<PAGE>
As filed with the Securities and Exchange Commission on November , 2000
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Registration Statement on Form S-2
Under the Securities Act of 1933
FIBERCHEM, INC.
(Exact Name of Registrant as Specified in Its Charter)
Delaware 2834 84-1063897
---------------------------- ------------------------- --------------------
(State or Other Jurisdiction (Primary Standard (I.R.S. Employer
of Incorporation or Industrial Classification Identification No.)
Organization) Code Number)
1181 Grier Drive, Suite B
Las Vegas, Nevada 89119
(702) 361-9873
(Address and Telephone Number of Principal Executive
Offices and Principal Place of Business)
Mr. Melvin Pelley
Chief Financial Officer
FiberChem, Inc.
1181 Grier Drive, Suite B
Las Vegas, Nevada 89119
Copies to:
Elliot H. Lutzker, Esq.
Snow Becker Krauss P.C.
605 Third Avenue
New York, NY 10158
Tel: (212) 687-3860
Fax: (212) 949-7052
Approximate Date of Proposed Sale to the Public: As soon as practicable after
this registration statement becomes effective.
<PAGE>
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If the registrant elects to deliver its latest annual report to security
holders, or a complete and legible facsimile thereof, pursuant to Item 11(a)(1)
of this form, check the following box. [ ]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
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 this Form is a post-effective amendment filed pursuant to Rule 462(d) 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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
* * * * *
* * * * *
* * * * *
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
Title of Proposed Proposed
Each Class Maximum Maximum
of Securities Amount Offering Aggregate Amount of
to be to be Price Per Offering Registration
Registered Registered Unit(1) Price Fee
---------- ---------- ------- ----- ---
<S> <C> <C> <C> <C>
Common Stock, 14,124,622 shares (2)(3) $0.20 (4) $2,824,924.40 $745.78
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 10,462,683 shares (5)(3) $0.20 (4) $2,092,536.60 $552.43
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 8,711,864 shares (6)(3) $0.20 (4) $1,742,372.80 $459.99
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 1,422,593 shares (7)(3) $0.20 (4) $284,518.60 $75.11
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
</TABLE>
-ii-
<PAGE>
<TABLE>
--------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, 60,000 shares (8)(3) $0.20 (4) $12,000.00 $3.17
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 10,000 shares (9)(3) $0.20 (4) $2,000.00 $0.53
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 960,000 shares (10)(3) $0.20 (4) $192,000.00 $50.69
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 683,704 shares (11)(3) $0.20 (4) $136,740.80 $36.10
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 3,000,000 shares (12)(3) $0.20 (4) $600,000.00 $158.40
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 58,078,222 shares (13)(3) $0.20 (4) $11,615,644.40 $3,066.53
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 9,450,000 shares (14)(3) $0.20 (4) $1,890,000.00 $498.96
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 9,450,000 shares (15)(3) $0.20 (4) $1,890,000.00 $498.96
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 75,000 shares (16)(3) $0.20 (4) $15,000.00 $3.96
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 100,000 shares (17)(3) $0.20 (4) $20,000.00 $5.28
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 600,000 shares (18)(3) $0.20 (4) $120,000.00 $31.68
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 7,047,826 shares (19)(3) $0.20 (4) $1,409,565.20 $372.13
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 100,000 shares (20)(3) $0.20 (4) $20,000.00 $5.28
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 180,000 shares (21)(3) $0.20 (4) $36,000.00 $9.50
$.0001 par value
--------------------------------------------------------------------------------------------------------------------
Common Stock, 15,000 shares (22)(3) $0.20 (4) $3,000.00 $0.79
$.0001 par value
-------------------------------------------------------------------------------------------------------------------
Total 124,531,514 shares $24,906,302.80 $6,575.27
</TABLE>
----------------------------
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 promulgated under the Securities Act of 1933, as
amended (the "Act").
(2) Consists of 14,124,622 shares or approximately 200% of the common stock
currently issuable to certain selling security holders upon conversion of
$1,350,000 aggregate
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<PAGE>
principal amount of 12% Senior Convertible Debentures due July 26, 2002
issued pursuant to Regulation S of the Act, held by such selling security
holders.
(3) Pursuant to Rule 416(a) under the Act, this registration statement also
relates to such number of shares of common stock as may become issuable as
a result of anti-dilution adjustment in accordance with the terms of
convertible securities, options or warrants.
(4) Pursuant to Rule 457(c) under the Act, the registration fee has been
calculated on the average of the high and low prices per share of common
stock reported on the Over-the Counter Bulletin Board maintained by NASDAQ,
which was $0.20 on November 3, 2000.
(5) Consists of 10,462,683 shares or approximately 200% of the common stock
currently issuable to a selling security holder upon conversion of
$1,000,000 aggregate principal amount of Senior Convertible Notes of the
registrant issued pursuant to the exemption under Section 4(2) of the Act,
held by such selling security holder.
(6) Consists of 8,711,864 shares or approximately 200% of the common stock
currently issuable to certain selling securityholders upon conversion of
257,000 shares of Series B Convertible Preferred Stock of the registrant
issued pursuant to Regulation S of the Act, held by such selling
securityholders.
(7) Consists of shares of common stock issuable upon exercise of warrants
issued as partial consideration for the services of a placement agent in
connection with the offering of the registrant's convertible notes and
debentures due July 26, 2002 and its Series B Convertible Preferred Stock.
(8) Consists of shares of common stock issuable upon exercise of warrants
issued as part of a Bridge Loan.
(9) Consists of shares of common stock issuable upon exercise of warrants
issued as partial consideration for the services of a placement agent in
connection with a Bridge Loan.
(10) Consists of shares of common stock issuable upon exercise of warrants
issued as partial consideration for consulting services.
(11) Consists of shares of Common Stock issuable upon conversion of a
convertible note due April 11, 2002.
(12) Consists of outstanding shares of Common Stock issued by the registrant
pursuant to Section 4(2) of the Securities Act as partial compensation for
services.
(13) Consists of shares of Common Stock issuable upon conversion of shares of
the registrant's Pandel Series Convertible Preferred Stock issued by the
registrant pursuant to Section 4(2)
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<PAGE>
of the Securities Act as consideration for the merger of a subsidiary of
registrant with Pandel Instruments, Inc. which became effective July 27,
2000.
(14) Consists of shares of Common Stock issuable upon conversion of Pandel
Series Convertible Preferred Stock issued to a selling stockholder pursuant
to Section 4(2) of the Securities Act in connection with a compensation
agreement entered into in connection with the merger of a subsidiary of
registrant with Pandel which became effective July 27, 2000.
(15) Consists of shares of common stock issuable to a selling securityholder
upon exchange of Intrex Data Communications Corp. Class B Shares issued to
such selling securityholder pursuant to a compensation agreement entered
into in connection with the business combination between the registrant and
Intrex which became effective July 27, 2000.
(16) Consists of shares of common stock issuable upon exercise of warrants
issued to a selling securityholder pursuant to Regulation S.
(17) Consists of shares of common stock issuable upon exercise of warrants
issued as partial consideration for consulting services.
(18) Consists of 400,000 shares of common stock and 200,000 shares of common
stock issuable upon exercise of warrants issued pursuant to a consulting
agreement.
(19) Consists of shares of common stock issuable upon exercise of warrants to be
issued on conversion of $1,621,000 convertible notes.
(20) Consists of shares of Common Stock issued as consideration for consulting
services rendered by a selling securityholder.
(21) Consists of shares of common stock issued pursuant to regulation S in
settlement of litigation with the selling securityholder.
(22) Consists of shares of Common Stock issued as consideration for services
rendered by a selling securityholder.
(23) The fee of $6,575.27 is being paid herewith.
================================================================================
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
-v-
<PAGE>
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 this Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
================================================================================
In accordance with Rule 429, the prospectus included in this Registration
Statement also relates to the offering of securities included in Post-Effective
Amendment No. 1 to Registration Statement 333-78319, declared effective March
29, 2000; Registration Statement No. 333-46555, declared effective October 23,
1998; and Registration Statement No. 33-73782, declared effective February 2,
1994.
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<PAGE>
The information in this prospectus is not complete and may be changed. These
securities may not be sold until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION - DATED NOVEMBER , 2000
FIBERCHEM, INC.
107,881,220 SHARES OF COMMON STOCK, $.0001 PAR VALUE
-----------------------
The selling securityholders are offering to the public up to 107,881,220 shares
of common stock which they can acquire upon conversion of convertible securities
and the exercise of warrants and options issued by us.
The common stock is a speculative investment and involves a high degree of risk.
You should read the description of certain risks under the caption "Risk
Factors" beginning on page 5 before purchasing the common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The common stock is quoted on the Over-The-Counter Electronic Bulletin Board
("OTCBB") under the symbol "FOCS." On November 3, 2000, the closing price per
share of common stock on the OTCBB was $.20.
Our executive offices are located at 1181 Grier Drive, Suite B, Las Vegas,
Nevada 89119, and our telephone number is (702) 361-9873.
THE DATE OF THIS PROSPECTUS IS NOVEMBER__, 2000.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements incorporated by reference or appearing
elsewhere in this prospectus. This prospectus contains, in addition to
historical information, forward-looking statements that involve risks and
uncertainties. FiberChem's actual results could differ materially from the
results discussed in the forward-looking statements. Factors that could cause or
contribute to such differences include, but are not limited to, FiberChem's lack
of profitability, the ability of the combined entity resulting from FiberChem's
business combination with Intrex Data Communications Corp. to market its
products and services using the two companies' technologies, the timely
development and acceptance of new products, FiberChem's ability to continue as a
going concern, intense competition in the industry, and the other risks
discussed in "Risk Factors," as well as those discussed elsewhere in this
prospectus.
INFORMATION ABOUT THE COMPANY
FiberChem, through its sensor division, develops, produces, markets and
licenses its patented fiber optic chemical sensor ("FOCS-Registered
Trademark-") technology which detects and monitors hydrocarbon pollution in
the air, water and soil. On July 27, 2000, we completed a business
combination with Intrex Data Communications Corp., a private company which
provides proprietary Internet and communications technology for communicating
data to or from remote or mobile assets on a real time basis using wireless,
satellite and cellular data systems. The consideration issued in the
combination provides Intrex shareholders with a minimum of approximately 50%
of the equity interest in the combined company and up to 80% of the equity
interest if certain milestones related to the Intrex business are met during
a two year period following the closing. For accounting purposes, the
combination will be treated as a reverse acquisition of FiberChem by Intrex.
Management of the combined companies believes that the new enterprise, to be
re-named DecisionLink, Inc. following stockholder approval, can establish itself
as a leading provider of corporate remote asset monitoring and control systems,
combining Intrex's satellite and wireless communication technology with
FiberChem's sensor technology, to greatly reduce the cost of transmitting and
monitoring data acquired from remote, mobile or difficult to service multiple
locations. These large potential cost savings are expected to open opportunities
for the combined company in markets such as residential and commercial propane
gas tanks, oil wells, oil and gas pipelines and vehicle fleets.
FiberChem has developed a range of sensor products and systems based on
FOCS-Registered Trademark- technology, which provide IN SITU and continuous
real-time information reporting. Products based on its FOCS-Registered
Trademark- technology currently being marketed by FiberChem include the
PetroSense-Registered Trademark- PHA-100 series of portable analyzers, the
CMS-4000 and 5000 Continuous Monitoring Systems and the OilSense-4000-TM-
System. These products detect and measure petroleum hydrocarbon
concentrations in a variety of applications, including groundwater, waste
water, storm water and process water streams on offshore platforms. FiberChem
is also developing for commercial use a range of chemical sensors based on
its Sensor-on-a-Chip-Registered Trademark-.
2
<PAGE>
technology for a wide variety of environmental, consumer, commercial,
industrial, automotive and military applications. FiberChem will continue to
pursue these products and markets and intends to incorporate Intrex's technology
where appropriate. FiberChem also intends to pursue new business opportunities
in Intrex markets that can incorporate FiberChem technology.
