<PAGE>
As filed with the Securities and Exchange Commission on October 23, 1997
Registration No. ___________
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
ADVANCED MATERIALS GROUP, INC.
(Exact name of Registrant as Specified in its Charter)
Nevada
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(State or Other Jurisdiction of Incorporation or Organization)
33-0215295
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(IRS Employer Identification Number)
20211 South Susana Road, Rancho Dominguez, California 90221
(310) 537-5444
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(Address, Including Zip Code, and Telephone Number,
including area code, of Registrant's Principal Executive Offices)
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Steve F. Scott Copy to:
Chairman, President and Chief Executive Officer Leonard J. McGill, Esq.
Advanced Materials Group, Inc. Day Campbell & McGill
20211 South Susana Road 3070 Bristol Street, Suite 650
Rancho Dominguez, California 90221 Costa Mesa, California 92626
(310) 537-5444 (714) 429-2900
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(Name, Address, Including Zip Code, and Telephone Number,
including area code, of Agent for Service)
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Approximate date of commencement of proposed sale to the public: From time to
time after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box: / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: /X/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier registration
statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If the delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
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<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
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Title of each class of Proposed Proposed
securities to be Amount to be maximum maximum
registered registered offering price aggregate offering Amount of
per unit(1) price(1) registration fee
<S> <C> <C> <C> <C>
Common Stock 2,830,807(2) $3.96(3) $11,209,995(3) $3,397
$.001 par value
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</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee under Rule 457.
(2) Comprised of: (a) 1,600,807 shares presently outstanding, (b) 35,000
shares issuable upon exercise of warrants at $0.90 per share, (c)
30,000 shares issued upon exercise of warrants at $0.75 per share, (d)
60,000 shares issuable upon exercise of warrants at $0.75 per share,
and (e) 840,000 shares issuable upon exercise of warrants at $2.98 per
share, and (f) 265,000 shares issuable upon exercise of options at
prices ranging from $1.28 to $3.44 per share.
(3) Based upon the average of the bid and asked prices for the Common
Stock on October 17, 1997, as reported on NASDAQ.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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<PAGE>
SUBJECT TO COMPLETION
DATED OCTOBER 22, 1997
ADVANCED MATERIALS GROUP, INC.
2,830,807 Shares
of
COMMON STOCK
($.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 and
for the account of certain selling stockholders ("Selling Stockholders") in
transactions in the national over-the-counter market or in negotiated
transactions, at market prices prevailing at the time of the sale or at
negotiated prices. The Company will not receive any of the proceeds from the
sale of the Shares. The expenses incurred in registering the Shares, estimated
to be $25,000, will be paid by the Company, except that certain of the Selling
Stockholders have agreed to reimburse the Company for certain of its expenses,
up to a maximum of $15,000.
The Shares offered hereby have been or upon the exercise of outstanding
warrants or options will be acquired by the Selling Stockholders from the
Company or from affiliates of 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 arrangement 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") SmallCap Market, under the NASDAQ symbol "ADMG". The bid and
asked prices for the Common Stock on October 17, 1997, as reported on NASDAQ,
were $3 7/8 and $4 1/32 per share, respectively.
THE COMMON STOCK OFFERED HEREBY IS HIGHLY SPECULATIVE AND INVOLVES A HIGH
DEGREE OF RISK. SEE "RISK FACTORS."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
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.
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The date of this Prospectus is October __, 1997.
<PAGE>
TABLE OF CONTENTS
AVAILABLE INFORMATION 3
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 4
THE COMPANY 4
RISK FACTORS 5
USE OF PROCEEDS 10
SELLING STOCKHOLDERS 10
PLAN OF DISTRIBUTION 12
DESCRIPTION OF CAPITAL STOCK 13
LEGAL MATTERS 14
EXPERTS 14
OTHER MATTERS 14
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
and Exchange Act of 1934 (the "1934 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, or from the Commission's web site at http://www.sec.gov.
