PROSPECTUS 424(b)(3)
993,384 Shares
UNITED SHIELDS CORPORATION
Common Stock
_______________
Certain selling shareholders (the "Selling Shareholders") are
offering for sale pursuant to this Prospectus up to 993,384 shares
(the "Shares") of the common stock without par value ("Common
Stock") of United Shields Corporation (the "Company"). The
Selling Shareholders originally acquired the Shares from the
Company in December 1997 pursuant to the merger into a wholly-owned subsidiary
of the Company of R.P. Industries, Inc. See
"Selling Shareholders." The Company will not receive any proceeds
from the sale of Shares hereunder.
The Shares may be sold from time to time by the Selling
Shareholders (or their pledges or donees) in one or more
transactions (which may include block transactions in the National
Association of Securities Dealers ("NASD") OTC Bulletin Board), in
negotiated transactions or otherwise, at prices then prevailing or
at negotiated prices. The Selling Shareholders may effect such
transactions by selling Shares directly to purchasers or to or
through broker-dealers which may act as agents or principals.
Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from the Selling
Shareholders and/or the purchasers of the Shares for whom such
broker-dealers may act as agents or to whom they sell as
principal, or both. In effecting sales, brokers or dealers
engaged by the Selling Shareholders may arrange for other brokers
or dealers to participate. Commissions or discounts which may be
received by brokers or dealers are not expected to exceed those
customary in the type of transactions involved. The Selling
Shareholders and any persons who act as broker-dealers in
connection with the sale of the Shares offered hereby might be
deemed to be "underwriters" within the meaning of Section 2(11) of
the Securities Act of 1933, as amended (the "Securities Act"), and
any commissions received by them, and any profit on the resale of
the Shares as principal, may under certain circumstances be deemed
to be underwriting discounts and commissions under the Securities
Act.
All expenses of registration of the Shares under the
Securities Act and applicable state laws will be borne by the
Company. Any commission expenses and brokerage fees, the fees of
counsel to the Selling Shareholders and any applicable taxes are
payable individually by the Selling Shareholders.
The Common Stock is traded on the over-the-counter and quoted
on the NASD OTC Bulletin Board under the symbol "UNSC". On June
25, 1998, the closing price of the Common Stock on the NASD OTC
Bulletin Board was $3.50 per share.
See "RISK FACTORS" on page 2 of this Prospectus for a
discussion of certain factors that should be considered by
prospective purchasers of the Shares.
__________
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 August 5, 1998
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Securities Exchange Act of 1934, as amended ("Exchange Act")
pursuant to Section 15(d) thereof, and in accordance therewith
files reports and other information with the Securities and
Exchange Commission (the "Commission"). Such reports and other
information concerning the Company can be inspected and copied at
the Public Reference Room of the Commission, Room 1024, 450 Fifth
Street, NW, Washington, D.C. and at the Commission's regional
offices at 500 West Madison Street, 14th Floor, Chicago, Illinois
60661 and Two World Trade Center, Suite 1300, New York, New York
10048. Copies of this material can be obtained from the Public
Reference Section of the Commission, 450 Fifth Street, NW,
Washington, D.C. 20549, at prescribed rates. The Commission also
maintains an Internet website at http://www.sec.gov from which
copies of documents electronically filed with the Commission may
also be obtained.
The Company has filed with the Commission in Washington,
D.C., a Registration Statement on Form S-2 (the "Registration
Statement") under the Securities Act, with respect to the Shares
offered by this Prospectus. This Prospectus, which constitutes a
part of the Registration Statement, does not contain all of the
information set forth in the Registration Statement and the
exhibits thereto. For further information with respect to the
Company and the Shares, reference is made to the Registration
Statement and the exhibits incorporated therein by reference or
filed as a part thereof. Statements made in this Prospectus as to
the contents of any contract, agreement or other document referred
to are not necessarily complete; with respect to each such
contract, agreement or other document filed or incorporated by
reference as an exhibit to the Registration Statement, reference
is made to the exhibit for a complete description of the matter
involved, and each such statement shall be deemed qualified in its
entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
A copy of the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1997 and the Company's Quarterly Report on
Form 10-QSB for the period ended March 31, 1996 are being
delivered with this Prospectus, which are hereby incorporated by
reference.
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 or is deemed to be
incorporated by reference 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.
