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As filed with the Securities and Exchange Commission on
September 20, 1995
Registration No. 33-72500
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST - EFFECTIVE
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AMENDMENT NO. 2
ON FORM S-3
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to
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ADVANCED MATERIALS GROUP, INC.
(Name of Small Business Issuer in its Charter)
NEVADA
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(State of Incorporation)
33-0215295
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(IRS Employer I.D. No.)
20211 South Susana Road, Rancho Dominguez, California 90221
(310) 537-5444
(Address and Telephone Number of Principal Executive Office and Principal
Place of Business)
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Steve F. Scott Copy to:
President and Chief Executive Officer Leonard J. McGill, Esq.
Advanced Materials Group, Inc. Jones, Day, Reavis & Pogue
20211 South Susana Road 2603 Main Street, Suite 900
Rancho Dominguez, California 90221 Irvine, California 92714
(310) 537-5444 (714) 553-7530
(Name, Address and Telephone
Number of Agent for Service)
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
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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, check the following box:/X/
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registration
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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PROSPECTUS
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ADVANCED MATERIALS GROUP, INC.
8,028,054 Shares
of
COMMON STOCK
($.001 par value)
The shares of Common Stock of Advanced Materials Group, Inc. ("AMG" or the
"Company") offered hereby (the "Shares") will be sold from time to time by the
stockholders described herein (the "Selling Stockholders") in transactions in
the national over-the-counter market or otherwise at prices prevailing at the
time of sale. The Company will not receive any of the proceeds from the sale of
the Shares. The expenses incurred in registering the Shares are being paid by
the Company.
The Shares offered hereby have been or upon the exercise of outstanding
options and warrants will be acquired by the Selling Stockholders from the
Company in private transactions and are or will be "restricted securities" under
the Securities Act of 1933, as amended (the "Act"), prior to their sale
hereunder. This Prospectus has been prepared for the purpose of registering the
Shares under the Act to allow for future sales by the Selling Stockholders to
the public without restriction. To the knowledge of the Company, the Selling
Stockholders have made no arrangements with any brokerage firm for the sale of
the Shares. The Selling Stockholders may be deemed to be "underwriters" within
the meaning of the Act. Any commissions received by a broker or dealer in
connection with resales of the Shares may be deemed to be underwriting
commissions or discounts under the Act. See "Plan of Distribution."
Brokers or dealers effecting transactions in the Shares should confirm the
registration of the Shares under the securities laws of the states in which such
transactions occur or the existence of an exemption from such registration, or
should cause such registration to occur in connection with any offer or sale of
the Shares.
The Common Stock of the Company is traded in the over-the-counter market
and quoted on the National Association of Securities Dealers Automated Quotation
System ("NASDAQ"), under the NASDAQ symbol "ADMG". The bid and asked prices for
the Common Stock on September 15, 1995, as reported on NASDAQ were $.5312 and
$.6562 per share, respectively. To date, the volume of trading in the Common
Stock has been limited and, therefore, the market prices for the Common Stock
may not accurately reflect the value of the Company.
THE COMMON STOCK OFFERED HEREBY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS."
THE NUMBER OF SHARES REGISTERED FOR SALE HEREUNDER, INCLUDING SHARES
ISSUABLE UPON THE EXERCISE OF OPTIONS AND WARRANTS HELD BY THE SELLING
STOCKHOLDERS AS OF SEPTEMBER 15, 1995, REPRESENTS APPROXIMATELY 72.8% OF THE
TOTAL NUMBER OF SHARES OUTSTANDING OR ISSUABLE UPON THE EXERCISE OF ALL OPTIONS
AND WARRANTS OR UPON CONVERSION OF DEBENTURES HELD BY THE SELLING STOCKHOLDERS
AS OF SEPTEMBER 15, 1995, AND INCLUDES ALL OF THE SHARES OWNED OR ISSUABLE UPON
THE EXERCISE OF OPTIONS HELD BY THE OFFICERS AND DIRECTORS OF THE COMPANY AS OF
SEPTEMBER 15, 1995. THE NUMBER OF SHARES OWNED OR ISSUABLE UPON THE EXERCISE OF
OPTIONS HELD BY THE OFFICERS AND DIRECTORS OF THE COMPANY AND REGISTERED FOR
SALE HEREUNDER REPRESENTS APPROXIMATELY 4% OF THE TOTAL NUMBER OF SHARES
OUTSTANDING OR ISSUABLE UPON EXERCISE OF OPTIONS AND WARRANTS OR UPON CONVERSION
OF DEBENTURES AS OF SEPTEMBER 15, 1995. SEE "RISK FACTORS" AND "SELLING
STOCKHOLDERS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is September __, 1995.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). 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 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices at Seven
World Trade Center, 13th Floor, New York, New York 10048 and Northwest Atrium
Building, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such material can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The documents listed below have been filed by the Company with the
Securities and Exchange Commission and are incorporated herein by reference:
(a) The Company's Annual Report on Form 10-KSB, as amended, for the fiscal
year ended November 30, 1994;
(b) The Company's Quarterly Reports on Form 10-QSB for the quarters ended
February 28,1995 and May 31, 1995; and
(c) The description of the Company's Common Stock contained in the
Registration Statement filed pursuant to Section 12 of the Exchange Act,
together with all amendments or reports filed for the purpose of updating such
description.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
termination of the Offering of Common Stock offered hereby shall be deemed to be
incorporated by reference into this Prospectus and to be part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is incorporated or deemed to be incorporated herein modifies or supersedes
such statement. Any such statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon the
written or oral request of any such person, a copy of any or all of the
documents referred to above which have been incorporated into this Prospectus by
reference (other than exhibits to such documents). Requests for such copies
should be directed to Steve F. Scott, President, Chief Executive Officer and
Secretary, Advanced Materials Group, Inc., 20211 South Susana Road, Rancho
Dominguez, California 90221 (Telephone (310) 537-5444).
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED SHARES
TO WHICH IT RELATES OR AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY
SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE 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.
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THE COMPANY
The Company, through its subsidiaries and division, develops, manufactures
and markets a wide variety of industrial products. The Company's principal
subsidiary, Advanced Materials, Inc. (formerly known as Wilshire Advanced
Materials, Inc.) ("AM"), is a forty year old business that converts specialty
materials including foams, foils, films and adhesive composites into components
and finished products such as printer inking felts, disk drive gaskets,
automobile air conditioning insulators, water and dust seals, surgical pads and
applicators for the medical, electronics, automotive and consumer products
markets. The Company's Condor Utility Products, Inc. ("Condor") subsidiary
produces specialized systems for mixing and dispensing multi-component chemicals
which, when combined, form sealants which are sold to end-users, chemical
manufacturers and repackagers for use in the telecommunications and power
utility industries. The Company's Performance Polymer Division plans to
manufacture and market a hydrophilic polymer developed by Innovative
Technologies, Ltd. ("IT"). In 1993 the Company purchased a 25.1% equity
interest (since reduced by dilution to approximately 12.3% and converted into a
like interest in Innovative Technologies Group plc ("IT Group")) in IT and
obtained an exclusive worldwide license to manufacture and sell the polymer as a
waterproof/breathable fabric coating for products such as rain gear, sports
apparel, tents and medical and clean room garments.