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 for the fiscal year ended
November 30, 1996;
(b) The Company's Quarterly Reports on Form 10-QSB for the quarters ended
February 28, 1997, June 1, 1997 and August 31, 1997;
(c) The Company's Current Reports on Form 8-K filed December 3, 1996,
August 7, 1997 and September 27, 1997, and on Form 8-K/A filed October 7, 1997;
and
(d) 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, Chairman, President and Chief Executive
Officer, 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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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in or incorporated by reference into this Prospectus
constitute "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company, or industry
results, to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general business conditions,
including a worsening economy which might slow the overall demand for the
Company's products; increased inflationary pressures which might lead to
increasing prices for raw materials, labor, and increases of interest costs
based on the Company's borrowing activities; competitive factors, including the
entry of new competitors into the marketplace and/or heightened competition from
existing competitors; and the introduction of new products or technologies by
customers or competitors; under utilization of the Company's factories and
plants, or of any new plants; concentrations of sales in markets and customers;
failure to obtain new customers, retain customers or volume reductions by
current customers; concentrations of raw material suppliers, including
difficulties or delays in obtaining raw materials; inability to execute
marketing and sales plans, including price increases; failure to attract and
retain R&D/engineering staffing to support sales efforts; inability to develop
cost effective means for timely production of new product orders in required
quantities; delays or cancellations of orders; timing of significant orders, and
introduction of new products; short-term fluctuations in margins due to yields
and efficiencies; loss of executive management or other key employees; changes
in financing amount, availability or cost; the effects of changes in costs and
availability of insurance coverage; the effects of changes in compensation or
benefit plans; adoptions of new, or changes in, accounting policies and
practices and the application of such policies and practices; adverse results in
significant litigation matters; and other factors referenced in the Prospectus.
THE COMPANY
GENERAL
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 the successor to a forty-four year old business that
converts specialty materials including foams, foils, films and adhesive
composites into components and finished products such as printer cartridge
inserts and 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, under license, to manufacture and market a
hydrophilic polymer developed by Innovative Technologies, Ltd. ("IT") assuming
satisfactory results are obtained in testing the product. Product testing is
ongoing and the Company is unable to predict when, if ever, such new product
will be commercialized.
The Company, which was formerly known as Far West Ventures, Inc., was
incorporated in Nevada in October, 1986. The Company was inactive from January
1990 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 General 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.
4
<PAGE>
RISK FACTORS
THE SECURITIES WHICH 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 realized net income of $4,184,000 in fiscal 1996 (ending
November 30, 1996) (which included a $4,310,000 gain resulting from sales of
securities previously held for investment and an extraordinary gain of
$508,000 from the early extinguishment of debt), and incurred net losses of
$2,979,000 and $2,756,000 in fiscal 1995 (ending November 30, 1995) and
fiscal 1994 (ending November 30, 1994) respectively. Past 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 as at August
31, 1997, of $1,558,000. 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 would, and the accumulated deficit
will, continue to impair the Company's ability to raise additional financing,
including debt financing.
RISKS OF BORROWING; RISK OF INABILITY TO SERVICE DEBT IN EVENT OF FLUCTUATIONS
IN INTEREST RATES OR INSUFFICIENT CASH FLOW
AM has established a revolving line of credit with a commercial lender, and
also owes $465,000 to the holders of 7 1/2% convertible debentures issued in the
first half of 1994. 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.
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 warrants or options held by the Selling
Stockholders as of October 17, 1997, represents approximately 28.8% of the
total number of shares which are outstanding or which are issuable upon the
exercise of warrants held by the Selling Stockholders. 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.
In addition to the shares registered hereunder the Company separately has
repurchased from Trilon Dominion Partners, LLC, a Delaware limited liability
company ("Trilon"), 2,000,000 shares of the Company's common stock at a price
of $1.75 per share. Prior to such transaction Trilon owned, assuming
exercise of warrants held by Trilon, approximately 39.9% of the outstanding
shares of common stock and, after such transaction, Trilon owned (assuming
exercise of warrants) approximately 26.9% of the outstanding common stock.