Intrex routes data through its global data network which acts as a data gateway
and applications service provider that allows customers to monitor and control
remote, mobile or difficult to service multiple locations such as gas wells,
pipelines, compressors, storage tanks, offshore platforms or service vehicle
fleets directly from a desktop PC. The Intrex technology can greatly reduce
costs by eliminating the need to hard wire remote locations and by allowing real
time monitoring of mobile and difficult to service multiple locations. Intrex is
a licensed reseller of the Orbcomm Global LP low earth orbit (or LEO) satellite
data and messaging communications services. Orbcomm is a partnership owned by
Orbital Sciences Corporation and Teleglobe, Inc. of Canada. Intrex also has
communications agreements that provide satellite and digital cellular services
through Norcom, Inc.
In connection with the business combination, FiberChem obtained cash financing
proceeds of $3,635,000 and certain securities of nominal value from the sale of
$2,350,000 principal amount of 12% convertible debentures and notes due July 26,
2002 and 257,000 shares of its Series B Convertible Preferred Stock, with a
stated value of $10 per share. The debentures and notes are convertible into
shares of common stock at a conversion price per share equal to the lesser of
$.30 or 92% of the average of the market price for the common stock for the 20
consecutive trading days ending two trading days prior to the conversion. Each
share of Series B Convertible Preferred Stock is convertible into a number of
shares of common stock equal to its stated value divided by the initial stated
conversion price of $.59 per share, subject to a reduction of $.07 per share on
August 25 in each year commencing 2001, and certain other adjustments in the
conversion price.
We file reports, proxy statements and other information with the SEC. You may
read and copy any document we file at the Public Reference Room of the SEC at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Regional Offices of the SEC at Seven World Trade Center, Suite 1300, New York,
New York 10048 and at 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511. Please call 1-800-SEC-0330 for further information concerning the
Public Reference Room. Our filings also are available to the public from the
SEC's website at www.sec.gov. We distribute to our stockholders annual reports
containing audited financial statements.
Information Incorporated by Reference
The SEC allows us to "incorporate by reference" the information we file with it,
which means that we can disclose important information to you by referring to
those documents. The information incorporated by reference is considered to be
part of this prospectus. This prospectus is accompanied by and incorporates by
reference the documents listed below.
3
<PAGE>
1. Annual Report on Form 10-KSB for the fiscal year ended September 30,
1999.
2. Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30,
2000.
3. Current Report on Form 8-K (Date of Earliest Event Reported July 27,
2000).
4. Amendment No. 1 to Current Report on Form 8-K (Date of Earliest Event
Reported June 27, 2000).
THE OFFERING
SECURITIES OFFERED:
- 107,881,220 shares of Common Stock offered by Selling Securityholders
<TABLE>
<CAPTION>
<S> <C>
OTCBB COMMON STOCK SYMBOL:...............................................................FOCS
NUMBER OF SHARES OF COMMON
STOCK OUTSTANDING AS OF OCTOBER 16, 2000...........................................66,446,350
</TABLE>
4
<PAGE>
RISK FACTORS
The securities offered hereby are speculative and involve a high degree of risk.
Accordingly, you as a prospective investor, should carefully consider the
following factors relating to an investment in FiberChem.
WE HAVE HAD HISTORICAL OPERATING LOSSES AND HAVE AN ACCUMULATED DEFICIT OF
APPROXIMATELY $35,916,000. For the fiscal years ended September 30, 1997, 1998
and 1999, we had net losses of approximately $3,227,000, $2,392,000 and
$2,222,000, respectively, and for the nine-month periods ended June 30, l999 and
2000 we had net losses of approximately $1,609,000 and $1,706,000, respectively,
with an accumulated deficit of approximately $35,916,000 at June 30, 2000. We do
not expect to obtain sufficient revenues from operations to offset our level of
fixed and planned expenditures, and expect that losses will continue for the
immediate future.
WE LACK WORKING CAPITAL AND WILL REQUIRE ADDITIONAL CAPITAL. We had working
capital at June 30, 2000 of approximately $2,153,000, as compared with working
capital of approximately $394,000, at September 30, 1999, an increase in working
capital of approximately $1,759,000. We had working capital of approximately
$394,000, at September 30, 1999, and negative working capital of $919,000 at
September 30, 1998, representing an increase of working capital of approximately
$1,313,000. The improvement in our working capital has been due primarily to
financing activities. As long as we continue to lose money and utilize capital
to support operations, we will require additional capital. We don't know whether
we will be able to obtain additional funding when it is needed, or that such
funding, if available, will be obtainable on terms favorable to or affordable to
us or on any terms. If we are unable to obtain other financing we may be unable
to continue in business. See "Ability to Continue as a Going Concern; Modified
Report of Independent Accountants" below.
ABILITY TO CONTINUE AS A "GOING CONCERN"; MODIFIED REPORT OF INDEPENDENT
ACCOUNTANTS. Our consolidated financial statements for the year ended September
30, 1999, indicated there is substantial doubt about our ability to continue as
a going concern due to our need to generate cash from operations and obtain
additional financing. We recently obtained cash financing proceeds of $3,635,000
and completed our business combination with Intrex. We are continuing to seek
additional financing for our operating needs and to provide funding to develop
business opportunities for the combined companies. Accordingly, our ability to
continue as a going concern on a short-term or long-term basis remains in
substantial doubt without permanent funding. In the event we are not able to
continue as a going concern, we may have to curtail operations, sell assets or
seek protection under the bankruptcy laws.
WE MAY NOT BE ABLE TO PROFITABLY MARKET NEW PRODUCTS UNDER DEVELOPMENT. We have
been engaged in the development of new products representing applications of our
chemical sensor technology and have had only limited sales of these products to
date. Before we can achieve profitable operations we must complete our product
development, develop adequate manufacturing capacity for these products and must
be able to sell our products to purchasers in adequate volumes and prices to
cover our costs and expenses.
5
<PAGE>
In addition, in order to conduct more extensive manufacturing, marketing and
sales activities, we will need to implement and improve operational, financial
and management information systems, procedures and controls. We do not know
whether there will be adequate demand for our products in commercial quantities,
that we will be able to manufacture our products at costs that would allow for
profitable sales or that, in general, we will be able to develop the
operational, financial and management information systems, procedures and
controls necessary to operate profitably on a larger scale than at present.
OUR FOCS-Registered Trademark- TECHNOLOGY MAY BECOME OBSOLETE. To date, we
have been dependent on the marketing and sale of our fiber optic chemical
sensors ("FOCS-Registered Trademark-"). Other technologies exist that compete
with the FOCS-Registered Trademark- technology. Although we are also
developing a range of sensor products based on our
Sensor-on-a-chip-Registered Trademark- technology, we do not know whether any
or all of our products will be rendered superfluous or obsolete by research
efforts and technological advances made by others. Our failure to
successfully market the products incorporating the technologies would have a
material adverse effect on our operations. We are also dependent on the
successful development and marketing by other entities of products
incorporating our sensors.
WE MUST COMPETE WITH LARGER AND FINANCIALLY STRONGER COMPETITORS. Competition in
the field of diagnostic sensor and environmental technology is intense.
Competition in the underground and aboveground storage tank detection markets
have intensified since the promulgation of various state and EPA regulations.
Most of our actual and potential competitors have greater financial
resources, more extensive business experience and larger organizations than
we possess. Even if we are able to successfully market our FOCS-Registered
Trademark- products, we do not know whether larger or better financed
companies will develop effective competitive products.
We believe that we will be able to compete favorably. However increased
competition could materially adversely affect our business, financial
condition and results of operations. Our success in the wireless electronics
market will depend heavily upon our ability to provide high quality products
and services in select target markets. While we will offer an end to end
problem solving system, we will be competing against others offering
competitive products and services. Other factors that will affect our success
in these markets include our continued ability to attract additional
experienced engineering, marketing, sales and management talent.
We believe that we will be able to compete on the basis of price and service.
Our success will depend on the ability to anticipate and respond to rapid
changes in customer preferences and the introduction of new services.
We do not know whether we will be able to compete successfully in our markets.
The wireless communications industry is characterized by frequent introduction
of new products and services, and is subject to changing consumer preferences
and industry trends, which may adversely affect our ability to plan for future
design, development and marketing of our products and services. The markets for
micro-electronic products, components and related services are
6
<PAGE>
also characterized by rapidly changing technology and evolving industry
standards, often resulting in product obsolescence or short product life cycles.
We will constantly be required to expend more sums in research and development
of new technologies.
EXTENSIVE EFFECT OF GOVERNMENT REGULATION IN ENVIRONMENTAL MONITORING AREA.
The EPA regulations regulate the installation, testing, manufacture and
maintenance of underground storage tanks. There can be no assurance that our
PetroSense-Registered Trademark- Continuous Monitoring System will meet future
regulatory requirements. The state and EPA regulations establish timetables
for the installation of leak detection equipment in aboveground and
underground storage tanks and pipings and are subject to interpretation and
subsequent changes. These regulations are the minimum federal requirements;
state and local regulators are permitted to enact more stringent standards.
The EPA also regulates the monitoring, management and cleanup of storm
water-generated pollution and hazardous wastes. We do not know whether other
sensor products under development will meet future federal or state
regulatory requirements.
WE ARE DEPENDENT ON PATENT PROTECTION OF OUR TECHNOLOGIES. Our
FOCS-Registered Trademark- technology, which is proprietary and patented, is
our most critical asset. We own numerous United States patents and have
additional patent applications pending with the United States Patent and
Trademark Office. We also have numerous foreign patents and foreign patent
applications pending for our various sensor technologies and devices. We do
not know whether such patents will protect us from other persons who develop
products that infringe our proprietary rights. Many patents involving fiber
optic technology have been issued to others. To our best knowledge, our
technologies do not infringe patent or other proprietary rights of others;
however, we do not know that such infringement has not occurred or will not
occur in the future.
If it were determined that our products infringed the claims of someone else's
issued patent, we could be enjoined from making or selling such products or be
forced to obtain a license in order to continue the manufacture or sale of the
product involved, requiring payment of a licensing fee or royalties of unknown
magnitude on sales of the product. In addition, we could be liable for
substantial damages, and even the defense of patent litigation can be extremely
expensive. We do not know whether, if any such license were required, it would
be available or available on terms acceptable to us. Any inability to obtain
required licenses on favorable terms, or at all, would adversely affect our
business.
We do not know whether our pending patent applications will be allowed, whether
any of our issued patents would be upheld, whether any issued patents will
provide us with significant competitive advantages, or whether challenges will
not be instituted against the validity or enforceability of any patents owned by
us and, if instituted, whether such challenges will not be successful. The cost
of litigation to uphold the validity of a patent and prevent infringement can be
substantial even if we prevail. Furthermore, we do not know whether others will
independently develop similar technologies, duplicate our technology or design
around the patented aspects of our technology. If patents do not issue from
present or future patent applications, we may be subject to greater competition.
In addition, our technology might be subject to reverse engineering, allowing
competitors to obtain our proprietary technology.
7
<PAGE>
WE HAVE LIMITED PRODUCTS LIABILITY INSURANCE AND EXPOSURE TO UNINSURED RISKS. We
have products liability insurance in the amount of $5 million. When we sell any
product it may become subject to substantial claims and liabilities from users
of such products in excess of our insurance. In the event of an uninsured claim
or one in excess of our coverage, our business and financial condition could be
materially adversely affected.
WE HAVE LIMITED MANUFACTURING FACILITIES. Our facilities in Las Vegas, Nevada
are capable of manufacturing our FOCS-Registered Trademark- and
Sensor-on-a-chip-Registered Trademark- products for our current sales
volumes. Although alternative assembly operations are currently available, we
do not know whether such operations will be available in the future or will
be available on terms acceptable to us.
WE ARE DEPENDENT ON THIRD PARTIES FOR MANUFACTURING AND SUPPLY. We currently
manufacture only one of the components of our FiberChem products, although we
currently assemble the products ourselves. We have not entered into any formal
arrangement with any supplier. Although we believe that there are several
potential suppliers for substantially all required components, we might incur
delays in meeting delivery deadlines in the event a particular supplier is
unable or unwilling to meet our requirements. Suppliers of custom designed
components would be more difficult to replace. We do not know whether the cost
of third party manufacturing of components or of our products will exceed
current estimates. In addition, we are largely dependent on our suppliers to
maintain quality control.