Requests for additional information should be directed to
T.J. Tully, Grand Baldwin Building, 655 Eden Park Drive, Suite
260, Cincinnati, Ohio 45202-2000, telephone (513) 241-7470.
TABLE OF CONTENTS
Available Information ii
Incorporation of Certain Documents by Reference ii
The Company 1
Risk Factors 1
Selling Shareholders 1
Plan of Distribution 2
Legal Matters 3
Experts 3
No person is authorized to give any information or make any
representations other than those contained or incorporated by
reference in this Prospectus, in connection with the offering
referred to herein and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company or the Selling Shareholders. This Prospectus does
not constitute an offer to sell or a solicitation of any offer to
buy the securities registered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation
in such jurisdiction. 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 or
incorporated by reference herein is correct as of any time
subsequent to its date.
<PAGE>
THE COMPANY
The Company is a holding and marketing company which intends
to acquire operating companies engaged in blow molding and
injection molding plastics businesses in a range of press
capacities from 20 ton to 3000 ton clamp pressure, providing a
fully integrated company which can provide its customers with
"one-stop shopping" for their blow molding and injection molding
needs. Additionally, the Company intends to further develop its
existing food and beverage packaging business. The Company is
seeking potential acquisition candidates involved in blow molding
and injection molding plastics manufacturing, production,
packaging, and distribution that will complement the Company's
business and increase the Company's asset and revenue base.
Plastics Division
The Plastics Division is currently comprised of R.P.
Industries, Inc. The Plastics Division has operations in Chester,
Virginia and Oxford, North Carolina, with approximately 40 molding
machines ranging in capacity from 22 tons to 700 tons of clamp
pressure. The Company manufactures component parts and finished
products primarily for original equipment manufacturers in the
southeast and mid-Atlantic regions and markets in Indiana,
Illinois and Canada. Secondary operations include hot stamping,
sonic welding, pad printing, chemical bonding, heat transfer decal
application, spray painting, drilling and assembly.
The Company intends to continue acquiring operating companies
engaged blow molding and injection molding plastics businesses in
an effort to create a fully integrated company which can provide
its customers with "one-stop shopping" for their blow molding and
injection molding needs. The Company expects to target
financially sound acquisition candidates that have developed a
unique process, design or product within the blow molding and
injection molding industry. The Company believes that
consolidation within such industry will occur as a result of what
it believes is a trend of customers desiring to reduce the number
of vendors they use. As the Company increases its holdings within
the industry, it believes it will benefit from the ability to
adequately service a broad range of blow molding and injection
molding needs, thereby providing customers with an option not
currently readily available within the industry. Additionally, by
targeting acquisition candidates with a unique process, design or
product, the Company believes it will be able to offer a unique
range of plastics blow molding and injection molding services not
currently available.
Food and Beverage Packaging
The HeaterMeals Company manufactures and markets portable
electrochemical heating devices and a line of shelf-stable meals
with a patented self-heating device. The self-heating device is
comprised of metallic alloy powder embedded with plastic which
generates heat when activated by water, but is flameless, non-toxic and
flexible in design. Since 1990, the Company has sold
over 80 million flameless ration heaters ("FRH") to government
contractors which incorporate the FRH into Meals-Ready-to-Eat, or
MRE's, for the United States military. Since 1996, the Company
has sold over 1.2 million shelf-stable meals under the trademark
HeaterMeals(R). HeaterMeals(R) is an assortment of breakfast and
dinner entrees packaged with the patented self-heating device,
utensil pack and water activation pouch, distributed to truckstops
throughout the United States, grocery stores located in Kentucky,
Ohio, Indiana and Michigan and various specialty retail outlets
and catalogues. The Company intends to expand its marketing and
sales of the HeaterMeals(R) brand by broadening the geographic
distribution of the products, creating new meals for new target
audiences where the convenience of the self-heating feature is
important, developing direct marketing opportunities, and
exploiting the self-heating technology in other commercial
categories.
The Company, through its subsidiary, UNSC, Inc., owns marketing
rights for a collapsible bottle for retail/consumer sale of water
and water-based beverages and pre-packed powdered instant drink
mixes. The bottle can be shipped and stored in its collapsible
state and water or other liquids can be added manually, without
the use of special equipment. The Company believes that the
convenience of being able to add liquids to the bottle at any
stage in the sales and distribution chain will enable the Company
to market the bottle for a variety of uses. The Company believes
that in addition to uses within the food and beverage industry,
the bottle may provide the medical industry with a clean, safe and
inexpensive alternative to glass containers.