The Company, which was formerly known as Far West Ventures, Inc., was
incorporated in Nevada in October, 1986. After acquiring an equity interest in
a computer training company and subsequently distributing such interest to its
stockholders as a dividend in January 1990, the Company became inactive. The
Company remained inactive until April, 1993, when it acquired AM. AM had
previously been formed as a California corporation in August, 1992 for the
purpose of acquiring the assets of the industrial foam products division of
Wilshire Technologies, Inc. ("WTI"). The assets acquired by AM constituted a
portion of the business and assets previously acquired by WTI from Wilshire Foam
Products, Inc. in November, 1990.
The Company's principal executive offices are located at 20211 S. Susana
Road, Rancho Dominguez, California 90221, and its telephone number is
(310) 537-5444.
RISK FACTORS
THE SECURITIES THAT ARE OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK INCLUDING,
BUT NOT NECESSARILY LIMITED TO, THE RISK FACTORS SET FORTH BELOW. PROSPECTIVE
PURCHASERS SHOULD CAREFULLY CONSIDER THE RISK FACTORS INHERENT IN AND AFFECTING
THE BUSINESS OF THE COMPANY AND THIS OFFERING IN MAKING AN INVESTMENT DECISION.
LOSSES FROM OPERATIONS; ACCUMULATED DEFICIT
The Company incurred net losses of $4,171,000, $2,169,000 and $2,756,000 in
fiscal 1992, fiscal 1993 and fiscal 1994, respectively. These losses have been
funded by borrowings and by the sale of the Company's securities in private
placements. In addition, the Company had an accumulated deficit at November 30,
1994, of $4,925,000, up from $2,169,000 as at November 30, 1993, the increase
attributable to the net loss of $2,756,000 for the fiscal year ended
November 30, 1994. There is no assurance that the Company's operations will be
profitable in the future. If additional losses are sustained, or profits are
not generated in an amount sufficient to diminish the accumulated deficit, the
accumulated deficit will continue to negatively affect the value of
stockholders' equity and, accordingly, the value of each share of Common Stock.
In addition, losses from operations and the accumulated deficit will continue to
impair the Company's ability to raise additional financing, including debt
financing.
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ADDITIONAL CAPITAL REQUIREMENTS
The Company will require additional capital to satisfy its long-term
obligations and to support future growth. Any additional equity financing may
be dilative to stockholders, and debt financing may impose substantial
restrictions on the Company's ability to operate and raise additional funds.
There can be no assurance that additional capital will be available or that, if
available, such capital will be on satisfactory terms.
RISKS OF BORROWING; RISK OF INABILITY TO SERVICE DEBT IN EVENT OF FLUCTUATIONS
IN INTEREST RATES OR INSUFFICIENT CASH FLOW
AM has established revolving lines of credit with a commercial lender of up
to $2.0 million, secured with either a first or second priority by substantially
all of the assets of AM. The current twelve month term of the agreement expires
May 1, 1996 with provisions for additional twelve month terms as agreed between
AM and the lender. The line of credit provides for interest at the prime rate
plus 4% plus a monthly administrative fee of .25%. Borrowings under the line of
credit are limited to a percentage of eligible receivables and inventory with a
limit of approximately $1,407,000 as of July 31, 1995. As of July 31, 1995, the
amount outstanding under the line of credit was $1,141,000.
The Company established a line of credit of up to $700,000 with Dominion
Capital, Inc. ("Dominion"), an affiliate of the Company. The line of credit
provides for the payment of interest only on a quarterly basis at the rate of 1%
in excess of the prime rate. The line of credit is secured by 800,000 shares of
stock in IT. The current term of the line of credit expires January 13, 1996.
In relation to the line of credit, the Company issued a warrant to Dominion
exercisable for 35,000 shares at an exercise price of $.90 expiring on September
30, 1999. As of July 31, 1995 the amount owed under the credit line was
$450,000. As of June 30, 1995, Dominion contributed the line of credit and the
warrants to a limited liability company in exchange for a membership interest
in that company. See "Risk Factors: Related Party Transactions."
The Company also owes $1,750,000 to Wilshire Technologies, Inc., an
affiliate (see "Risk Factors: Related Party Transactions," below), and $535,000
to the holders of 7-1/2% convertible debentures issued in the first half of
1994. Upward fluctuations in interest rates and continuing losses from
operations, among other factors, could impair AM's and the Company's ability to
repay borrowings and meet interest charges. If the Company is unable to
generate sufficient cash flow from operations in the future, it may be unable to
pay principal or interest on its borrowings when due and may be required to
refinance all or a portion of its existing debt or to obtain additional
financing. There can be no assurance that any such refinancing would be
possible or that any additional financing could be obtained on terms that are
favorable or acceptable to the Company. The indebtedness of the Company may
also limit the Company's ability to respond to changing business and economic
conditions, insofar as it may affect the financial condition and financing
requirements of the Company.
SUBSTANTIAL NUMBER OF SHARES REGISTERED FOR SALE; CHANGE IN CONTROL
The number of shares registered for sale hereunder, including shares
issuable upon the exercise of options and warrants held by the Selling
Stockholders as of September 15, 1995, represents approximately 72.8% of the
total number of shares outstanding or issuable upon the exercise of all options
and warrants held by the Selling Stockholders as of September 15, 1995. Sales
of substantial amounts of the Company's Common Stock registered for sale
hereunder, or even the potential for such sales, could have a negative effect on
the market price of shares of the Company's Common Stock and could impair the
Company's ability to raise capital through the sale of its own equity
securities.
The sale of all or substantially all of the shares registered for sale
hereunder could result in a change in control of the Company. A change in
control of the Company could result in a change in the Company's management
which, in turn, could result in a change in the Company's business plans and
policies or other aspects of the Company's business. There can be no assurance
that a new control person or group would continue to pursue the policies or
business practices of existing management, and there can likewise be no
assurance that such a change in control will not have a material adverse effect
on the Company's financial condition or results of operations, or on the value
of the Common Stock, or on the ability of the Company to attract additional
financing.
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PROCEEDS TO BENEFIT OFFICERS AND DIRECTORS
The Company's officers and directors have registered for sale hereby all of
the shares of the Company's Common Stock owned or issuable upon the exercise of
options held by them as of September 15, 1995. The Company will not receive any
of the proceeds from the sale of their shares, but will receive payment upon
exercise of the options. The sale by the Company's officers and directors of
all or substantially all of the shares owned or issuable upon the exercise of
options held by them could also have a negative effect on the market price of
shares of the Company's Common Stock. In addition, as noted above, a change in
control of the Company could result in a change in the Company's management
which, in turn, could result in a change in the Company's business plans and
policies or other aspects of the Company's business. There can be no assurance
that a new control person or group would continue to pursue the policies or
business practices of existing management, and there can likewise be no
assurance that such a change in control will not have a material adverse affect
on the Company's financial condition or results of operations, or on the value
of the Common Stock, or on the ability of the Company to attract additional
financing.
