares covered by this Prospectus, each must
comply with, among other things, Rule 10b-6 under the Exchange Act, and pursuant
thereto: (i) shall not engage in any stabilization activity in connection with
the Company's securities; (ii) shall furnish each broker through which
securities covered by this Prospectus may be offered the number of copies of
this Prospectus which are required by each broker; and (iii) shall not bid for
or purchase any securities of the Company or attempt to induce any person to
purchase any of the Company's securities other than as permitted under the
Exchange Act.
Upon the Company's being notified by a Selling Stockholder that any
material arrangement has been entered into with a broker or dealer for the sale
of Shares through a secondary distribution, or a purchase by a broker or dealer,
a supplemented Prospectus will be filed, if required, pursuant to Rule 424(c)
under the Securities Act, disclosing (a) the name of each such broker-dealer(s),
(b) the number of shares involved, (c) the price at which such shares were sold,
(d) the commissions paid or discounts or concessions allowed to such
broker-dealer(s), where applicable, (e) that such broker-dealer(s) did not
conduct any investigation to verify the information set out or incorporated by
reference in this Prospectus, and (f) other facts material to the transaction.
In order to comply with certain state securities laws, if applicable,
the Shares will not be sold in Washington, D.C., unless such securities have
been registered or qualified for sale in such state or an exemption from
registration for qualification is available and complied with, nor will Shares
be sold in New York unless such sales are effected through the use of a
broker-dealer registered in such state.
No person is authorized to give any information or to make any
representation in connection with the offering and sale of the Shares offered
hereby, other than those contained in this Prospectus, and any such information
or representations not contained in this Prospectus must not be relied upon as
having been authorized. This Prospectus does not constitute an offer to sell or
solicitation of an offer to buy any securities other than the registered
securities to which it relates. This Prospectus does not constitute an offer to
sell or a solicitation of an offer to buy such securities under any
circumstances where such an offer or solicitation is unlawful. Neither the
delivery of this Prospectus nor any sales made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the date hereof or that the information contained
herein is correct as of any time subsequent to its date.
15
<PAGE> 18
LEGAL MATTERS
The legality of the securities offered hereby has been passed upon for
the Company by Gallagher, Briody & Butler, Princeton, New Jersey.
EXPERTS
The consolidated financial statements of the Company at December 31,
1996 and December 31, 1995 and for the years then ended appearing in the
Company's Form 10-KSB have been audited by Wiss & Company, LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such Company consolidated financial statements are
incorporated herein by reference in reliance upon such reports given upon the
authority of such firm as experts in accounting and auditing.
16
<PAGE> 19
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, as filed by the Company with the
Securities and Exchange Commission, are incorporated by reference in this
Registration Statement and made a part hereof:
(i) the Company's Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1996;
(ii) the Company's Quarterly Reports on Form 10-QSB
for the quarters ended March 31, 1997, June 30, 1997 and
September 30, 1997;
(iii) the Company's Current Reports on Form 8-K dated
January 14, 1997, February 4, 1997, February 25, 1997, March
18, 1997, April 8, 1997, August 21, 1997 and September 22,
1997, December 11, 1997 and December 23, 1997; and
(iv) the description of the Common Stock which is
contained in the Company's Form 8-A Registration Statement
filed with the Commission on January 24, 1990, including any
amendments or reports filed for the purpose of updating such
description.
All reports and other documents subsequently filed by the
Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934, prior to the filing of a post-effective amendment that
indicates that all securities offered hereby have been sold or that deregisters
all securities then remaining unsold, shall be deemed to be incorporated by
reference herein and to be part hereof from the date of filing of such
documents. Any statement contained in any document, all or a portion of which is
incorporated by reference herein, shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained or incorporated by reference herein 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 Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
As permitted by Section 145 of the Delaware General
Corporation Law (the "DGCL"), Article V of the Company's By-laws provides for
the indemnification of an "authorized representative" of the Company (a) against
expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person, by reason of the fact that such person was
or is an authorized representative of the Company, in connection with a
threatened, pending or completed third party proceeding, whether civil or
criminal, administrative or investigative, if such individual acted in good
faith and in a manner such person reasonably believed to be in, or not opposed
to, the best interests of the Company, and, if the action was a criminal
proceeding, if such person had no reasonable cause to believe that such person's
conduct was unlawful; and (b) against expenses actually and reasonably incurred
17
<PAGE> 20
by such person in connection with the defense or settlement of a threatened,
pending or completed corporate proceeding, by reason of the fact such person was
or is an authorized representative of the Company, if such person acted under
the standards set forth in section (a) above and if such person was not found
liable to the Company (or if so found liable, if a proper court found such
person to be fairly and reasonably entitled to indemnification). The Company's
By-laws further provide for mandatory indemnification of authorized
representatives of the Company who have been successful in defense of any third
party or corporate proceeding or in defense of any claim, issue or matter
therein, against expenses actually and reasonably incurred in connection with
such defense. An "authorized representative" of the Company includes a director,
officer, employee or agent of the Company, or a person serving at the request of
the Company as a director, officer of another corporation, partnership, joint
venture, trust or other enterprise.