RISK FACTORS
INVESTMENT IN THE SHARES IS SUITABLE ONLY FOR INVESTORS WHO
UNDERSTAND, AND HAVE FINANCIAL RESOURCES SUFFICIENT TO ENABLE THEM
TO BEAR, A NUMBER OF RISKS, INCLUDING BUT NOT NECESSARILY LIMITED
TO THOSE DESCRIBED BELOW. PROSPECTIVE INVESTORS SHOULD CONSIDER
CAREFULLY THE FOLLOWING FACTORS AND OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS BEFORE PURCHASING ANY OF THE SHARES:
Need for Additional Financing
The Company currently estimates that cash generated from
operations and available under the Company's existing lines of
credit will be sufficient to finance its current operations and
obligations for only a two month period. Due to restrictive
covenants in its credit facility, R.P. Industries, Inc. is not
able to provide dividends to the Company of revenues derived from
the operations of R.P. Industries, Inc. The Company is actively
pursuing additional funding through public or private financing,
including equity financing. There can be no assurance that
adequate financing will be available, or if available, on terms
acceptable to the Company. If additional funds are raised by
issuing equity securities, existing shareholders may experience
dilution. Insufficient funds may require the Company to scale
back or eliminate some of its products.
Additionally, a principal component of the Company's business
strategy is to increase its revenues, earnings and market share
through the acquisition of additional companies with similar or
complementary businesses. There can be no assurance that the
Company will be able to generate internal cash or obtain financing
from external sources, or that, if available, such financing will
be on the terms acceptable to the Company. The issuance of
additional Common Stock to finance acquisitions may result in
substantial dilution to the purchasers of the Common Stock offered
hereby. Any debt financing may significantly increase the
Company's leverage and may involve restrictive covenants that
limit the Company's operations. As a result, there can be no
assurance that the Company will be able to implement its
acquisition strategy successfully.
Limited Operating History and Losses from Operations; Uncertainty
of Future Profitability
The Company has only had operations for approximately one
year, and during such time, has not been profitable. There can be
no assurance that recent capital infusions, acquisitions, related
management changes or the market for the Company's services will
cause the Company to become profitable overall, or that, if
achieved, profitability will be sustained. To the extent the
Company cannot achieve profitable operations, the Company could
fail to timely meet its obligations when they come due. In such
event, if the Company's creditors sought to satisfy amounts owed
them, these actions could have a material adverse effect on the
Company's business, financial condition and results of operations.
Risks Generally Associated with Acquisitions
A principal component of the Company's business strategy
going forward is to increase its revenues, earnings and market
share through the acquisition of additional companies with similar
or complementary business. However, and there can be no assurance
that it will successfully be able to identify attractive
acquisition candidates or to negotiate acquisition transactions on
economically acceptable terms with any candidates which may be
identified.
Acquisitions may involve a number of special risks, including
adverse short-term effects on the Company's operating results,
diversion of management's attention to the assimilation of the
operations and personnel of the acquired companies, the potential
inability to integrate financial and management reporting systems,
dependence on retention, hiring and training of key personnel,
risks associated with unanticipated problems or legal liabilities
and amortization of acquired intangible assets, some or all of
which could have a material adverse effect on the Company's
operations and financial performance. To the extent any such
acquisitions are successfully consummated, there can be no
assurance that they will ultimately be beneficial to the Company's
operation or that they will contribute to its growth. Likewise,
there can be no assurance that any completed acquisitions will
produce returns to the Company that will justify the Company's
investment. See "Possible Need for Additional Financing."
Potential Inability to Manage Growth
The Company hopes to expand its operations significantly in
the near future, which will place demands on the Company's
administrative, operational and financial resources. Any
significant growth of the Company's customer base and its services
could place an additional strain on the capacity, management and
operations of the Company. The Company's future performance and
profitability will depend in part on its ability to successfully
integrate new acquisitions, implement improved financial and
management systems, add capacity as and when needed and hire
qualified personnel to respond to changes in its business. The
failure to integrate new acquisitions, implement such systems, add
any capacity or hire such qualified personnel may have a material
adverse effect on the Company's business, financial condition and
results or operations.