Trilon then, on September 15, 1997, in a privately negotiated transaction,
sold all of its shares, and warrants to acquire shares, of the Company's
common stock to certain of the Selling Stockholders named herein. All of the
shares held by such Selling Stockholders, and all shares of the Company's
common stock issuable upon exercise of warrants held by such Selling
Stockholders, are being registered on the registration statement of which
this Prospectus forms a part.
Accordingly, the sale of all or substantially all of the shares registered
for sale hereunder would 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
5
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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.
PROCEEDS TO BENEFIT SELLING STOCKHOLDERS
The Company will not receive any of the proceeds from the sale of shares
hereunder, but will receive payment upon exercise of the warrants. The sale by
the Selling Stockholders of all or substantially all of the shares owned or
issuable upon the exercise of warrants or 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 October 17, 1997, was $3.96. Of the 2,830,807 shares being
registered for sale hereunder, 1,600,807 were acquired at a price of $1.75
per share, and 1,230,000 may be acquired upon exercise of warrants and
options at exercise prices ranging from $0.75 to $3.44.
RELATED PARTY TRANSACTIONS WITH TRILON
In 1994, a major shareholder sold shares of the Company's common stock to
Dominion Capital, Inc. ("Dominion"), which also purchased shares directly from
the Company. William J. Hopke, an officer of Dominion, was named Chairman of
the Company. As a result, immediately prior to June 30, 1995, Dominion 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 Trilon in exchange
for a non-voting Class B membership interest in Trilon. Mr. Hopke became
Executive Vice President and Director of Trilon. Subsequently, Mr. Hopke was
replaced as a director and as Chairman of the Board of the Company by Ronald W.
Cantwell, the President of Trilon. Trilon subsequently acquired additional
shares of the Company's common stock in a private placement.
When Trilon advised the Company that it proposed to sell its holdings in
the Company the Company formed an independent committee of the Board of
Directors to determine whether it would be fair to the stockholders of the
Company from a financial point of view to repurchase some of those shares from
Trilon. The independent committee, after deliberation, recommended to the Board
of Directors that the Company purchase 2,000,000 shares from Trilon at a price
of $1.75 per share, and further agreed to recommend to the Board of Directors to
register the remainder of the shares, including shares issuable upon exercise of
warrants, on the registration statement of which this Prospectus forms a part,
on behalf of Trilon or any approved purchaser from Trilon. Trilon subsequently
sold its shares, and its warrants to acquire shares, of the Company's common
stock to certain of the Selling Stockholders named herein. Mr. Cantwell then
resigned from the Board and was replaced as a director by Timothy R. Busch, a
representative of certain of the Selling Stockholders.
COMPETITION; OBSOLESCENCE
The custom materials fabrication industry in which AM competes is highly
competitive. High barriers to entry and fragmented competition characterize the
industry. Barriers to entry are high because most of the products must be
produced by customized, proprietary equipment which is designed and/or built
in-house and cannot be produced with standard equipment. Most of the Company's
competitors are small, privately held companies, which generally specialize in
only one product or process. Three of the Company's principal competitors are
Boyd Industrial, which has four locations in the Western United States,
Packaging Alternatives Corp. and Foam Molders. AM competes primarily on the
basis of its ability to meet customers' specifications promptly and cost
effectively, and on the quality of its products.
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Current competitors or new market entrants could introduce new or enhanced
products with features which render AM's 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 market place or successfully develop new products, which are in demand by
the industry.
The market in which Condor competes is competitive. Condor competes
against one large competitor, Courtaulds Aerospace, which has substantially
greater financial, marketing, personnel, and other resources than Condor, and at
least 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.