WE ARE DEPENDENT UPON KEY PERSONNEL. We are dependent upon the services of
Geoffrey Hewitt, our Chairman and Chief Executive Officer; David S. Peachey, our
President and Chief Operating Officer; Peter J. Lagergren, President -
Communications Division; Thomas Collins, President-Sensor Division, and Melvin
Pelley, our Chief Financial Officer. To the extent that any of their services
become unavailable, our business or prospects may be adversely affected. Each is
employed pursuant to employment agreements which automatically renew for a one
year term unless terminated by either party to the agreements. We do not know
whether we would be able, or how long it would take, to employ qualified persons
to replace these key individuals. We carry key man life insurance policies of $3
million, $2 million and $1 million on the lives of Messrs. Hewitt, Collins and
Pelley, respectively, and we intend to purchase insurance on the lives of
Messrs. Peachey and Lagergren.
WE ARE DEPENDENT ON TECHNICAL AND PROFESSIONAL PERSONNEL. Our ability to
produce and market our FOCS-Registered Trademark- products and develop new
products is dependent upon the availability and technical abilities of our
in-house staff and facilities and/or agreements to be negotiated with third
parties. Competition for qualified technical personnel is intense. We do not
know whether we will be able to retain independent persons presently employed
and be able to attract qualified individuals in the future to satisfy our
requirements for technical expertise.
CERTAIN RISKS SPECIFICALLY RELATED TO WIRELESS TECHNOLOGY. Some specific risks
facing our wireless technology operations are concentrated on our ability to
maintain its technological advantage:
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- The time frame required to marketable products using wireless related
technologies - The window of opportunity on these products is
estimated to be, at most, 36 months before being made obsolete by
improvements in technology.
- Copiers of the technology - Although our wireless technology will be
protected by patents wherever practical, people have attempted and may
attempt to replicate our present products. New technology is being
developed daily which might allow a competitor to duplicate, through
"reverse engineering" or otherwise, our products' functionality.
- Undeveloped technologies - As new technological developments arise it
is possible that one could render present product(s) obsolete.
Although unlikely, such a development could draw customers away from
wireless related technology until our products are able to match or
surpass them.
COMPLIANCE WITH GOVERNMENT REGULATIONS CAN INCREASE COSTS AND SLOW GROWTH.
Telecommun-ication and wireless transmissions services are subject to regulation
by the Federal Communications Commission (the "FCC") and sometimes by state
regulatory authorities as well. Among other things, these regulatory authorities
impose regulations governing the rates, terms and conditions for interstate and
intrastate telecommunication services. The federal law governing regulation of
interstate telecommunications are the Communications Acts of 1934 and 1996 (the
"Communications Acts").
We believe that we are in substantial compliance with all material laws, rules
and regulations governing our operations and have obtained or are in the process
of obtaining all licenses, tariffs and approvals necessary for the conduct of
its business. In the future, legislation enacted by Congress, court decisions
relating to the telecommunications industry, or regulatory actions taken by the
FCC or the states in which we operate could have a negative impact on our
business. Changes in existing laws and regulations, particularly relaxation of
existing regulations resulting in significantly increased price competition, may
have a significant impact on our activities and operating results. Adoption of
new statutes and regulations and our expansion into new geographic markets could
require us to alter our methods of operations, at costs which could be
substantial, or otherwise limit the types of services we offer. We cannot assure
you that we will be able to comply with additional applicable laws, regulations
and licensing requirements.
WE MAY BE ADVERSELY AFFECTED BY A DOWNTURN IN OUR INDUSTRY. Our industry is
cyclical and as a result is subject to downturns in general economic conditions
and changes in client business and marketing budgets. A downturn in general
economic conditions in one or more markets or changes in client business and
marketing budgets could have a material adverse effect on our business,
financial condition and results of operations.
REGULATORY AND LEGAL UNCERTAINTIES COULD HARM OUR BUSINESS. Several industries
in which we operate are subject to varying degrees of governmental regulation.
Generally, compliance with these regulations is the responsibility of our
customers. However, we could be subject to a
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variety of enforcement or private actions for our failure or the failure of our
clients to comply with these regulations. These actions could have a material
adverse effect on our business.
From time to time, state and federal legislation is proposed with regard to the
use of proprietary databases of consumer groups. The fact that we generate and
receive data from many sources increases the uncertainty of the regulatory
environment. As a result, there are many ways both domestic and foreign
governments might attempt to regulate our use of our data. Any such restrictions
could have a material adverse affect on our business.
The services we offer both within and outside the United States may be subject
to United States and foreign regulations including:
- advertising content;
- activities requiring customers to send money with mail orders; and
- the maintenance and use of customer data held on databases.
RISK FACTORS RELATING TO INTERNET OPERATIONS
INTERNET OPERATIONS' LIMITED HISTORY OF OPERATIONS MAY NOT BE A RELIABLE BASIS
FOR EVALUATING OUR PROSPECTS. Because our Internet operations are in a
development stage, we have limited operating and financial data to give to you
to evaluate our future performance and prospects concerning these entities. Our
prospects must be considered in light of the risks, expenses, delays, problems
and difficulties frequently encountered in the establishment of a new business
in the Internet industry, which is an evolving industry characterized by intense
competition. You must consider the risks, expenses and uncertainties that an
early stage business like our Internet communications business faces. These
risks include our ability to:
- establish awareness of our services to businesses in emerging Internet
economies;
- expand business-to-business services;
- respond effectively to competitive pressures; and
- continue to develop and upgrade our technology and distribute any
future joint venture partner's technology.
If we are unsuccessful in addressing these risks, our business, financial
condition and results of operations will be materially and adversely affected.
WE ARE DEPENDENT ON OUR PLANS TO FORM A JOINT VENTURE WITH CORNERSTONE PROPANE
PARTNERS, L.P. Intrex has entered into a memorandum of understanding with
Cornerstone Propane Partners, L.P., the fourth largest propane distributor in
the United States, to form a joint venture to market
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a system for monitoring gas levels in propane tanks, transmitting the data on a
real time basis through Intrex's wireless communications technology and using
the data to schedule and route deliveries of propane gas. We are dependent on
the formation of the joint venture with Cornerstone in order to generate
additional revenues in the near term. Moreover, the joint venture would require
us to seek additional financing to fund capital expenditures, which would result
in substantial dilution to existing shareholders. In addition, if the joint
venture is formed, securities convertible into or exchangeable for approximately
126,000,000 FiberChem common shares would be released to former Intrex and
Pandel stockholders pursuant to escrow arrangements established in connection
with the Intrex business combination. The release of these securities to former
Intrex and Pandel securityholders could also dilute the equity interest of other
stockholders.
OUR INTERNET RELATED BUSINESS MAY HAVE DIFFICULTY COMPETING. Our businesses,
insofar as they relate to the Internet, compete in the Internet market which is
characterized by increasing competition from "brand-named" entities and the
rapid adoption of new technologies. We might in the future face competition from
a wide range of companies including, but not limited to, Internet service
providers (ISP's) and Internet portals such as Yahoo!, America On Line and
Earthlink, and from applications service providers (ASP's) such as SAP, J.D.
Edwards and PeopleSoft. In addition, we could encounter competition from new
sources as the Internet and wireless technology markets continue to evolve.
Our competitors may have capabilities and resources equal to or greater than we
do. In addition, there are relatively few barriers preventing competitors from
entering the Internet industries in which we compete. As a result, new companies
may enter into the market at any time and threaten the business of our Internet
operations. Existing or future competitors may develop or offer comparable or
superior services at a lower price, which could have a material adverse effect
on the business, financial condition and results of operations of our Internet
business.
SIGNIFICANT COMPETITION IN PROVIDING INTERNET SERVICES AND WIRELESS SERVICES
COULD REDUCE THE DEMAND FOR AND PROFITABILITY OF OUR SERVICES. Though our focus
is predominately upon business-to-business e-commerce in emerging Internet
economies, wherein there presently is little competition, the wireless component
sector is very competitive. For example, we may compete with cellular
communications companies such as CellNet; other satellite communications
companies, such as Globalstar, and even other licensed resellers for Orbcomm. In
addition, a number of multinational corporations, including giant communications
carriers, such as Qualcomm and Worldcom and some of the regional operating
companies, are offering, or have announced plans to offer wireless remote asset
communications.
In the future, our competitors in the business-to-business e-commerce realm, as
opposed to the wireless and Internet communications arena, may even include
prospective customers such as major multinational oil companies and automobile
manufacturers. We believe that new competitors, which may include computer
software and services, telephone, energy, environmental and other companies, are
likely to enter the services market. Competition for
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electronic commerce partners is intense and is expected to increase
significantly in the future because there are no substantial barriers to entry
in our market.
In addition, we believe that the Internet service and on-line service businesses
will further consolidate in the future. We believe this could result in
increased price and other competition in the industry and adversely impact us.
This may cause us to lower our fees in order to compete in an already limited
market space.
Many of our Internet and wireless technology competitors possess financial
resources significantly greater than what we might expect to have and,
accordingly, could initiate and support prolonged price competition to gain
market share. Many competitive products and services are marketed by companies
which:
- are well established;
- have reputations for success in the development and sale of products
and services; and
- have significantly greater financial, marketing, distribution,
personnel and other resources, thereby permitting them to implement
extensive advertising and promotional campaigns, both general and in
response to efforts by additional competitors to enter into new
markets and introduce new products and services.
We believe we will be able to compete favorably in these areas. However
increased competition in any one of these areas could materially adversely
affect our business, financial condition and results of operations. Other
factors that will affect our success in these markets include our continued
ability to attract additional experienced marketing, sales and management
talent, in the communications, energy and related industries, and in the area of
government environment regulations, and the expansion of support, training and
field service capabilities.
The Internet and the technology industries are characterized by frequent
introduction of new products and services, and are subject to changing consumer
preferences and industry trends, which may adversely affect our ability to plan
for future design, development and marketing of our products and services. The
markets for our products and services are also characterized by rapidly changing
technology and evolving industry standards, often resulting in product
obsolescence or short product life cycles.
WE ARE UNCERTAIN OF OUR PRODUCTS BEING ACCEPTED BY THE MARKET. Achieving market
acceptance for our products and services requires substantial marketing efforts
and the expenditure of significant funds, which we don't currently have, to
create both awareness and demand.
Because demand by our customers may be interrelated, any lack or lessening of
demand could have a negative affect on overall market acceptance of our products
and services. Markets
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may not develop for our Internet related business, and we may not be able to
meet our current marketing objectives or succeed in positioning ourselves as a
key player in the Internet industry.
RELIANCE ON NEW PRODUCTS. A substantial part of our business and financial plan
focuses on a product line which is relatively new. We do not know whether sales
levels sufficient to run our business profitably (or sufficient to continue
Intrex's operations at all) can be achieved and, if achieved, maintained.
Internal cash generated by operations may not permit the level of research and
development spending required to further new product improvements and outside
financing may not be available.
PRODUCT OBSOLESCENCE. Our business is at risk if we do not continue to upgrade
and improve our products. Typically, the communications industry is
characterized by a consistent flow of new improved products which render
existing products obsolete. The market may not consider our products to be
superior or equivalent to existing or future competitive products and we may not
be able to adapt to evolving markets and technologies, develop new products,
achieve and maintain technological advantages or maintain prices competitive
with other products.
SMALL CUSTOMER BASE: We have recently completed beta testing of remote data
communications products and are now beginning our marketing efforts. We have not
yet built a significant customer base and may be unable to do so.
RELIANCE ON SATELLITE SERVICE-PROVIDERS: By relying on communications satellites
operated by Orbcomm or other satellite providers becoming and remaining fully
operational, we take on the risks inherent to the satellite communications
industry (for instance, the risks of damage to satellites caused by collisions
in space with such things as meteor showers or space debris or the risk of
damage from solar flares). In addition, the satellite industry has very high
fixed costs and satellite service providers may experience financial
difficulties if they are unable to achieve profitability. Our ability to provide
services, whether using the Orbcomm satellites or any other satellite, is
dependent on the continued operation of those satellites and on our continued
access to those satellites. We may not continue to have access to satellites or
sufficient access to enable us to operate our business.