Competition
The injection molding and food and beverage industries are
extremely competitive. Many companies offer one or more of the
products and services offered by the Company. Some of these
competitors may be able to offer a product or products at a lower
price than the Company. In addition, many potential customers of
the Company may use more than one supplier for injection molding
or food and beverage products and services. The Company may not
be able to compete effectively against its current competitors,
and the Company cannot assure that additional competitors with
greater resources than the Company will not enter the industry and
compete effectively against the Company. To the extent that the
Company is unable to compete successfully against its existing and
future competitors, its business, operating results and financial
condition could be materially adversely affected.
Rapid Technological Change
The injection molding market is characterized by rapid
technological change, changing customer needs, frequent new
product introductions and evolving industry standards. The
Company believes that its future success will depend upon its
ability to keep pace with technological developments and emerging
industry standards. The introduction of competing products
embodying new technologies and the emergence of new industry
standards could render the Company's existing product lines
obsolete and unmarketable. Accordingly, the Company anticipates
that significant amounts of future revenue will need to be derived
from products and product enhancements which either do not exist
today or have not been sold in large enough quantities to ensure
market acceptance. If the Company is unable to obtain and
introduce product enhancements and new products in a timely and
cost-effective manner in response to changing market conditions or
customer requirements, the Company's business, operating results
and financial condition will be materially and adversely affected.
Proprietary Technology Infringement
Although the Company does not believe that it currently
infringes on the proprietary rights of any third party, in the
future the Company may receive notices claiming that it is
infringing the proprietary rights of third parties and may become
the subject of infringement claims or legal proceedings by third
parties with respect to current or future products. Any such
claim could be time consuming, result in costly litigation, cause
product shipment delays or force the Company to enter into royalty
or license agreements rather than dispute the merits of such
claims and have a material adverse effect on the Company's
business, operating results and financial condition.
Risk of New Products
The Company's business strategy emphasizes the design,
development and commercialization of enhancements to the
HeaterMeals(R) product line. The developing and marketing of any
new product in a new market, particularly new beverage and food
products is intensely competitive. Most new products are not
successful. Even for products which are successful, the success
may not be achieved without incorporating numerous changes and/or
refinements to the product and/or its packaging. Such changes and
refinements may be costly and may also result in delays in the
manufacturing, marketing and selling of the product. While the
HeaterMeals(R) product line was introduced in March 1995, its is
too early to determine whether this product will be successful.
There is also no assurance that any other new product introduced
by the Company in the future will be successful or profitable.
Uncertainty of Market Acceptance
The commercial market for HeaterMeals is relatively new, and
there can be no assurance that the market will accept HeaterMeals
in sufficient quantities to ensure the profitability or long-term
viability of the Company. The cost and availability of other
products may contribute to HeaterMeals not achieving broad market
acceptance which would have a material adverse effect on the
Company's business, financial condition and results of operations.
Control of the Company
Upon completion of the Offering, T.J. Tully, the Chairman and
CEO of the Company, together with his and his spouse's family
members will continue to own beneficially an aggregate of
approximately 53.8% of the issued and outstanding shares of common
Stock of the Company. As a practical matter, the Tully family is
in a position to control the management, policies and operations
of the Company.
Dependence on Key Personnel
The departure of any of the members of senior management,
especially T.J. Tully, Granville G. Valentine, and Donald T.
Zimmerman, could materially adversely affect the Company's ability
to meet its strategic and financial objectives.
Product Liability
The marketing sale of the Company's products incorporating the
self-heating device involve an inherent risk of claims for product
liability. Due to the reactive nature of the electrochemical
heaters with liquids and the release of hydrogen as part of the
reaction, the product is subject to misuse. Hydrogen gas is
highly flammable and is explosive in certain concentrations. Due
to its highly buoyancy, hydrogen dissipates rapidly into the
atmosphere and is considered the safest of the common combustible
gases. If hydrogen is confined or its flow restricted to a narrow
channel, explosive or combustible conditions would be created. A
very large amount of material and an extremely hot source to
induce ignition is required before a hazardous condition can be
created. The occurrence of an injury-producing event is most
unlikely unless deliberately contrived. The Company has been
advised by government investigators that the product sold to the
military has been misused to create a handmade explosive device.