GOVERNMENT REGULATION
The manufacture of certain 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 and its subsidiaries do not maintain
environmental impairment insurance. There can be no assurance that the Company
and its subsidiaries will not incur environmental liability or that hazardous
substances are not or will not be present at their facilities.
The Company and its AM and Condor subsidiaries are subject to regulations
administered by the United States Environmental Protection Agency, various state
agencies and county and local authorities acting in conjunction with federal and
state agencies. Among other things, these regulatory bodies impose restrictions
to control air, soil and water pollution. The extensive regulatory framework
imposes significant complications, burdens and risks on the Company.
Governmental authorities have the power to enforce compliance with these
regulations and to obtain injunctions and/or impose civil and criminal fines or
sanctions in the case of violations.
The Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), imposes strict joint and several
liability on the present and former owners and operators of facilities which
release hazardous substances into the environment. The Federal Resource
Conservation and Recovery Act of 1976, as amended ("RCRA"), regulates the
generation, transportation, treatment, storage and disposal of hazardous waste.
In California, the handling and disposal of hazardous substances is governed by
the law, which contains the California counterparts of CERCLA and RCRA. The
Company and its subsidiaries believe that their manufacturing activities are in
substantial compliance with all material Federal and state laws and regulations
governing their respective operations. Amendments to existing statutes and
regulations could require the Company or its subsidiaries to modify or alter
methods of operations at costs, which could be substantial. There can be no
assurance that the Company or its subsidiaries will be able, for financial or
other reasons, to comply with applicable laws and regulations.
Various laws and regulations relating to safe working conditions, including
the Occupational Safety and Health Act ("OSHA"), are also applicable to the
Company and its subsidiaries. The Company believes it and its subsidiaries are
in substantial compliance with all material Federal, state and local laws and
regulations regarding safe working conditions.
RELIANCE ON MAJOR CUSTOMERS; REGIONAL BUSINESS
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. These 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 customer or one market sector. However, one customer accounted for 28%
and 13% of consolidated revenue for the year ended November 30, 1996 and 1995,
respectively. While AM has acquired new customers as well as orders for new
products from existing customers, the loss of one or more of its largest
customers or a decline in the economic prospects of such customers could, and in
the case of its largest customer would, have an adverse effect on AM's business.
7
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AM's prices are competitive with other fabricators of custom materials. AM
sales are typically made on terms which require payment of the net amount due in
30 days.
Major customers for Condor are primarily in the telecommunications and
power utility business. Condor has identified the electronics and aerospace
industries as future target markets for a new line of adhesive products, which
Condor has developed and is launching in the near future.
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 Rancho Dominguez, Portland,
Denver and Dallas facilities make it difficult for AM to be competitive in other
regions of the United States or internationally.
DEPENDENCE ON MAJOR SUPPLIERS
AM purchases raw materials primarily consisting of polyurethane foam,
crosslinked polyolefin foams and pressure sensitive adhesives. Polyurethane
foam accounted for approximately 48% of the raw materials purchased by AM in
fiscal 1996 and fiscal 1995. The Company's largest supplier of raw materials is
Foamex Engineered Polyurethanes ("Foamex"), which in fiscal 1996 and fiscal 1995
supplied approximately 31% and 39%, respectively, of AM's raw materials'
requirements.
AM is an authorized fabricating distributor for a number of raw material
suppliers, including Foamex, Voltek, Avery Dennison (pressure sensitive
adhesives), Zotefoam (crosslinked polyethylenes) and Ensolite (vinyl foam).
Management believes that these supply arrangements, many of which have been
active for 25 years or more, provide AM with a diverse mix of raw materials at
the best available prices. 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. AM purchases its raw materials on standard credit terms
and considers its relationship with its suppliers to be good.
Management believes that the loss of either Foamex or Voltek as a major
supplier of foam would not have a materially adverse effect on AM's business in
the long term because other suppliers of foam could be relied upon to meet AM's
requirements at a comparable cost. However, the loss of either Foamex or Voltek
would have a materially adverse effect on AM's business in the short term
(approximately three months), and the Company has secured contingent business
interruption insurance to offset such losses. Management believes that the loss
of any other supplier would not have a material adverse effect on AM.