FINANCIAL RISK IN RELIANCE ON ORBCOMM AS A SATELLITE SERVICE PROVIDER: Orbcomm,
the exclusive provider of satellite communications services for our proposed
joint venture with Cornerstone Propane Partners, L.P., has experienced financial
difficulties and filed a petition in the United States Bankruptcy Court for
reorganization under Chapter 11 of the United States Bankruptcy Act on September
15, 2000. Orbcomm's management has advised us that it intends to continue to
provide satellite communications services to us and that it believes its
reorganization will be successful. However, under Chapter 11, Orbcomm, subject
to court approval, can reject its agreements with us and can also discontinue
its operations generally if a successful reorganization cannot be achieved. The
loss of the services provided to us by Orbcomm, or the mere possibility of the
loss of those services, could have a material adverse effect on our business and
could have the effect of delaying the implementation of the proposed joint
venture with Cornerstone or increasing the cost of wireless communications
services to the joint venture if
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those services must be obtained from another provider. The loss of the services
of Orbcomm would also jeopardize our present and any future investment in
hardware and software that is specific to the Orbcomm satellite communication
system.
TECHNOLOGICAL RISKS: The Orbcomm satellites and any other satellites that we may
be use are exposed to the risks inherent in a large-scale complex communications
system employing advanced technology. Even if our system is built to
specifications, the Orbcomm satellites or any other satellite that we may use
will not always function as expected in a timely and cost-effective manner.
Performance degradation in any satellite which we use may occur in the future.
LIMITED LIFE OF SATELLITES. We may not be able to rely on Orbcomm, or any other
satellite service provider, being able to finance its next generation of
satellites. Our management understands that the first-generation satellites are
designed to operate for the next five years.
REGULATORY RISKS: Our ability to expand into foreign markets may be affected by
our ability to receive any necessary licences to operate. There is no assurance
that we will be successful in gaining any required foreign regulatory
authorizations. If we are not successful, services relying on the Orbcomm
satellites will not be available in such countries. Some countries continue to
require that a communications service is provided by a government-owned entity
and in those countries we may be unable to provide service using the Orbcomm
satellite.
IF WE DO NOT EFFECTIVELY IMPLEMENT OUR MARKETING STRATEGY AND EFFECTIVELY MANAGE
OUR OPERATIONS, OUR BUSINESS COULD SUFFER. Implementation of our business plan
will depend on, among other things, the following:
- our ability to establish contractual arrangements targeting several
market segments for our Internet business; and
- hire and retain skilled management, financial, marketing, sales and
other personnel.
Our marketing strategy and plans are subject to change as a result of a number
of factors, including, but not limited to, progress or delays in:
- our marketing efforts;
- changes in market conditions, including the emergence of significant
supplementary markets;
- the nature of possible strategic alliances which may become available
to us in the future; and
- competitive factors.
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WE MAY NOT BE ABLE TO IMPLEMENT SUCCESSFULLY OUR BUSINESS PLAN FOR OUR INTERNET
RELATED BUSINESS OR OTHERWISE CONTINUE OUR OPERATIONS. In order to implement our
business plan for our Internet and wireless technology business, we will be
required to:
- improve our operating systems;
- attract and retain skilled executive, management and technical
personnel; and
- successfully manage growth, including monitoring operations,
controlling costs and maintaining effective quality, and service
controls.
JOINT VENTURES, ACQUISITIONS OR STRATEGIC ALLIANCES MAY NOT BE AVAILABLE. We do
not know if we will be able to identify any future joint ventures, acquisitions
or strategic alliances or that we will be able to successfully finance these
transactions. A failure to identify or finance future transactions may impair
our growth. In addition, to finance these transactions, it may be necessary for
us to raise additional funds through public or private financings. Any equity or
debt financings, if available at all, may impact our operations and, in the case
of equity financings, may result in substantial dilution to existing
stockholders.
IN THE FUTURE WE WILL DEPEND ON THE DEVELOPING MARKET OF THE INTERNET. Our
ability to derive revenues by providing online commerce and Internet and/or
wireless technology related services will depend, in part, upon a developed and
robust industry and the infrastructure for providing Internet access and
carrying Internet traffic. The necessary infrastructure, such as a reliable
network backbone, or complementary products, such as lower cost high speed cable
modems, may not be developed or the Internet may not become a viable commercial
marketplace in those segments we target. Critical issues concerning the
commercial use of the Internet, including:
- security
- ease of use and access
- reliability
- quality of service
- cost
remain unresolved and may impact the growth of Internet use. In the event that
the necessary infrastructure or complementary products are not developed or the
Internet does not become a viable commercial marketplace, our future business,
operating results and financial condition could be negatively affected if we
were to expend significant resources for the development of Internet services.
CONCERNS ABOUT SECURITY OF ELECTRONIC COMMERCE TRANSACTIONS AND CONFIDENTIALITY
OF INFORMATION ON THE INTERNET MAY REDUCE OVERALL INTERNET USE AND IMPEDE OUR
GROWTH. A significant barrier to electronic commerce and confidential
communications and transmissions over the Internet has been the need for
security and reliability. Internet usage could decline if any well-publicized
compromise of security occurred. We may incur significant costs to protect
against the threat of
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security breaches or to alleviate problems caused by these breaches or other
problems with the general integrity of our system. Unauthorized persons could
attempt to penetrate our network security. If successful, they could
misappropriate proprietary information or cause interruptions in our services.
As a result, we may be required to expend capital and resources to protect
against or to alleviate these problems. Security breaches could have a material
adverse effect on our business, financial condition and results of operations.
COMPUTER VIRUSES MAY CAUSE OUR SYSTEMS TO INCUR DELAYS OR INTERRUPTIONS AND MAY
ADVERSELY AFFECT OUR BUSINESS. Computer viruses may cause our systems to incur
delays or other service interruptions. In addition, the inadvertent transmission
of computer viruses could expose us to a material risk of loss or litigation and
possible liability. Moreover, if a computer virus affecting our system is highly
publicized, our reputation could be materially damaged.
WE MAY BECOME SUBJECT TO BURDENSOME GOVERNMENT REGULATIONS AND LEGAL
UNCERTAINTIES AFFECTING THE INTERNET WHICH COULD ADVERSELY AFFECT OUR BUSINESS.
To date, governmental regulations have not materially restricted use of the
Internet in our markets, except in so far as our business relates to
environmental matters. However, the legal and regulatory environment that
pertains to the Internet is uncertain and may change. Uncertainty and new
regulations could increase our costs of doing business and prevent us from
delivering our products and services over the Internet. The growth of the
Internet may also be significantly slowed. This could delay growth in demand for
our network and limit the growth of our revenues.
In addition to new laws and regulations being adopted, existing laws may be
applied to the Internet. New and existing laws may cover issues which include:
- sales and other taxes;
- user privacy;
- pricing controls;
- data security and integrity issues;
- characteristics and quality of products and services;
- consumer protection;
- cross-border commerce;
- libel and defamation;
- copyright, trademark and patent infringement; and
- other claims based on the nature and content of Internet materials.
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UNAUTHORIZED USE OF OUR INTELLECTUAL PROPERTY BY THIRD PARTIES MAY ADVERSELY
AFFECT OUR BUSINESS. We regard our copyrights, service marks, trademarks, trade
secrets and other intellectual property as important to our success.
Unauthorized use of our intellectual property by third parties may adversely
affect our business and our reputation. We rely on trademark and copyright law,
trade secret protection and confidentiality and/or license agreements with our
employees, customers, partners and others to protect our intellectual property
rights. Despite our precautions, it may be possible for third parties to obtain
and use our intellectual property without authorization. Furthermore, the
validity, enforceability and scope of protection of intellectual property in
Internet-related industries is uncertain and still evolving. The laws of some
foreign countries are uncertain or do not protect intellectual property rights
to the same extent as do the laws of the United States.
WE MAY BE SUBJECT TO CLAIMS BASED ON THE CONTENT WE PROVIDE OVER OUR NETWORK.
The laws in the United States and in other countries relating to the liability
of companies which provide online services, like ours, for activities of their
customers are currently unsettled. Claims have been made against online service
providers and networks in the past for defamation, negligence, copyright or
trademark infringement, obscenity, personal injury or other theories based on
the nature and content of information. We could be subject to similar claims and
incur significant costs in their defense.
RISKS RELATING TO OUR SECURITIES
POSSIBLE VOLATILITY OF COMMON STOCK PRICES. The market price of our common stock
may be significantly affected by various factors, including, but not limited to,
general economic conditions and those specific to our business, future
acquisitions, if any, and our financial condition. Moreover, the price of our
common stock may be affected by the significant number of shares of common stock
outstanding, and the shares underlying outstanding warrants and/or options to
purchase shares of our common stock. See "Market for Common Stock and Related
Stockholder Matters."
SHARES ELIGIBLE FOR FUTURE SALES BY OUR CURRENT STOCKHOLDERS MAY AFFECT OUR
STOCK PRICE AND POTENTIAL FUTURE DILUTION. Approximately 6.4 million of the
66,446,350 shares of common stock outstanding as of October 16, 2000 are
"restricted securities" as such term is defined in Rule 144 promulgated under
the Securities Act. Restricted securities may only be publicly sold pursuant to
an effective registration statement under the Securities Act or in accordance
with applicable exemptions from the registration requirements of the Securities
Act. Rule 144 provides for the public sale by affiliates and non-affiliates of
limited quantities of restricted securities without registration under the
Securities Act when the securities are held over one year. Non-affiliates that
hold the restricted securities over two years may sell an unlimited quantity of
the restricted securities. Currently, approximately 345,849 shares of restricted
securities are held by non-affiliates for over two years and approximately
518,000 are held by non-affiliates for less than one year.
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We are unable to predict the effect that sales made pursuant to this prospectus,
Rule 144 or otherwise may have on the then prevailing market price of our
securities, although sales of substantial amounts of shares by existing
stockholders, or even the potential of such sales, may be expected to have an
adverse effect on the trading price and market for our securities.
YOUR OWNERSHIP INTEREST MAY BECOME DILUTED. In the event that our stock price
increases, holders of outstanding options and warrants may elect to exercise
them, and holders of outstanding convertible securities may elect to convert
them, resulting in dilution of other stockholders' interests. As of October 16,
2000, we had outstanding 1,895,175 Class D warrants. Each Class D Warrant is
currently exercisable by the holder thereof to purchase one share of common
stock at an exercise price of $1.25 through the expiration date of September 17,
2001. There are an additional 37,500 warrants each exercisable at $.90,
1,637,000 warrants each exercisable at $1.00 and 75,000 warrants each
exercisable at $0.35 (collectively with the Class D warrants, the "Outstanding
Warrants"). The holders of Series A Convertible Preferred Stock currently have
the right to convert the 207,848 shares of convertible preferred stock
outstanding into 2,078,480 shares of common stock (to be increased to 15,588,600
shares in satisfaction of anti-dilution adjustments and dividends in arrears)
and redemption under certain circumstances. The holders of the 8% Senior
Convertible Notes have the right to convert their notes into an aggregate of
743,478 shares of common stock, assuming a conversion price of $.23, subject to
adjustment and redemption under certain circumstances. We have agreed to issue
to the holders of the outstanding 8% Senior Convertible Notes upon conversion of
their notes and to holders who have already converted their 8% Senior
Convertible Notes, warrants to purchase 7,047,826 shares of common stock,
exercisable at $.23 for approximately two years from issuance. In addition, we
have previously registered an additional 2,113,942 shares of common stock and
intend to register 5,000,000 shares of common stock underlying a like number of
options (3,723,942 options outstanding; 3,390,000 options authorized, but not
granted) and 250,000 shares of common stock issuable pursuant to an Employee
Stock Purchase Plan pursuant to registration statements on Forms S-8. In
addition, 400,000 shares of Common Stock are issuable upon exercise of options
(at prices ranging from $.50 to $1.00 per share) granted pursuant to consulting
agreements.