The Company is unaware of any injuries caused by the use or misuse
of any of its products. Although the Company intends to maintain
limited product liability insurance coverage, there can be no
assurance that the Company or the subsidiaries will have resources
sufficient to satisfy liability claims in excess of policy limits
if required to do so. Further, there can be no assurance that the
Company or the subsidiaries will be able to maintain coverage of
sufficient scope at acceptable rates.
Limited Marketing and Sales Force; Inability to Obtain Grocery
Shelf Space
Currently, the Company has very limited internal marketing and
sales capacity. Although the Company believes that its strategy
of establishing an alliance with a major marketer to the
supermarket and convenience store markets will be sufficient to
generate sales of HeaterMeals(R) products, there can be no
assurances that the Company will be successful in establishing
such relationships or that a significant market for the Company's
products or services will develop.
Dependence on Key Suppliers
There is no assurance that the Company will develop successful
relationships with suppliers that will provide their products at a
reasonable cost and on a timely basis. The Company knows of only
one domestic source of supply for the electrolytic iron powder
used in the HeaterMeals(R) product line alloy which is a
specification for manufacturing the Company's military product.
Alternative types of iron powder which can be used for commercial
products are widely available.
Shares Eligible for Future Sale
The market price of the Common Stock of the Company could be
adversely affected by the sale of substantial amounts of the
Common Stock in the public market following this Offering. The
shares being sold in this Offering will be freely tradable unless
acquired by affiliates of the Company.
Most shares of the Company's Common Stock were acquired in
transactions registered under the Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, may not be sold
except in transactions registered under the Securities Act or
pursuant to an exemption from registration.
Lack of Dividends
The Company does not expect that it will pay dividends on its
shares in the foreseeable future. Instead, the Company intends to
apply any earnings to the expansion, research, and development of
its business. This investment should not be considered by
purchasers in need of current income from the investment.
Potential Volatility of Stock Price
The market price of the Company Common Stock historically has
been subject to substantial price volatility. Such volatility may
recur in the future due to overall market conditions or business-specific
factors such as the Company's ability to effectively
penetrate the market, new technological innovations and products,
changes in government regulations, the issuance of new or changed
stock market analyst reports and recommendations, the Company's
ability to meet analysts' projections, fluctuations in the
Company's financial results or other unforeseen factors. In
addition, the Company Common Stock could experience extreme
fluctuations in market price that are wholly unrelated to the
operating performance of the Company.
<PAGE>
SELLING SHAREHOLDERS
The Selling Shareholders acquired the Shares as of December
31, 1997 as the result of the merger into a wholly owned
subsidiary of the Company of R.P. Industries. As a post-closing
covenant, the Company was required to file a registration
statement under the Securities Act to cover the resale of the
Shares.
The following table sets forth information as of January 30,
1998, with respect to beneficial ownership of Common Stock by the
Selling Shareholders and has been provided to the Company by the
Selling Shareholders:
Prior to Offering After the Offering (2)
------------------ ----------------------
Shares Shares
Name of Benefi- Shares to Benefi-
Selling cially be Sold in cially
Shareholder(1) Owned Percent Offering Owned
Percent
- -------------- ------- ------- ----------- ------- -------
Gene G. Bright(3) 31,378 * 31,378 - 0 - - 0 -
Austin Brockenbrough
III(4) 1,784 * 1,874 - 0 - - 0 -
Isadore Brown 89 * 89 - 0 - - 0 -
Eunice Bass Browning 357 * 357 - 0 - - 0 -
Joseph Brugh 27 * 27 - 0 - - 0 -
Jonathan Bryan
III(5) 612,733 5.1% 612,733 - 0 - - 0 -
Lorraine Clark 89 * 89 - 0 - - 0 -
Lilliam Heretick 89 * 89 - 0 - - 0 -
James R.V.
Daniel(6) 173,063 1.4% 173,063 - 0 - - 0 -
Mary Meade Trice
Davenport 62 * 62 - 0 - - 0 -
Harry Easterly, Jr. 10,780 * 10,780 - 0 - - 0 -
Dr. Morris M.
Edison 1,783 * 1,783 - 0 - - 0 -
Gail & Marvin Greer 36 * 36 - 0 - - 0 -
Mark Holt 134 * 134 - 0 - - 0 -
Donald Kidd 134 * 134 - 0 - - 0 -
Margaret V. Lechner 312 * 312 - 0 - - 0 -
Lawrence Lewis, Jr.