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 is dependent upon the efforts and abilities of its senior
management, especially its Chairman, President and Chief Executive Officer,
Steve F. Scott. The loss of any of the Company's senior management could have
an adverse effect on its business and prospects. The Company has not obtained
any key man life insurance on any of
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its senior management other than a $500,000 policy on Mr. Scott. The Company
has, however, entered into employment agreements with Mr. Scott and with two
other senior officers, David Lasnier and J. Douglas Graven.
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
Warrants and options to acquire 2,538,467 shares of Common Stock are
outstanding as of October 17, 1997. 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.
LITIGATION
In October 1996, the Company was notified that it was named in a bodily
injury lawsuit pending in 192nd Judicial District Court of Dallas County Texas,
involving silicon breast implants. The suit alleges that AMI supplied certain
foam "wipers" which were incorporated into certain implants by manufacturers
also named in the suit, which have allegedly caused adverse effects to the
plaintiffs. The suit asks for unspecified damages. The Company believes it has
no exposure in this case as: (1) AMI was not incorporated at the time of such
implants; (2) AMI has had no involvement with silicone or other breast implants;
(3) AMI has never marketed such "wipers"; and, (4) there exists two
indemnification agreements with sellers of businesses acquired by the Company
that provide protection to the Company. The Company believes the aforementioned
provide several layers of protection in the event this case progresses.
Accordingly, no provision for any liability has been made in the Company's
financial statements. An adverse ruling could, however, have a marked adverse
effect on the Company's financial condition.
AMI currently maintains product liability insurance in the amount of
$1,000,000, with excess umbrella coverage in the amount of $10,000,000. Except
for the breast implant suit, no product liability claims have been made to date.
However, there can be no assurance that any such claims will not be made in the
future in excess of such limits or that any such claims, if successful and in
excess of such limits, will not have a material adverse effect on AMI's assets
and its ability to conduct its business.
The Company's Condor subsidiary was named in a lawsuit originally filed in
the Superior Court of California, San Joaquin County, on January 24, 1992 by
Vern Auten and Shirley Auten, doing business as Aglo Plastics Company.
Plaintiffs alleged that Condor breached a supply contract by obtaining various
molds from a competing supplier, and are seeking damages therefor. Plaintiffs
are also seeking damages based upon an alleged intentional infliction of
emotional distress upon plaintiffs by a Condor employee and by its then owner
(and current President). Condor filed a cross-complaint alleging that
plaintiffs breached the contract. Plaintiffs received a nonbinding arbitration
award of approximately $267,000 plus interest. Condor had requested a trial de
novo. Condor subsequently received notice from an attorney representing the
plaintiffs of an alleged infringement by Condor of a patent held by the
plaintiffs. Condor believes the plaintiff's claims to be without merit, intends
to vigorously defend against the claims, and moved for declaratory relief in
federal district court for the eastern district of California, and joined the
actions that were the subject of claims between Condor and the plaintiffs in
state court. Trial has been set to commence in June, 1998.
The sellers of Condor have agreed to indemnify the Company with respect to
any potential liability from the alleged breach of contract. The ultimate
outcome of this litigation cannot presently be determined. Accordingly, no
provision for any liability that may result upon adjudication has been made in
the Company's financial statements. An adverse ruling could, however, have a
material adverse effect on the Company's financial condition.
9
<PAGE>
USE OF PROCEEDS
All of the Shares offered hereby are being offered by the Selling
Stockholders. The Company will not receive any proceeds from the sales of the
Shares by the Selling Stockholders.
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 October 17, 1997, and as adjusted to reflect the sale of the shares.