The average of the bid and asked prices of the Common Stock as reported by
NASDAQ on September 15, 1995, was $.5937. Of the 650,000 shares being
registered for sale by officers and directors hereunder, 50,000 were acquired at
a price of $1.50, 160,000 may be acquired by Steve F. Scott, the Company's
President and Chief Executive Officer at an exercise price of $.30, and the
remaining 440,000 may be acquired by such persons upon exercise of options at
exercise prices ranging from $1.50 to $4.00.
RELATED PARTY TRANSACTIONS
The Company's AM subsidiary was formed in August, 1992 for the purpose of
acquiring the industrial foam products division of Wilshire Technologies, Inc.
("WTI"). AM acquired the industrial foam products division of WTI for aggregate
consideration of approximately $5,971,000. As part of the purchase price, AM
issued its secured subordinated promissory note to WTI in the amount of
$1,000,000 and assumed approximately $3,971,000 of liabilities of WTI related to
its industrial foam products division. Michael W. Crow was an officer, director
and principal stockholder of both AM and WTI at the time of the acquisition.
The transaction was approved by the Board of Directors of WTI, two of the three
members of which were independent, and a fairness opinion with respect to the
transaction was received by WTI and AM from an independent firm. Since the
acquisition, AM has been a supplier of foam fabricated products to WTI on terms
which the Company's management believes are competitive with those WTI could
obtain from unrelated suppliers.
On November 23,1993, AM purchased from WTI certain assets of WTI's OEM
Medical Products Division that had been used in connection with the private
label manufacturing of products for medical accounts. The aggregate purchase
price was $2,300,000, and AM further assumed liabilities on certain executory
contracts in the approximate amount of $21,000. The consideration was paid in
the form of a secured note in the principal amount of $1,550,000, payable 45
days after the closing, and the amendment and restatement of AM's secured
subordinated promissory note to WTI to increase the principal amount thereof
from $1,000,000 to $1,750,000. AM also agreed to purchase related finished
goods, tools and drawings for an aggregate purchase price of $555,000 which
represented the full retail value of such products. In addition, AM agreed to
maintain separate records of sales relating to the acquired assets, and may have
been required pursuant to the agreement to pay up to an additional $500,000 to
WTI based on sales of such medical supply products in AM's first two fiscal
quarters of 1994. However, no additional consideration was payable to WTI based
on such sales. The purchase price was based on a percentage of WTI's projected
sales in fiscal year 1994 derived from the assets sold to AM. Michael W. Crow
was an officer, director and principal stockholder of both the Company and WTI
at the time of the acquisition. The transaction was approved by the Board of
Directors of the Company, two of the three members of which were disinterested,
and a fairness opinion with respect to the transaction was received by WTI from
an independent firm. On February 26, 1994, AM paid $575,000 of its $1,550,000
note to WTI and WTI extended the due date to March 31, 1994. On March 25, 1994,
AM paid the balance of the note in full.
Prior to March 28, 1994, Mr. Crow was President and Chairman of WTI and
prior to July 5, 1994, Mr. Crow was Chairman of the Company. In addition,
Mr. Crow, to the Company's knowledge, is beneficial
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owner of no more than 7.42% of the outstanding shares of Common Stock of WTI
(based on WTI's proxy statement filed with the Commission on August 12, 1994),
and until March, 1994, beneficially owned 51% of the outstanding shares of
Common Stock of the Company. To the best of the Company's knowledge, Mr. Crow
presently is the beneficial owner of approximately 18.7% of the outstanding
shares of Common Stock of the Company.
On October 3, 1994, Dominion filed a Schedule 13D with the Securities and
Exchange Commission disclosing that it owns 20.9% of WTI. Subsequently, on
December 9, 1994, WTI announced that William J. Hopke, Senior Vice President and
Treasurer of Dominion, had been appointed as a director of WTI. Mr. Hopke is
presently Chairman of the Company. Immediately prior to June 30, 1995, Dominion
also owned approximately 32% of the Company's outstanding common stock. In a
transaction reported on a Schedule 13D filed by Dominion and others dated June
30, 1995, Dominion contributed its ownership of such common stock, including
warrants to acquire common stock of the Company and a line of credit, to a
limited liability company, Trilon Dominion Partners, L.L.C (formerly known as
Venture Capital Equities, L.L.C.) ("Trilon") in exchange for a non-voting
Class B membership interest in Trilon. In its Schedule 13D filing describing
the transaction, Dominion stated that it may be considered to be an indirect
beneficial owner of such shares of the Company's common stock, although it
disclaims such beneficial ownership.
Thus, there has in the past existed, and there now exists, the potential
for conflicts of interest in transactions between WTI and the Company.
Accordingly, in all such transactions, the Company has attempted to ensure, by
means of the approval of the independent directors and otherwise, that any such
transactions were entered into on terms that were no less favorable than could
have been obtained in transactions with unrelated third parties. Following the
resignation of Mr. Crow as Chairman of the Company effective July 5,1994, and
given that Mr. Crow is no longer the Company's largest single stockholder, and
given that Mr. Crow is no longer an officer or director or the largest single
stockholder of WTI, the Company believed that the potential for conflicts of
interests had been eliminated.
The acquisition by Dominion of additional shares in WTI, as announced in
the Schedule 13D filed October 3,1994, and the appointment of Mr. Hopke as a
director of WTI, as announced by WTI on December 9, 1994, again raises the
potential for conflicts of interest. Other than the outstanding balance on a
note to WTI, however, the only transactions between WTI and the Company at this
time are sales in the ordinary course, which accounted for approximately 11% and
9% of AM's gross revenues in fiscal 1993 and 1994, respectively. Neither
Dominion nor Mr. Hopke has attempted to influence Company management in the
conduct of its relations with WTI, and Company management intends to ensure, by
means of the approval of the independent members of the Board of Directors, that
any transactions between the Company and WTI are entered into on terms that are
no less favorable than could be obtained in transactions with unrelated third
parties. The independent members of the Board of Directors will be asked to
review and approve every transaction with WTI in excess of $50,000, and where
possible will be provided with comparative information as to comparable
contracts with unrelated third parties.
LEGAL AND OTHER MATTERS INVOLVING WILSHIRE TECHNOLOGIES, INC., MICHAEL W. CROW
AND THE COMPANY
On March 14, 1994, WTI issued a press release announcing that it was
withdrawing a previously published preliminary unaudited earnings report which
had reported earnings for the 1993 focal year of $2,057,000 or $.54 per share
and that it was likely a substantial loss would be reported for the year. The
press release indicated that questions concerning both proper timing and the
recognition of certain revenues relating to several significant transactions,
including the sale of WTI's OEM Medical Division to AM, had been raised by WTI's
auditors. In addition, the press release stated that Michael W. Crow, WTI's
Chief Executive Officer, had taken a paid leave of absence pending completion of
an investigation of accounting and reporting matters by WTI's Audit Committee.