Estate 6,465 * 6,465 - 0 - - 0 -
Frederick Leys 62 * 62 - 0 - - 0 -
C. Henry &
Marguarite Lumsford 178 * 178 - 0 - - 0 -
Mrs. Erin McKlveen 892 * 892 - 0 - - 0 -
Mrs. Douglas Moncure 1,587 * 1,587 - 0 - - 0 -
Dr. Dorothy Moore 89 * 89 - 0 - - 0 -
Dr. Sidney G. Page 10,753 * 10,753 - 0 - - 0 -
Carlton & Elaine
Potts 27 * 27 - 0 - - 0 -
Dr. David H.
Reams Jr. 134 * 134 - 0 - - 0 -
Edward Ritz 23,183 * 23,183 - 0 - - 0 -
Betsy Coke Sebrell 89 * 89 - 0 - - 0 -
Robert Shultz, Jr. 1,783 * 1,783 - 0 - - 0 -
Charlis Tribble 1,427 * 1,427 - 0 - - 0 -
Granville Valentine 67,124 0.1% 67,124 - 0 - - 0 -
III
Dr. Joseph Whittle 357 * 357 - 0 - - 0 -
Majorie Williams 53 * 53 - 0 - - 0 -
J.W. Phillips & Sons 134 * 134 - 0 - - 0 -
Plmmer Printing Co. 410 * 410 - 0 - - 0 -
M.B. Perkins 1,114 * 1,114 - 0 - - 0 -
F.B. Fowlkes 1,115 * 1,115 - 0 - - 0 -
James C. Wheat, Jr.
GST, Nonexempt
Marital Trust 7,312 * 7,312 - 0 - - 0 -
Smith Barney 285 * 285 - 0 - - 0 -
Kray & Co. 29 * 29 - 0 - - 0 -
Anne Wright Hunt 265 * 265 - 0 - - 0 -
University of
Virginia 35,667 * 35,667 - 0 - - 0 -
TOTAL 993,384 993,384 - 0 - - 0 -
_________________
[FN]
(1) Persons named in this table have sole voting and
investment power with respect to all Shares shown as beneficially
owned by them, subject to community property laws, where
applicable.
(2) The information provided in this column assumes that
the Selling Shareholders will offer for sale all Shares
beneficially owned by them, although there can be no assurance
that any of the Selling Shareholders will in fact sell all or any
specific portion of such Shares.
(3) Includes 22,059 shares held by Gene G. Bright and
9,319 shares held by Gene G. Bright and Donna D. Bright.
(4) Includes 892 shares held by Austin Brockenbrough III
and 892 shares held by Jane Brockenbrough.
(5) Includes 358,573 shares held by Jonathan Bryan III,
8,917 shares held by Jonathan Bryan III for the benefit of Isabell
Scott Bryan, 84,708 shares held by Robert Carter Bryan, 67,938
shares held by John Bryan IV, 75,791 shares held by Isabell Bryan,
5,590 shares held by John Bryan, IV for the benefit of Jeb Bryan,
5,590 shares held by John Bryan, IV for the benefit of Elle Bryan,
and 5,590 shares held by John Bryan, IV for the benefit of Gussie
Bryan and 36 shares held by Lamont Bryan.
(6) Includes 170,833 shares held by James R.V. Daniel,
446 shares held by Colleen Hayes Daniel, 892 shares held by J.
Randolph Daniel, and 892 shares held by Derby Ranes Adcock Daniel.
</FN>
DESCRIPTION OF CAPITAL STOCK
The Articles of Incorporation of the Company authorizes
500,000,000 shares of Common Stock, no par value ("Company Common
Stock"). The holders of shares of Company Common Stock have one
vote per share. The Company Common Stock does not have any
conversion rights. The closing price of the shares of the Company
Common Stock on the NASD OTC Bulletin Board at June 25, 1998 was
$3.50 per share. The holders of shares of Company Common Stock
are entitled to dividends when and as declared by the Board of
Directors from funds legally available therefor. The Company does
not anticipate declaring or paying any cash dividends for the
foreseeable future. Cumulative voting of shares of Company Common
Stock is not authorized.