<TABLE>
<CAPTION>
Maximum Beneficial Ownership and
Beneficial Number of Percentage of Common
Ownership of Shares of Stock After Giving Effect
Common Stock at Common Stock to Proposed Sale
Name of Selling October 15, 1997 Offered for Sale (2)
Shareholder (1) (1) Number Percent
<S> <C> <C> <C> <C>
Dito Caree Limited 1,330,096 1,330,096 0 0%
Partnership
Dennis Harwood 29,558 29,558 0 0%
Gregory A. Busch and
David L. Keligian,
Trustees of the Lenawee
Trust, dated December 30, 873,795 873,795 0 0%
1992(3)
Timothy R. Busch (3) 20,000 20,000 0 0%
Four JM, LLC 133,010 133,010 0 0%
David B. Hehn 8,399 8,399 0 0%
David L. Keligian 47,293 47,293 0 0%
Gregory A. Busch (3) 48,770 48,770 0 0%
George P. Mulcaire 6,999 6,999 0 0%
James J. Scheinkman 8,399 8,399 0 0%
Karen M. Busch 2,800 2,800 0 0%
Clay Stevens 4,199 4,199 0 0%
Steven P. Howard 4,199 4,199 0 0%
Douglas M. Stevens 2,800 2,800 0 0%
Rudy J. Fuchs 4,199 4,199 0 0%
10
<PAGE>
<CAPTION>
<S> <C> <C> <C> <C>
John Savage 6,999 6,999 0 0%
Sherri Schaefer 6,999 6,999 0 0%
Rick S. Weiner 47,293 47,293 0 0%
Steve F. Scott (4) 520,000 85,000 244,000 2.2%
J. Douglas Graven (5) 177,417 50,000 127,417 1.5%
David Lasnier (6) 210,000 50,000 140,000 1.6%
Ronald W. Cantwell (7) 20,000 20,000 0 0%
N. Price Paschall (8) 240,000 10,000 70,000 *
Michael A. Ledeen (9) 90,000 10,000 30,000 *
Allan H. Meltzer (10) 51,000 10,000 21,000 *
Sarah Casey (11) 10,000 10,000 0 0%
</TABLE>
- --------------------------------
* Less than 1%.
(1) Includes shares of Common Stock which may be acquired through the
exercise of warrants, as follows: Dito Caree Limited Partnership (430,096);
Dennis Harwood (9,558); Gregory A. Busch and David L. Keligian, Trustees of
the Lenawee Trust dated December 30, 1992 (419,988); Four JM, LLC (43,010);
David B. Hehn (2,399); David Keligian (15,293); Gregory A. Busch (15,770);
George P. Mulcaire (1,999); James J. Scheinkman (2,399); Karen M. Busch
(800); Clay R. Stevens (1,199); Steven Howard (1,199); Douglas M. Stevens
(800); Rudy J. Fuchs (1,199); John Savage (1,999), Sherri Schaefer (1,999);
Rick S. Weiner (15,293). Includes shares of Common Stock which may be
acquired through the execution of options, as follows: Timothy R. Busch
(20,000); Steve F. Scott (85,000); J. Douglas Graven (50,000); David Lasnier
(50,000); Ronald W. Cantwell (20,000); N. Price Paschall (10,000); Michael A.
Ledeen (10,000); Allan H. Meltzer (10,000); and Sarah Casey (10,000).
(2) Assumes the sale of all shares covered by this Registration Statement and
by the Company's other registration statement on Form S-3 (Registration No.
33-72500). 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) Timothy R. Busch is presently a director of the Company. Shares
beneficially owned by the Lenawee Trust, of which Mr. Busch is a beneficiary,
includes 453,807 outstanding shares of Common Stock, as well as 419,988 shares
of Common Stock which may be acquired through the exercise of warrants as
described in Note 1. Shares deemed beneficially owned by Mr. Busch includes
such shares, as well as 20,000 shares issuable upon exercise of an option held
by Mr. Busch that is exercisable on or after March 15, 1998. Gregory A. Busch,
a brother of Timothy R. Busch, is a co-trustee of the Lenawee Trust and
disclaims beneficial ownership of the shares owned beneficially by Lenawee Trust
and Timothy R. Busch.