WTI issued a subsequent press release on March 28, 1994, announcing an
unaudited net loss of $4,532,000 or $1.38 per share for the fiscal year ended
November 30, 1993 as compared to the previously announced net earnings of
$2,057,000 or $.54 per share. WTI cited a number of reasons for the revision of
its
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1993 earnings including the reversal of previously reported sales of certain
products, the writeoff of all inventory of a certain product and the reversal of
gains relating to the sale of WTI's OEM Medical Products Division to AM in
November, 1993. WTI stated that it would report gains relating to the sale of
its OEM Medical Products Division only to the extent of payments received in the
second quarter of fiscal 1994 and thereafter. WTI also announced that it had
terminated Mr. Crow as an officer and employee.
In addition, WTI stated in the press release that it had been named as a
defendant along with Mr. Crow in several class action lawsuits filed under the
Federal securities laws. Subsequently, in August, 1994, the complaint in such
class action suits was refiled to name additional defendants, including the
Company. The complaint alleges that the Company has violated Section 10(b) of
the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated
thereunder. The Company strongly denies such allegations, and intends to
vigorously defend itself against them.
The Company paid the entire amount of the $1,550,000 short term note of AM
to WTI, which constituted a portion of the purchase price of the OEM Medical
Products Division, in the second quarter of fiscal 1994. Mr. Crow no longer
serves as Chairman of the Board of the Company, although to the best of the
Company's knowledge he owns approximately 18.7% of the Company's outstanding
Common Stock as of September 15, 1995, and he is no longer a director of WTI.
The Company believes that the effect of the above-mentioned legal and other
matters involving WTI will be mitigated by Mr. Crow's resignation as Chairman
of the Company, but that such matters could have a material adverse effect on
the Company's operations or on sales to WTI, which accounted for approximately
11% and 9% of AM's gross revenues in fiscal 1993 and fiscal 1994, respectively.
COMPETITION; OBSOLESCENCE
The custom materials fabrication industry is highly competitive. Most of
AM's competitors, however, are small, privately held companies which generally
specialize in only one product or process, and barriers to entry by new market
entrants are generally high because most of the products must be produced by
customized, proprietary equipment which is designed and/or built in-house. AM
competes primarily on the basis of its ability to meet customers' specifications
promptly and cost effectively, and on the quality of its products. In addition,
the industry in which AM competes has been characterized in recent years by
rapid and significant technological changes and frequent new product
introductions. Current competitors or new market entrants could introduce new
or enhanced products with features which render the Company's fabricating
techniques or products obsolete or less marketable, or could develop means of
producing competitive products at a lower cost. The ability of AM to compete
successfully will depend in large measure on its ability to adapt to
technological changes in the industry. There can be no assurance that AM will be
able to keep pace with the technological demands of the marketplace or
successfully enhance its products or develop new products which are in demand by
the industry.
The market in which the Company's Condor subsidiary competes with its
specialty sealant products is competitive. Condor competes against one large
competitor, which has substantially greater financial, marketing, personnel and
other resources than Condor, and three smaller competitors which supply only
small segments of the market Condor competes primarily on the basis of the
quality and utility of its products rather than on the basis of price.
RELIANCE ON MAJOR CUSTOMERS; REGIONAL BUSINESS
A substantial portion of AM's revenues have been derived primarily from a
limited number of customers. For the fiscal years ended November 30, 1992, 1993
and 1994, sales of AM's products to AM's five largest customers accounted for
approximately 58.4%, 45.3%, and 37.3%, respectively, of AM's revenues. AM
generally sells its products pursuant to customer purchase orders. There can be
no assurance that any such customers will continue to purchase products from AM
in the future. AM's largest five customers are in the computer printer, medical
disposables, automotive air conditioning, and consumer cleaning supply markets.
Management believes that this diversity spreads the risk of dependence upon one
market sector. While AM has acquired new customers as well as orders for new
products from existing customers, the loss of certain large
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customers or a decline in the economic prospects of such customers could have an
adverse effect on AM's business.
AM's domestic customers are located primarily in the West, Southwest and
Southeast regions of the United States. For bulky, low value products, high
freight costs on long distance shipments from AM's Carson and Dallas facilities
make it difficult for AM to be competitive in other regions of the United
States. For small, value added products, AM competes on a global basis with
approximately 40% of AM's current products being in this category. AM has
recently initiated a restructuring plan to downsize its Carson facility and to
shift part of its operations to its Dallas facility and to a new facility in
Portland, Oregon. The restructuring plan has been designed to eliminate excess
manufacturing capacity for the Southern California market and shift operations
closer to the Company's existing customer base and markets with greater
potential.
DEPENDENCE ON MAJOR SUPPLIERS
AM's two largest suppliers of raw materials are Foamex Engineered
Polyurethanes ("Foamex") and Voltek which supplied approximately 25% and 19%,
respectively, of AM's raw material requirements in fiscal 1994, and
approximately 35% and 15%, respectively, in fiscal 1993. AM has been a customer
of Foamex and Voltek for 30 and 20 years, respectively.
Management believes that the loss of either Foamex or Voltek as a supplier
would adversely affect AM's business in the short term (three months) until
acceptable alternative raw materials could be approved by customers. Most of
AM's other raw materials are readily substitutable so that the loss of a
supplier would have little or no impact.
AM's business is subject to the risk of price fluctuations and periodic
shortages of raw materials. AM purchases raw materials pursuant to purchase
orders placed from time to time in the ordinary course of business. Failure or
delay by such suppliers in supplying necessary raw materials to AM could
adversely affect AM's ability to manufacture and deliver products on a timely
and competitive basis.
PROPRIETARY RIGHTS; LACK OF PATENT PROTECTION
None of AM's current manufacturing processes or products are protected by
patents. AM relies on proprietary know-how and employs various methods to
protect its processes. However, such methods may not afford complete
protection, and there can be no assurance that others will not independently
develop such processes.
DEPENDENCE UPON KEY PERSONNEL
The Company's AM subsidiary is dependent upon the efforts and abilities of
its senior management. The loss of any of AM's senior management could have an
adverse effect on the business and prospects of AM. The Company does not have
an employment agreement with any of its senior management. The Company has not
obtained any key man life insurance on any of its senior management other than a
$500,000 policy on the Company's President and Chief Executive Officer, Steve F.
Scott.