PLAN OF DISTRIBUTION
General
The Shares may be sold from time to time by the Selling
Shareholders (or their transferees, assignees, pledgees or donees)
in one or more transactions (which may include block transactions
on the NASD OTC Bulletin Board) in negotiated transactions or
otherwise, at prices then prevailing or at negotiated prices. The
Selling Shareholders may effect such transactions by selling the
Shares directly to purchasers or to or through broker-dealers
which may act as agents or principals. Such broker-dealers may
receive compensation in the form of discounts, concessions or
commissions from the Selling Shareholders and/or the purchasers of
the Shares for whom such broker-dealers may act as agents or to
whom they may sell as principal, or both. In effecting sales,
brokers or dealers engaged by the Selling Shareholders may arrange
for other brokers or dealers to participate. Commissions or
discounts which may be received by brokers or dealers are not
expected to exceed those customary in the type of transactions
involved. The Selling Shareholders and any persons who act as
broker-dealers in connection with the sale of the Shares offered
hereby might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received
by them, and any profit on the resale of the Shares as principal,
may, under certain circumstances, be deemed to be underwriting
discounts and commissions under the Securities Act.
All expenses of registration of the Shares with the Commission,
estimated to be approximately $20,000, will be borne by the
Company. Any commission expenses and brokerage fees, the fees of
counsel to the Selling Shareholders, and any applicable taxes are
payable individually by the Selling Shareholders.
The Company will receive no proceeds from the sale of any
Shares under this Prospectus.
Indemnification
The Company's Articles of Incorporation provide that the
Company shall indemnify and advance expenses to its officers,
directors, employees and agents to the fullest extent permitted by
Colorado law. The Colorado Business Corporation Act ("CBCA")
permits indemnification of director if the director conducted
himself in good faith and reasonably believed, in the case of
conduct in an official capacity with the Company, that his conduct
was in the Company's best interest, and in all other cases that
his conduct was at least not opposed to the Company's best
interests, and in the case of any criminal proceeding, the
director had no reasonable cause to believe his conduct was
unlawful. However, the Company may not indemnify a director in
connection with a proceeding by or in the right of Company in
which the director was adjudged liable to the corporation, or in
connection with any proceeding charging that the director derived
an improper personal benefit, whether or not involving action in
an official capacity, in which proceeding the director was
adjudged liable on the basis that he derived an improper personal
benefit. Indemnification under the CBCA is limited to reasonable
expenses incurred in connection with the proceeding. The CBCA
also requires indemnification of director to the extent he is
wholly successful, on the merits or otherwise, in the defense of
any proceeding to which the director was a party because he is or
was a director, against reasonable expense incurred by him in
connection with the proceeding. The CBCA also permits a
corporation to reimburse the reasonable expenses incurred by
director who is a party to a proceeding in advance of the final
disposition of the proceeding if the director furnishes to the
Company a written affirmation of the director's good faith belief
that he has met the standard of conduct required under the CBCA
and furnishes a written undertaking to repay the advance if it is
ultimately determined that he did not meet that standard of
conduct. The CBCA also allows indemnification of officers,
employees, fiduciaries and agents of the Company to a greater
extent, and requires indemnification for officers, employees,
fiduciaries and agents of the Company in each case in which such
indemnification is required for a director. Further, the Company
may indemnify and advance expenses to an officer, employee,
fiduciary or agent of the Company to the same extent as to a
director. The CBCA allows the Company to purchase and maintain
insurance, at its expense, to protect itself and any director,
officer, employee, fiduciary or agent of the Company against any
expense, liability, or loss, whether or not the Company would have
the power to indemnify such person against such expense,
liability, or loss under the CBCA.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the Company pursuant to the foregoing
provisions, or otherwise, the Company has been advised that, in
the opinion of the Commission, such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable.
LEGAL MATTERS
The validity of the Shares of Common Stock offered hereby
will be passed upon for the Company by Dinsmore & Shohl LLP,
Cincinnati, Ohio.
EXPERTS
The financial statements of the Company as of December 31,
1997 and 1996, and for each of the three years in the period ended
December 31, 1997, incorporated in this Prospectus by reference to
the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1997, have been so incorporated in reliance on the
report of Grant Thornton LLP, independent accountants, given on
the authority of said firm as experts in accounting and auditing.