(4) Steve F. Scott is presently Chairman, President and Chief Executive Officer
of the Company.
(5) J. Douglas Graven is Vice President, Chief Financial Officer and Secretary
of the Company.
(6) David Lasnier is Senior Vice President of the Company and General Manager
of the Company's Advanced Materials, Inc. subsidiary.
(7) Ronald W. Cantwell was Chairman of the Board from January, 1997 to
September, 1997.
(8) N. Price Paschall is a director of the Company.
(9) Michael A. Ledeen is a director of the Company.
(10)Allan H. Meltzer is a director of the Company.
(11)Sarah Casey is an employee of the Company.
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Stockholders for their
own account. The Company will not receive any of the proceeds from the sale of
the Shares pursuant to this Prospectus. Except as described below, the Company
has agreed to bear the expenses of the registration of the Shares, including
legal and accounting fees, and such
11
<PAGE>
expenses are estimated to be $25,000. Certain of the Selling Shareholders have
agreed to reimburse the Company for certain of such expenses up to a maximum of
$15,000.
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 an "underwriter" 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 Regulation M under the Securities Exchange Act of 1934, as
amended, may apply to its sales in the market and has furnished the Selling
Stockholders with a copy of these Rules and has informed it of the need for
delivery of copies of this Prospectus.
The 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,
or other such exceptions as may be available to them under the Act.
12
<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 8,585,097
were outstanding as of October 17, 1997. 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"), of which $70,000 in principal amount had converted as at October
17, 1997. The Debentures are convertible at the holders' option 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.
TRANSFER AGENT
The Transfer Agent and Registrar with respect to the Company's Common Stock
is American Stock Transfer and Trust Company.
INDEMNIFICATION
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. Insofar as indemnification for
liabilities arising under the Act may be permitted to
13
<PAGE>
directors, officers or persons controlling the Company pursuant to the foregoing
provisions or otherwise, the Company has been informed that in the opinion of
the Commission such indemnification is against public policy as expressed in the
Act and is therefore unenforceable.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for the
Company by Day Campbell & McGill, 3070 Bristol Street, Suite 650, Costa Mesa,
California.
EXPERTS
The audited financial statements of the Company as of November 30, 1995
and November 30, 1996, and for the years then ended incorporated herein by
reference in this Prospectus and the related Registration Statement, have
been audited by Corbin & Wertz, independent auditors, as set forth in their
report thereon, and are incorporated herein by reference in reliance upon
such reports given upon the authority of such firm as experts in accounting
and auditing.
OTHER MATTERS
The Company's Articles of Incorporation provides that (a) the personal
liability of a director or officer to the Company or its stockholders for
damages for breach of fiduciary duty as a director or officer shall be
eliminated to the fullest extent permissible under Nevada law except for: (i)
acts or omissions which involve intentional misconduct, fraud or a knowing
violation of law; or (ii) the payment of distributions in violation of Section
78.300 or the Nevada Revised Statutes, and (b) if the Nevada Revised Statutes
are hereinafter amended to authorize the further elimination or limitation of
the liability of a director or officer, then the liability of a director or
officer of the corporation shall be eliminated or limited to the fullest extent
permitted by the Nevada Revised Statutes, so as amended.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers or persons controlling the Company
pursuant to the foregoing provisions, the Company has been informed that in the
opinion of the Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, as amended (the "Securities Act") and
is therefore unenforceable.
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Registration fee $ 3,397
Blue Sky fees and expenses 500
Legal fees and expenses 13,000
Accounting fees and expenses 4,000
Printing 3,500
Miscellaneous 500
--------
TOTAL $ 25,000
--------
- --------------
(1) All of the above expenses except the SEC registration fee are estimated.