POTENTIAL LIABILITY AND INSURANCE; GOVERNMENT REGULATION
The manufacture of certain industrial products by AM and Condor requires
the purchase and use of chemicals and other materials which are or may be
classified as hazardous substances. The Company does not maintain environmental
impairment insurance. There can be no assurance that the Company will not incur
environmental liability or that hazardous substances are not or will not be
present at the Company's facilities. The use of hazardous substances is subject
to extensive and frequently changing Federal, state and local laws and
substantial regulation under these laws by governmental agencies, including the
United States Environmental Protection Agency, various state agencies and county
and local authorities acting in conjunction with federal and state authorities.
Among other things, these regulatory bodies impose restrictions to control air,
soil and water
-9-
<PAGE>
pollution. The Company believes that it is in substantial compliance with all
material Federal, state and local laws and regulations governing its operations
and all material licensing or permitting requirements thereunder. Furthermore,
amendments to statutes and regulations and the Company's expansion into new
areas could require the Company to continually modify or alter methods of
operations at costs which could be substantial. There can be no assurance that
the Company will be able, for financial or other reasons, to comply with
applicable laws and regulations. Failure by the Company to comply with
applicable laws and regulations could subject the Company to civil remedies,
including fines and injunctions, as well as potential criminal sanctions, which
could have an adverse effect on the Company.
LOAN TO COMPANY FROM MICHAEL W. CROW
On March 25, 1994, Michael W. Crow loaned $787,618 to the Company. The
proceeds of the loan were used to pay the unpaid balance of AM's $1,550,000 note
to WTI. The loan was evidenced by the Company's unsecured promissory note which
provided for payment of interest only on a quarterly basis, at a rate of 1% in
excess of a bank's prime rate and payment of principal on March 25, 1997. The
note further provided for payments of principal prior to the due date at the
rate of 50% of all new equity financing in excess of the first $1,000,000
received by the Company after March 25, 1994. As of August 31, 1994, the note
was cancelled and reissued in equal amounts to each of Sandra Crow (Mr. Crow's
former spouse) and The Peninsula Group Trust, a grantor trust of which Mr. Crow
is a beneficiary.
NO DIVIDENDS CONTEMPLATED ON COMMON STOCK
To date, no dividends have been paid on the Common Stock, and the Company
does not currently anticipate paying any such cash dividends in the foreseeable
future, but rather intends to invest profits, if any, in its business.
EXERCISE OF OUTSTANDING WARRANTS AND OPTIONS
The Company has reserved 1,050,000 shares of Common Stock for issuance upon
exercise of options outstanding as of September 15, 1995. In addition, warrants
to acquire 905,000 shares of Common Stock were outstanding as of September 15,
1995. During the terms of such options and warrants, the holders thereof will
have the opportunity to profit from an increase in the market price of Common
Stock with resulting dilution in the interest of holders of Common Stock. The
existence of such options and warrants may adversely affect the terms on which
the Company can obtain additional financing, and the holders of such options and
warrants can be expected to exercise such options and warrants at a time when
the Company, in all likelihood, would be able to obtain additional capital by
offering shares of its Common Stock on terms more favorable to the Company than
those provided by the exercise of such options and warrants.
IMPACT OF POSSIBLE DELISTING OF SECURITIES FORM NASDAQ SYSTEM; PENNY STOCK
REGULATIONS
The Company's Common Stock is currently quoted on NASDAQ. In order to
maintain the Company's NASDAQ listing, the Company must, among other
requirements, have at least $2,000,000 in assets, $1,000,000 in capital and
surplus, a minimum bid price (subject to certain exceptions) of $1.00 per share
and two market-makers. From time to time, the Company has had a bid price below
$1.00. The Company does, however, meet the exceptions to such maintenance
requirement, because it does have a market value of public float of at least
$1,000,000 and did have at least $2,000,000 in capital and surplus.
Accordingly, the Company presently meets the NASDAQ standards for maintenance of
its listing. If the Company is unable to maintain the listing criteria, its
securities will be subject to delisting from NASDAQ. Trading, if any, in the
Company's securities would thereafter be conducted in the over-the-counter
market on the NASD Electronic Bulletin Board or in what are commonly referred to
as the "pink sheets." As a result, an investor may find it more difficult to
dispose of, or to obtain accurate quotations as to the price of, the Company's
securities. In addition, if the Company's securities are delisted from NASDAQ,
the securities would be subject to a rule that imposes additional sales practice
requirements on broker-dealers who sell such securities.
-10-
<PAGE>
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by the Selling Stockholders
as of September 15, 1995, and as adjusted to reflect the sale of the Shares.
Except as set forth below, none of the Selling Stockholders is currently an
affiliate of the Company, and none of them has had a business relationship with
the Company in the past three years.
<TABLE>
<CAPTION>
MAXIMUM
NUMBER NUMBER
OF SHARES OF SHARES SHARES
BENEFICIALLY TO BE SOLD BENEFICIALLY OWNED
OWNED PRIOR PURSUANT TO AFTER OFFERING(2)
NAME TO OFFERING(1) THIS PROSPECTUS(1) NUMBER PERCENT
---- -------------- ------------------ --------------
<S> <C> <C> <C> <C>
Steven Anagnos 2,500 2,500 _ _
George Anagnos 2,500 2,500 _ _
Josephine G. Anagnos 2,500 2,500 _ _
Roland J. Beneke 5,000 5,000 _ _
JoAnne Bertolini 7,800 7,800 _ _
Leonard and
Ellen L. Bogner 15,151 15,151 _ _
Greg T. Buchholz 14,350 14,350 _ _