In addition, Article Ninth of the Company's Certificate of
Incorporation provides that, to the full extent that the DGCL permits the
limitation or elimination of the liability of directors or officers of a
corporation, directors of the Company shall not be personally liable to the
Company or its stockholders for monetary damages. As a result of this provision,
the Company and its stockholders may be unable to obtain monetary damages from a
director for breach of such director's duty of care. Although stockholders may
continue to seek injunctive or other equitable relief for an alleged breach of
fiduciary duty by a director, stockholders may not have any effective remedy
against the challenged conduct if equitable remedies are unavailable.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the foregoing provisions, or otherwise, the
Company 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 Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted against
the Company by such director, officer or controlling person in connection with
the securities being registered, the Company will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
Item 7. Exemption from Registration Claimed.
The Shares of Common Stock which have been issued to employees
of the Company and options which have been granted to certain officers and
directors of the Company, were issued without registration under the Securities
Act of 1933 (the "Securities Act") in accordance with the exemption from
registration contained in Section 4(2) of the Securities Act.
Item 8. Exhibits.
The following is a list of exhibits filed as part of this
registration statement.
<TABLE>
<CAPTION>
Exhibit Number Exhibit
- -------------- -------
<S> <C>
4.1 Certificate of Incorporation of the Company
(incorporated herein by reference to Appendix B
contained in the Company's Information Statement
pursuant to Section 14(c) of the Securities Exchange
Act of 1934, dated January 19, 1996)
5.1 Opinion of Gallagher, Briody & Butler (filed as
Exhibit 5.1 to the Company's Registration Statement
on Form S-8 (Registration No. 333- 13775) filed
October 9, 1996).
</TABLE>
18
<PAGE> 21
<TABLE>
<S> <C>
23.1 Consent of Wiss & Company, LLP
23.2 Consent of Gallagher, Briody & Butler (included as
part of Exhibit 5.1)
</TABLE>
Item 9. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers
or sales are being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts
or events arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the
registration statement; 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;
Provided, however, that subparagraphs (a)(1)(i) and
(a)(1)(ii) of this section 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 Company pursuant to Section 13 or Section 15(d) of
the Securities Exchange Act of 1934 that are incorporated by referenced 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 that remain
unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for the
purpose of determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 (and, where applicable, each filing of a
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in this registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to transmit
or cause to be transmitted to all participants in the 1994 Stock Incentive Plan
and/or the Directors Stock Plan who do not otherwise receive such material as
shareholders of the Company, at the time such material is sent to shareholders,
copies of all reports, proxy statements and other communications distributed to
its shareholders generally.
19
<PAGE> 22
(d) Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
20
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Company
has duly caused this Amendment to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the Town of Plymouth
Meeting, Commonwealth of Pennsylvania, on this 15th day of January, 1998.
LITHIUM TECHNOLOGY CORPORATION
By: Thomas R. Thomsen
Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by or on behalf of
the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- ----
<S> <C> <C>
/s/ Thomas R. Thomsen Chairman, Chief Executive Officer and January 15, 1998
- ---------------------
Thomas R. Thomsen Director (Principal and Executive Officer)
/s/ David J. Cade Director January 15, 1998
- -----------------
David J. Cade
/s/ William H. Chu Director January 15, 1998
- ------------------
William H. Chu
/s/ George R. Ferment Director January 15, 1998
- ---------------------
George R. Ferment
/s/ Stephen F. Hope Director January 15, 1998
- -------------------
Stephen F. Hope
/s/ Ralph D. Ketchum Director January 15, 1998
- --------------------
Ralph D. Ketchum
/s/ Gerald M. Labush Director January 15, 1998
- --------------------
Gerald M. Labush
/s/ John D. McKey, Jr. Director January 15, 1998
- ----------------------
John D. McKey, Jr.
/s/ William D. Walker Treasurer and Chief Financial Officer January 15, 1998
- ---------------------
William D. Walker (Principal Financial Officer)
</TABLE>
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit
- ------ -------
<S> <C>
4.1 - Certificate of Incorporation of the
Company (incorporated herein by
reference to Appendix B contained
in the Company's Information
Statement pursuant to Section
14(c) of the Securities Exchange
Act of 1934, dated January 19,
1996)
5.1 - Opinion of Gallagher, Briody &
Butler (filed as Exhibit 5.1 to the
Company's Registration Statement
on Form S-8 (Registration No.
333-13775) filed October 9,
1996).
23.1 - Consent of Wiss & Company,
L.L.P.
23.2 - Consent of Gallagher, Briody &
Butler (included as part of Exhibit
5.1)
</TABLE>
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-8 of our report dated January 22, 1997 relating to the
Consolidated Financial Statements of Lithium Technology Corporation and
Subsidiary included in its Annual Report on Form 10-KSB for the year ended
December 31, 1996.
We also consent to the reference to us under the heading "Expert" in such
Registration Statement.
WISS & COMPANY, LLP
Woodbridge, New Jersey
January 16, 1998