The holders of our 12% convertible debentures and notes issued to obtain
financing in connection with the recent business combination with Intrex have
the right to convert their notes into 12,293,653 shares of common stock,
assuming an effective conversion price of $.1912 per share, subject to
adjustment. The holders of our Series B Convertible Preferred Stock have the
right to convert their shares into 4,355,932 shares of common stock, subject to
adjustment. As consideration for a bridge loan of $600,000 which was re-financed
with 12% convertible debentures, the bridge lenders received warrants expiring
May 19, 2005 to purchase 60,000 shares of common stock at an exercise price
equal to the lesser of $.50 per share or 75% of the closing market price the day
before the conversion. The placing agent for the bridge loan, the 12%
convertible debentures and notes and the Series B Preferred Stock received, for
nominal consideration, a warrant expiring May 19, 2005, to purchase 10,000
shares of common stock at an exercise price of $.50 per share and warrants
expiring July-September 2005, to purchase
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1,422,593 shares of common stock at a currently effective exercise price of $.24
per share, subject to adjustment.
As consideration for the business combination with Intrex we have agreed to
issue, subject only to the authorization by FiberChem shareholders of a
sufficient number of shares of Common Stock, 252,218,952 shares of our common
stock upon conversion of convertible securities issued by us and in exchange for
Intrex Class B Shares, of which 189,164,214 shares will be held in escrow and
will be released only if certain milestones related to the Intrex business are
met by July 27, 2002. As part of the fee for advisory services rendered in
connection with the business combination, we also issued a promissory note due
April 11, 2002, which is convertible into 683,704 shares of Common Stock,
representing a conversion price of $.185 per share and a warrant expiring April
11, 2004, to purchase 960,000 shares of common stock at an exercise price of
$.185 per share.
During the terms of our warrants, options, convertible preferred stock,
debentures, notes and the exchangeable securities issued in connection with the
Intrex business combination the holders may be able to purchase shares of common
stock at prices substantially below the then current market price of our common
stock, with a resultant dilution in the interests in the existing common
stockholders. The holders of the warrants, options, convertible preferred stock,
notes and exchangeable securities may be expected to exercise their rights to
acquire shares of common stock at times when we might be able to obtain needed
capital through a new offering of securities on terms more favorable than those
provided by these outstanding securities. Thus, exercise of the warrants, and
options and/or the conversion of convertible preferred stock, notes and
exchangeable securities may be expected to have a depressive effect on the
market price for the common stock and might adversely affect the terms on which
we may be able to obtain additional financing or additional capital. In
addition, the exercise or conversion or exchange of the warrants, options,
convertible preferred stock, notes and exchangeable securities and the
subsequent sales of shares of common stock by holders of such securities
pursuant to a registration statement, under Rule 144, or otherwise, could have
an adverse effect upon the market for our securities. Moreover, warrant holders
who fail to exercise their warrants will experience a corresponding decrease in
their interest held in us relative to the ownership interest held by exercising
warrant holders.
In connection with the Intrex business combination, former shareholders of
Intrex and shareholders of FiberChem who own or have the right to acquire a
total of 192,944,645 shares of FiberChem Common Stock have agreed that until
July 27, 2001, each of them will not sell any FiberChem common stock owned by
them or ownership of which may be acquired in an amount which exceeds, together
with other sales for the account of such stockholder during the preceding three
months, the greater of (1) one percent of the shares of Common Stock outstanding
as shown on FiberChem's most recently published Annual Report on Form 10-KSB or
Quarterly Report on Form 10-QSB, (2) the average weekly reported trading volume
during the four weeks preceding the filing of any required notice of sale
pursuant to Rule 144 or, if no such notice is required, the date of receipt of
the order to execute the transaction by the broker or the date of execution of
the transaction directly with a market maker.
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CLASSIFIED BOARD OF DIRECTORS. Our by-laws provide for a classified Board of
Directors with board members serving staggered three-year terms. The Board has
three classes of directors serving for three-year terms, with one class of
directors to be elected at each annual meeting of stockholders. The
classification of Directors has the effect of making it more difficult to change
the composition of the Board of Directors and more difficult for a third-party
to acquire us.
PREFERRED STOCK AUTHORIZATION. Our Certificate of Incorporation authorizes the
issuance of a maximum of 10,000,000 shares of "blank check" preferred stock,
$.001 par value with such designations, rights and preferences as may be
determined from time to time by our Board of Directors. As of October 16, 2000,
we had outstanding (i) 207,848 shares of Series A Preferred Stock currently
convertible into 2,078,848 shares of Common Stock (expected to be increased to
15,588,6000 shares in satisfaction of anti-dilution adjustments and dividends in
arrears), (ii) 675,282.22 shares of Participating Convertible Preferred Stock,
Pandel Series, convertible into 67,528,222 shares of Common Stock, (iii)
1,752,409 shares of a series of preferred stock designated as Special Shares
which is not convertible into common stock and (iv) 257,000 share of Series B
Convertible Preferred Stock, initially convertible into 4,355,932 shares of
common stock. We cannot assure you that we will not issue additional preferred
stock in the near future. If issued, the terms of a series of additional
preferred stock could operate to the significant disadvantage of holders of
outstanding convertible preferred stock and/or common stock. In addition, in the
event of a proposed attempt to gain control of us where the Board of Directors
does not approve, the Board could authorize the issuance of preferred stock as
an anti-takeover device, which could prevent the completion of such a
transaction to the detriment of public stockholders.
DISCLOSURE RELATING TO LOW-PRICED STOCKS. Our common stock, which is traded on
the OTCBB, is subject to Rule 15g-9 promulgated under the Securities Exchange
Act of 1934, as amended, which imposes various sales practice requirements on
broker-dealers who sell securities governed by Rule 15g-9 to persons other than
established customers and accredited investors (generally institutions with
assets in excess of $5,000,000 or individuals with a net worth in excess of
$1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their
spouse). For transactions covered by Rule 15g-9, the broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, Rule
15g-9 may have an adverse effect on the ability of broker-dealers to sell our
securities and may affect the ability of purchasers in this offering to sell our
securities in the secondary market and otherwise affect the trading market in
the common stock.
The Commission has adopted rules that regulate broker-dealer practices in
connection with transactions in "penny stocks." Investors in the offering may
find it more difficult to sell their shares because our securities have become
subject to the penny stock rules. Penny stocks generally are equity securities
with a price of less than $5.00 (other than securities registered on certain
national securities exchanges or quoted on the NASD's automated quotation
system, provided that current price and volume information with respect to
transactions in that security is provided by the exchange or system). The penny
stock rules require a broker-dealer, prior to a
20
<PAGE>
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Commission that provides
information about penny stocks and the nature and level of risks in the penny
stock market. The broker-dealer also must provide the customer with current bid
and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer's account. The bid and
offer quotations, and the broker dealer salesperson compensation information,
must be given to the customer orally or in writing before or with the customer's
confirmation. These disclosure requirements may have the effect of reducing the
level of trading activity in the secondary market for a stock such as ours which
has become subject to the penny stock rules.
YEAR 2000. We have not experienced any disruptions in our operations, nor have
there been reports of customer disruptions, as a result of Year 2000 issues.
For all of the aforesaid reasons and others set forth herein, the purchase of
securities offered hereby involves a high degree of risk. Any person considering
an investment in the securities offered hereby should be aware of these and
other factors set forth in this prospectus. The securities should be purchased
only by persons who can afford to absorb a total loss of their investment in us
and have no need for a return on their investment.
USE OF PROCEEDS
FiberChem will not receive the proceeds from the sales of common stock by the
selling securityholders. However, FiberChem may receive up to $2,459,628 from
the exercise of warrants and options by the selling securityholders which it
intends to use for working capital and other general corporate purposes.
MARKET FOR COMMON STOCK AND RELATED STOCKHOLDERS MATTERS
FiberChem's common stock was traded on the Nasdaq/SCM under the symbol "FOCS"
until February 25, 1998, when it was delisted. Since then it has been traded on
the OTCBB. The following table sets forth the high and low trade prices of the
common stock for the periods shown through February 25, 1998 as reported by
Nasdaq and as reported by the National Quotation Bureau thereafter. The prices
quoted on the OTCBB reflect inter-dealer prices without retail mark-up,
mark-down or commission and may not represent actual transactions.
<TABLE>
<CAPTION>
HIGH LOW
------- -------
COMMON STOCK
<S> <C> <C>
FISCAL YEAR ENDED SEPTEMBER 30, 1998
First Quarter $0.28 $0.12
Second Quarter 0.22 0.12
Third Quarter 0.24 0.16
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
HIGH LOW
------- -------
<S> <C> <C>
Fourth Quarter 0.15 0.11
FISCAL YEAR ENDED SEPTEMBER 30, 1999
First Quarter $0.23 $0.15
Second Quarter 0.28 0.13
Third Quarter 0.23 0.13
Fourth Quarter 0.21 0.12
FISCAL YEAR ENDING SEPTEMBER 30, 2000
First Quarter $0.30 $0.11
Second Quarter 2.03 0.16
Third Quarter 1.02 0.48
Fourth Quarter 0.59 0.23
OCTOBER 1 - NOVEMBER 3, 2000 0.31 0.17
</TABLE>
On November 3, 2000, the closing sales price of the common stock on the OTCBB
was $0.20.
At November 3, 2000, there were approximately 534 holders of record of common
stock. We estimate that we have approximately 9,000 beneficial holders of our
common stock.
DIVIDEND POLICY
The payment of dividends by FiberChem is within the discretion of its Board of
Directors and depends in part upon our earnings, capital requirements and
financial condition. Since our inception, we have not paid any dividends on our
common stock and do not anticipate paying such dividends in the foreseeable
future. FiberChem intends to retain earnings, if any, to finance our operations.
Pursuant to the terms of the FiberChem's Series A convertible preferred stock,
dividends are payable annually on November 1st. The holders of the convertible
preferred stock may elect to receive their dividend payments in cash at a rate
of 11% of the liquidation value, or in additional shares of convertible
preferred stock at the rate of 8% of the number of shares of convertible
preferred stock held by such holder on the date of declaration. In September,
1999, FiberChem's Board of Directors determined that, in view of the recent
trading price of FiberChem's common stock and in view of FiberChem's current
cash position, it would not be appropriate to declare the annual dividend
payable on the convertible preferred stock on November 1, 1999. As a result,
that dividend will accumulate in accordance with the terms of the convertible
preferred stock. The undeclared dividends in arrears as of September 30, 2000
are $1,028,848 if elected entirely in cash or 53,981 additional shares of
convertible preferred stock if
22
<PAGE>
elected solely in shares. No assurance can be given that FiberChem will be able
to make dividend distributions in the future if the holders of the convertible
preferred stock request cash.
SELLING SECURITYHOLDERS
The following table sets forth certain information known to FiberChem with
respect to beneficial ownership as of October 16, 2000, of the common stock by
each selling securityholder before the offering, the number of shares of Common
Stock to be offered and the beneficial ownership of common stock immediately
after the offering assuming the securities to be offered by them are sold.