Carl Coppola 15,151 15,151 _ _
Charles Wayne Crow 4,500 4,500 _ _
Harvey S. Davidson 3,000 3,000 _ _
Charles E. Davidson 100,000 100,000 _ _
David J. Doerge Trust 15,000 15,000 _ _
Dolphco Partners, L.P. 50,000 50,000 _ _
Bernard Ebbers 105,000 105,000 _ _
Arthur Giglio 10,000 10,000 _ _
John and
Vera-Ellenbernard
Hathaway 7,500 7,500 _ _
Edward Lagomarsino 15,151 15,151 _ _
Robert Scott London 30,303 30,303 _ _
Daniel and JoAnne Megna 15,151 15,151 _ _
Boyce W. Meyer 20,000 20,000 _ _
Morgan L. Miller 15,151 15,151 _ _
Dan Najor 6,000 6,000 _ _
Wallis G. Owens 20,000 20,000 _ _
Stephen J. Patterson, III 10,000 10,000 _ _
Maria Pierce 2,500 2,500 _ _
John R. Purcell 50,000 50,000 _ _
A. & S. Kilkin
Partnership 30,303 30,303 _ _
Andrea Roon 15,000 15,000 _ _
Bruce Russell 5,000 5,000 _ _
Walter S. Schacht 10,000 10,000 _ _
Jeff A. Schnepper, Esq. 7,576 7,576 _ _
Allan L. Schrager 15,200 15,200 _ _
Barry Schrager 10,000 10,000 _ _
SIAR Corp. Money Purchase
Pension Plan 22,727 22,727 _ _
Philip W. Sloan 16,000 16,000 _ _
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
MAXIMUM
NUMBER NUMBER
OF SHARES OF SHARES SHARES
BENEFICIALLY TO BE SOLD BENEFICIALLY OWNED
OWNED PRIOR PURSUANT TO AFTER OFFERING(2)
TO OFFERING(1) THIS PROSPECTUS(1) NUMBER PERCENT
-------------- ------------------ --------------
<S> <C> <C> <C> <C>
George and Marilyn
Somkin 10,000 10,000 _ _
David P. Steinmann
Defined Benefit Plan
& Trust 2,000 2,000 _ _
Catherine L. Steinmann 2,000 2,000 _ _
David P. Steinmann 2,000 2,000 _ _
Robert Vaughan 10,000 10,000 _ _
Edward Weinberger 10,000 10,000 _ _
Davis Weinstock, II 15,151 15,151 _ _
Edwin L. Weisl, Jr. 15,151 15,151 _ _
Michael W. Crow(3) 1,020,000 1,020,000 _ _
Steve F. Scott(4) 190,000 190,000 _ _
Michael Ledeen(5) 50,000 50,000 _ _
Michael and Barbara Ledeen(5) 10,000 10,000 _ _
Jerry E. Fullerton(6) 20,000 20,000 _ _
Rowland W. Day II(7) 42,000 42,000 _ _
Day & Campbell(8) 82,285 82,285 _ _
Caldwell R. Campbell(9) 38,000 38,000 _ _
Eric Meyer 50,000 50,000 _ _
Weiskopf Silver & Co. 12,000 12,000 _ _
SIAR Corp. Defined Benefit
Pension Plan 25,000 25,000 _ _
The American Heritage Fund 200,000 200,000 _ _
Toni Kuebler 5,000 5,000 _ _
Chester Financial Inc. 100,000 100,000 _ _
The Research Works, Inc. 30,000 30,000 _ _
The Scibelli Trust
established 3/1/89(10) 204,000 204,000 _ _
Stephen P. Scibelli, Jr.(10) 40,000 40,000 _ _
Price Paschall(11) 160,000 160,000 _ _
David Lasnier(12) 20,000 20,000 _ _
Fred Piper(12) 5,000 5,000 _ _
Loi Tran(12) 10,000 10,000 _ _
Larry Drew(12) 10,000 10,000 _ _
Jim Sierra(12) 5,000 5,000 _ _
Becky Austin(12) 5,000 5,000 _ _
Joseph M. Salvani 80,000 80,000 _ _
Discovery Partners L.P. 50,000 50,000 _ _
Walter S. Grossman 80,000 80,000 _ _
Susan J. Bender 20,000 20,000 _ _
Perry J. Scheer 20,000 20,000 _ _
Dominion Capital, Inc.(13) 3,215,000 3,215,000 _ _
Crow Family Trust(14) 200,000 200,000 _ _
The Peninsula Group
Trust(14) 500,000 500,000 _ _
</TABLE>
-12-
<PAGE>
<TABLE>
<CAPTION>
Maximum
Number Number
of Shares of Shares Shares
Beneficially to be Sold Beneficially Owned
Owned Prior Pursuant to AFTER OFFERING(2)
TO OFFERING(1) THIS PROSPECTUS(1) NUMBER PERCENT
-------------- ------------------ --------------
<S> <C> <C> <C> <C>
Sandra Crow(15) 500,000 500,000 _ _
Myron & Donna Goldstein JT 2,286 2,286 _ _
J&E Retirement Plan 22,857 22,857 _ _
Robert Goldfarb IRA 11,429 11,429 _ _
Erwin Ephron Profit Sharing
Keogh 9,143 9,143 _ _
Bellport Animal Retirement 11,429 11,429 _ _
Bruce Allen 4,571 4,571 _ _
Michael Ferrigno Family Trust 4,114 4,114 _ _
Richard Richter IRA 6,171 6,171 _ _
Anthony Giordano
Rosemarie Giordano 2,286 2,286 _ _
Physical Therapy Home
& Office Services P.C. 5,714 5,714 _ _
Kania O'Brien 6,957 6,957 _ _
Richard Martino 13,913 13,913 _ _
Joseph Angelo IRA 3,061 3,061 _ _
Joan M. Rowley 6,957 6,957 _ _
James Cots-UGMA-Maria L.
Ramirez-Cots Custodian 2,226 2,226 _ _
Mark Cots-UGMA-Maria L.
Ramirez-Cots Custodian 2,226 2,226 _ _
Christine Cots-UGMA-Maria L.
Ramirez-Cots Custodian 2,226 2,226 _ _
Richard Richter & Joan Richter 5,565 5,565 _ _
Jim Jedrlinic 5,565 5,565 _ _
Patrick Calabria IRA Rollover 2,783 2,783 _ _
Gary and Doris Valiska(16) 41,981 41,981 _ _
Milton Fandrich(16) 13,994 13,994 _ _
Tansa Group 60,000 60,000 _ _
William J. Hopke(17) 20,000 20,000 _ _
Allan H. Meltzer(18) 20,000 20,000 _ _
Total: 8,028,054 8,028,054
-------------------
(1) Includes, with respect to the following persons, the following number of
shares which may be acquired through the exercise of stock options:
Michael W. Crow (20,000); William J. Hopke (20,000); Allan H. Meltzer
(20,000); Michael Ledeen (10,000); Steve F. Scott (190,000); Price Paschall
(160,000); Chester Financial, Inc. (100,000); Eric Meyer (50,000); Rowland
W. Day II (42,000); Stephen P. Scibelli, Jr. (40,000); Caldwell R. Campbell
(28,000); Jerry E. Fullerton (20,000); David Lasnier (20,000); Larry Drew
(10,000); Loi Tran (10,000); Fred Piper (5,000); Jim Sierra (5,000); Becky
Austin (5,000); and Tansa Group (60,000). Also includes, with respect to
the following persons, the following number of shares which may be acquired
through the exercise of a warrant: The Research Works, Inc. (30,000); and
Dominion Capital, Inc. (875,000). Also includes, with respect to the
following persons, the following number of shares which may be acquired
upon the conversion of 7-1/2% convertible debentures: Myron
-13-
<PAGE>
& Donna Goldstein JT (2,286); J&E Retirement Plan (22,857); Robert Goldfarb
IRA (11,429); Erwin Ephron Profit Sharing Keogh (9,143); Bellport Animal
Retirement(11,429); Bruce Allen (4,571); Michael Ferrigno Family Trust
(4,114); Richard Richter IRA (6,171); Anthony Giordano & Rosemary Giordano
(2,286); Physical Therapy Home & Office Services P.C. Defined(5,714);
Kania, O'Brien (6,957); Richard Martino (13,913); Joseph Angelo IRA
(3,061); Joan M. Rowley (6,957); James Cots-UGMA-Maria L. Ramirez-Cots
Custodian (2,226); Mark Cots-UGMA-Maria L. Ramirez-Cots Custodian (2,226);
Christine Cots-UGMA-Maria L. Ramirez-Cots Custodian (2,226); Richard
Richter & Joan Richter (5,565); Jim Jedrlinic (5,565); Patrick Calabria IRA
Rollover (2,783).