All of the above expenses will be paid by the Company, except that certain of
the Selling Stockholders have agreed to reimburse the Company for certain of its
expenses, up to a maximum of $15,000.
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.
15
<PAGE>
Item 16. EXHIBITS
Exhibit
Number
4.1* Articles of Incorporation of the Company
4.2* Certificate of Amendment of Articles of Incorporation of the
Company
4.3* Bylaws of the Company
4.4* Specimen stock certificate of the Company
5** Opinion of Day Campbell & McGill
23.1** Consent of Corbin & Wertz.
23.4** Consent of Day Campbell & McGill, counsel for the
Registrant, included in Exhibit 5.
24** Power of Attorney
- -----------------------------
* Filed as an exhibit to the Company's Registration Statement and Form
SB-2 dated December 6, 1993 (Registration No. 33-72500).
** Filed herewith.
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, during 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.
16
<PAGE>
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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 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 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.
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.
17
<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 October
21, 1997.
ADVANCED MATERIALS GROUP, INC.
By: /s/ Steve F. Scott
------------------------------------
Steve F. Scott, President, Chief Executive
Officer (Principal Executive Officer) and
Chairman
Each person whose signature to this Registration Statement appears below
hereby appoints J. Douglas Graven as his attorney-in-fact to sign on his behalf
individually and in the capacity stated below and to file all amendments and
post-effective amendments to this Registration Statement as such
attorney-in-fact may deem necessary or appropriate.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Steve F. Scott October 21, 1997
- -----------------------------------------------
Steve F. Scott, President, Chief Executive Officer
(Principal Executive Officer) and Chairman
/s/ J. Douglas Graven October 21, 1997
- -----------------------------------------------
J. Douglas Graven, Chief Financial Officer,
Vice President (Principal Financial and
Principal Accounting Officer) and Secretary
/s/ Timothy R. Busch October 21, 1997
- -----------------------------------------------
Timothy R. Busch, Director
October , 1997
- -----------------------------------------------
Michael A. Ledeen, Director
October , 1997
- -----------------------------------------------
Allan H. Meltzer, Director
/s/ N. Price Paschall October 21, 1997
- -----------------------------------------------
N. Price Paschall
18
<PAGE>
EXHIBIT 5
DAY CAMPBELL & McGILL
3070 Bristol, Suite 650
Costa Mesa, CA 92626
(714) 429-2900
FAX (714) 429-2901
October 21, 1997
Advanced Materials Group, Inc.
20211 South Susana Road
Rancho Dominguez, California 90221
Re: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
You have requested our opinion as counsel for Advanced Materials Group,
Inc., a Nevada corporation (the "Company"), as to the matters set forth below in
connection with the registration under the Securities Act of 1933 on Form S-3,
of 2,830,807 shares of the Company's Common Stock, $.001 par value per share
(the "Shares"), including 1,230,000 Shares (the "Warrant Shares") issuable upon
exercise of outstanding warrants or options (the "Warrants").
We have examined the Company's Registration Statement on Form S-3 filed
with the Securities and Exchange Commission ("Commission") on today's date (the
"Registration Statement"). We have also examined the Articles of Incorporation
of the Company, as amended, the Bylaws and the minute books of the Company, and
such other documents as we deemed pertinent as a basis for the opinion
hereinafter expressed.
Based on the foregoing, it is our opinion that:
The Shares have been duly authorized and are, or in the case of the Warrant
Shares upon exercise of the respective Warrants and upon payment therefor will
be, legally and validly issued, fully paid and non-assessable.
We consent to the inclusion of our name in the Registration Statement under
the caption "Legal Matters" and the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ DAY CAMPBELL & McGILL
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Advanced Materials Group, Inc.
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated January 23, 1997 appearing in the
Annual Report on Form 10-KSB of Advanced Materials Group, Inc. for the year
ended November 30, 1996 and to the reference to our firm as experts.
CORBIN & WERTZ
Irvine, California
October 23, 1997