<TABLE>
<CAPTION>
---------------------------------------------- ---------------------------- -------------- --------------------------
Shares of Common Stock Shares of Shares of Common Stock
Beneficially Owned Prior Common Stock Beneficially Owned After
to the Offering (1)(2) Offered the Offering (3)
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Selling Securityholder Number % Number %
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Sreedeswar Holdings Inc., Panama(4) 3,613,705 5.16% 3,613,705 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
JO Hambro Capital Management Ltd. for Acct. 1,307,835 1.93% 1,307,835 -0- *
of American Opportunities Trust(5)
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
James Ladner(6) 653,455 * 653,455 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Dr. Roland Hartmann(5) 523,134 * 523,134 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Heinz Bertsch(5) 523,134 * 523,134 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Miriam Bertsch(5) 261,567 * 261,567 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Renato Schaeppi(5) 261,567 * 261,567 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Franz Grob(5) 261,567 * 261,567 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
E.F.G. Private Bank SA(7) 787,932 1.17% 787,932 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Coutts Bank(8) 391,296 * 391,296 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
RP&C International Limited(9) 2,952,169 4.25% 2,952,169 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
RemoteDataPartners(5) 5,231,341 7.30% 5,231,341 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Lawewa International Limited(10) 84,746 * 84,746 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Tranec Anstalt(10) 338,983 * 338,983 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
JS Cresvale Securities Asia Limited(11) 3,397,936 4.87% 3,397,936 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Global Convertible Megatrend Ltd.(10) 847,458 1.26% 847,458 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
entrenet Group, LLC(12) 4,643,000 6.53% 4,643,000 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
David Peachey(13) 56,018,224 45.74% 9,450,000 46,568,224 21.09%
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------- ---------------------------- -------------- --------------------------
Shares of Common Stock Shares of Shares of Common Stock
Beneficially Owned Prior Common Stock Beneficially Owned After
to the Offering (1)(2) Offered the Offering (3)
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Selling Securityholder Number % Number %
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Peter J. Lagergren(14) 59,493,463 47.24% 59,493,463 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Stig Lagergren(15) 1,340,426 1.98% 1,340,426 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
C. Cameron Allen(15) 1,218,569 1.80% 1,218,569 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Alpha Harrison(15) 121,857 * 121,857 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Michael J. McCune(15) 121,857 * 121,857 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
L. Lacey Lance(15) 121,857 * 121,857 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
C.E. Daniels(15) 121,857 * 121,857 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Robert L. Ballinger(15) 121,857 * 121,857 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
MSI Capital Corporation(15) 121,857 * 121,857 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Concorde 1987 Venture Investors(15) 544,457 * 544,457 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Profit Sharing Trust for Employees of Taber 136,114 * 136,114 -0- *
Corporation(15)
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Lyda Hill(15) 272,228 * 272,228 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Lewis T. Sweet, Jr.(15) 2,132,496 3.11% 2,132,496 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Mary Catherine Sweet(15) 1,659,326 2.44% 1,659,326 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Royal Bank of Scotland(16) 75,000 * 75,000 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Bert Siegel(17) 100,000 * 100,000 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Banca del Gottardo(18) 669,566 1.00% 669,566 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Bank Leu AG Credit Suisse Group(18) 1,304,348 1.93% 1,304,348 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Brown Brothers Harriman(18) 326,087 * 326,087 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Manport AG(18)(19) 678,261 1.01% 678,261 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Medig Placements S.A.(18) 217,391 * 217,391 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Valux S.A.(18) 217,391 * 217,391 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Lloyds TSB Bank plc, Geneva(18) 339,130 * 339,130 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Continental Capital & Equity Corporation (20) 600,000 * 600,000 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------- ---------------------------- -------------- --------------------------
Shares of Common Stock Shares of Shares of Common Stock
Beneficially Owned Prior Common Stock Beneficially Owned After
to the Offering (1)(2) Offered the Offering (3)
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
<S> <C> <C> <C> <C> <C>
Selling Securityholder Number % Number %
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
D2E (21) 180,000 * 180,000 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
SBK Investment Partners (22) 688,182 * 100,000 588,182 *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Daniel Spethman (23) 15,000 * 15,000 -0- *
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
Total 155,037,626 107,881,220
----- ----------- -----------
---------------------------------------------- ----------------- ---------- -------------- --------------- ----------
</TABLE>
* Less than 1% of the total number of shares issued and outstanding.
The table includes shares of our common stock issuable upon conversion of
our 12% senior convertible debentures and senior convertible notes due 2000
based on the current effective conversion price of $.19 per share. The
actual number of shares issuable upon conversion of the debentures and
notes is equal to the product of (A) their principal amount divided by a
conversion price equal to the lesser of (i) $.30 per share and (ii) 92% of
the average of the closing bid price for the common stock on the
Over-the-Counter Bulletin Board for the twenty consecutive trading days
ending two trading days prior to the conversion date and (B) 1.26.
The table also includes shares of our common stock issuable upon conversion
of shares of our Series B Convertible Preferred Stock at the initial
conversion price of $.59 per share. The actual number of common shares
issuable upon conversion of the Series B Convertible Preferred Stock is
equal to the conversion value of the preferred stock of $10 per share
divided by the applicable conversion price at the time of conversion. The
conversion price for the Series B Convertible Preferred Stock is equal to
$.59 per share, subject to a reduction of $.07 per share on August 25 in
each year commencing 2001 and certain other customary adjustments.
(1) Unless otherwise noted, FiberChem believes that all persons named in the
table have sole voting and investment power with respect to the shares
beneficially owned by them. A person is deemed to be the beneficial owner
of securities that can be acquired by such person within 60 days from the
date hereof upon the exercise of warrants or options or upon the conversion
of convertible securities.
(2) Based on 66,446,350 shares of common stock outstanding as of October 16,
2000.
(3) Based on 147,254,977 shares to be outstanding following this offering.
25
<PAGE>
(4) Includes 2,694,140 shares issuable upon conversion of 12% senior
convertible debentures due 2002 and warrants to purchase 919,565 shares
owned by the selling securityholder.
(5) Represents shares issuable upon conversion of our 12% senior convertible
debentures and notes due 2002.
(6) Includes 643,455 shares issuable upon conversion of our 12% senior
convertible debentures and 10,000 shares issuable upon exercise of
warrants.
(7) Consists of 366,193 shares of common stock issuable upon conversion of 12%
senior convertible debentures due 2002 and 421,739 shares of common stock
issuable upon exercise of warrants.
(8) Consists of 52,513 shares of common stock issuable upon conversion of 12%
senior convertible debentures due 2002 and 338,983 shares of common stock
issuable upon conversion of shares of our Series B Convertible Preferred
Stock.
(9) Consists of (i) 167,402 shares issuable upon conversion of our 12% senior
convertible debentures due 2002, (ii) 1,432,593 shares issuable upon
exercise of warrants issued as partial consideration for services rendered
as placement agent by RP&C International Limited for the 12% senior
convertible debentures and notes, the Series B Convertible Preferred Stock
and a bridge loan and (iii) 1,352,174 shares issuable upon exercise of
other warrants owned by RP&C International (Guernsey) Limited, an affiliate
of RP&C International Limited.
(10) Represents shares of common stock issuable upon conversion of shares of our
Series B Convertible Preferred Stock owned by the selling securityholder.
(11) Includes 2,745,762 shares of common stock issuable upon conversion of
shares of our Series B Convertible Preferred Stock and 652,174 shares
issuable upon exercise of warrants owned by the selling securityholder.
(12) Represents 3,000,000 outstanding shares, 960,000 shares issuable upon
exercise of a warrant and 683,704 shares issuable upon conversion of a
convertible note, all of which were issued to the selling securityholder in
consideration for advisory and consulting services.
(13) Includes 9,450,000 shares which may be issuable to David S. Peachey in
exchange for Intrex Class B Shares upon satisfaction of certain milestones
specified in a compensation agreement among Mr. Peachey, FiberChem and
Intrex Data Communications Corp. Mr. Peachey is our President and Chief
Operating Officer. The shares of common stock owned beneficially by Mr.
Peachey prior to the offering include 46,568,224 shares not offered hereby
which may be issued in exchange for Intrex Class B Shares owned by him.
26
<PAGE>
(14) Represents (i) 9,450,000 shares issuable to Peter J. Lagergren upon
conversion of Pandel Series Preferred Stock, subject to release upon
satisfaction of certain milestones specified in a compensation agreement
between Mr. Lagergren and FiberChem, and (ii) 50,043,464 shares issuable to
Mr. Lagergren upon conversion of shares of Pandel Series Convertible
Preferred Stock, including shares which are subject to release upon
satisfaction of certain milestones related to the business of Intrex. Mr.
Lagergren is President of our Communications Division.
(15) Represents shares issuable to the selling stockholder upon conversion of
Pandel Series Preferred Stock, including shares which are subject to
release upon satisfaction of certain milestones related to the business of
Intrex.
(16) Represents shares issuable upon exercise of warrants issued to the selling
securityholder pursuant to Regulation S.
(17) Represents shares issuable upon exercise of a warrant issued as partial
consideration for consulting services.
(18) Represents shares issuable to the selling stockholder upon exercise of
warrants.
(19) Walter Haemmerli, the Chief Executive Officer of Manport AG, is a member of
our board of directors.
(20) Represents 400,000 shares issued and an additional 200,000 shares issuable
upon exercise of warrants issued as compensation for consulting services.
(21) Represents shares issuable pursuant to a settlement agreement of certain
claims made against us.
(22) The 100,000 shares of our common stock being offered by SBK Investment
Partners represent shares issued in consideration of consulting services
rendered to us. SBK Investment Partners is an investment entity of members
of Snow Becker Krauss P.C., which regularly provides legal services to us.
The number of shares of common stock owned beneficially by SBK Investment
Partners prior to the offering but not being offered hereby includes 6,250
shares which Snow Becker Krauss P.C. can acquire upon exercise of Class D
Warrants owned by it and 579,693 outstanding shares owned by Snow Becker
Krauss P.C.
(23) Represents shares issued in consideration of services rendered to us.
27
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock being offered by the selling securityholders can be
acquired by them upon conversion or exercise of outstanding convertible
securities, warrants and options and upon exercise of rights to exchange Class B
shares of FiberChem's subsidiary Intrex Data Communications Corp. for shares of
FiberChem common stock. These shares are being offered by the selling
securityholders for their own accounts and not for the account of FiberChem.
The selling securityholders may sell the common stock being offered by them in
the over-the-counter market, or privately, through broker dealers selected by
them, or as principals.
Usual and customary or negotiated brokerage fees or commissions may be paid by
the holders in connection with such sales.
The selling securityholders, their respective transferees, intermediaries,
donees, pledgees or other successors in interest through whom the selling
securityholders' common stock is sold may be deemed "underwriters" within the
meaning of Section 2(11) of the Securities Act, with respect to the securities
offered and any profits realized or commissions received may be deemed to be
underwriting compensation. Any broker-dealers that participate in the
distribution of the selling securityholders' securities may be deemed to be
"underwriters," as defined in the Securities Act, and any commissions,
discounts, concessions or other payments made to them, or any profits realized
by them upon the resale of any selling securityholders' securities purchased by
them as principals, may be deemed to be underwriting commissions or discounts
under the Securities Act.
FiberChem will pay all expenses incident to the registration of the securities
covered by this prospectus. FiberChem will not pay, among other expenses,
commissions and discounts of brokers, dealers or agents.
The sale of the common stock is subject to the prospectus delivery and other
requirements of the Securities Act. To the extent required, FiberChem will use
its best efforts to file and distribute, during any period in which offers or
sales are being made, one or more amendments or supplements to this prospectus
or a new registration statement to describe any material information with
respect to the plan of distribution not previously disclosed in this prospectus,
including, but not limited to, the number of securities being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by the underwriter for securities
purchased from a selling securityholder, any discounts, commissions or
concessions allowed or reallowed or paid to dealers and the proposed selling
price to the public.
Under the Exchange Act and the regulations thereunder, any person engaged in a
distribution of the securities of FiberChem offered by this prospectus may not
simultaneously engage in market-making activities with respect to the common
stock of FiberChem during the applicable "cooling off" period five business days
prior to the commencement of such distribution. The selling securityholders will
also be subject to applicable provisions of the Exchange Act and the rules and
regulations thereunder, including, Regulation M, in connection with transactions
in the securities, which provisions may limit the timing of purchases and sales
of securities by the selling securityholders.
28
<PAGE>
In connection with the Intrex business combination, former shareholders of
Intrex and Pandel and shareholders of FiberChem who own or have the right to
acquire a total of 192,944,645 shares of FiberChem Common Stock have agreed that
until July 27, 2001, each of them will not sell any FiberChem common stock owned
by them or ownership of which may be acquired in an amount which exceeds,
together with other sales for the account of such stockholder during the
preceding three months, the greater of (1) one percent of the shares of Common
Stock outstanding as shown on FiberChem's most recently published Annual Report
on Form 10-KSB or Quarterly Report on Form 10-QSB, (2) the average weekly
reported trading volume during the four weeks preceding the filing of any
required notice of sale pursuant to Rule 144 or, if no such notice is required,
the date of receipt of the order to execute the transaction by the broker or the
date of execution of the transaction directly with a market maker
DESCRIPTION OF SECURITIES
The following summary description of FiberChem's common stock offered hereby is
qualified in its entirety by reference to FiberChem's Certificate of
Incorporation and By-Laws, copies of which are available upon request.