(2) Assumes the sale of all shares covered by this Prospectus. There can be no
assurance that any of the Selling Stockholders will sell any or all of the
shares of Common Stock offered by them hereunder.
(3) Mr. Crow is the former Chairman of the Board of the Company.
(4) Mr. Scott is a director, secretary, President and Chief Executive Officer
of the Company.
(5) Mr. Ledeen is a director of and acts as a consultant to the Company.
(6) Mr. Fullerton is the Vice President and Controller of the Company.
(7) Mr. Day served as a director of the Company from October, 1986 through
September 3,1993. Mr. Day is a member of the law firm of Day & Campbell,
which has provided legal services to the Company in the past.
(8) Day & Campbell has provided legal services to the Company in the past. The
shares were acquired after March 31, 1994 as payment of legal fees.
(9) Mr. Campbell is a member of the law firm of Day & Campbell, which has
provided legal services to the Company in the past.
(10) Mr. Scibelli served as a director of the Company from January 26, 1994
to February 28, 1994, acts as a consultant to the Company, and was an
owner of Wilshire Foam Products, Inc., a predecessor of the Company.
(11) Mr. Paschall is a director of and acts as a consultant to the Company.
(12) An employee of the Company.
(13) As of the date of this Prospectus, Dominion Capital, Inc. is the
record owner of approximately 32% of the Company's outstanding Common
Stock, including 840,000 shares issuable upon exercise of warrants
held by Dominion Capital, Inc. Dominion Capital, Inc. has advised the
Company, however, that it has contributed such securities to a limited
liability company, Trilon Dominion Partners, LLC, in exchange for a
non-voting Class B membership interest in Trilon. In a Schedule 13D
filing dated June 30, 1995, Dominion disclaims indirect beneficial
ownership in such shares of the Company's common stock contributed to
Trilon. Mr. William J. Hopke, a director of the Company, is an
officer of Dominion Capital, Inc. and Trilon.
(14) Michael W. Crow, former Chairman of the Board, is a beneficiary of The
Crow Family Trust and of The Peninsula Group Trust
(15) Sandra Crow is the former spouse of Michael W. Crow.
-14-
<PAGE>
(16) Messrs. Valiska and Fandrich are officers of the Company's Condor
subsidiary.
(17) Mr. Hopke is the Chairman of the Board of Directors of the Company.
(18) Dr. Meltzer is a director of the Company.
</TABLE>
-15-
<PAGE>
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Stockholders for
their own accounts. The Company will not receive any of the proceeds from the
sale of the Shares pursuant to this Prospectus. The Company agreed to bear the
expenses of the registration of the Shares, including legal and accounting fees,
and such expenses were estimated to be $284,745.
The Selling Stockholders may offer and sell the Shares from time to
time in transactions in the over-the-counter market or in negotiated
transactions, at market prices prevailing at the time of sale or at negotiated
prices. The Selling Stockholders have advised the Company that they have not
entered into any agreements, understandings or arrangements with any
underwriters or broker-dealers regarding the sale of their Shares, nor is there
an underwriter or coordinating broker acting in connection with the proposed
sale of Shares by the Selling Stockholders. Sales may be made directly or to or
through broker-dealers who may receive compensation in the form of discounts,
concessions or commissions from the Selling Stockholders or the purchasers of
Shares for whom such broker-dealers may act as agent or to whom they may sell as
principal, or both (which compensation as to a particular broker-dealer may be
in excess of customary commissions).
The Selling Stockholders and any broker-dealers acting in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Act, and any commissions received by them
and any profit realized by them on the resale of Shares as principals may be
deemed underwriting compensation under the Act.
The Company has informed the Selling Stockholders that the anti-
manipulative Rules 10b-6 and 10b-7 under the Securities Exchange Act of 1934, as
amended, may apply to their sales in the market and has furnished each Selling
Stockholder with a copy of these Rules and has informed them of the need for
delivery of copies of this Prospectus.
Selling Stockholders may also use Rule 144 under the Act to sell the
Shares if they meet the criteria and conform to the requirements of such Rule.
-16-
<PAGE>
DESCRIPTION OF CAPITAL STOCK
COMMON STOCK
The Company's Articles of Incorporation authorize the issuance of
25,000,000 shares of Common Stock, par value $.001 per share, of which 9,173,541
were outstanding as of September 15, 1995. All outstanding shares of Common
Stock, including the Shares offered hereby, are fully paid and nonassessable.
All Shares to be issued upon due and proper exercise of outstanding options and
warrants, assuming full payment of the exercise price in connection therewith,
will be fully paid and nonassessable. Holders of Common Stock have no
preemptive, redemption or conversion rights, and are entitled to one vote for
each share held on each matter submitted to a vote of stockholders. Cumulative
voting for the election of directors is not permitted so that holders of more
than 50% of the outstanding Common Stock can elect all of the directors.
Subject to preferences that may be applicable to any outstanding preferred
stock, holders of the Company's Common Stock are entitled to receive ratably
such dividends as may be declared by the Board of Directors out of funds legally
available therefor and in liquidation proceedings.
PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of 5,000,000
shares of Preferred Stock, par value $.001 per share. None of the Company's
Preferred Stock is issued and outstanding. The Company's Board of Directors has
authority, without action by the stockholders, to issue all or any portion of
the authorized but unissued Preferred Stock in one or more series and to
determine the voting rights, preferences as to dividends and liquidation,
conversion rights, and other rights of such series. The Preferred Stock, if and
when issued, will likely carry rights superior to those of the Common Stock.
DEBENTURES
The Company has issued convertible debentures in the aggregate principal
amount of $535,000 which bear interest at the rate of 7-1/2% per annum (the
"Debentures"). The Debentures are convertible into shares of the Company's
Common Stock at the initial conversion rate for each of the Debentures of 125%
of the closing bid price of the Common Stock on the day prior to the day of sale
of the respective Debentures. The term of the Debentures is 10 years. The
Debentures may be pre-paid, in whole or in part, after 18 months from the issue
date, but not before, upon 20 days' prior notice, at a price equal to the face
value of the Debenture plus accrued and unpaid dividends to the payment date.
The Company has the right to require conversion of the Debentures after 18
months from the issue date, if the average closing bid or sale price per share
of Common Stock, for a period of 10 consecutive trading days, equals or exceeds
150% of the closing bid price for the Common Stock on the day prior to the day
of sale of the respective Debentures. The holders of the Debentures have no
voting rights. The Debentures have not been registered under the Act; however,
the Company has agreed to register the shares of Common Stock underlying the
Debentures. The Company has terminated its Debenture offering and has no
present plans to offer or sell any additional debentures. The proceeds from the
sale of the Debentures were used to reduce payables and for general corporate
purposes.