COMMON STOCK
FiberChem is authorized to issue 150,000,000 shares of common stock, $.0001 par
value, of which 66,446,350 shares of common stock were issued and outstanding as
of October 16, 2000. All of the outstanding shares of common stock are duly and
validly issued, fully paid and non-assessable. In connection with the business
combination with Intrex, the board of directors of FiberChem has agreed to call
and hold a meeting of stockholders at which the board will submit to
stockholders a proposal to increase FiberChem's authorized common stock from
150,000,000 shares to 500,000,000 shares.
Subject to the rights of the holders of preferred stock, holders of common stock
are entitled to receive, pro rata, such dividends and distributions as may, from
time to time, be declared by the Board of Directors, from funds legally
available therefor. FiberChem has not paid any cash dividends on its common
stock and does not anticipate paying cash dividends in the foreseeable future.
See "Dividend Policy". In the event of liquidation, dissolution or winding up of
FiberChem, holders of common stock are entitled to share ratably in all assets
of FiberChem available for distribution to holders of common stock, subject to
the rights of creditors and holders of preferred stock. The holders of common
stock are not subject to redemption, further calls or assessments by FiberChem.
Holders of common stock have no preemptive, subscription or conversion rights.
Holders of common stock are entitled to one vote per share on all matters
submitted to the stockholders, and the holders of the majority of the
outstanding shares of common stock currently constitute a quorum at any meeting
of stockholders.
29
<PAGE>
Since the common stock does not have cumulative voting rights, holders of more
than 50% of the outstanding shares can elect the Directors of FiberChem.
However, FiberChem's Board of Directors is divided into three classes, each of
which is to be elected for three-year terms. As the term of each class expires,
Directors of that class are elected for full three-year terms. FiberChem's Board
of Directors currently has eight Directors.
PREFERRED STOCK. The Company is authorized to issue 10,000,000 shares of
Preferred Stock, $.01 par value. The Preferred Stock may be issued by the
Company's Board of Directors from time to time in one or more series. The
Board of Directors is authorized to determine the rights, preferences,
privileges and restrictions, including the dividend rights, conversion
rights, voting rights, terms of redemption (including sinking fund
provisions, if any) and liquidation preferences, of any series of Preferred
Stock and to fix the number of shares of any such series without any further
vote or action by stockholders.
Although the Company has no present intention to issue Preferred Stock to
discourage or defeat efforts to acquire control of the Company through the
acquisition of shares of its Common Stock, it has the ability to do so through
the issuance of Preferred Stock. See "Risk Factors - Preferred Stock
Authorized."
SERIES A PREFERRED STOCK. An aggregate of 207,848 shares of Series A Convertible
Preferred Stock are currently outstanding. Each share of the Series A
Convertible Preferred Stock is convertible into ten shares of the Company's
Common Stock, subject to customary anti-dilution provisions. The conversion
ratio is expected to be changed from ten common shares for each preferred share
to seventy-five shares in satisfaction of the anti-dilution provisions of the
Series A Convertible Preferred Stock and dividends in arrears. Holders of Series
A Convertible Preferred Stock vote together with the holders of Common Stock as
one class on all matters submitted to a vote of stockholders, except where a
class vote may be required by law. Holders of Series A Convertible Preferred
Stock are entitled to the number of votes into which the shares of Series A
Convertible preferred Stock are convertible on all matters presented to the
stockholders for action. Dividends are cumulative and are payable annually on
November 1st, in cash (11%) or additional shares of Convertible Preferred Stock
(8% on the number of shares owned at date of declaration) at the sole discretion
of the holders. The Series A Convertible Preferred Stock entitles the holder to
a liquidation preference of $15 per share upon liquidation, dissolution or
winding up of the Company. The Series A Convertible Preferred Stock is
redeemable by the Company when and if the closing bid price of the Company's
Common Stock is at least 200% of the Conversion Price for twenty consecutive
trading days. Upon redemption, the Company would issue the number of shares of
its Common Stock into which the Series A Convertible Preferred Stock is then
convertible.
SERIES B CONVERTIBLE PREFERRED STOCK. An aggregate of 257,000 shares of Series B
Convertible Preferred Stock, all of which remain outstanding, were issued on
August 25, 2000, for cash proceeds of $1,285,000 and certain securities of
nominal value. Each share of Series B Preferred Stock is convertible into a
number of shares of common stock equal to the stated or
30
<PAGE>
redemption value of the Series B Preferred Stock divided by the conversion
price, initially $.59 per share, subject to reduction by $.07 per share on
August 25 in each year commencing 2001 and for certain dilutive events. Holders
of Series B Preferred Stock are not entitled to any voting rights except where a
class vote or other vote may be required by law. The Series B Preferred Stock is
not entitled to payment of any dividends or any preference or priority over the
commence stock or any other class of preferred stock with respect to the payment
of dividends. The Series B Preferred Stock entitles the holder to a liquidation
preference of $10 per share upon liquidation, dissolution or winding up of the
Company. The Series B Preferred Stock is redeemable by the Company when and if
the closing bid price of the Company's Common Stock is at least 200% of the
Conversion Price for twenty consecutive trading days.
We have the right to cause the Series B Preferred Stock to be converted at the
then applicable conversion price if (i) the common stock continues to be
eligible for quotation on the NASDAQ OTC bulletin board or another national
stock exchange or quotation service and we have complied with our agreement to
register under the Securities Act the shares of common stock issuable upon
conversion of the Series B Preferred Stock and (ii) the average closing bid
price for the common stock during any 20 consecutive trading days and on the
date notice of conversion is given equals or exceeds 130% of the then applicable
conversion price.
We also have the right to redeem any shares of Class B Preferred Stock for cash
on thirty days notice at a price equal to the redemption price. If the common
stock continues to be eligible for quotation on the NASDAQ OTC bulletin board or
another national stock exchange or quotation service, we also have the right on
like notice, at any time and from time to time on or after June 1, 2004, to
redeem during any 180 day period up to 50% of the number of outstanding shares
of Series B Preferred Stock at a redemption price payable in freely tradeable
shares of common stock valued at a price per share related to then recent market
prices equal to (i) if the market capitalization of our common stock is less
than $300 million, 110% of the redemption value of the shares being redeemed and
(ii) if the market capitalization of our outstanding common stock is $300
million or more, 105% of the redemption value of the shares being redeemed.
PREFERRED SPECIAL SHARES. In connection with our business combination with
Intrex Data Communications Corp. we issued preferred stock designated as Special
Shares. We issued one one-hundredth of a Special Share together with each Intrex
Class B Share issued to Intrex common shareholders in connection with the
business combination with Intrex, or a total of 1,846,909 Special Shares. The
Special Shares are entitled to a liquidation preference of $0.10 per share upon
any liquidation or dissolution and can be redeemed by us for nominal
consideration when a holder of Special Shares exchanges such holder's Intrex
Class B Shares for shares of our common stock. The purpose of issuing Intrex
Class B Shares and Special Shares to Intrex stockholders was to allow them to
defer what might otherwise be considered a taxable event under Canadian law
arising from the business combination.
PANDEL SERIES PREFERRED STOCK. In connection with our business combination with
Intrex, we also issued shares of a class of preferred stock designated as Pandel
Series Preferred Stock. Holders of Pandel Series Preferred Stock are entitled to
one hundred votes per share, voting
31
<PAGE>
together with the holders of common stock as one class on all matters submitted
to a vote of stockholders, except where a class vote may be required by law. The
Pandel Series Preferred Stock participates equally with the common stock as to
payment of dividends and other distributions based on the number of shares of
common stock into which the Pandel Series Preferred Stock is convertible and
also has a liquidation preference of $.10 per share prior to any distribution to
the holders of common stock. Provided we have a sufficient number of authorized
shares of common stock, each share of Pandel Series preferred Stock will be
automatically converted into one share of our common stock on December 31, 2000,
or prior thereto at our option.
REPORTS TO STOCKHOLDERS
FiberChem distributes to its stockholders annual reports containing financial
statements audited and reported upon by its independent certified public
accountants after the end of each fiscal year, and makes available such other
periodic reports as FiberChem may deem to be appropriate or as may be required
by law or by the rules or regulations of any stock exchange on which FiberChem's
common stock is listed. FiberChem's fiscal year end is September 30.
LEGAL MATTERS
The legality of the securities offered by this prospectus will be passed upon
for FiberChem by Snow Becker Krauss P.C., New York, New York. Snow Becker Krauss
P.C. owns 579,623 shares of common stock. SBK Investment Partners, an investment
entity of members of Snow Becker Krauss P.C. owns 102,309 shares of common stock
and 6,250 Class D warrants.
EXPERTS
The consolidated balance sheet of FiberChem, Inc. and subsidiaries as of
September 30, 1999 and the related consolidated statements of operations,
stockholders' deficiency and cash flows for each of the two years in the period
ended September 30, 1999 have been incorporated by reference and incorporated in
the Registration Statement in reliance upon the report of Goldstein Golub
Kessler LLP, independent certified public accountants, and upon the authority of
said firm as experts in accounting and auditing.
32
<PAGE>
TABLE OF CONTENTS
Prospectus Summary
Risk Factors
Use of Proceeds
Market for Common Equity and Related Shareholders Matters
Selling Securityholders
Plan of Distribution
Description of Securities
Legal Matters
Experts
107,881,220 Shares of
Common Stock
of
FiberChem, Inc.
-----------
PROSPECTUS
-----------
,2000
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses payable by FiberChem in connection with the issuance and
distribution of the securities being registered are estimated as follows:
<TABLE>
<S> <C>
SEC Registration Fee.................................................................. $ 6,575,27
----------
Printing ............................................................................ 11,000.00
----------
Legal Fees and Expenses............................................................... 15,000.00
----------
Accounting and Auditing Fees
and Expenses......................................................................... 5,000.00
----------
Miscellaneous......................................................................... 2,424.73
----------
Total............................................................................ $40,000.00
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law ("DGCL") permits a
corporation organized thereunder to indemnify its directors and officers for
certain of their acts. The Articles of Incorporation of FiberChem are framed so
as to conform to the DGCL.
The laws of Delaware provide for indemnification of officers and directors who
are totally successful in defending themselves, by placing a restrictive
provision in the Articles of Incorporation.
Delaware law provides that a director who is found to be liable for negligence
or misconduct in the performance of his duty to FiberChem, is indemnified if a
court, upon application, finds that despite the adjudication of liability, but
in view of all circumstances of the case, such person is fairly and reasonably
entitled to indemnification for such expenses which the court deems proper.
FiberChem's By-Laws provide for indemnification of officers and directors,
except in relation to matters as to which they are finally adjudged to be liable
for negligence or misconduct, but only if the corporation is advised in writing
by its counsel that in his opinion the person indemnified did not commit such
negligence or misconduct. The DGCL provides that an officer or director may be
indemnified if he (a) conducted himself in good faith, (2) reasonably believed,
in his official capacity with the corporation, that his conduct was in the
corporation's best interest, or (3) in all other cases, his conduct was at least
not opposed to the corporation's best interest; however, if in connection with a
proceeding by or in the right of the corporation in which he was
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<PAGE>
adjudged liable to the corporation or in connection with any proceeding charging
improper personal benefit to the director, whether or not involving action in
his official capacity, in which he was adjudged liable on the basis that
personal benefit was improperly received by him, Delaware law provides that
indemnification is not available.