WARRANTS
The Company has issued warrants to Dominion Capital, Inc. to purchase
840,000 shares of Common Stock at an exercise price of $2.98 per share. The
warrants are exercisable for a period of five years from March 25, 1994. The
warrants may be redeemed by the Company at any time upon 30 days' prior notice
if the closing price of the Company's Common Stock as reported on NASDAQ equals
or exceeds 150% of the exercise price for at least seven trading days. The
Company has also issued warrants to Dominion Capital, Inc. to purchase 35,000
shares of the Common Stock at an exercise price of $.90 per share, exercisable
until September 30, 1999. Dominion Capital, Inc. has advised the Company that
it has contributed all such warrants to a limited liability company named Trilon
Dominion Partners, L.L.C. ("Trilon") in exchange for a non-voting Class B
membership interest in Trilon.
-17-
<PAGE>
The Company has also issued warrants to The Research Works, Inc. to
purchase 30,000 shares of Common Stock at an exercise price of $5.50 per share.
The warrants are exercisable for a period of three years from August 10, 1993.
TRANSFER AGENT
The Transfer Agent and Registrar with respect to the Company's Common Stock
is American Stock Transfer and Trust Company.
LEGAL MATTERS
The validity of the Common Stock offered hereby has been passed upon for
the Company by Jones, Day, Reavis & Pogue, 2603 Main Street, Suite 900, Irvine,
California 92714-6232.
EXPERTS
The audited financial statements of the Company as of November 30, 1994 and
for the year then ended appearing in the Company's Annual Report on Form 10-KSB,
as amended, for the year ended November 30, 1994, included in this Prospectus
and the related Registration Statement, have been audited by Corbin & Wertz,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference, and are included in reliance upon such reports
given upon the authority of such firm as experts in accounting and auditing.
-18-
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Registration fee $ 13,245
Blue Sky fees and expenses 7,500
Legal fees and expenses 205,000
Accounting fees and expenses 42,000
Printing 12,000
Miscellaneous 5,000
-------
TOTAL $284,745
--------------------
(1) All of the above expenses except the SEC registration fee are estimated.
All of the above expenses will be, or have been, paid by the Company.
</TABLE>
Item 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Company's Bylaws and Section 78.751 of the Nevada Revised Code
provide for indemnification of directors and officers against certain
liabilities. Officers and directors of the Company are indemnified generally
against expenses actually and reasonably incurred in connection with actions,
suits or proceedings, whether civil or criminal, provided that it is determined
that they acted in good faith, and, in any criminal matter, had reasonable cause
to believe that their conduct was not unlawful.
Item 16. EXHIBITS
2.1 Agreement and Plan of Reorganization dated April 21, 1993 between Far
West Ventures, Inc. (now known as Advanced Materials Group, Inc.),
Wilshire Advanced Materials, Inc., and the stockholders of Wilshire
Advanced Materials, Inc. *
4.1 Articles of Incorporation of Advanced Materials Group, Inc. (formerly
known as Far West Ventures, Inc.). *
4.2 Certificate of Amendment of Incorporation of Advanced Materials Group,
Inc. *
4.3 Bylaws, as amended, of Advanced Materials Group, Inc. *
5.1 Opinion of Jones, Day, Reavis & Pogue**
23.1 Consent of Corbin & Wertz.**
23.2 Consent of Jones, Day, Reavis & Pogue, counsel for the Registrant, included
in Exhibit 5.1.**
24. Power of Attorney.***
-----------------------------
* FILED AS AN EXHIBIT TO THE COMPANY'S REGISTRATION STATEMENT ON FORM
SB-2 DATED DECEMBER 6, 1993 (REGISTRATION NO. 33-72500).
** TO BE FILED BY AMENDMENT.
*** APPEARS ON THE SIGNATURE PAGE HEREOF.
-19-
<PAGE>
17. UNDERTAKINGS
A. SUPPLEMENTARY AND PERIODIC INFORMATION, DOCUMENTS AND REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the Registrant hereby undertakes to file with the
Securities and Exchange Commission such supplementary and periodic information,
documents and reports as may be prescribed by any rule or regulation of the
Commission heretofore or hereafter duly adopted pursuant to authority in that
Section
B. ITEM 512 UNDERTAKING WITH RESPECT TO RULE 415 UNDER THE SECURITIES ACT
OF 1933
The undersigned Registrant hereby undertakes:
(1) To file, any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(a) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(b) 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
(c) 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) shall
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 this Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1993, 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 the initial bona
fide offering thereof,
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
C. INDEMNIFICATION
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 ("Securities Act") may be permitted to directors,
officers or persons controlling the Registrant pursuant to the foregoing
provisions or otherwise, the Registrant has been informed that in the opinion of
the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities 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 counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public, policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
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<PAGE>
D. ITEM 512 UNDERTAKING WITH RESPECT TO RULE 430A
The undersigned registrant hereby undertakes that:
(i) For purposes of determining any liability under the Securities
Act of 1933, the registrant will treat the information omitted from the form of
prospectus filed as part of this registration statement in reliance upon Rule
430A and contained in a form of prospectus filed by the registrant pursuant to
Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this
registration statement as of the time it was declared effective.
(ii) For the purpose of determining any liability under the Securities
Act of 1933, the registrant will treat each post-effective amendment that
contains a form of prospectus as a new registration statement for the securities
offered in the registration statement, and the offering of such securities at
that time as the initial bona fide offering thereof.
E. FILINGS INCORPORATING CERTAIN EXCHANGE ACT DOCUMENTS BY REFERENCE
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
issuer'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 an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-3 and has duly caused this Amendment to
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rancho Dominguez, State of California on
September 15, 1995.
ADVANCED MATERIALS GROUP, INC.
By: /s/ Steve F. Scott
----------------------------------
Steve F. Scott, President and Chief
Executive Officer
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Steve F.
Scott his true and lawful attorney-in-fact and agent, acting alone, with full
powers of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any or all Amendments to this
Registration Statement, and to file the same, with all other documents in
connection therewith, with the Securities and Exchange Commission granting unto
said attorney-in-fact and agent, acting alone, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said attorney-in-
fact and agents, each acting alone, or his substitute, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Steve F. Scott September 15, 1995
--------------------------------------------------------
Steve F. Scott, President and Chief Executive Officer
(Principal Executive Officer), Secretary and Director
/s/ Jerry E. Fullerton September 15, 1995
--------------------------------------------------------
Jerry E. Fullerton (Principal Accounting Officer)
/s/ William J. Hopke September 15, 1995
--------------------------------------------------------
William J. Hopke, Chairman and Director
/s/ N. Price Paschall September 15, 1995
--------------------------------------------------------
N. Price Paschall, Director
/s/ Michael A. Ledeen September 15, 1995
--------------------------------------------------------
Michael A. Ledeen, Director
/s/ Allan H. Meltzer September 15, 1995
--------------------------------------------------------
Allan H. Meltzer, Director
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