ITEM 16. EXHIBITS
2.1 Amended Arrangement Agreement, dated as of May 26, 2000, entered into on
June 2, 2000, between FiberChem, Inc., a Delaware corporation and Intrex
Data Communications Corp., a British Columbia company. (1)
2.2 Agreement and Plan of Merger by and Among FiberChem, Inc., Pandel
Instruments, Inc., Pandel Mergerco, Inc. and Peter J. Lagergren. (1)
3.1 Articles of Incorporation of Registrant, as amended. (2)
3.2 By-Laws of Registrant. (3)
3.3 Certificate of Merger of Pandel Instruments, Inc. and Pandel Mergerco,
Inc. dated July 27, 2000. (4)
3.4 Certificate of Designation of Special Series Preferred Stock of
FiberChem, Inc. dated July 27, 2000. (4)
3.5 Certificate of Designation of Pandel Series Convertible Preferred Stock
of FiberChem, Inc. dated July 27, 2000. (4)
4.1 Trust Indenture Agreement dated as of July 28, 2000, between FiberChem
and The Bank of New York, as Trustee. (4)
4.2 U.S. $1,350,000 Global Bearer Debenture without interest coupons issued
by FiberChem on July 28, 2000. (4)
4.3 Form of 12% Senior Convertible Promissory Note due 2002. (4)
4.4 Class D Warrant Agreement of the Registrant with form of Warrant
Certificate. (5)
4.5 Form of 8% Senior Convertible Note Due 1999 issued in the Company's
February 1996 private placement. (6)
4.6 Form of Warrant to purchase Common Stock on or before May 31, 2001. (7)
5.1* Opinion of Snow Becker Krauss P.C.
10.1 Lease Agreement and Reimbursement Agreement dated July 27, 1989 by and
between the Company and Howard Hughes Properties for Hughes Airport
Center, 1181 Grier Drive, Suite B, Las Vegas, Nevada. (8)
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<PAGE>
10.2 Amendment dated May 6, 1991 and September 26, 1991 to the Industrial Real
Estate Lease (Exhibit 10.10) for the Company's facilities. (9)
10.3 Employee Stock Bonus Plan. (5)
10.4 Amendments dated October 23, 1990 and February 21, 1991 to the Industrial
Real Estate Lease (Exhibit 10.10) for the Company's facilities. (10)
10.5 Non-qualified stock option plan. (11)
10.6 Qualified Stock Option Plan. (12)
10.7 Consulting agreement by and between the Company and with Irwin J.
Gruverman, dated November 4, 1993. (13)
10.8 Qualified Stock Option Plan. (14)
10.9 FCI FiberChem, Inc. and FCI Environmental, Inc. 401(k) Profit Sharing
Plan. (15)
10.10 Qualified Stock Option Plan (16)
10.11 License Agreement with Texas Instruments, Incorporated, dated June 15,
1995. (17)
10.12 Cooperative Development Agreement with Texas Instruments, Incorporated,
dated June 15, 1995. (17)
10.13 Form of Distribution Agreement. (18)
10.14 Form of agreement for services with Gordon Werner and others dated as of
September 15, 1995. (18)
10.15 Agreement dated November 8, 1996 by and between FCI Environmental, Inc.
and Alcohol Sensors International, Ltd. CERTAIN INFORMATION IN THIS
EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SEC PURSUANT TO A
REQUEST FOR CONFIDENTIAL TREATMENT. (19)
10.16 Agreement dated October 1, 1996 by and between FCI Environmental, Inc.
and Autronica AS. (19)
10.17 OEM Strategic Alliance Agreement dated June 30, 1996 by and between
Whessoe Varec, Inc. and FCI Environmental, Inc. (19)
10.18 1997 Employee Stock Plan (20)
10.19* Employment and Non-Competition Agreement with Geoffrey F. Hewitt dated
July 27, 2000.
10.20* Employment and Non-Competition Agreement with Melvin W. Pelley dated July
27, 2000.
10.21* Employment and Non-Competition Agreement with Thomas A. Collins dated
July 27, 2000.
10.22* Employment and Non-Competition Agreement with David S. Peachey dated July
27, 2000.
10.23* Employment and Non-Competition Agreement with Peter J. Lagergren dated
July 27, 2000.
10.24* Employment and Non-Competition Agreement with Brian O'Neil dated July 27,
2000.
10.25 Amendment to Whessoe Varec, Inc. OEM Strategic Alliance Agreement dated
August 13, 1997. (21)
10.26* Release and Settlement Agreement dated as of April 12, 2000 between the
Company and entrenet Group, L.L.C.
10.27* Agreement dated October 4, 2000 between the Company and Continental
Capital & Equity Corporation.
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<PAGE>
10.28 1999 Employee Stock Option Plan (23)
13.1* Annual Report on Form 10-KSB for the fiscal year ended September 30,
1999.
13.2* Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30,
2000.
13.3* Current Report on Form 8-K (Date of Earliest Event Reported July 27,
2000).
13.4* Amendment No. 1 to Current Report on Form 8-K (Date of Earliest Event
Reported July 27, 2000).
21.1* Subsidiaries of the Registrant.
23.1 The consent of Snow Becker Krauss P.C. is included in Exhibit 5.1
23.2* Consent of Goldstein Golub Kessler LLP.
24.1 Powers of Attorney are included on the signature page.
---------------------------
(24) Incorporated by reference from the Company's Current Report on Form 8K
(Date of Earliest Event Reported June 2, 2000).
(25) Incorporated by reference from the Company's January 13, 1988 Post
Effective Amendment to the Registration Statement on Form S-18 (File No.
33-12097-C) as declared effective on March 3, 1988.
(26) Incorporated by reference from the Company's April 15, 1987 Amendment to
the Registration Statement on Form S-18 (File No. 33-12097-C) as declared
effective on March 3, 1988.
(27) Incorporated by reference from the Company's Current Report on Form 8K
(Date of Earliest Event Reported July 27, 2000).
(28) Incorporated by reference from the Company's Registration Statement No.
33-35985
(29) Incorporated by reference from the Company's Current Report on Form 8-K
for February 15, 1996.
(30) Incorporated by reference from the Company's Current Report on Form 8-K
on July 15, 1996.
(31) Incorporated by reference from the Company's Registration Statement No.
33-29338.
(32) Incorporated by reference from the Company's Annual Report on Form 10-K
for September 30, 1991.
(33) Incorporated by reference from the Company's April 24, 1991 Post
Effective Amendment to the Registration Statement on Form S-18 (File No.
33-35985) as declared effective on April 30, 1991.
(34) Incorporated by reference from the Company's Registration Statement on
Form S-8 for April 28, 1992. (No. 33-47518).
(35) Incorporated by reference from the Company's Proxy Statement dated May 3,
1993.
(36) Incorporated by reference from the Company's Report on Form 10-K for
September 30, 1993.
(37) Incorporated by reference from the Company's Proxy Statement dated May
23, 1994.
(38) Incorporated by reference from the Company's Report on Form 10-KSB for
September 30, 1994.
(39) Incorporated by reference from the Company's Report on Form S-8 for
August 1, 1995.
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<PAGE>
(40) Incorporated by reference from the Company's Report on Form 8-K/A for
August 30, 1995.
(41) Incorporated by reference from the Company's Report on Form 10-KSB for
September 30, 1995.
(42) Incorporated by reference from the Company's Report on Form 10-KSB for
September 30, 1996.
(43) Incorporated by reference from the Company's Proxy Statement dated May
20, 1997.
(44) Incorporated by reference from the Company's Report on Form 10-KSB for
September 30, 1997.
(45) Incorporated by reference from the Company's registration statement on
Form S-2 filed May 12, 1999 (registration no. 333-78319)
(46) Incorporated by reference from the Company's registration statement on
form S-8 filed March 1, 2000 (File No. 333-31412).
* Filed herewith.
II-5
<PAGE>
ITEM 17. UNDERTAKINGS
RULE 415 OFFERING
FiberChem hereby undertakes:
(a)(1) To file, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) Reflect in the prospectus any facts or events which, individually
or together, represent a fundamental change in the information in the
registration statement;
(iii) Include any additional or changed material information on the
plan of distribution.
(2) For determining liability under the Act, to treat each post-effective
amendment as a new registration statement of the securities offered, and the
offering of the securities at that time to be the initial bona fide offering.
(3) To file a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.
(e) REQUEST FOR ACCELERATION OF EFFECTIVE DATE. Insofar as indemnification
for liabilities arising under the Act may be permitted to directors, officers
and controlling persons of the small business issuer pursuant to the foregoing
provisions, or otherwise, the small business issuer has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by FiberChem of expenses incurred or paid by a director,
officer or controlling person of FiberChem 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, FiberChem will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Las Vegas, State of Nevada, on November 9, 2000.
FIBERCHEM, INC.
By: /s/ GEOFFREY F. HEWITT
------------------------------------------
Geoffrey F. Hewitt
CHIEF EXECUTIVE OFFICER
(Principal Executive Officer)
By: /s/ MELVIN W. PELLEY
------------------------------------------
Melvin W. Pelley
CHIEF FINANCIAL OFFICER
(Principal Financial and Accounting
Officer)
POWER OF ATTORNEY
Each of the undersigned hereby authorizes Geoffrey F. Hewitt or Melvin W. Pelley
as his attorney-in-fact to execute in the name of each such person and to file
such amendments (including post-effective amendments) to this registration
statement as the Registrant deems appropriate and appoints such person as
attorney-in-fact to sign on his behalf individually and in each capacity stated
below and to file all amendments, exhibits, supplements and post-effective
amendments to this registration statement.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed by the following persons on November , 2000 in the
capacities indicated.
NAME TITLE
/s/ GEOFFREY F. HEWITT CHIEF EXECUTIVE OFFICER AND CHAIRMAN OF
---------------------- THE BOARD
GEOFFREY F. HEWITT (PRINCIPAL EXECUTIVE OFFICER)
/s/ DAVID S. PEACHEY DIRECTOR, PRESIDENT AND CHIEF OPERATING
-------------------- OFFICER
DAVID S. PEACHEY
/s/ PETER J. LAGERGREN DIRECTOR, PRESIDENT - COMMUNICATIONS
---------------------- DIVISION
PETER J. LAGERGREN
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<PAGE>
/s/ MELVIN W. PELLEY CHIEF FINANCIAL OFFICER
-------------------- (PRINCIPAL FINANCIAL AND ACCOUNTING
MELVIN W. PELLEY OFFICER)
/s/ BRIAN A. O'NEIL
------------------- DIRECTOR, VICE PRESIDENT - OPERATIONS
BRIAN A. O'NEILL
/s/ WALTER HAEMMERLI
-------------------- DIRECTOR
WALTER HAEMMERLI
/s/ IRWIN J. GRUVERMAN
---------------------- DIRECTOR
IRWIN J. GRUVERMAN
/s/ BYRON A. DENENBERG
---------------------- DIRECTOR
BYRON A. DENENBERG
*/s/ TREVOR S. NELSON
--------------------- DIRECTOR
TREVOR S. NELSON
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<PAGE>
EXHIBIT INDEX
Exhibit No. Name
5.1 Opinion of Snow Becker Krauss P.C.
10.19 Employment and Non-Competition Agreement with Geoffrey F. Hewitt dated
July 27, 2000.
10.20 Employment and Non-Competition Agreement with Melvin W. Pelley dated July
27, 2000.
10.21 Employment and Non-Competition Agreement with Thomas A. Collins dated
July 27, 2000.
10.22 Employment and Non-Competition Agreement with David S. Peachey dated July
27, 2000.
10.23 Employment and Non-Competition Agreement with Peter J. Lagergren dated
July 27, 2000.
10.24 Employment and Non-Competition Agreement with Brian O'Neil dated July 27,
2000.
10.26 Release and Settlement Agreement dated as of April 12, 2000 between the
Company and entrenet Group, L.L.C.
10.27 Agreement dated October 4, 2000 between the Company and Continental
Capital & Equity Corporation.
13.1 Annual Report on Form 10-KSB for the fiscal year ended September 30,
1999.
13.2 Quarterly Report on Form 10-QSB for the fiscal quarter ended June 30,
2000.
13.3 Current Report on Form 8-K (Date of Earliest Event Reported July 27,
2000).
13.4 Amendment No. 1 to Current Report on Form 8-K (Date of Earliest Event
Reported July 27, 2000).
21.1 SUBSIDIARIES OF THE REGISTRANT.
23.1 THE CONSENT OF SNOW BECKER KRAUSS P.C. IS INCLUDED IN EXHIBIT 5.1.
23.2 Consent of Goldstein Golub Kessler LLP.
